Opinion
No. 2:01-CV-48.
December 13, 2002
MEMORANDUM AND ORDER
Plaintiff Forward Air, Inc., brings this action alleging violations under the Lanham Act, 15 U.S.C. § 1125(a), and various Tennessee statutory and common law claims. (Court File No. 1). Defendant U.S. Xpress Enterprises, Inc., asserts counterclaims against Forward Air under various state common law theories and for violation of the Tennessee Consumer Protection Act, § 47-18-104. (Court File No. 12). Presently before the Court is defendants motion to transfer this case. (Court File No. 13). For the following reasons, it is hereby ORDERED that this motion (Court File No. 13) is DENIED.
I. Facts
Various parties are involved in this lawsuit and the allegedly parallel litigation currently pending in the United States District Court for the Northern District of Alabama. SouthTrust Bank v. U.S. Xpress Enterprises, Inc., and CSI Acquisition Corp., Civil Action No. 00-G-3480-S. The Court has done its best to accurately depict the relationships between the parties. For the sake of clarity, the Court will first discuss this information.
Plaintiff Forward Air, Inc. ("Forward Air"), is a Tennessee corporation with its principal place of business in Tennessee. (Court File No. 1). Defendant U.S. Xpress Enterprises, Inc. ("USX"), is a Nevada corporation with its principal place of business in Tennessee. (Court Files No. 1, 13A). U.S. Xpress is the parent company of CSI/Crown, Inc. ("CSI/Crown"); Crown Acquisition Corp. ("Crown"); and U.S. Xpress, Inc. ("U.S. Express"). (Court File No. 13A). CSI/Crown has its principal place of business in Georgia. (Court File No. 1). CSI/Crown is the parent company of Dedicated Xpress Services, Inc. ("Dedicated Xpress"), a Nevada corporation. (Court Files No. 1, 13A). SouthTrust Bank ("SouthTrust") is an Alabama state banking company with its principal place of business in Alabama. (Court File No. 13, ex. A). Also relevant to this case, although not a party to either lawsuit, is Dedicated Transport Services, Inc. ("DTSI"), a Georgia corporation. DTSI's assets included the service marks DEDICATED, DEDICATED TRANSPORTATION SERVICES, and DTSI. SouthTrust, as DTSI's primary lender, held perfected security interests in these and other assets.
Forward Air, a "freight broker," provides transportation services to customers, who are primarily airlines and air freight forwarders. Forward Air arranges shipments of freight for customers who generally have less than a full truckload to ship. USX is a "truckload carrier," meaning that USX contracts to ship full truckloads of freight. Prior to sometime in late 2000, DTSI was also a "freight broker" and competed directly with Forward Air. To meet its point-to-point transportation requirements, DTSI regularly contracted with USX to transport freight belonging to DTSI customers.
In the latter part of 2000, DTSI and its parent company (not a party to any relevant litigation) experienced financial difficulties. Sometime in November 2000, USX realized that SouthTrust might foreclose on DTSI's assets. USX asserts that DTSI then owed USX $1.8 million in transportation fees and other costs. USX had approximately fifty-six loads of DTSI cargo in its possession. (Court File No. 13A).
During November 2000, SouthTrust foreclosed on DTSI's assets, including the service marks referenced above. Either USX or CSI, acting on behalf of USX, then entered into a contract with SouthTrust for the purchase of DTSI's assets. The contract included a provision granting CSI the first right to match any higher bid submitted to SouthTrust. Forward Air then submitted a higher bid to SouthTrust. Forward Air and SouthTrust entered into a purchase agreement, subject to CSI's right of first refusal to match the bid. CSI did not submit a matching bid by the deadline of December 1, 2000. Forward Air took over DTSI's assets.
