Opinion
Civil Action No. 04-0342 Section: I/3.
January 11, 2005
ORDER AND REASONS
This matter is before the Court pursuant to a motion to dismiss filed on behalf of defendants Northern Life Insurance Company, ING Reliastar Life Insurance Company, ING Life Insurance and Annuity Company, and ING Financial Advisors, LLC (collectively "ING"). Plaintiffs, Donna M. Dorsey, Kathleen "Bebe" Labourdette, Lily C. Miller, Joseph W. Pitts and/or Joseph W. Pitts CLU, Inc., Carlos "Chuck" Sabadie, Jr., Tasha Nicole Galan, and United Consumers Healthcare Association, Inc. oppose the motion.
Rec. Doc. No. 8.
On November 5, 2004, this Court denied defendants' Rule 12(b)(3) motion to dismiss which was based on the forum selection clauses contained in the plaintiffs' sales agreements with defendants. This Court ordered the parties to brief the issue of whether this case should be transferred pursuant to 28 U.S.C. § 1404(a). Having reviewed the parties submissions and for the reasons assigned, the Court concludes that transfer pursuant to § 1404(a) is not appropriate in this case. Additionally, for the following reasons, plaintiffs' request to amend the complaint is GRANTED, defendants' request for a more definite statement pursuant to Fed.R.Civ.P. 12(e) is GRANTED and, therefore, defendants' motion to dismiss the current complaint pursuant to Fed.R.Civ.P. 12(b)(6) and 9(b) is DISMISSED WITHOUT PREJUDICE to defendants' right, should they so choose, to re-urge the motion with respect to the amended complaint.
Rec. Doc. No. 30.
FACTS AND PROCEDURAL HISTORY
Plaintiffs are independent insurance agents licensed by the State of Louisiana. Between 1990 and 2000, they sold insurance pursuant to separate sales agreements with Northern Life Insurance Company ("Northern Life") which, according to the complaint, is owned, operated, controlled and/or is the alter ego of named defendant ING Life Insurance and Annuity Company and/or ING Financial Advisors, LLC. A portion of the agents' clientele included public school employees to whom they marketed certain tax-deferred annuities, called section 403(b) annuities, in Orleans Parish and elsewhere. Pursuant to their contracts with Northern Life, plaintiffs allege that they were permitted to act as independent agents for other insurance and annuity companies selling similar products.
See Rec. Doc. No. 1, Comp., ¶ 10.
Sections 403(b) and 457 are the Internal Revenue Code provisions which cover pre-tax funding of teacher and governmental worker retirement accounts through the purchase of annuities. 26 U.S.C. §§ 403(b), 457.
See id., ¶¶ 11-13.
Northern Life subsequently merged into its parent company, Reliastar Life Insurance Company, which is a wholly-owned subsidiary of ING. As agents of ING, plaintiffs continued selling the same insurance products. About the same time, ING also acquired the annuity and life insurance business of a former competitor, Aetna Life Insurance Company, which had a salaried sales force. Plaintiff's allege that the acquired company became reorganized under ING as ING Reliastar Life Insurance and Annuity Company ("ILIAC"). As a result of the acquisition, plaintiffs allege that ING had two groups of agents — a group of independent agents, which included plaintiffs, and a group of employee agents which included the former Aetna agents.
Id., ¶¶ 16-17.
Id, ¶ 17.
Plaintiffs allege that in conjunction with their individual insurance agency businesses, plaintiffs built up their own individual reputations and defendants' reputations in the school districts in which plaintiffs marketed and sold section 403(b) annuities. Plaintiffs assert that as part of their business, each plaintiff developed his or her own client list which was shared with Northern life and, subsequently, with defendants, ING Financial Advisors, LLC and ING Life Insurance and Annuity Company, in conjunction with promoting and selling Northern Life annuity and insurance products.
Id., ¶¶ 13-15.
