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refusing to sever a case where venue was proper as to some claims given that all of the claims "ar[o]se from the same underlying set of facts" and "[b]reaking case into separate pieces would create additional costs for the parties and for the courts"
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Civ. No. 02-3994 (JEL/JGL)
February 24, 2003
Sarah Crippen Madison, Esq., Best Flanagan LLP, appeared for Plaintiff Quality Improvement Consultants, Inc.
Patrick C. Summers, Esq., Mackall, Crounse Moore, plc, appeared for Defendants Ralph Williams, Cooliemon, LLC, and Alan S. Koch.
ORDER
This is an action by a consulting and training company, Quality Improvement Services, Inc. (QIC), against two of its former independent contractors, Ralph Williams and Alan Koch, and a consulting and training company created by Williams, Cooliemon, LLC (Cooliemon). QIC asserts claims under federal law for copyright infringement and service mark infringement, as well as several claims under state law. Before the Court is a motion by the defendants to dismiss for lack of personal jurisdiction or improper venue. In the alternative, the defendants seek to transfer the action to the United States District Court for the Western District of Pennsylvania, or to stay the action pending the resolution of a similar action in Pennsylvania state court. For the reasons given below, the Court transfers the action to the Western District of Pennsylvania.
I. SUBJECT MATTER JURISDICTION
The Court has jurisdiction over QIC's federal law claims pursuant to 28 U.S.C. § 1331, 1338 (2000), and over its state law claims pursuant to 28 U.S.C. § 1332(a)(1), 1367(a) (2000).
II. BACKGROUND
QIC is a corporation engaged in the business of providing "quality and process improvement consulting services and training to businesses." (Olson Aff. ¶ 2.) The president of QIC, Timothy Olson, moved from Pennsylvania to Minnesota in April 1994. (Id. at ¶ 4.) Olson operated QIC as a Minnesota sole proprietorship from April 1994 until October 1997, and as a Minnesota corporation from October 1997 until the summer of 2001. (Id.) In June 2001, QIC merged with a Nevada corporation, and in August 2001, Olson moved QIC's principal place of business to California. (Id. at ¶ 16.) QIC is a citizen of Nevada and California, and Olson is a citizen of California. (See id.)
Williams and Koch are citizens of Pennsylvania. (See Williams Aff. ¶ 1; Koch Aff. ¶ 1.) Williams began working for QIC as an independent contractor in 1996, providing training and consulting services to QIC's customers in Minnesota and in other states. (Olson Aff. ¶ 5.) In October 1997, Williams and QIC formalized their relationship by executing a professional services agreement (id. at ¶ 6), and they executed a second professional services agreement in Minnesota in May 1999 (id. at ¶ 7). Williams continued to provide services to QIC's customers until early 2002. (Id. at ¶ 21.)
Koch and QIC executed a professional services agreement in September 1999, pursuant to which Koch agreed to work for QIC as an independent contractor, providing consulting and training services to QIC's customers. (Id. at ¶ 9.) Koch's relationship with QIC ended in early 2002. (Id. at ¶ 21.)
In 2001 or early 2002, Williams formed Cooliemon, a Pennsylvania limited liability company, which provides consulting and training services and products to businesses. (Cooliemon Aff. ¶¶ 2-3; Olson Aff. ¶ 22.) Williams is the president and sole member of Cooliemon. (Cooliemon Aff. at ¶ 1.) Unlike Williams and Koch, Cooliemon has never had a business relationship with QIC, and has not had any contacts with QIC.
In June 2002, Williams filed, but did not serve, an action against QIC and Olson in Pennsylvania state court. (Madison Aff. ¶ 2, Ex. A.) Williams sought damages for breach of contract and unjust enrichment based on QIC and Olson's alleged failure to pay him for services he provided to QIC's customers. He also sought a declaratory judgment that certain noncompetition provisions found in his professional service agreements were unenforceable or, in the alternative, that he had not violated the noncompetition provisions, and an injunction preventing QIC and Olson from taking any action to enforce the noncompetition provisions.
