Rosebud LMS, Inc. v. Salesforce.com, Inc.

Filing 28

MEMORANDUM OPINION Signed by Judge Colm F. Connolly on 11/20/2018. (nmf)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
ROSEBUD LMS, INC.,
Plaintiff,

v.

Civil Action No. 17-1712-CFC

SALESFORCE.COM, INC.,
Defendant. :

Richard C. Weinblatt, STAMOULIS & WEINBLATT LLC, Wilmington,
Delaware; Cecil E. Key, DIMUROGINSBERG, P.C., Alexandria, Virginia
Counsel for Plaintiff
Jack B. Blumenfeld, Stephen J. Kraftschik, MORRIS, NICHOLS, ARSHT &
TUNNELL LLP, Wilmington, Delaware
Counsel for Defendant

MEMORANDUM OPINION

November 20, 2018
Wilmington, Delaware

ES DISTRICT JUDGE

Defendant Salesforce.com, Inc. ("Salesforce") has moved pursuant to 28
U.S.C. § 1404(a) to transfer this patent case to the Northern District of California.
D.I. 18. For the reasons discussed below, I will deny Salesforce's motion.
Both Salesforce and the Plaintiff Rosebud LMS, Inc. ("Rosebud") are
Delaware corporations. Rosebud filed this action on November 28, 2017, alleging
that Salesforce's online platform "Quip" infringes two patents (the "Rosebud
patents"). D.I. 1 at ,r 16. After Salesforce moved to dismiss (D.1. 8), Rosebud filed
a first amended complaint on February 9, 2018 (D.I. 12). The amended complaint
added a joint infringement allegation, accusing Sales force of "partner[ing] with
third parties ... including ... Atlassian, Facebook[], Google, Lucid Software,
Smartsheet, and Docusign" to infringe one of the Rosebud patents. Id. at ,r 37.
Salesforce moved to dismiss Rosebud's amended complaint on February 23, 2018
(D.I. 14), and filed its motion to transfer on April 3, 2018.
Section 1404(a) provides that "[t]or the convenience of the parties and
witnesses, in the interests of justice, a district court may transfer any civil action to
any other district or division where it might have been brought." 28 U.S.C. §

1404(a). It is undisputed that this action could have been brought in the Northern
District of California, where Salesforce has its headquarters and principal place of
business. D.I. 25 at 5. Thus, the only issue before me is whether I should exercise
my discretion under§ 1404(a) to transfer the case to the Northern District of
California.
As the movant, Salesforce has the burden "to establish that a balancing of
proper interests weigh[s] in favor of the transfer." Shutte v. Armco Steel Corp.,
431 F.2d 22, 25 (3d Cir. 1970). This burden is heavy. "[U]nless the balance of
convenience of the parties is strongly in favor of [the] defendant, the plaintiffs
choice of forum should prevail." Id. (emphasis in original) (internal quotation
marks and citation omitted).
The proper interests to be weighed in deciding whether to transfer a case
under§ 1404(a) are not limited to the three factors recited in the statute (i.e., the
convenience of the parties, the convenience of the witnesses, and the interests of
justice). Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995).
Although there is "no definitive forr~mla or list of the factors to consider" in a
transfer analysis, the court in Jumara identified 12 interests "protected by the
language of§ 1404(a)." Id. Six of those interests are private:
[l] plaintiffs forum preference as manifested in the
original choice; [2] the defendant's preference; [3]
whether the claim arose elsewhere; [4] the convenience
of the parties as indicated by their relative physical and
2

financial condition; [5] the convenience of the
witnesses-but only to the extent that the witnesses may
actually be unavailable for trial in one of the fora; and [6]
the location of books and records (similarly limited to the
extent that the files could not be produced in the
alternative forum).
Id. (citations omitted). The other six interests are public in nature:

[7] the enforceability of the judgment; [8] practical
considerations that could make the trial easy, expeditious,
or inexpensive; [9] the relative administrative difficulty
in the two fora resulting from court congestion; [ 10] the
local interest in deciding local controversies at home;
[11] the public policies of the fora; and [12] the
familiarity of the trial judge with the applicable state law
in diversity cases.
Id. at 879-80 (citations omitted). As the parties have not identified relevant factors

beyond these 12 interests, I will balance the Jumara factors in deciding whether to
exercise the discretion afforded me by § 1404(a).
I.