Plaintiffs allege that ING introduced new section 403(b) and section 457 annuity products in an effort to offer an annuity package that would be endorsed by the American Federation of Teachers ("AFT"). According to the complaint, ING worked through the president of the Orleans Parish local chapter of the AFT in an effort to acquire section 403(b) and/or section 457 "pay slots" in the Orleans Parish School System which would allow the ILIAC employee-agents to market and sell the AFT-endorsed ING annuity products to AFT-member teachers in the Orleans Parish School system. According to the complaint, in late 2003, the Southeast regional manager of ING came to New Orleans and met with a group of ING independent agents, including some of the named plaintiffs, and advised the agents that they would not be allowed to sell ING and/or Reliastar section 403(b) plans if they utilized an AFT endorsement to procure business within the Orleans Parish School system. Plaintiffs allege that to facilitate the success of the ILIAC employee-agents, ING has provided or will provide the ILIAC employee-agents with plaintiffs' confidential customer information in an effort to misappropriate plaintiffs' clients.
According to ING, "pay slots" refer to the financial institutions chosen by a local school district from which annuity products and mutual funds may be purchased by section 403(b) participants.
See id., ¶¶ 18-23.
Plaintiffs filed this lawsuit on February 6, 2004, in the Eastern District of Louisiana, invoking this Court's diversity jurisdiction. Plaintiffs claim that after the Aetna acquisition, ING violated several different provisions of Louisiana law when it used customer lists provided by plaintiffs to market ING products through the ILIAC agents. Plaintiffs alleged claims based upon the Louisiana Unfair Trade Practices Act, LSA-R.S. § 51:1401, et seq., the Louisiana Trade Secrets Act, LSA-R.S. § 51:1431, La. Civ. Code art. 2315, unjust enrichment pursuant to La. Civ. Code art. 2298, detrimental reliance, breach of contract, fraudulent and/or negligent misrepresentation in violation of Louisiana law, and tortious interference with contract in violation of Louisiana law.
In the complaint, plaintiffs did not specifically invoke Louisiana law with respect to their claims for detrimental reliance and breach of contract.
On May 4, 2004, defendants filed the instant motion, seeking dismissal of plaintiffs' lawsuit pursuant to Federal Rule of Civil Procedure 12(b)(3). Additionally, defendants moved for dismissal pursuant to Rule 12(b)(6) because plaintiffs plead their claims pursuant to Louisiana law in contravention of the Washington choice of law provision in the sales agreements or, alternatively, because plaintiffs' complaint failed to state any cognizable claim pursuant to Louisiana law. Defendants also argued that plaintiffs' fraud claims should be dismissed for failure to plead fraud with the requisite particularity pursuant to Fed.R.Civ.P. 9(b).
On November 5, 2004, this Court entered an order and reasons denying defendants' motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(3). This Court determined that, with the exception of the forum selection clause contained in the sales agreement signed by plaintiff, Joseph W. Pitts, the forum selection clauses contained in the remaining six plaintiffs' contracts with ING were permissive and, therefore, venue was not improper in this district. With respect to Pitts, this Court determined that the forum selection clause was mandatory and reasonable and, therefore, enforceable. However, because venue in this district was proper pursuant to 28 U.S.C. § 1391, the forum selection clause in Pitts contract provided for an alternative federal forum, and because plaintiffs raised the issue of transfer pursuant to 28 U.S.C. § 1404(a), this Court determined that dismissal of Pitts' claim pursuant to Fed.R.Civ.P. 12(b)(3) for improper venue was inappropriate and it ordered the parties to brief whether this case should be transferred to the Western District of Washington pursuant to 28 U.S.C. § 1404. Pending a determination with respect to transfer, this Court deferred making a decision on defendants' motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) and 9(b).
Rec. Doc. No. 30.
LAW AND ANALYSIS
I. Transfer Pursuant to 28 U.S.C. § 1404 28 U.S.C. § 1404(a) provides that "[f]or 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." "Section 1404(a) is intended to place discretion in the district court to adjudicate motions for transfer according to an 'individualized, case-by-case consideration of convenience and fairness.'" Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29, 108 S. Ct. 2239, 2244, 101 L.Ed.2d 22 (1988) (quoting Van Dusen v. Barrack, 376 U.S. 612, 622, 84 S.Ct. 805, 812, 11 L.Ed.2d 945 (1964)). The analysis of whether to transfer a case pursuant to 28 U.S.C. § 1404(a) "turns on a number of private and public interest factors, none of which are given dispositive weight." In re Volkswagen, AG, 371 F.3d at 203 (citing Action Indus., Inc. v. U.S. Fidelity Guar. Co., 358 F.3d 337, 340 (5th Cir. 2004) (citation omitted)). As explained by the Fifth Circuit:
Defendants argue that this Court must transfer Pitts' claim pursuant to 28 U.S.C. § 1406 based upon this Court's determination that the forum selection clause in Pitts' contract is mandatory. However, defendants also argue that the interests of justice, judicial economy and fairness to ING require that all of the plaintiffs' claims be tried in one court.
