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In Isbell, the court based its finding of personal jurisdiction on the fact that the defendant "could have reasonably foreseen that its licensee would sell... [certain products] in Texas, and that [the plaintiff] would feel the effects [in Texas]."
Summary of this case from LCW Automotive Corporation v. Restivo EnterprisesOpinion
Civil Action No. 3:02-CV-1408-G.
June 4, 2004
MEMORANDUM ORDER
Before the court is the motion of the defendant DM Records, Inc. ("DM") to dismiss this case for lack of subject matter jurisdiction, lack of personal jurisdiction, and improper venue, pursuant to FED. R. CIV. P. 12(b)(1-3), or alternatively, to transfer venue to the United States District Court for the Middle District of Tennessee, pursuant to 28 U.S.C. § 1404(a). For the reasons discussed below, DM's motions are denied, but the case is transferred, on the court's own motion, to the United States District Court for the Eastern District of Texas.
I. BACKGROUND
This case involves a copyright dispute between DM and Alvertis Isbell ("Isbell"). Plaintiff Isbell, doing business as Alvert Music ("Alvert"), is a citizen of the state of Arkansas and is in "the business of music publishing and otherwise commercially exploiting musical composition copyrights." See Complaint ¶¶ 5, 11. Defendant DM is a Florida corporation with its principal place of business in Boca Raton, Florida. See Defendant DM Records, Inc.'s Amended Motion to Dismiss or, in the Alternative, to Transfer Venue and Memorandum of Law in Support Thereof ("Motion") at 2; see also Complaint ¶ 6. DM is in the business of producing and distributing sound recordings. Motion at 2; see also Complaint ¶ 6; Response and Brief in Opposition of Alvert Music to the Motion to Dismiss or, in the Alternative, to Transfer Venue of Defendant DM Records, Inc., or in the Alternative, Motion of Alvert Music for Continuance to Conduct Further Discovery ("Response") at 1.In 1999, representatives of DM traveled to Texas to negotiate and consummate the purchase of assets of the bankruptcy estate of Isbell Records, Inc., doing business as Bellmark Records ("Bellmark"). Response at 1. The bankruptcy proceeding took place in the United States Bankruptcy Court for the Eastern District of Texas, Sherman Division (the "Bankruptcy Court"). Complaint ¶ 17; Response at 1. During that proceeding, the Bankruptcy Court appointed Mark A. Weisbart, an attorney practicing in Dallas, Texas, as trustee (the "Trustee" or "bankruptcy trustee") of the debtor's estate. Complaint ¶ 17. DM purchased the assets of Bellmark from the Trustee through an Asset Purchase Agreement. See Asset Purchase Agreement, attached to Motion as Exhibit B; see also Complaint ¶ 18; Motion at 4.
Isbell was the president and CEO of Bellmark. Complaint ¶ 10.
Bellmark filed for Chapter 11 bankruptcy on or about April 18, 1997. Complaint ¶ 17. The Chapter 11 bankruptcy was converted to a Chapter 7 bankruptcy on or about January 7, 1998. Id.
The instant dispute emanates from competing claims of ownership to various composition copyrights, notably "Whoomp There It Is!" and "Dazzey Duks" (the "Subject Compositions"). See Complaint ¶ 20; Motion at 3; Response at 1. DM contends that, having purchased Bellmark's assets, DM became the owner of the copyrights in both the sound recordings and musical compositions of the Subject Compositions. See Motion at 3-5. Alvert, on the other hand, asserts that "Bellmark never owned any musical compositions, only sound recordings," and that Alvert owns the composition copyrights in the Subject Compositions. Complaint ¶ 19. Therefore, Alvert argues, DM could not have purchased the Subject Compositions in the Bellmark bankruptcy sale. See id. ¶¶ 19-20; Response at 1.
Following the asset purchase from Bellmark's bankruptcy trustee, DM began holding itself out as the owner of the Subject Compositions with a right to license the manufacture, distribution, sale, and/or public performance of the Subject Compositions. See Motion at 5; Complaint ¶¶ 20, 23. Alvert contends that by exploiting the Subject Compositions without paying mechanical or other royalties to Alvert, DM has infringed Alvert's copyrights in the Subject Compositions. See id. ¶¶ 32-43. Alvert also seeks a declaratory judgment that Alvert is the rightful owner of the Subject Compositions. See id. ¶¶ 27-31.
According to Alvert, DM has also taken action against the performing rights organization Broadcast Music Incorporated ("BMI") to claim ownership of the Subject Compositions and to instruct BMI to divert performance royalties to DM. See Complaint ¶ 22.
On October 23, 2003, DM filed the present motion to dismiss for lack of subject matter jurisdiction, lack of personal jurisdiction, improper venue or, alternatively, to transfer venue. See generally Docket Sheet; Motion.
II. ANALYSIS A. Subject Matter Jurisdiction 1. The Legal Standard
Federal courts are courts of limited jurisdiction. See Kokkonen v. Guardian Life Insurance Company of America, 511 U.S. 375, 377 (1994); Owen Equipment and Erection Company v. Kroger, 437 U.S. 365, 374 (1978). A federal court may exercise jurisdiction over cases only as expressly provided by the Constitution and laws of the United States. See U.S. CONST. art. III §§ 1-2; see also Kokkonen, 511 U.S. at 377. Federal law gives the federal district courts original jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. Moreover, a party seeking relief in a federal district court bears the burden of establishing the subject matter jurisdiction of that court. United States v. Hays, 515 U.S. 737, 743 (1995); McNutt v. General Motors Acceptance Corporation of Indiana, Inc., 298 U.S. 178, 189 (1936); Langley v. Jackson State University, 14 F.3d 1070, 1073 (5th Cir.), cert. denied, 513 U.S. 811 (1994).
Rule 12(b)(1) of the Federal Rules of Civil Procedure authorizes the dismissal of a case for lack of jurisdiction over the subject matter. See FED. R. CIV. P. 12(b)(1). A motion to dismiss pursuant to Rule 12(b)(1) for lack of subject matter jurisdiction must be considered by the court before any other challenge because "the court must find jurisdiction before determining the validity of a claim." Moran v. Kingdom of Saudi Arabia, 27 F.3d 169, 172 (5th Cir. 1994) (internal citation omitted); see also Ruhrgas AG v. Marathon Oil Company, 526 U.S. 574, 577 (1999) ("The requirement that jurisdiction be established as a threshold matter . . . is inflexible and without exception") (citation and internal quotation marks omitted). On a Rule 12(b)(1) motion, which "concerns the court's 'very power to hear the case . . . [,] the trial court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case.'" MDPhysicians Associates, Inc. v. State Board of Insurance, 957 F.2d 178, 181 (5th Cir.) (quoting Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir.), cert. denied, 454 U.S. 897 (1981)), cert. denied, 506 U.S. 861 (1992). In ruling on a motion to dismiss under Rule 12(b)(1), the court may rely on: "1) the complaint alone; 2) the complaint supplemented by undisputed facts; or 3) the complaint supplemented by undisputed facts and the court's resolution of disputed facts." MCG, Inc. v. Great Western Energy Corporation, 896 F.2d 170, 176 (5th Cir. 1990) (citing Williamson, 645 F.2d at 413).
