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finding little connection to the Southern District of New York with the exception of a meeting between the parties
Summary of this case from Cohn v. Metropolitan Life Insurance, Co.Opinion
05 Civ. 8914 (SAS).
June 19, 2006.
Michael Utilla, Esq., UTILLA ASSOCIATES Brooklyn, NY, For Plaintiff.
Lawrence R. Gelber, Esq. Brooklyn, NY, For Defendants.
Thomas Fleming, Esq. OLSHAN GRUNDMAN FROME ROSENZWEIG WOLOSKY LLP Park Avenue Tower New York, NY.
Stephen M. Goldberg, Esq. Judith L. Meadow, Esq. RUSS, AUGUST KABAT Los Angeles, CA.
OPINION AND ORDER
I. INTRODUCTION
Paula Harrison brings this action to recover damages resulting from defendants' intentional malfeasance. Harrison alleges that defendants used her refusal to participate in their criminal activity as a pretext to steal her business — a contemporary urban culture magazine. Harrison seeks compensation for "damages in the form of lost time, energy, and resources invested in Unleashed Magazine as well as lost revenue from sales and advertising, and lost business opportunities." Defendants now move to dismiss Harrison's First Amended Complaint pursuant to Federal Rules of Civil Procedure 12(b)(2), 12(b)(3), and 12(b)(6), or in the alternative, to transfer this action to the Central District of California pursuant to section 1404(a) of Title 28 of the United States Code.
See First Amended Complaint ("Compl.") ¶¶ 13, 17.
Id. ¶ 17.
See Defendants' Memorandum of Law in Support of Their Motion to Dismiss or, in the Alternative, for Transfer of Venue ("Def. Mem.") at 1.
II. FACTS
The following allegations, drawn from the Complaint, are presumed to be true for purposes of this motion. Harrison resides in the Eastern District of New York. Defendants Ronald Samuel, Nicole Cooper, Daniel Cohen, Samuel Publishing, Samuel Cohen Media, LLC, and Unleashed Magazine all reside in the Central District of California. Defendant Brian Glazen resides in Ohio. Defendant Unleashed Publishing, Inc. is a Florida corporation operating out of the Central District of California.
See Compl. ¶¶ 4-12; 2/10/06 Affidavit of Plaintiff Paula Harrison in Opposition to Defendants' Motion to Dismiss ("Harrison Aff.") ¶ 5; State of Florida Department of Corporations Website Printout ("Fla. Corp. Printout"), Ex. A to 2/10/06 Affirmation of Michael Utilla, plaintiff's counsel ("Utilla Aff.").
In early 2000, Harrison and Cooper developed a business plan for a contemporary urban culture magazine. They agreed to be equal partners in this venture and to name the publication "Unleashed Magazine" (the "Magazine"). By June, Harrison and Cooper had begun to prepare a prototype issue of the Magazine and to seek potential investors. Around October 2000, Cooper informed Harrison that she had found a potential investor for the Magazine — Ronald Samuel. Samuel, Cooper, and Harrison met in Los Angeles in January 2001, at which time Samuel told Harrison that he was capable of, and interested in, funding the Magazine.
See Compl. ¶¶ 17-21.
See id. ¶¶ 22-23.
See id. ¶ 24.
See id. ¶¶ 25-29.
Shortly after the Los Angeles meeting, the three met again in New York to discuss the business plan further. They agreed that Samuel would acquire a fifty percent interest in the business, contingent upon his investment. Harrison and Cooper each agreed to retain twenty-five percent interests. After these meetings, Harrison learned that Samuel would be funding the Magazine through money obtained from illegal activities, including money laundering and the distribution of MDMA — a controlled substance also known as Ecstasy.
See id. ¶ 30.
See id. ¶¶ 32-33.
During the first two months of 2001, when Harrison was in Los Angeles, she observed Cooper, who was then unemployed, place several assets and liabilities of the Magazine under her name, including the lease of a BMW automobile (the "Company Vehicle"), in an effort to conceal Samuel's ownership of these assets and liabilities. Cooper also deposited cash provided by Samuel in California and Florida bank accounts, and Cooper paid the Magazine's expenses using Samuel's cash. In February 2001, Harrison observed Samuel give Cooper a "brick" of U.S. currency and a bag of Ecstasy tablets at a gas station in Los Angeles. Cooper placed the "brick" in the Company Vehicle and later transferred the cash to the Magazine's Los Angeles office. Harrison left Los Angeles in late February 2001 after Cooper asked her to smuggle Ecstasy from Holland using counterfeit passports.