Section 1406 provides for dismissal or transfer if a plaintiff "lay[s] venue in the wrong division or district." Id. Courts differ with respect to whether a forum selection clause renders venue "improper" for purposes of transfer pursuant to § 1406. Compare, e.g., Smith v. Doe, 991 F. Supp. 781, 782 n. 1, 784 (E.D.La. 1998) (transferring pursuant to § 1406 based upon a forum selection clause) and Launey v. Carnival Corp., 1997 WL 426095, *2 (E.D.La. July 25, 1997) (applying § 1406 and holding that a forum selection clause renders venue improper) with Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 28 n. 8, 32, 108 S. Ct. 2239, 2243 n. 8, 2245, 101 L.Ed.2d 22 (1988) (noting that venue was not improper notwithstanding a mandatory forum selection clause because venue comported with 28 U.S.C. § 1391 and holding that in a diversity case, "federal law, specifically 28 U.S.C. § 1404(a), governs the District Court's decision whether to give effect to the parties' forum-selection clause and transfer this case"), Jumara v. State Farm Ins. Co., 55 F.3d 873, 877-79 (3d Cir. 1995) (citing Stewart and holding that whether venue is "proper" for purposes of § 1406 is governed by federal venue statutes not forum selection clauses), and Brock v. Baskin-Robbins USA Co., 113 F.Supp.2d 1078, 1084 (E.D. Tex. 2000) (noting that the United States Supreme Court implied in Stewart that forum selection clauses do not render defective venue that was otherwise appropriate pursuant to § 1391 and holding that, in a diversity case, when a forum selection clause allows the parties to bring the action in another federal court and venue is proper pursuant to § 1391, the standards of § 1404(a) apply). The Fifth Circuit has recognized that transfer pursuant to a forum selection clause may occur either by virtue of § 1406 or 1404(a). See Jackson v. West Telemarketing Corp. Outbound, 245 F.3d 518, 522 (5th Cir. 2001).
Even assuming defendants are correct that Pitts' claim alone should be transferred pursuant to § 1406, such a transfer would not affect this Court's analysis pursuant to § 1404(a) with respect to the other six plaintiffs. With respect to those six plaintiffs, § 1406 is inapplicable because the forum selection clauses pertaining to those plaintiffs are merely permissive and venue in this district is proper pursuant to 28 U.S.C. § 1391. See Rec. Doc. No. 30, at 9 n. 10. In light of the United States Supreme Court's holding in Stewart and the parties' agreement that plaintiffs' claims should not be split between two different federal courts, the unique circumstances of this case warrant analyzing the transfer of this entire case, including Pitts' claim, pursuant to § 1404(a).
The Fifth Circuit has instructed that the first determination a court must make in its transfer analysis is whether the judicial district to which transfer is sought would have been a district in which the claim could have been filed. See In re Volkswagen, AG, 371 F.3d 201, 203 (5th Cir. 2004); In re Horseshoe Entm't, 337 F.3d 429, 433 (5th Cir. 2003). Neither party disputes that plaintiffs could have properly filed this action in the Western District of Washington.
The private concerns include: (1) the relative ease of access to sources of proof; (2) the availability of compulsory process to secure the attendance of witnesses; (3) the cost of attendance for willing witnesses; and (4) all other practical problems that make trial of a case easy, expeditious and inexpensive. Piper Aircraft Co. v. Reyno, 454 U.S. 235, 241 n. 6, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981). The public concerns include: (1) the administrative difficulties flowing from court congestion; (2) the local interest in having localized interests decided at home; (3) the familiarity of the forum with the law that will govern the case; and (4) the avoidance of unnecessary problems of conflict of laws of the application of foreign law. Id.In re Volkswagen AG, 371 F.3d at 203.