PLAINTIFF'S FORUM PREFERENCE

This factor clearly weighs against transfer. The parties agree on that much.
They disagree, however, about the amount of weight I should give this factor in
conducting the balancing of interests called for by Jumara. Salesforce argues that
Rosebud's forum choice deserves "little weight" (D.I. 19 at 6); Rosebud contends
that I should give its forum choice "paramount consideration" (D.I. 25 at 6).
In Shutte, the Third Circuit held that "[i]t is black letter law that a plaintiff's
choice of a proper forum is a paramount consideration in any determination of a
3

transfer request" brought pursuant to § 1404(a), and that this choice "should not be
lightly disturbed." 431 F .2d at 25 (internal quotation marks and citation omitted).
The parties have not cited and I am not aware of any Third Circuit or United States
Supreme Court case that overruled Shutte. Jumara cited Shutte favorably and
reiterated Shutte's admonition that "the plaintiff's choice of venue should not be
lightly disturbed." Jumara, 55 F .3d at 879 (internal quotation marks and citation
omitted). Thus, I agree with Rosebud that binding Third Circuit law compels me
to treat its forum choice as "a paramount consideration" in the § 1404(a) balancing
analysis.
Salesforce, however, asks me to ignore Shutte's unambiguous language (and

Jumara' s endorsement of Shutte), and instead give Rosebud's forum choice "little
weight" because Rosebud's only connection to Delaware is the fact that Rosebud is
a Delaware corporation. D.I. 19 at 6. Salesforce cites in support of its position
certain opinions issued by district court judges in the Third Circuit that appear to
assign less weight to a plaintiff's forum choice when the forum is not the plaintiff's
"home turf' -

that is, if the plaintiff has limited or no facilities, operations, or

employees in the forum -

and/or when the facts giving rising to the lawsuit did

not occur in the plaintiff's selected forum. See id. at 6; D.I. 26 at 1. I am not,
however, persuaded that these opinions are consistent with Shutte. I will instead

4

follow Judge Stapleton's lead in Burroughs Wellcome Co. v. Giant Food, Inc., 392
F. Supp. 761 (D. Del. 1975).
Like Judge Stapleton, I read Shutte 's "statement of 'black letter law' as an
across-the-board rule favoring plaintiffs choice of forum." Id. at 763. As Judge
Stapleton explained in rejecting the "home-turf" rule argued by the defendant in
Burroughs:

The court's decision in Shutte to give weight to the
plaintiffs choice of forum is not an application of any of
the criteria recited in[§ 1404(a)]. Assuming jurisdiction
and proper venue, weight is given to plaintiffs choice
because it is plaintiffs choice and a strong showing under
the statutory criteria in favor of another forum is then
required as a prerequisite to transfer. One can perhaps
debate whether plaintiffs choice should be given any
weight at all in a transfer context, but assuming it is to be
given some weight in cases where the plaintiff lives in the
forum state, it is difficult to see why it should not also be
given weight when the plaintiff lives in [another] state ....
[The] plaintiffs contact or lack thereof with the forum
district will ordinarily be reflected in the 'balance' of
conveniences, but that contact, per se, is unrelated to
anything in Shutte, or Section 1404(a).
Id. at 763 n.4.

I, too, find it difficult to understand why the plaintiffs forum choice in and
of itself merits less weight when the plaintiff has no ties to the selected forum or
when the facts underlying the controversy occurred elsewhere. I do not mean to
suggest that these two latter considerations will not impact the overall transfer
analysis. On the contrary, because these considerations are subsumed and given
5

weight under Jumara factors 3 (whether the claim arose elsewhere), 4
(convenience of the parties), 5 (convenience of the witnesses), 6 (location of books
and records), 8 (practical considerations that could make the trial easy, expeditious,
or inexpensive), and 10 (the local interest in deciding local controversies at home),
a defendant seeking to transfer a case when neither the plaintiff nor the facts giving
rise to the case have any connection to the selected forum will generally have less
difficulty in meeting its burden to establish that the Jumara factors weigh strongly
in favor of transfer.
I do not believe that the Federal Circuit's opinion in In re Link_A_Media

