Agincourt Gaming LLC v. Zynga Inc.

Filing 68

MEMORANDUM OPINION re 60 Sealed Memorandum Opinion regarding the Motion to Transfer. Signed by Judge Richard G. Andrews on 7/29/2013. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

AGINCOURT GAMING LLC,
Plaintiff,
Civil Action No. 11-720-RGA

v.
ZYNGAINC.,
Defendant.

MEMORANDUM OPINION
Joseph J. Farnan, Jr., Esq., FARNAN LLP, Wilmington, Delaware; Attorney for Plaintiff.
Jack B. Blumenfeld, Esq., Morris, Nichols, Arsht & Tunnell LLP, Wilmington, Delaware;
Attorney for Defendant.

July ~~ , 2013
Wilmington, Delaware

~.~~.DISTRICT

JUD E:

The Defendant has filed objections (D.I. 64) to the decision ofthe United States
Magistrate Judge. (D.I. 60). 1 The Plaintiff has responded. (D.I. 66). The matter is now before
this Court.
The motion at issue is a motion to transfer the case to the United States District Court for
the Northern District of California. The Magistrate Judge had authority to make the decision
pursuant to 28 U.S.C. § 636(b )(1 )(A), which provides that "a [district] judge may designate a
magistrate judge to hear and determine any pretrial matter pending before the court, except a
motion for injunctive relief, for judgment on the pleadings, for summary judgment, ... , to dismiss
or to permit maintenance of a class action status, to dismiss for failure to state a claim upon
which relief can be granted, and to involuntarily dismiss an action." (emphasis added). Such a
designation was made. (Oral Order, April26, 2012).
The matters that are excepted from§ 636(b)(l)(A) are controlled by§ 636(b)(l)(B). The
most significant difference between the two sections involves the standard of review.
A § 636(b )(1 )(A) decision is subject to review as set forth in that section, which further
provides that the district judge "may reconsider any pretrial matter ... where it has been shown
that the magistrate judge's order is clearly erroneous or contrary to law." Thus, findings of fact
are reviewed for clear error. Review of the factual determinations is limited to the record that
was before the magistrate judge. Determinations of applicable legal standards are reviewed for
error. There are also decisions that involve the exercise of discretion, and discretionary decisions

1

Foreshadowing the dispute to come, while the Magistrate Judge styled her opinion as a
"Memorandum Opinion," the Defendant styled its objections as being to the "Report and
Recommendation," notwithstanding that the Magistrate Judge nowhere refers to her product as
being a Report and Recommendation.

are reviewed for abuse of discretion. "This deferential standard of review is 'especially
appropriate where the Magistrate Judge has managed this case from the outset and developed a
thorough knowledge of the proceedings.'" Cooper Hospital/University Me d. Ctr. v. Sullivan,
183 F.R.D. 119, 127 (D.N.J. 1998) (quoting another District ofNew Jersey case).
A § 636(b)(1)(B) decision is subject to de novo review.
Thus, whether a particular decision of the Magistrate Judge will be upheld may depend,
in some cases, on how it is characterized. In this case, as the parties acknowledge, there is a split
of authority as to how a motion to transfer is characterized. 2 One might think this was a fairly
easy issue to resolve; after all, the statute expressly states which motions are not referrable to a
Magistrate Judge under§ 636(b)(l)(A). A motion to transfer is not one of the listed nonreferrable motions. The statute does not have any language suggesting that motions like the
listed motions are also included.
The Court of Appeals, nevertheless, has put a gloss on the statute: "In essence, the statute
and [the New Jersey] local rule allow a magistrate judge to hear and determine nondispositive
motions and to recommend decisions to the court on dispositive motions. These
recommendations are subject to a heightened standard of review." NLRB v. Frazier, 966 F.2d
812, 816 (3d Cir. 1992). Our local rule describes the excepted motions as "dispositive" motions.
D.Del. LR 72.1(a)(3). Thus, our local rule too is consistent with the idea that a motion to transfer
is not a dispositive motion.
Subsequently to Frazier, the Court of Appeals made clear that a plain reading of§
636(b)(1 )(A) is not enough.
2

For example, compare Carl Zeiss Meditec, Inc. v. Xoft, Inc., 2011 WL 1212235, at *1
(D.Del. Mar. 30, 2011) (deferential review), with In re First Solar, Inc. Derivative Litig., Civ.
Act. 12-412, slip op. at 2 n.1 (D.Del. July 12, 2013) (de novo review).

