Opinion
Civil Action No. 03-4550 (JCL).
June 30, 2004
MEMORANDUM AND ORDER
Plaintiff Thorlabs, Inc. ("Thorlabs"), a New Jersey corporation with its principal place of business in Newton, New Jersey, instituted this suit against defendants Townsend Communications, L.L.C. ("Townsend"), and Narrowgate, L.P. ("Narrowgate"), in the Superior Court of New Jersey, Law Division, Sussex County. Thereafter, on September 25, 2003, defendants removed the case to federal court, basing jurisdiction upon diversity of citizenship pursuant to 28 U.S.C. § 1332. Presently before the Court is Narrowgate's motion to dismiss the complaint for lack of personal jurisdiction and improper venue or, in the alternative, for change of venue to the United States District Court for the Northern District of Texas.
BACKGROUND
Thorlabs is engaged in the business of manufacturing and selling mechanics, optics, electronics, laser diodes, and fiber optics products. Townsend — a Missouri limited liability company with its principal place of business in Kansas City, Missouri — provides commercial printing services. Narrowgate is a Texas limited partnership with its principal place of business in Grand Prairie, Texas. Narrowgate's sole general partner is WBMD Management, L.L.C., a Texas limited liability company, and its sole limited partner is Windell Baggett, an individual and resident of Texas. Narrowgate is a bindery company providing binding and other finishing services to printing trade customers.
In August 2002, Thorlabs and Townsend entered into a written contract to print and bind Volume 15 of Thorlab's catalog. According to the Quotation for Printing, Townsend agreed to print 150,000 copies of the catalog. Townsend printed the catalog and retained Narrowgate to perform the binding services for the printed catalog. The selection of Narrowgate to bind the catalog was made solely by Townsend, with no input from Thorlabs. Narrowgate has never maintained offices, employed staff, or owned any real or personal property in the State of New Jersey. Narrowgate has never conducted business in New Jersey.
Any information provided to Narrowgate relating to the details of the binding or otherwise related to the printing job was provided by Townsend. No communications concerning the binding of the printing job were ever received by Narrowgate directly from Thorlabs. Further, Narrowgate billed the cost of its bindery services directly to Townsend and was paid by Townsend for those same services.
Narrowgate received the printed catalog at its offices in Grand Prairie, Texas, by shipment from Townsend's office in Missouri. After Narrowgate performed the bindery services, it received instructions from Townsend concerning the shipping destinations and other related details for the bound, printed catalogs. On a few limited occasions, Narrowgate received direct e-mail communications from Thorlabs regarding the shipments of the bound, printed material. Each of these communications was initiated by Thorlabs, and Narrowgate responded as necessary.
Narrowgate was instructed (by Townsend or Thorlabs) to ship the bound, printed catalogs to the following entities and locations:
1. Quik Pak, Inc., Indianapolis, Indiana
2. Elliot Scientific Ltd., London, United Kingdom
3. Rosh Electropics, Israel
4. Applied Laser Technology, Netherlands
5. Optoprism, France
6. Thorlabs, Germany
7. World Distribution Service, Elk Grove, Indiana
8. Tetsuya, Japan
In addition to the shipments of the printed material to the entities and locations identified above, Narrowgate, upon Townsend's instruction, shipped copies of the bound, printed catalog to both Townsend in Missouri and Thorlabs in New Jersey. The precise number of shipments to Thorlabs in New Jersey is disputed. At most, there were five separate shipments of the printed material to Thorlabs, totaling roughly 1000 copies, delivered by a common carrier (Roadway and/or Federal Express).
In early 2003, Thorlabs noticed that the catalogs were falling apart and advised Townsend of the alleged binding defects. Townsend then notified Narrowgate about Thorlab's problem with the quality of the binding, to which Narrowgate responded by sending a letter to Townsend, dated February 27, 2003, stating that the binding quality of Thorlab's catalog exceeds industry standards. Thorlabs never communicated directly with Narrowgate about the quality of the binding services.