Devices Corp., 662 F.3d 1221 (Fed. Cir. 2011), also cited by Salesforce, compels a
different conclusion. In Link_A_Media, the Federal Circuit vacated this court's
denial of a§ 1404(a) motion to transfer a patent case filed here by a non-United
States company. Id. at 1222. The Federal Circuit held that this court committed a
"fundamental error [in] making [the plaintiffs] choice of forum and the fact of [the
defendant's] incorporation in Delaware effectively dispositive of the transfer
inquiry." Id. at 1223~ Although the Federal Circuit did not cite Shutte in

Link_A_Media, it applied Third Circuit law and noted that "[t]o be sure, the Third
Circuit places significance on a plaintiffs choice of forum." Id.
In dicta in Link_A_Media, the court noted that "[w]hen a plaintiff brings its
charges in a venue that is not its home forum, ... that choice of forum is entitled to
6

less deference." Id.

~

understand this statement, however, to apply only when the

plaintiff, like the plaintiff in Link_A_Media, is a non-United States company. I
draw this inference because the court cited in support of its statement two Supreme
Court decisions, Sinochem Int'/ Co. v. Malaysia Int'/ Shipping Corp., 549 U.S. 422
(2007) and Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981), neither of which
involved transfer motions brought pursuant to§ 1404(a). Rather, in both Sinochem
and Piper Aircraft, the Supreme Court reviewed dismissals of actions filed by nonUnited States plaintiffs based on the common-law forum non conveniens doctrine.
As the Court explained in Piper Aircraft, "1404(a) transfers are different than
dismissals on the ground offorum non conveniens." 454 U.S. at 253. Unlike §
1404(a), "[t]he common-law doctrine offorum non conveniens has continuing
application [in federal courts] only in cases where the alternative forum is abroad,
and perhaps in rare instances where a state or territorial court serves litigational
convenience best." Sinochem, 549 U.S. at 430 (second alteration in original)
(internal quotation marks and citation omitted). The doctrine "is designed in part
to help courts avoid conducting complex exercises in comparative law" and thus
enables a district court to dismiss the case where it would be otherwise "required to
untangle problems in conflict of laws, and in law foreign to itself" Piper Aircraft,
454 U.S. at 251 (internal quotation marks and citation omitted). Because these
concerns about foreign law and comparative law issues are not implicated by a §
7

1404(a) transfer motion in a patent case filed by a domestic plaintiff, I understand
Link_A_Media to say that a plaintiffs forum choice in a patent case merits "less
deference" for§ 1404(a) purposes only if the plaintiff does not reside in the United
States.
In this case, Rosebud is a domestic company (indeed, it is a Delaware
company), and therefore I will follow Shutte and give Rosebud's forum choice
paramount consideration in balancing the Jumara factors.

II.

DEFENDANT'S FORUM PREFERENCE

This factor favors transfer.

III.

WHETHER THE CLAIM AROSE ELSEWHERE

This factor bears only slightly on the transfer analysis. On one hand,
research and development efforts associated with the Quip platform occurred in the
Northern District of California. The connection between those efforts and the
Northern District favors transfer. See In re Hoffmann-La Roche, Inc., 587 F.3d
1333, 1338 (Fed. Cir. 2009). On the other hand, patent claims arise wherever the
allegedly-infringing products are sold, Treehouse Avatar LLC v. Valve Corp., 170
F. Supp. 3d 706, 710 (D. Del. 2016) (first citing 35 U.S.C. § 271(a); then citing
Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1360 (Fed.
Cir. 1998)), and Salesforce does not dispute Rosebud's assertion that the Quip

8

product is marketed and sold online, including in Delaware. Overall, this factor
weighs in favor of transfer, but only slightly.

IV.

