Court Opinion

ID: 3002523
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:30:08.337875+00
Date Added: 2024-06-11T11:45:49.766108
License: Public Domain

In the

United States Court of Appeals
               For the Seventh Circuit

No. 08-3499

IN RE:
  L IMITN ONE, LLC,
                                                              Petitioner.

                  On Petition for a Writ of Mandamus
         to the Northern District of Illinois, Eastern Division.
             No. 08-CV-4178—Blanche M. Manning, Judge

  S UBMITTED O CTOBER 2, 2008—D ECIDED D ECEMBER 19, 2008

  Before B AUER, C OFFEY, and S YKES, Circuit Judges.
  P ER C URIAM. In this intellectual-property dispute, the
district court ordered the case transferred to the Northern
District of California on the basis of forum-selection clauses
in two of the contracts between the parties. LimitNone,
LLC, filed a petition for a writ of mandamus seeking an
order directing the district court to vacate the transfer
order. Because LimitNone has not shown an indisputable
right to the relief it seeks, we deny the petition for a writ of
mandamus.
2                                                No. 08-3499

                       I. Background
  LimitNone is a software development and consulting
company. Google, Inc., the real party in interest, also in the
computer-software business, developed a suite of applica-
tions called “GoogleApps” to compete with the Microsoft
Office suite of products. As of January 2007, Google lacked
a method for Microsoft Outlook users to move their e-mail,
calendar, and contacts to the Google platform. LimitNone
developed an application called “gMove” to fill this need.
According to LimitNone, Google encourages and solicits
third-party developers to develop applications for use with
Google’s existing products. Accordingly, LimitNone
pitched its gMove product to Google in March 2007. Before
the meeting LimitNone signed a “Mutual Non-Disclosure
Agreement,” and both parties signed a “Google Enterprise
Professional Agreement.” Both agreements provided that
the parties agreed to protect the confidentiality of the
information that they exchanged. The agreements also
contained forum-selection clauses providing that the
“exclusive venue for any dispute relating to this Agree-
ment shall be in state or federal courts within Santa Clara
County, California.” Finally, both agreements provided
that any modifications must be made in writing and signed
by the parties.
  The parties exchanged trade secrets during the meeting,
and afterward LimitNone revised gMove to meet Google’s
additional specifications. LimitNone then provided a
“beta”version of gMove to Google. LimitNone asserts that
when a Google employee installed the beta version of the
gMove software, he electronically agreed to the “Beta
No. 08-3499                                                  3

License Agreement” on behalf of Google by clicking
“accept” on a preliminary screen before proceeding with
the program. In September 2007 LimitNone sent Google a
final version of gMove. LimitNone maintains that a Google
employee clicked “accept” on the “LimitNone License
Agreement.” This electronic agreement, unlike those
signed before the meeting, provided for exclusive jurisdic-
tion and venue in the state courts sitting in Lake County,
Illinois, or the United States District Court for the Northern
District of Illinois.
  The parties continued to refine gMove over the next
several months. Then, in December 2007 Google notified
LimitNone that it had developed its own alternative to
gMove called “Google Email Uploader,” which it would
give to its customers for free, thus destroying LimitNone’s
customer base for its gMove product.
   In June 2008 LimitNone sued Google in the Circuit Court
of Cook County, Illinois, alleging violations of the Illinois
Trade Secrets Act, 765 Ill. Comp. Stat. 1065/1 et seq., and the
Illinois Consumer Fraud and Deceptive Business Practices
Act, 815 Ill. Comp. Stat. 505/1 et seq. The next month Google
removed the case to the United States District Court for the
Northern District of Illinois. See 28 U.S.C. § 1441. Google
asserted that removal was proper because the Consumer
Fraud Act claim was preempted by the federal Copyright
Act, see 17 U.S.C. § 301, and the federal court had supple-
mental jurisdiction over the Trade Secrets Act claim.
LimitNone sought leave of the court, as Judge Manning
requires, to file a motion to remand, and Google filed a
motion to dismiss or, in the alternative, to transfer the case
4                                               No. 08-3499

under 28 U.S.C. § 1404(a) to the Northern District of
California. Google asserted that the business relationship
between the parties was governed by the Non-Disclosure
Agreement and the Google Enterprise Professional Agree-
ment, both of which vested exclusive jurisdiction in the
federal and state courts sitting in Santa Clara County,
California.
   The district court found that the Non-Disclosure Agree-
ment and the Google Enterprise Professional Agreement
applied to this dispute and that the other agreements could
not have superseded them because according to
LimitNone’s own description, they were not in writing or
signed by the parties. The district court therefore ordered
the case transferred to the Northern District of California
but did so under 28 U.S.C. § 1406(a), holding that venue in
Illinois was improper given the forum-selection clauses.
The court never ruled on LimitNone’s request for leave to
file a motion to remand. LimitNone now petitions for a
writ of mandamus directing the district court to vacate its
order transferring the case. The district court stayed the
transfer pending the resolution of this petition.