2. Copyright Registration as a Condition Precedent
DM argues that Alvert's claim that DM violated 17 U.S.C. § 411, a part of the Copyright Act of 1976, should be dismissed under FED. R. CIV. P. 12(b)(1) because the court lacks subject matter jurisdiction. See Motion at 15; Defendant's Reply to Plaintiff's Response and Brief in Opposition of Alvert Music to the Motion to Dismiss or, in the Alternative, to Transfer Venue of Defendant DM Records, Inc., or, in the Alternative, Motion of Alvert Music for Continuance to Conduct Further Discovery ("Reply") at 10-11. The court disagrees.
District courts are without subject matter jurisdiction to hear claims for federal copyright infringement unless a plaintiff asserts in its pleadings facts showing it has satisfied the statutory formalities found in section 411 of Title 17 of the United States Code. See Geoscan, Inc. of Texas v. Geotrace Technologies, Inc., 226 F.3d 387, 392-93 (5th Cir. 2000); Lakedreams v. Taylor, 932 F.2d 1103, 1108 (5th Cir. 1991). Section 411 provides that "no action for infringement of the copyright in any United States work shall be instituted until registration of the copyright claim has been made in accordance with this title." 17 U.S.C. § 411(a); see also 2-7 NIMMER ON COPYRIGHT § 7.16[B][1][a] ("[R]egistration is a condition precedent for a court to exercise jurisdiction in an infringement case."). This section has been construed broadly by the Fifth Circuit to allow for the commencement of an infringement action upon the Copyright Office's receipt of "the application for registration, fee and deposit." See Lakedreams, 932 F.2d at 1108 (citing Apple Barrel Productions, Inc. v. Beard, 730 F.2d 384, 386-87 (5th Cir. 1984)).
DM misconstrues the requirement for establishing subject matter jurisdiction for copyright infringement. See Reply at 3-4. The proposition that a plaintiff actually possess the certificate of registration prior to initiating a lawsuit has been endorsed by several courts. See, e.g., Goebel v. Manis, 39 F. Supp.2d 1318, 1319-20 (D. Kan. 1999); Ryan v. Carl Corporation, No. C 97-3873 FMS, 1998 WL 320817 at *2 (N.D. Cal. June 15, 1999). While these cases uniformly cite 17 U.S.C. § 411(a) as support for this proposition, they are not consistent with the Fifth Circuit's more liberal reading of § 411(a). See Goebel, 39 F. Supp.2d at 1320; Ryan, 1998 WL 320817 at *2.
There is no requirement under 17 U.S.C. § 411 that the only person who may bring an action is the person who applies for the copyright registration. See Latin American Music Company, Inc. v. Archdiocese of San Juan of the Roman Catholic and Apostolic Church, 194 F. Supp.2d 30, 49 (D.P.R. 2001) ("[T]o initiate a suit, a plaintiff need not be the one who registered the copyright."); Vapac Music Publishing, Inc. v. Tuff 'N' Rumble Management, No. 99 CIV. 10656 JGK, 2000 WL 1006257 at *2 (S.D.N.Y. July 19, 2000) ("By its terms, 17 U.S.C. § 411(a) requires only that a copyright be registered; it does not require that the plaintiff be the party who caused the registration to occur."); Tang v. Hwang, 799 F. Supp. 499, 503-04 (E.D. Pa. 1992) ("There is no requirement under the statute that the only person who may bring an action is the person who applies for the copyright registration."); see also 3-12 NIMMER ON COPYRIGHT § 12.02[B] ("[T]he plaintiff in court obviously need not be the same party who initially registered the subject work."). The law merely provides that there must be registration of the copyright claim under the Copyright Act prior to instituting an infringement action.
In this case, Alvert asserts that in 1992 and 1993 the authors of both "Dazzey Duks" and "Whoomp There It Is!" transferred their composition copyrights to Alvert. See Plaintiff's Surreply Re Motion to Dismiss or, in the Alternative, to Transfer Venue of Defendant DM Records, Inc. ("Surreply") at 1-2; see also Certificates of Recordation, located in Plaintiff's Appendix to the Statement of Facts in Support of the Response to Defendant's Motion to Dismiss or, in the Alternative, to Transfer Venue ("Plaintiff's Appendix") at 367-413. According to Alvert, these compositions were not a part of the Bellmark bankruptcy and, therefore, DM could not have purchased the composition copyrights. See Complaint ¶¶ 34, 40; Surreply at 2. Although Alvert currently does not appear on the registered works database of the Copyright Office, see Declaration of Kelly Huffman, Exhibits A-C, attached to Surreply at Tab 1, Alvert filed copyright recordations recording the 1992 and 1993 transfers of the compositions from the original authors on September 23, 2002. See Certificates of Recordation, Plaintiff's Appendix at 367-413.
It is clear from the record that "Whoomp There It Is!" and "Dazzey Duks" have been registered. See generally Declaration of Kelly Huffman, Exhibits A-C; Motion at 15; Reply at 10-11; Surreply at 1-3. This satisfies the jurisdictional prerequisite of 17 U.S.C. § 411. Alvert is merely asserting its ownership, and contesting DM's ownership, in "Whoomp There It Is!" and "Dazzey Duks"; to require a second attempt at registration would be superfluous.
Although the condition precedent of 17 U.S.C. § 411 has been satisfied by Alvert, the heart of the dispute — ownership of the composition copyrights — remains. See, e.g., Tuff-N-Rumble Management, Inc. v. Sugarhill Music Publishing, Inc., 99 F. Supp.2d 450, 457 (S.D.N.Y. 2000) ("[E]stablishing the chain of title is not a prerequisite to establishing subject matter jurisdiction, but, rather, can be a defense to establishment of valid ownership of the copyright.").
3. Standing under the Copyright Act
DM challenges Alvert's standing to sue for copyright infringement. DM argues that because the registered works database does not contain any registration for either "Whoomp There It Is!" and "Dazzey Duks" identifying Alvert as owner or claimant, Alvert is not the legal owner and thus lacks standing. See Motion at 15; Reply at 10-11. The court disagrees.It is appropriate to address the question of standing in deciding a motion to dismiss for lack of subject matter jurisdiction because the elements of standing are "an indispensable part of the plaintiff's case," and accordingly must be supported at each successive stage of the litigation in the same manner as any other matter on which the plaintiff bears the burden of proof. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). Accordingly, no less than in other cases, courts look to the elements of standing in copyright infringement actions. See 3-12 NIMMER ON COPYRIGHT § 12.02. If Alvert lacks standing to assert its federal copyright claims, this court does not have subject matter jurisdiction and dismissal is appropriate. See FED. R. CIV. P. 12(b)(1). However, at this stage of the pleading, Alvert need only show that the facts alleged, if proved, would confer standing upon him. See Steel Company v. Citizens for a Better Environment, 523 U.S. 83, 104 (1998).
