Opinion
Civil Action No. 3:03-CV-0092-L
May 22, 2003
FINDINGS, CONCLUSIONS, RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
Before the court are Defendants' Motion to Dismiss for Lack of Jurisdiction Over the Person and Improper Venue, filed March 13, 2003, the plaintiffs' Opposition to Defendants' Motion to Dismiss for Lack of Jurisdiction Over the Person and Improper Venue, filed April 7, 2003, and the defendants' Reply in Support of Defendants' Motion to Dismiss for Lack of Jurisdiction Over the Person and Improper Venue, filed April 28, 2003. The preceding filings were referred to the undersigned U.S. Magistrate Judge for hearing, if necessary, and findings and recommendation pursuant to the District Court's Order, filed April 4, 2003. The court held an evidentiary hearing on the above motion on Friday, May 16, 2003, at 10:00 A.M. Based on the filings, the oral arguments, the evidence, and the applicable law, the court recommends that the above motion be DENIED.
I. BACKGROUND
IBEW-NECA Southwestern Health and Benefit Fund, a multi-employer welfare benefit plan (the "Plan"), and its Board of Trustees (the "Trustees," collectively the "Plaintiffs") bring this action pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended, § 502(a)(3), 29 U.S.C. § 1002(1) and (3), and 1132(d)(1). (Complaint ("Compl.") at 1; Declaration of Todd A. Schroeder ("Schroeder Decl."), ¶ 2.) The defendant Joseph Gurule is an employee covered by the Plan; the defendants Sandra Gurule and Alicia Cordova are his eligible dependents (all collectively the "Defendants"). The Plan is administered by a third-party administrator in Dallas, Texas. (Schroeder Decl., ¶ 2.) The administrative record for the decision at issue is located in Texas. Id. at ¶ 3.The facts are undisputed. On or about March 31, 2002, Alicia Cordova was involved in an automobile accident in which she was injured by a third person. (Compl. at 3; Hearing ("Hrg.").) The Plaintiffs allege that, in order to cover Alicia Cordova's medical bills "that she otherwise would not have been entitled to," they conditionally advanced the Defendants full and immediate payment of $31,751.69. Id. The advance was subject to a Reimbursement Agreement governed by the Plan and signed by the Defendants, which provided that the Plan would receive full reimbursement of the advanced funds from any recovery against a third person or insurance company. Id. The Reimbursement Agreement expressly assigned the right to recovery against a third person or an insurance company. Id.
The Defendants did not present any evidence — documentary or testimonial — in their motion, reply or at the hearing. Rather, they rely on their counsel's representations that all facts relevant to venue — mainly the Defendants' and their expert witness's residence in New Mexico — are "undisputed." In light of the fact that the Plaintiffs' evidence consists of the affidavit of one its attorneys of record, the court assumes for purposes of this motion that the Defendants counsel's proffer of these "undisputed" facts suffices as evidence.
Subsequently, the Defendants recovered $100,000.00 from the responsible driver's insurance company. Id. at 4. Pursuant to the terms of the Reimbursement Agreement, the Plaintiffs demanded reimbursement of the full $31,751.69. Id. The Defendants' counsel requested a reduction of the full amount advanced via a letter to the Trustees in Dallas, Texas. Id. At a meeting in Dallas, Texas, in October 2002, the Trustees considered the request in light of the Plan's terms, declined to reduce the amount due, and demanded full payment. Id. By this suit, the Plaintiffs seek declaratory and injunctive relief, specific performance, restitution, reimbursement and/or recovery of the full amount allegedly owed by the Defendants under the terms of the Plan and a Reimbursement Agreement.
II. ANALYSIS
A. Personal Jurisdiction
The Defendants move to dismiss for lack of personal jurisdiction because they are residents of New Mexico, all medical services were provided in New Mexico, the accident occurred in New Mexico, and the entire amount paid by the Plaintiffs is being held in the defense counsel's trust account in New Mexico. (Mot. at 1-2.) When a nonresident defendant moves to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing the jurisdiction. See IBEW-NECA Southwestern Health and Benefit Plaintiffs v. Tafoya, 2001 WL 1042733, at *3 (N.D. Tex. Aug. 29, 2001) (Buchmeyer, J.) (citing Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985)). When the court conducts a pre-trial evidentiary hearing, the plaintiff must prove jurisdiction by a preponderance of the evidence. Travelers Indem. Co. v. Calvert Fire Ins. Co., 798 F.2d 826, 831 (5th Cir. 1986).
