Summary
In Century 21, the court denied the defendant's motion to transfer venue to California, finding that to do so would merely switch the burden of litigation between the parties, and that the defendant was as able as Lyon to bear the costs of litigating away from home.
Summary of this case from Lyon Financial Services v. Reno Sparks Assoc., RealtorsOpinion
Civil No. 02-3817 (DWF/SRN)
August 29, 2003
Kevin K. Stroup, Esq., for Plaintiff
William Partridge, Esq., for Defendant/Third-Party Plaintiff
ORDER
The above entitled matter came before the undersigned United States Magistrate Judge on Defendant's Motion to Transfer Venue (Doc. No. 16). This matter has been referred to the undersigned for resolution of pretrial matters pursuant to 28 U.S.C. § 636 and Local Rule 72.1.
I. BACKGROUND
Plaintiff is a Minnesota corporation. Defendant is a California corporation. Third-Party Defendant Skipco. is a Nevada corporation. In December of 1999, Defendant entered into a Total Customer Care (TCC) lease agreement with Skipco. for the lease of a copy machine and associated services. Hans Voglmeyer, the manager of Defendant's Desert Hot Springs, California office, negotiated the TCC agreement with Zach Darr, a then existing employee of Skipco. On the same day Defendant and Skipco. signed the TCC agreement, Skipco. assigned the lease to Plaintiff. The TCC agreement contains a forum selection clause that provides:
This Agreement shall be deemed fully executed and performed in the state of Owner or holder of Owner's interest principal place of business and shall be governed by and construed in accordance with its laws. If the Owner or holder of Owner's interest shall bring any judicial proceeding in relation to any matter arising under the Agreement, the Customer irrevocably agrees that any such matter may be adjudged or determined in any court or courts in the state of the Owner or holder of Owner's interest principal place of business, or in any court or courts in Customer's state of residence, or in any other court having jurisdiction over the Customer or assets of the Customer, all al the sole election of the Owner or holder of Owner's interest. The Customer hereby irrevocably submits generally and unconditionally to the jurisdiction of any such court so elected in relation to such matters.E.g., (Pl's Mem. in Supp. of Mot. to Transfer Venue, Ex. A).
In the future, the parties shall submit an affidavit with exhibits attached thereto and indexed.
The TCC agreement provided, for the first twenty-four months, a base charge per copy of $.0563 and a base monthly minimum of 4,000 copies.Id. For months twenty-five through sixty-three, the base charge per copy remained the same, but the base monthly minimum of copies jumped to 32,861. Id. At some point, Defendant alleges that it successfully negotiated with Skipco. for an addendum to the TCC agreement to reduce its obligations for months twenty-five through sixty-three. (Dedola Decl. ¶ 9-10). A disagreement arose between the parties, Defendant allegedly defaulted under the TCC agreement, the copier was repossessed, and Plaintiff commenced a lawsuit in Lyon County District Court. Defendant promptly removed the matter to this Court and filed a third-party complaint against Skipco. Defendant now seeks to transfer the case to California pursuant to 28 U.S.C. § 1404(a).
Third-Party Defendant Skipco. has not joined in Defendant's motion and has taken no position on such motion.
I. DISCUSSION
Section 1404(a) provides:
For 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.
"Section 1404(a) accords [a] district court much discretion in deciding such motions." Terra Int'l. Inc. v. Mississippi Chem. Corp., 119 F.3d 688, 697 (8th Cir. 1997); see also Norwood v. Kirkpatrick, 349 U.S. 29, 32 (1955). "The party seeking transfer bears the heavy burden of showing that the balance of factors strongly favors the movant," United Mortgage. Corp. v. Plaza Mortgage. Corp., 853 F. Supp. 311, 315 (D. Minn. 1994), and "federal courts give considerable deference to a plaintiffs choice of forum." Terra Int'l, 119 F.3d at 695. Therefore, an order to transfer venue "should not be freely granted." In re Nine Mile Ltd., 692 F.2d 56, 61 (8th Cir. 1982).