Under the Copyright Act, "[t]he legal or beneficial owner of an exclusive right under a copyright is entitled . . . to institute an action for any infringement of that particular right committed while he or she is the owner of it." 17 U.S.C. § 501(b). In other words, only two types of claimants have standing to sue for copyright infringement under the Copyright Act: (1) owners of copyrights, and (2) persons who have been granted exclusive licenses by owners of copyrights. See id.; 3-12 NIMMER ON COPYRIGHT § 12.02.
In this case, Alvert has alleged facts showing its ownership rights in the "Whoomp There It Is!" and "Dazzey Duks" composition copyrights. Specifically, Alvert contends those copyrights were transferred from their original authors to Alvert in 1992-93. See Surreply at 1-3. Alvert asserts that although DM may have bought the sound recording copyrights in "Whoomp There It Is!" and "Dazzey Duks" from Bellmark's bankruptcy trustee, Alvert it is the "rightful owner" of the musical composition copyrights. Complaint ¶ 29; Response at 1. Taking Alvert's assertions as true, the court finds that Alvert has standing to bring this action against DM for copyright infringement.
4. The Declaratory Judgment Act
The Declaratory Judgment Act, 28 U.S.C. § 2201 ("DJA"), permits federal courts to "declare the rights and other legal relations of any interested party seeking such declaration." The DJA does not, however, provide an independent basis for, nor does it extend or expand, the subject matter jurisdiction of the federal courts. See Skelly Oil Company v. Phillips Petroleum Company, 339 U.S. 667, 671 (1950); Lawson v. Callahan, 111 F.3d 403, 405 (5th Cir. 1997) ("[I]t is well settled that [the DJA] does not confer subject matter jurisdiction on a federal court where none otherwise exists."). The DJA merely enlarges the range of remedies available in a matter properly before the court. See Wilton v. Seven Falls Company, 515 U.S. 277, 286-87 (1995).
28 U.S.C. § 2201 states: "In a case of actual controversy within its jurisdiction, . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought."
In this case, the court has found that the Copyright Act provides an independent jurisdictional foundation for Alvert's claims. Even though this suit otherwise satisfies subject matter jurisdictional prerequisites, however, the DJA is "an authorization, not a command" Public Affairs Associates, Inc. v. Rickover, 369 U.S. 111, 112 (1962). Thus, the court may properly consider the plaintiff's request for an order declaring that Alvert is the rightful owner of the Subject Compositions. See Complaint ¶¶ 27-31.
5. Summary
For these reasons, the motion to dismiss for lack of subject matter jurisdiction is denied.
B. Personal Jurisdiction 1. The Factual Standard: A Prima Facie Case
When a nonresident defendant moves to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing the district court's jurisdiction over the nonresident. Wilson v. Belin, 20 F.3d 644, 648 (5th Cir.), cert. denied, 513 U.S. 930 (1994); Gardemal v. Westin Hotel Company, 186 F.3d 588, 592 (5th Cir. 1999). If the district court chooses to decide the matter without an evidentiary hearing, the plaintiff may meet its burden by presenting a prima facie case for personal jurisdiction. Wilson, 20 F.3d at 648; Gardemal, 186 F.3d at 592.
The court will take the allegations of the complaint as true, except where they are controverted by opposing affidavits, and all conflicts in the facts are resolved in favor of the plaintiff. Wilson, 20 F.3d at 648; Gardemal, 186 F.3d at 592. In making its determination, the court may consider affidavits, interrogatories, depositions, oral testimony, or any combination of recognized discovery methods. Allred v. Moore Peterson, 117 F.3d 278, 281 (5th Cir. 1997), cert. denied, 522 U.S. 1048 (1998); Thompson v. Chrysler Motors Corporation, 755 F.2d 1162, 1165 (5th Cir. 1985).
2. The Legal Standard
A federal district court may exercise personal jurisdiction over a nonresident defendant if: (1) the long-arm statute of the forum state permits the exercise of personal jurisdiction over the defendant; and (2) the exercise of such jurisdiction by the forum state is consistent with due process under the United States Constitution. Revell v. Lidov, 317 F.3d 467, 469 (5th Cir. 2002); see also J.R. Stripling v. Jordan Production Company, LLC, 234 F.3d 863, 869 (5th Cir. 2000). A defendant is amenable to the personal jurisdiction of a federal court sitting in a federal question case to the same extent that it would be amenable to the jurisdiction of a state court in the same forum. Burstein v. State Bar of California, 693 F.2d 511, 514 (5th Cir. 1982) (holding that, under FED. R. CIV. P. 4(e), "a federal court, even in a federal question case, can use a state long-arm statute only to reach those parties whom a court of the state could also reach under it."). Applying state law, this court must first determine whether Texas, the forum state, could assert long-arm jurisdiction. Pedelahore v. Astropark, Inc., 745 F.2d 346, 347 (5th Cir. 1984). Because the Texas long-arm statute confers jurisdiction to the limits of the federal constitution, Access Telecom, Inc. v. MCI Telecommunications Corporation, 197 F.3d 694, 716 (5th Cir. 1999), cert. denied, 531 U.S. 917 (2000); Hall v. Helicopteros Nacionales de Colombia, S.A., 638 S.W.2d 870, 872 (Tex. 1982), rev'd on other grounds, 466 U.S. 408 (1984), the court need only concern itself with the federal due process inquiry. Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir. 1999); Ruston Gas Turbines, Inc. v. Donaldson Company, Inc., 9 F.3d 415, 418 (5th Cir. 1993); see also TEX. CIV. PRAC. REM. CODE ANN. § 17.041, et seq. (Vernon 1997) (Texas long-arm statute).
3. Due Process Requirements
Due process requires the satisfaction of two elements to exercise personal jurisdiction over a nonresident defendant: (1) the nonresident must have some minimum contact with the forum that results from an affirmative act on his part such that the nonresident defendant could anticipate being haled into the courts of the forum state; and (2) it must be fair or reasonable to require the nonresident to defend the suit in the forum state. Burger King Corporation v. Rudzewicz, 471 U.S. 462, 474-77 (1985). The Due Process Clause ensures that persons have a "fair warning that a particular activity may subject [them] to the jurisdiction of a foreign sovereign." Id. at 472 (quoting Shaffer v. Heitner, 433 U.S. 186, 218 (1977) (Stevens, J., concurring)).
(1) Minimum Contacts
To establish minimum contacts, a nonresident defendant must do some act by which it "purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253 (1958) (citing International Shoe Company v. Washington, 326 U.S. 310, 319 (1945)); see also Electrosource, Inc. v. Horizon Battery Technologies, Ltd., 176 F.3d 867, 871 (5th Cir. 1999). The unilateral activity of one asserting a relationship with the nonresident defendant does not satisfy this requirement. World-Wide Volkswagen Corporation v. Woodson, 444 U.S. 286, 298 (1980) (quoting Hanson, 357 U.S. at 253). In determining whether the exercise of jurisdiction is appropriate, the Supreme Court has considered whether a defendant's contacts with the forum state make it reasonable to require the defendant to defend the particular suit in that forum. Shaffer, 433 U.S. at 203; Quill Corporation v. North Dakota, 504 U.S. 298, 307 (1992).