At this point the facts get murky. Forward Air contends that after it took over DTSI's assets, USX engaged in a "systematic, deliberate, and intentional pattern of activity intended to interfere with and frustrate Forward Air's use and enjoyment of the DTSI assets." (Court File No. 1). USX contends that at some point during November or December 2000, USX instructed SouthTrust that it intended to protect its interest in the $1.8 million owed by DTSI. Neither SouthTrust nor Forward Air would agree to pay USX the shipping costs associated with the former DTSI loads in transit with USX or the past due freight charges. On Saturday, December 2, 2000, USX began stopping its trucks containing DTSI freight and refusing to finish the shipments.
On December 4, 2000, Forward Air obtained a temporary restraining order from the Chancery Court of Greene County, Tennessee. USX was restrained from continuing to withhold delivery of former DTSI shipments. USX alleges that this TRO was unlawfully obtained. USX contends that prior to issuance of the TRO, USX had determined that exercising its alleged lien rights on the freight was cost prohibitive. USX alleges that it had already re-commenced the shipment of that freight when the TRO was issued. At any rate, Forward Air and USX negotiated a settlement of the TRO issues.
During the same time period, on December 1, 2000, after declining to match Forward Air's bid for the DTSI cargo, USX formed U.S. Xpress Services, Inc. Also sometime in late 2000, CSI/Crown changed its name to CSI/Crown, d/b/a Dedicated Xpress Services, Inc. Around this time, USX announced that it would offer transportation services to thirty-four locations under the name "Dedicated Xpress Services." Foward Air alleges that USX performed services under the DEDICATED service mark. Plaintiff claims that these and other actions were intended to allow USX to compete unfairly with Forward Air.
II. Procedural History
On December 5, 2000, SouthTrust filed an action against USX and CSI in the United States District Court for the Northern District of Alabama. SouthTrust alleges in that lawsuit that USX's refusal to deliver the former DTSI freight was wrongful and was intended to interfere with SouthTrust's purchase agreement with Forward Air. As a result of these actions, SouthTrust was required to escrow one million dollars of the proceeds from its transaction with Forward Air to cover any and all expenses caused by wrongful conduct of USX. SouthTrust asserts a claim for tortious interference with business relations.
On February 15, 2001, Forward Air filed the instant lawsuit. Foward Air claims that defendants' allegedly improper use of the DEDICATED service mark constitutes trademark or service mark infringement and unfair competition under the Lanham Act, 15 U.S.C. § 1125(a); violates the Tennessee Consumer Protection Act, TENN. CODE ANN. § 47-18-104; and constitutes unfair competition under Tennessee common law. Forward Air also brings claims of inducement to breach a contract and unjust enrichment protesting USX's failure to timely ship the former DTSI cargo. Forward Air argues that USX's failure to ship DTSI assets was intended to induce the breach of contracts between DTSI and its customers.
On March 26, 2001, defendants filed their answer in this case. At that time, USX filed counterclaims against Forward Air for breach of contract; unjust enrichment; violation of the TCPA; outrageous conduct; misrepresentation; and slander, libel, and false light defamation. USX argues that Forward Air is liable for failing to pay transportation expenses to USX for the DTSI loads in transit at the time of SouthTrust's sale to Forward Air.
On March 30, 2001, USX and CSI filed a motion to add Forward Air as a third party defendant in the Alabama lawsuit. USX and CSI assert on the face of the motion that Forward Air is liable for indemnity of USX and CSI, conversion, breach of contract, and unjust enrichment. This Court does not have a copy of that motion. SouthTrust has opposed the motion to add Forward Air to the Alabama case. SouthTrust argues that USX and CSI have failed to allege any facts supporting their position that Forward Air must indemnify them with respect to SouthTrust's claims.
Three days after filing its motion to add Forward Air to the Alabama case, USX and the other defendants filed their motion to transfer this lawsuit to the United States District Court for the Northern District of Alabama, or in the alternative, to the Southern Division of the Eastern District of Tennessee. Plaintiff opposes this motion. The parties have had ample opportunity to fully brief the issue of transfer under 28 U.S.C. § 1404(a).
