In Re Howmedica Osteonics Corp.
867 F.3d 390
| 3rd Cir. | 2017Background
- Howmedica (New Jersey) sued five former California sales reps (Sales Reps), DePuy, and Golden State in the D.N.J. for breach of employment covenants and related torts after the reps joined DePuy/Golden State.
- Four Sales Reps' employment agreements had New Jersey forum-selection clauses (one had Michigan); DePuy and Golden State had no such clauses.
- Defendants moved under 28 U.S.C. § 1404(a) to transfer the entire case to the N.D. Cal.; the D.N.J. granted transfer in full.
- Howmedica sought mandamus from the Third Circuit arguing the district court misapplied Atlantic Marine (forum-selection clauses must be enforced in all but unusual cases).
- Third Circuit found the D.N.J. erred by treating Atlantic Marine as all-or-nothing and by conflating private convenience factors with public interests; it crafted a four-step framework and ordered severance and transfer of claims only as to DePuy and Golden State.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Atlantic Marine requires enforcing forum-selection clauses against contracting parties even when non-signatories seek transfer | Howmedica: Atlantic Marine presumption compels enforcing forum clauses against the Sales Reps, so claims vs. them should remain in N.J. | Defendants: Convenience and witnesses in California justify transferring entire case under § 1404(a) | Atlantic Marine applies to signatories; district courts must treat contracting parties’ private interests as favoring the selected forum and not conflate private convenience with public interests |
| How to apply § 1404(a) when some defendants are non-signatories (competing interests/jurisdictional defects) | Howmedica: enforce forum clauses against signatories and retain claims vs. Sales Reps in N.J.; sever other defendants only if necessary | Defendants: transfer the whole case for efficiency and witness convenience | Court adopted a four-step test (forum clauses; non-signatory private/public interests; severance thresholds; efficiency vs. prejudice) and applied it to permit selective severance/transfer |
| Whether the D.N.J. could transfer claims against Golden State given lack of personal jurisdiction there | Howmedica: Golden State is a necessary party or is closely related so N.J. forum should control | Golden State: lacks minimum contacts with N.J.; personal jurisdiction challenge preserved; must be dismissed or transferred | Golden State is neither indispensable under Rule 19 nor bound by others’ forum clauses; N.J. lacks personal jurisdiction over Golden State, so claims against it must be severed and transferred to N.D. Cal. |
| Whether mandamus relief was appropriate to correct the D.N.J.’s transfer order | Howmedica: district court abused discretion and legal error justified mandamus; delay was minimal | Defendants: mandamus improper because transferee court had progressed and mandamus unavailable | Third Circuit: mandamus appropriate (clear error of law), retained jurisdiction, vacated full transfer, and ordered severance and transfer of claims against DePuy and Golden State only |
Key Cases Cited
- Atlantic Marine Constr. Co. v. U.S. Dist. Court, 134 S. Ct. 568 (2013) (forum-selection clauses presumptively enforceable; modify § 1404(a) analysis)
- Jumara v. State Farm Ins. Co., 55 F.3d 873 (3d Cir. 1995) (enumeration of private and public factors for § 1404(a) transfers)
- In re Rolls Royce Corp., 775 F.3d 671 (5th Cir. 2014) (framework for handling mixed signatory/non-signatory transfer disputes)
- In re United States, 273 F.3d 380 (3d Cir. 2001) (mandamus review of § 1404(a) transfer orders; timing considerations)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) (personal jurisdiction minimum-contacts standard)
- Dayhoff, Inc. v. H.J. Heinz Co., 86 F.3d 1287 (3d Cir. 1996) (non-signatory cannot ordinarily be bound by another’s forum-selection clause)