Minimum contacts can be sufficient to establish two types of in personam jurisdiction over a nonresident defendant: specific jurisdiction and general jurisdiction. Specific jurisdiction exists if the cause of action is related to, or arises out of, the nonresident defendant's contacts with the forum state and those contacts meet the due process standard. Stripling, 234 F.3d at 871 (quotations and citations omitted). "Specific jurisdiction over a nonresident corporation is appropriate when that corporation has purposefully directed its activities at the forum state and the 'litigation results from alleged injuries that "arise out of or relate to" those activities.'" Alpine View Company Limited v. Atlas Copco AB, 205 F.3d 208, 215 (5th Cir. 2000) (quoting Burger King, 471 U.S. at 472; Helicopteros, 466 U.S. at 414). General jurisdiction, on the other hand, may be found when the claim is unrelated to the nonresident's contacts with the forum, but where those contacts are "continuous and systematic." Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 415-16 (1984); Alpine View, 205 F.3d at 215.
Under either a specific or general jurisdiction analysis, "the constitutional touchstone remains whether the defendant purposefully established 'minimum contacts' in the forum [s]tate." Burger King, 471 U.S. at 474 (quoting International Shoe, 326 U.S. at 316). The "purposeful availment" requirement of the minimum contacts inquiry "ensures that a defendant will not be haled into a jurisdiction solely as a result of 'random,' 'fortuitous,' or 'attenuated' contacts . . . or of the 'unilateral activity of another party or a third person.'" Id. at 475 (citations omitted). A plaintiff must establish a substantial connection between the nonresident defendant and the forum state. Jones v. Petty-Ray Geophysical, Geosource, Inc., 954 F.2d 1061, 1068 n. 9 (5th Cir.), cert. denied, 506 U.S. 867 (1992). "[W]hether the minimum contacts are sufficient to justify subjection of the non-resident to suit in the forum is determined not on a mechanical and quantitative test, but rather under the particular facts upon the quality and nature of the activity with relation to the forum state." Mississippi Interstate Express, Inc. v. Transpo, Inc., 681 F.2d 1003, 1006 (5th Cir. 1982) (emphasis added); see also Coats v. Penrod Drilling Corporation, 5 F.3d 877, 884 (5th Cir. 1993), cert. denied, 510 U.S. 1195 (1994).
(a) Specific Jurisdiction
There are three reasons for exercising specific jurisdiction over DM in this case: (1) DM consummated and performed a contract in Texas to purchase the Bellmark assets including, allegedly, the Subject Compositions; (2) DM's alleged exploitation of the Subject Compositions' composition copyrights bore fruit in Texas after DM placed the Subject Compositions into the stream of commerce; and (3) DM allegedly committed tortious infringement activity in Texas.
(i) Contracting in Texas
Alvert argues that because DM's ownership claims arise from the Bellmark bankruptcy asset purchase, DM has purposefully availed itself of "the privilege of conducting activities in Texas." See Response at 23. The court agrees.
The facts present in the instant case are analogous to the situation in Command-Aire Corporation v. Ontario Mechanical Sales and Service Inc., 963 F.2d 90, 94-95 (5th Cir. 1992). In Command-Aire, the Fifth Circuit upheld personal jurisdiction over the nonresident defendant when a contract for the sale of goods was entered into which provided for dispute resolution in Texas, the contract was performed partially in Texas, and the defendant traveled to Texas on matters related to the contract. Id. at 93-94.
The situation in Command-Aire is similar to the facts here, where DM voluntarily came to Texas during the Bellmark bankruptcy proceeding to negotiate the purchase of the Bellmark assets. The Asset Purchase Agreement — allegedly covering the Subject Compositions — specifically stated that "[a]ny dispute or controversy in connection with the performance or terms of this Agreement, . . . shall be brought in the Bankruptcy Court [of the Eastern District of Texas] which shall have exclusive jurisdiction to resolve any such dispute or controversy." See Asset Purchase Agreement ¶ 6.3. By entering this agreement, DM had reason to foresee that it could be haled into court in Texas for any dispute over the ownership of the assets allegedly purchased from the Bellmark bankruptcy trustee. Moreover, the activities undertaken by DM to procure the Bellmark assets, including any telephone conferences, faxes, mailings, or negotiations with the Trustee, serve as additional evidence of DM's voluntary entry into the Texas business market. For these reasons, the court concludes that DM's conduct is sufficient to establish that it purposefully availed itself of the privilege of conducting activities in Texas.
(ii) Stream of Commerce
Next, Alvert argues that DM is subject to personal jurisdiction in this court because DM placed the Subject Compositions into the stream of commerce with the knowledge and expectation that those compositions would reach the Texas market. See Response at 28. The court agrees."The Supreme Court has stated that a defendant's placing of its product into the stream of commerce with the knowledge that the product will be used in the forum state is enough to constitute minimum contacts." Ruston, 9 F.3d at 419 (citing World-Wide Volkswagen, 444 U.S. at 298); see also Bearry v. Beech Aircraft Corporation, 818 F.2d 370, 374 (5th Cir. 1987). "[M]ere foreseeability or awareness [is] a constitutionally sufficient basis for personal jurisdiction if the defendant's product made its way into the forum state while still in the stream of commerce." Ruston, 9 F.3d at 419. While a plurality of the Supreme Court in Asahi Metal Industries Company, Ltd. v. Superior Court of California, Solano County, 480 U.S. 102, 112 (1987), opined that personal jurisdiction over a foreign defendant under the "stream of commerce" theory should not be exercised unless "[a]dditional conduct" by that defendant could be demonstrated, "the Fifth Circuit has continued to follow the original 'stream-of-commerce' theory established in the majority opinion of World-Wide Volkswagen, and has rejected the 'stream-of-commerce-plus' theory advocated by the Asahi plurality." Ruston, 9 F.3d at 420.
The stream of commerce theory cannot, however, establish general jurisdiction in a forum. Alpine View, 205 F.3d at 216.
The Fifth Circuit has not yet resolved the question of whether activities amounting to exploitation of an allegedly infringing copyright in the stream of commerce constitute sufficient minimum contacts with the forum state to satisfy the purposeful availment requirement of the due process inquiry. Three Fifth Circuit cases, however, have touched on this issue.
First, in Ham v. La Cienega Music Company, 4 F.3d 413, 415 (5th Cir. 1993), the Fifth Circuit analyzed a stream of commerce case involving copyrights in musical recordings. The defendant, La Cienega Music Company ("La Cienega"), alleged in a letter to the plaintiff that a song to which the plaintiff owned rights, "La Grange," infringed La Cienega's copyrights on its song "Boogie Chillen" and derivatives of that song. Id. at 415. After receiving this letter from La Cienega, the plaintiff then sought a declaratory judgment that "La Grange" did not infringe on La Cienega's copyrights. Id. The court agreed that there was evidence that La Cienega had sought to exploit its song "Boogie Chillen" in Texas and that its efforts had "borne fruit in Texas" within the meaning of the stream of commerce principle. Id. at 416. The court determined, nevertheless, that resolution of the underlying action depended "solely upon whether 'La Grange' infringed copyrights owned by [the defendants]," and concluded that the plaintiff's intent to exploit his own copyrights for "Boogie Chillen" in the forum state and beyond "in no way relates to the merits of that question." Id. Therefore, the court concluded, personal jurisdiction over the nonresident defendant was lacking. Id. The court did state, however, that it "might reach a different result in an action asserting 'Boogie Chillen' as infringing the copyright on another work." Id. at 416 n. 13.
