Opinion
No. C 04-2478 MHP.
November 16, 2004
MEMORANDUM ORDER
David A. Dudash, an employee of defendant Varnell Struck and Associates, has brought the present class action to challenge the terms and conditions of his employment. Plaintiff alleges that defendant's classification of Dudash and other similar employees as exempt from the Fair Labor Standards Act ("FLSA") violated his right to overtime wages and other workplace protections. In addition, he brings four pendent causes of action under the California Labor Code and Business and Professions Code alleging failure to pay overtime wages, failure to provide rest and meal breaks, and unlawful, unfair, and fraudulent business practices. Now before the court is defendant's motion to dismiss plaintiff's complaint based on improper venue, as well as a motion to strike plaintiff's prayer for punitive damages. After considering the parties' arguments and submissions, and for the reasons set forth below, the court rules as follows.
All facts herein have been taken from the plaintiff's Complaint, unless otherwise noted.
Plaintiff has worked as an "area service representative" for defendant Varnell Struck and Association ("Varnell") since February 15, 2002. Varnell supplies stock clerks to retail chain stores throughout the country, including Lowe's Home Improvement Stores ("Lowe's"). Scherr Dec. at 2. The company's principal place of business is in Duluth, Georgia, and it is incorporated in Delaware. Id. at 1. Plaintiff and other area service representatives are assigned to a regional sales route of Lowe's stores where their duties include stocking, pricing, labeling, and shelving merchandise pursuant to "planograms" and other instructions provided by managers at Lowe's and Varnell. Dudash Dec. ¶¶ 3-5. Such positions are salaried, with no entitlement to overtime pay, as defendant classifies them as "exempt" under the FLSA. Plaintiff's sales route has changed once, but throughout his employment it has run through Los Angeles and Orange Counties, California. Kilburn Dec. ¶¶ 5-11.
Plaintiff filed the present action on July 8, 2004, alleging that his employment with Varnell violates the FLSA, the California Labor Code, and the California Business and Professions Code. Now before the court is defendant's motion to dismiss for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3), or in the alternative, transfer pursuant to 28 U.S.C. § 1406(a). In addition, defendant has moved to strike plaintiff's prayer for punitive damages. Defendant also moved to strike plaintiff's fifth cause of action on the basis of failure to exhaust statutory remedies; however, plaintiff subsequently completed such measures and defendant concedes that his motion to strike on that point is now moot.
LEGAL STANDARD
A. Venue
In an action not founded solely on diversity, venue is proper in the district in which (1) any defendant resides, if all of the defendants reside in the same state, (2) the district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) a judicial district in which any defendant may be found, if there is no district in which the action may otherwise be brought. 28 U.S.C. § 1391(b).
When venue is improper, the district court must either dismiss the case or transfer it "in the interests of justice" to an appropriate jurisdiction. See Fed.R.Civ.Pro. 12(b)(3); 28 U.S.C. § 1406(a). Even where venue is proper, the court may transfer any civil action to another jurisdiction where it may have been brought "for the convenience of parties and witnesses, in the interests of justice." 28 U.S.C. § 1404(a). In a motion to dismiss for improper venue under Federal Rule of Civil Procedure 12(b)(3), the court may consider facts outside the pleadings, and the pleadings need not be accepted as true. See Murphy v. Schnieder National, Inc., 362 F.3d 1133, 1137 (9th Cir. 2004).
DISCUSSION
Defendant has moved to dismiss, or in the alternative, to transfer plaintiff's action on the basis of improper venue and strike plaintiff's prayer for punitive damages.
I. Motion to Dismiss Based on Improper Venue
Venue relates to the convenience of the litigants, rather than the power of the court. See Neirbo Co. v. Bethlehem Shipbuilding Corp., 308 U.S. 165, 168 (1939). Plaintiff has brought the present action on his own behalf, as well as on behalf of a putative class of Varnell area service representatives. Contrary to defendant's unsupported assertion, the burden to prove venue is generally and properly placed on defendant, as the doctrine protects defendant's privilege to avoid litigation in inconvenient forums. See, e.g., Myers v. American Dental Ass'n, 695 F.2d 716, 724 (3d Cir. 1982). See also 17 Moore's Federal Practice-Civil § 110.01 (noting that "[o]nce the defendant timely objects to venue, courts of appeals generally, and correctly, treat the venue question as an affirmative defense. Therefore, the defendant has the burden of establishing that venue is improper.") While the rule is unclear in the Ninth Circuit, there is no doubt that even if the burden to show proper venue is construed to belong to plaintiff, he may use "declaration[s], affidavit[s], oral testimony, or 'other evidence,'" and he may argue facts beyond the pleadings. See Ziegler Chemical and Mineral Corp. v. Standard Oil Company, 32 F.R.D. 241, 243 (N.D.Cal. 1962),disapproved on other grounds Piedmont Label Co. v. Sun Garden Packing Co., 598 F.2d 491 (9th Cir. 1979).
