Godo Kaisha IP Bridge 1 v. Intel Corporation

RESPONSE to 175 Notice

E.D. Tex.December 12, 2018

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS MARSHALL DIVISION GODO KAISHA IP BRIDGE 1, Plaintiff, v. INTEL CORPORATION, Defendant. Case No. 2:17-cv-00676-RWS-RSP JURY TRIAL DEMANDED IP BRIDGE’S RESPONSE TO INTEL’S NOTICE OF ADDITIONAL AUTHORITY Case 2:17-cv-00676-RWS-RSP Document 177 Filed 12/12/18 Page 1 of 8 PageID #: 7922 IP BRIDGE’S RESPONSE TO INTEL’S NOTICE OF ADDITIONAL AUTHORITY – Page 1 Plaintiff Godo Kaisha IP Bridge 1 (“IP Bridge”) respectfully submits this brief response to Defendant Intel Corporation’s Notice of Additional Authority (Dkt. No. 175) (“Notice”).1 Regarding the standard of review to be applied to Judge Payne’s rulings on Intel’s non- dispositive motion to transfer venue: Intel’s Notice highlights the fundamental flaws in Intel’s arguments concerning the applicable standard of review of Judge Payne’s findings concerning Intel’s § 1404(a) motion to transfer venue. The question is whether the issue ruled upon is dispositive or non-dispositive; not the vehicle through which the ruling is delivered. At oral argument and in the face of overwhelming support, Intel conceded that motions to transfer venue are non-dispositive. (11/20/18 Hrg. Tr. at 38:18-39:3.) With that concession, there should be no remaining dispute that this Court applied an incorrect standard of review: The governing statute here, 28 U.S.C. § 636(b)(1), as well as IP Bridge’s cited case law and Federal Rule of Civil Procedure 72, all confirm that the statutorily prescribed standard of review for a magistrate judge’s findings depends on whether the underlying motion is dispositive or non-dispositive. Accordingly, this Court was required to apply the clearly erroneous standard of review to Judge Payne’s finding on Intel’s motion to transfer venue. Intel’s attempt to distinguish IP Bridge’s cases does not withstand scrutiny for at least three reasons. First, Intel attempts to explain away those cases in which the court held that it must apply the clearly erroneous standard of review to a Report and Recommendation (“R&R”) on a motion to transfer venue, arguing that those courts merely “chose” to apply that standard of review. (See 1 A notice of additional authority typically includes a citation to new case law, without argument or analysis. In contrast, Intel’s Notice does not contain a citation to new case law, but instead contains substantial argumentation about cases raised at the hearing on IP Bridge’s Motion for Reconsideration. While Intel complains that IP Bridge raised at the hearing cases not cited in the briefing, Intel cannot deny that the majority of those cases responded to arguments that Intel made for the first time in its sur-reply brief (Dkt. No. 170), to which IP Bridge had not previously had an opportunity to respond. Should the Court consider the new arguments Intel raises in its Notice, IP Bridge respectfully requests the Court also consider IP Bridge’s Response to Intel’s Notice. Case 2:17-cv-00676-RWS-RSP Document 177 Filed 12/12/18 Page 2 of 8 PageID #: 7923 IP BRIDGE’S RESPONSE TO INTEL’S NOTICE OF ADDITIONAL AUTHORITY – Page 2 Notice at 1-2 & n.1.) In other words, Intel asserts that the applicable standard of review is a matter of choice for the district judge, rather than a matter prescribed by statute. Intel’s characterization of those cases could not be more wrong.2 None of those cases characterized the applicable standard of review as a choice. Indeed, the very fact that those cases analyzed what standard of review to apply demonstrates that the courts did not view the standard to apply to be a matter of choice—if it were a choice, such analysis would be unnecessary since the court could just select what standard to apply. Each of those cases establishes that this Court clearly erred in applying de novo review to Judge Payne’s findings concerning Intel’s motion to transfer venue. Intel’s argument that the Court may “choose” what standard of review to apply not only is unsupported by the cited cases, it fundamentally contravenes the statute. The Federal Magistrates Act empowers district judges, in the exercise of their discretion, to refer certain matters to magistrate judges. 