The Third Circuit Grants Mandamus, and Announces a New Test for Transfer in Unusual Circumstances

In re Howmedica Osteonics Corp., ___ F.3d ___ (3d Cir. 2017).  Today’s opinion by Judge Krause contains a little bit of a lot of things: in no particular order, waiver, forum selection clauses, section 1404 transfer law, necessary party law, personal jurisdiction, mandamus, appellate jurisdiction to grant mandamus, and the standard of review for mandamus cases, severance, and the proper application of Atlantic Marine Construction Co. v. U.S. District Court, 134 S.Ct. 568 (2013), which directed federal courts to honor forum selection clauses “[i]n all but the most unusual cases.”

Those concepts all came into play in the uncommon factual setting of this particular appeal.  This multi-defendant case was filed in the District of New Jersey.  Some of the defendants had contractual forum selection clauses, while others did not.  All defendants moved to transfer the case to the Northern District of California, pursuant to 28 U.S.C. §1404(a), which allows transfer “for the convenience of parties and witnesses” and “in the interest of justice” to any District where the case “might have been brought.”

The District Court granted transfer of the whole case.  The question was “how district courts should apply Atlantic Marine where all defendants seek a transfer to one district under §1404(a) and where some, but not all, of those defendants are parties to form-selection clauses that designate different districts.”

The end of the story is that the panel found that it had jurisdiction to consider this request for mandamus even though there had been some proceedings in the transferee California court, granted mandamus, and created a new four-part test for circumstances “where both contracting and non-contracting parties are found in the same case and where the non-contracting parties’ private interests run headlong into the presumption of Atlantic Marine.”  Judge Krause drew significantly on a Fifth Circuit case, In re Rolls Royce Corp., 775 F.3d 671 (5th Cir. 2014), in crafting that test.

The panel then applied the new test and concluded that only the claims against the two defendants who  did not have forum selection clauses should have been transferred.  Judge Krause had noted the “quandary” that the panel faced  from “complications such as competing forum-selection clauses, personal jurisdiction challenges, and allegations of necessary party status.”  Her concluding paragraph brought together virtually all of the wrinkles of the case and explained how the panel had reached a result correctly smoothed out and handled all those wrinkles, almost like Hercule Poirot explaining how he solved a complex murder mystery.  Read the opinion in full to see how she did it.

Leave a Reply