In determining whether to transfer a case pursuant to § 1404(a), a forum selection clause that provides for exclusive venue in a particular forum, i.e., a mandatory forum selection clause, "will be a significant factor that figures centrally in the district court's calculus." Stewart, 487 U.S. at 29, 108 S. Ct. at 2244. In ruling on such a motion, a district court will assess the convenience of the forum "given the parties' expressed preference for that venue, and the fairness of transfer in light of the forum-selection clause and the parties' relative bargaining power." Id.; Von Graffenreid v. Craig, 246 F. Supp.2d 553, 563 (N.D. Tex. 2003). A forum selection clause that specifies an exclusive forum for the adjudication of disputes, which represents the parties' agreement as to the most proper forum, should receive neither dispositive weight or no consideration, "but rather the consideration for which Congress provided in § 1404(a)." Stewart, 487 U.S. at 31, 108 S. Ct. at 2245.
Ordinarily, a plaintiff's choice of forum is given deference and the party seeking a change of venue bears the burden of proving that transfer pursuant to § 1404(a) is appropriate. Jumara v. State Farm Ins. Co., 55 F.3d 873, 880 (3d Cir. 1995); In re Ricoh Corp., 870 F.2d 570, 573 (11th Cir. 1989); Time, Inc. v. Manning, 366 F.2d 690, 698 (5th Cir. 1966); Von Graffenreid, 246 F. Supp.2d at 563. Several circuits have held that the presence of a valid and enforceable forum selection clause shifts the burden to the party resisting transfer to demonstrate that transfer pursuant to § 1404(a) is inappropriate. Jumara, 55 F.3d at 880; In re Ricoh, 870 F.2d at 573; see also In re Fireman's Fund Ins. Co., 588 F.2d 93, 95 (5th Cir. 1979) ("Where the parties have by contract selected a forum, it is incumbent upon the party resisting to establish that the choice was unreasonable, unfair, or unjust."). However, when a forum selection clause is permissive rather than mandatory, courts accord less weight to the forum selection clause or decline to shift the burden of demonstrating that transfer is warranted to the party resisting transfer. See Watson v. John K. Burch Co., 2003 WL 21145744, *4 (N.D. Tex. May 14, 2003); Von Graffenreid, 246 F.Supp.2d at 564. Therefore, with respect to all plaintiffs except Pitts, defendants, as the parties seeking to have this Court decline jurisdiction, bear the burden of demonstrating that transfer is appropriate. With respect to Pitts, however, Pitts bears the burden of demonstrating why he should not be bound by his contractual choice of forum. See Jumara, 55 F.3d at 880. Additionally, the party seeking a change of venue "must show that trial in the district where the suit was originally filed will result in a balance of inconvenience to the movant — not that a transfer would merely shift the inconvenience to the non-moving party. Florida Marine Transporters v. Lawson Lawson Towing Co., Inc., 2001 WL 1018364, *3 (E.D.La., Aug. 31, 2001) (citing Lewis v. Magnolia Marine Transport, 1998 WL 19626, *2 (E.D.La., Jan. 16, 1998)).
Upon review of the parties submissions, the Court concludes that transfer is not warranted in this action. As noted above, the forum selection clauses contained in all of the plaintiffs' contracts, with the exception of Pitts, are permissive rather than mandatory. Additionally, the choice of a forum in the State of Washington appears to have been selected because of Northern Life's presence in Seattle, Washington at the time plaintiffs entered into the sales agreements with Northern Life. Although this Court ruled in its previous order and reasons that the merger of Northern Life with ING did not preclude the enforcement of the provisions of the sales agreements as a matter of law, defendants have submitted no factual evidence or argument with respect to ING's presence in the State of Washington. Additionally, defendants have not submitted any evidence of any connection between the contractually selected forum and the underlying claims. Those facts are of primary significance in this Court's assessment of the weight to afford the forum selection clauses. See Von Graffenreid, 246 F. Supp.2d at 564 (declining to retain a case in a contractually selected forum when the forum selection clause was permissive and there was no significant connection between the selected forum and the underlying claims). These same considerations counsel against affording undue weight to the mandatory forum selection clause in Pitts' contract.