"Fifth Circuit case law provides two distinct avenues by which a court may assert personal jurisdiction over a defendant." Management Insights, Inc. v. CIC Enterprises, Inc., 194 F. Supp.2d 520, 522 (N.D. Tex. Nov. 19, 2001) (Lynn, J.) In diversity cases, the defendant must have had minimum contacts with the forum state so that haling the defendant into that jurisdiction "is consonant with the dictates of due process and with the requisites of the state's long-arm jurisdiction statute." Id. at 523 (citing Holt Oil Gas Corp. v. Harvey, 801 F.2d 773, 777 (5th Cir. 1986)). Under federal question jurisdiction, the existence of a federal statutory grant of jurisdiction is broader than that allowed under the traditional minimum contacts inquiry. Id. (citing Submersible Systems v. Perforadora Central, 249 F.3d 413, 418 (5th Cir. 2001) ("Absent a federal statute that provides for more expansive personal jurisdiction, the personal jurisdiction of a federal district court is coterminous with that of a court of general jurisdiction of the state in which the district court sits.")).
The ERISA statute is a federal question statute providing for nationwide service of process. See 15 U.S.C. § 1132(e)(2) (providing expanded service of process in ERISA cases). Thus, the district court is not bound by the state's jurisdictional limits. The Fifth Circuit concluded that the broad service of process power affects a court's jurisdictional analysis in the following manner:
[W]hen a federal court attempts `to exercise personal jurisdiction over a defendant in a suit based upon a federal statute providing for nationwide service of process, the relevant inquiry is whether the defendant has had minimum contacts with the United States.' . . . [I]n such a case the relevant sovereign is the United States, and . . . the due process concerns of the Fifth Amendment are satisfied and traditional notions of fair play and substantial justice are not offended where a court exercises personal jurisdiction over a defendant residing within the United States. Bellaire Gen. Hosp. v. Blue Cross Blue Shield, 97 F.3d 822, 825-26 (5th Cir. 1996).Management Insights Inc., 194 F. Supp.2d at 523 (emphasis added). This court has previously determined that it may exercise personal jurisdiction over a non-resident defendant in an ERISA suit to enforce a reimbursement agreement against that defendant. See Tafoya, 2001 WL 1042733, at *3 (finding personal jurisdiction over non-resident defendant in reimbursement suit under ERISA) (citing Busch v. Buchman, 11 F.3d 1255, 1258 (5th Cir. 1994)). All that is necessary is that the nonresident defendant be a resident of the United States and properly served with process. Id.
Busch involved the nationwide service of process provision in § 78aa of the Securities Exchange Act of 1934, which is similar to the service of process provision in ERISA. In a later case, the Fifth Circuit extended Busch's jurisdictional analysis to ERISA. See Bellaire, 97 F.3d at 826 (finding that the ERISA jurisdictional analysis "falls squarely within" the Busch holding).
It is undisputed that the Defendants are residents of the United States and that they were served with process pursuant to 29 U.S.C. § 1132(e)(2). The Defendants conceded at the hearing that under the jurisdictional analyses in Busch and Bellaire, this court has personal jurisdiction over them. Nevertheless, the Defendants urge the court to follow Judge Emilio Garza's dissenting opinion in Busch. See Busch, 11 F.3d at 1258-59 (reasoning that in a nationwide service of process case, personal jurisdiction should not arise out of minimum contacts with the Unites States) (Garza, J., dissenting); see also Bellaire, 97 F.3d at 826 ("Thus, though we follow Busch today and find that the district court properly exercised personal jurisdiction over Blue Cross in this case, we do so with grave misgivings regarding the authority upon which we rely."). Although the Fifth Circuit has expressed its "misgivings" regarding the "nationwide approach," the Defendants conceded at the hearing that the test remains binding precedent in this circuit. See Management Insights Inc., 194 F. Supp.2d at 523 n. 2; see also Bellaire, 97 F.3d at 826; Tafoya, 2001 WL 1042733, at *3. Accordingly, the motion to dismiss for lack of personal jurisdiction should be denied.