In June 2003, Thorlabs filed its complaint against Townsend and Narrowgate in the Superior Court of New Jersey, Law Division, Sussex County, asserting claims for breach of contract, breach of the duty of good faith and fair dealing, breach of express and implied warranties, and unjust enrichment. All claims are based on the same alleged facts concerning the inadequate and deficient performance of the bindery services. Narrowgate filed the present motion, after Townsend, with Narrowgate's consent, removed the matter to this Court.
DISCUSSION
A. Personal Jurisdiction
Narrowgate moves to dismiss Thorlab's complaint for lack of personal jurisdiction. In the alternative, Narrowgate moves to transfer this action pursuant to 28 U.S.C. § 1404. As the Court is transferring this case to the United States District Court for the Northern District of Texas, it will decline to decide the personal jurisdiction question raised by Narrowgate. A district court has the power to transfer a case pursuant to 28 U.S.C. § 1404(a) with or without personal jurisdiction over the defendant. U.S. v. Berkowitz, 328 F.2d 358, 361 (3d Cir. 1964) (citing Goldlawr, Inc. v. Heiman, 369 U.S. 463 (1962)); see also Lomanno v. Black, 285 F. Supp.2d 637, 640 (E.D. Pa. 2003). Therefore, in the interests of expediency, the Court will move directly into deciding whether a change of venue is appropriate.
Narrowgate also moves to dismiss or transfer this case for improper venue pursuant to 28 U.S.C. § 1406(a). Narrowgate's reliance on section 1406(a) appears to be misplaced. Where, as here, an action is removed from state court, the removal statute, 28 U.S.C. § 1441, rather than the general venue statute, 28 U.S.C. § 1391, governs the question of venue. Polizzi v. Cowles Magazines, Inc., 345 U.S. 663, 665 (1953). Section 1441 provides, in pertinent part, that "any civil action brought in a State court of which district courts of the United States have original jurisdiction . . . may be removed by the defendant . . . to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). This action was originally filed in the Superior Court of the State of New Jersey, Law Division, Sussex County, and could only have been removed to this federal district. Venue in New Jersey is not technically improper. As a result, transfer of this action is governed only by 28 U.S.C. § 1404(a). See Chicosky v. Presbyterian Medical Center, 979 F. Supp. 316, 319-20 (D.N.J. 1997) (noting that because action could only have been removed to one district under removal statute, it could not be transferred under section 1406(a)).
The Court notes, though, that it has serious reservations about the constitutionality of asserting personal jurisdiction over Narrowgate. Narrowgate's only two contacts with New Jersey — the shipment of a relatively small number of catalogs (at the direction of Townsend or Thorlabs) and the email communications (initiated by Thorlabs) — certainly do not support the assertion of general jurisdiction and render highly doubtful the assertion of specific jurisdiction. As this case ultimately turns of the quality of Narrowgate's performance, it cannot be readily resolved without Narrowgate's participation — a consideration which favors transfer to a forum where all defendants are subject to personal jurisdiction.
B. Change of Venue
A court may transfer an action for the convenience of the parties and witnesses and in the interests of justice to any district where the action might have been brought. See 28 U.S.C. § 1404(a). Venue for this action would be proper in the Northern District of Texas, as the allegations in the complaint center on the quality of the binding services performed by Narrowgate in that district. See 28 U.S.C. § 1391(a)(2). In addition, Narrowgate is clearly subject to personal jurisdiction in Texas. Townsend also appears subject to personal jurisdiction in Texas. Thorlab's complaint against Townsend, and the cross-claims that have been or will be filed by Narrowgate and Townsend, are all based on the provision of binding services by Narrowgate, which occurred in Texas pursuant to Townsend's request, for the ultimate benefit of Thorlabs.
The purpose of § 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 v. Barrack, 376 U.S. 612, 616 (1964) (quoting Continental Grain Co. v. Barge FBL-585, 364 U.S. 19, 26-27 (1960)). The moving party bears the burden of establishing that transfer is warranted and must submit "adequate data of record" to facilitate the Court's analysis. Piper Aircraft Co. v. Reyno, 454 U.S. 235, 248 (1981); Ricoh v. Honeywell, Inc., 817 F. Supp. 473, 480 (D.N.J. 1993). Analysis of whether transfer is appropriate does not necessarily require extensive investigation.n Cauwenberghe v. Biard, 486 U.S. 517, 529 (1988). The moving party must demonstrate that the proposed alternative forum is not only adequate, but also more convenient than the present forum.Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995).
