Prins v. Lightyear Network Solutions, Inc. et al

Filing 54

ORDER that this action is transferred to the Southern District of Texas. Signed by Judge Andrew P. Gordon on 8/25/15. (Copies have been distributed pursuant to the NEF - MMM)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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TODD A. PRINS,

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Case No. 2:14-cv-01696-APG-CWH
Plaintiff,
ORDER TRANSFERRING CASE TO
SOUTHERN DISTRICT OF TEXAS

v.
LIGHTYEAR NETWORK SOLUTIONS,
INC.; RICK HUGHES; and CHRIS
SULLIVAN,
Defendants.

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Plaintiff Todd A. Prins brought this suit in Texas state court on June 4, 2014. (Dkt. #1-1 at

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5.) Prins asserts fraud- and negligence-based claims against defendants Lightyear Network

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Solutions, Inc., Rick Hughes, and Chris Sullivan arising out of Prins’ purchase of Lightyear

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stock. Defendants removed the action to federal court and then moved to have the case

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transferred to the District of Nevada. (Dkt. #1; Dkt. #12.) The Southern District of Texas

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transferred the case to this court. (Dkt. #20.)

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After the transfer, defendants Hughes and Sullivan moved to dismiss for lack of personal

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jurisdiction, arguing they have no relevant contacts with Nevada. Prins did not respond to the

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individual defendants’ argument regarding lack of personal jurisdiction, and he thereby consented

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to this portion of the motion being granted. LR 7-2(d). Additionally, Prins did not meet his

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burden of making a prima facie showing of personal jurisdiction. Dist. Council No. 16 of Int’l

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Union of Painters & Allied Trades, Glaziers, Architectural Metal & Glass Workers, Local 1621

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v. B & B Glass, Inc., 510 F.3d 851, 855 (9th Cir. 2007).

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However, instead of dismissing Hughes and Sullivan, I directed the defendants to show

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cause why this action should not be transferred back to the Southern District of Texas as

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improperly transferred under 28 U.S.C. § 1404(a). The transfer was improper under that section

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because (1) this court lacks personal jurisdiction over Hughes and Sullivan so the action could not

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have been brought here originally and (2) Prins did not consent to transfer to this jurisdiction.

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Hoffman v. Blaski, 363 U.S. 335, 343-44 (1960); In re Rolls Royce Corp., 775 F.3d 671, 675 n.5

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(5th Cir. 2014).

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The defendants responded to my order to show cause by arguing that the Southern

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District of Texas transferred this case under § 1404(a) based on the forum selection clause

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contained in the contract between Prins and Lightyear. The defendants contend I should not send

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this case back to Texas because the Southern District of Texas already decided the transfer issue

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and I should treat that decision as the law of the case. According to the defendants, a transfer

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back to Texas would result in the same outcome because the Texas court would dismiss or sever

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Hughes and Sullivan and transfer Prins’ claims against Lightyear under the forum selection

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clause. Finally, the defendants argue that judicial economy counsels in favor of keeping the case

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here because a related case is already pending in this district. Prins did not respond.

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Under the law of the case doctrine, “when a court decides upon a rule of law, that decision

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should continue to govern the same issues in subsequent stages in the same case.” Christianson v.

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Colt Indus. Operating Corp., 486 U.S. 800, 816 (1988) (quotation omitted). “This rule of

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practice promotes the finality and efficiency of the judicial process by protecting against the

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agitation of settled issues.” Id. (quotation omitted). The doctrine applies to “transfer decisions of

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coordinate courts” because reconsideration of transfer decisions could “threaten to send litigants

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into a vicious circle of litigation.” Id.

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Although a prior decision ordinarily should govern, the court “has the power to revisit

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prior decisions of its own or of a coordinate court,” but it should do so only under “extraordinary

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circumstances.” Id. at 817. Accordingly, a transferee court may “decline jurisdiction only if (1)

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the [transferor court’s] decision[ was] clearly erroneous; (2) there has been an intervening change

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in the law; (3) the evidence . . . is substantially different; (4) other changed circumstances exist;

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or (5) a manifest injustice would otherwise result.” Microsoft Corp. v. Motorola, Inc., --- F.3d ---

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-, 2015 WL 4568613, at *5 (9th Cir. 2015) (quotation omitted). However, “if the transferee court

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can find the transfer decision plausible, its jurisdictional inquiry is at an end.” Christianson, 486

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U.S. at 819.
Here, the transfer decision was clearly erroneous because the action could not have been

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brought here originally and not all parties consented to the transfer. The defendants made no

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argument and presented no evidence to the Southern District of Texas that this action could have

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been brought in the District of Nevada, and the transfer order sets forth no findings on the matter.

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(Dkt. #12; Dkt. #20.) Instead, the defendants requested that the Southern District of Texas

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transfer the entire action, including Prins’ claims against Hughes and Sullivan, based on the

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forum selection clause. But a forum selection clause between two of the parties does not trump

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§ 1404(a)’s statutory requirement that a case can be transferred only to a jurisdiction where it

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could have been brought originally or to which all parties consent.
After the transfer decision in this case, the United States Court of Appeals for the Fifth

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Circuit set forth a procedure for district courts to follow to determine whether transfer is

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appropriate where some, but not all, parties to a case have entered into agreements with

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mandatory forum selection clauses. See In re Rolls Royce Corp., 775 F.3d at 679-81. The

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defendants contend that several factors weigh in favor of keeping Prins’ claims against Lightyear

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here. But the Southern District of Texas must decide whether to (1) sever or dismiss Prins’

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claims against Hughes and Sullivan and transfer Prins’ claims against Lightyear or (2) keep the

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entire case. See id.
IT IS THEREFORE ORDERED that this action is transferred to the Southern District of

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Texas.
DATED this 25th day of August, 2015.

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ANDREW P. GORDON
UNITED STATES DISTRICT JUDGE

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