B. Venue
The Defendants conceded at the hearing that venue is "arguably proper" in the Northern District of Texas because the Plan is administered in this district. Accordingly, the only issue remaining for determination is whether this case should be transferred to the district court for the District of New Mexico under 28 U.S.C. § 1404(a) for the convenience of the parties and witnesses. (Mot. at 1-4; Reply at 3.) As the moving parties, the Defendants bear the burden of proving by a preponderance of the evidence that transfer is appropriate. Bank One, N.A. v. Euro-Alamo Investments, Inc., 211 F. Supp.2d 808, 811 (N.D. Tex. 2002).
In their Motion, the Defendants initially argued that the court may transfer this action under 28 U.S.C. § 1407. (Mot. at 4) (citing In re Litigation Arising From Termination of Retirement Plan for Employees of Fireman's Fund Ins. Co., 422 F. Supp. 287, 290-91 (Jud. Pan. Mult. Lit. 1976)). Section 1407 allows a federal court to consolidate related cases in multi-district litigation. This argument fails for lack of evidence of related cases pending before the district court for the District of New Mexico. Further, the Defendants requested transfer according to § 1404 under the heading "Forum Non-Conveniens" in their Reply. (Reply at 2-3.) Forum non-conveniens and § 1404 are distinctly separate venue doctrines. See Norwood v. Kirkpatrick, 349 U.S. 29, 31-32 (1955). The narrower doctrine of forum non-conveniens requires that a case be dismissed "because the forum chosen by the plaintiff is so completely inappropriate and inconvenient that it is better to stop the litigation in the place where brought and let it start all over again somewhere else." Norwood, 349 U.S. at 31 (emphasis added). Because the Defendants admitted at the hearing that venue is "arguably proper" in this district because the Plan is administered here, this argument also fails.
Under 28 U.S.C. § 1404(a), a district court may transfer any civil action to any district or division where it might have been brought for (1) the convenience of the parties and witnesses, and (2) in the interest of justice. International Truck and Engine Corp. v. Quintana, ___ F. Supp.2d ___, 2003 WL 1993897, at *4 (N.D. Tex. Apr. 29, 2003). In determining whether a transfer of venue is warranted, the court considers the following factors:
1) the availability and convenience of witnesses and parties;
2) the availability of process to compel the presence of unwilling witnesses;
3) the location of counsel;
4) the relative ease of access to sources of proof;
5) the cost of obtaining attendance of witnesses and other trial expenses;
6) the location of the alleged wrong;
7) the possibility of delay and prejudice if transfer is granted;
8) the plaintiff's choice of forum;
9) calendar congestion; and
10) the interests of justice in general.
Id. "A plaintiff's choice of forum is entitled to great deference and generally should not be disturbed unless the balance of factors strongly favors the moving party." Id. "This requires a particularized showing regarding why transfer is necessary, including identification of key witnesses and the general content of their testimony." Bank One, 211 F. Supp.2d at 811 (emphasis added) ( citing Young v. Armstrong World Indus., Inc., 601 F. Supp. 399, 401-02 (N.D. Tex. 1984) (Sanders, J.)).
1. Convenience of Parties Witnesses
The Defendants argue that they and one expert witness will be called to testify that the Trustees abused their discretion in denying the request for a reduction in the reimbursement amount. Thus, transferring this case to the District of New Mexico where they reside would make it more convenient for them to testify. "Many courts regard the convenience of the witnesses as the most important factor to be considered when deciding whether to transfer venue." Red Star Company, Inc. v. AAi.FosterGrant, Inc., 1999 WL 721967, at *2 (N.D. Tex. Sept. 15, 1999) (citing Gundle Lining Construction Corp. v. Fireman's Fund Insurance Co., 844 F. Supp. 1163, 1166 (S.D. Tex. 1994) and Fletcher v. Southern Pacific Transportation Company, 648 F. Supp. 1400, 1401-02 (E.D. Tex. 1986)).