THE CONVENIENCE OF THE PARTIES AS INDICATED BY
THEIR RELATIVE PHYSICAL AND FINANCIAL
CONDITION

This factor weighs against transfer. Salesforce, as a multinational company
incorporated in Delaware, can demonstrate "inconvenience" for§ 1404(a)
purposes only if it "prove[ s] that litigating in Delaware would pose a unique or
unusual burden on [its] operations." Graphics Props. Holdings Inc. v. Asus
Comput. Int'/, Inc., 964 F. Supp. 2d 320, 325 (D. Del. 2013) (second alteration in

original) (internal quotation marks and citation omitted); see also ADE Corp. v.
KLA-Tencor Corp., 138 F. Supp. 2d 565, 573 (D. Del. 2001) ("[A]bsent some

showing of a unique or unexpected burden, a company should not be successful in
arguing that litigation in its state of incorporation is inconvenient."). Salesforce
has not identified any significant inconvenience -

let alone a unique or unusual

burden - that it would encounter as a party in this Court. Salesforce is a large
company with thousands of employees and 51 offices located in 12 states and 27
countries. D.I. 20 at ,r 4; D.I. 25-2 at ,r 2. Its size, financial resources, and status as
a Delaware corporation negate its assertion that it would be inconvenienced by
having to litigate in Delaware. See Smart Audio Techs., LLC v. Apple, Inc., 910 F.
Supp. 2d 718, 731 (D. Del. 2012).
9

I do not doubt that the Northern District of California is a more convenient
venue for Salesforce. Its headquarters are only two miles from the Northern
District courthouse in San Francisco, and its employees who are most
knowledgeable about the Quip product reside in the Northern District. D.I. 20 at

,r,r 9-10, 15.

But Delaware is a more convenient forum for Rosebud. Its single

office in New York is significantly closer to Wilmington than it is to San
Francisco. D.I. 25 at 10. And Rosebud has more limited financial resources than
does Salesforce to bear the costs of cross country travel. Moreover, its 80-year-old
CEO (and co-inventor of the Rosebud patents), John J. Mohan, who resides in Fort
Lauderdale, Florida, has declared under oath that traveling to San Francisco will be
more burdensome and stressful than traveling to Wilmington and will take more
time and thus make it more difficult for him to operate the company. D.I. 25-1 at

,r,r 6-7.

Given Mr. Mohan's age and health concerns (Id. at ,r 6) and the fact that

Fort Lauderdale is approximately 2,000 miles closer to Wilmington than it is to
San Francisco (D.1. 25-2 at ,r 3), I am persuaded that Delaware is a more
convenient venue for him and Rosebud.
Overall, after balancing the convenience of litigating in the Northern District
of California for Sales force with ( 1) Salesforce' s status as a Delaware corporation,
(2) the relative size and financial resources of the parties, and (3) the convenience

10

of litigating in the District of Delaware for Rosebud and its CEO, I find that this
factor weighs against transfer.

V.

THE CONVENIENCE OF THE WITNESSES

This factor carries weight "only to the extent that the witnesses may actually
be unavailable for trial in one of the fora." Jumara, 55 F.3d at 879; see also Smart

Audio, 910 F. Supp. 2d at 732 (noting that this factor applies only insofar as "a
witness actually will refuse to testify absent a subpoena"). "[W] itnesses who are
employed by a party carry no weight," because "each party is able, indeed,
obligated to procure the attendance of its own employees for trial." Affymetrix,

Inc. v. Synteni, Inc., 28 F. Supp. 2d 192, 203 (D. Del. 1998). In considering this
factor, "the Court should be particularly concerned not to countenance undue
inconvenience to third-party witnesses ... who have no direct connection to the
litigation." Intellectual Ventures I LLC v. Altera Corp., 842 F. Supp. 2d 744, 757
(D. Del. 2012), mandamus denied sub nom. In re Altera Corp., 494 F. App'x. 52
(Fed. Cir. 2012).
By way of a sworn declaration from Alice Rehman, the COO of Salesforce' s
wholly-owned subsidiary Quip, Inc., Salesforce identifies four nonparty residents
of the Northern District of California who "are most knowledgeable about"
Salesforce' s relationship with four of the six companies that are alleged by
Rosebud to have partnered with Salesforce to infringe one of the Rosebud patents.
11

