Applying the Statute

Applying the Statute

Every rule in this chapter serves one question: does the district where the plaintiff filed qualify as a proper venue? For an ordinary civil action, § 1391(b) supplies three alternatives. Venue lies in a district where any defendant resides, provided all defendants reside in the state that contains the district. It lies in a district where a substantial part of the events or omissions giving rise to the claim occurred, or where a substantial part of the property at issue is situated. And it lies in any district where a defendant is subject to personal jurisdiction on the claim, but only if no district anywhere satisfies either of the first two alternatives.¹ The Supreme Court has described the inquiry in the same terms: when a defendant challenges venue, the court asks whether the case falls within one of those three categories, and if it does not, the case must be dismissed or transferred under § 1406(a).² That narrow inquiry can be run as a procedure, and the procedure should be stated before facts test it.

The Method

The first two steps decide more problems than they appear to. Section 1391 does not govern a removed case at all: the venue chapter does not determine the district to which a state case may be removed, and the proper venue for a removed action is the federal district embracing the place where the state action was pending, and only that district.³ A claim that carries its own venue statute follows that statute instead. Patent infringement actions, for example, may be brought only where the defendant resides, or where the defendant committed acts of infringement and has a regular and established place of business, and special provisions also govern copyright suits, interpleader actions, and actions against federal officials.⁴

Step two supplies the input for (b)(1). An individual resides in the district of domicile, so a defendant domiciled in Florida does not reside in Alabama and cannot support residence venue there.⁵ An entity defendant resides in every district where it is subject to personal jurisdiction on the civil action in question.⁶ In a state with several districts, a corporation is tested district by district, as though each were a separate state, and if no district qualifies, it resides in the district of its most significant contacts.⁷ Acme, with its headquarters in Los Angeles and no other California contacts, therefore resides in the Central District of California but not in the Northern District, where it has no contacts.⁸ A defendant not resident in the United States may be sued in any district, and its joinder is disregarded in deciding where the action may be brought against the other defendants.⁹

Steps three and four are alternatives. Satisfying either makes the filing district proper, and more than one district may qualify at once.¹⁰ Step five comes last because the fallback is conditional: subsection (b)(3) applies only when no district anywhere satisfies (b)(1) or (b)(2), so a plaintiff cannot invoke it merely because the filing district failed the first two tests.¹¹ Step six keeps venue in its place. Venue is a separate ring from personal jurisdiction, and a district can satisfy the venue statute while the court lacks power over a particular defendant there.¹² The problems that follow run this sequence on full facts.

Dixie and Mead

The Dixie problems run the method on one set of facts. Dixie Corporation is incorporated in Maryland, has its headquarters in Atlanta, Georgia, and operates significant manufacturing facilities in the Middle District of Tennessee. Mead sues Dixie over a defamatory statement that a Dixie officer made in the Eastern District of Pennsylvania.¹⁴ The suit began in federal court and no special venue statute applies, so the work lies in step two. Dixie is an entity, and whether it resides in a district depends on whether it is subject to personal jurisdiction there on this claim. Four districts show the range of outcomes:

• The District of Maryland is proper under (b)(1). A corporation is subject to general personal jurisdiction where it is incorporated, and Maryland's single district encompasses the whole state, so Dixie resides there even though nothing in the suit happened there. The result is not anomalous, because venue provisions often lay venue where a defendant has important connections, such as a residence or place of business, even if the claim arose elsewhere.¹⁵
• The Middle District of Tennessee is very probably improper. The claim arose from Dixie's contacts in Pennsylvania, which disposes of (b)(2), and after Daimler AG v. Bauman and Goodyear Dunlop Tires Operations, S.A. v. Brown, a corporation will rarely, if ever, be subject to general personal jurisdiction outside its state of incorporation and its principal place of business, however large its factories there.¹⁶
• The Southern District of Georgia is improper. Dixie's Atlanta headquarters probably subject it to personal jurisdiction throughout Georgia, but § 1391(d) deems a corporation to reside only in those districts of a multi-district state whose contacts would support jurisdiction if the district were a state. Dixie has no contacts with the Southern District, and no events occurred there.¹⁷
• The Eastern District of Pennsylvania is proper on two grounds. The defamatory statement occurred there, so a substantial part of the events giving rise to the claim did too, which satisfies (b)(2). And because Dixie's officer made the statement there, Dixie would be subject to jurisdiction in that district on this claim, so Dixie resides there and (b)(1) is satisfied as well.¹⁸

Now add Calhoun, the officer who made the statement, who is domiciled in Atlanta. Section 1391(b)(1) requires that all defendants reside in the state containing the district, and both defendants reside in Georgia: Dixie through its headquarters and Calhoun by domicile. Any Georgia district in which either defendant resides therefore qualifies, and both reside in the Northern District of Georgia, so that district is proper.¹⁹ The Southern District of Georgia still fails, because neither defendant resides there and no events occurred there. Maryland, which qualified against Dixie alone, now drops out: Calhoun does not reside in Maryland, so (b)(1) is unavailable, and nothing happened in Maryland to support (b)(2).²⁰ The Eastern District of Pennsylvania stays proper, but only through (b)(2), because Calhoun does not reside in Pennsylvania and (b)(1) therefore fails there.²¹