III. Analysis
Title 28 U.S.C. § 1404(a) provides that "[f]or 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." The purpose of § 1404(a) is to prevent the waste of time, energy, and money, and to protect litigants, witnesses, and the public against unnecessary inconvenience and expense. Van Dusen v. Barrack, 376 U.S. 612, 616 (1964); Continental Grain Co. v. The FBL-585, 364 U.S. 19, 26-27 (1960). The burden is on the moving parties, here defendants, to establish that transfer would serve the convenience of the parties and witnesses, and be in the interests of justice. See Carborundum Co. v. Bay Fabricators, Inc., 461 F. Supp. 437 (E.D. Tenn. 1978).
To obtain a transfer under § 1404(a), defendants must establish that (1) venue is proper in the transferor district, the Eastern District of Tennessee; (2) the plaintiff could have brought suit in the transferee court, the Northern District of Alabama; and (3) the transfer is for the convenience of the parties and witnesses, and is in the interest of justice. Thomas v. Home Depot, USA, 131 F. Supp.2d 934, 396 (E.D.Mich. 2001); Commissioner of Ins. of Mich. v. DMB Kyoto Plaza Shopping Ctr., 42 F. Supp.2d 726, 734 (W.D.Mich. 1998); Kepler v. ITT Sheraton Corp., 860 F. Supp. 393, 398 (E.D.Mich. 1994).
The parties have not explicitly addressed the first two issues, although it is not at all clear that venue would be proper in the Northern District of Alabama, the proposed transferee district. The parties have not alleged any facts suggesting that this lawsuit has any connection to that district. Defendants USX and CSI both argued before the Alabama district judge that venue was not proper there. Interestingly, those defendants now argue that a transfer to that district would be appropriate.
However, the Court need not determine whether venue would lie in the Northern Division of Alabama because defendants have failed to demonstrate that Alabama would be a more convenient forum. Under § 1404(a), defendants must show that the Northern District of Alabama is a more convenient forum than the Eastern District of Tennessee. Section 1404(a) provides for transfer to a more convenient forum, not an equally convenient forum. Van Dusen, 376 U.S. at 645-46; Coffee v. Van Dorn Iron Work, 796 F.2d 217, 219-20 (7th Cir. 1986). Transfer is inappropriate if the ultimate effect is to shift the burden from one party to another. UAW v. Aluminum Co. of Am., 875 F. Supp. 430, 433 (N.D.Ohio. 1995); Evans Tempcon, Inc. v. Index Indus., Inc., 778 F. Supp. 371, 377 (W.D.Mich. 1990). Factors demonstrating the relative convenience of each district include: (1) the location of willing and unwilling witnesses; (2) the residence of the parties; (3) the location of sources of proof; (4) the location of the events that gave rise to the dispute; and (5) any other public-interest concerns, such as systemic integrity and fairness. See Moses v. Business Card Express, Inc., 929 F.2d 1131, 1137 (6th Cir. 1991); Blane v. American Inventors Corp., 934 F. Supp. 903, 907 (M.D.Tenn. 1996). The Court is not limited to these factors, but must consider everything of relevance.
Defendants assert that the Northern District of Alabama, specifically Birmingham, is more convenient for their witnesses. They first point out that Chattanooga is closer in proximity to Birmingham than to Greeneville, Tennessee. Defendants assert that SouthTrust will call witnesses from Alabama and that the parties will call witnesses from around the country. Defendants argue that Birmingham's airport, to which these unnamed witnesses can travel, is more convenient than Greeneville, which lacks an airport. Chattanooga also has an airport.
In response, Forward Air points out that defendants have failed to provide any affidavit testimony naming their expected witnesses. At the time the parties briefed these issues, defendants had also refused to hold a planning meeting under FED. R. CIV. P. 26(f) or to provide plaintiff with initial disclosures under FED. R. CIV. P. 26(a)(1). Therefore the record is unclear as to which individuals defendants expect to call as witnesses. SouthTrust is not a party to this lawsuit and cannot call any witnesses. In contrast, Forward Air argues that their primary witnesses, Richard Roberts and Bruce Campbell, will come from Greeneville, Tennessee, rendering the Eastern District of Tennessee is a more convenient forum for plaintiff.