QIC filed this action on October 8, 2002, alleging that Williams and Koch violated the noncompetition provisions of their professional services agreements, and that Williams, Koch, and Cooliemon misused information and intellectual property that Williams and Koch had obtained during their relationships with QIC. On October 23, 2002, approximately two weeks after QIC commenced this action, Williams filed an Amended Complaint in the Pennsylvania state court action which, among other things, added Koch as a plaintiff. (Id. at ¶ 3.) Koch did not assert any claims for damages, but he did join Williams in seeking declaratory and injunctive relief with respect to the noncompetition provisions. QIC and Olson were served with the Amended Complaint on October 28, 2002. (Id.)
In November 2002, QIC and Olson filed a petition to compel arbitration in the Pennsylvania state court action. The petition was based on an arbitration provision found in all of the professional services agreements, which stated in relevant part: All disputes arising out of this contract, or with respect to its effectiveness, shall, if a mutual settlement cannot be reached (e.g., mediation), be decided by arbitration barring ordinary legal proceedings. . . . The arbitration shall be conducted either via electronic medium or in person in the Minneapolis/St. Paul, MN, metro area. The laws of the State of Minnesota shall be applicable.
On January 14, 2003, the Pennsylvania state court granted the petition and ordered a stay of Williams's breach of contract and unjust enrichment claims pending the arbitration decision.
The parties disagree as to the effect of the Pennsylvania state court's decision. According to QIC, the entire action will be decided by arbitration. According to Williams and Koch, the only issue to be decided by arbitration is whether the noncompetition provisions are enforceable.
III. DISCUSSION
A. Personal JurisdictionWilliams, Koch, and Cooliemon move to dismiss this action for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2). To survive this motion, QIC must make a prima facie showing of personal jurisdiction. Stevens v. Redwing, 146 F.3d 538, 543 (8th Cir. 1998); Digi-Tel Holdings, Inc. v. Porteq Telecomms. (PTE), Ltd., 89 F.3d 519, 522 (8th Cir. 1996). For purposes of a prima facie showing, the Court must view the evidence in the light most favorable to QIC, and must resolve all factual conflicts in QIC's favor. Digi-Tel, 89 F.3d at 522; Dakota Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir. 1991).
The Court can exercise personal jurisdiction over a nonresident defendant if (1) Minnesota's long-arm statute, Minn. Stat. § 543.19 (2002), is satisfied and (2) the exercise of personal jurisdiction does not offend due process. Guinness Import Co. v. Mark VII Distribs., Inc., 153 F.3d 607, 613-14 (8th Cir. 1998); Minn. Mining Mfg. Co. v. Nippon Carbide Indus. Co., 63 F.3d 694, 696-97 (8th Cir. 1995). Because Minnesota's long-arm statute extends the personal jurisdiction of Minnesota courts as far as due process allows, In re Minn. Asbestos Litig., 552 N.W.2d 242, 246 (Minn. 1996); Marquette Nat'l Bank of Minneapolis v. Norris, 270 N.W.2d 290, 294 (Minn. 1978), the two requirements collapse into one, and the Court need only determine whether the exercise of personal jurisdiction comports with due process, Guinness Import, 153 F.3d at 614; Minn. Mining Mfg., 63 F.3d at 697.
A court's assertion of personal jurisdiction over a nonresident defendant satisfies due process when the defendant has "certain minimum contacts" with the forum state "such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). Minimum contacts exist when "the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). It is "essential . . . that there be some act by which the defendant purposefully avails itself of the privileges 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). In contrast, contacts that are merely "random," "fortuitous," "attenuated," or that are the result of "unilateral activity of another party or a third person" will not support personal jurisdiction. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985).
