Summary
holding that convenience of the parties favored denying transfer from Southern District of New York where individual foreign plaintiff took frequent business trips to New York City
Summary of this case from Marshall Gobuty Int'l USA, Inc. v. Nike, Inc.Opinion
03 Civ. 9727 (SAS).
July 6, 2004
Howard C. Miskin, Esq., Stoll, Miskin, Hoffman Badie, New York, NY. for Plaintiff Roland Caville.
David M. Dahan, Esq., Frank J. Colucci, Esq., Colucci Umans, New York, NY. for Defendant Malibu Toys, Inc.
OPINION AND ORDER
Roland Caville brings this suit against Malibu Toys, Inc. ("Malibu") alleging infringement of one or more claims of Caville's patent through the sale and distribution of a product called the "Flashin' Lix" ("Malibu's product"). Malibu now moves for a change of venue to the Central District of California pursuant to section 1404(a). For the following reasons, Malibu's motion to transfer is denied.
United States Patent Number 6,135,606 for Combined Dancing Light Lollypop-Pacifier Holder, Ex. A to Complaint ("'606 Patent"). See also Complaint ("Compl.") ¶ 6.
I. BACKGROUND
A. The Parties
Caville is a French citizen residing and principally doing business in Hong Kong, China. Caville owns the rights to the '606 Patent, which is an invention to hold and simultaneously illuminate translucent lollipops or other similar candies. Caville distributes his candy products embodying the '606 Patent through Yanova, Inc. ("Yanova"), a company incorporated and principally doing business in New York City. Yanova's co-owners and only employees are New York residents Lance Kushner and Glenn Rudin.
See Compl. ¶ 4.
See '606 Patent.
See Declaration of Lance Kushner, co-president of Yanova, in Opposition to Defendant's Motion to Transfer Venue ("Kushner Decl.") ¶¶ 2-6.
See id. ¶¶ 3-5.
Malibu is a California corporation with its principal place of business in Chatsworth, California. All of Malibu's employees reside in the Central District of California.
See 3/17/04 Declaration of Kami Gillmour-Bryant, owner of Malibu Toys, in Support of Motion to Transfer Venue ("3/17/04 Gillmour-Bryant Decl.") ¶ 3.
See Defendant's Reply Brief in Further Support of the Motion to Transfer Venue ("Def. Reply") at 7. Malibu is owned by Kami Gillmour-Bryant and Lydia Lopez and employs three other people.
Malibu is in the business of purchasing and selling candy. Although its 2003 calendar year sales were slightly more than $1,000,000, it ended the year with a net loss. All of its products are manufactured in China and then shipped to a warehouse in California, from which they are then delivered to Malibu's customers. Two such purchasers, Target and Toys 'R Us, have retail stores that allegedly sell Malibu's products in New York. In addition, Malibu exhibited but did not sell any of its products at the annual International Toy Fair in February of 2004, which was held in New York City.
See Defendant's Memorandum in Support of Motion by Malibu Toys, Inc. to Transfer Venue ("Def. Mem.") at 2; see also 3/17/04 Gillmour-Bryant Decl. ¶ 5.
See 3/17/04 Gillmour-Bryant Decl. ¶ 12.
See id.
See 5/4/04 Supplemental Declaration of Kami Gillmour-Bryant in Further Support of Defendant's Motion to Transfer Venue ("5/4/04 Gillmour-Bryant Decl.") ¶ 2; see also Def. Reply at 3.
See 5/4/04 Gillmour-Bryant Decl. ¶ 3; see also Def. Reply at 4.
B. Facts
In his Complaint, Caville alleges that Malibu's product embodies and thus infringes the '606 Patent. Caville further avers that because Malibu had "knowledge of the '606 [P]atent," Malibu's infringement was "deliberate, willful, and wanton."
See Compl. ¶ 13.
Id. ¶ 14.
To prove his claim, Caville intends to call the following witnesses: Mark Merryweather, an independent consultant who resides in Connecticut, to describe "the sales and marketing of [Malibu's allegedly] infringing products;" Kushner, co-president of Yanova, to describe "the extent of damages [Yanova] and Caville have suffered;" Rodolfo Fernandez and Blas Castor Perez, inventors of the '606 Patent who reside in North Carolina, to "testify about the scope of the patent-in-suit;" and representatives of Frankford Candy Chocolate Company ("Frankford"), located in Philadelphia, Pennsylvania, "to testify at trial on the issue of damages incurred. . . ."
Declaration of Roland Caville in Opposition to Defendant's Motion to Transfer Venue ("Caville Decl.") ¶ 5.
Plaintiff's Memorandum of Law in Support of Plaintiff's Opposition to Defendant's Motion to Transfer Venue ("Pl. Mem.") at 16; see also Kushner Decl. ¶ 6.
Caville Decl. ¶ 6; see also Pl. Mem. at 14-16.