For the proposition that plaintiff bears the burden to show proper venue in reliance on admissible evidence, defendant cites to a case in which the Ninth Circuit held that admissible evidence is required on a motion for summary judgment pursuant to Federal Rule of Civil Procedure 56(e). See Def.'s Reply at 3 (citing Beyene v. Coleman Security Services, Inc., 854 F.2d 1179, 1181 (9th Cir. 1988)).
In his complaint, plaintiff alleges proper venue on the basis that "the events described herein occurred in this judicial district," apparently a claim for venue under 28 U.S.C. § 1391(b)(2). However, plaintiff's complaint describes a series of events in the Central District of California, the site of plaintiff's employment relationship, sales route, and job responsibilities with Varnell. The facts allege a failure to provide overtime pay, off-duty rest and meal breaks, and accurate wage statements. Plaintiff does not dispute that his sales route for Lowe's Stores was entirely within Los Angeles and Orange Counties, nor does he argue in his opposition to the present motion that substantial events relevant to his action occurred in the Northern District. Clearly, under a 28 U.S.C. § 1391(b)(2) analysis, they did not. Dudash's description of one or more brief episodes of employment in this district over a two year period, as well as conference calls with Varnell employees in this district, do not constitute a "substantial part of the events or omissions giving rise to the claim." See Dudash Dec. ¶¶ 6-7.
Plaintiff argues that his claim nevertheless establishes venue under 28 U.S.C. § 1391(b)(1), "a district in which any defendant resides." For purposes of a venue analysis when the defendant is a corporation, residence is determined in terms of the court's personal jurisdiction over the defendant at the time the action commenced. 28 U.S.C. § 1391(c). The Ninth Circuit has consistently found that California's jurisdiction statute is coextensive with federal due process requirements; therefore, jurisdictional inquiries under state law and federal due process standards merge into one analysis. See e.g., Roth v. Garcia Marquez, 942 F.2d 617, 621 (9th Cir. 1991). Personal jurisdiction of non-resident corporations is determined according to a "minimum contacts" analysis which ensures that the exercise of jurisdiction "does not offend traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). "[I]t is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege 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). The Ninth Circuit has identified two means for satisfying this constitutional test: (1) a demonstration of "substantial" or "continuous and systematic" contacts with the forum state, even where the cause of action is unrelated to the defendant's activities in the forum, or (2) "a strong relationship between the quality of the defendant's forum activities and the cause of action." Decker Coal Co. v. Commonwealth Edison Company, 805 F.2d 834, 839 (9th Cir. 1986).
Plaintiff argues that assertion of personal jurisdiction over defendant would be proper based on Varnell's "substantial, continuous, and systematic contacts with the Northern District of California." Pl.'s Opp'n at 8. He argues that Varnell supplies area service representatives for four Lowe's stores within the district. Id. Defendant concedes the existence of these stores, as well as a fifth store opening soon, and acknowledges the presence of four to nine Varnell area service representatives operating in this district over the course of the relevant period. See Nelson Dec. ¶¶ 4-5; Kilburn Dec. ¶¶ 5-6; Scherr Dec. ¶¶ 7-8; Lyons Dec. ¶ 9. The placement of fixed employees and sales routes within this district constitute continuous and systematic contacts, availing Varnell of the privileges and protections of business in this district and making a lawsuit relating to Varnell's California employment base foreseeable. See Burger King v. Rudzewicz, 471 U.S. 462, 472-76 (1985). In addition, plaintiff's lawsuit, particularly as a putative class action, is directly related to the nature of defendant's contacts, namely defendant's retention of employees in this district. Plaintiff is therefore correct that venue in this court is proper under 28 U.S.C. § 1391(b)(1).