Although the notion that a very strong showing must be made comes from Gulf Oil Corp. v. Gilbert. 330 U.S. 501 (1947), a case discussing forum non conveniens, this District still requires a strong showing that transfer is favored while cognizant of the fact that a lesser showing is required than under the doctrine of forum non conveniens. See Brockman v. Sun Valley Resorts. Inc., 923 F. Supp. 1176, 1178-80 (D. Minn. 1996);K-Tel Int'l. Inc. v. Tristar Prod. Inc., 169 F. Supp.2d 1033, 1045 (D. Minn. 2001); Graff v. Qwest Comm. Corp., 33 F. Supp.2d 1117, 1121 (D. Minn. 1999).
In deciding a motion to transfer, courts will consider three general categories of factors: (1) convenience of the parties; (2) convenience of the witnesses; and (3) the interests of justice. 28 U.S.C. § 1404 (a). Beyond these factors, a court must make "a case-by-case evaluation of the particular circumstances at hand and a consideration of all relevant factors" to arrive at an equitable decision. E.g., Terra Int'l. 119 F.3d at 691 (citing Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29(1988)).
Under the convenience of the parties factor, the "normal presumption [is] in favor of a plaintiffs choice of forum" especially "where the plaintiff resides in the district in which the lawsuit was filed." Graff v. Qwest Comm. Corp., 33 F. Supp.2d 1117, 1121 (D. Minn. 1999) (citations omitted); see also e.g. K-Tel Int'l. Inc. v. Tristar Prod. Inc., 169 F. Supp.2d 1033, 1045 (D. Minn. 2001). Moreover, transferring venue to a court that merely shifts the inconvenience from one party to another is wholly inappropriate. E.g. Terra Int'l. 119 F.3d at 696-97; Alternative Pioneering Sys. v. Direct Innovative Prods., Inc., 1992 WL 510190, *5 (D. Minn. Aug., 20, 1992). Rather, transfer should be made only to a more convenient forum for the parties, "not to a forum likely to prove equally convenient or inconvenient." Van Dusen v. Barrack, 376 U.S. 612, 646 (1964).
Under the convenience of the witnesses factor, relevant considerations include the number of non-party witnesses, the location of all witnesses, the preference of courts for live testimony as opposed to depositions, e.g. K-Tel Int'l, 169 F. Supp.2d at 1045, and other issues concerning the "relative ease of access to sources of proof." Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947). This factor, however, "should not be determined solely upon a contest between the parties as to which of them can present a longer list of possible witnesses located in the respective districts; the party seeking the transfer must clearly specify the essential witnesses to be called and must make a general statement of what their testimony will cover." Nelson v. Master Lease Corp., 759 F. Supp. 1397, 1402 (D. Minn. 1991) (citing WRIGHT ET AL. FEDERAL PRACTICE AND PROCEDURE § 3851 at 425); see also Scheidt v. Klein, 956 F.2d 963, 966 (10th Cir. 1992); NEO Corp. v. Fortistare Methane. LLC. 2001 WL 1640061, *4 (D. Minn. Sept. 6, 2001).
Under the interest of justice factor, a court may consider, among other things, the plaintiffs choice of forum, judicial economy, the parties' ability to bear the costs of litigating in each forum, obstacles to a fair trial, conflict of law issues, and advantages of having a local court determine local law. E.g. Terra Int'l, 119 F.3d at 696.
Finally, "a valid and applicable forum selection clause in a contract is `a significant factor that figures centrally in the district court's calculus.'" Id at 691 (quoting Stewart Org. Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988)). A forum selection clause, however, should not receive dispositive consideration. Stewart, 487 U.S. at 31.
A. Convenience of the Parties
Defendant argues that its business would be disrupted by a trial in Minnesota because three current employees would all have to take time off from work to attend the trial. (Dedola Decl. ¶ 18). Plaintiff argues that the same would be true if the case were transferred to California. Further, Plaintiff submits that the forum selection clause weighs heavily in favor maintaining the case in Minnesota, and its choice of forum should not be disturbed.