Pl. Mem. at 14 ("Philadelphia . . . is a short drive away from the Southern District of New York."). Although Caville does not explicitly state where Frankford's representatives reside, Caville suggests that because the company is located in Philadelphia, its employees similarly reside within the Philadelphia metropolitan area.
Malibu also expects to-call various witnesses to testify in its defense: Helene Bartels, Malibu's Vice President of Sales, will "testify about sales and claimed damages;" Winnie Lam, Malibu's Director of Operations, will "testify about the qualities of the subject item; about when and where items were shipped out of the warehouse and purchasing of [Malibu's] products;" Brad Thayer, an employee of a warehouse used by Malibu, will testify "as to what was received and where and when it was shipped to customers;" Andrew Lewis and Bob Kelly, Malibu's accountant and bookkeeper respectively, will testify on the issue of damages; and Daryoush Aryapour, owner of Aryapour Designs, will testify on the issue of "design and packaging." With the exception of Thayer (who appears to reside elsewhere in California), all of Malibu's witnesses reside within the Central District of California.
See 3/17/04 Gillmour-Bryant Decl. ¶¶ 6-10.
Id. ¶ 6.
Id.
Id. ¶ 5.
See id. ¶¶ 9-10; see also Declaration of Andrew Lewis, Malibu's accountant, in Support of Malibu Toys, Inc.'s Motion to Transfer Venue ("Lewis Decl.") ¶ 2; see generally Declaration of Bob Kelly, Malibu's bookkeeper, in Support of Reply Brief to Malibu Toys, Inc.'s Motion to Transfer Venue ("Kelly Decl.").
3/17/04 Gillmour-Bryant Decl. ¶ 10; see also Declaration of Daryoush Aryapour, independent contractor, in Support of Reply Brief to Malibu Toys, Inc.'s Motion to Transfer Venue ("Aryapour Decl.") ¶ 1.
See Lewis Decl. ¶ 2; see also Def. Reply at 7.
II. LEGAL STANDARD
Section 1404 provides: "For the convenience of the parties and witnesses, in the interests of justice, a district court may transfer any civil action to any other district or division where it might have been brought." The defendant must make a "convincing showing" that the action would be better litigated elsewhere. Relevant factors include the: (1) deference accorded to plaintiff's choice of forum; (2) convenience to witnesses and parties; (3) situs of operative facts; (4) interests of justice and judicial economy; (5) relative ease of access to sources of proof; (6) availability of process to compel unwilling witnesses; (7) relative means of the parties; and (8) forum's familiarity with the governing law. Of these factors, plaintiff's choice of forum is usually given the greatest weight, but when the plaintiff is a nonresident and the operative facts bear little connection to the chosen forum, plaintiff's choice is shown less deference.
Alonso v. Saudi Arabian Airlines Corp., No. 98 Civ. 7781, 1999 WL 244102, at *6 (S.D.N.Y. 1998); see also Gulf Oil v. Gilbert, 330 U.S. 501, 508 (1947) ("Unless the balance is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed.").
See Berman v. Informix Corp., 30 F. Supp.2d 653, 657 (S.D.N.Y. 1998); see also Gulf Oil, 330 U.S. at 508.
See Invivo Research Inc. v. Magnetic Resonance Equip. Corp., 119 F. Supp.2d 433, 438 (S.D.N.Y. 2001); see also Berman, 30 F. Supp.2d at 657-59.
III. DISCUSSION
Although this action could have been brought in the Central District of California, for the reasons that follow, Malibu has not made a sufficient showing to justify transfer.
See 28 U.S.C. § 1400(b) ("Any civil action for patent infringement may be brought in the judicial district where the defendant resides. . . .").
A. Deference Accorded to Plaintiff's Choice of Forum
In general, a court should not disturb a plaintiff's choice of forum "unless the balance of the factors weighs strongly in favor of transfer." Where, as here, the forum selected by the plaintiff is not where he resides,
Renaissance Cosmetics v. Development Specialists, 277 B.R. 5, 18 (S.D.N.Y. 2002) (citation omitted).
the degree of deference given to plaintiff's choice of a non-home forum depends on the motivations behind that choice. A court must give greater deference to a plaintiff's choice of a non-home forum where that choice was "motivated by legitimate reasons, including plaintiff's convenience and the ability of [plaintiff] to obtain jurisdiction over the defendant." Courts should give "diminishing deference" to a plaintiff's choice of a non-home forum "to the extent that it was motivated by tactical advantage," such as forum shopping.
Id. (quoting Iragorri v. United Techs. Corp., 274 F.3d 65, 72 (2d Cir. 2001)).
