Opinion
Civil Action No. 1:19-cv-1555
2020-03-24
NOETIC SPECIALTY INSURANCE COMPANY, Plaintiff, v. The NORTH CAROLINA MUTUAL WHOLESALE DRUG COMPANY, Defendant.
Kelly Marie Lippincott, Gordon Rees Scully Mansukhani, LLP, Alexandria, VA, for Plaintiff. Harold Edward Johnson, Williams Mullen, Richmond, VA, for Defendant.
Kelly Marie Lippincott, Gordon Rees Scully Mansukhani, LLP, Alexandria, VA, for Plaintiff.
Harold Edward Johnson, Williams Mullen, Richmond, VA, for Defendant.
ORDER
T. S. Ellis, III, United States District Judge At issue in this insurance coverage dispute is defendant's motion to transfer this matter pursuant to 28 U.S.C. § 1404(a) to the Middle District of North Carolina, the forum in which the majority of the related underlying lawsuits have been brought and the forum in which a similar insurance coverage lawsuit against defendant is currently pending. The matter has been fully briefed and thus is ripe for disposition.
For the reasons that follow, the transfer calculus mandated by 28 U.S.C. § 1404(a) points persuasively to the conclusion that this matter is appropriately transferred to the Middle District of North Carolina.
I.
Plaintiff, Noetic Specialty Insurance Company ("Noetic"), is a Vermont corporation that sells insurance. The parties dispute whether Noetic's principal place of business is Montpelier, Vermont or Chantilly, Virginia. Defendant, The North Carolina Wholesale Drug Company ("N.C. Mutual"), is a pharmaceutical distribution company incorporated and headquartered in North Carolina.
This dispute is discussed at length in Part III.A., supra.
N.C. Mutual has sought insurance coverage from Noetic in connection with forty-one lawsuits arising out of N.C. Mutual's role in the sale and distribution of opioid products in North Carolina and South Carolina. On December 11, 2019, Noetic filed the instant action in the Eastern District of Virginia seeking a declaratory judgment pursuant to 28 U.S.C. § 2201 that the insurance policy Noetic issued to N.C. Mutual does not provide coverage for any liability arising out of the underlying opioid distribution related claims against N.C. Mutual. On February 14, 2020, N.C. Mutual filed its motion to transfer this matter to the Middle District of North Carolina pursuant to 28 U.S.C. § 1404(a).
II.
The analysis under § 1404(a) is too well-settled to merit extended discussion here. As an initial matter, § 1404(a) only allows transfer to a transferee district if the case "might have been brought" in that district in the first instance. 28 U.S.C. § 1404(a). The movant must show at the threshold that personal jurisdiction and venue would have been proper in the transferee forum. See Hoffman v. Blaski , 363 U.S. 335, 342–43, 80 S.Ct. 1084, 4 L.Ed.2d 1254 (1960). And importantly, the party seeking transfer cannot overcome this hurdle simply by waiving these requirements as to itself. Id. at 343–44, 80 S.Ct. 1084. Only if § 1404(a)'s threshold requirements are met may a case be transferred "for the convenience of the parties and witnesses, [and] in the interest of justice ...." 28 U.S.C. § 1404(a).
Here, neither party disputes that personal jurisdiction and venue would be proper in the Middle District of North Carolina. N.C. Mutual is organized under North Carolina law and has its principal place of business in Durham, North Carolina. Thus, the Middle District of North Carolina has personal jurisdiction over N.C. Mutual. See Goodyear Dunlop Tires Operations, S.A. v. Brown , 564 U.S. 915, 924, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011) (a corporation's principal place of business is a basis for the exercise of general jurisdiction). Moreover, the Middle District of North Carolina is an appropriate venue for this matter pursuant to 28 U.S.C. § 1391(b)(1). Title 28 U.S.C. § 1391(b)(1) provides that a civil action may be brought "in a judicial district in which any defendant resides." N.C. Mutual maintains its principal place of business in the Middle District of North Carolina, and thus resides within that district. See 28 U.S.C. § 1391(c)(2) (a defendant corporation resides in any district in which it is subject to personal jurisdiction). Accordingly, venue is proper in the Middle District of North Carolina pursuant to § 1391(b)(1).
Specifically, the parties do not dispute whether the Middle District of North Carolina has personal jurisdiction and venue over defendant N.C. Mutual, but the parties do dispute whether the Middle District of North Carolina has personal jurisdiction and venue with respect to plaintiff Noetic. In this respect, the parties' dispute is meritless.