Defendant argues, without legal authority, that plaintiff's failure to plead venue on the basis of 28 U.S.C. § 1391(b)(1) is grounds for dismissal. The rules of pleading do not require a plaintiff to allege venue, though it is good practice to do so. See Fed.R.Civ.Pro 8(a); 2 Moore's Fed. Practice Civ. § 8.03[1] (2004) (stating that while the federal rules require a claimant to plead a basis for subject matter jurisdiction, they do not require allegations of venue, which can be conferred by waiver or consent). Though plaintiff incorrectly asserted venue in this district on the basis of events, he also alleges that Varnell was a "corporation doing business in the State of California and within this judicial district" — an allegation supported by the facts pled and argued in this case by both parties. It is well settled that this court may consider facts outside of the pleadings in conducting an analysis of improper venue under Fed.R.Civ.Pro. 12(b)(3). See Murphy v. Schnieder National, Inc., 362 F.3d 1133, 1137 (9th Cir. 2004). Therefore, plaintiff's mistaken characterization of the basis for venue in this district is not grounds for dismissal or transfer based on improper venue. B. Transfer
Apparently realizing the risk of a finding of proper venue here, defendant argued in its reply that this court should transfer the present action to the Central District of California pursuant to 28 U.S.C. § 1404(a), "for the convenience of parties and witnesses, in the interests of justice." See Van Dusen v. Barrack, 376 U.S. 612, 616 (1964). Despite defendant's failure to move for transfer pursuant to this provision, the court can order such a transfer sua sponte here. See Muldoon v. Tropitone Furniture Co., 1 F.3d 964 (9th Cir. 1993) (describing sua sponte transfer pursuant to section 1404(a)). In order to upset a plaintiff's choice of forum, a defendant must make a "strong showing of inconvenience." See Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986). Analysis of suitability for transfer involves private factors, such as the ease of access to proof, availability of compulsory process for unwilling witnesses, costs, and other practical considerations for an efficient and expeditious trial.Id. In addition, it considers public factors such as the local public and jury pool's interest in localized controversies. Id.
Defendant has made an unusually strong showing of inconvenience to the parties and witnesses involved in this case. Plaintiff does not allege or argue that he resides in this district, nor that his employment was located here, and defendants have offered evidence that his residence has been, and continues to be, in the Central District. See Coto Dec., Exhs. A-C. The vast majority of liability and damages witnesses to this dispute are not located in this district. Numerous key witnesses to plaintiff's work schedule, meal and rest breaks, job duties, and level of responsibility will be Lowe's employees along plaintiff's Southern California sales route. Barry Kilburn, a Varnell witness who will provide testimony regarding plaintiff's job description, income, and other employment conditions, is outside California entirely. See Def.'s Mot. at 3.
In fact, this court is at a loss to identify parties, witnesses, or items of evidence pertinent to Dudash's claims which would be more conveniently accessed in this district. Dudash's description of one or more brief episodes of employment in this district over a two year period, as well as conference calls with Varnell employees located in Northern California, does not suggest a critical mass of witnesses or parties to this dispute that will be more conveniently accessed locally.See Dudash Dec. ¶¶ 6-7. The additional fact that members of plaintiff's putative class are in the Northern District is also insufficient to weigh against transfer, as here again, the majority of these class members within California are assigned to sales routes in Southern California.See Nelson Dec. ¶ 7 (stating that there are 33 Lowe's Stores in Central District, compared to five in the Northern District). See also Kilburn Dec. ¶¶ 5-6; Scherr Dec. ¶¶ 7-8; Lyons Dec. ¶ 9 (stating the comparative numbers of Varnell area service representatives staffed along Southern California compared to Northern California sales routes).
As for the public factors relevant to a section 1404(a) transfer, it is true that the local public and members of the jury pool in this district have an interest in guarding against labor violations against Varnell's local employees. However, their interest pales in comparison to that of the Central District, where the class representative and the majority of other class members allege labor violations. Id. A plaintiff is not obliged to file his action in the most convenient forum as long as the forum is proper, but he cannot maintain his action in the least convenient forum when faced with a motion to transfer. Thus, while this court must apply deference to plaintiff's choice of forum, the present action presents a classic case to invoke the anti-forum shopping objectives of section 1404(a).
The court thus orders this matter transferred "for the convenience of parties and witnesses, in the interests of justice" to the Central District of California. Subsequent to submission and briefings of the present motion, plaintiff stipulated to such a transfer.
The court reminds plaintiff that such stipulations are more conveniently entered prior to submission of an opposition and reply brief and prior to the day of oral arguments on such a motion.
II. Defendant's Motion to Strike Plaintiff's Claims for Exemplary or Punitive Damages
Given the above holding to transfer this case, the court declines to consider defendant's arguments for striking plaintiff's prayer for exemplary and punitive damages. The transferee district will be a more appropriate setting to consider that issue. CONCLUSION
For the convenience of the parties and witnesses and in the interest of justice, the court hereby TRANSFERS this action to the Central District of California pursuant to 28 U.S.C. § 1404(a). The Clerk of the Court is directed to transfer this matter forthwith.
IT IS SO ORDERED.