In some ERISA cases, however, the court "is limited to a review of the administrative record, namely, `relevant information made available to the administrator prior to the complainant's filing of a lawsuit and in a manner that gives the administrator a fair opportunity to consider it.'" Moore v. Reliance Standard Life Ins. Co., 2000 WL 1537990, at *3 (E.D.La. Oct. 17, 2000) (quoting Vega v. National Life Ins. Servs., Inc., 188 F.3d 287, 300 (5th Cir. 1999) ( en banc)).
Some non-ERISA cases emphasize the importance of oral testimony to the trier of fact's ability to evaluate the credibility and demeanor of witnesses. None of these cases, however, is an ERISA `records' case, i.e., a suit such as this one in which a district court reviews an administrative decision for an abuse of discretion. In such a case, the district court, in evaluating whether a plan administrator abused his discretion in making a factual determination, may consider only the evidence that was available to the plan administrator.
Bellaire, 97 F.3d at 827 (footnote omitted) (citing Southern Farm Bureau Life Ins. Co. v. Moore, 993 F.2d 98, 102 (5th Cir. 1993)). Indeed, when the court is bound to the administrative record, the parties cannot supplement that record with additional oral testimony. Bellaire, 97 F.3d at 827. The Plaintiffs allege that this case is precisely such an ERISA `records' case" because the Plan vests the Trustees with broad discretion to interpret its terms, and their interpretation is reviewable only for an abuse of discretion. (Resp. at 6) (citing Sunbeam-Oster Co. Group Benefits Plan v. Whitehurst, 102 F.3d 1368, 1373 (5th Cir. 1996)).
At the hearing, the Defendants did not dispute that this case involves a review of the administrative record. However, they maintain that they should be allowed to supplement that record with live testimony. See Moore, 2000 WL 1537990, at *3 (noting that the reviewing court may consider additional evidence if reviewing for self-interest or bad-faith). Assuming that the district court will consider live testimony in addition to the administrative record and that the Defendants' testimony is relevant to the determination of whether the Trustees abused their discretion in denying the request for a reduction of the amount, the Defendants have merely shown that their convenience and that of their witness will be enhanced by transferring the case to the district court for the District of New Mexico. If live testimony is permitted, the Plaintiffs' witnesses will surely include the Trustees who made the decision at issue. The court may not simply shift the burden from one party to another. Bank One, 211 F. Supp.2d at 812. Given the uncertainty of whether live testimony will even be permitted in this case, the convenience of the parties and witnesses does not necessarily weigh in favor of transfer.
2. Applicable Law
The parties also dispute whether New Mexico or federal law applies in this case. The Defendants argue that because ERISA is an equitable statute, New Mexico's state equitable doctrines apply. The Plaintiffs argue that New Mexico law is preempted by ERISA and otherwise irrelevant to a venue decision, relying on the Fifth Circuit's pronouncement that "it is well established that state subrogation doctrines are preempted under ERISA[.]" Sunbeam-Oster, 102 F.3d at 1374. The issue of preemption is neither before the court nor necessary for a fair decision on venue. Nor is the record adequately developed for consideration of applicable law as a determinative factor. See Eastman Medical Products, Inc. v. E.R. Squibb Sons, Inc., 199 F. Supp.2d 590, 597 (ND. Tex. 2002); see also Young v. Armstrong World Industries, Inc., 601 F. Supp. 399, 401 (N.D. Tex. 1984) (declining to prematurely consider applicable law in a venue transfer decision). If it turns out that New Mexico law applies, the district court is quite capable of applying a foreign jurisdiction's law. See Collins v. Gospo Centric Records, 2001 WL 194985, at *3 (N.D. Tex. Feb. 22, 2001) (applying California law to a case transferred from California); see also Amoco Production Co. v. Hydroblast Corp., 90 F. Supp.2d 727, 736 (N.D. Tex. 1999) (applying New Mexico law to a case removed from Texas state court). The argument that New Mexico law may apply weighs neither in favor nor against a transfer of venue.
