Opinion
Case No. 01-CV-0768H(AJB)
August 23, 2001
On June 13, 2001, plaintiff David J. Rodolff ("Plaintiff') filed a complaint against defendants Provident Life and Accident Insurance Company, a Tennessee corporation, Northrop Voluntary Accidental Death and Dismemberment Plan for Employees of Northrop Grumman Corporation, a group welfare benefits plan under ERISA, and Does 1 Through 10 ("Defendants"), as a result of Provident's denial of benefits to Plaintiff under a group accident insurance policy governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq.
On July 13, 2001, Defendants filed a Motion to Dismiss for Improper Venue (FRCP 12(b)(3)); or in the Alternative to Transfer for Convenience ( 28 U.S.C. § 1404 (a)); or in the alternative to transfer for improper venue ( 28 U.S.C. § 1406 (a)). On August 13, 2001, Plaintiff filed its opposition to Defendants' motion. On August 20, 2001, Defendants filed their reply. Pursuant to Local Rule 7.1(d)(1), the matter was submitted on the papers.
BACKGROZD
Plaintiff was employed by Northrop Grumman Corporation ("Northrop") and received from Northrop, among other benefits, Accidental Death and Dismemberment ("ADD") coverage. After Plaintiffs spouse passed away on May 4, 1997, Plaintiff filed a claim for ADD benefits. On October 9, 1998, Provident denied the requested benefits for two reasons. First, Provident contended that Plaintiffs spouse died from an overdose of medication that was therefore not an "accident" covered by the policy. Second, Provident stated that decedent's endocarditis, a bacterial infection of the heart valves, constituted an independent and direct cause of her death.
Plaintiff appealed the denial of benefits and Provident sought an independent review of the medical records. As a result, Provident reversed its previous two bases for non-coverage, but reaffirmed its denial of the benefits based on a new reason: It asserted that Plaintiffs wife died from hypertrophic cardiomyopathy.
After allegedly exhausting his administrative remedies, Plaintiff timely filed his complaint in this Court. Plaintiff alleges that he is entitled to the ADD benefits for his wife's accidental death and that Provident's denial constituted a violation of ERISA. In response, Defendants filed these motions either to dismiss the case for improper venue or to transfer it to the Central District of California.
DISCUSSION
1. Motion to Dismiss Under Federal Rule of Civil Procedure 12(b)(3) A. Legal Standards
The defense of improper venue may be raised by motion pursuant to Rule 12(b)(3) of the Federal Rules of Civil Procedure. Fed.R.Civ.P. 12(b)(3). Once venue is challenged, Plaintiff bears the burden of showing that venue is proper. Piedmont Label Company v. Sun Garden Packing Co., 598 F.2d 491, 496 (9th Cir. 1979); King v. Vesco, 342 F. Supp. 120, 125 (N.D. Cal. 1972). Facts supporting venue may be shown by declaration, affidavit, oral testimony, or "other evidence." Ziegler Chemical and Mineral Corp. v. Standard Oil Company, 32 F.R.D. 241, 243 (N.D. Cal. 1962). Unlike a Rule 12(b)(6) motion, a motion under Rule 12(b)(3) does not require that the pleadings be accepted as true. Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 324 (9th Cir. 1996). The Court is permitted to consider facts outside of the pleading. Id. B. Analysis
ERISA's liberal venue provision, states that "where an action brought under this subchapter is brought in a district court, it may be brought in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found." 29 U.S.C. § 1132(e)(2). In these provisions, Congress intended to give ERISA plaintiffs an expansive range of venue locations.Varsic v. U.S. District Court for the Central District of California, 607 F.2d 245, 248 (9th Cir. 1979) (reviewing a denial to dismiss for want of venue and a grant of venue transfer under ERISA, 29 U.S.C. § 1132(e)(2)). Given this Congressional intent, the Ninth Circuit has concluded that "if personal jurisdiction is properly asserted over the Fund, it [defendant] is "found' there."Id. at 248. Thus, venue under ERISA is proper where the Court has personal jurisdiction over the defendants.