D.I. 20 at ,r,r 1, 18. In its opening brief filed in support of its motion, Salesforce
says that it "will want to present testimony" from these four witnesses to challenge
Rosebud's joint infringement allegation. D.I. 19 at 4. Salesforce never expressly
states in either its opening brief or its reply brief that it intends to present the live
testimony of these witnesses at trial; but it intimates in its briefing that it wants to
call the witnesses at trial or at least to have the option to do so. See id. at 9-1 0;
D.I. 26 at 7-8. Salesforce argues that these witnesses could not be compelled to
testify at trial in Delaware, see Fed. R. Civ. P. 45(c), 1 and Ms. Hehman avers in her
declaration that she has ''no reason to believe that these [witnesses] would
voluntarily travel to Delaware to testify[.]" D.I. 20 at ,r 18. Neither Ms. Hehman
nor Salesforce, however, suggest that anyone from or on behalf of Salesforce has
ever discussed with the witnesses whether they would be willing to testify at trial
-

in California or in Delaware. Salesforce also says nothing about the location or

the availability for trial (in California or Delaware) of nonparty witnesses from the
two other companies that are alleged to have partnered with Salesforce to infringe
one of the Rosebud patents.

1

Under Federal Rule of Civil Procedure 45(c), a subpoena may command
appearance at trial only within 100 miles of where that person resides, is employed,
or regularly transacts business in person or within the state where the person
resides, is employed, or regularly transacts business in person, if the person is a
party or a party's officer or is commanded to attend a trial and would not incur
substantial expense.
12

For its part, Rosebud argues that two of its nonparty witnesses -

each a co-

inventor of the Rosebud patents - would have more difficulty attending trial in
San Francisco than they would in Wilmington because they reside in locations
closer to Delaware. D.I. 25 at 12-13. Neither of the inventors can be compelled to
appear in either the Northern District or in Delaware, as one lives in Wisconsin and
the other resides in Canada. Mr. Mohan avers in his declaration that one of the
inventors "has indicated that he has no objection to voluntarily appearing in
Delaware if needed." D.I. 25-1 at ,I 8. But neither Mr. Mohan nor Rosebud say
that the remaining inventor would appear voluntarily in Delaware; and, like Ms.
Hehman, Mr. Mohan offers a less-than-definitive statement about the inventors'
availability in Rosebud's disfavored forum. In Mr. Mohan's sworn words: "there
is no indication that either of the ... co-inventors will be as amenable to traveling
to San Francisco" as they would to Wilmington. Id. at ,I 9.
Because neither party has demonstrated that a necessary witness will refuse
to appear or otherwise be unavailable for trial in either venue, I arguably could find
that this factor is neutral in the Jumara analysis. Both declarations relied upon by
the parties essentially speculate that nonparty fact witnesses may not attend trial in
one of the competing fora. I nevertheless find that this factor weighs slightly in
favor of transfer. Salesforce, unlike Rosebud, gives a specific reason why it
wishes to present testimony from specific nonparty witnesses (i.e., to rebut
13

Rosebud's joint infringement allegation). D.I. 19 at 8-9. It further explains why
there is reason to believe that those witnesses would not voluntarily appear at trial
(i.e., because they would potentially subject their employers to future litigation
with Rosebud). D.I. 26 at 6-7. I am also persuaded by the fact that the nonparty
witnesses identified by Sales force reside within the Northern District of California
and none of the nonparty witnesses identified by Rosebud live in or very close to
Delaware. D.I. 19 at 9; D.I. 25 at 12.

VI.

THE LOCATION OF BOOKS AND RECORDS

"In patent infringement cases, the bulk of the relevant evidence usually
comes from the accused infringer. Consequently, the place where the defendant's
documents are kept weighs in favor of transfer to that location." In re Genentech,

Inc. 566 F.3d 1338, 1345 (Fed. Cir. 2009). Jumara, however, instructs me to give
weight to the location of books and records only "to the extent that the files [and
other documentary evidence] could not be produced in the alternative forum." 55
F.3d at 879.
In this case, Salesforce argues that it keeps its documents and electronic
records in San Francisco. D.I. 19 at 10. But Salesforce has not identified any
evidence that could not be produced in Delaware; nor has it shown that the
documentary evidence relevant to this action is found exclusively or even primarily
in the Northern District of California. Given the advances in technology that have
14

reduced the burdens associated with producing records in a distant district and the
Third Circuit's instruction in Jumara to focus on whether the records in question
cannot be produced in the competing fora, see Intellectual Ventures, 842 F. Supp.
2d at 758-59, I find that this factor weighs in favor of transfer but I will give the
factor only minimal weight.