It is unclear as to the proper amount of weight the court should give to its familiarity with the applicable law. See Eastman, 199 F. Supp.2d at 597 n. 26 (explaining that the weight of this factor ranges from the Supreme Court's discussion of it as a "public interest" factor to this circuit's rolling it into the "other practical considerations" element); see also Burbank Int'l Ltd. v. Gulf Consolidated Int'l, Inc., 441 F. Supp. 819, 821 n. 3 (N.D. Tex. 1977) (discussing the varying weights given to this factor). The Eastman court found that the movant's "burden on the transfer issue is a relatively steep one given that the relative importance of this factor is not profound within this Circuit, and that the transfer request is made in relation to this limited proceeding." Eastman, 199 F. Supp.2d at 597 n. 26.
3. Plaintiffs' Choice of Forum
Out of the remaining factors to be considered in transferring venue, the parties only dispute the proper weight to be afforded to the Plaintiffs' choice of forum. The Plaintiffs argue that their "choice of forum is entitled to substantial weight and should be highly esteemed." Bank One, 211 F. Supp.2d at 812 (citing Enserch Int'l Exploration, Inc. v. Attock Oil Co., 656 F. Supp. 1162, 1167 n. 15 (N.D. Tex. 1987) (Fitzwater, J.)). The Defendants admit that, generally, "ERISA favors Plaintiffs' choice of forum . . ." (Mot. at 3.) However, "where contacts between the Plaintiffs' selected forum and the underlying cause of action are attenuated, the weight given Plaintiffs' choice is diminished." Id. (citing Trustees of Nat. Automatic Sprinkler Industry Pension Plaintiffs v. Delta Automatic Systems, Inc., 1992 WL 175503, at *3 (D.Md. July 21, 1992)). According to the Defendants, the Plaintiffs' choice is diminished because "[a]ll witnesses to this action and the funds which Plaintiffs seek to recover are located within the State of New Mexico" and "Plaintiffs' `witnesses' consist of documents only." (Mot. at 2; Reply at 3.) As explained above, the Defendants have failed to establish that they or their witness will be permitted to testify. As a consequence, the Defendants have failed to counterbalance the weight normally accorded a plaintiffs venue selection. The Plaintiffs' choice of venue weighs against a transfer.
4. Other Considerations
The parties do not seriously dispute the remaining factors: 2) the availability of process to compel the presence of unwilling witnesses; 3) the location of counsel; 4) the relative ease of access to sources of proof, 6) the location of the alleged wrong; 7) the possibility of delay and prejudice if transfer is granted; 9) calendar congestion; and 10) the interests of justice in general. See International Truck and Engine, 2003 WL 1993897, at *4. In fact, it is undisputed that the administrative record is located in this district, and that the decision to deny the reduction of amount owed was also made in this district. Thus, the fourth and sixth factors weigh against transfer. The remaining factors do not weigh either in favor of or against transfer. As to the third factor, counsel for the Plaintiffs is located in Dallas, Texas, while counsel for the Defendants is located in New Mexico. Regarding the ninth factor, the Defendants have not indicated that the docket in the district court for the District of New Mexico is any less crowded than in this court. (Resp. at 4 n. 4.) Accordingly, the balance of the remaining factors likewise does not weigh in favor of transfer.
Upon consideration of all of the applicable factors, the court concludes that the Defendants have failed to establish "by a preponderance of the evidence that transfer is appropriate." Bank One, 211 F. Supp.2d at 811.
III. RECOMMENDATION
For the foregoing reasons, the court RECOMMENDS that Defendants' Motion to Dismiss for Lack of Jurisdiction Over the Person and Improper Venue be DENIED.
INSTRUCTIONS FOR SERVICE AND OF RIGHT TO APPEAL/OBJECT
The United States District Clerk shall serve a copy of these findings, conclusions, and recommendation on all parties by mailing a copy to each of them. Pursuant to 28 U.S.C. § 636(b)(1), any party who desires to object to these findings, conclusions and recommendation must file and serve written objections within ten (10) days after being served with a copy. A party filing objections must specifically identify those findings, conclusions, or recommendation to which objections are being made. The District Court need not consider frivolous, conclusory or general objections. Failure to file written objections to the proposed findings, conclusions, and recommendation within ten days after being served with a copy shall bar the aggrieved party from appealing the factual findings and legal conclusions of the Magistrate Judge that are accepted by the District Court, except upon grounds of plain error. Douglass v. United Servs. Auto Ass'n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) ( en banc).