Once it has been decided that a defendant purposefully established minimum contacts with the forum state, the contacts must be considered in light of other factors to determine whether the assertion of personal jurisdiction comports with "fair play and substantial justice." Burger King, 471 U.S. at 476. The five factors to consider are: (1) the nature and quality of the contacts; (2) the quantity of the contacts; (3) the relation between the contacts and the action; (4) the forum state's interest in the litigation; and (5) the convenience of the parties. Digi-Tel, 89 F.3d at 522-23; Aftanase v. Econ. Baler Co., 343 F.2d 187, 197 (8th Cir. 1965). The last two factors are of secondary importance and are not determinative. Guinness Import, 153 F.3d at 614; Minn. Mining Mfg., 63 F.3d at 697. The third factor is used to distinguish specific jurisdiction from general jurisdiction. Burlington Indus., Inc. v. Maples Indus., Inc., 97 F.3d 1100, 1102 (8th Cir. 1996); Digi-Tel, 89 F.3d at 522 n. 4. Specific jurisdiction refers to the exercise of personal jurisdiction over a defendant in an action arising out of or related to the defendant's contacts with the forum. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n. 8 (1984). General jurisdiction refers to the exercise of personal jurisdiction over a defendant in an action not arising out of or related to the defendant's contacts with the forum. Id. at 414 n. 9. General jurisdiction is proper only when the defendant's contacts with the forum state are "continuous and systematic." Id. at 416.
In this case, QIC argues that Williams, Koch, and Cooliemon are subject to specific and general jurisdiction. The Court will consider each defendant in turn. See Calder v. Jones, 465 U.S. 783, 790 (1984) ("Each defendant's contacts with the forum State must be assessed individually.").
1. Williams
Williams's six-year relationship with QIC began in 1996, when Williams and Olson first entered discussions about the possibility of Williams serving as an independent contractor for QIC. (Olson Aff. ¶ 5.) Williams worked on "a few" projects for QIC in 1996 (id.), including a project that required him to travel to Chaska, Minnesota, to provide services to FSI, Inc., one of QIC's Minnesota-based customers (id. at ¶ 19). Williams and QIC entered the first of two professional services agreements in October 1997, pursuant to which QIC hired Williams as an independent contractor. (Id. at ¶ 5.) The professional services agreement's arbitration provision stated that all disputes arising out of the contract or relating to its effectiveness would be arbitrated in Minnesota under Minnesota law.
Williams traveled to Minnesota twice in 1999 to provide services to QIC's customers, with each trip lasting at least five days. (Id. at ¶ 19.) Williams and Olson signed a second professional services agreement on May 6, 1999, when Williams was in Shoreview, Minnesota, performing work for Deluxe Corporation, another of QIC's Minnesota-based customers. (Id. at ¶ 7.) Like the first agreement, the second provided for arbitration in Minnesota under Minnesota law of all disputes arising out of the contract or relating to its effectiveness. On the same day and at the same location, Williams and Olson signed a Statement of Work that described the services Williams was to provide to Deluxe Corporation. (Id.) Williams and Olson discussed the Deluxe Corporation project and the need to revise Williams's first professional services agreement for at least one month prior to May 6, 1999. (Id.)
Throughout his service as an independent contractor for QIC, Williams engaged in frequent contacts with Olson in Minnesota by telephone and e-mail. (See Williams Aff. ¶ 14; Olson Aff. ¶ 17.) He also visited QIC's office in Minnesota once or twice, and he "spent a great deal of time discussing business and doing work" with Olson during those visits. (Olson Aff. ¶ 19.) All of Williams's work assignments came from QIC in Minnesota, as did the approximately $414,000 he received from QIC in exchange for his work. (Id. at ¶¶ 17-18.)
These facts demonstrate that Williams purposefully directed his activities at QIC, a Minnesota corporation, as well as a number of QIC's Minnesota-based customers. These contacts were not random, fortuitous, or attenuated, nor were they result of the unilateral activity of another party or a third person. Rather, they were the result of Williams's deliberate decision to enter a business relationship with QIC. Williams derived a substantial commercial benefit from this relationship, as evidenced by his receipt of more than $410,000 over approximately six years. Furthermore, by agreeing to arbitrate disputes in Minnesota under Minnesota law, Williams strengthened his connection to Minnesota and ensured that his activities would receive the benefits and protections of Minnesota law.
