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Borgwarner, Inc. v. Hilite International

August 14, 2008

BORGWARNER, INC., AND BORGWARNER MORSE TEC, INC., PLAINTIFFS,
v.
HILITE INTERNATIONAL, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Judge James B. Zagel

MEMORANDUM OPINION AND ORDER

I. INTRODUCTION

This is a motion to transfer venue pursuant to 28 U.S.C. §1404(a). Defendant Hilite International, Inc. ("Hilite") moves to transfer this action from the Northern District of Illinois to the District of Delaware. Plaintiffs BorgWarner, Inc. and BorgWarner Morse Tec, Inc. ("BorgWarner," collectively) oppose the motion. For the reasons stated below, Defendant's motion to transfer venue is denied.

II. STATEMENT OF FACTS

On June 13, 2007, Plaintiff BorgWarner filed a complaint for patent infringement in this Court against Defendants Hilite, Aisin Seiki Co., and Aisin Automotive Casting Tennessee, Inc. This action involves BorgWarner's U.S. Patent No. 5,497,738 ("the '738 patent"). BorgWarner alleges that Defendants sell variable camshaft timing ("VCT") phasers and solenoid valves for use in automobiles that infringe upon the '738 patent. BorgWarner subsequently settled with the Aisin parties, and those parties were dismissed from the suit. On March 11, 2008, Hilite filed its answer, including a counterclaim and several affirmative defenses. BorgWarner then responded with its answer to Hilite's pleadings. The parties have also served document requests and interrogatories, and have conducted a Rule 26(f) discovery conference.

On May 16, 2008-more than eleven months after BorgWarner initiated this action and five days after it filed its answer to BorgWarner's complaint-Hilite filed a complaint of its own in the United States District Court for the District of Delaware. Hilite's complaint alleges that BorgWarner is infringing upon its (Hilite's) VCT systems patent, U.S. Patent No. 6,209,497 ("the '497 patent"). In its complaint, Hilite asserts that its claim is related to a previous Delaware action between BorgWarner and Hitachi: Hitachi, Ltd. v. BorgWarner Inc., No. 05-48-SLR (D. Del., filed Jan. 31, 2005). In that case, Hitachi sought a declaratory judgment that it had not infringed BorgWarner's '738 patent and that the '738 patent was invalid and unenforceable. The judge in Delaware-Judge Robinson-assigned a Special Master to handle discovery proceedings; the judge ultimately entered the Special Master's Reports and Recommendations as orders. The parties filed claim construction briefs and briefs on motions for summary judgment, but reached a settlement before the court in Delaware considered those motions.

Because Hilite asserted that its case is related to Hitachi, the case was assigned to Judge Robinson, who also presided over Hitachi. BorgWarner has not yet filed an answer in the action in Delaware.

Hilite has moved to transfer this action to the District Court of Delaware. Its argument-a variation of the transitive property*fn1 -is that because Hitachi is related to its Delaware action, this case must also be related to its Delaware action, because Hitachi and this case both concern the '738 patent. BorgWarner insists that its action is the first-filed case, and that the Northern District of Illinois is the proper venue.

III. DISCUSSION

Under certain circumstances, a federal court may transfer a case to another judicial district. See 28 U.S.C. §1404(a) ("[f]or the convenience of parties and witnesses in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought."); see also Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219 (7th Cir. 1986). The Seventh Circuit has held that the requirements for transfer are: 1) venue is proper in the transferor and transferee court; 2) transfer is for the convenience of the parties and witnesses; and 3) transfer will serve the interests of justice. Id.; United Air Lines, Inc. v. Mesa Airlines, Inc., 8 F. Supp.2d 796, 798 (N.D. Ill. 1998); Van Holdt v. Husky Injection Molding Sys, Ltd., 887 F. Supp. 185, 188 (N.D. Ill. 1995); Heller Fin., Inc. v. Riverdale Auto Parts, Inc., 713 F. Supp. 1125, 1127 (N.D. Ill. 1989).

A. The First-filed Rule Does Apply and Favors the Northern District of Illinois

Generally, the first-filed rule "gives priority, for purposes of choosing among possible venues when parallel litigation has been instituted in separate courts, to the party who first establishes jurisdiction." Newell Co. v. Lee, 950 F. Supp. 864, 870 (N.D. Ill. 1997) (quoting Northwest Airlines v. American Airlines, 989 F.2d 1002, 1006 (8th Cir. 1993)). In this case, BorgWarner filed its action over eleven months before Hilite's action was filed in Delaware.

It is true that "[t]his circuit does not rigidly adhere to a 'first-to-file' rule, . . . and the mere fact that [the plaintiff] first filed the action in Illinois does not give it an absolute right to choose the forum." Trippe Mfg. Co. v. Am. Power Conversion Corp., 46 F.3d 624, 629 (7th Cir. 1995). However, the facts in Trippe are distinguishable from the circumstances present here. In Trippe, the Seventh Circuit affirmed the dismissal of the plaintiff's complaint in light of duplicate litigation in Rhode Island. The district court in Rhode Island had stayed the action there, having determined that the action in the Northern District of Illinois was the first-filed. The district court in the Northern District of Illinois held that it was not required to determine the issue of venue; in order to transfer from Rhode Island to Illinois, it was preferable to file a motion to transfer in Rhode Island, instead of filing an amended complaint in Illinois.

Normally, "[w]hen two similar actions are filed, the general rule favors the forum of the first-filed suit." Schwarz v. National Van Lines, Inc., 317 F. Supp.2d 829, 832-33 (N.D. Ill. 2004). The first-filed rule applies unless matters of convenience or other circumstances suggest otherwise. Campbell Software, Inc. v. Kronos, Inc., No. 95 C 7348, 1996 WL 124457, at *4 (N.D. Ill. Mar.19, 1996). In this case, there are no extenuating circumstances or clear reasons for disregarding the first-filed rule. Other than the parties being incorporated in Delaware, there are no other substantial ties to the state. BorgWarner filed its action in this court almost one full year before Hilite filed its action in Delaware. Hilite claims that the two actions are sufficiently related as to call for consolidation in the same venue, but it could have brought its claim as a counterclaim in this action instead of filing a separate suit in Delaware. It appears as though Hilite is seeking to dictate the venue of BorgWarner's action. Nevertheless, ...


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