Personal jurisdiction must be determined by using the "minimum contact test," as set forth in International Shoe Co. v. Washington, 326 U.S. 310 (1945). See Varsic, 607 F.2d at 249. As the Ninth Circuit explained, "[i]f the nonresident defendant's activities within a state are "substantial' or "continuous and systematic," there is a sufficient relationship between the defendant and the state to support jurisdiction even if the cause of action is unrelated to the defendant's forum activities." Id. (quoting Data Disc, Inc. v. Systems Tech. Assocs. Inc., 557 F.2d 1280 1287 (9th Cir. 1977)). However, where the defendant's activities are not so pervasive to subject him to general jurisdiction,
the issue whether jurisdiction will lie turns on an evaluation of the nature and quality of the defendant's contacts in relation to the cause of action. In our circuit, we use the following approach in making this evaluation: (1) The nonresident defendant must do some act or consummate some transaction with the forum or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws. (2) The claim must be one which arises out of or results from the defendant's forum-related activities. (3) Exercise of jurisdiction must be reasonable.Id.
In this case, personal jurisdiction is proper under both tests. First, Defendants have pervasive contacts with the forum state and this particular district. Although based in Los Angeles, CA, Northrop has entered into substantial financial contracts with San Diego-based entities. See, e.g., "Logicon Wins $46 Million U.S. Navy Contract For Advanced C4ISR Technology Development," available at http://www.northgrum.com/news/news_releases/0400-54Spawar.html (stating in a press release dated April 11, 2000, that the San-Diego based Space and Naval Warfare Systems Command has awarded a large contract to a Northrop-controlled company). Also, Northrop employs many individuals in San Diego. See, e.g., "Northrop Grumman Consolidates Uav Capabilities In New Unmanned Systems Integrated Product Team," available at http://www.northgrum.com/news/news_releases/109-140.html (stating in a press release dated October 18, 1999, that Northrop was consolidating one of its product teams and basing it in San Diego). As to Provident, although it is domiciled in Chattanooga, TN, this insurance company covers Northrop's ADD plan. It covers Northrop employees working in this forum state, but also those working and living in San Diego county. Its collection of premiums from and coverage of San Diegans would have put Provident on notice that it would have to defend a suit in California and, in particular, in this district. In sum, there are sufficiently pervasive contacts between the Defendants and this district to grant this Court general personal jurisdiction over them. Venue under 29 U.S.C. § 1132(e)(2) is thus proper.
Even if this Court arguably did not have general jurisdiction over the Defendants, there are sufficient minimum contacts under the Data Disc test to exercise specific jurisdiction over Northrop, its ADD plan, and Provident. Under the first Data Disc prong, the Defendants must "personally avail himself of the privilege of conducting activities in the forum." Varsic, 607 F.2d at 249 (quoting Data Disc, 557 F.2d at 1287). The Court has already discussed the nature and extent of these contacts above and therefore need not repeat it here. The Second Data Disc prong requires that the claim "must be one which arises out of or results from the defendant's forum-related activities." Although Defendants argue that the claim in this case arose in the Central District rather than the Southern District of California, they mistakingly construe the word "forum." Courts have traditionally understood the word "forum" to refer to a "state" rather than a judicial district within a state. See, e.g., Myers v. Bennett Law Offices, 238 F.3d 1068 (9th Cir. 2000) (discussing minimum contact test with Nevada as the forum state); Data Disc, 557 F.2d at 1287-88 (discussing contacts with California as the forum rather than the district). Third, the exercise of jurisdiction must be reasonable. "The degree to which a defendant interjects himself into the (forum) affects the fairness of subjecting him to jurisdiction." Varsic, 607 F.2d at 250 (quoting Data Disc, 557 F.2d at 1288). Northrop is headquartered in California and employs individuals throughout the state, including San Diego. Provident, as insurer of Northrop's ADD plan, placed itself as a fiduciary capacity and received premiums from the forum state, including individuals in San Diego. Both defendants could easily have anticipated this very suit. See Varsic, 607 F.2d at 250 (finding that out-of-state insurance company that had acted as a fiduciary and received contribution from the forum could anticipate the ERISA suit, and concluding that specific jurisdiction was proper). The three prongs of Data Disc are satisfied, personal jurisdiction exists over the Defendants, and they are "found" in this forum under 29 U.S.C. § 1132(e)(2).