In 1948 and 1950, Bernard Besman and John Lee Hooker wrote a song entitled "Boogie Chillen" and a derivative entitled "Boogie Chillen No. 2." Ham, 4 F.3d at 414. In 1970, Hooker released another derivative of the song. Id. Besman registered all three works with the Copyright Office and, through La Cienega, holds the copyrights. Id. In 1973, the rock band ZZ Top wrote and recorded the song entitled "La Grange." Plaintiff Ham (the band's manager), acquired the rights to "La Grange" in 1973. Id. at 415.
Second, in Alpine View, 205 F.3d at 216, the Fifth Circuit analyzed a stream of commerce argument in a breach of contract and fraud action. The plaintiff, Alpine View, contended that the district court erred in refusing to exercise specific jurisdiction over two defendants under the stream of commerce theory. See id. at 215. The Fifth Circuit conceded that it has not, in its "decisions dealing with the stream-of-commerce theory, entirely foreclosed its application to cases not involving product liability claims." Id. at 216. In agreement with the district court, however, the court of appeals determined that defendants' delivery of products into the stream of commerce did "not support a finding of any connection between [the defendants'] contacts, the forum state, and [Alpine View's] causes of action." Id. According to the court, Alpine View's claims arose from the "losses they experienced as a result of [the defendants'] alleged actions vis-à-vis the [contract at issue], not as a result of any contact with a product." Id. at 216-17 (citing Ham, 4 F.3d at 416; Gulf Consolidated Services, Inc. v. Corinth Pipeworks, S.A., 898 F.2d 1071, 1073-74 (5th Cir. 1990)). Alpine View had "not asserted that the alleged misdeeds occurred in Texas, or that the [contract at issue] was negotiated or executed in Texas." Id. at 217. The court concluded that Alpine View "failed to make a prima facie showing that the 'litigation results from alleged injuries that arise out of or relate to' [the defendants'] contacts with Texas." Id. (citing Burger King, 471 U.S. at 472).
Third, in Nuovo Pignone, SpA v. Storman Asia M/V, 310 F.3d 374 (5th Cir. 2002), the Fifth Circuit noted in dicta its "reluctan[ce] to extend the stream-of-commerce principle outside the context of products liability cases." Id. at 381. "Where we have been presented with the opportunity to extend the principle to other areas such as contract or copyright, we have found the defendant's delivery of products into the stream-of-commerce to be unrelated to the cause of action." Id. (emphasis added) (citing Alpine View, 205 F.3d at 217; Ham, 4 F.3d at 416).
The Ham, Alpine View, and Nuovo opinions intimate that copyright infringement activity might, in certain circumstances, satisfy the stream of commerce test for minimum contacts. To establish personal jurisdiction under the stream of commerce test presaged by these three cases, the plaintiff would have to present a prima facie case that: (1) the defendant delivered its allegedly infringing work into the stream of commerce with the expectation that the work would make its way into the forum state, see, e.g., Ruston, 9 F.3d at 419; Bearry, 818 F.2d at 374; Alpine View, 205 F.3d at 216; and (2) there is a connection between the plaintiff's injuries, the forum state, and the defendant delivering the infringing work into the stream of commerce, see Shaffer, 433 U.S. at 204 ("[T]he relationship among the defendant, the forum, and the litigation . . . [is] the central concern of the inquiry into personal jurisdiction."); Alpine View, 205 F.3d at 216 (finding that the plaintiffs had failed to show the requisite connection between the defendants' contacts, the forum state, and the plaintiff's causes of action); Guidry v. United States Tobacco Company, Inc., 188 F.3d 619, 624-25 (5th Cir. 1999). See also, e.g., Excel Music v. Simone, No. 95-3626, 1996 WL 5708 at *5 (E.D. La. Jan. 5, 1996) (finding personal jurisdiction where, "[u]nlike the situation in Ham," the defendant's placing of at least some of the allegedly infringing "recordings into the stream of commerce in the forum state ha[d] a direct impact on the suit."). Otherwise, a copyright infringement defendant would be subject to personal jurisdiction in any forum in which a copy of the allegedly infringing work was ultimately sold by others.
In this case, Alvert has alleged facts sufficient to satisfy the stream of commerce test, permitting a finding of specific jurisdiction over DM. Alvert contends that DM, which receives sales income and royalties on each record sold, improperly sells recordings of the Subject Compositions in Texas through a distribution agreement with Ryko Distribution Partners (the "Ryko Agreement"). See Response at 9-11. The Ryko Agreement allegedly reflects DM's expectation of, and financial interest in, having its recordings distributed throughout the United States, including in Texas. Id. at 25. The Subject Compositions, according to Alvert, have been and are presently for sale on DM records in Dallas, Texas. Id.
Alvert makes reference to the Ryko Agreement in its pleadings, see Response at 9-11; however, this document is currently under seal. See Agreement Between Ryko Distribution Partners and DM Records, Inc., located in Plaintiff's Appendix at 280-90.
According to Alvert, DM seeks to exploit for profit the sound recording and composition copyrights of "Whoomp There It Is!" and "Dazzey Duks" on the broadest possible geographical basis. See Response at 9-10.
In addition, Alvert alleges that DM exploits the composition copyrights in the Subject Compositions by licensing and receiving royalty income from third parties for inclusion of those compositions on records and movies sold nationally, including in Texas. See Response at 11-13, 25-26, 32. Alvert also asserts that DM improperly licenses and receives royalties from the performance of the Subject Compositions in Texas. See id. at 26-27, 32.
Taking these facts as true, the court concludes that DM delivered its allegedly infringing recordings into the stream of commerce with the expectation that the work would make its way into Texas. The court further finds that Alvert has demonstrated a connection between the subject matter of this action — composition copyright ownership and infringement — and the distribution of recordings in Texas by DM. Accordingly, the court concludes that Alvert has made a prima facie case, under the stream of commerce test for minimum contacts, for exercising specific jurisdiction over DM.
(iii) Effects Test
Finally, Alvert asserts that DM, a nonresident, intentionally aimed tortious infringement activity into Texas by selling and performing the Subject Compositions here. See Response at 33. The court agrees.