See id. ¶¶ 34-36.
See id. ¶ 37.
See id. ¶ 38.
See id. ¶ 39.
See id. ¶ 43.
After Harrison left, Samuel and Cooper continued their enterprise, forming several corporations — also named as defendants in this action — with defendant Daniel Cohen. In September 2001, Cooper, Samuel, Cohen, Unleashed Publishing, Samuel Publishing, Unleashed Magazine, and Samuel Cohen Media began publishing the Magazine in Los Angeles and distributing it in interstate commerce without Harrison's consent. In 2002, Samuel Cohen Media attempted to trademark "Unleashed Magazine," but Harrison successfully contested its application. Brian Glazen then applied for and received the "Unleashed Magazine" trademark in 2004, and immediately licensed it to Samuel Cohen Media.
See id. ¶¶ 45-48.
See id. ¶ 57; 3/2/06 Declaration of Ronald Samuel in Support of Defendants' Motion to Dismiss ("Samuel Decl.") ¶ 3.
See Compl. ¶¶ 58-59.
See Order Sustaining Plaintiff's Opposition to Unleashed, Inc.'s Application for the Trademark Unleashed Magazine, Ex. E to Utilla Aff.
See Compl. ¶¶ 60-65; Confirmatory Trademark License Agreement ("License Agreement"), Ex. M to Utilla Aff. See also Samuel Decl. ¶ 4.
III. LEGAL STANDARD
A. Transfer Under Section 1404
"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." This statute has superseded the common-law doctrine of forum non conveniens, which is now appropriately used only in "cases where the alternative forum is abroad." Courts may transfer cases under section 1404(a) even if they lack personal jurisdiction over defendants and even if venue is improper in the transferor district.
28 U.S.C. § 1404(a) (2006).
See Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 722 (1996) (quoting American Dredging Co. v. Miller, 510 U.S. 443, 449 n. 2 (1994)). See also Iragorri v. United Techs. Corp., 274 F.3d 65, 72 (2d Cir. 2001) (en banc).
See Songbyrd, Inc. v. Estate of Grossman, 206 F.3d 172, 179 (2d Cir. 2000).
In order to transfer a civil action under section 1404(a), the moving party must satisfy two requirements. First, the transferee court must be able to exercise jurisdiction over the parties and must be an appropriate venue for the action. Second, the balance of convenience and justice must favor transfer. Although the first requirement is straightforward, the second requirement "`is essentially an equitable task' left to the Court's discretion."
Relevant factors include the: (1) deference accorded to plaintiff's choice of forum; (2) convenience to witnesses and parties; (3) situs of operative facts; (4) interests of justice and judicial economy; (5) relative ease of access to sources of proof; (6) availability of process to compel unwilling witnesses; (7) relative means of the parties; and (8) forum's familiarity with the governing law.
See Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 30 (1988).
Citigroup, Inc. v. City Holding Co., 97 F. Supp. 2d 549, 561 (S.D.N.Y. 2000) (quoting First City Nat'l Bank Trust Co. v. Simmons, 878 F.2d 76, 80 (2d Cir. 1989)).
Micromuse, Inc. v. Aprisma Mgmt. Techs., Inc., No. 05 Civ. 0894, 2005 WL 1241924, at *2 (S.D.N.Y. May 24, 2005). See also Iragorri, 274 F.3d at 73-74 (citing Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947)).
When conducting this balancing test, the court enjoys "broad discretion" and decides based on "notions of convenience and fairness on a case-by-case basis." The movant bears the burden of showing that transfer is warranted.
In re Cuyahoga Equip. Corp., 980 F.2d 110, 117 (2d Cir. 1992) (citing Stewart Org., 487 U.S. at 29).
See Iragorri, 274 F.3d at 71 (citing Gulf Oil, 330 U.S. at 508).
Not all of the above factors merit equal weight. When plaintiff does not reside in and the operative facts bear little connection to the forum district, plaintiff's choice is shown less deference. Greater deference to plaintiff's choice of a non-resident forum is appropriate, however, where that choice was "motivated by legitimate reasons, including plaintiff's convenience and the ability of [plaintiff] to obtain jurisdiction over defendant."
See Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255-56 (1981).
Iragorri, 274 F.3d at 72.
