Opinion
IP 01-C-0050B/S
May 30, 2001
Robert M. Baker III, Hoover Hull Baker Heath Indianapolis, IN.
Rebecca D. Ward Blank, Rome Comisky McCauley Philadelphia, PA.
ORDER GRANTING DEFENDANT'S MOTION FOR TRANSFER OF VENUE
This is a lawsuit brought by Plaintiff, Aearo Company ("Aearo") against Defendant, SunGard Recovery Services Inc. ("SunGard"), for breach of contract and declaratory judgment. Aearo, a Delaware corporation with its principal place of business in Indiana, alleges that SunGard, a Pennsylvania corporation with its principal place of business in New Jersey, agreed to provide computer recovery services in the event of a disaster, for which Aearo was to pay a monthly fee to SunGard. Their agreement was set out in a document entitled Recovery Service Agreement, the terms of which obligated SunGard to provide a computer system and network capability and recovery support according to specified standards. However, when the system got up, it didn't run, so says Aearo, at least; when tested, the disaster recovery capability system failed to perform properly. Aearo accordingly gave notice to SunGard of its intention to terminate the agreement effective September 1, 1998. Aearo seeks money damages for the breach of the agreement and a declaration of its rights under that agreement.
The Complaint asserts that SunGard is a Pennsylvania corporation. However, in SunGard's Motion for Transfer (Fn #1), we are informed that SunGard recently reorganized into a limited partnership. Because one of the two members forming the limited partnership is a corporation with citizenship in New Jersey and the other member is the limited partner held entirely by a Pennsylvania corporation, diversity jurisdiction appears complete. Cosgrove v. Bartolotta, 150 F.3d 729, 731 (7th Cir. 1998).
Aearo, previously conducting business as Cabot Safety Corporation, was located in Southbridge, Massachusetts. As SunGard describes Cabot/Aearo in its motion, it is "an international manufacturer and marketer of personal protective equipment for industrial use, such as head and hearing protection devices, non-prescription and prescription eyewear, eye protection and other products." Aearo's manufacturing facility and customer service center is in Southbridge, Massachusetts, though it reportedly has facilities in Canada, Europe, Australia, Asia and Africa. (Page 3, "Memorandum . . . in Support of . . . Motion for Transfer of Venue")
The negotiations that resulted in the agreement between the parties commenced prior to September 9, 1995 (the date of the agreement) at Aearo's Southbridge facilities; SunGard was located in Wayne, Pennsylvania. Representing Aearo in the negotiations and execution of the agreement was Bryan J. Casey, who apparently still resides in Massachusetts. Representing SunGard was William J. Flounders who, though no longer employed by SunGard, resides in or near Philadelphia. Theodore Gaasche, in 1995 a Vice President and Controller of SunGard, executed an addendum to the agreement in Philadelphia.
During the course of their dealings with each other, communications passed between SunGard's offices in Wayne, Pennsylvania, and Aearo's offices in Southbridge, Massachusetts. SunGard asserts in its Motion that various employees responsible for conducting these communications and transactions now reside in the Philadelphia area or in Massachusetts. The tests of the disaster recovery system which ultimately disclosed the inability of the system to perform its intended mission occurred at SunGard's facility in Philadelphia in July 1996 and January and August 1997; tests scheduled for 1998 were cancelled. The employees involved in the testing are, for the most part, still in Philadelphia, though only some of them are still employed by SunGard at the Philadelphia facilities; one SunGard employee works at SunGard's offices in Ohio and several others' whereabouts are unknown. When the tests were conducted, Aearo employees traveled from Massachusetts to Philadelphia for that purpose. When the parties' relationship began to wobble, the correspondence between them was exchanged between the Philadelphia and Southbridge locations. The employees involved in this stage of the relationship today remain primarily in the Philadelphia and Massachusetts areas. SunGard asserts that from all of these individuals the witnesses for this case will be drawn and that a transfer of venue to the United States District Court for the Eastern District of Pennsylvania, which sits in Philadelphia, will thus clearly be more convenient.
