Opinion
No. 04 Civ. 8114 (NRB).
July 25, 2005
Deborah Hrbek, Esq., Hrbek Law LLC, New York, NY, Attorney for Plaintiffs.
Cheryl M. Stanton, Esq., Carmen DiMaria, Esq., Ogletree Deakins Nash Smoak Stewart, P.C., Morristown, NJ, Attorneys for Defendants.
MEMORANDUM AND ORDER
Plaintiffs Tina Iyalla ("Iyalla") and Najiyya Scott ("Scott") (collectively "plaintiffs") bring this action against defendants TRT Holdings, Inc. ("TRT Holdings"), TRT Holdings doing business as Omni Hotels ("TRT Holdings d/b/a Omni Hotels"), and Omni Hotels Management Corporation ("OHMC") (collectively "defendants"), alleging violation of the plaintiffs' rights under 42 U.S.C. § 1981 and New York State Human Rights Law, N.Y. Exec. Law § 296. The defendants filed the instant motion to transfer venue to the Western District of Pennsylvania pursuant to 28 U.S.C. § 1404(a), to dismiss the complaint for improper venue pursuant to Fed.R.Civ.P. 12(b)(3), and to dismiss plaintiffs' state law claim pursuant to Fed.R.Civ.P. 12(b)(6). For the following reasons, defendants TRT Holdings and TRT Holdings d/b/a Omni Hotels are dismissed from the action, and the remaining litigation is transferred to the Western District of Pennsylvania.
BACKGROUND
The Allegations of the ComplaintIn November of 2003, plaintiffs, both African-American women, were attending an educational program at the Omni William Penn Hotel in Pittsburgh, Pennsylvania. On November 4, 2003, the plaintiffs attempted to enter the hotel's restaurant, the Tap Room, for lunch. Despite the availability of tables and seats at the bar, the plaintiffs were denied service by two Tap Room employees, referred to as "Ron" and "Kim" in the complaint, allegedly because the restaurant was too busy. Plaintiffs claim that there were no non-white patrons in the Tap Room at the time they were denied service. After being turned away, the plaintiffs informed one of their teachers, a white female referred to in the complaint as the "Professor," of the incident at the Tap Room. The Professor then went to the Tap Room for lunch, and was promptly given a menu and offered a seat. Plaintiffs estimate that the Professor was seated approximately ten minutes after plaintiffs had been denied service.
Except where noted, the following facts are drawn from plaintiffs' complaint and are assumed true at this stage.
The following day, plaintiff Scott returned to the Tap Room with two white students, and all three of them sat at the Tap Room bar waiting to be served. Once again, plaintiff Scott was denied service by Tap Room employee Kim, who refused to take her order and would only speak to the white students. Besides plaintiff Scott, there were no other non-white patrons at the Tap Room.
After these incidents, plaintiffs spoke with the management of the Omni William Penn Hotel regarding the treatment they had received from the Tap Room employees. Plaintiffs contend that the hotel management failed to take any action in response to their employees' discriminatory actions. On October 15, 2004, plaintiffs filed the instant complaint in federal court.
Procedural History
The motion to transfer was originally filed solely on behalf of TRT Holdings. In its motion, TRT Holdings contended that (i) TRT Holdings d/b/a Omni Hotels was not a recognized legal entity, and (ii) TRT Holdings was not subject to personal jurisdiction in New York, and therefore venue was improper in New York. In addition, TRT Holdings argued that it was an improper party in the action, and that it should ultimately be dismissed from the lawsuit. On June 3, 2005, plaintiffs amended their complaint adding OHMC as a defendant, and by letter dated June 24, 2005, OHMC joined in the pending motion.
The Parties
Plaintiff Iyalla is a resident of State of New York, and plaintiff Scott is a resident of the State of California. Unfortunately, a description of the various corporate defendants and their related subsidiaries is not quite as simple. Because aspects of defendants' motion turn on the relationship of the various defendants with each other, as well as their relationship with New York and Pennsylvania, a brief description of each defendant follows.
TRT Holdings d/b/a Omni Hotels does not refer to any recognized legal entity. See Jorge Aff. ¶ 11. Accordingly, it is not a proper party to this action, and is dismissed.