The convenience of witnesses is the most important factor in deciding whether to transfer an action, although the court does not generally consider witnesses located outside both the current and transferee districts. The location of documents, on the other hand, is "not a compelling consideration when records are easily portable." For the purpose of determining the "situs of operative facts," a court may make reasonable assumptions regarding the location of events if they are not clearly specified in the complaint. Finally, American courts cannot compel unwilling foreign witnesses to testify.
See Filmline (Cross-Country) Productions, Inc. v. United Artists Corp., 865 F.2d 513, 520 (2d Cir. 1989). Accord 17 James Wm. Moore et al., Moore's Federal Practice § 111.13[1][f][i] (3d ed. 2005). But see Aerotel, Ltd. v. Sprint Corp., 100 F. Supp. 2d 189, 197 (S.D.N.Y. 2000) ("where the movant has an extensive nationwide network, the scale tilts slightly in favor of the nonmovant"); TSE v. Ventana Med. Sys., Inc., No. 97-37-SLR, 1997 WL 811566, at *6 (D. Del. Nov. 25, 1997) ("For a company engaged in business throughout the United States, the claim that litigation away from the most convenient forum is burdensome is somewhat suspect."); Rubinstein v. Skyteller, Inc., 48 F. Supp. 2d 315, 325 (S.D.N.Y. 1999) (quoting Purcell Graham, Inc. v. Nat'l Bank of Detroit, No. 93 Civ. 8786, 1994 WL 584550, at *5 (S.D.N.Y. Oct. 24, 1994) ("Although convenience to the parties and party witnesses is important, the `availability of process to require non-party witnesses to testify is the most compelling consideration.'")).
See Wechsler v. Macke Int'l Trade, Inc., No. 99 Civ. 5725, 1999 WL 1261251, at *6 (S.D.N.Y. Dec. 27, 1999).
KPMG Consulting, Inc. v. LSQ II, LLC, No. 01 Civ. 11422, 2002 WL 1543907, at *4 (S.D.N.Y. July 12, 2002) (internal quotations omitted). Accord Coker v. Bank of Am., 984 F. Supp. 757, 766 (S.D.N.Y. 1997) ("In today's era of photocopying, fax machines and Federal Express, the location of documents factor is neutral.") (internal quotations omitted).
See Alonso v. Saudi Arabian Airlines Corp., No. 98 Civ. 7781, 1999 WL 244102, at *7 (S.D.N.Y. Apr. 23, 1999).
See DiRienzo v. Philip Servs. Corp., 294 F.3d 21, 30 (2d Cir. 2002).
B. Personal Jurisdiction
Because California's long-arm statute permits a court to exercise personal jurisdiction to the fullest extent allowed under due process, "the jurisdictional analyses under state law and federal due process are the same." The Ninth Circuit uses a three-prong test to determine whether the court's exercise of personal jurisdiction comports with due process:
See Cal. Civ. Proc. Code § 410.10 (2006).
Yahoo! Inc. v. La Ligue Contre Le Racisme, 433 F.3d 1199, 1205 (9th Cir. 2006).
(1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; 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 relates to the defendant's forum-related activities; and
(3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.
Id. at 1205-06 (internal quotations omitted).
C. Venue
A civil action wherein jurisdiction is not founded solely on diversity of citizenship may, except as otherwise provided by law, be brought only in (1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial 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) (2006).
Residence is determined at the time that plaintiff commences the action. In a tort action, the locus of the injury is a relevant factor of subsection (2).
See Daniel v. Am. Bd. of Emergency Med., 428 F.3d 408, 431 (2d Cir. 2005); King v. Russell, 963 F.2d 1301, 1305 (9th Cir. 1992).
See Myers v. Bennett Law Offices, 238 F.3d 1068, 1076 (9th Cir. 2001) (citing Bates v. C S Adjusters, Inc., 980 F.2d 865, 867-68 (2d Cir. 1992)).
IV. DISCUSSION
1. Personal Jurisdiction
A. The Central District of California Is a Proper Forum for this Action
A court sitting in the Central District of California could exercise personal jurisdiction over the six defendants who reside there; however, Glazen, an Ohio resident, is subject to personal jurisdiction in California only if that state's long-arm jurisdiction statute applies. The California long-arm statute authorizes the exercise of personal jurisdiction to the fullest extent allowed under due process. Thus, this court must determine whether Glazen had sufficient minimum contacts with California such that the maintenance of the action in California would not offend traditional notions of fair play and substantial justice.
