Day v. City of Galveston, 2012 U.S. App. LEXIS 9592 (3d Cir. May 11, 2012):

District courts generally should not dismiss IFP [in forma pauperis] complaints sua sponte for improper venue. As we explained:

28 U.S.C. § 1915 [the IFP statute] contains no express authorization for a dismissal for lack of venue. In the absence of any such statutory authority, it is inappropriate for the trial court to dispose of the case sua sponte on an objection to the complaint which would be waived if not raised by the defendant(s) in a timely manner. Furthermore, even where a defect in venue has been properly raised, a question remains whether the case should be dismissed or transferred to a district in which venue would be proper.

Sinwell v. Shapp, 536 F.2d 15, 19 (3d Cir. 1976) (footnotes omitted); see also Gomez v. USAA Fed. Sav. Bank, 171 F.3d 794, 796 (2d Cir. 1999) ("A district court may not dismiss a case sua sponte for improper venue absent extraordinary circumstances."). In this case, the District Court raised the issue of venue sua sponte without giving Day an opportunity to respond (by amendment or otherwise) and without expressly considering whether the interests of justice weigh in favor of transferring the matter instead of dismissing it. See 28 U.S.C. § 1406(a). This was error.

Under the circumstances presented here, however, that error was harmless. See Buchanan v. Manley, 145 F.3d 386, 388 (D.C. Cir. 1998) (applying harmless error to improper sua sponte dismissal for lack of venue). We reach this conclusion for two reasons. First, Day's complaint makes it abundantly clear that there is no conceivable basis for venue in the Eastern District of Pennsylvania because none of the defendants is alleged to reside there and because his allegations are not related in any way to that District. See 28 U.S.C. § 1391(b); 18 U.S.C. § 1965(a). To the contrary, Day's few specific factual allegations concern the conduct of Texas residents and entities in Texas. ***

Second, there also is no indication that transferring this matter instead of dismissing it might be in the interests of justice. Dismissal poses no apparent problem with the four-year civil RICO statute of limitations. See Rogers v. McDorman, 521 F.3d 381, 387 & n.23 (5th Cir. 2008) (citing Agency Holding Corp. v. Malley-Duff & Assocs., Inc., 483 U.S. 143 (1987)); Cetel v. Kirwan Fin. Grp., Inc., 460 F.3d 494, 510 n.11 (3d Cir. 2006) (same). Day alleges that defendants' conduct occurred between August 2010 and December 2011. Thus, he will have ample time to refile his claims in a proper venue. And requiring him to do so will not subject him to a second filing fee because the District Court granted him leave to proceed IFP and did not assess one.