Minimum contacts exist where a nonresident defendant expressly aims intentionally tortious activity into the forum state. See Calder v. Jones, 465 U.S. 783, 789-90 (1984); Guidry, 188 F.3d at 628 ("Even an act done outside the state that has consequences or effects within the state will suffice as a basis for jurisdiction in a suit arising from those consequences if the effects are seriously harmful and were intended or highly likely to follow from the nonresident defendant's conduct."). The Calder "effects" test applies to intentional business torts, including copyright infringement. See, e.g., Johnson v. Tuff N Rumble Management, Inc., No. 99-1374, 1999 WL 1201891 at *4 (E.D. La. Dec. 15, 1999); Realsongs v. Gulf Broadcasting Corporation, 824 F. Supp. 89, 91 (M.D. La. 1993) ("[c]opyright infringement is in the nature of a tort"); Broadcast Music, Inc. v. Hobi, Inc., Civ. A. Nos. 92-228-B, 92-657-B, 1993 WL 404152 at *2 (M.D. La. June 24, 1993) (same), aff'd, 20 F.3d 1171 (5th Cir. 1994) (table); see also Southern Mississippi Planning Development District, Inc. v. Robertson, 660 F. Supp. 1057, 1062 (S.D. Miss. 1986); Swallow Turn Music v. Wilson, 831 F. Supp. 575, 579 (E.D. Tex. 1993). Therefore, this court may base specific personal jurisdiction on a defendant's tortious infringement activity that is purposefully directed toward Texas. See Lipton v. The Nature Company, 781 F. Supp. 1032, 1035 (S.D.N.Y. 1992) (stating that copyright infringement is a commercial tort that is "deemed to take place at the point of consumer purchase."), aff'd, 71 F.3d 464 (2d Cir. 1995).
Although Calder involved the intentional tort of libel, the Fifth Circuit has held that the Supreme Court did not intend to limit its holding only to libel cases. See Guidry, 188 F.3d at 629.
The court concludes that Alvert has pled facts sufficient to show that DM intentionally aimed its allegedly tortious conduct at Texas, knowing that Alvert would feel the effects here. Alvert's allegation that DM licensed the Subject Compositions to distributors, third-party labels, and performance rights organizations for sale or performance in Texas supports a finding that DM intentionally aimed its allegedly tortious infringement activity at Texas. See, e.g., Johnson, 1999 WL 1201891 at *4-*5 (finding specific personal jurisdiction under Calder where the defendant knew the plaintiff would "feel the brunt of the injury" in Louisiana and the defendant "could reasonably foresee that its affiliate would use the licensing agreement to sell the [allegedly infringing] song in Louisiana"); Editorial Musical Latino Americana, S.A. v. Mar International Records, Inc., 829 F. Supp. 62, 64 (S.D.N.Y. 1993) ("Offering one copy of an infringing work for sale in New York, even if there is no actual sale, constitutes commission of a tortious act within the state sufficient to imbue this Court with personal jurisdiction over the infringers."); Lipton, 781 F. Supp. at 1035-36 (finding jurisdiction, in part, because a license agreement to sell products allegedly violating a copyright was arguably a tortious act entered into out of state which could reasonably have been foreseen to have consequences within the forum state); Testa v. Janssen, 482 F. Supp. 1195, 1197-98 (W.D. Pa. 1980) (finding jurisdiction in a copyright infringement action where an agreement licensing public performance rights amounted to shipping of merchandise into state). DM could have reasonably foreseen that its licensees would sell or perform those compositions in Texas, and that Alvert would feel the effects here. Therefore, the court finds that these contacts are enough to support the exercise of specific personal jurisdiction in this case.
In sum, the court bases its finding that DM is subject to specific jurisdiction in this case on three separate and independent grounds. First, DM entered into and performed, in part, a contract in Texas to purchase the Bellmark assets, which allegedly included the Subject Compositions. Second, DM's alleged exploitation of the Subject Compositions' composition copyrights bore fruit in Texas after DM placed the Subject Compositions into the stream of commerce. Third, DM allegedly committed tortious infringement activity in Texas. Accordingly, the court concludes that Alvert has presented a prima facie case that DM purposefully availed itself of the privilege of conducting activities in Texas.
(b) General Jurisdiction
Because the plaintiff is asserting that the claims in this case arise out of DM's contacts with Texas, and because the plaintiff has not alleged that DM had continuous and systematic contacts with Texas outside of these claims, see Helicopteros, 466 U.S. at 415-16, the court will not address the question of general jurisdiction.
(2) Fair Play and Substantial Justice
The due process inquiry limits the court's power to exercise personal jurisdiction over a nonresident if the exercise of jurisdiction under the circumstances would offend "traditional notions of fair play and substantial justice." International Shoe, 326 U.S. at 316 (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). The fairness factors considered by the court include: (1) the defendant's burden; (2) the forum state's interests; (3) the plaintiff's interest in convenient and effective relief; (4) the judicial system's interest in efficient resolution of controversies; and (5) the state's shared interest in furthering fundamental social policies. See Ruston Gas, 9 F.3d at 421 (citing Asahi, 480 U.S. at 112; World-Wide Volkswagen, 444 U.S. at 292). Once minimum contacts have been established, the defendant must present a compelling case that conducting the litigation in this court would be so gravely difficult and inconvenient that it would be at a severe disadvantage in comparison to the plaintiff. See Burger King, 471 U.S. at 477.
In this case, Texas has an interest in providing a forum for redressing injuries allegedly inflicted by an out-of-state actor, DM. See id. at 473 (citations omitted). Texas has an interest in adjudicating a dispute that involves defining the parameters of an Asset Purchase Agreement created and performed — at least in part — in Texas, and that allegedly involved the sale of the Subject Compositions to a purchaser, DM. Moreover, both parties have expressed a preference for litigating this matter in Texas. See Motion at 11-12; Response at 35.
DM has pointed to no burden on itself that outweighs the interests of Texas or Alvert in litigating this matter in Texas. See Gundle Lining Construction Corporation v. Adams County Asphalt, Inc., 85 F.3d 201, 207 (5th Cir. 1996). The burden on DM to defend in Texas is not unreasonable, given that DM traveled to Texas in connection with its purchase of the Subject Compositions. Furthermore, as DM consented to jurisdiction in Texas by signing the Asset Purchase Agreement, DM will not now be heard to claim that such jurisdiction violates due process. See Alms, Ltd., L.L.P. v. Guzman, No. 3:98-CV-1798-G, 1999 WL 172267 at *5 (N.D. Tex. Mar. 17, 1999). Therefore, the second prong of the due process test is satisfied; the exercise of personal jurisdiction over DM in Texas does not offend fair play and substantial justice.
4. Summary
In sum, Alvert has made a prima facie case supporting personal jurisdiction and, accordingly, this court's exercise of jurisdiction over DM is proper. The motion to dismiss for lack of personal jurisdiction if therefore denied.C. Venue
Alvert's complaint alleges that venue in this district is appropriate under both 28 U.S.C. § 1400(a) and 1391(c). Complaint ¶ 9. DM, however, asserts that this case should be dismissed for improper venue. See Motion at 5-10. Again, the court disagrees with DM.
Venue in a copyright action is governed by 28 U.S.C. § 1400(a), which provides that venue is proper in any "district in which the defendant or his agent resides or may be found." It is well established that, for purposes of Section 1400(a), a defendant "may be found" in any district in which it is subject to personal jurisdiction. See, e.g., Milwaukee Concrete Studios, Ltd. v. Fjeld Manufacturing Company, Inc., 8 F.3d 441, 445-47 (7th Cir. 1993); General Design Sign Company, Inc. v. American General Design, Inc., No. 3:02-CV-2298-H, 2003 WL 251931 at *2 (N.D. Tex. Jan. 31, 2003). Because the court has determined that it has personal jurisdiction over DM, DM "may be found" "in this district and venue is therefore proper.