QIC's claims are related to Williams's contacts with Minnesota, in that they are all predicated on Williams's alleged violations of his contracts with QIC and his alleged misuse of information and intellectual property he obtained during his relationship with QIC. For these reasons, the Court concludes that QIC has made a prima facie showing of specific jurisdiction over Williams, and it therefore denies the motion to dismiss QIC's claims against Williams for lack of personal jurisdiction.
2. Koch
Viewing the record in the light most favorable to QIC, the Court concludes that QIC has also carried its burden of making a prima facie showing of specific jurisdiction over Koch. Like Williams, Koch deliberately reached out beyond his home state of Pennsylvania and became an independent contractor of a Minnesota corporation. Their relationship lasted for approximately two-and-one-half years (id. at ¶¶ 9, 21), and Koch derived a substantial commercial benefit from his contacts with QIC, receiving more than $75,000 in exchange for the services he provided to QIC's customers (id. at ¶¶ 17, 18). Those customers were located in Iowa and Virginia (Koch Aff. ¶¶ 13, 15), but all of the work assignments and payments came from QIC in Minnesota (Olson Aff. ¶ 17). In addition, during his tenure as an independent contractor, Koch traveled to QIC's office in Minnesota at least once to discuss business with Olson (id. at ¶ 20), engaged in marketing efforts in Minnesota (id.), and frequently contacted Olson in Minnesota by telephone and e-mail (see Koch Aff. ¶ 17; Olson Aff. ¶ 17). The presence of the arbitration provision in Koch's professional services agreement reinforced his deliberate affiliation with Minnesota. QIC's claims against Koch are related to his contacts with QIC in Minnesota, as they are based on his alleged failure to abide by the terms of his personal services agreement and his alleged misuse of information and intellectual property he obtained from QIC. Based on these considerations, the Court denies the motion to dismiss QIC's claims against Koch for lack of personal jurisdiction.
3. Cooliemon
QIC makes two arguments in support of its position that Cooliemon is subject to personal jurisdiction. First, it claims that Cooliemon has purposefully directed its activities toward Minnesota residents by marketing its services and offering publications for sale through its website. To determine whether personal jurisdiction is proper based on Cooliemon's Internet activity, the Court assesses the nature and quality of the activity using the "sliding scale" approach established in Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, 1124 (W.D. Pa. 1997). See Multi-Tech Sys., Inc. v. VocalTec Communications, Inc., 122 F. Supp.2d 1046, 1050-51 (D.Minn. 2000) (applying Zippo's sliding scale approach). That approach divides commercial Internet activity into three general areas along a spectrum. At the active end of the spectrum, the defendant clearly does business over the Internet, entering into contracts with residents of the forum State that involve "knowing and repeated transmission of computer files." Zippo, 952 F. Supp. at 1124. Activity at the active end of the spectrum generally supports personal jurisdiction. Id. At the passive end of the spectrum, the defendant merely posts information on a website that is accessible to users in the forum State. Id. Activity at the passive end of the spectrum does not support personal jurisdiction. Id. The middle of the spectrum is occupied by interactive websites that permit users to exchange information with a host computer. Id. Whether activity that falls mid-spectrum supports personal jurisdiction depends on "the level of interactivity and [the] commercial nature of the exchange of information." Id.
