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Q: Legal jurisdiction = venue- in federal courts for civil actions ( Answered,   2 Comments )
Question  
Subject: Legal jurisdiction = venue- in federal courts for civil actions
Category: Business and Money > Small Businesses
Asked by: jax3-ga
List Price: $75.00
Posted: 06 Jun 2005 14:28 PDT
Expires: 06 Jul 2005 14:28 PDT
Question ID: 530055
A defendant in a copyright matter has his place of business in New
York State. Complainant is a corporation in New York State. Defendant
has an employee who did routine work for the defendant and was located
in Maryland. This employee did know of the activity of defendant and
that there was a potential for infringement, however only did such
work as the defendant requested and only on a part time basis.
Complainant brought an action in Maryland joining the main defendant
and the employee.

What must the defendant show to justify bringing the action into
federal court in Maryland? In its complaint complainant erroneously
states that the Defendant's principal place of doing business is
within Maryland.

Request for Question Clarification by pafalafa-ga on 06 Jun 2005 15:02 PDT
In what Maryland court was the original complaint filed?

Clarification of Question by jax3-ga on 07 Jun 2005 04:30 PDT
The action is pending in the US District Court for the district of Maryland

it states:

"Venue is proper in this court under 28 USC 1391 since the defendants
principle place of doing business us within this district (not true),
defendant conduct business activites and or resude within this
district (one of them does) and since a substantial portion of the
acts giving rise to this case occurred within this district (not
true)."

Request for Question Clarification by pafalafa-ga on 07 Jun 2005 04:48 PDT
That's what I thought.  But now I don't understand your question,
which you stated as:


"What must the defendant show to justify bringing the action into
federal court in Maryland?"


Seems to me, the action is ALREADY in federal court in Md.  What am I missing?


pafalafa-ga
Answer  
Subject: Re: Legal jurisdiction = venue- in federal courts for civil actions
Answered By: richard-ga on 07 Jun 2005 15:38 PDT
 
Hello and thank you for your question.

You're probably aware that there are two main ways that federal courts
obtain their jurisdiction.

One is diversity jurisdiction.  Under 28 USC 1391,
" 1391. Venue generally
(a) A civil action wherein jurisdiction is founded only on diversity
of citizenship may, except as otherwise provided by law, be brought
only in
(1) a judicial district where any defendant resides, if all defendants
reside in the same State,
(2) a judicial district in which a substantial part of the events or
omissions giving rise to the claim occurred, or a substantial part of
property that is the subject of the action is situated, or
(3) a judicial district in which any defendant is subject to personal
jurisdiction at the time the action is commenced, if there is no
district in which the action may otherwise be brought."

But I'm going to assume for purposes of this answer that in your case
jurisdiction <is not> founded only on diversity, and therefore that 
1391(a) does not apply.  I say this because (i) you probably don't
have diversity, if both the complainant (plaintiff) and the defendant
have their principal places of businesses or are incorporated in New
York, and (ii) even if this is not so, the action is being brought
under the federal copyright act, and so is not founded <only> on
diversity anyway.

That means that the venue test is under  1391(b):
"(b) A civil action wherein jurisdiction is not founded solely on
diversity of citizenship may, except as otherwise provided by law, be
brought only in
(1) a judicial district where any defendant resides, if all defendants
reside in the same State,
(2) a judicial district in which a substantial part of the events or
omissions giving rise to the claim occurred, or a substantial part of
property that is the subject of the action is situated, or
(3) a judicial district in which any defendant may be found, if there
is no district in which the action may otherwise be brought."

So the next question is, where do the defendants reside?

You didn't mention in your question whether the defendant employer is
a corporation or an individual/unincorporated entity.  If the
defendant employer is a corporation, then under  1391(c)
"(c) For purposes of venue under this chapter, a defendant that is a
corporation shall be deemed to reside in any judicial district in
which it is subject to personal jurisdiction at the time the action is
commenced. In a State which has more than one judicial district and in
which a defendant that is a corporation is subject to personal
jurisdiction at the time an action is commenced, such corporation
shall be deemed to reside in any district in that State within which
its contacts would be sufficient to subject it to personal
jurisdiction if that district were a separate State, and, if there is
no such district, the corporation shall be deemed to reside in the
district within which it has the most significant contacts. "

So if the employer if a corporation, then, besides residing in New
York, it can for these purposes also be deemed to reside in Maryland,
if under service-of-process rules a summons was or could be served on
that Maryland employee and the employer has sufficient contacts with
Maryland to make it subject to the Maryland court's jurisdiction.  So
the Answer to your Question, if the defendant is a corporation, is as
follows:
The showing that needs to be made to justify holding the action in the
federal court in Maryland is that the defendant corporation was
subject to personal jurisdiction at the time the action is commenced. 
This implicates the 'long arm' statute, and since we know there is a
Maryland-based employee, then yes, there is proper jurisdiction in the
Maryland federal district court.

If the employer is not a corporation, then we can assume that the
employer resides in New York and not in Maryland.  So we should
disregard paragraph (b)(1)[because there's one defendant resident in
Maryland and one defendant resident in New York] and we need to
re-read 1391(b)(2) and (3) with that in mind:
"(b) A civil action wherein jurisdiction is not founded solely on
diversity of citizenship may, except as otherwise provided by law, be
brought only in
...
(2) a judicial district in which a substantial part of the events or
omissions giving rise to the claim occurred, or a substantial part of
property that is the subject of the action is situated, or
(3) a judicial district in which any defendant may be found, if there
is no district in which the action may otherwise be brought."