A forum selection clause selecting an exclusive forum is given "significant weight" in the transfer analysis based upon the assumption that it "represents the parties' agreement as to the most proper forum." Stewart, 487 U.S. at 31, 108 S.Ct. at 2245. That rationale has less force when, as here, there is no evidence of any connection between the specified forum and any of the parties to the current litigation or the alleged wrong. The fact that the forum selection clauses in the other plaintiffs' contracts do not require that this litigation take place in the State of Washington, combined with defendants' own argument that it would be unfair and burdensome to require them to litigate identical claims in two separate fora, counsel against permitting Pitts' forum selection clause to drive this Court's analysis with respect to all seven plaintiffs.
The private factors pertaining to the convenience of the parties and witnesses weigh against transferring this case to the Western District of Washington. Several courts have emphasized that the convenience of witnesses is of primary importance in the transfer calculus. See Von Graffenreid, 246 F. Supp.2d at 563 ("The convenience of witnesses is often regarded as the most important factor to be considered in deciding whether to transfer venue.") (citations omitted); Continental Airlines, Inc. v. Am. Airlines, Inc., 805 F. Supp. 1392, 1396 (S.D. Tex. 1992) ("The convenience of the witnesses is arguably the most important factor in determining whether a case should be transferred pursuant to section 1404(a)."); Gardipee v. Petroleum Helicopters, Inc., 49 F. Supp.2d 925, 928-29 (E.D. Tex. 1999) ("Typically, the convenience of the witnesses and parties is the most important factor in determining whether a case should be transferred pursuant to § 1404(a)."). Additionally, "[i]t is the convenience of non-party witnesses, rather than that of employee witnesses, however, that is the more important factor and is accorded greater weight." Gundle Lining Constr. Corp. v. Fireman's Fund Ins. Co., 844 F. Supp. 1163, 1166 (S.D. Tex. 1994) (citations omitted). The party seeking a change of forum must specifically identify the key witnesses and outline the substance of their testimony. Gardipee, 49 F. Supp.2d at 929; Dupe v. Spaniel Marine Corp., 810 F. Supp. 823, 826 (S.D. Tex. 1993); Continental Airlines, 805 F. Supp. at 1396.
In their initial disclosures, plaintiffs have identified forty-three witnesses, nineteen of which are located in Louisiana. The Louisiana witnesses include not only certain ING personnel, but fifteen non-party witnesses including AFT and local school system personnel. Although roughly half of plaintiffs' witnesses are located in states other than Louisiana, none of the listed witnesses are located in the State of Washington. Defendants have not identified any potential defense witnesses located in Washington. The Louisiana non-party witnesses are outside the Western District of Washington's subpoena power for depositions, see Fed.R.Civ.P. 45(c)(3)(A)(ii), and trial subpoenas requiring these witnesses to travel more than 100 miles for trial would be subject to motions to quash. See Fed.R.Civ.P. 45(c)(3); see also In re Volkswagen, 371 F.3d at 205 n. 4. Moreover, the Fifth Circuit has noted that "[w]hen the distance between an existing venue under § 1404(a) is more than 100 miles, the factor of inconvenience to witnesses increases in direct relationship to the additional distance to be traveled." In re Volkswagen, 371 F.3d at 204-05. It is significant that defendants have not identified any witnesses, including any relevant ING personnel, who are located in the northwest United States, much less the State of Washington. On balance, the inconvenience to witnesses would be increased by transferring this case to Washington.
See Rec. Doc. No. 32, Ex. 1.