Cooliemon's website advertises its services and offers publications for sale. (Olson Aff., Ex. C.) Users can purchase the publications online by submitting their billing, shipping, and credit card information, or they can print an order form and send it to Cooliemon by fax. (Id.) Relying on two decisions from this district, Multi-Tech and Mulcahy v. Cheetah Learning LLC, Civ. No. 02-791, 2002 WL 31053211 (D.Minn. Sept. 4, 2002), QIC argues that Cooliemon is subject to personal jurisdiction due to these interactive features. In Multi-Tech, the court exercised jurisdiction over an Israeli corporation in a patent infringement action, in part because the corporation's website allowed Minnesota residents to download the defendant's allegedly infringing software product after registering and entering a software licensing agreement with the defendant online. 122 F. Supp.2d at 1048. It appears that Minnesota residents actually had downloaded the software from the defendant's website. The court noted, for example, that one of the arguments made by the plaintiff was that "Minnesotans can [download] and have downloaded" the software. Id. at 1049 (emphasis added). The court also stated:
"[i]f the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet computer network, personal jurisdiction over defendant is proper." Zippo, 952 F. Supp. at 1124. Here, there has been no discovery to date of knowing and repeated transmissions of . . . software from [the defendant's] website to Minnesota residents.
Id. at 1050. The court's emphasis of the word "repeated" suggests that transmissions had occurred, but that the transmissions were relatively few in number.
In Mulcahy, the court exercised specific jurisdiction over a Connecticut company that provided examination preparation courses and material in a copyright infringement action. 2002 WL 31053211, at *3-4. The court's decision was based in part on the fact that the defendant had advertised a course to Minnesota residents through its interactive website, id. at *3, and in part on the fact that the defendant had sold tickets to Minnesota residents for a course to be held in Minnesota, id. at *3-4. It is not clear whether those sales took place through the defendant's website or through more traditional means of exchange. In any event, in both Multi-Tech and Mulcahy, the nonresident defendant's contacts with Minnesota extended beyond the existence of an interactive website offering goods or services to Minnesota residents to include actual transactions and exchanges of information with Minnesota residents.
In this case, there is no evidence that Cooliemon engaged in any transaction or exchange of information with a Minnesota resident through its website. (See Cooliemon Aff. ¶¶ 4-5.) Thus, while it is somewhat difficult to pinpoint Cooliemon's position on Zippo's spectrum, it is safe to say that Cooliemon's contacts with Minnesota are less than those of the defendants in Multi-Tech and Mulcahy. More to the point, the nature and quality of Cooliemon's Internet activity places it on that part of the spectrum that does not support the exercise of personal jurisdiction. If Cooliemon's website, standing alone, were enough to satisfy International Shoe's "minimum contacts" standard, then due process would impose little restraint on the Court's ability to exercise jurisdiction over every e-commerce entrepreneur who offers goods or services for sale online. The Court is not willing to interpret due process so narrowly, and it therefore concludes that QIC has failed to make a prima facie showing of personal jurisdiction over Cooliemon on the basis of its Internet activity.
QIC's second argument is based on the theory that Williams acted both as an individual and in his capacity as president and owner of Cooliemon when he engaged in contacts with Minnesota, and that, as a result, Williams's contacts with Minnesota should also be counted as contacts by Cooliemon. According to QIC, its dual capacity theory is supported by Arneson v. Gygax, 473 F. Supp. 759 (D.Minn. 1979). Arneson involved a suit by a coauthor of the game "Dungeons and Dragons" against the other coauthor and the corporation that owned the rights to publish, sell, and distribute the game. Id. at 760-61. The defendant coauthor, Gygax, was also the chief executive officer of the corporation. Id. at 762. In deciding whether to exercise jurisdiction over Gygax as an individual, the court noted that his activities as coauthor of the game were "intermingled and coincide[d] with" his activities as chief executive officer of the corporation, thereby creating an inference that Gygax was acting both in his corporate capacity and in his individual capacity when he engaged in activities in Minnesota. Id. at 762-63.
The evidence in this case does not support an inference that Williams acted in a dual capacity when he engaged in contacts with Minnesota. Williams's contacts with QIC in Minnesota began in 1996 and terminated in August 2001, when Olson moved the company to California. Williams did not form Cooliemon until 2001 or early 2002. Thus, with respect to the bulk of Williams's contacts with Minnesota, it would be impossible to conclude that he was acting in a dual capacity. As for Williams's contacts with QIC during the first eight months of 2001, there is no evidence that Williams intermingled his activities as an independent contractor of QIC with his activities as a representative of Cooliemon during that period.
