Prins v. Lightyear Network Solutions, Inc.
2:14-cv-01696
D. Nev.Aug 25, 2015Background
- Plaintiff Todd A. Prins sued Lightyear Network Solutions, Inc., Rick Hughes, and Chris Sullivan alleging fraud and negligence based on his purchase of Lightyear stock.
- Case filed in Texas state court on June 4, 2014, removed to federal court and transferred by the Southern District of Texas to the District of Nevada under 28 U.S.C. § 1404(a).
- After transfer, Hughes and Sullivan moved to dismiss for lack of personal jurisdiction; Prins did not oppose that argument and failed to make a prima facie showing of jurisdiction.
- The Nevada court concluded the action could not have been brought in Nevada as to Hughes and Sullivan and Prins had not consented to transfer, raising § 1404(a) transfer defects.
- Defendants argued the Texas transfer was based on a forum‑selection clause between Prins and Lightyear and urged the Nevada court to follow the Southern District of Texas’ transfer decision under the law‑of‑the‑case doctrine.
- The Nevada court found the prior transfer clearly erroneous for failing to show the case could have been brought in Nevada or that all parties consented, and therefore ordered the action transferred back to the Southern District of Texas for further proceedings (including the Fifth Circuit’s prescribed approach to partial forum‑selection clauses).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction over Hughes and Sullivan | Prins did not contest jurisdiction; no showing of contacts with Nevada | Hughes/Sullivan argued they lack Nevada contacts | Court found Prins failed to make a prima facie showing; no personal jurisdiction over Hughes and Sullivan |
| Validity of transfer under § 1404(a) where some defendants lack contacts | Transfer improper because action could not have been brought in Nevada as to Hughes and Sullivan and Prins did not consent | Defendants relied on forum‑selection clause between Prins and Lightyear to justify transfer of entire case | Transfer to Nevada was improper because statutory requirement (could have been brought or all parties consent) was not met |
| Effect of forum‑selection clause between only some parties | Prins implicitly: clause cannot override § 1404(a) requirements for all parties | Defendants: Texas court already decided transfer under the clause; law of the case supports keeping case in Nevada and Texas would sever/dismiss individual defendants then transfer claims vs. Lightyear | Court held forum‑selection clause among some parties does not trump § 1404(a); Southern District of Texas must decide sever/dismiss and transfer options per Fifth Circuit guidance |
| Application of law‑of‑the‑case / revisiting transfer decision | Prins did not argue to preserve transfer | Defendants urged deference to prior transfer as law of the case and judicial economy | Court concluded prior transfer was clearly erroneous and declined to treat it as controlling; transferred case back to Southern District of Texas |
Key Cases Cited
- Christianson v. Colt Indus. Operating Corp., 486 U.S. 800 (U.S. 1988) (law‑of‑the‑case doctrine and limits on revisiting coordinate court decisions)
- Hoffman v. Blaski, 363 U.S. 335 (U.S. 1960) (transfer cannot overcome venue/jurisdictional defects where case could not have been brought in transferee district)
- Dist. Council No. 16 of Int’l Union of Painters & Allied Trades v. B & B Glass, Inc., 510 F.3d 851 (9th Cir. 2007) (plaintiff bears burden to make prima facie showing of personal jurisdiction)
- In re Rolls Royce Corp., 775 F.3d 671 (5th Cir. 2014) (procedure for district courts where some, but not all, parties have mandatory forum‑selection clauses)