There are several legitimate reasons for Caville to bring suit in New York. First, he frequently travels to New York for business. Second, Yanova, Caville's distributor of products embodying the '606 Patent, resides and principally does business in New York. Third, the majority of Caville's witnesses are within the subpoena power of this Court. Thus, although he is a foreign plaintiff, these reasons establish the legitimacy of Caville's choice of New York. There is no basis for concluding that his selection of this forum is motivated by tactical advantage and, thus, some deference is warranted. B. Convenience of the Witnesses and Parties
See Caville Decl. ¶ 4.
Further supporting the legitimacy of Caville's ties to and choice of New York as a forum is the fact that he is one of three Yanova shareholders. See Caville Decl. ¶ 3; see also Kushner Decl. ¶ 4.
Although Caville and Malibu dispute Yanova's role in this analysis, I am treating Yanova as if it were an additional plaintiff. That Malibu moved for transfer of venue before Caville moved to amend his complaint to add Yanova as a party should not preclude consideration of Yanova as a plaintiff in this analysis.
Although Malibu and its witnesses will undoubtedly be inconvenienced by litigation in New York, careful consideration of the needs of both parties and their respective witnesses advises against transfer.
1. Inconvenience to Witnesses
Caville names several key witnesses who, as residents of New York, Connecticut, and Pennsylvania, will be inconvenienced by litigation in California. That Caville's witnesses are located either in or within relatively close proximity to New York counsels against transfer.
See supra pp. 4-5.
Moreover, Caville expects that Fernandez and Perez, inventors of the '606 Patent and residents of North Carolina, will "testify to the scope of the patent-in-suit." Although Malibu correctly states that courts have accorded less significance to the inconvenience of witnesses who reside outside both the current and transferee forums, the convenience of Fernandez and Perez lends mild support to Caville's choice of forum. The testimony of these witnesses is critical to Caville's case and travel from North Carolina to New York is somewhat more convenient than travel from North Carolina to California.
Id.
Cf, e.g., Wechsler v. Macke Int'l Trade, Inc., No. 99 Civ. 5725, 1999 WL 1261251, at *6 (S.D.N.Y. Dec. 27, 1999) ("[T]he court dismisses from consideration the convenience of witnesses who are located outside both the current and transferee forums.") (citations omitted).
Malibu counters with its own list of witnesses who, it claims, will be inconvenienced by litigation in New York. However, transfer of this action to California would merely shift the inconvenience from Malibu to Caville. Because "exchanging the burdens of inconvenience from one party to the other is not a basis for transfer," Malibu's argument fails. Thus, this factor slightly favors Caville.
See supra pp. 5-6.
Hypoxico, Inc. v. Colorado Altitude Training, No. 02 Civ. 6191, 2003 WL 21649437, at *8 (S.D.N.Y. July 14, 2003).
2. Convenience of the Parties
The convenience of the parties also favors denying transfer. Because Caville frequently does business in New York, there is a strong possibility that his appearances for this litigation could be combined with business trips. New York is thus more convenient for Caville than California.
New York is also more convenient for Yanova, because Yanova resides and principally does business in this jurisdiction. Moreover, Yanova only employs two people, both of whom are its owners. Because litigation in California would require both of these employees to travel, that inconvenience could significantly impact its business.
On the other hand, Malibu is a California company and claims that defending this action in New York would be burdensome. While this may be so, Malibu has chosen to exhibit and sell its product in New York, which makes suit in this district reasonably foreseeable.
C. The Situs of Operative Facts
Courts have held that the situs of operative facts in an infringement action is the jurisdiction where the product was designed, developed, and marketed. Because Malibu's product was designed and developed in China and because Malibu markets its product throughout the United States, most of the operative facts occurred in China and, thus, this factor favors neither party.
See Bionx, 1999 WL 342306, at *4 (holding that locus of operative facts was where product allegedly infringing plaintiff's patent had been designed, developed, and marketed); see also Coloplast v. Amoena Corp., No. 92 Civ. 3432, 1992 WL 346359, at *2 (S.D.N.Y. Nov. 18, 1992) (holding operative events were where alleged infringement, manufacture, and sales had occurred).
Malibu argues that California is the situs of the operative facts, because the "allegedly infringing products were indisputably designed, developed, packaged, and marketed" in California. This argument fails for a number of reasons. First, it is not clear that Malibu's product was in fact designed and developed in California. Malibu does not even suggest that the factories in China are manufacturing its product pursuant to its instructions. Indeed, Malibu readily admits that it is in the business of "purchasing and selling candy." Second, it is not clear that the candy is packaged in California. Malibu states that its product is shipped to a warehouse, from which it is then shipped to its customers. Malibu makes no mention of packaging or re-packaging the product it sells. Third, while it is likely true that Malibu markets its product in California, Malibu also does so in many other markets. For example, Malibu concedes that it attended the International Toy Fair to exhibit, and thus market, its product in New York. It also admits that Toys 'R Us and Target may have sold its product in New York.