Roles can also reverse. Suppose Dixie sues Mead for trademark infringement, alleging that Mead sold goods bearing Dixie's mark throughout Ohio, a state with a Northern and a Southern District, and that Mead is domiciled in the Northern District. Assume no special venue statute governs. Mead is the only defendant, so step two applies the individual rule: Mead resides in the Northern District of Ohio, all defendants reside in Ohio, and (b)(1) makes that district proper.²² Courts have held venue proper in each district where infringement is properly alleged to have occurred, so (b)(2) reaches the Southern District as well.²³ Where Dixie is incorporated or headquartered adds nothing, because residence venue looks only to the defendants. Had Dixie filed in a state where Mead is not domiciled, (b)(1) would fail, as it did for a plaintiff who sued a Florida domiciliary in Alabama.²⁴

The Wine Importer

Dynamo Corp., a French company, sells wine to liquor stores in South Carolina and has no other contact with the United States. Perry buys a bottle of Dynamo's adulterated wine in South Carolina, becomes ill, and sues Dynamo in federal court in South Carolina, a state with a single federal district.²⁵ The suit began in federal court and no special statute is in play, so the venue question reduces to (b)(1) and (b)(2). Under (b)(2), the sale of the wine and Perry's illness both occurred in South Carolina, which is a substantial part of the events giving rise to the claim. Under (b)(1), Dynamo resides in every district where it is subject to personal jurisdiction on this claim. Dynamo sold wine in South Carolina, and the claim arose directly out of that contact, so, assuming South Carolina's long-arm provisions reach it, Dynamo resides in the state's only district.²⁶ Subsection (d) adds nothing, because it matters only in states with more than one district.²⁷

Students sometimes compare this problem to Asahi, but the foreign defendant there sold no goods directly into California, so its contact with the forum was far more attenuated. Dynamo sold directly into South Carolina, and Perry's claim comes straight out of those sales.²⁸

Because both alternatives are satisfied, the fallback never opens. Dynamo's lack of a place of business in South Carolina is beside the point, since an entity resides wherever personal jurisdiction on the claim exists. A court that instead treats Dynamo as a defendant not resident in the United States reaches the same result, because such a defendant may be sued in any district.²⁹ Either way, the residence analysis for an entity borrows the personal jurisdiction test, which is why step six stays on the list: the long-arm assumption behind Dynamo's residence must still be established as a requirement of its own.

Fallback and Jurisdiction

Defendants from different states tempt students to reach for the fallback at once, but it opens only when no district anywhere satisfies (b)(1) or (b)(2). Take a contract suit in the District of Massachusetts against two defendants, an individual domiciled in Illinois and a New York corporation whose only place of business is in California. Step three fails immediately, because the defendants do not all reside in one state. Assume that the events behind the claim were scattered so widely that no district holds a substantial part of them, so step four fails everywhere. Only now does (b)(3) open, and it asks whether any defendant is subject to personal jurisdiction on the claim in the filing district. If the Illinois individual is, venue lies in the District of Massachusetts.³⁰ Had even one district anywhere held a substantial part of the events, the fallback would have stayed closed, however unwelcome that result for the plaintiff.

The statute asks about any one defendant, so the fallback does not carry the corporation along. Venue and personal jurisdiction are separate rings, and the court would still need an independent basis for jurisdiction over the corporation.³¹

The same separation appears in the opposite direction. Grant sues Longstreet in Ohio, where venue is proper. Longstreet dealt only with Lee, and did so in Virginia rather than Ohio, so Grant will probably be unable to satisfy the personal jurisdiction ring as to Longstreet in Ohio.³² Massachusetts shows venue depending on personal jurisdiction, because the fallback borrows that test. Ohio shows venue existing without it, and the missing jurisdiction defeats the claim anyway.

Forum-Selection Clauses

Mead's claim against Dixie raises one last question. Mead files in the Eastern District of Pennsylvania, where the statement was made, and bases venue on (b)(2). Dixie moves to dismiss because, when Mead was hired, he signed a contract with a forum-selection clause requiring all suits arising from his employment to be filed in the District of Maryland.³³ Federal courts have generally enforced such clauses, even when the clause lays venue in a district that § 1391 would not otherwise allow.³⁴ The only question is the vehicle, and the instinct is to call a clause that points elsewhere a venue defect and move to dismiss for improper venue.

In Atlantic Marine Construction Co. v. U.S. District Court, the Supreme Court rejected that instinct. Section 1406(a) and Rule 12(b)(3) permit dismissal only when venue is “wrong” or “improper,” and whether it is wrong or improper depends exclusively on whether the court in which the case was brought satisfies the federal venue laws.³⁵ A forum-selection clause has no bearing on whether a case falls into one of the § 1391(b) categories, so a case filed in a district that qualifies may not be dismissed under § 1406(a) or Rule 12(b)(3).³⁶ The statute's design confirms the point. Subsection (b)(3) ensures that venue lies somewhere whenever a federal court has personal jurisdiction over the defendant, so a rule that let a clause defeat venue would leave some cases, those whose clause points to a state or foreign court, with no federal district in which venue lay, and the design contemplates no such gap.³⁷

The Eastern District of Pennsylvania satisfies (b)(2), so Dixie's motion to dismiss for improper venue fails. The court honors the clause by transferring the case under § 1404(a), which permits transfer to any district where the action might have been brought or to any district to which all parties have consented.³⁸ Maryland is the district the parties chose, so Mead will very likely end up litigating there.³⁹

A filing in the Middle District of Tennessee would end differently. No defendant resides there and no events occurred there, so the district falls within no § 1391(b) category, venue is improper, and the case must be dismissed or transferred under § 1406(a). The clause cannot make that district proper.⁴⁰ The remedy follows from the statute, and the first question is always whether the filing district fits § 1391. The clause matters only afterward.