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holding that “[t]here is a strong policy favoring the litigation of related claims in the same tribunal” because, among other things, it avoids wasted “time and expense for both parties”
Summary of this case from Meritage Homes Corp. v. JPMorgan Chase Bank, N.A.Opinion
01 CIV 4390 (JSM)
March 14, 2002
For Plaintiff William A. Harvey Klehr, Harrison, Harvey, Branzburg Ellers LLP, Philadelphia, PA
For Defendants Bruce D. Angiolillo, Simpson Thacher Bartlett, New York, N Y; Stellman Keehnel, Gary Cary Ware Freidenrich LLP, Seattle, WA.
OPINION AND ORDER
Capital Ventures International ("Plaintiff") brought this action against Network Commerce, Inc. ("Network"), a Washington corporation and nine individuals, who were officers, directors or employees of Network, seeking to recover loses sustained as a result of its purchase of Network securities. Defendants move pursuant to 28 U.S.C. § 1404 (a) to transfer this action to the Western District of Washington where there are seven class actions currently pending that contain similar allegations against Network and the majority of the individual Defendants (one case names eight of the nine individual Defendants herein along with the corporation, and seven are against Mr. Walker and the corporation). These actions have been consolidated before a single judge in Washington. Defendants argue that the witnesses and discovery relevant to the eight lawsuits will overlap.
While Plaintiff does not dispute the similarity of the facts and allegations in this case to those in the Washington actions, and that the consolidation of this case with those actions would serve the convenience of the witnesses and the Defendants, Plaintiff opposes Defendants' motion on the grounds that the contract between itself and the corporate Defendant contains a forum selection clause designating New York as the forum where disputes will be litigated.
Under 28 U.S.C. § 1404 (a), there are three factors to be considered on a motion to transfer venue, i.e., the convenience of parties, the convenience of witnesses, and the interest of justice. 28 U.S.C. § 1404 (a); see also Savin v. CSX Corporation, 657 F. Supp. 1210, 1214 (S.D.N.Y. 1997). Only one factor, the convenience of the parties, is "within the power of the parties themselves to affect by a forum-selection clause." Orix Credit Alliance, Inc. v. H.D. Paul, No. 91 CIV 6893, 1994 WL 75024, at *2 (S.D.N.Y. March 4, 1994) citing 15 Charles A. Wright, Arthur R. Miller Edward H. Cooper, Federal Practice and Procedure § 3847 (1986). "The other factors — the convenience of witnesses and the interest of justice — are third party or public interests that must be weighed by the district court; they cannot be automatically outweighed by the existence of a purely private agreement between the parties." Id. (Emphasis added).
The Supreme Court has stated:
Section 1404(a) directs a district court to take account of factors other than those that bear solely on the parties' private ordering of their affairs. The district court also must weigh in the balance the convenience of the witnesses and . . . systemic integrity and fairness that, in addition to private concerns, come under the heading of `the interests of justice.' . . . [B]ecause of these factors a district court (may) transfer a case notwithstanding . . . the forum selection clause.Stewart Organization, Inc. v. Richoh Corporation, 487 U.S. 22, 30-31, 108 S.Ct. 2239, 2244 (1988) (emphasis added).
The interest of justice is a broad concept which requires the court to consider the totality of the circumstances presented. Bombardier Capital, Inc. v. Solomon, No. 00 CIV 0848, 2000 WL 1721138, at *6 (S.D.N.Y. Nov. 17, 2000) quoting Brockmeyer v. May, No. 98 CIV 5521, 1999 U.S. Dist. LEXIS 4372, at *7 (S.D.N.Y. April 6, 1999); see also Everest Capital Limited v. Everest Funds Management, L.L.C., 2002 WL 21979, at *4 (S.D.N.Y. Jan. 8, 2002).
The interest of justice is implicated where transferring the case would serve the interest of judicial economy. APA Excelsior III L.P. v. Premiere Technologies, Inc., 49 F. Supp.2d 664 (S.D.N.Y. 1999). As Judge Walker observed in Savin v. CSX Corporation, 657 F. Supp. 1210 (S.D.N.Y. 1997):
`There is a strong policy favoring the litigation of related claims in the same tribunal in order that pretrial discovery can be conducted more efficiently, duplicitous litigation can be avoided, thereby saving time and expense for both parties and witnesses, and inconsistent results can be avoided.' Wyndham Associates v. Bintliff, A.G., 398 F.2d 614, 619 (2d Cir.), cert. denied, 393 U.S. 977, 89 S.Ct. 444, 21 L.Ed.2d 438 (1968). Accord Somerville v. Major Exploration, Inc., 576 F. Supp. 902, 908 (S.D.N.Y. 1983) ("The existence of a related action in the transferee district is a strong factor to be weighed in the interest of judicial economy."). Accordingly, cases often have cited the pendency of related actions in another court as strongly supporting the transfer of an action to that court. See, e.g., Durham Productions, Inc. v. Sterling Film Portfolio, Ltd., 537 F. Supp. 1241, 1244 (S.D.N.Y. 1982); Full-Sight Contact Lens v. Soft Lenses, Inc., 466 F. Supp. 71, 75 (S.D.N.Y. 1978); Farbenfabriken Bayer A.G. v. National Distillers and Chemical Corp., 324 F. Supp. 156, 158-59 (S.D.N.Y. 1971).Id. at 1214.
In APA Excelsior III L.P. v. Premiere Technologies, Inc., 49 F. Supp.2d 664 (S.D.N.Y. 1999), the court concluded that the interest of justice in judicial economy in transferring the case outweighed the importance of the forum selection because of the existence of twenty-two related and consolidated actions in another forum at the time the motion to transfer venue was made, and that this was the overriding consideration in transferring the case. Id. at 668. The court stated "It is well established that the existence of a related action pending in transferee court weighs heavily toward transfer." Id. (citations omitted). Similarly, in Savin v. CSX Corporation, 657 F. Supp. 1210 (S.D.N.Y. 1987), the litigation of six related cases in Pittsburgh lead the court to conclude that the motion to transfer the case to that court should be granted in the interests of justice, and that this outweighed any inconvenience resulting from the transfer of the case notwithstanding the forum selection clause.
Here, there are seven class action lawsuits involving identical or significantly similar facts and allegations pending in the Western District of Washington against the corporate Defendant Network Commerce and the majority of the individual Defendants that already have been consolidated before a single judge.
Plaintiffs argue that they chose to commence this lawsuit in New York based on a negotiated provision contained in the Securities Agreement whereby NCI not only irrevocably consented to the jurisdiction of the Courts in New York, but also irrevocably waived the right to argue that New York would be an inconvenient forum. However, the individual defendants did not sign the Securities Agreement and there is no merit to Plaintiff's argument that the individual Defendants are bound by the forum selection clause because they are so closely related to the corporate defendant that it was foreseeable that they could be subject to the clause. In any event, even if all the defendants were bound by the forum selection clause, the public interest in judicial economy would militate against enforcement of the contractual provision precluding the Plaintiffs from raising the issue. APA Excelsior III L.P. v. Premiere Technologies, Inc., 49 F. Supp.2d 664, 671 (S.D.N.Y. 1999).
Since the interest of justice weighs heavily in favor of transfer, the motion to transfer is granted.
SO ORDERED.