Pl. Reply at 3.
3/17/04 Gillmour-Bryant Decl. ¶ 5.
D. Judicial Economy
This factor is also neutral. Malibu claims that the Southern District of New York is overburdened. Caville presents evidence that more cases were filed in the Central District of California than in the Southern District of New York in 2003. It is thus not clear that trial efficiency favors either forum.
See Def. Mem. at 11 (citing Beverage Marketing Corp. v. Emerald Coast Spring Water Co., 697 F. Supp. 767, 771 (S.D.N.Y. 1988) ("[I]t is unlikely that any court bears as crushing a burden as does the Southern District of New York.")).
See Pl. Mem. at 19-20; see also Exhibit B to Declaration of Gloria Tsui-Yip, Caville's counsel, in Opposition to Defendant's Motion to Transfer Venue ("Tsui-Yip Decl.") ¶ 3.
Malibu asserts that judicial economy favors it because "there is a pending litigation between the parties on the patent-in-suit in the Central District of California." This argument, however, lacks merit. "Where two courts have concurrent jurisdiction over an action involving the same parties and issues, courts will follow a `first filed' rule whereby the court which has possession of the action decides it." Malibu filed its action on March 2, 2004 — well after Caville filed his action in New York. It would be illogical and unfair to allow the moving party to shore up its motion to transfer by filing a subsequent action in anticipation of making a transfer motion.
Def. Mem. at 12.
800-Flowers, Inc. v. Intercontinental Florist, Inc., 860 F. Supp. 128, 131 (S.D.N.Y. 1984).
See Def. Mem. at 12. See generally Compl.
E. Interests of Justice
This factor does not favor either party. California has an interest in rendering a judgment relating to Malibu which principally does business and is incorporated in California. Because Malibu sells its product in New York, New York also has an interest in rendering a judgment in favor of or against Malibu. Although New York has little interest in rendering a judgment in favor of or against Caville, a foreign plaintiff, this state does have such an interest in doing so with regard to Yanova, a company that principally does business and is incorporated in New York.
F. Relative Ease and Sources of Proof
This factor again does not favor either party. "The location of relevant documents and ease of access to sources of proof is typically dependent on the locus of the operative facts." The circumstances in this case are no exception. First, the situs of the operative facts is predominately China. Second, Caville states that all of his documents regarding the '606 Patent will come from either Hong Kong or Yanova's offices in New York. While Malibu's documents are undoubtedly located in California, substituting one convenience for another cannot support a transfer of venue.
Wechsler, 1999 WL 1261251, at *8 (quotations omitted).
G. Availability of Process to Compel Unwilling Witnesses
Although this factor slightly favors Malibu because it has more unwilling witnesses than Caville, it does not overcome all of the previously discussed factors favoring the denial of transfer. Kelly, Lewis, and Aryapour, have stated that they will not voluntarily appear in New York. By the same token, Kushner, co-owner of Yanova, suggests he would not voluntarily travel to California.
See Kelly Decl. ¶ 2; Lewis Decl. ¶ 2; Daryoush Decl. ¶ 2.
See Pl. Mem. at 13; see also Kushner Decl. ¶ 9 ("[I]t would be a major burden for me to travel to Los Angeles for trial. It would especially be a hardship if both Glenn Rudin and I travel to Los Angeles and both of us attend the trial. Our business would suffer materially.").
H. Relative Means of the Parties
A court should consider the relative means of the parties "[w]here a disparity exists between the means of the parties in determining venue." While this factor again mildly favors Malibu, it similarly does not rise to the level of warranting transfer. Although Malibu was founded in 2000 and had a net loss in 2003, Malibu has exhibited and sold its product in New York. This fact weakens Malibu's argument that it does not have the means to conduct litigation in New York.
Everest Capital Ltd. v. Everest Funds Mgmt. LLC., 178 F. Supp.2d 459, 467 (S.D.N.Y. 2002).
See generally 3/17/04 Gillmour-Bryant Decl.
I. Forum's Familiarity with the Governing Law
"Patent law is federal law and any district court may handle a patent case with equal skill." This factor is therefore neutral.
Wechsler, 1999 WL 1261251, at *9 (quotations and citations omitted).
J. Summary of Venue Issues
Malibu has failed to meet its burden to demonstrate that this action would be better litigated in the Central District of California. Although the availability of process to compel unwilling witnesses and the relative means of the parties slightly favor Malibu, these factors are outweighed by the deference accorded to Caville's choice of forum and the convenience that conducting litigation in New York will afford Caville and his witnesses.
IV. CONCLUSION
For the foregoing reasons, Malibu's motion to transfer this action to the Central District of California is denied. The Clerk of the Court is directed to close this motion [#19 on the docket sheet]. A conference is scheduled for July 14, 2004, at 4:30 p.m. in Courtroom 15C.
SO ORDERED.