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Delta T, LLC v. Dan's Fan City, Inc.

United States District Court, D. Maryland, Southern Division

July 17, 2019

DELTA T, LLC d/b/a BIG ASS FAN COMPANY, Plaintiff,
v.
DAN'S FAN CITY, INC. Defendant

          MEMORANDUM OPINION

          PAUL W. GRIMM UNITED STATES DISTRICT JUDGE

         Plaintiff Delta T, LLC. ("Delta") seeks permanent injunctive relief and monetary damages from Defendant Dan's Fan City, Inc. ("Dan's") for patent infringement. See Compl. 1, ECF No. 1. Dan's moved to dismiss for improper venue. Fed.R.Civ.P. 12(b)(3); see Def.'s Mot. to Dismiss, ECF No. 26. Because I find that the Federal Circuit's restrictive interpretation of 28 U.S.C. § 1400(b) precludes a finding that Dan's has a "regular and established place of business" in Maryland, this Court is not a proper venue. See In re Cray Inc., 871 F.3d 1355 (Fed. Cir. 2017). But rather than dismiss this case, I will transfer it to an appropriate venue. 28 U.S.C. § 1406(a). The Defendant previously asked Delta to agree to a transfer to the District Court for the Central District of Florida, and, because I find that that is an appropriate venue, that is where it will be transferred. See Pl.'s Opp'n, ECF No.27, Ex. 1.

         FACTUAL BACKGROUND

         The issue before me is whether Maryland is an improper venue. Dan's' motion to dismiss was made pursuant to Rule 12(b)(3), under which this Court is permitted to consider evidence outside of the pleadings and it must view the facts in the light most favorable to the plaintiff. Aggarao v. MOL Ship Management Co., Ltd., 675 F.3d 355, 365-66 (4th Cir. 2012). Because the facts cited in the motion to dismiss and opposition are more relevant to the issue of proper venue than those in the complaint, they are what I will consider, and I will draw all inferences in favor of Delta.

         Dan's is a distributor of ceiling fans. It is incorporated, headquartered, and has its principal place of business in the State of Florida. See Hibbeln Dec'l ¶¶ 2-3, ECF No. 26-2.[1] To reach customers, Dan's offers its products through its own website, 30 stores that it owns, and 9 that are independently owned, but employ the name "Dan's Fan City" to indicate that they offer Dan's products, as well as through the websites of Home Depot and Amazon. Id. at ¶ 9, 10.

         Dan's once owned two stores in Maryland but sold both to Fan Man of Rockville Inc. ("Fan Man") in 1990. Id. at ¶ 11-12. Today, only one of those stores remains open, and it is the only store in Maryland using "Dan's Fan City" in its name. Id. at ¶ 12. That store is known as Dan's Fan City of Rockville ("DFC Rockville"). The relationship between Dan's and DFC Rockville is the crux of this motion to dismiss.

         As Dan's CEO explains in his declaration, from 1990-2000, the relationship between Dan's and DFC Rockville was governed by a written Dealership Agreement. See Hibbeln Dec'l ¶ 13, ECF No. 26-2; see also Pl.'s Opp'n, ECF No. 27, Ex. 2 ("Dealership Agreement"). That agreement detailed the many ways in which Dan's had the authority to dictate the operations of DFC Rockville, such as approval over: the physical appearance of the store, the advertising DFC Rockville presented, what the employees wore and how they were trained, and store hours. Dealership Agreement ¶ 13. However, since the expiration of the Dealership Agreement in 2000, the only governing agreement between Dan's and DFC Rockville is oral and has only two terms: (1) either party may terminate the relationship upon notice to the other party and; (2) to be able to use "Dan's Fan City" in its store name, Fan Man's store inventory must consist of mostly Dan's products. Hibbeln Dec'l. ¶ 14.

         Imporatantly, Dan's CEO swore in his declaration that DFC Rockville operates independently from it because, inter alia, DFC Rockville: owns or leases its own place of business; makes personnel decisions; trains its employees; uses its own Maryland issued tax identification number; determines its hours of operation, products to stock and sell, product pricing, store layout, inventory, advertising; has its own customer lists (which it does not share with Dan's); maintains its own books and records, carries its own insurance, has its own business license, and files its own tax returns under its own federal ID number. Hibbeln Dec'l ¶15, As Delta points out, Dan's refers to DFC Rockville on its website as one of its "own 44-Retail Locations," and invites customers through its website to provide feedback about their buying experience of any Dan's products, including those purchased at the DFC Rockville store. See Pl.'s Opp'n, ECF No. 27, Ex. 5, 8. Lastly, Dan's directs purchasers of any of its products to contact it directly for any warranty questions, and to return defective products to it directly instead of to the retail medium (store or internet) the customer used to purchase the product. See Pl.'s Opp'n, ECF No. 27, Ex. 10.

         The issue for this Court, then, is whether the relationship between Dan's and DFC Rockville is close enough to establish Maryland as a proper venue for this suit against Dan's.

         STANDARD OF REVIEW

         Rule 12(b)(3) of the Federal Rules of Civil Procedure authorizes parties in a civil action to move to dismiss an action for improper venue. "When an objection to venue has been raised under Rule 12(b)(3), the burden lies with the plaintiff to establish that venue is proper in the judicial district in which the plaintiff has brought the action." Plant Genetic Sys., N. V. v. Ciba Seeds, 933 F.Supp. 519, 526 (M.D. N.C. 1996). If the Court has not held an evidentiary hearing, the plaintiff must make only a prima facie showing of venue to survive the motion to dismiss. Mitrano v. Howes, 377 F.3d 402, 405 (4th Cir. 2004).

         DISCUSSION

         28 U.S.C. § 1400(b) controls what venue is proper for patent infringement cases. The statute provides:

Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a ...

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