                        II. Analysis
  Mandamus is an extraordinary remedy. This court will
issue the writ only when two conditions are met:
    The first is that the challenged order not be effectively
    reviewable at the end of the case—in other words, that
    it inflict irreparable harm. . . . The petitioner must
    ordinarily demonstrate that something about the order,
No. 08-3499                                                   5

    or its circumstances, would make an end-of-case
    appeal ineffectual or leave legitimate interests unduly
    at risk. . . . Second, the order must so far exceed the
    proper bounds of judicial discretion as to be legiti-
    mately considered usurpative in character, or in
    violation of a clear and indisputable legal right, or, at
    the very least, patently erroneous.
United States v. Vinyard, 539 F.3d 589, 591 (7th Cir. 2008)
(quoting In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293, 1295
(7th Cir. 1995) (omissions in original)).
  This court has approved of the use of mandamus to
prevent out-of-circuit transfers under 28 U.S.C. § 1404. See
Hicks v. Duckworth, 856 F.2d 934, 935 (7th Cir. 1988) (“It is
difficult to see how such an error could be corrected
otherwise.”). The Supreme Court, however, has suggested
that mandamus is not an appropriate remedy for an
erroneous transfer order under § 1406(a). Bankers Life &
Cas. Co. v. Holland, 346 U.S. 379, 380-81, 383-85 (1953).
   Bankers Life might control this case except that the district
court mischaracterized the transfer as one under § 1406(a)
when it was 28 U.S.C. § 1404(a) that provided the necessary
authority. Transfer under § 1406(a) is appropriate only
when venue is improperly laid. 28 U.S.C. § 1406(a). Venue
is proper in a federal-question (or, as here, purported
federal-question) case in the judicial district where the
defendant resides. Id. § 1391(b). A corporation is deemed
to reside in any district “in which it is subject to personal
jurisdiction at the time the action is commenced.” Id.
§ 1391(c). Google is licensed to do business in the State of
Illinois and does business in the Northern District of
6                                                      No. 08-3499

Illinois. We have no doubt that the federal court sitting in
that district had personal jurisdiction over Google when
LimitNone filed its complaint. See Int’l Shoe Co. v. Washing-
ton, 326 U.S. 310, 319 (1945); Kinslow v. Pullara, 538 F.3d 687,
690-91 (7th Cir. 2008). Venue was therefore proper, within
the meaning of § 1391,1 in the Northern District of Illinois,
notwithstanding the forum-selection clauses. There often
may be multiple proper venues, although one, on the basis
of a forum-selection clause or for other reasons, may be
superior to the rest. See Albion v. YMCA Camp Letts, 171
F.3d 1, 2 n.1 (1st Cir. 1999). Because the Northern District
of Illinois was not an improper venue, § 1404(a), rather
than § 1406(a), provided the authority for the transfer
order.2 See also Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22,
29, 32 (1988) (applying § 1404(a) to transfer based on
forum-selection clause). Mandamus is therefore an appro-

1
   We take no position on whether LimitNone’s claims “aris[e]
under” the Copyright Act, but note that we would reach the
same conclusion if we applied the venue provision applicable to
copyright actions. See 28 U.S.C. § 1400(a); Janmark, Inc. v. Reidy,
132 F.3d 1200, 1203 (7th Cir. 1997) (applying the definition of
“reside” found in § 1391(c) to venue determination under
§ 1400(a)).
2
    The district court appears to have subsequently corrected
itself. In its order granting a stay of proceedings pending the
resolution of this petition, the court referred to the transfer order
as “discretionary,” and 28 U.S.C. § 1404(a) uses the permissive
language “a district court may transfer,” while § 1406(a) uses the
mandatory language “shall dismiss, or . . . transfer.” See 28
U.S.C. §§ 1404(a) & 1406(a).
No. 08-3499                                                         7