No rigid rule governs a transfer determination; a § 1404(a) analysis is flexible and turns on the unique facts of each case.Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29-30 (1988). The Third Circuit has provided helpful guidance by highlighting some relevant factors district courts should consider: the private interests of the litigants and the public interests in fair, efficient administration of justice. Jumara, 55 F.3d at 879. The private interest factors to be considered include: (1) plaintiff's forum choice; (2) defendant's forum preference; (3) whether the claim arose in another forum; (4) "the convenience of the parties as indicated by their relative physical and financial condition"; (5) "the convenience of the witnesses — but only to the extent that the witnesses may actually be unavailable for trial in one of the fora"; and (6) the location of any books or records (similarly limited to the extent that such files could not be produced in the alternative forum). Id.; Clark v. Burger King Corp., 255 F. Supp.2d 334, 337-38 (D.N.J. 2003).
The public interests to be considered include: (1) judgment enforceability; (2) "practical considerations that could make the trial easy, expeditious, or inexpensive"; (3) court congestion in each district; (4) local interest in deciding local controversies at home; (5) the relevant public policies of each forum; and (6) in diversity cases, the district judge's familiarity with the applicable state law. Jumara, 55 F.3d at 879-80;Clark, 255 F. Supp.2d at 338.
Within this framework, great weight is placed on valid forum-selection clauses. In a letter submitted to Magistrate Judge Falk, Townsend alludes to a forum-selection clause in the contract between Townsend and Thorlabs. However, no party has raised this issue before the Court, and it thus has no part in the Court's analysis.
Synthesizing these factors based on the record established by the parties, the Court's transfer determination rests on the fact that Texas is the focal point of this litigation. On balance, therefore, the convenience of parties and witnesses and the interests of justice dictate that the ultimate resolution of this case is best effectuated by transfer to Texas.
As a general matter, plaintiff's choice of forum is given great weight in the § 1404(a) analysis. E.g., Lony v. E.I. DuPont de Nemours Co., 886 F.2d 628, 633 (3d Cir. 1989). A plaintiff's choice of forum should rarely be disturbed, unless the balance of the factors is strongly in favor of the defendant. Lacey v. Cessna Aircraft Co., 862 F.3d 38, 43 (3d Cir. 1988). When the central facts of a lawsuit occur outside of the chosen forum, plaintiff's choice of forum is accorded less weight. Honeywell, 817 F. Supp. at 481; NCR Credit Corp. v. Ye Seekers Horizon, Inc., 17 F. Supp.2d 317, 321 (D.N.J. 1998) (citing S.C. Johnson Son, Inc. v. Gillette Co., 571 F. Supp. 1185, 1188 (N.D. Ill. 1983) ("[A]s a general rule, the preferred forum is that which is the center of gravity of the accused activity."); Gallant v. Trustees of Columbia University in the City of New York, 111 F. Supp.2d 638, 646-47 (E.D. Pa. 2000).
Here, New Jersey has little connection to the operative facts of the lawsuit, which significantly limits the deference normally accorded to plaintiff's choice of forum. This is primarily a dispute between Thorlabs and Narrowgate over the quality of binding services. While there might not have been a direct contractual relationship between Thorlabs and Narrowgate, Thorlabs is proceeding against Narrowgate on a third-party beneficiary theory and, in any event, cross-claims between Narrowgate and Townsend either have been filed or are imminent. Narrowgate is a Texas limited partnership with a principal, and sole, place of business in Grand Prairie, Texas. Almost all of the relevant communications concerning the binding services occurred between Townsend (Missouri) and Narrowgate (Texas). All billing and payment for the services occurred outside of New Jersey, either in Texas or Missouri. The most critical fact is that Narrowgate performed the binding services in Texas, and the place of performance is where a claim for breach of contract typically arises.
