In Re: Rolls Royce Corporation
775 F.3d 671
| 5th Cir. | 2014Background
- PHI sued three defendants in Louisiana federal court after a Gulf of Mexico helicopter crash: Rolls Royce (engine bearing), Apical (pontoon flotation system), and OHS (repair work). Defendants removed under diversity jurisdiction.
- Rolls Royce invoked a forum-selection clause in the bearing’s warranty consenting to suit in Indiana federal or state courts and moved under Rule 21 and 28 U.S.C. § 1404(a) to sever and transfer only the claims against it to the Southern District of Indiana.
- Apical, OHS, and PHI opposed severance and transfer; the district court denied Rolls Royce’s motion, concluding Atlantic Marine did not require severance where not all parties had agreed to the forum clause and that severance factors weighed against splitting the case.
- Rolls Royce petitioned this court for mandamus review seeking an order to sever and transfer its claims pursuant to its forum-selection clause.
- The Fifth Circuit granted mandamus, holding the district court erred by failing to treat the private-interest factors for the contracting party as conclusively favoring transfer under Atlantic Marine, while also explaining that judicial-economy considerations may in some cases justify denying severance.
Issues
| Issue | Plaintiff's Argument (PHI) | Defendant's Argument (Rolls Royce) | Held |
|---|---|---|---|
| Whether a forum-selection clause binding only some parties mandates severance and transfer of the consenting party’s claims | Severance would prejudice non-signatory defendants and disrupt judicial economy; Atlantic Marine inapplicable because not all parties agreed | Forum clause binds the signatory; under Atlantic Marine private-interest factors favor transfer and district must enforce clause by severing and transferring those claims | Court: Private-interest factors for signatory must be treated as favoring transfer; district must also weigh nonsignatories’ private interests and overarching judicial-economy/public-interest factors before denying severance; here district erred by failing to apply Atlantic Marine to Rolls Royce |
| Availability of mandamus to review denial of combined severance-and-transfer motion | District order is interlocutory and not mandamus-worthy | Mandamus is proper because ordinary appeal is inadequate to review a transfer/severance denial under § 1404 | Held: Mandamus is appropriate because transfer orders are otherwise unreviewable and severance inquiry is tied to transfer analysis |
| Proper analytical framework when some parties have forum-selection clauses | Atlantic Marine should not automatically control; Rule 21 factors apply and can defeat severance | Atlantic Marine requires treating private-interest factors for contracting parties as conclusively favoring chosen forum; district must then consider non-signatories and judicial economy | Held: Adopt a three-part approach—(1) treat signatory private factors as favoring transfer per Atlantic Marine; (2) assess private factors for non-signatories normally; (3) determine whether judicial-economy/public-interest concerns outweigh severance and transfer |
| Whether district abused discretion in this case | Denial was reasonable under Rule 21 severance factors and to avoid duplication | District failed to apply Atlantic Marine to Rolls Royce and did not adequately consider mechanisms to preserve judicial economy while severing | Held: District abused discretion; mandamus granted to sever and transfer Rolls Royce’s claims to Indiana |
Key Cases Cited
- Atl. Marine Const. Co. v. U.S. Dist. Court, 134 S. Ct. 568 (2013) (forum-selection clauses generally control private-interest analysis in § 1404 transfers)
- In re Volkswagen of Am., Inc., 545 F.3d 304 (5th Cir. 2008) (governing § 1404 transfer factors and appellate review limits)
- Van Dusen v. Barrack, 376 U.S. 612 (1964) (policy behind transfers and effect on choice-of-law)
- Cont’l Grain Co. v. The FBL-585, 364 U.S. 19 (1960) (public interest in avoiding parallel litigation)
- Liaw Su Teng v. Skaarup Shipping Corp., 743 F.2d 1140 (5th Cir. 1984) (severance-and-transfer inquiry emphasizing judicial economy)
- Cheney v. U.S. Dist. Court for D.C., 542 U.S. 367 (2004) (mandamus standard and extraordinary relief)