Defendants argue that plaintiffs cannot claim that litigating this claim in the Western District of Washington is inconvenient because many of plaintiffs' listed witnesses, including ING personnel, are located in states other than Louisiana and, therefore, those witnesses will be required to travel whether this litigation takes place in Washington or Louisiana. That argument is unpersuasive. "Section 1404(a) allows transferring to a more convenient forum, 'but not one which is likely to prove equally convenient or inconvenient.'" Holmes v. Freightliner, LLC, 237 F. Supp.2d 690, 693 (M.D. Ala. 2002) (quoting Van Dusen v. Barrack, 376 U.S. 612, 645-46, 84 S. Ct. 805, 824, 11 L. Ed.2d 945 (1964)). The fact that some witnesses will have to travel whether this litigation takes place here or in Washington does not weigh in favor of transfer when, as here, transfer to Washington would require all of the witnesses to travel. In such circumstances, there is no basis upon which to find that a Washington forum would be more convenient for the parties or the witnesses. Instead, a transfer to the State of Washington would only increase the costs of litigation and logistical difficulties without a corresponding increase in convenience to any party or witness. Additionally, although defendants argue that much of the relevant documentation is located in states other than Louisiana, defendants have not suggested that any documentation is located in Washington.
Defendants assert that the majority of the relevant documentation is located in the main offices of ING and the AFT. However, defendants have declined to inform the Court as to where such main offices are located. Accordingly, the Court cannot assess whether the location of such documentation is relevant to the question of transfer to the Western District of Washington.
The public concerns also do not favor transfer of this case to Washington. At this time, this Court's docket is not overly congested. Neither party has provided the Court with any information on the status of docket congestion in the Western District of Washington. However, according to the statistics compiled by the Administrative Office of the United States Courts, the Western District of Washington, as of March 31, 2004, had 4,062 civil cases pending as compared with 3,161 pending civil cases in the Eastern District of Louisiana. Additionally, the conduct which forms the basis of this lawsuit occurred primarily in Louisiana and, given the fact that the marketing of certain insurance products in Louisiana to local school board employees is at issue in this case, such conduct is of local interest. Ferens v. John Deere Co., 494 U.S. 516, 530, 110 S.Ct. 1274, 1283, 108 L.Ed.2d 443 (1990) ("There is a local interest in having localized controversies decided at home."). Additionally, "[t]he Supreme Court has determined that '[j]ury duty is a burden that ought not to be imposed upon the people of a community which has no relation to the litigation.'" In re Volkswagen, 371 F.3d at 206(quoting Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508-09, 67 S. Ct. 839, 91 L. Ed. 1055 (1947)). Defendants have not pointed to any fact, other than the existence of the forum selection clause, that demonstrates any connection between this litigation and the State of Washington.
The last two factors at issue in this case are the familiarity with the law that will govern the case and the avoidance of unnecessary problems of conflict of laws. With respect to the choice of law, defendants assert that pursuant to the sales agreements, Washington law will apply to this case. Plaintiff has not directly responded to defendants' argument pertaining to the applicable law and neither party has specifically briefed the issue pertaining to the scope of the language used by the parties with respect to the choice of law clause. The United States Supreme Court has noted that there is an appropriateness in "having the trial of a diversity case in a forum that is at home with the state law that must govern the case, rather than having a court in some other forum untangle problems in conflicts of laws, and in law foreign to itself." Id. (quoting Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508-509, 67 S.Ct. 839, 843, 91 L.Ed. 1055 (1947)) (internal quotation marks omitted). Nonetheless, even assuming arguendo that defendants are correct that Washington law would apply, a position plaintiffs have at least implicitly opposed by filing their claims pursuant to Louisiana law, this Court does not find that the potential application of Washington law to plaintiffs' tort and breach of contract claims outweighs the other factors in this Court's analysis, which factors clearly weigh in favor of declining to transfer this action.
The choice of law clauses found in the plaintiffs' sales agreement states: "This Agreement is governed by the laws of the State of Washington." Rec. Doc. No. 9, Ex 2, ¶ 22; Exs. 3-5, ¶ 20; Ex. 6, ¶ 22; Ex. 7, ¶ 20; Rec. Doc. No. 13, Ex. 1, ¶ 22.
In sum, the private and public interest factors weigh against transferring this case to the Western District of Washington. Defendants have not borne their burden of demonstrating that the Western District of Washington is a more convenient forum. The same facts, in addition to the added inconvenience and unfairness of requiring both parties to simultaneously litigate the same claims in two different fora, support the conclusion that Pitts has sustained his burden of showing why he should not be bound to litigate his claims in the Western District of Washington. Accordingly, this Court declines to transfer this action to the Western District of Washington.