Therefore, the Court DENIES Defendants' motion for dismissal for improper venue under Rule 12(b)(3).
II. Motion to Transfer Venue For The Conyenience of The Parties
Defendants also request that, in the alternative, the Court transfer this case to the Central District of California pursuant to 28 U.S.C. § 1404 (a). 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." The threshold question in a 1404(a) transfer is whether the case could have been brought in the proposed venue. Venue is proper in the Central District of California because a substantial part of the events giving rise to the claim occurred there and defendants Northrop and Provident, as insurer of Northrop's ADD plan, are subject to personal jurisdiction there. They can both be "found" there under the provisions of 29 U.S.C. § 1132(e)(2).
Once this threshold requirement is met, this court has wide discretion to determine whether transfer of this action to the Central District should occur for the convenience of parties and witnesses and in the interest of justice. Arley v. United Pacific Ins. Co., 379 F.2d 183, 189 (9th Cir. 1967). After a careful weighing of the legal factors relevant to such transfers and an examination of the facts in this case, this Court concludes that the interest of justice would be best served by retaining jurisdiction over this case.
Defendants must make a strong showing of inconvenience to warrant upsetting the plaintiffs choice of forum. Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986) As part of its inquiry, the Court considers private and public interest factors affecting the convenience of the forum. See Piper Aircraft Co. v. Reyno, 454 U.S. 235, 241 (1981). "Private factors include the `relative ease of access to sources of proof, availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; possibility of view of premises, if view would be appropriate to the action; and all other practical problems that make trial of a case easy, expeditious and inexpensive.'" Decker Coal, 805 F.2d at 843 (quoting Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947)). Public factors include "the administrative difficulties flowing from court congestion; the "local interest in having localized controversies decided at home'; the interest in having the trial of a diversity case in a forum that is at home with the law that must govern the action; the avoidance of unnecessary problems in conflict of laws, or in the application of foreign law; and the unfairness of burdening citizens in an unrelated forum with jury duty." Piper Aircraft, 454 U.S. at 241 n. 6, (quotingGulf Oil Corp., 330 U.S. at 509).
In this case, Defendants have failed to make a sufficient showing to warrant a transfer under 28 U.S.C. § 1404 (a). None of the Pipers Aircraft public factors weigh in Defendants' favor. Both the Central and Southern Districts of California reside in the same forum state. The controlling law is federal law, thereby avoiding any conflict of law. Neither the congestion nor the jury burden favor either district. As to the private factors, the distance between Los Angeles and San Diego is minimal in this age of automobiles and airplanes. The difference in the cost of litigating in either district and in the convenience for the parties and witnesses is marginal. Therefore, this Court sees no reason to disturb the "strong presumption in favor of the plaintiffs choice of forum." Piper Aircraft v. Reyno, 454 U.S. 235, 255 (1981); Decker Coal, 805 F.2d at 843.
Therefore, the Court DENIES Defendants' motion to transfer venue for convenience under 28 U.S.C. § 1404 (a).
III. Motion to Transfer For Improper Venue Under 28 U.S.C. § 1406 (a)
In the alternative to the above motions, Defendants also move to transfer this case to the Central District under 28 U.S.C. § 1406 (a). Section 1406(a) provides: "The 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." Section 1406(a) thus applies only where the venue was improper in this district. However, the Court has already addressed the propriety of venue in this district pursuant to 29 U.S.C. § 1132(e)(2), and thus need not repeat this analysis here. It suffices to say that 28 U.S.C. § 1406 (a) is inapplicable in this case.
Therefore, the Court DENIES Defendants' motion for transfer for improper venue under 28 U.S.C. § 1406 (a), and [3] motion to transfer for improper avenue under 28 U.S.C. § 1406(a).
CONCLUSION
For the reasons stated above, this Court DENIES Defendants' [1] motion to dismiss for improper venue under FRCP 12(b)(3), [2] motion to transfer for convenience under 28 U.S.C. § 1404 (a), and [3] motion to transfer for improper venue under 28 U.S.C. § 1406 (a).
IT IS SO ORDERED