According to its website, Omni Hotels is a "privately-owned, mid-size company that operates 40 luxury hotels in the top business getaways and leisure destinations in the United States, Mexico and Canada." This array of hotels includes the Omni William Penn Hotel, located in Pittsburgh and the site of the alleged incident, and the Omni Berkshire Place, located in midtown Manhattan. In 1996, TRT Holdings purchased the Omni Hotel chain, and accordingly, its North American hotel properties. While the Omni Hotel chain presents itself as one entity online, in reality the hotel chain consists of a variety of different corporate entities.
Located at http://www.omnihotels.com
TRT Holdings, the ultimate parent corporation of the Omni Hotel chain, is a Delaware corporation, with its principal place of business in Irving, Texas. TRT Holdings is a diversified private holding company, with investments in numerous properties, such as Gold's Gym International, in addition to the Omni Hotel chain. OHMC, a subsidiary of TRT Holdings, is also a Delaware corporation, with its offices located in Irving, Texas, and is apparently the corporate entity which manages the Omni Hotel chain.
Neither TRT Holdings nor OHMC directly own any hotels in either Pittsburgh or New York. Instead, additional layers of corporate subsidiaries separate both TRT and OHMC from the ultimate hotel properties. The Omni William Penn Hotel in Pittsburgh is owned by the Omni Pittsburgh Corporation. Jorge Aff. ¶ 8. Similarly, the Omni Berkshire Place in Manhattan is owned by the Omni Berkshire Corporation. TRT Holdings, as the parent corporation of the hotel chain, has a substantial, if not complete, ownership interest in both the Omni Berkshire Corporation and the Omni Pittsburgh Corporation. In addition, TRT Holdings shares corporate offices and a corporate director with OHMC, the Omni Berkshire Corporation, and the Omni Pittsburgh Corporation. All four entities list their principal offices as suites at 420 Decker Drive in Irving, Texas, and James Caldwell is listed as chief executive officer of OHMC and the Omni Berkshire Corporation, and as a vice-president of TRT Holdings.
It is unclear whether James Caldwell is a corporate officer of the Omni Pittsburgh Corporation.
DISCUSSION
I. The Motion to Dismiss for Improper VenueUnder the federal venue statute, 28 U.S.C. § 1391, venue is proper in civil actions not based on diversity jurisdiction 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 (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). For corporations, "a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced." 28 U.S.C. § 1391(c). Personal jurisdiction over defendants is determined under New York law, see PC COM, Inc. v. Proteon, Inc., 906 F. Supp. 894, 904 (S.D.N.Y. 1995), and, under New York's long-arm statute, a foreign corporation is subject to general jurisdiction "if the corporation is `doing business' in the state." N.Y.C.P.L.R. § 301; Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 95 (2d Cir. 2000). In this instance, venue is proper in the Southern District of New York if both TRT Holdings and OHMC are subject to personal jurisdiction within this district.
Defendant OHMC has registered with the State of New York to do business within New York. Under New York law, any corporation registered to do business within the state is subject to personal jurisdiction in the state. See Cannon v. Newmar Corp., 210 F. Supp. 2d 461, 463 n. 2 (S.D.N.Y. 2002) (noting that under N.Y.C.P.L.R. § 301, New York courts have jurisdiction over any corporation registered to do business within the state). Accordingly, OHMC is subject to personal jurisdiction within New York, and is a resident of this district for venue purposes.
Personal jurisdiction over TRT Holdings, however, is far from clear from the facts. TRT Holdings is a private holding company located in Texas with no direct contact with New York. Acknowledging this lack of contact between TRT Holdings and this forum, plaintiffs seek to assert jurisdiction over TRT Holdings based on the activities of its hotel subsidiaries within this district — OHMC and the Omni Berkshire Corporation. Under the applicable standard, "[f]or New York courts to have personal jurisdiction [over a parent corporation because of the activities of a subsidiary], the subsidiary must be either an `agent' or a `mere department' of the foreign parent." Jazini v. Nissan Motor Co., 148 F.3d 181, 184 (2d Cir. 1998). Prior to any discovery, a plaintiff need only make a prima facie showing of personal jurisdiction to survive a motion to dismiss. See A.I. Trade Finance, Inc. v. Petra Bank, 989 F.2d 76, 79 (2d Cir. 1993).