28 U.S.C. § 636(b)(1). When a district judge exercises that discretion, a party may file objections to the magistrate judge’s resolution of such matter, as Intel did here. Id. When a party does so object, Congress mandated the standard of review the court must apply based on whether the underlying matter is non-dispositive or dispositive: clearly erroneous or contrary to law for those matters not excepted from § 636(b)(1)(A) (i.e., for non-dispositive matters), and de 2 In Smith v. Hilton, this Court looked to the statute, 28 U.S.C. § 636(b)(1)(A), and determined that it must apply the clearly erroneous standard of review to the R&R on transfer, because a transfer motion is non-dispositive. No. 6:16- cv-913, 2016 WL 6246449, at *1 (E.D. Tex. Oct. 26, 2016) (“Because the instant motions are non-dispositive, the Court reviews the Magistrate Judge’s findings for clear error.”). Likewise, in Capstone, the court looked to the statute and Rule 72 and held that the “only” question for the Court when reviewing a magistrate judge’s determination of a non-dispositive matter is whether it was “clearly erroneous or contrary to law.” Capstone Int’l, Inc. v. Univentures, Inc., No. 3:10-CV-416, 2011 WL 4529372, at *2-*3 (N.D. Ind. Sept. 28, 2011) (noting that “when reviewing a magistrate judge’s non-dispositive decision to transfer a case, the Court asks only whether the order is “clearly erroneous or contrary to law,” treating the magistrate judge’s R&R on transfer as a “nullity” because the statue does not provide for a magistrate judge to issue an R&R on a non-dispositive matter, and returning the underlying motion to transfer to the magistrate judge for issuance of an order rather than an R&R). And, in McEvily, the court flatly rejected the argument that it would be proper to apply de novo review to an R&R on a motion to transfer venue, noting that “clearly erroneous” is “the one” standard to be applied to non-dispositive matters. McEvily v. Sunbeam-Oster Co., 878 F. Supp. 337, 340 (D.R.I. 1994) (“I need labor no further—as a motion to transfer venue is a nondispositive motion, the ‘clearly erroneous’ standard is the one to be employed in deciding this appeal.”). Case 2:17-cv-00676-RWS-RSP Document 177 Filed 12/12/18 Page 3 of 8 PageID #: 7924 IP BRIDGE’S RESPONSE TO INTEL’S NOTICE OF ADDITIONAL AUTHORITY – Page 3 novo for those matters that are excepted from § 636(b)(1)(A) (i.e., for dispositive matters). See 28 U.S.C. § 636(b)(1)(A) & (B).3 Nothing in the statute makes the applicable standard of review a matter of choice for the district court.4 Critically, Intel has not cited a single case holding that a district judge may choose which standard of review to apply in reviewing a matter referred to a magistrate judge. The standard of review is set by statute. Second, Intel unsuccessfully attempts to distinguish a trio of cases from the Southern District of New York.5 (See Notice at 2 & n.4.) Each of those cases held that the applicable standard of review of a magistrate judge’s R&R turns on whether the underlying motion is dispositive or non-dispositive, not on whether the magistrate judge styled the decision an R&R versus an order.6 Intel attempts to distinguish these cases on the basis that they did not involve a motion to transfer venue, but that is a difference without distinction. Nothing in the Federal Magistrates Act, Rule 72, or any other relevant law sets motions to transfer venue apart from other 3 See also Fed. R. Civ. P. 72; Peretz v. United States, 501 U.S. 923, 944 (1991) (“The Federal Magistrates Act provides two separate standards of judicial review: ‘clearly erroneous or contrary to law’ for magistrate resolution of nondispositive matters, see 28 U.S.C. § 636(b)(1)(A), and ‘de novo’ for magistrate resolution of dispositive matters, see § 636(b)(1)(B)–(C).”). 4 Similarly, and contrary to Intel’s suggestion, nothing in the statute permits a magistrate judge to dictate the standard of review to be applied by the district judge by “elect[ing]” to issue a report and recommendation. (See Notice at 2). Consistent with the statutory text, and all of the case law, the standard of review turns on whether the motion is non- dispositive, and is not a matter of choice for the magistrate judge or district judge. 