14 October 2008

Eastern District of Texas Dissed By 5th Circuit

The federal court in Marshall, Texas, which is the United States District Court for the Eastern District of Texas, is well known as one of he most Plaintiff friendly venues in the United States, so it attracts many class action and product liability suits with only weak connections to the case. What Delaware is to corporate management in publicly held companies, Marshall, Texas is to the Plaintiff's bar.

The 5th Circuit Court of Appeals drew the line, however, in a product liability suit against Volkswagon arising out of a car accident in Dallas, Texas (which is in the Northern District of Texas) that had no connection of any kind to the Eastern District of Texas other than the Plaintiff's decision to file suit there. In making its ruling the en banc appellate panel summed up its reasoning as follows:

Concluding that the district court gave undue weight to the plaintiffs’ choice of venue, ignored our precedents, misapplied the law, and misapprehended the relevant facts, we hold that the district court reached a patently erroneous result and clearly abused its discretion in denying the transfer.

The dissent argues that the statute imposes very few limitations on where a product liability suit against a major corporation may be brought, and that permitting pre-trial review of these kinds of venue decisions takes too long (twenty-one months in this case) to make pre-trial review appropriate to provide.

While this case is a loss for the Plaintiff in this particular product liability case, it may be a win for the Plaintiff's bar overall. Tort reform efforts (i.e. efforts to restrict the rights of injured people to sue) is driven by extreme verdicts and rulings, particularly in a handful of venues like Marshall, Texas.

This ruling essentially gives a green light to removing any case which no specific factual connection to Marshall, Texas, itself a rural location with fairly little truly local litigation. This ruling could, as a result, greatly shrink the local cottage industry of tort suits. This, in turn, would allow opponents of tort reform to credibly argue that cases against major corporations are unlikely to be tried in Marshall, Texas, which is widely viewed as an unfair forum.

The case is a good example of a fairly obscure civil procedure issue (venue transfers and the scope of appropriate pre-trial review of court orders), having a major impact on substantive law at a national level (by impacting how friendly venues are in major tort litigation for Plaintiffs).

1 comment:

Andrew Oh-Willeke said...

There will also be a big impact on patent law plaintiff cases.