A subsidiary is considered an agent of the parent corporation if it "renders services that go beyond mere solicitation and are sufficiently important to the foreign [parent] entity that the corporation itself would perform equivalent services if no agent were available." Wiwa, 226 F.3d at 95. Similarly, "[a] corporate entity is considered to be a mere department of a parent company only where the control of the lesser entity is pervasive enough that the corporate separation is more formal than real." Jacobs v. Felix Bloch Erben Verlag fur Buhne Film und Funk KG, 160 F. Supp. 2d 722, 734 (S.D.N.Y. 2001) (internal quotations and citations omitted). Under the mere department test, the court considers whether there is: (1) common ownership by the parent corporation of the New York subsidiary, (2) financial dependency of the subsidiary on the parent, (3) lack of observance of corporate formalities; and (4) significant control by the parent over the subsidiary's marketing and operational policies. If these factors are satisfied, jurisdiction will exist in New York. See Jazini, 148 F.3d at 184-85; Weiss v. La Suisse, 69 F.Supp.2d 449 (S.D.N.Y. 1999); Taca Int'l Airlines S.A. v. Rolls Royce of England, Ltd., 15 N.Y. 2d 97, 256 N.Y.S.2d 129 (1965).
Under either test, plaintiffs have failed to establish aprima facie case for personal jurisdiction over TRT Holdings. Plaintiffs have cited nothing more than the common ownership and common officer between TRT Holdings and its subsidiaries as a basis for jurisdiction over TRT Holdings. Such allegations are insufficient to establish jurisdiction, as they are common to almost all parent-subsidiary relationships. See Jazini, 148 F.3d at 185-86; Dorfman v. Marriott Intern. Hotels, Inc., No. 99 Civ. 10496, 2002 WL 14363, at *6-*7 (S.D.N.Y. Jan. 3, 2002). "What plaintiffs need — and have failed — to demonstrate is a `total disregard for the separate corporate existence of the subsidiary.'" Weiss, 69 F. Supp. 2d at 458 (quotingVolkswagenwerk v. Beech Aircraft Corp, 751 F.2d 117, 120 (2d Cir. 1984)). Without such a showing, we must respect the separate legal identities of the different corporations. Therefore, we find that TRT Holdings is not subject to personal jurisdiction in this district. Accordingly, the complaint is dismissed as to TRT Holdings.
We recognize that 28 U.S.C. § 1406(a) grants this Court the authority to transfer this litigation even if we do not have personal jurisdiction over TRT Holdings. However, venue and personal jurisdiction must be proper in the transferee district in order to transfer the action. See 28 U.S.C. § 1406(a);Minnette v. Time Warner, 997 F.2d 1023, 1026 (2d Cir. 1993). Because the determination of whether there is jurisdiction over TRT Holdings in Pennsylvania is virtually identical to the discussion above, see Action Mfg. Co. v. Simon Wrecking Co., No. Civ. A. 02 Civ. 8964, 2005 WL 1463267, at *7 (E.D. Pa. Jun. 20, 2005) (plaintiff must establish that "the subsidiary corporation is really the alter-ego of the parent corporation" to establish jurisdiction based on contacts of subsidiaries), we do not believe that TRT Holdings is subject to personal jurisdiction in the Western District of Pennsylvania. Accordingly, we dismiss plaintiffs' action against TRT Holdings.
II. The Motion to Transfer
Having dismissed TRT Holdings and TRT Holdings d/b/a Omni Hotels, we now examine the motion to transfer by OHMC. Section 1404(a) provides that "[f]or the convenience of the 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." 28 U.S.C. § 1404(a). The purpose of section 1404(a) is to "protect litigants, witnesses and the public against unnecessary inconvenience and expense."Van Dusen v. Barrack, 376 U.S. 612, 616 (1964) (internal quotation and citation omitted).
As venue is appropriate as to OHMC, the remaining defendant, we apply section 1404. See Water Energizers Ltd. v. Water Energizers, Inc., 788 F. Supp. 208, 211 (S.D.N.Y. 1992) (transferring matter under section 1404(a) after dismissing defendant over whom court lacked personal jurisdiction).