priate means to challenge the transfer order. See Hicks, 856
F.2d at 935.
  LimitNone, however, has not shown the district court’s
order exceeded its jurisdiction or was otherwise erroneous.
LimitNone maintains that the district court exceeded its
authority in ordering the case transferred because (1) the
district court failed to consider the “convenience, fairness,
and judicial economy” of transferring the case before
ruling on subject-matter jurisdiction, purportedly contrary
to Sinochem International Co. v. Malaysia International
Shipping Corp., 127 S. Ct. 1184, 1192 (2007);3 and (2) the
district court ruled on matters going to the merits of the
dispute without first establishing its own subject-matter
jurisdiction. LimitNone relies, if indirectly, on the Supreme
Court’s repudiation of the doctrine of “hypothetical
jurisdiction” in Steel Co. v. Citizens for a Better Environment,
523 U.S. 83 (1998).
  The district court transferred the case before ruling on
LimitNone’s motion to remand because, it concluded, “the
issue of venue is fairly easy to resolve.” The district court
further noted that the conduct at issue occurred “mostly”
in California. The relative ease of determining venue before
subject-matter jurisdiction is an issue of judicial economy;
the site of the majority of the conduct in question concerns

3
    Google submits that LimitNone waived this argument by
failing to raise it in the district court, but Google has not directed
us to any case where the principles of waiver or forfeiture have
been applied to an original action commenced in the court of
appeals. We therefore proceed to the merits.
8                                                No. 08-3499

the convenience and fairness of transferring the case.
Assuming for the sake of argument that Sinochem imposes
on district courts the requirements regarding transfer
orders that LimitNone suggests, the district court satisfied
them here.
  Furthermore, the district court was not required to
determine its own subject-matter jurisdiction before
ordering the case transferred. Although in Steel Co. the
Supreme Court mandated that issues of jurisdiction
precede a determination of the merits, the Supreme Court
has consistently held that “there is no mandatory ‘sequenc-
ing of jurisdictional issues.’ ” Sinochem, 127 S. Ct. at 1191
(quoting Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584
(1999)). Indeed, “a federal court has leeway ‘to choose
among threshold grounds for denying audience to a case
on the merits.’ ” Id. (quoting Ruhrgas, 526 U.S. at 585). For
example, the Supreme Court has approved of addressing
personal jurisdiction before subject-matter jurisdiction, see
Ruhrgas, 526 U.S. at 584-85, and of addressing venue before
personal jurisdiction, see Leroy v. Great W. United Corp., 443
U.S. 173, 180 (1979). Other ways a district court may
dispose of a case before reaching the merits—and thus
without necessarily first determining its own subject-
matter jurisdiction—include declining to adjudicate state-
law claims, see Moor v. County of Alameda, 411 U.S. 693, 715-
16 (1973); abstaining under the doctrine of Younger v.
Harris, 401 U.S. 37 (1971), see Ellis v. Dyson, 421 U.S. 426,
433-34 (1975); and dismissing lawsuits under the doctrine
of Totten v. United States, 92 U.S. 105 (1875) (prohibiting
suits against the government based upon covert espionage
No. 08-3499                                                   9

agreements), see Tenet v. Doe, 544 U.S. 1, 7 n.4 (2005). We
see no reason to treat venue differently.
  The line that the Supreme Court has drawn, consistent
with its holding in Steel Co., is that jurisdiction “ ‘is vital
only if the court proposes to issue a judgment on the
merits.’ ” Sinochem, 127 S. Ct. at 1191-92 (quoting Intec USA,
LLC v. Engle, 467 F.3d 1038, 1041 (7th Cir. 2006)). The
question, then, is whether the district court’s transfer order
constituted a judgment on the merits. It did not. No
judgment on the merits has been entered in this case.
LimitNone implicitly recognizes as much; for if a final
judgment had been entered, this petition would be unnec-
essary. See 28 U.S.C. § 1291. A determination “that venue
is improper . . . is not a determination of the claim, but
rather a refusal to hear it.” Bryant v. Rich, 530 F.3d 1368,
1374 (11th Cir. 2008) (quoting 18 JAMES W M. M OORE ET AL.,
M OORE’S F EDERAL P RACTICE, § 131.30[3][b] at 104 (3d ed.
2008)). The Supreme Court’s decision in Sinochem is
particularly instructive. There, the Court held that a
dismissal on the grounds of forum non conveniens was “a
determination that the merits should be adjudicated
elsewhere.” Sinochem, 127 S. Ct. at 1192. It “does not entail
any assumption by the court of substantive ‘law-declaring
power.’ ” Id. at 1192-93 (quoting Ruhrgas, 526 U.S. at 584-
85). And as § 1404(a) is nothing more than a codification of
the traditional forum non conveniens rules without the
attendant disadvantages of outright dismissal, see Sinochem,
127 S. Ct. at 1190-91; Lafferty v. St. Riel, 495 F.3d 72, 79 n.8
(3d Cir. 2007); Albion, 171 F.3d at 2, it is appropriate to
apply the same rules regarding the necessity of establish-
ing jurisdiction to both.
10                                               No. 08-3499

