Opinion
NO. 3-03-CV-0383-BD.
June 18, 2003.
MEMORANDUM OPINION AND ORDER
Defendant Starving Students, Inc. ("SSI") has filed a motion to transfer this case to the United States District Court for the Central District of California pursuant to 28 U.S.C. § 1404(a). For the reasons stated herein, the motion is denied.
In its original motion, SSI also sought a transfer on the basis that this court lacked personal jurisdiction over a co-defendant, Ethan H. Margalith. See 28 U.S.C. § 1406(a) (dismissal or transfer of venue warranted where case is filed in wrong division or district). However, after the motion was filed, plaintiff dismissed its claims against Margalith. This moots consideration of SSI's motion to transfer under section 1406(a).
I.
Plaintiff AMS Staff Leasing, Inc. ("AMS") is a Texas corporation that provides staff leasing services to client companies. (Plf. App. at 50, ¶ 3). These services include payroll processing, payment of federal, state and local taxes, and furnishing workers' compensation insurance for the leased employees. ( Id.) In return, clients pay AMS a fee based on the salary paid to leased employees, employment taxes, and workers' compensation insurance premiums. ( Id. at 50, ¶ 3 53-55). The staff leasing contract also contains a deductible agreement, whereby clients agree to "make payments to [AMS] for the first $2,500.00 in medical and disability costs a associated with each occupational injury/disease occurrence within 30 days of invoice." ( Id. at 56).
On or about March 21, 2001, AMS entered into a staff leasing contract and deductible agreement with SSI, a national moving company headquartered in Los Angeles, California. ( Id. at 56, 97). Since that time, SSI has leased more than 1,400 employees in 22 different states from AMS, including 662 employees in Texas. ( Id. at 57-94). A dispute subsequently arose over the amount due under the contract. AMS contends that SSI owes $158,331.59 for staff leasing services and related expenses. (Plf. Orig. Pet. at 2, ¶ 4.02). SSI counters that it is entitled to unspecified offsets and credits for overpayments made under the deductible agreement. (Def. Orig. Ans. Countercl. at 4-5, ¶¶ 1-6). Unable to resolve their differences, AMS filed a collection action against SSI in Texas state court. SSI timely removed the case to federal court, filed counterclaims for breach of contract, unjust enrichment, restitution and fraud, and now seeks to transfer venue to the Central District of California. The motion to transfer has been briefed by the parties and is ripe for determination.
Federal jurisdiction is proper because the parties are citizens of different states and the amount in controversy exceeds $75,000, exclusive of interest and costs. See 28 U.S.C. § 1332(a)(1).
II.
Section 1404(a) provides that "[f]or the convenience of the 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." 28 U.S.C. § 1404(a). The purpose of this statute is "to prevent the waste of time, energy, and money and to protect litigants, witnesses, and the public against unnecessary inconvenience and expense." DataTreasury Corp. v. First Data Corp., 243 F. Supp.2d 591, 593 (N.D. Tex. 2003) (citing cases). In ruling on a motion to transfer venue under section 1404(a), the court should consider the following factors. (1) the availability and convenience of the witnesses and parties; (2) the availability of process to compel the attendance of unwilling witnesses; (3) the cost of obtaining attendance of witnesses; (4) the relative ease of access to sources of proof; (5) the place of the alleged wrong; (6) the possibility of delay and prejudice if the case is transferred; (7) the plaintiff's right to choose its forum; and (8) the interests of justice in general. Dupre v. Spanier Marine Corp., 810 F. Supp. 823, 825 (S.D. Tex. 1993). The movant must demonstrate that the balance of convenience and justice weighs heavily in favor of transfer. Id.
III.
SSI offers only two reasons why the Central District of California is a more appropriate and convenient forum in which to litigate this case: (1) its key employees, witnesses, documents, and sources of proof are located in California; and (2) the contract was executed in California and will be governed by California law. The court will address these arguments in turn.A.
The court initially observes that AMS's decision to file suit in the Northern District of Texas is entitled to substantial deference and "should not be lightly disturbed." Nokia Corp. v. Buca, Inc., 2002 WL 1461913 at *2 (N.D. Tex. Jul. 2, 2002) (citing cases). While the plaintiff's choice of forum is no longer reflexively accorded the decisive weight it once enjoyed under the doctrine of forum non conveniens, it still is a significant factor that must be considered. N2Consulting, LLC v. Engineered Fastener Co., 2002 WL 31246770 at *2 (N.D. Tex. Oct. 2, 2002). See also Gundle Lining Construction Corp. v. Fireman's Fund Insurance Co., 844 F. Supp. 1163, 1165 (S.D. Tex. 1994); Continental Airlines, Inc. v. American Airlines, Inc., 805 F. Supp. 1392, 1395 (S.D. Tex. 1992) (where plaintiff's chosen forum is its place of incorporation and principal place of business, the importance of this factor is heightened). Thus, AMS's decision to file suit in Texas weighs against transfer.