One scholar has argued that whether the transferee court has jurisdiction over the plaintiff should be relevant to the § 1404(a) analysis. See Scott Dodson, Plaintiff Personal Jurisdiction and Venue Transfer , 117 Mich. L. Rev. 1463, 1464-67 (2019) (arguing that personal jurisdiction protects plaintiffs in venue-transfer cases). But that argument ignores the text of the statute, which allows transfer to a court where the case "might have been brought." 28 U.S.C. § 1404(a) ; see also In re Genentech , 566 F.3d 1338, 1346 (Fed. Cir. 2009) ("There is no requirement under § 1404(a) that a transferee court have jurisdiction over the plaintiff or that there be sufficient minimum contacts with the plaintiff; there is only a requirement that the transferee court have jurisdiction over the defendants in the transferred complaint." (citing Hoffman v. Blaski , 363 U.S. 335, 343-44, 80 S.Ct. 1084, 4 L.Ed.2d 1254 (1960) )). Moreover, the remaining requirements of § 1404(a), namely the convenience of the parties and the interest of justice, address the concern that a plaintiff would be subject to an inappropriate forum via transfer. Nor is there any doubt in this case that plaintiff could have brought this suit in North Carolina or that plaintiff would be subject to jurisdiction in North Carolina. Here, plaintiff explicitly agreed to "submit to the jurisdiction of a court of competent jurisdiction within the United States of America" in the insurance policy at issue in this case. Dkt. 1-3, at p. 32. Moreover, plaintiff has had substantial contacts with North Carolina related to this action, namely the insurance policy was issued pursuant to North Carolina law and was procured by an insurance broker in North Carolina. See Dkt. 1-3, at 6, 41. Accordingly, there is no doubt that the threshold requirement of § 1404(a) has been met in this case.
III.
Where, as here, § 1404(a)'s threshold requirements are satisfied, a district court may transfer a civil action to any other appropriate district court "for the convenience of parties and witnesses, [and] in the interest of justice ...." 28 U.S.C. § 1404(a). The decision whether to transfer is committed to the sound discretion of the district court. Southern R. Co. v. Madden , 235 F.2d 198, 201 (4th Cir. 1956). In determining whether to grant a motion to transfer under § 1404(a), a court considers and balances a variety of factors, including (i) the weight accorded to plaintiff's choice of venue; (ii) witness convenience and access; (iii) convenience of the parties; and (iv) the interest of justice. See Trustees of the Plumbers & Pipefitters Nat. Pension Fund v. Plumbing Servs., Inc. , 791 F.3d 436, 444 (4th Cir. 2015) ; see also U.S. Ship Mgmt., Inc. v. Maersk Line, Ltd. , 357 F. Supp. 2d 924, 936 & n. 28 (E.D. Va. 2005).
For a convenient summary of all the factors relevant to the § 1404(a) transfer analysis and the cases discussing these factors, see Questions as to convenience and justice of transfer under forum non conveniens provision of Judicial Code , 1969 WL 20096, 1 A.L.R. Fed. 15 (1969).
A.
In balancing the relevant factors, there is "ordinarily a strong presumption in favor of the plaintiff's choice of forum." Piper Aircraft Co. v. Reyno , 454 U.S. 235, 255, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981). But this principle is not conclusive; a plaintiff's choice of forum is not entitled to substantial weight if the plaintiff chooses a foreign forum, or the cause of action bears little or no relation to that forum. U.S. Ship Mgmt., Inc. , 357 F. Supp. 2d at 936.
In this respect, the parties dispute whether Virginia is Noetic's home forum. Noetic argues that Virginia is its home forum because Noetic's main administrative office is located in Chantilly, Virginia and because Noetic avers that the Chantilly, Virginia office is the nerve center for the day-to-day operations related to its "Life Sciences" policies, including the policy at issue here. N.C. Mutual counters that the policy at issue explicitly identifies Montpelier, Vermont as Noetic's "home office", that Noetic's quarterly financial statements identify Noetic's "Statutory Home Office" as located in Vermont, and that its quarterly financial statements provide that Noetic adheres to rules prescribed by the Vermont Commissioner of Insurance.
On this record, Noetic's home forum is Vermont, the state in which it is incorporated and where its home office is located. Although Noetic avers that its Virginia office is the company's nerve center for its "Life Sciences" policies, a corporation has only a single nerve center, not a nerve center for each of its business segments. See Hertz Corp. v. Friend , 559 U.S. 77, 93, 130 S.Ct. 1181, 175 L.Ed.2d 1029 (2010) ("A corporation's ‘nerve center,’ usually its main headquarters, is a single place."). Accordingly, although Noetic has an office in Virginia, Noetic's choice of forum receives less deference because Noetic has not brought suit in its home forum of Vermont.