Harrison does not allege where the licensing agreement between Glazen and Samuel Cohen Media took place, but the text of the agreement states that disputes over the "[l]icense shall be construed and interpreted according to California law" and "any disputes arising out of this license may be brought only before the State and Federal Courts located in Los Angeles County, California." Though the License Agreement is the only alleged contact between Glazen and California, the fraud claim against Glazen arises directly from this contact. A California court may therefore exercise personal jurisdiction over Glazen.
License Agreement ¶ 8.
Although Harrison alleged in her Complaint that Unleashed Publishing, Inc. was "organized under the laws of the State of California," subsequent research by Harrison's counsel revealed that Unleashed Publishing, Inc. was actually incorporated in Florida. Despite this, Unleashed Publishing has operated out of California since at least January 2001, when expenditures for the Magazine began in earnest. Unleashed Publishing's extensive contacts with California (and the fact that Harrison's claims against Unleashed Publishing arise directly from these contacts) permit a California court to exercise personal jurisdiction over Unleashed Publishing.
Compl. ¶ 10.
See Fla. Corp. Printout.
See Compl. ¶ 34.
2. Venue
Because "a substantial part of the events or omissions giving rise to the claim occurred" in Los Angeles, venue is proper under section 1391(b)(2). Nearly all of the events alleged in the Complaint occurred in the Central District of California, with the exception of a single meeting between Samuel, Cooper, and Harrison in the Southern District of New York in January 2001. Notably, all of the predicate acts on which Harrison bases her RICO claim occurred in the Central District of California. In addition, the Magazine is published in Los Angeles, which is within the Central District of California.
See id. ¶ 30.
See Plaintiff's RICO Statement at 7-22.
See Def. Mem. at 23.
B. The Balance of Convenience and Justice Favors Transfer to the Central District of California
The eight factors used to analyze a section 1404(a) transfer militate strongly in favor of a change of venue. First, the deference accorded to plaintiff's choice of forum is weak. Harrison resides in the Eastern District of New York, not in the Southern District. The operative facts of this case bear little connection to the Southern District of New York. The overwhelming majority of the events that Harrison alleges took place in the Central District of California, with the exception of a meeting between Samuel, Cooper, and Harrison in the Southern District of New York in early 2001. Second, the convenience to witnesses and parties favors transfer to California. Six of the eight party witnesses are in California. The remaining witnesses do not reside in either California or New York. With modern air travel, Glazen, an Ohio resident, can travel to Los Angeles nearly as easily as he can to New York. Although Harrison plans to call several witnesses from Canada, defendants plan to call more witnesses from Los Angeles. Third, as already noted, the situs of operative facts favors transfer to California. Fourth, the interests of justice and judicial economy favor transfer to California. Samuel has been indicted for several of the predicate crimes that Harrison alleges in her RICO claim. Because Samuel is being held in California without bail, it would be extremely difficult for him to appear in the Southern District of New York to defend against Harrison's claim. Fifth, the relative ease of access to sources of proof favors transfer to California, as all of the business records are located in California. Sixth, the availability of process to compel unwilling witnesses is neutral. Neither party has alleged that any of the witnesses are expected to be uncooperative. Notably, several of Harrison's expected witnesses reside in Canada, so neither a New York nor a California federal court would be able to compel their testimony. Seventh, the relative means of the parties slightly favors adjudication in New York. Plaintiff Harrison is an individual, whereas there are many defendants including business enterprises that transact business on an international scale. These companies, however, are small and recently organized, so it is unlikely that they enjoy legal resources vastly superior to Harrison's. Eighth, the forum's familiarity with the governing law slightly favors transfer to California. Certainly both courts are equally capable of dealing with RICO law, but the pendent state-law claims are brought under California law.
See Harrison Aff. ¶ 5. Legitimate reasons of convenience likely motivated her choice to file her action in the Southern District, as the districts are only two miles apart.
See Compl. ¶¶ 17-65.
See [Plaintiff's] Witness Chart, Ex. A to Harrison Aff.
See [Defendants'] Witness Chart, Ex. A to Samuel Decl.
See supra note 51 and accompanying text.
See 5/9/06 Letter from Michael Utilla to the Court at 1.
See Samuel Decl. ¶ 2. With today's technology, the location of documents and other sources of proof is no longer a major factor.
See supra note 36.
See id. ¶ 3.
V. CONCLUSION
For the foregoing reasons, defendants' motion to transfer venue is granted. The Clerk of the Court is directed to: close this motion [number 11 on the docket sheet], close this case, and transfer the file forthwith to the Central District of California, Western Division.
SO ORDERED.