In order to transfer venue, it must be true that the action could have initially been brought in the proposed transferee forum. See Promuto v. Waste Management Inc., 44 F. Supp. 2d 628, 637 (S.D.N.Y. 1999). OHMC is registered to do business in Pennsylvania, and like New York, Pennsylvania provides for personal jurisdiction over corporations that have registered to do business within the state. See Bane v. Netlink, Inc., 925 F.2d 637, 640 (3d Cir. 1991) ("Pennsylvania law explicitly states that the qualification of a foreign corporation to do business is sufficient contact to serve as the basis for the assertion of personal jurisdiction."). Accordingly, there is personal jurisdiction over OHMC in the transferee court.
Since transfer to the Western District is possible, we proceed to whether such a transfer would be in the best interests of the litigation. Motions for transfer lie within the broad discretion of the district court, and turn upon "notions of convenience and fairness on a case-by-case basis." In re Cuyahoga Equip. Corp., 980 F.2d 110, 117 (2d Cir. 1992). In determining whether to transfer venue, a court should consider: (1) the convenience of the parties; (2) the convenience of the witnesses; (3) the relative means of the parties; (4) the locus of the operative events; (5) the relative ease of access to sources of proof; (6) the weight accorded to plaintiff's choice of forum; (7) the availability of process to compel unwilling witnesses; (8) the forum's familiarity with the governing law; and (9) trial efficacy and the interests of justice based upon the totality of the circumstances. Schauder v. Intern. Knife Saw, Inc., No. 02 Civ. 8361, 2003 WL 1961611 (S.D.N.Y. Apr. 28, 2003). Based on our analysis of the factors listed above, we find that the transfer of this action to the Western District of Pennsylvania is warranted.
The convenience of party and non-party witnesses is the most important consideration on a Section 1404(a) motion. See Mitsui Marine Fire Ins. Co. v. Nankai Travel Intern. Co., 245 F. Supp. 2d 523, 526 (S.D.N.Y. 2003); TM Claims Service v. KLM Royal Dutch Airlines, 143 F. Supp. 2d 402, 405 (S.D.N.Y. 2001). In evaluating this factor, the court should "consider the materiality, nature and quality of each witness, not merely the number of witnesses in each district." Royal Sunalliance v. British Airways, 167 F. Supp. 2d 573, 577 (S.D.N.Y. 2001).
Both plaintiffs and defendants contend that this factor weighs in their favor, and have submitted affidavits from potential witnesses in support of their arguments. Defendants have named seven potential witnesses, all residents of the Pittsburgh area, for whom Pennsylvania would be a more convenient forum. These witnesses consists of various employees of the Omni William Penn Hotel in Pittsburgh who can testify about the events in question, as well as the overall management of the hotel and its restaurant.
The proposed testimony of two of the potential witnesses, Randy Connolly and Tina Wagner, consists primarily of hearsay and therefore has been discounted in our consideration.
Plaintiffs, on the other hand, have identified only four potential witness for whom New York is a preferable forum for the litigation. Of these four potential named witnesses, only plaintiff Iyalla both resides in New York and has knowledge of the events in dispute. All of the remaining witnesses listed by plaintiffs — plaintiff Scott, Dr. Stephen Teich, and Sarah Kunstler — either have no connection to New York or to the event resulting in this case. Plaintiff Scott has firsthand knowledge of the alleged incident, and contends that "[t]raveling to Pittsburgh would be more expensive and time consuming than if case were to remain in New York." Scott Aff. ¶ 6. However, plaintiff Scott is a resident of California, not New York, and therefore must travel substantial distance regardless of whether this litigation proceeds in New York or Pennsylvania. In such situations, "the Court dismisses from consideration the convenience of witnesses who are located outside both the current and transferee forums." Wechsler v. Macke Intern. Trade, Inc., No. 99 Civ. 5725, 1999 WL 1261251, at *6 (S.D.N.Y. Dec. 27, 1999). Accordingly, plaintiff Scott's preference for New York as a forum is not entitled to significant weight in our analysis.
In their affidavits, both plaintiffs refer to unnamed witnesses for whom it would be more convenient if the litigation were in New York. As plaintiffs have failed to even name these potential witnesses, let alone submit affidavits from these witnesses attesting that New York would be a more convenient forum in which to proceed, we have not considered the convenience of the unnamed witnesses.