In sum, QIC has failed to make a prima facie showing of personal jurisdiction over Cooliemon, either on the basis of Cooliemon's website or under the theory that Williams acted in a dual capacity when he engaged in contacts with QIC in Minnesota. Accordingly, the Court concludes that it cannot exercise personal jurisdiction over Cooliemon.
B. Venue
The Court will next address whether venue is proper with respect to QIC's claims against Williams and Koch.
Given that Cooliemon is not subject to personal jurisdiction, the Court need not address whether venue is proper with respect to QIC's claims against Cooliemon.
1. Copyright infringement claim
QIC's copyright infringement claims are governed by a special venue statute, 28 U.S.C. § 1400(a) (2000), which provides that actions "arising under any Act of Congress relating to copyrights or exclusive rights in mask works or designs may be instituted in the district in which the defendant or his agent resides or may be found." (Emphasis added.) It is undisputed that neither Williams nor Koch "resides" in the District of Minnesota; the issue presented is whether they "may be found" here.
The overwhelming majority of decisions interpreting section 1400(a) hold that a defendant "may be found" in any district in which he is subject to personal jurisdiction. See, e.g., Real Good Toys, Inc. v. XL Mach. Ltd., 163 F. Supp.2d 421, 425 (D.Vt. 2001); Dakotah, Inc. v. Tomelleri, 21 F. Supp.2d 1066, 1075 (D.S.D. 1998); Blackburn v. Walker Oriental Rug Galleries, Inc., 999 F. Supp. 636, 638 (E.D.Pa. 1998); Linzer v. EMI Blackwood Music, Inc., 904 F. Supp. 207, 215 (S.D.N.Y. 1995); Johannsen v. Brown, 788 F. Supp. 465, 469 (D.Or. 1992); Store Decor Div. of Jas Int'l, Inc. v. Stylex Worldwide Indus., Ltd., 767 F. Supp. 181, 185 (N.D.Ill. 1991); Advideo, Inc. v. Kimel Broadcast Group, Inc., 727 F. Supp. 1337, 1341 (N.D. Cal. 1989); Thomas Jackson Publ'g, Inc. v. Buckner, 625 F. Supp. 1044, 1046 (D.Neb. 1985); Micromanipulator Co., Inc. v. Bough, 558 F. Supp. 36, 37 (D.Nev. 1982); United Merchs. Mfrs., Inc. v. David Dash, Inc., 439 F. Supp. 1078, 1085 (D.Md. 1977). Decisions from this district are consistent with this interpretation. See Network Prof'ls, Inc. v. Network Int'l Ltd., 146 F.R.D. 179, 184 (D.Minn. 1993) (observing that section 1400(a) "has been interpreted to mean that a copyright action may be brought in any district in which the defendant is subject to personal jurisdiction"); Alternative Pioneering Sys., Inc. v. Direct Innovative Prods., Inc., Civ. No. 4-92-278, 1992 WL 510190, at *4 (D.Minn. Aug. 20, 1992) ("For purposes of § 1400(a), a defendant may be `found' in those districts in which personal jurisdiction might be obtained over it.").
Relying on a single case, Blue Compass Corp. v. Polish Masters of America, 777 F. Supp. 4 (D.Vt. 1999), Williams and Koch argue that only corporate defendants "may be found" in any district in which they are subject to personal jurisdiction. In Blue Compass, the United States District Court for the District of Vermont held that, although it had personal jurisdiction over a California sole proprietor, venue was improper under section 1400(a) because the defendant did not reside and could not be found in Vermont. Blue Compass, 777 F. Supp. at 5. The court reasoned:
[The defendant] lives and operates his business in California, and, according to his affidavit, has never set foot in Vermont. Although a corporat[e] defendant "shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction" for purposes of venue, under 28 U.S.C. § 1391(c), [the defendant's] business is not a corporation. The materials before the court show that [the defendant] and his sole proprietorship do not reside and may not be found in Vermont under the venue provisions.