Aearo maintains that it filed this action in our district because it is the most convenient forum for Aearo and its witnesses. After the execution of the agreement, Aearo moved its corporate headquarters to Indianapolis, Indiana, where Roland Cyr, Aearo's Chief Information Officer who made the decision to terminate the agreement, currently spends approximately half of his time. Another Aearo official who was also involved in the decision to terminate the agreement, Mr. Rozman, spends 30% of his time in Indianapolis. (Both Messrs. Cyr and Rozman apparently still reside in Massachusetts.) With regard to two former employees of Aearo (Rivera and Yadav), one lives in Indianapolis and the other in Massachusetts. Aearo hangs its hat, in terms of its defense to the Motion currently under consideration, primarily on the deference it claims its choice of venue is entitled to under applicable legal authorities.
Section 1404 of Title 28, United States Code, is our starting point in considering a motion for change of venue, which provides:
(a) For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.
Venue transfers thus may be ordered for the convenience of the parties, the witnesses, and in the interests of justice, "meaning the efficient administration of the court system." Coffey v. Van Dorn Iron Works, 796 F.2d 217, 220 n. 3, 221 (7th Cir. 1986) (noting also that the weighing of these factors is within the court's discretion). Section 1404(a) does not dictate the relative weight to be given to each factor, allowing the district court discretion to "adjudicate motions for transfer according to an individualized, case-by-case consideration of convenience and fairness." Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29, 108 S.Ct. 2239, 2244, 101 L.Ed.2d 22 (1988) We must therefore balance the factors specified by the statute in light of the particular circumstances of the case. See Coffey, 796 F.2d at 219, n. 3. Moreover, the party moving for transfer has the "burden of establishing, by reference to particular circumstances, that the transferee forum is clearly more convenient" than the transferor forum. Id at 220. See Somers v. Flash Technology Corp. of America, 2000 WL 1280314 (S.D.Ind. Aug. 25, 2000) (Barker, J.)
The parties' dispute places in contention only the factor of the relative convenience of the available forums to the witnesses and parties. As an initial matter, we note that the plaintiff's choice of forum is entitled to "some" weight, especially when the action is brought in the plaintiff's home forum. See FDIC v. Citizens Bank Trust Co., 592 F.2d 364, 368 (7th Cir. 1979). However, an exception to this principle arises where the chosen venue has no connection to the plaintiff's underlying cause of action. See Chicago R.F. P.P. Co. v Igoe, 220 F.2d 299, 304 (7th Cir. 1955) (holding that whether to accord a "large measure of deference" to "plaintiff's freedom to select his own forum . . . has minimal value where none of the conduct complained of occurred in the forum selected by the plaintiff"); Alliance General Ins. Co. v Deutsch, No. 99 C 2311, 1999 WL 637205, at *1 (N.D.Ill. 1999) (stating that "a claim having no substantive connection to a forum creates only a minimal preference for the plaintiff's choice of forum"). Courts are also directed to consider "the parties' respective residences and their abilities to bear the expense of trial in a particular forum." College Craft Co., Ltd. v. Perry, 889 F. Supp. 1052, 1056 (N.D.Ill. 1995) (quoting Heller Financial, Inc. v. Riverdale Auto Parts Inc., 713 F. Supp. 1125, 1130-31 (N.D.Ill. 1989)). These considerations control our determination of which forum is more convenient to the parties. However, transfer of an action is not appropriate if its only effect will be to shift the inconvenience from one side to another. See Ronco, Inc. v. Plastics, Inc., 539 F. Supp. 391, 402 (N.D.Ill. 1982); 15 Charles Alan Wright, Arthur R. Miller Edward H. Cooper, Federal Practice and Procedure § 3848 (2d ed. 1986).
It is clear that in choosing to litigate this dispute in the Southern District of Indiana, plaintiff's decision was not anchored to or otherwise reflective of any real or meaningful substantive connection between the dispute and this forum. The contract was not entered into here, neither party resided here either during the negotiations or at the time of the execution of the agreement or its alleged breach, and, in fact, it appears that the parties did not anticipate that the contract would be performed here. (We draw the inference regarding place of performance from the reference in Schedule A to the agreement wherein the subscriber's location is listed as the Southbridge, Massachusetts address.) Further, the agreement provides that any interpretation of its terms and any subsequent disputes shall be governed by "substantive Pennsylvania law," though we acknowledge that it contains no forum selection clause as such. (¶ 10 of the agreement) Aearo concedes in its briefing (at page 3) that, in fact, it was not until after the execution of the agreement that Aearo moved its corporate headquarters to Indianapolis, Indiana, which constitutes at this juncture the only connection of any sort to this forum.