Moreover, "the plaintiff's choice [of forum] is entitled to less weight where there is little to connect the chosen forum with the cause of action." Bd. of Trustees, Sheet Metal Workers Nat. Fund v. Baylor Heating & Air Conditioning, Inc. , 702 F. Supp. 1253, 1256 (E.D. Va. 1988). Here, the claim at issue is more closely tied to North Carolina than Virginia. The vast majority of the underlying opioid distribution related suits against N.C. Mutual have been brought by North Carolina plaintiffs. Thus, the underlying events for which coverage is sought primarily took place in North Carolina. See TRAVCO Ins. Co. v. Ward , 2010 WL 11570116 *2 (E.D. Va. 2010) ("[I]n an insurance coverage action, to establish venue via [ § 1391(b)(2) ], a court looks to the underlying events for which coverage is sought."). Moreover, the insurance policy in dispute was issued in North Carolina pursuant to North Carolina law. Accordingly, the overwhelming majority of events that give rise to this litigation occurred in North Carolina, and this is a further reason that Noetic's choice of forum of Virginia is not entitled to substantial weight.
This suits against N.C. Mutual include over seventy suits filed by North Carolina plaintiffs, thirty-eight suits filed by South Carolina plaintiffs, and three suits filed by Virginia plaintiffs. See Dkt. 12, at 2 n.2. While three suits have been filed against N.C. Mutual by Virginia plaintiffs, Noetic only seeks declaratory relief in this action for the underlying claims brought against N.C. Mutual in North Carolina and South Carolina, not the claims brought in Virginia. See Dkt. 14-2, ¶¶ 14-16.
Because Vermont is Noetic's home forum and because North Carolina has a significantly greater connection to the underlying claims at issue, plaintiff's choice of forum is entitled to less deference than it is typically accorded. See Convergence Techs. (USA) LLC v. Microloops Corp. , 711 F. Supp. 2d 626, 641-42 (E.D. Va. 2010) ("[W]hether Virginia has a substantial connection to the events giving rise to the litigation remains, at best, unclear, and therefore [plaintiff's] choice of its home forum should receive less deference than it is typically accorded."). Accordingly, there is no presumption in favor of Noetic's choice of forum in this case.
B.
The convenience of the parties and witnesses is the next § 1404(a) factor to consider. Importantly, the purpose and function of § 1404(a) is not to "shift the balance of inconvenience" from defendant to plaintiff. See Smithfield Packing Co., Inc. v. V. Suarez & Co., Inc. , 857 F. Supp. 2d 581, 589 (E.D. Va. 2012) ; Board of Trustees, Sheet Metal Workers Nat. Fund v. Baylor Heating & Air Conditioning, Inc. , 702 F. Supp. 1253, 1259 (E.D. Va. 1988). In this respect, insurance coverage disputes often do not require much discovery or witness testimony. N.C. Mutual, however, argues that fact witness testimony may be necessary in this case because the complaint alleges that "N.C. Mutual had prior knowledge of the alleged harm posed by the opioid epidemic" and Noetic is not obligated to provide coverage because of N.C. Mutual's prior knowledge. Dkt. 1, at ¶¶ 59-68. To the extent such testimony is necessary, N.C. Mutual has provided the names and business addresses of potential witnesses, and these potential witnesses work in the Middle District of North Carolina. Accordingly, the convenience for witnesses weighs slightly in favor of N.C. Mutual in this case, but it is not a significant factor given that the nature of this claim requires few, if any, witnesses.
See Westfield Ins. Co. v. Nautilus Ins. Co. , 154 F. Supp. 3d 259, 264 (M.D.N.C. 2016) ("The duty to defend is generally determined by analyzing the pleadings in the underlying lawsuit. To determine whether circumstances give rise to a duty to defend, ... ‘the pleadings are read side-by-side with the policy.’ ") (quoting Waste Mgmt. of Carolinas, Inc. v. Peerless Ins. Co. , 315 N.C. 688, 340 S.E.2d 374, 377 (1986) ).
C.