Blue Compass, 777 F. Supp. at 5.
The Court is not persuaded that noncorporate defendants should be treated differently than corporate defendants for purposes of determining whether they "may be found" in a district under section 1400(a). Section 1400(a) itself does not draw a distinction between corporations and noncorporations, see Donner, 480 F. Supp. at 1234-35 ("The language of 28 U.S.C. § 1400(a) makes no distinction between corporate defendants and individual defendants, and we can discern no reason for any such distinction."), and it appears that Blue Compass is the only case to draw such a distinction. Furthermore, a subsequent case from the District of Vermont minimized the significance of Blue Compass, stating in a footnote that it "was limited to the `resides' language, and did not discuss whether the defendant could be `found' in the forum." Real Good Toys, 163 F. Supp.2d at 426 n. 3.
Applying the well-established interpretation of section 1400(a), the Court concludes that Williams and Koch "may be found" in this district because they are subject to personal jurisdiction. See Network Prof'ls, 146 F.R.D. at 184; Alternative Pioneering, 1992 WL 510190, at *4. Venue is therefore proper with respect to QIC's copyright infringement claims against Williams and Koch.
2. Remaining claims
QIC's remaining claims are governed by the general venue statute, 28 U.S.C. § 1391 (2000). QIC asserts that venue is proper under section 1391(b)(2), which provides that a civil action wherein jurisdiction is not founded solely on diversity of citizenship may be brought in "a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred."
In Woodke v. Dahm, 70 F.3d 983 (8th Cir. 1995), the Eighth Circuit stated that, "by referring to `events or omissions giving rise to the claim,' Congress meant to require courts to focus on relevant activities of the defendant, not of the plaintiff." Id. at 985. Woodke also instructs that it is not enough that a defendant's acts or omissions are connected to the claim "in a causal sense." See id. Rather, only an act or omission that is "itself wrongful" can be counted as an event or omission giving rise to the claim. Id.; see also Barber v. Simpson, Civ. No. 95-4210, 1996 WL 477005, at *1 (8th Cir. Aug. 23, 1996) (per curiam) (citing Woodke in support of holding that venue was improper when "the specific allegedly wrongful conduct of [the] defendants . . . occurred elsewhere"). Thus, under Woodke, to decide whether venue is proper under section 1391(b)(2), the Court must determine whether a substantial part of the defendants' allegedly wrongful acts or omissions occurred in this district.
In this case, QIC failed to identify, either in its Complaint or in its evidentiary submissions in connection with the defendants' motion, any allegedly wrongful act or omission by Williams or Koch that occurred in Minnesota. Accordingly, the Court concludes that the District of Minnesota is not one in which "a substantial part of the events or omissions giving rise to [QIC's claims] occurred." See Barber, 1996 WL 477005, at *1; Woodke, 70 F.3d at 985. Venue is therefore improper as to these claims.
C. Transfer
Having concluded that venue is proper as to QIC's copyright infringement claims, and that venue is improper with respect to QIC's other claims, the Court will now address the defendants' motion to transfer the action to the United States District Court for the Western District of Pennsylvania. The posture of this case calls for the application of two transfer statutes: 28 U.S.C. § 1404(a) (2000), which authorizes transfer from a proper venue, and 28 U.S.C. § 1406(a) (2000), which authorizes transfer from an improper venue.
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." A party seeking a transfer under this section typically bears the burden of proving that a transfer is warranted. Terra Int'l, Inc. v. Miss. Chem. Corp., 119 F.3d 688, 695 (8th Cir. 1997). In deciding whether to transfer an action, a district court must consider the three factors listed in the statute-the convenience of the parties, the convenience of the witnesses, and the interest of justice-and it may also consider "any other relevant factors." Id. at 696. To satisfy its burden of proof, the movant must demonstrate that the balance of factors strongly favors transfer. Graff v. Qwest Communications Corp., 33 F. Supp.2d 1117, 1121 (D. Minn. 1999).