B.
The crux of SSI's argument is that its employees, witnesses, documents, and sources of proof are all located in California. The convenience of witnesses is often regarded as the most important factor to be considered in deciding whether to transfer venue. See N2 Consulting, 2002 WL 31246770 at *3; Continental Airlines, 805 F. Supp. at 1396. A party seeking a transfer on that basis "must specifically identify the key witnesses and outline the substance of their testimony." N2 Consulting, 2002 WL 31246770 at *3, quoting Dupre, 810 F. Supp. at 825.
SSI identifies two current employees, two former employees, and an insurance agent as potential witnesses in this case. All reside in or near Los Angeles, California. According to Ethan H. Margalith, Chairman of the Board of SSI:
Through telephone conversations, electronic mail and letters directed to [Glen] Mavros at his office in Torrence, California, I, along with Michael B. Kadish, Starving Students' former in-house attorney, and Richard Noyes, Starving Students' former CFO, negotiated and executed, on behalf of Starving Students, an agreement with AMS.
(Def. App. at 2, ¶ 11). Margalith further states that Bryan Bengston, Vice President and Chief Financial Officer of the company, "is very involved with the day-to-day operations of Starving Students including billing, payments and other financial matters." ( Id. at 2, ¶ 5). Based solely on the physical location of these witnesses, SSI argues that it would be substantially inconvenienced by having to litigate this case in Texas.
The court is not so convinced. First, where the key witnesses are employees of the party seeking transfer, their convenience is entitled to less weight because the party is able to compel their attendance at trial. See Continental Airlines, 805 F. Supp. at 1397. This neutralizes SSI's argument with respect to Margalith and Bengston. Nor has SSI shown that transfer is necessary to compel the attendance of third-party witnesses. In this connection, there is no evidence that SSI's former employees, Kadish and Noyes, or its insurance agent, Mavros, are either unwilling or unable to travel to Texas for trial. Second, SSI has failed to explain why the testimony of these witnesses is important. This is a suit on a sworn account with counterclaims based on improper credits allowed for overpayments made under a deductible agreement. It is not clear how testimony relating to the negotiation and execution of the staff leasing contract or the day-to-day billing operations of SSI is relevant to any issue in this case. See Nokia, 2002 WL 1461913 at *2, citing American Airlines, Inc. v. Roberson ATS, 952 F. Supp. 377, 384 (N.D. Tex. 1996) (moving party must do more than make general allegation that certain key witnesses are not available or inconveniently located).
SSI also contends that certain unspecified "financial documents and records" related to the staff leasing contract are located in California. This is undoubtedly true. However, as AMS points out, other relevant documents and sources of proof, including payroll and tax records and invoices relating to SSI's account, are located in Texas. Consequently, these factors do not militate in favor of transfer.
C.
The only other argument made by SSI is that the contract was negotiated in California and likely will be governed by California law. Although the place of the alleged wrong may be an important factor in venue determinations, "this factor, like the other factors, is only part of the equation." McGinnis v. Eli Lilly Co., 181 F. Supp.2d 684, 690 (S.D. Tex. 2002), quoting Dupre, 810 F. Supp. at 827. Similarly, the fact that California law may apply does not weigh heavily in favor of transfer. This court, like all federal courts, is experienced in applying the law of other jurisdictions and can certainly do so in a simple breach of contract case.
AMS also points out that there are fewer civil cases pending in the Northern District of Texas than in the Central District of California with a shorter disposition time. Not only is this true as a statistical matter, but the parties have waived their right to trial by an Article III judge and consented to have a magistrate judge conduct all further proceedings. This court's consent docket currently consists of 33 cases. An initial scheduling order has been issued with a discovery cutoff of October 21, 2003 and a dispositive motion deadline of November 21, 2003. A trial can be scheduled within weeks after summary judgment motions are decided. It is doubtful that more favorable docket conditions exist in the Central District of California. See N2 Consulting, 2002 WL 31246770 at *4.
CONCLUSION
SSI has failed to establish that the balance of convenience and justice weighs heavily in favor of transfer. While it may be more convenient for SSI to litigate this action in California, transfer is not appropriate where the only justification is to shift the balance of inconveniences from one party to another. See N2 Consulting, 2002 WL 31246770 at *5, citing Dupre, 810 F. Supp. at 826. Accordingly, the motion to transfer venue is denied.SO ORDERED.