Venue is also proper under 28 U.S.C. § 1391(c), which provides, inter alia, that a corporate defendant is deemed to "reside" in any district in which it is subject to personal jurisdiction at the time the action is commenced. Id. Venue in this district is therefore proper because DM is subject to personal jurisdiction here. The motion to dismiss for improper venue is accordingly denied.
D. Transfer of Venue under 28 U.S.C. § 1404(a)
When deciding whether to transfer venue, discretion must be exercised according to an "individualized, case-by-case consideration of convenience and fairness." Van Dusen v. Barrack, 376 U.S. 612, 622 (1964). Here, the court concludes that although venue is proper in the Northern District of Texas, the case should be transferred to the Eastern District of Texas, Sherman Division.
1. The Legal Standard
A district court may transfer any civil case "[f]or the convenience of parties and witnesses, in the interest of justice, . . . to any other district or division where it might have been brought." 28 U.S.C. § 1404(a). The purpose of Section 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, 376 U.S. at 616 (quoting Continental Grain Company v. Barge FBL-585, 364 U.S. 19, 26, 27 (1960)). The decision to transfer a pending case is committed to the sound discretion of the district court. Jarvis Christian College v. Exxon Corporation, 845 F.2d 523, 528 (5th Cir. 1988); see also Balawajder v. Scott, 160 F.3d 1066, 1067 (5th Cir. 1998), cert. denied, 526 U.S. 1157 (1999); Caldwell v. Palmetto State Savings Bank of South Carolina, 811 F.2d 916, 919 (5th Cir. 1987). In exercising its discretion, the court considers "all relevant factors to determine whether or not on balance the litigation would more conveniently proceed and the interests of justice be better served by transfer to a different forum." Peteet v. Dow Chemical Company, 868 F.2d 1428, 1436 (5th Cir.) (internal quotations and citations omitted), cert. denied, 439 U.S. 935 (1989).
Generally, the plaintiff is afforded some deference in choosing a forum. Time, Inc. v. Manning, 366 F.2d 690, 698 (5th Cir. 1966); Lindloff v. Schenectady International, 950 F. Supp. 183, 185 (E.D. Tex. 1996). However, the plaintiff's choice of forum has reduced significance where most of the operative facts occurred outside the district. Lindloff, 950 F. Supp. at 185; see also Robertson v. Kiamichi Railroad Company, L.L.C., 42 F. Supp.2d 651, 656 (E.D. Tex. 1999). The plaintiff's forum choice is also given less weight when the plaintiff brings suit outside its home district. Hanby v. Shell Oil Company, 144 F. Supp.2d 673, 677 (E.D. Tex. 2001); Rock Bit International, Inc. v. Smith International, Inc., 957 F. Supp. 843, 844 (E.D. Tex. 1997); Alexander Alexander, Inc. v. Donald F. Muldoon Company, 685 F. Supp. 346, 349 (S.D.N.Y. 1988).
In deciding whether to transfer a case, the court should consider (1) the convenience of the parties, (2) the convenience of material witnesses, (3) the availability of process to compel the presence of unwilling witnesses, (4) the cost of obtaining the presence of witnesses, (5) the relative ease of access to sources of proof, (6) calendar congestion, (7) where the events in issue took place, and (8) the interests of justice in general. Minka Lighting, Inc. v. Trans Globe Imports, Inc., No. 3:02-CV-2538-G, 2003 WL 21251684 at *2 (N.D. Tex. May 23, 2003); see also Gundle Lining Construction Corporation v. Fireman's Fund Insurance Company, 844 F. Supp. 1163, 1165 (S.D. Tex. 1994). Each of these factors will be analyzed to determine whether this case should be transferred.
DM explicitly asks the court to transfer venue to the Middle District of Tennessee. See Motion at 12-15; Reply at 10. Although DM argues that if venue is proper in any Texas court, it is proper in the Eastern District of Texas, see Motion 11-12; Reply at 4, DM does not specifically ask this court to transfer venue there under 28 U.S.C. § 1404(a). The factors to be considered on a § 1404(a) motion will be considered in the context of DM's motion to transfer venue to the Middle District of Tennessee, but they will also be examined with reference to a transfer to the Eastern District of Texas. See Mills v. Beech Aircraft Corporation, Inc., 886 F.2d 758, 761 (5th Cir. 1989) (stating that a court may transfer case to another district sua sponte under § 1404(a)); Republic of Bolivia v. Philip Morris Companies, Inc., 39 F. Supp.2d 1008, 1008-09 (S.D. Tex. 1999) (same).
2. Factor (1): The Convenience of the Parties
It is clear that none of the forums discussed by the parties — the Northern District of Texas, the Eastern District of Texas, or the Middle District of Tennessee — offer either party greater convenience or economic benefit. Alvert Isbell, doing business as Alvert, is a citizen of the State of Arkansas. Complaint ¶ 5. DM is a Florida corporation with its principal place of business in Florida. Id. ¶ 6. This factor thus has neutral weight in the analysis.3. Factors (2), (3), and (4): The Convenience of Material Witnesses, Availability of Process, and Cost of Obtaining Witnesses
The convenience of the witnesses is often regarded as the most important factor to be considered in deciding whether to transfer venue. Travelers Indemnity Company of America v. National Union Fire Insurance Company of Pittsburgh, Pennsylvania, No. 3:02-CV-0585-G, 2002 WL 1575409 at *2 (N.D. Tex. July 16, 2002); Gundle, 844 F. Supp. at 1166; Fletcher v. Southern Pacific Transportation Company, 648 F. Supp. 1400, 1401-02 (E.D. Tex. 1986). Of the witnesses, the convenience of the non-party witnesses is accorded the greatest weight. Travelers Indemnity, 2002 WL 1575409 at *2; Gundle, 844 F. Supp. at 1166. A party seeking a transfer for the convenience of witnesses "must specifically identify the key witnesses and outline the substance of their testimony." N2 Consulting, LLC v. Engineered Fastener Company, No. 3-02-CV-0308-BD, 2002 WL 31246770 at *3 (N.D. Tex. Oct. 2, 2002) (Kaplan, Magistrate J.) (internal quotations and citations omitted); see also AMS Staff Leasing v. Starving Students, Inc., No. 3-03-CV-0283-BD, 2003 WL 21436476 at *2 (N.D. Tex. June 18, 2003) (Kaplan, Magistrate J.).DM fails to specifically identify any potential party or non-party witness. Moreover, DM has not shown that transfer is necessary to compel the attendance of any witness, that any witness would be either unwilling or unable to travel to Texas for trial, or that the testimony of any witness is important to this case. See N2 Consulting, 2002 WL 31246770 at *3. Therefore, this factor is given no weight in the analysis.