VII. ENFORCEABILITY OF THE JUDGMENT
The parties agree that this factor is neutral, as judgments from this District
and the Northern District of California would be equally enforceable.

VIII. PRACTICAL CONSIDERATIONS
Jumara instructs me to give weight to "practical considerations that could
make the trial easy, expeditious, or inexpensive." 55 F.3d at 879. Given the fact
that many of the witnesses and most of the relevant records are located in the
Northern District of California, I agree with Salesforce that the overall cost of trial
would likely be less if the matter were transferred. Although I did not consider
issues of economic cost and logistical convenience with respect to potentially
relevant Salesforce employees when I assessed the "witness convenience" factor, it
is appropriate to consider these issues in assessing "practical considerations." See
Joao Control & Monitoring Sys., LLC v. Ford Motor Co., 2013 WL 4496644, at *7
(D. Del. Aug. 21, 2013); Mite/ Networks Corp. v. Facebook, Inc., 943 F. Supp. 2d
463, 475-76 (D. Del. 2013). That said, given the relative size and financial
15

resources of Salesforce as compared to Rosebud, and the fact that a trial in
California would likely result in higher travel costs for Rosebud, this factor weighs
only slightly in favor of transfer.

IX.

RELATIVE ADMINISTRATIVE DIFFICULTY DUE TO
COURT CONGESTION

This factor is neutral. Both fora are heavily congested.

X.

LOCAL INTEREST IN DECIDING LOCAL CONTROVERSIES
ATHOME

The local controversy factor is neutral. First, "[p]atent issues do not give
rise to a local controversy or implicate local interests." TriStata Tech., Inc. v.

Emu/gen Labs., Inc., 537 F. Supp. 2d 635, 643 (D. Del. 2008). Second, Salesforce,
with thousands of employees in dozens of countries, is not a "local" company; and
its dispute with Rosebud, which does not reside in California, is not a "local
controversy" in the Northern District. One could fairly conclude that this factor
weighs against transfer because this action involves a dispute between two
Delaware corporate citizens; but I will treat this factor as neutral because the
parties' Delaware corporate status also bears on the next factor (public policies of
the fora).

XI.

PUBLIC POLICIES OF THE FORA

Delaware's public policy encourages Delaware corporations to resolve their
disputes in Delaware courts. Round Rock Research, LLC v. Dell, Inc., 904 F.
16

Supp. 2d 374, 378 (D. Del. 2012). Salesforce has not cited any countervailing
California public policy. Thus, this factor weighs against transfer, although I will
give it minimal weight. See Intellectual Ventures, 842 F. Supp. 2d at 760; In re
Altera Corp., 494 F. App 'x. at 53 ("the relevant inquiry [in the transfer analysis] is

broad enough to include the Delaware court's interest in resolving disputes
involving its corporate citizens").

XII. FAMILARITY OF THE TRIAL JUDGES WITH THE
APPLICABLE STATE LAW IN DIVERSITY CASES
Rosebud's claims arise under the federal patent laws. Therefore, the
familiarity of the respective districts with state law is not applicable and this factor
is neutral.

****
In sum, of the 12 Jumara factors, four are neutral, three weigh to varying
degrees against transfer, and five weigh to varying degrees in favor of transfer. On
the whole, recognizing the appropriate weight to be given to each factor and giving
paramount consideration to Rosebud's choice of this forum, I find that Salesforce
has failed to demonstrate that the Jumara factors weigh strongly in favor of
transfer, and therefore, I will deny Salesforce's motion to transfer. 2

2

I note that I would have reached the same conclusion had I given "significant"
but less than "a paramount consideration" to Rosebud's forum choice in my
balancing of the Jumara factors. See Link_A_Media, 662 F .3d at 1223 (noting that
17

The Court will enter an order consistent with this Memorandum Opinion.

"[t]o be sure, the Third Circuit places significance on a plaintiffs choice of
forum.").
18