This factor strongly weighs against transfer. The Court does not doubt that requiring multiple employees to travel to Minnesota for a trial would disrupt Defendant's business. Plaintiff, however, may feel the same effects if the case were transferred to California. As one Court has pointedly stated:
Granted, it would be inconvenient for Century to litigate this case in New Hampshire due to the business disruption caused by having to uproot a "multitude" of employees from Ohio to New Hampshire. Certainly no less so, it would be burdensome for plaintiff to litigate in Ohio, because he would have to bear the financial burden of transporting himself and his witnesses there, as well as leaving his two jobs for the occasion. Since there is a presumption in favor of plaintiffs choice, transfer is not appropriate where its effect is merely to shift the inconvenience from one party to the other.Anderson v. Century Prod. Co., 943 F. Supp. 137, 148 (D.N.H. 1996): see also Terra Int'l. 119 F.3d at 696-97 (`"Merely Shifting the inconvenience from one side to the other, however, obviously is not a permissible justification for a change of venue.'").
Here, Plaintiff is a resident of this forum, and, therefore, Plaintiffs choice of this forum is entitled to particular deference. E.g., Graff, 33 F. Supp.2d at 1121.
In addition, the forum selection clause significantly tilts the scales against transfer. As an initial matter, the Court notes that Defendant neither disputes the validity of the forum selection clause nor the applicability of the forum selection clause to Plaintiffs claims. The forum selection clause plainly applies to Plaintiffs claim that Defendant is in default under the TCC agreement. Defendant, a commercial enterprise, signed the TCC agreement that allowed the Owner or the holder of the Owner's interest to bring suit under the agreement in the state of the Owner or the holder of the Owner's interest, and Defendant consented to the jurisdiction of such court. The TCC agreement also clearly provided that Skipco. could assign the agreement. The TCC agreement is not particularly complex-its general substantive provisions are only one page. Thus, Defendant knew that if a dispute arose concerning the TCC agreement, Skipco. or whoever held the interest in the agreement could sue Defendant in a state other than California. This was an arms-length bargain between two businesses concerning a copier, and Defendant could have bargained for more advantageous terms, and maybe did, in exchange for allowing the inclusion of the forum selection clause and/or the assignment provision. See Stewart, 487 U.S. at 29 (explaining that a court should consider "the fairness of transfer in light of the forum-selection clause and the parties' relative bargaining power"). In agreeing to the forum selection clause, Defendant agreed to the convenience or inconvenience of potentially litigating in a distant forum.
B. Convenience of the Witnesses
Defendant argues that the convenience of the witnesses favors transfer because all of the relevant witnesses reside in California, and the TCC agreement and the alleged addendum were negotiated, executed, and performed in California. Defendant states that three current employees-John Dedola, Monica Barnes, and Anthony Hail-as well as two former employees-Hans Voglmeyer and Caroline West-have knowledge of facts relevant to this lawsuit. (Dedola Decl. ¶ 14). Dedola, Barnes, Hall, and Voglmeyer all reside in California, and West is believed to reside in California. Id. ¶ 14-15. Defendant explains that Voglmeyer, a former employee of Defendant, and Zach Darr, a former Skipco. employee, were the parties that were directly involved in negotiations, and that they are outside the subpoena power of this Court.
The fact that the agreement was negotiated, executed, and performed in a certain locale is relevant in the sense that access to sources of proof may be more readily available in such locale, but otherwise such considerations are typically associated with personal jurisdiction.
Plaintiff asserts that Defendant has not established that Voglmeyer or Darr would be unwilling to travel to Minnesota to testify. Plaintiff argues that Defendant does not even know where Darr lives. Moreover, Plaintiff states that if Voglmeyer and Darr refuse to travel to Minnesota, their testimony could be presented by deposition.