From the briefing on the motion, it is evident that in terms of sheer numbers, most of the potential witnesses do not reside within the Southern District of Indiana but rather either in and around Philadelphia or in Massachusetts. Neither party has provided us with an indication of which specific witnesses it deems to be essential to a resolution of this dispute or which of these essential witnesses would be beyond the subpoena power of the court in either forum, respectively. SunGard identified 24 people who apparently played some role in the transaction with Aearo, but we assume some lesser number of those will actually be called on to testify. In its Reply brief, SunGard mentions that seventeen of its witnesses, of whom eight are non-party witnesses and nine are current employees, live in the Philadelphia area.
Aearo has described all four of its identified witnesses as "key witnesses," one of whom is located in Philadelphia, another who spends 30% of his time in Indianapolis but acutally lives in Philadelphia and the other two of whom spend 100% of their time in Indianapolis (and, we assume, live there.) Aearo's reference that "(t)wo of these four witnesses are not employed by Aearo, and one of Aearo's two non-party witnesses lives in Indianapolis," leaves us wondering which ones are which. (Memorandum in Opposition to Motion for Transfer, page 6.)
We pause to mention in the context of the parties' somewhat belabored discussion of the locations and residences and places of employment of their witnesses that in our experience, in most breach of contract cases (as well as requests for declaratory relief based on contract disputes), the cases turn on the written contracts themselves, without the necessity of evidence from live witnesses, the exception being, of course, when parole evidence is required to explicate the terms of the agreement. The testimony of witnesses, therefore, especially from those involved in tangential matters, such as the early negotiations or the actual physical acts pertaining to the execution of the agreement prior to any breach or ministerial activities relating to the production or transmission of the document itself, is usually of little or no importance. Since we have been deprived of any descriptions or explanations of the expected testimony of any of the witnesses, our understanding of the importance of any particular witnesses to this case is impeded and we are prevented ultimately from being able to make a clear assessment of the impact of the claimed inconvenience to either side, should any particular witness(es) be excluded by virtue of a transfer of venue.
Moving to a slightly different issue, Aearo maintains that this litigation will proceed most efficiently in this district because its corporate headquarters are located in Indianapolis as are "the bulk of (its) files and the bulk of (its) witnesses." (Memorandum in Opposition to Motion for Transfer, page 6) We frankly don't see what difference the location of corporate headquarters makes, especially in light of the fact that Aearo is licensed to do business in Pennsylvania, having recently changed the location of its registered agent from Harrisburg to Philadelphia. Further, Aearo has not enlightened us as to the meaning of its use of the term "bulk" in this context, again leaving us unclear as to whether their files which repose in Indianapolis consist of a few, easily transportable and copied batch of documents or constitute a room full of papers and boxes and file cabinets, or something else, such as complex computer systems. Also Aearo, which has identified only four witnesses, has left us bemused by its use of the phrase "bulk of witnesses" in describing them; we won't venture a guess as to what that might mean.
In light of all of these considerations, we find ourselves finally drawn back to the central fact that the Southern District of Indiana bears no substantive connection with the dispute at issue. The chosen venue has absolutely no connection to the plaintiff's underlying cause of action. That Aearo wound up in Indiana at all was somewhat fortuitous, in terms of this litigation, because the move of their corporate headquarters to Indianapolis did not occur until sometime after the agreement between itself and SunGard was reached and implementation or execution was underway. Add to this lack of substantive connection the fact that a sizeable majority of the witnesses, regardless of how many actually are called or on whose behalf they testify, will clearly have easier access, or at least as easy an access, to Philadelphia than to Indianapolis and the preferred venue starts to become self-evident. We do not believe that in transferring venue to Philadelphia we merely would shift the inconvenience from one side to the other side and there is no unusual or inordinate burden financially to either side, insofar as we have been apprised, that would result from either venue choice. The transferee forum is, in our judgment, clearly more convenient and more appropriately located, as the place where the dispute arose and where a preponderance of the witnesses reside or can at least easily access, than the transferor forum.
For these reasons, we hereby GRANT Defendant's Motion for Transfer of Venue. The Clerk is directed to transfer forthwith this cause to the Eastern District of Pennsylvania, at Philadelphia, for filing on that court's docket.
It is so ORDERED.