Thorlab argues that its claims arose in New Jersey because some catalogs allegedly fell apart in New Jersey. This argument is defeated by the fact that the majority of the finished catalogs were shipped to locations outside New Jersey. Indeed, Narrowgate, upon the instruction of Townsend or Thorlabs, shipped only 1000 of the nearly 150,000 catalogs to New Jersey. Thorlab's argument ultimately leads to the untenable conclusion that its claims arose wherever some catalogs happened to fall apart, or possibly wherever the majority of the catalogs fell apart. The wrong allegedly committed by Narrowgate, namely breach of contract, occurred at Narrowgate's Grand Prairie facility, when it allegedly failed to adhere to its contractual obligations by manufacturing defective bindings. The place of performance (Texas), not the fortuitous destination of the finished catalogs, is where Thorlab's claims arose.
Thorlabs also argues that its claims arose in New Jersey because it suffered damages in New Jersey. But the mere fact that Thorlab might have suffered damages in New Jersey does not mean that its claims arose in New Jersey. See Abramoff v. Shake Consulting, L.L.C., 288 F. Supp.2d 1, 5 (D.D.C. 2003) (noting that fact that plaintiff may feel damages in the district does not create venue under section 1391(a)(2)). It is the alleged failure of performance, not the underlying damages suffered, which must be considered in determining where the center of gravity of this litigation exists.
In light of the foregoing considerations, Thorlab's choice of forum is accorded significantly less weight in the Court's section 1404(a) analysis, and because Texas is the focal point of this litigation, transfer is appropriate.
Additionally, it appears that Texas state law will govern this action, which also militates in favor of transfer. A federal court sitting in diversity must apply the choice of law rules of the forum state. On Air Ent. Corp. v. National Indem. Co., 210 F.3d 146, 149 (3d Cir. 2000). In addition, where the transfer of venue is pursuant to section 1404, the court to which the matter is transferred must apply the choice of law rules that would have been followed in the transferor court. Van Dusen v. Barrack, 376 U.S. 612 (1964). Thus, New Jersey choice of law rules govern plaintiff's claims. According to those rules, the law of the state with the most significant connections to the parties and the action applies. See Gilbert Spruance v. Pennsylvania Man., 134 N.J. 96, 102-103 (1993).
A possible exception to this rule exists where the transferor court lacked personal jurisdiction over the defendant.See Reyno v. Piper Aircraft Co., 630 F.2d 149, 164-165 (3d Cir. 1980) (holding that when there has been an interstate transfer without personal jurisdiction, the transferor state's choice of law does not apply to that defendant), rev'd on other grounds, 454 U.S. 235 (1981). However, even if the transferee court (Northern District of Texas) applied Texas choice of law rules, instead of New Jersey choice of law rules, Texas law would still govern this action, as both states apply the most significant relationship test. See Duncan v. Cessna Aircraft Co., 665 S.W.2d 414, 421 (Tex. 1984); see also Restatement (Second) of Conflict of Laws §§ 6, 145, 188 (1971).
As set forth above, Texas clearly has the stronger interest in this case because the alleged failure of performance, which resulted in plaintiff's damages, occurred in Texas. Aside from the fact that Thorlabs is a New Jersey corporation, it only points to two other connections with New Jersey: the shipment of the catalogs and the email communications. Neither of these contacts are substantial. While New Jersey certainly has some interest in this case, namely, protecting a resident corporation from the alleged wrongful acts of a non-resident corporation or partnership, it is not sufficient to warrant the application of New Jersey law. The Northern District of Texas is better equipped to apply Texas law.
CONCLUSION
For the foregoing reasons, the Court will grant Narrowgate's motion to transfer this action to the United States District Court for the Northern District of Texas pursuant to 28 U.S.C. § 1404(a).
Accordingly, IT IS on this 30th day of June 2004
ORDERED that the motion of defendant Narrowgate, L.P. to transfer this case to the United States District Court for the Northern District of Texas is granted; and it is further
ORDERED that the Clerk of the Court shall transfer this case to the United States District Court for the Northern District of Texas.