Under section 1406(a), "[t]he district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought." The standard for transfer under section 1406(a) is less demanding than the standard used in connection with section 1404(a). "Transfer pursuant to § 1406(a) to remove a procedural obstacle such as lack of personal jurisdiction is favored over dismissing an action because transfer facilitates the adjudication of a dispute on its merits." Wilson v. St. Mary's Hosp., 822 F. Supp. 1450, 1451 (D. Minn. 1993) (citing Sinclair v. Kleindienst, 711 F.2d 291, 294 (D.C. Cir. 1983)). A district court can transfer an action under section 1406(a) even if it lacks personal jurisdiction over the defendant. Goldlawr, Inc. v. Heiman, 369 U.S. 463, 466 (1962). Thus, QIC's claims against Cooliemon can be transferred under this section, as well.
There is no dispute that QIC could have brought all of its claims against Williams, Koch, and Cooliemon in the Western District of Pennsylvania; all of the defendants reside in that district.
It is also clear that transfer of QIC's copyright infringement claims against Williams and Koch would greatly enhance the overall convenience of the parties. QIC operates out of California, Olson resides in California, and Williams and Koch are residents of Pennsylvania. Thus, unlike cases involving a defendant who seeks to transfer an action from the district in which the plaintiff resides to the district in which the defendant resides, a transfer here would not merely shift the inconvenience of litigating in a foreign district from one party to the other. On the plaintiff's side of the balance, litigating in the Western District of Pennsylvania is only marginally less convenient than litigating in Minnesota. On the defendants' side, it would be far more convenient for Williams and Koch to litigate in their home district. This factor weighs heavily in favor of transfer.
As for the convenience of the witnesses, the parties have provided the Court with scant information about the identity of the witnesses they plan to call, the location of those witnesses, their relative degree of importance, or the nature of their testimony. The defendants state merely that QIC has not identified any potential witnesses located in Minnesota. For its part, QIC makes the vague claim that "witnesses who might be called, including QIC's customers, are distributed around the country." (Plaint.'s Mem. Opp. Mot. Dismiss, Transfer, or Stay at 26.) Without more information, it is impossible to determine whether transfer would serve the convenience of the witnesses in this case. Thus, this factor weighs neither for nor against transfer.
Finally, the interest of justice, which is considered under both section 1404(a) and section 1406(a), weighs heavily in favor of transfer. In essence, this is a dispute between residents of California and residents of Pennsylvania that stems from allegedly wrongful acts and omissions that occurred outside of Minnesota. The Court does not have personal jurisdiction over one of the three defendants in this action, and this is an improper venue for all but two of QIC's claims. If the Court permits QIC's copyright infringement claims against Williams and Koch to proceed in this district and dismisses the remainder of the action without prejudice, it is likely that QIC will bring an action (or actions) against Williams, Koch, and Cooliemon in another district. Given that all of QIC's claims arise from the same underlying set of facts, such an action would closely parallel the action proceeding here. The same difficulty would result if the Court permits the copyright infringement claims to proceed here and transfers the remainder of the action to the Western District of Pennsylvania pursuant to section 1406(a). Breaking this case into separate pieces would create additional costs for the parties and for the courts. To avoid this problem, and to further the convenience of the parties, the Court concludes that QIC's copyright infringement claims against Williams and Koch should be transferred to the Western District of Pennsylvania pursuant to section 1404(a), and that the remainder of the action, including QIC's claims against Cooliemon, should be transferred to the same district pursuant to section 1406(a).
D. Stay
The defendants' also move for a stay of this action pending the resolution of the Pennsylvania state court action. Having decided that transfer is appropriate, the Court declines to rule on this motion.
IV. CONCLUSION
Based on the files, records, and proceedings herein, and for the reasons stated above, IT IS ORDERED THAT:
1. This action shall be transferred to the United States District Court for the Western District of Pennsylvania pursuant to 28 U.S.C. § 1404(a), and 28 U.S.C. § 1406(a).