5 Intel also addresses the Fourth Circuit’s decisions in Aluminum Co. of Am., but IP Bridge highlighted that case at the hearing as further support for the proposition that motions to transfer venue are non-dipositive, a point that Intel conceded. Further, contrary to Intel’s assertion, IP Bridge did address that case in prior briefing. (Dkt. No. 168 at 3.) 6 Nikkal Indus., Ltd. v. Salton, Inc., 689 F. Supp. 187 (S.D.N.Y. 1988) (“In reviewing Magistrate Francis’s findings, the court will be guided by the Judicial Procedure Act, 28 U.S.C. § 636 (1986), which directs that one of two standards are applicable in the instant situation. Either a de novo review or a clearly erroneous standard will be employed. The standard depends on whether the issue decided by the magistrate is dispositive or non-dispositive.”) (emphasis added); R.F.M.A.S., Inc. v. So, 748 F. Supp. 2d 244, 285 n.1 (S.D.N.Y. 2010) (“Although Magistrate Judge Dolinger characterized his ruling as a Report and Recommendation, for the purposes of the applicable standard of review this Court considers the relevant inquiry, consistent with the plain text of 28 U.S.C. § 636(b)(1)(A) and Federal Rule of Civil Procedure 72(a), to be whether the pretrial matter at issue is ‘dispositive of a party's claim or defense,’ rather than how a magistrate judge styles his decision.”) (emphasis added); Chichinlnisky v. Trustees of Columbia Univ. in City of New York, No. 91-cv-4617, 1993 WL 403972, at *9 (S.D.N.Y. Oct. 7, 1993) (“For this Court to reject all or a portion of the report [and recommendation], Columbia must demonstrate that the Magistrate Judge’s findings are clearly erroneous or contrary to law.”) (emphasis added). Case 2:17-cv-00676-RWS-RSP Document 177 Filed 12/12/18 Page 4 of 8 PageID #: 7925 IP BRIDGE’S RESPONSE TO INTEL’S NOTICE OF ADDITIONAL AUTHORITY – Page 4 non-dispositive motions. The analysis and holding of this trio of cases apply equally here to Intel’s non-dispositive motion to transfer venue. Further, Intel’s argument that none of those cases concluded it would be error to review an R&R on a non-dispositive issue de novo, simply ignores the express holding of each of those cases—that the district court must apply the “clearly erroneous” standard of review to an R&R on a non-dispositive matter. See supra footnote 6. Each of these cases also establishes that this Court clearly erred in applying de novo review to Judge Payne’s findings concerning Intel’s motion to transfer venue. Third, and perhaps in recognition that it cannot adequately distinguish the cited cases, Intel concludes its argument concerning the proper standard of review by referring to a “practice” of magistrate judges issuing R&Rs on motions to transfer venue and of district courts reviewing those R&Rs de novo. (See Notice at 3.) But Intel’s argument fails for two reasons. First, past “practice” does not and cannot trump statutory law. Second, as noted at the hearing, in every case that Intel cited concerning such past “practice,” the district judge affirmed the magistrate judge’s R&R. (See 11/20/18 Hrg. Tr. at 65:9-25.) The issue present here, however, only arises when a district judge reverses a magistrate judge’s findings on a non-dispositive matter: A magistrate judge’s decision that is affirmed under de novo review would necessarily and a fortiori be affirmed under deferential “clearly erroneous” review. Intel’s heavy reliance, therefore, on past “practice” misses the mark, as any such “practice” has no bearing on the present issue before this Court. Regarding this Court’s analysis of witness convenience: At the hearing, as IP Bridge did in briefing (Dkt. No. 161 at 8-9; Dkt. No. 168 at 3-5), IP Bridge cited to numerous cases that establish that the Court must consider all potential material and relevant witnesses in the transfer analysis. In its Notice, Intel does not contest the force of this legal principle. Instead, Intel argues that those cases do not establish that “this Court committed Case 2:17-cv-00676-RWS-RSP Document 177 Filed 12/12/18 Page 5 of 8 PageID #: 7926 IP