The respective locations of the parties also supports plaintiff's position. Defendant USX has its principal place of business in Chattanooga, Tennessee. USX is the parent company of CSI/Crown, which is the parent company of Dedicated Xpress. Thus, all defendants in this action have ties to Tennessee. Plaintiff is a Tennessee corporation with its principal place of business in Greeneville, Tennessee. None of the relevant parties in this lawsuit have demonstrated a strong connection to Alabama.
The parties do not extensively address the location of the actions and decisions that gave rise to this lawsuit. Defendants argue that none of the events relevant to this lawsuit occurred in Greeneville, Tennessee. However, the TRO, which defendants contend was unlawfully obtained, and which forms the basis of defendants' allegations in this action, was obtained in Greene County, Tennessee. None of the activities in this lawsuit are alleged to have occurred in Alabama.
Court's traditionally consider the plaintiff's choice of forum in evaluating motions to transfer. See, e.g., Norwood v. Kirkpatrick, 349 U.S. 29, 32 (1955); Lewis v. ACB Bus. Servs., Inc., 135 F.3d 389, 413 (6th Cir. 1998); Vector Co. v. Urban Sys. Dev. Corp., 360 F. Supp. 864, 865 (E.D. Tenn. 1972). This factor weighs heavily in favor of the Eastern District of Tennessee. The plaintiff's choice of forum is accorded some deference and given substantial weight, although it is not a dispositive factor. Lewis, 135 F.3d at 413; General Motors Corp. v. Ignacio Lopez de Arriortua, 948 F. Supp. 656, 668 (E.D.Mich. 1996).
The most important factor to consider in this case involves the allegedly parallel action filed in the Northern District of Alabama. The timing of the pleadings and motions filed in the two lawsuits are intricately interwoven. However, the Court finds that careful consideration of the nature of each lawsuit supports the Court's retention of venue in Tennessee.
SouthTrust Bank did file the Alabama lawsuit before Forward Air filed this one. However, at the time of filing, Forward Air was not a party to the Alabama action. Additionally, USX filed its counterclaim against Forward Air before this Court prior to filing its motion to add Forward Air as a third party defendant in the Alabama case. Following the logic of this timing, both plaintiff Forward Air and defendant USX brought their claims first before this Court.
Defendants argue that the claims in this case and those in the Alabama case are virtually identical. Notably, the only identical claims are those raised by the defendants. Based upon the initial complaint filed, this lawsuit primarily involved Forward Air's claims under the Lanham Act. Forward Air also asserted claims that USX sought to interfere with the contracts between DTSI and its customers who had freight in transit at the time DTSI's assets were sold. The Alabama lawsuit also involved SouthTrust's claims arising from USX's cessation of shipping. However, SouthTrust's claims protest USX's interference with the contract between SouthTrust and Forward Air. While the facts involved in the two lawsuits are intricately intertwined, the actual claims of each plaintiff can be resolved separately. Defendants cannot compel transfer of this lawsuit by attempting to raise the same claims in two courts.
The Court recognizes the interest in avoiding duplicative litigation. However, the fact that the parties may need to provide similar proof at each of the two trials is not dispositive of the motion to transfer before the Court. Additionally, it is not clear that Forward Air can properly be added to the Alabama lawsuit. SouthTrust protests that addition. Finally, the Court cannot deem it just to require Forward Air to litigate its Lanham Act claims in another forum simply because SouthTrust raised its largely unrelated, contractual claims first.
The Court also declines to transfer this case to the Southern Division of the Eastern District of Tennessee. Without fully reiterating all of the facts explained above, defendants cannot establish that Chattanooga is a more convenient forum than Greeneville. Defendant USX has its principal place of business in Chattanooga. Forward Air is located in Greeneville. The witnesses plaintiff has identified are located in Greeneville. The TRO, which defendant USX argues was unlawfully obtained, was issued in Greene County, which is located in Greeneville. Moreover, the Court must give some deference to plaintiff's choice of Greeneville as the forum for this lawsuit. This case shall remain for adjudication in the Northeastern Division of the Eastern District of Tennessee.