So the Answer to your Question, if the defendant is a not corporation,
is as follows:
The showing that needs to be made to justify holding the action in the
federal court in Maryland is that a substantial part of the events or
omissions giving rise to the claim occurred in Maryland.

You know the facts better than I do, but again it looks to me like this is a 'yes.'

Since the case seems already to be in Maryland, it ought to stay
there.  If the case were in New York and the defendant wanted it moved
to Maryland, there would be room for further argument:

"Within the Federal court system, the plaintiff?s choice of venue, the
location of the trial, which also chooses the body of applicable law,
is most often determinative. However, a defendant may seek a change of
venue by moving to transfer the case to a different District Court.
The judicial code, specifically 28 U.S.C.  1404(a) governs the
discretionary transfer of an action:
for the convenience of parties and witnesses, in the interest of
justice, the district court may transfer any civil action to any other
district or division where it might have been brought.

There are any number of convenience factors considered by the courts
in weighing convenience under  1404(a). Most courts consider the
three factors set forth in the statute and the "individualized,
case-by-case of convenience and fairness." Coffey v. Van Dorn Iron
Works, 796 F.2d 217, 219 (7th Cir. 1986)."

Forum Shopping in Trademark Litigation in the United States 
Date: Oct 1998 
Author(s): Kathleen Cooney-Porter, Jonathan Hudis, David J. Kera 
http://www.oblon.com/media/index.php?id=77

But again, since you're already in Maryland, the showing that needs to
be made to stay there is as I've stated above.

Search terms used
federal court conveniens trademark
28 usc 1391 diversity

Thanks again for letting us help.
Richard-ga

Request for Answer Clarification by jax3-ga on 08 Jun 2005 12:15 PDT
Good work Richard- lets go further (I'll add 40 to tip) and let me
clear up what the situation is:

the alleged infringing products were sold from a web site I own and
operate from NY. Most of the activity - purchasing, billing, shipping
etc took place in NY. we are sued as individuals by complainant.
Service was made in MD only- I wasn't served because at the same time
I (coincidently) moved. the employee did very little beyond some
shipping and handling returns. Our theory is that it was one of those
shipments to an order placed by complainant that triggered their use
of the MD address. From there they got to us in NY. We have retained
an attorney who hasn't had time to get to the venue issue. He
represents both of us

I'd like you to keep what you have done so far and summarise our
options including the service issue and including the claim to venue
thay might make that since they found out about the employee first-
they had no way of knowing where the case was to be made - noting that
they did send complaint to both NY and MD. I'm also interested in the
75,000 federal court limit and to see if the MD employee has any
protection given that. basically- I want to get the employee out of
this.

What else do you need to know?

tom

Clarification of Answer by richard-ga on 08 Jun 2005 16:20 PDT
Hello again.

Commenter ipfan-ga makes a very good point, that to the extent the
plaintiff is alleging a violation of federal copyright law, his
proceeding "may be instituted in the district in which the defendant
or his agent resides or may be found."
Clearly the service on your agent in Maryland supports jurisdiction of
the case in the federal district court in Maryland.

This brings us back to the reference in my answer to section 1404, and
to the article that I cited addressing the grounds for you to ask that
the case be transferred to New York if you prefer that venue.

As we noted there appears to be incomplete diversity between the parties anyway.
Sometimes a court will claim both 1391 and 1400 diversity for a mix of
claims, some under the federal statute and others not, even though the
statute seems not to allow that.  For example
System Enhancement Associates
http://www.bbsdocumentary.com/library/CONTROVERSY/LAWSUITS/SEA/sea-comp.txt

Unfortunately the $75,000 requirement is only for diversity cases, and
yours isn't that.

So basically you have the choice of having the case against you tried
in Maryland (that might suit your employee better), or you could ask
to have it moved to New York "For the convenience of parties and
witnesses, in the interest of justice"
http://caselaw.lp.findlaw.com/casecode/uscodes/28/parts/iv/chapters/87/sections/section_1404.html

Probably if you prefer to be in New York, the plaintiff might agree
with that as being more convenitent for them as well [and indeed, they
might be the ones making the 1404 argument to move it to New York now
that they've acquired jurisdiction over both you and the employee]. 
After all, they issued summonses in both states at the outset.

So chances are you can have New York if you prefer it to Maryland. 
But wherever the case proceeds, it looks like you and your employee
will be co-defendants at least while discovery and pretrial
negotiations proceed.

-R
Comments  
Subject: Re: Legal jurisdiction = venue- in federal courts for civil actions
From: ipfan-ga on 08 Jun 2005 15:24 PDT
 
Looks like everyone missed the fact that copyright has its own venue
statute: 28 U.S.C. Section 1400(a)
(http://caselaw.lp.findlaw.com/scripts/ts_search.pl?title=28&sec=1400),
which states: "Civil actions, suits, or proceedings arising under any
Act of Congress relating to copyrights . . . may be instituted in the
district in which the defendant or his agent resides or may be found."

On the facts as stated, it sounds like you have an agent (the
employee) who may "be found in" Maryland.  Your attorney needs to
research Maryland law on what is meant by "may be found" under 28
U.S.C. Section 1400(a), but it sounds to me like venue IS proper in
Maryland under the more liberal copyright venue statute.
Subject: Re: Legal jurisdiction = venue- in federal courts for civil actions
From: pafalafa-ga on 08 Jun 2005 20:11 PDT
 
Don't know if I've ever said this before, ipfan-ga, but it's nice
having you around.

paf

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