BRIDGE’S RESPONSE TO INTEL’S NOTICE OF ADDITIONAL AUTHORITY – Page 5 any error in weighing IP Bridge’s generically-identified third party witnesses.” (Notice at 3.) But again, Intel’s argument strays wide of the mark. The error here was not in how the Court weighed IP Bridge’s third party witnesses—it was that the Court failed to weigh them at all. By removing third party witnesses from the willing witnesses factor and then not considering those third parties under the unwilling witnesses factor, the Court removed IP Bridge’s third parties from the analysis altogether. That was clear error. And had the Court considered IP Bridge’s third party witnesses under the unwilling witnesses factor after removing them from the willing witnesses factor, then the unwilling witnesses factor indisputably would weigh in favor of not transferring out of this District.7 * * * Intel’s attempt via its Notice to explain away cases directly on point to the issues before this Court, fails. The case law cited in Intel’s Notice confirms that reconsideration is warranted to address and correct certain clear errors that, respectfully, this Court made in reversing Judge Payne and ordering transfer to the District of Oregon. 7 As IP Bridge noted during the hearing, Intel’s argument that the third party witnesses IP Bridge identified are entitled to no weight because they are identified by company name, not individual name, is an argument that Intel did not raise in the briefing before Judge Payne on Intel’s motion to transfer venue, and therefore waived. (11/20/18 Hrg. Tr. at 26:8-27:1.) Intel admitted that it did not raise that argument until it filed objections to Judge Payne’s R&R. (Id. at 40:25-41:8.) And, as IP Bridge pointed out at the hearing, Fifth Circuit law holds that a party waives any argument presented for the first time in objections to an R&R. See epicRealm Licensing, LLC v. Autoflex Leasing, 492 F. Supp. 2d 608, 613 (E.D. Tex. 2007) (“The 5th Circuit has held that the issues raised for the first time in objections to a Report and Recommendation of a magistrate judge are not properly before the district judge.”). Case 2:17-cv-00676-RWS-RSP Document 177 Filed 12/12/18 Page 6 of 8 PageID #: 7927 IP BRIDGE’S RESPONSE TO INTEL’S NOTICE OF ADDITIONAL AUTHORITY – Page 6 Respectfully submitted, /s/ Jennifer H. Doan Jennifer H. Doan State Bar No. 08809050 Joshua R. Thane State Bar No. 24060713 J. Randy Roeser Texas Bar No. 24089377 Kyle R. Akin Texas Bar No. 24105422 HALTOM & DOAN 6500 Summerhill Road, Suite 100 Texarkana, Texas 75503 Telephone: (903) 255-1000 Facsimile: (903) 255-0800 Email: jdoan@haltomdoan.com Email: jthane@haltomdoan.com Email: rroeser@haltomdoan.com Email: kakin@haltomdoan.com James R. Batchelder (CA Bar. 136347) (Eastern District of Texas Member) Andrew N. Thomases (CA Bar No. 177339) (Eastern District of Texas Member) Andrew T. Radsch (CA Bar No. 303665) (Eastern District of Texas Member) Christopher M. Bonny (CA Bar No. 280554) (Eastern District of Texas Member) Joseph B. Palmieri (CA Bar No. 312725) (Eastern District of Texas Member) ROPES & GRAY LLP 1900 University Avenue, 6th Floor East Palo Alto, CA 94303-2284 Telephone: (650) 617-4000 Facsimile: (650) 617-4090 james.batchelder@ropesgray.com andrew.thomases@ropesgray.com andrew.radsch@ropesgray.com christopher.bonny@ropesgray.com joseph.palmieri@ropesgray.com Case 2:17-cv-00676-RWS-RSP Document 177 Filed 12/12/18 Page 7 of 8 PageID #: 7928 IP BRIDGE’S RESPONSE TO INTEL’S NOTICE OF ADDITIONAL AUTHORITY – Page 7 Alexander E. Middleton (Eastern District of Texas Member) ROPES & GRAY LLP 1211 Avenue of the Americas New York, NY 10036 Telephone: (212) 596-9000 Facsimile: (212) 596-9090 alexander.middleton@ropesgray.com ATTORNEYS FOR GODO KAISHA IP BRIDGE 1 CERTIFICATE OF SERVICE The undersigned certifies that the foregoing document was filed electronically in compliance with Local Rule CV-5(a). Pursuant to Local Rule CV-5(c), all counsel of record were served a true and correct copy of the foregoing document by electronic mail on this the 12th day of December, 2018. /s/ Jennifer H. Doan Jennifer H. Doan Case 2:17-cv-00676-RWS-RSP Document 177 Filed 12/12/18 Page 8 of 8 PageID #: 7929