This factor weighs in favor of transfer. Hans Voglmeyer was apparently the individual that negotiated the TCC agreement and its alleged addendum on behalf of Defendant. Accordingly, his testimony at trial would be especially relevant. Mr. Voglmeyer is no longer an employee of Defendant and beyond the subpoena power of this Court. It is, however, not known whether he would voluntarily come to Minnesota for a trial. Nevertheless, it would be more convenient for Mr. Voglmeyer to testify at a trial in California, and his live testimony at trial is preferred. John Dedola is an officer of Defendant and also appears to have relevant information regarding the purpose of the alleged addendum. (Dedola Decl. ¶ 6-13). The same compulsion problems, however, do not apply to Mr. Dedola.
Plaintiffs argument that "[t]he availability of deposition testimony defeats a claim of inconvenience to Defendant," (Pl.'s Mem. in Opp'n to Mot. to Transfer, at 8) (emphasis added), is simply wrong. Plaintiff cites one Minnesota state court case for this proposition. Federal courts, of course, "much prefer the presentation of live testimony to depositions." Coast-to-Coast Stores, Inc. v. Womack-Bowers, Inc., 594 F. Supp. 731, 734 (D. Minn. 1984); accord, e.g. Terra Int'l, 119 F.3d at 696-97; Graff, 33 F. Supp.2d at 1122. Thus, the availability of deposition testimony is merely a consideration in judging the convenience of the witnesses factor.
Defendant has identified three other present or former employees who "have knowledge of the facts relevant to this lawsuit." (Dedola Decl. ¶ 14). As for Ms. West, a receptionist for Defendant, and Mr. Hall, Defendant does not provide a "general statement of what their testimony will cover." Nelson. 759 F. Supp. at 1402. Defendant does not even represent that it intends to call Ms. West or Mr. Hall as witnesses at trial. As noted, the convenience of the witnesses is not gauged by which party "can present a longer list of possible witnesses located in the respective districts." Id. In regard to Ms. Barnes, she can testify about some of the terms of the TCC agreement (such as the copies required and charges per copy, all of which are apparent from the agreement itself), how much Defendant used the copier, mechanical problems with the copier, and the fact that Defendant was not aware the agreement had been assigned to Plaintiff. (Barnes Decl. ¶ 2-6). Ms. Rarnes' live testimony does not seem to be particularly essential in light of Defendant's "defense that an addendum to the agreement negates or substantially reduces Plaintiffs claim against it." (Def.'s Mem. in Supp. of Mot. to Transfer Venue, at 2).
Defendant has not presented any other defense from which to gauge the relevance of Ms. Barnes' potential testimony.
In addition, Defendant asserts that the testimony of Zach Darr, the former Skipco. employee that negotiated the TCC agreement and alleged addendum, is highly relevant. At present, however, Defendant admits that it does not know of Mr. Darr's whereabouts. Defendant believes "he may still reside in southern California." (Def.'s Mem. in Supp. of Mot. to Transfer Venue, at 7). Plaintiff and Third-Party Defendant Skipco, each of whom presumably would find Mr. Darr's testimony relevant as well, offer no guidance as to Mr. Darr's whereabouts. Thus, Mr. Darr's role in the analysis of convenience of the witnesses is essentially non-existent.
On the other hand, Plaintiff alludes to only one potential witness, Barbara Williams, who resides in Minnesota and signed the TCC agreement and assignment. Plaintiff wholly fails to provide any description of what relevant testimony Ms. Williams might offer especially when it appears that another person, Zach Darr, negotiated both the TCC agreement and alleged addendum. The record only reflects that Ms. Williams placed her signature on the documents. The Court will not speculate on the relevance of Ms. Williams' testimony.
Given that the only two key witnesses, Mr. Voglmeyer and Mr. Dedola, described by either party reside in California, this factor weighs in favor of transfer. The convenience of the witnesses does not strongly favor transfer, however, because Mr. Dedola could be forced to testify in Minnesota and Mr. Voglmeyer's willingness to voluntarily come to Minnesota for a trial is unknown. In addition, there are not other sources of proof that have some particular connection to California. This does not appear to a be a document or discovery intensive case. The TCC agreement (three pages), its alleged addendum (one page), and the parties' intentions/testimony is all that appears to be at issue
C. Interests of Justice
Defendant argues that absorbing the costs of litigating in Minnesota would be more burdensome to it than it would be for Plaintiff to litigate in California. Defendant states that it would have to pay for travel and lodging of its employees and potential non-party witnesses. Plaintiff asserts that the same would be true if it had to litigate in California.