   LimitNone maintains that the factual determinations
necessary to the transfer decision—that is, which contracts
govern this dispute and where the parties have agreed to
litigate—constituted decisions on the merits, and as a result,
they were improperly made before a decision on subject-
matter jurisdiction was rendered. District courts are
permitted, indeed, in some instances required, to make
whatever factual findings are necessary prior to issuing a
preliminary order. See, e.g., Szabo v. Bridgeport Machines,
Inc., 249 F.3d 672, 676 (7th Cir. 2001) (instructing district
courts to make whatever factual findings are necessary to
a determination of class certification). Such is the case for
determining where venue properly lies. Id. The Supreme
Court rejected arguments to the contrary in Ruhrgas and
Sinochem. In Sinochem, the Court reasoned:
     Of course a court may need to identify the claims
     presented and the evidence relevant to adjudicating
     those issues to intelligently rule on a forum non
     conveniens motion. But other threshold issues may
     similarly involve a brush with “factual and legal issues
     of the underlying dispute.” For example, in ruling on
     the nonmerits threshold question of personal jurisdic-
     tion, a court may be called upon to determine whether
     a defendant’s contacts with the forum relate to the
     claim advanced by the plaintiff.
Sinochem, 127 S. Ct. at 1192 (quoting Van Cauwenberghe v.
Biard, 486 U.S. 517, 529 (1988)) (citation omitted); see also
Ruhrgas, 526 U.S. at 585-86. Other examples are not hard to
imagine. A factual dispute regarding diversity of citizen-
ship might overlap with the merits of an action. Or, as the
No. 08-3499                                               11

Supreme Court noted in Ruhrgas, a federal court could
conclude that state law does not allow punitive damages
and remand the removed case for failure to meet the
amount-in-controversy requirement. The plaintiff may be
precluded from relitigating that point in state court even if
it overlaps with the merits of the action. See Ruhrgas, 526
U.S. at 585-86. But the fact that issues necessary to a
determination of some preliminary inquiry may overlap, or
as LimitNone has put it, “arguably impact[]” the merits of
the case, does not mean that the preliminary inquiry is a
decision on the merits that requires the court to first
determine its own jurisdiction. It would be awkward, at
best, to suggest that district courts must resolve their own
jurisdiction before proceeding to factual disputes necessary
to that very determination. Although LimitNone may be
barred from relitigating the issue of venue, the district
court did not exceed its authority by making that decision
prior to determining its subject-matter jurisdiction.
   Our holding today should not be read to suggest that
district courts may in every case decide venue in advance
of subject-matter jurisdiction without due consideration of
whether it is advisable to do so. There may be circum-
stances in which a court abuses its discretion in electing to
resolve one jurisdictional issue before another. See Leroy,
443 U.S. at 180 (noting that reversing the usual order of
personal jurisdiction and venue requires “sound prudential
justification”). Indeed, the transfer statute itself provides
that the “interest of justice” is a necessary precondition to
transferring a case to another district. 28 U.S.C. § 1404(a).
But LimitNone has suggested only that the district court
erred as a matter of law, and the indeterminacy of subject-
12                                               No. 08-3499

matter jurisdiction is not, standing alone, a bar to consider-
ation of venue.
  Because the district court did not act outside of its
authority either in the manner of its consideration of the
transfer request or in deciding the issue of venue prior to
subject-matter jurisdiction, the petition for a writ of
mandamus is denied. LimitNone may move to remand the
case to state court, should it so desire, after the case is
transferred. See 28 U.S.C. § 1447(c) (“If at any time before
final judgment it appears that the district court lacks
subject matter jurisdiction, the case shall be remanded.”).
                                           P ETITION D ENIED.

                           12-19-08