Nevertheless, because a remand order is dispositive insofar as proceedings in the federal
court are concerned, the order is the functional equivalent of an order of dismissal for
purposes of that section. While we recognize that after a remand a case may go forward in
the state court, still the order for remand conclusively terminates the matter in the federal
court against the will of the party who removed the case.

In reUS. Healthcare, 159 F.3d 142, 145 (3d Cir. 1998). In essence, the issue boils down to
whether resolving a motion to transfer is a dispositive motion. Both in common usage among
lawyers, and in practical effect, the granting of a motion to transfer is not dispositive - the case
would proceed, in federal court, much the same as it would had it stayed in the first jurisdiction.
The resolution of a motion to transfer is not the "functional equivalent of an order of dismissal."
Thus, I conclude that a motion to transfer is not a dispositive motion for purposes of§
636(b)(l), and I proceed to review the Magistrate Judge's decision under the deferential standard
of review of§ 636(b)(l)(A).
I examine the conclusion that transfer should be denied for an abuse of discretion. In this
regard, the Magistrate Judge went through each of the transfer factors. She balanced them, and
the balancing was reasonable. Indeed, I have sometimes balanced the Jumara factors in cases
with similar circumstances, and denied transfer; other times, I have granted transfer. Motions to
transfer are sometimes close calls. When at least a dozen factors are being considered, small
distinctions may make a difference. Here, the Magistrate Judge gave considerable weight to
Plaintiff's choice of forum, which was reasonable given that both Plaintiff and Defendant are
Delaware corporations. See Micron Tech, Inc. v. Rambus Inc., 645 F.3d 1311, 1332 (Fed. Cir.
2011). It maybe that more ofthe factors favored transfer than not, but the Magistrate Judge did
not abuse her discretion in reaching a reasoned conclusion that all of the factors favoring transfer,
taken as a whole, were insufficient to outweigh the deference owed under Third Circuit precedent
to Plaintiffs choice of forum.

I do not believe that the Magistrate Judge treated as dispositive that both Plaintiff and
Defendant are Delaware corporations. (D.I. 64, at 3-4). Thus, there was no legal error.
I also do not believe that any of the Magistrate Judge's findings are clearly erroneous.
Third Circuit law does strongly support the Plaintiff's choice of forum, although not as
strongly as if the Plaintiffhad stronger connections to Delaware.
As for where the claims arise, Defendant does not allege that the Magistrate Judge erred
in stating that it sells and distributes its products nationally, which supports the conclusion that
the "where the claims arose factor" is neutral. In my opinion, the transcript of oral argument
shows that the Defendant agreed with this proposition. Thus, Defendant cannot complain about
the Magistrate Judge's conclusion.
The Defendant also complains that the Magistrate Judge erred in concluding that the
convenience of the parties favored transfer. The primary basis for this argument is that the
Defendant would have $10,000 to $100,000 in extra costs in litigating in Delaware. The
Magistrate Judge's conclusion that this financial impact, on a multi-billion dollar corporation, in
a case likely to cost multiple millions to litigate, was such a modest financial burden that it did
not impact on the convenience ofthe parties is not clearly erroneous. Neither was it clearly
erroneous not to find this factor in favor of the Defendant because its employees would be
"called away from work." If there is a trial in Delaware, an unlikely event, then Defendant and
its witnesses might be inconvenienced, but this is fairly speculative. Most of the inconvenience
comes from being sued in the first place, and that is going to be the same regardless of where an
eventual trial is held.
The Defendant also challenges the conclusion that the convenience of the witnesses is
neutral. Under Third Circuit law, in regard to this factor, only non-party witnesses matter. The

primary non-party witnesses - the inventors - appear to be available to testify in Delaware. The
Magistrate Judge's conclusion that this factor was neutral is therefore not clearly erroneous.
This is not a local controversy. Thus, the Defendant's last argument (D.I. 64, pp. 9-10) is
without merit.
Therefore, the Magistrate Judge's decision is affirmed. A separate order will be entered.