This factor weighs against transfer. "The interest of justice factor is weighed very heavily," Graff, 33 F. Supp.2d at 1122, and a court may consider a variety of factors including the plaintiffs choice of forum, judicial economy, the parties' ability to bear the costs of litigating in each forum, obstacles to a fair trial, conflict of law issues, and advantages of having a local court determine local law. E.g. Terra Int'l, 119 F.3d at 696. Here, Plaintiffs choice of forum favors maintaining the case in this forum. There are no conflict of law issues as it appears, and neither party argues otherwise, that pursuant to the TCC agreement Minnesota law applies. Although California federal courts are certainly capable of applying Minnesota law, it is, of course, ideal to have the Court most familiar with a particular state's laws apply them. No obstacles to a fair trial in this forum have been advanced.
Finally, this case is distinguishable from a similar case involving Plaintiff. In Lyon Fin. Serv., Inc. v. Powernet. Inc., No. 01-1089, 2001 WL 1640099, at *1 (D. Minn. Nov. 19, 2001) (Tunheim, J.), the same type of copier lease was made between Skipco. and Powernet in Nevada. Skipco. assigned the lease to Lyon Financial, a dispute arose, and Lyon Financial brought suit in Minnesota against Powernet and Powernet's CEO, Patrick Colegrove. Id. The lease agreement contained the exact same forum selection clause as in the present case. Id. at *2. The Court found that the interests of justice factor weighed in favor of transfer because Lyon Financial could "better absorb the litigation and travel costs associated with suit in Nevada than can an individual defendant like Colegrove." Id. at *3. In addition, the Court found that considerations of judicial economy supported transfer because it "appear[ed]" that Skipco. lacked minimum contacts with Minnesota and had not consented to jurisdiction here. Id. at *3 n. 3. Thus, if the case were transferred to Nevada, it was more likely that all claims against all relevant parties could be resolved. Id. at *3.
The Powernet Court refers to Lyon Financial as BCL Capital. At the time, BCL Capital was a subsidiary of Lyon Financial. Id. at *1.
In the present case, Defendant is a business and no individual defendants are involved. Defendant's claims that Plaintiff can better bear the costs of litigation are without foundation. Defendant offers no evidence to compare the financial condition of each business and the Court refuses to speculate on such matters. Moreover, "[i]n today's business world, the expense of defending lawsuits, both meritorious and nonmeritorious, is an inevitable, yet unfortunate, cost of doing business which can, in turn, be defrayed by passing it on to the ultimate consumer." Anderson v. Century Prod. Co., 943 F. Supp. 137, 149 (D.N.H. 1996). Thus, this case is distinguishable from those cases where litigating in a distant forum would potentially prohibit an individual from prosecuting claims or defending against claims. See Powernet. Inc., 2001 WL 1640099, at *3; Nelson, 759 F. Supp. at 1401-02 ("The apparent inability of the plaintiff (a person without substantial personal or business assets) to litigate this action in Pennsylvania strongly suggests that this litigation is best pursued in Minnesota. Defendant is a large corporation with operations across the United States and the ability to protect its interests in this forum.").
The same analysis would apply under the convenience of the parties factor.
Judicial economy also weighs against transfer. In this case, Defendant has filed a third-party complaint against Skipco. (Doc. No. 11 and 13), and Skipco. has answered without objecting to jurisdiction (Doc. No. 12). Thus, all relevant issues can likely be resolved in this forum. Further, transferring the matter to California will only delay the resolution of this case, which is already set for trial on October 6, 2003.
Given the above, Defendant has not met its burden to show that the balance of factors strongly weighs in favor of transfer.
THEREFORE, IT IS HEREBY ORDERED that:
1. Defendant's Motion to Transfer Venue (Doc. No. 16) is DENIED.