II. Motion to Dismiss pursuant to Fed.R.Civ.P. 12(b)(6) and 9(b)
Defendants have moved to dismiss plaintiffs' complaint on two alternative grounds. First, defendants argue that because plaintiffs' complaint is plead pursuant to Louisiana law in contravention of the choice of law clause in the sales agreements, plaintiffs' entire complaint is subject to dismissal. In the alternative, defendants argue that plaintiffs have failed to state any cognizable claim pursuant to Louisiana law. Specifically, defendants contend that plaintiffs are unable to state any viable claim for relief because (i) the sales agreements specifically contradict plaintiffs' allegations and explicitly permit the conduct which forms the basis of plaintiffs' claims; (ii) Louisiana law provides no basis for plaintiffs' claims; and (iii) plaintiffs have failed to state any of their fraud-based claims with particularity. Additionally, defendants urge the Court to require plaintiffs to file a more definite statement pursuant to Fed.R.Civ.P. 12(e) with respect to plaintiffs' breach of contract claim because, according to defendants, the sales agreements specifically permit the conduct alleged in the complaint and plaintiffs' have not identified the provision of the contract upon which their breach of contract claim is based.
Fed.R.Civ.P. 12(e) provides that a party may move for a more definite statement "[i]f a pleading to which a responsive pleading is permitted is so vague or ambiguous that a party cannot reasonably be required to frame a responsive pleading. . . ."
As noted above, plaintiffs have not explicitly articulated their position with respect to whether Louisiana law or Washington law applies by virtue of the choice of law clause in the sales agreements. Additionally, plaintiffs have not responded to defendants' argument with respect to the effect of the provisions of the sales agreements and have only cursorily responded to defendants' arguments with respect to the viability of their claims pursuant to Louisiana law. Instead, plaintiffs' primary response in opposition to defendants' motion to dismiss is repeated requests for leave to amend the complaint to allow plaintiffs the opportunity to cure any deficiencies in complaint.
Although plaintiffs have plead their claims pursuant to Louisiana law, plaintiffs have also argued, in their brief to this Court regarding transfer, that this Court should retain this case because, inter alia, Washington law and Louisiana law are similar and the application of Washington law would not interpose any particular difficulty in this case.
Neither party has briefed the issue of whether plaintiffs' complaint states any valid claim pursuant to Washington law.
"A party may amend the party's pleading once as a matter of course at any time before a responsive pleading is served. . . ." Fed.R.Civ.P. 15(a). Plaintiff has not previously filed an amended complaint and defendant has not yet filed an answer in this action. The Fifth Circuit has held that because a Rule 12(b)(6) is not a "responsive pleading," the filing of such a motion does not extinguish a party's right to amend as a matter of course. McKinney v. Irving Indep. Sch. Dist., 309 F.3d 308, 315 (5th Cir. 2002). Therefore, leave to amend is not required before plaintiffs may amend their complaint. "'When, as in this case, a plaintiff who has a right to amend nevertheless petitions the court for leave to amend, the court should grant the petition.'" Id. (quoting Saidi v. Ehrlich, 732 F.2d 1218, 1220 (5th Cir. 1984)).
In light of plaintiffs' right to amend the complaint, their request to amend the complaint, the fact that defendants' brief has put plaintiffs' on more than adequate notice of defendants' arguments pertaining to the sufficiency of the complaint, and defendants' alternative request for a more definite statement pursuant to Fed.R.Civ.P. 12(e), the proper course of action is for this Court is to permit plaintiffs to file an amended complaint and permit defendants the opportunity to re-urge their arguments with respect to such amended complaint.
Accordingly,
IT IS ORDERED that plaintiffs' request to amend the complaint is GRANTED. IT IS FURTHER ORDERED that defendants' request for a more definite statement is GRANTED. IT IS FURTHER ORDERED that plaintiffs shall file an amended complaint within 10 days of the date of entry of this order.
IT IS FURTHER ORDERED that defendants' motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) and 9(b) (Rec. Doc. No. 8) is DISMISSED WITHOUT PREJUDICE to defendants' right to re-urge the motion with respect to the amended complaint.