4. Factors (5) and (7): Where the Events Took Place and Sources of Proof
A court should also consider, when deciding whether to transfer venue, where the events took place and the relative ease of access to the sources of proof. Q West Energy v. General Electric Company, No. 3:98-CV-1491-P, 1998 WL 872705 at *2 (N.D. Tex. Dec. 1, 1998). Here, the events giving rise to this case took place, in significant part, in the Eastern District of Texas. DM's grounds for asserting ownership over the Subject Compositions arise from the bankruptcy proceeding in that court. See Motion at 11-12. Moreover, there are significant questions about the extent to which, if at all, the Asset Purchase Agreement covering assets owned by Bellmark governs this action. If the Asset Purchase Agreement does apply, the Bankruptcy Court "shall have exclusive jurisdiction to resolve" this controversy. See Asset Purchase Agreement ¶ 6.3.
Alvert claims that copyright infringement is occurring in Dallas, Texas. See Response at 20. If infringement is occurring at all, however, it is occurring throughout Texas and the United States. See Response at 10 (alleging that the Subject Compositions are " distributed nationally, including in Texas" by DM) (emphasis added), and 25-26 (alleging that DM licenses and receives royalty income from third party labels for inclusion of the Subject Compositions on records sold " nationally, including in Texas") (emphasis added). In such a circumstance, one Texas venue is not favored over another.
Alvert's contention that venue should remain in the Northern District of Texas because the bankruptcy trustee and the files from the bankruptcy proceeding are located here in Dallas, see Response at 20, 36, is unpersuasive. The bankruptcy trustee is an agent and officer of the bankruptcy court, see In re Beck Industries, Inc., 725 F.2d 880, 888 (2d Cir. 1984) (noting that a bankruptcy trustee is an officer of the court); Skistimas v. Bank of America National Trust and Savings Association, 928 F.2d 409 (9th Cir. 1991) (unpublished) (same), i.e., the United States Bankruptcy Court for the Eastern District of Texas. That the Trustee's office or files are within the Northern District of Texas does not change the fact that he acts as an arm of the appointing court. Therefore, the weight of this factor favors transferring the case to the Eastern District of Texas.
5. Factor (6): Calendar Congestion
Neither party has presented arguments related to the comparative calendar congestion ( i.e., the amount of time needed to adjudicate a civil dispute) in the Northern District of Texas, the Eastern District of Texas, or the Middle District of Tennessee. This factor thus has neutral weight in the analysis. See The Whistler Group, Inc. v. PNI Corporation, No. 3:03-CV-1536-G, 2003 WL 22939214 at *4 (N.D. Tex. Dec. 5, 2003).
6. Factor (8): The Interest of Justice
The "interest of justice" component of § 1404(a) may, in itself, be determinative of the decision to allow a transfer, even where the convenience of the parties and witnesses would call for a different result. See 15 CHARLES A. WRIGHT, ARTHUR R. MILLER, EDWARD H. COOPER, FEDERAL PRACTICE PROCEDURE 2d, § 3854 (1986) at 439-40. One significant element relating to "the interest of justice" is the desire to avoid a multiplicity of litigation from a single transaction. Continental Grain Company, 364 U.S. at 25-26. Another important element is the efficient administration of the court system. See Ferens v. John Deere Company, 494 U.S. 516, 529 (1990) (stating that consideration of the interest of justice "must include the convenience of the court").
In the case sub judice, DM has shown that the bankruptcy court in the Eastern District of Texas is intimately familiar with the bankruptcy proceedings which are implicated here. Indeed, DM's claims of ownership are predicated upon that proceeding. The bankruptcy court has delved into substantive areas of the parties' claims, is familiar with the Asset Purchase Agreement at issue, and can expeditiously decide who owns the Subject Compositions. Principles of comity also counsel in favor of having the bankruptcy court construe the documents, pleadings, and orders relevant to the bankruptcy proceeding. Accordingly, the interests of efficient litigation and substantive justice all indicate that this case should be transferred to Eastern District of Texas.
Alvert asserts that a transfer is inappropriate because it would be "prejudicial to require any further delay to a court . . . unfamiliar with the issues." Response at 38. However, "[n]either the passage of time nor involvement in discovery is a reason alone for denying transfer." Mag Instrument, Inc. v. Sears Roebuck Company, No. H-8-2216, 1990 WL 124071 at *3 (S.D. Tex. Jan. 31, 1990). Although delay may be a factor, it is incumbent upon Alvert to show that it will be prejudiced by such a transfer. Id. at *4. Alvert has not made such a showing. Moreover, Alvert's argument about familiarity with the issues is disingenuous — if Alvert were truly concerned about familiarity and judicial expediency, it would have filed this case in the Eastern District of Texas.
"The preference for honoring a plaintiff's choice of forum is simply that, a preference; it is not a right." E.I. Dupont de Nemours Company v. Diamond Shamrock Corporation, 522 F. Supp. 588, 592 (D. Del. 1981). Thus, although Alvert's forum choice is clearly a factor to be considered in the venue transfer analysis, "in and of itself it is neither conclusive nor determinative." In re Horseshoe Entertainment, 337 F.3d 429, 434 (5th Cir.) (citing Garner v. Wolfinbarger, 433 F.2d 117, 119 (5th Cir. 1970)), cert. denied, ___ U.S. ___, 124 S.Ct. 826 (2003); Shoemake v. Union Pacific Railroad Company, 233 F. Supp.2d 828, 830 (E.D. Tex. 2002). Here, Alvert's choice of forum is given less weight because very few of the operative facts appear to have occurred within this district. See, e.g., Minka Lighting, 2003 WL 21251684 at *4; Dearing v. Sigma Chemical Company, 1 F. Supp.2d 660, 665 (S.D. Tex. 1998); Quicksilver, Inc. v. Academy Corporation, No. 3:98-CV-1772-R, 1998 WL 874929 at *4 (N.D. Tex. Dec. 3, 1998). Consequently, Alvert's choice of forum is not enough to outweigh the balance of the other factors discussed above that favor a transfer to the Eastern District of Texas. See Shoemake, 233 F. Supp.2d at 830-31; Hanby, 144 F. Supp.2d at 677; Robertson, 42 F. Supp.2d at 656; Rock Bit, 957 F. Supp. at 844.
III. CONCLUSION
For the foregoing reasons, DM's motion to dismiss for lack of subject matter jurisdiction, pursuant to FED. R. Civ. P. 12(b)(1), lack of personal jurisdiction, pursuant to FED. R. CIV. P. 12(b)(2), and improper venue, pursuant to FED. R. CIV. P. 12(b)(3), is DENIED.However, "the balance of convenience and justice" weighs heavily in favor of transfer. Minka Lighting, 2003 WL 21251684 at *4 (quoting State Street Capital Corporation v. Dente, 855 F. Supp. 192, 197 (S.D. Tex. 1994)). On the court's own motion, therefore, this case is TRANSFERRED, pursuant to 28 U.S.C. § 1404(a), to the United States District Court for the Eastern District of Texas, Sherman Division.
It is recommended to the transferee district court that this case be referred to the bankruptcy court.
In light of this disposition, DM's alternative motion to transfer venue to the Middle District of Tennessee and Alvert's motion for a continuance to conduct further discovery are hereby DENIED.