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In re Cray Inc.

United States Court of Appeals, Federal Circuit

September 21, 2017

IN RE: CRAY INC., Petitioner

         On Petition for Writ of Mandamus to the United States District Court for the Eastern District of Texas in No. 2:15-cv-01554-JRG, Judge J. Rodney Gilstrap.

          Before Lourie, Reyna, and Stoll, Circuit Judges.

         ON PETITION

          ORDER

          LOURIE, CIRCUIT JUDGE.

         Cray Inc. ("Cray") petitions for a writ of mandamus vacating the order of the United States District Court for the Eastern District of Texas denying its motion to transfer the case to the United States District Court for the Western District of Wisconsin. See Raytheon Co. v. Cray, Inc., No. 2:15-cv-01554-JRG, 2017 WL 2813896 (E.D. Tex. June 29, 2017) ("Transfer Order"). Raytheon Company ("Raytheon") opposes the petition. The district court misinterpreted the scope and effect of our precedent in determining that Cray maintained "a regular and established place of business" in the Eastern District of Texas within the meaning of 28 U.S.C. § 1400(b). Accordingly, the court's decision refusing transfer pursuant to 28 U.S.C. § 1406(a) was an abuse of discretion. We therefore grant Cray's petition for a writ of mandamus and direct transfer of the case.

         Background

         This petition arises from a patent infringement action filed by Raytheon against Cray in the Eastern District of Texas. Cray sells advanced supercomputers that Raytheon accuses of infringement. Cray is a Washington corporation with its principal place of business located there. It also maintains facilities in Bloomington, Minnesota; Chippewa Falls, Wisconsin; Pleasanton and San Jose, California; and Austin and Houston, Texas.

         Although Cray does not rent or own an office or any property in the Eastern District of Texas, it allowed Mr. Douglas Harless and Mr. Troy Testa to work remotely from their respective homes in that district. Transfer Order, 2017 WL 2813896, at *1-2 & n.1. Mr. Testa worked for Cray as a senior territory manager while residing in the district from 2010 to 2011 before the underlying suit was filed. Id. at *1 n.1

         Mr. Harless worked as a "sales executive" for approximately seven years with associated sales of Cray systems in excess of $345 million. Id. at *1. Mr. Harless's responsibilities also included "new sales and new account development in [the] Central U.S." and "management of key accounts within the Financial, Biomedical and Petroleum Industries." Id. (alteration in original) (quotation marks omitted). Cray's "Americas Sales Territories" map, an internal document, identified Mr. Harless as a "Named Account Manager" and his location at his Eastern District of Texas personal home. Id. Mr. Harless received reimbursement for his cell phone usage for business purposes, internet fees, and mileage or "other costs" for business travel. Id. Cray provided Mr. Harless with "administrative support" from its Minnesota office. Id. He provided "price quotations" to customers, listing himself as the "account executive" and the person who prepared the quotation. Id. at *6. The communications also identified his home telephone number as his "office" telephone number with an Eastern District of Texas area code. Id.

         Mr. Harless, however, did not maintain Cray products at his home, nor did he maintain product literature at his home because it was available online. Id. at *9. It is undisputed that Cray never paid Mr. Harless for the use of his home to operate its business, or publicly advertised or otherwise indicated that his home residence was a Cray place of business.

         Cray moved to transfer this suit under 28 U.S.C. § 1406(a), which provides that "[t]he district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought." Cray argued that it does not "reside" in the Eastern District of Texas in light of the Supreme Court's decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S.Ct. 1514 (2017). The district court agreed that Cray does not reside in the district. Transfer Order, 2017 WL 2813896, at *4.

         Cray further argued that venue was improper in the Eastern District of Texas because Cray had neither committed acts of infringement, nor maintained a regular and established place of business within that district. The district court, however, rejected that argument. The court found that Mr. Harless's activities were factually similar to the activities performed by the representatives in In re Cordis Corp., 769 F.2d 733 (Fed. Cir. 1985), in which this court rejected a mandamus request to reverse an order denying transfer for improper venue. See Transfer Order, 2017 WL 2813896, at *8-10. The court did not rely on Mr. Testa's activities in determining that venue was proper.

         Although the district court found that Cordis resolved this case, the district court then went on "[f]or the benefit of" other litigants and counsel to set out four factors for inquiries into what constitutes a regular and established places of business "in the modern era, " including physical presence, defendant's representations, benefits received, and targeted interactions with the district. Id. at *11-14. The court, however, "decline[d] to expressly apply the factors . . . in this particular case; although, [it noted that it was] satisfied that had it done so, the result would remain the same." Id. at *14 n.13.

         Cray petitions for a writ of mandamus directing reversal of the district court's denial of its motion to transfer venue and directing the district court to transfer this case to the Western District of Wisconsin pursuant to 28 U.S.C. § 1406(a).

         Discussion

         I. The Mandamus Standard

         We may issue a writ under the All Writs Act, 28 U.S.C. § 1651(a), as "'necessary or appropriate in aid of' our jurisdiction." Miss. Chem. Corp. v. Swift Agric. Chems. Corp., 717 F.2d 1374, 1379 (Fed. Cir. 1983) (quoting 28 U.S.C. § 1651(a)). Mandamus is reserved for exceptional circumstances. Bankers Life & Cas. Co. v. Holland, 346 U.S. 379, 382-83 (1953). A writ of mandamus "is appropriately issued, however, when there is 'usurpation of judicial power' or a clear abuse of discretion." Schlagenhauf v. Holder, 379 U.S. 104, 110 (1964) (quoting Bankers Life, 346 U.S. at 383).

         A writ of mandamus may issue where: (1) the petitioner has "no other adequate means to attain the relief he desires"; (2) the petitioner shows "his right to mandamus is 'clear and indisputable'"; and (3) the issuing court is "satisfied that the writ is appropriate under the circumstances." In re TC Heartland LLC, 821 F.3d 1338, 1341 (Fed. Cir. 2016) (quoting Cheney v. U.S. Dist. Court for the Dist. of Columbia, 542 U.S. 367, 380-81 (2004)), rev'd and remanded sub nom., on other grounds, TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514 (2017). Similarly, mandamus may be appropriate, as it is here, to decide issues "important to 'proper judicial administration.'" In re BP Lubricants USA Inc., 637 F.3d 1307, 1313 (Fed. Cir. 2011) (quoting LaBuy v. Howes Leather Co., 352 U.S. 249, 259-60 (1957)). Additionally, the Supreme Court has approved the use of mandamus to decide a "basic [and] undecided" legal question when the trial court abused its discretion by applying incorrect law. Schlagenhauf, 379 U.S. at 110.

         That is the circumstance here: the district court misunderstood the scope and effect of our decision in Cordis, and its misplaced reliance on that precedent led the court to deny the motion to ...


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