The third major factor considered in the § 1404(a) analysis is the interest of justice. The interest of justice consideration is focused on "systemic integrity and fairness." Stewart Org., Inc. v. Ricoh Corp. , 487 U.S. 22, 30, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988). In this respect, the interest of justice includes such factors as the pendency of a related action, the fairness interest in having local controversies decided at home, and the court's familiarity with the applicable law. See U.S. Ship Mgmt., Inc. v. Maersk Line, Ltd. , 357 F. Supp. 2d 924, 937 (E.D. Va. 2005).
Here, N.C. Mutual is already engaged in litigation in the Middle District of North Carolina with a different liability insurer related to insurance policy coverage for liability arising out of the opioid distribution litigation. North Carolina law governs both this case and the pending insurance coverage litigation in North Carolina because the policies at issue were delivered in North Carolina. See Res. Bankshares Corp. v. St. Paul Mercury Ins. Co. , 407 F.3d 631, 635 (4th Cir. 2005) (holding that the substantive law of the state in which policy was delivered applies to the interpretation of an insurance policy). Although federal courts are qualified and required to apply any state's law in certain cases, it is reasonable to conclude that federal courts in North Carolina have a greater familiarity with the application of North Carolina state law to insurance policies delivered in North Carolina than do federal courts in other states. Thus, the risk of inconsistent applications of North Carolina law to determine the coverage, if any, that various insurance policies provide for liability arising out of the underlying opioid distribution cases is greater if the cases are litigated in different states. See id. ("The interest of justice weighs heavily in favor of transfer when related actions are pending in the transferee forum."). Accordingly, the pending insurance coverage litigation against N.C. Mutual in the Middle District of North Carolina and the fact that North Carolina law governs both that case and this case weigh heavily in favor of the transfer of this litigation to the Middle District of North Carolina.
See, e.g., Board of Trustees, Sheet Metal Workers Nat. Fund v. Baylor Heating & Air Conditioning, Inc. , 702 F. Supp. 1253, 1260 n.24 (E.D. Va. 1988) (collecting cases); Fairfax Dental (Ireland) Ltd. v. S.J. Filhol Ltd. , 645 F. Supp. 89, 92 (E.D.N.Y. 1986) ("The pendency of a related case in the proposed transferee forum is a powerful reason to grant a motion for a change of venue") (quoting Supco Automotive Parts, Inc. v. Triangle Auto Spring Co. , 538 F. Supp. 1187, 1192 (E.D. Pa. 1982) ); Schneider v. Sears , 265 F. Supp. 257, 266 (S.D.N.Y. 1967) ("There is a strong policy favoring litigation of related claims in the same tribunal ...."); 17 James Wm. Moore et al., Moore's Federal Practice § 111.13[1][o] (3d ed. 2004) (collecting cases).
Moreover, the fairness interest in having local controversies decided at home weighs in favor of transfer here. See Heinz Kettler GMBH & Co. v. Razor USA, LLC , 750 F. Supp. 2d 660, 669-70 (E.D. Va. 2010). North Carolina has a greater interest in this litigation than Virginia. The majority of the plaintiffs in the underlying litigation are public entities in, and residents of, North Carolina. N.C. Mutual is a North Carolina company, and the majority of its customers are independent pharmacies in North Carolina. The insurance policy at issue was delivered in North Carolina with state-specific endorsements. Conversely, very few of the underlying plaintiffs reside in Virginia, Noetic has not sought declaratory relief in this action with respect to the Virginia plaintiffs' claims against N.C. Mutual, and Noetic is "neither licensed nor regulated by the Virginia Bureau of Insurance." Dkt. 14-7. Accordingly, the fairness interest in having local controversies decided at home weighs in favor of transfer to the Middle District of North Carolina where, as here, the transferee court has a significantly greater interest in the litigation.
In sum, the interest of justice weighs in favor of transfer where, as here, there is pending related litigation in the transferee court, the transferee court has a significantly greater local interest in the dispute, and the transferee court has more familiarity with the applicable law.
Courts should be cautious not to overturn plaintiff's choice of forum where the § 1404(a) calculus is uncertain. A plaintiff has the right to choose the forum in which to bring suit, and Congress permits transfer from plaintiff's choice of forum only in certain limited circumstances. Here, the § 1404(a) calculus points persuasively to the conclusion that transfer is appropriate.
Accordingly,
It is hereby ORDERED that defendant's motion to transfer venue of this matter pursuant to 28 U.S.C. § 1404(a) (Dkt. 11) is GRANTED. The matter is appropriately TRANSFERRED to the Middle District of North Carolina pursuant to 28 U.S.C. § 1404(a).