The remaining two named witnesses, Dr. Teich and Ms. Kunstler, are both New York residents for whom New York is a preferable forum. However, neither witnesses' preference is entitled to deference. As for Dr. Teich, an expert witness for plaintiffs, it is well-established that "[t]he location of expert witness is entitled to little or no weight in deciding a transfer motion."Babbidge v. Apex Oil Co., 676 F. Supp. 517, 520 (S.D.N.Y. 1987). With respect to Ms. Kunstler, who does not appear to have been directly involved in the underlying dispute, it is unclear what, if any, relevant testimony that she is qualified to give.See Kunstler Aff. Plaintiffs merely state that "the nature of Ms. Kunstler's testimony in this case will be investigative." Pls.' Sur-Reply at 5. As such, her testimony does not appear to be material, and we accord her preference little weight as well.
In sum, weighing the information provided about the potential witnesses clearly favors transfer of the litigation to the Western District of Pennsylvania.
The location of the operative events is also a "primary factor" in determining a motion to transfer, Smart v. Goord, 21 F. Supp. 2d 309, 316 (S.D.N.Y. 1998), and here strongly favors transfer to Pennsylvania. In the instant action, all of the operative events at issue in this litigation occurred within one location, the Omni William Penn Hotel in Pittsburgh. Consequently, there is absolutely no connection between the alleged denial of service and New York. We also find that the location of the relevant documents and the relative ease of sources of proof weigh in favor of transferring the case to Pennsylvania, as all the events transpired there. To the extent that there are any relevant documents or records relating to the incident itself, the overall management of the Tap Room, and the hotel's handling of the incident are likely to be found in Pittsburgh. Accordingly, these two factors also weigh in favor of transferring this action to the Western District of Pennsylvania.
Of the remaining factors, only two, plaintiffs' choice of forum and the relative means of the parties, favor New York as the forum. While plaintiffs' choice of forum is generally a substantial consideration, "when a plaintiff brings a suit . . . in a forum that has no material connection with the action, this factor should be given little weight." Wechsler, 1999 WL 1261251, at *9 (quoting Brown v. Dow Corning Corp., No. 93 Civ. 5510, 1996 WL 257614, at *3 (S.D.N.Y. May 15, 1996)). Other than being the residence of one of the two plaintiffs, New York has no connection with the underlying dispute, any plaintiffs' choice of forum is consequently entitled to little deference. Similarly, while the relative means of the parties is a factor in considering a motion to transfer, it has "rarely been a dispositive reason to grant or deny a transfer motion." Thomas America Corp. v. Fitzgerald, 94 Civ. 0262, 1994 WL 440935, at *5 (S.D.N.Y. Aug. 11, 1994).
Neither party argues that the availability of process, the forum's familiarity with the governing law, or trial efficacy and the interest of justice favors either New York or Pennsylvania as a forum for the litigation.
In total, we find that three factors, including the two most important factors — convenience of the witnesses and the location of the operative events — weigh strongly in favor of transfer. Of the other two factors that generally favor plaintiffs, they are due little deference given the facts of this case. Accordingly, we find that application of 28 U.S.C. § 1404(a) clearly supports transferring this litigation to the Western District of Pennsylvania.
III. Defendants' Motion to Dismiss New York Human Rights Law Claim
Having found that this action should be transferred to the Western District of Pennsylvania, we do not reach defendants' motion to dismiss plaintiffs' claim for violation of section 296 of New York Human Rights Law. See Aetna, Inc. v. Medtest Express, Inc., No. 01 Civ. 4398, 2001 WL 1776155, at *5 (E.D.N.Y. Nov. 30, 2001); Handler v. Regents of the Univ. of Mich., No. 00 Civ. 6314, 2000 WL 1635701, at *3 (S.D.N.Y. Nov. 1, 2000).
CONCLUSION
For the foregoing reasons, the complaint is dismissed as to defendants TRT Holdings and TRT Holdings d/b/a Omni Hotels, and the Clerk of the Court is hereby directed to promptly transfer the action to the United States District Court for the Western District of Pennsylvania.SO ORDERED.