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finding that defendants can compel their employees to testify in another district
Summary of this case from Z-Tel Communications, Inc. v. SBC Communications, Inc.Opinion
Civil Action No. 3:99-CV-1877-G.
March 7, 2000.
MEMORANDUM ORDER
Before the court is the motion of the defendant Dr. Darryl See ("See") to transfer the venue of this case, pursuant to 28 U.S.C. § 1404(a), to the United States District Court for the Central District of California, Southern Division — Santa Ana. For the following reasons, See's motion is denied.
See also seeks dismissal of this case, under Rule 12(b)(3), F.R. Civ. P., for improper venue. This being a diversity case, venue is proper in this district if "a substantial part of the events or omissions giving rise to the claim occurred" here. 28 U.S.C. § 1391(a). For the reasons discussed below at 9-10, the court finds that venue in this district is proper and that this portion of See's motion should accordingly be denied.
I. BACKGROUND
The plaintiff, Mannatech, Incorporated ("Mannatech"), is a Texas corporation with its principal place of business in Coppell, Texas. Complaint ¶ 1. See is a doctor of medicine and a citizen of California who resides in California. Id. ¶ 2. Mannatech manufactures a line of proprietary nutritional and dietary supplement products that it sells to its independent sales associates throughout the United States. Id. ¶ 5. Mannatech's products are subject to the Dietary Supplement Health Education Act of 1994 ("DHSEA") and the rules and regulations issued thereunder by the Food and Drug Administration. Id.
Mannatech alleges that it was approached by See in 1998, at which point he represented to Mannatech that he was a professor at the School of Medicine at the University of California, Irvine ("UCI"). Complaint ¶ 6. According to Mannatech, See informed the employees with whom he spoke that during the years 1992 through 1998, he had conducted research (the "Research") into the role of natural products in antiviral and immunologic activity. Id. He also represented to Mannatech that both Mannatech's products and component ingredients of its products were among the 196 natural products tested in his Research, and that these products demonstrated no toxicity and a high level of benefit in connection with enhanced immune system functions. Id. ¶¶ 6-7. Mannatech had not funded See's research, and it alleges See represented that his Research was funded by a grant (the "PHS Grant") from the Public Health Service/National Institutes of Health ("PHS") and that he was the principal investigator under that grant. Id. ¶ 8. As Mannatech tells it, See sought a relationship with it to continue his research and lecturing activities into the effect of natural products on various illnesses. Id. ¶ 11.
Because of See's credentials and the representations he had made to Mannatech concerning his Research, Mannatech approved See to speak at Mannatech meetings in or around May 1998. Id. See sought grants from Mannatech to do further research on its products, and he entered a Consultancy Agreement (the "Agreement") with Mannatech on June 1, 1999 to conduct research on Mannatech and other products, assist in new product development, and appear at Mannatech functions. Id. ¶ 12; also Letter of Understanding Regarding Consultancy ("Letter"), attached as Exhibit 2 to Complaint. According to Mannatech, See's representations that the Research was conducted under the PHS Grant were particularly material to Mannatech as they added further legitimacy and prestige to See's findings. Complaint ¶ 13.
In July and August 1999, Mannatech alleges that it began to receive complaints from UCI concerning the description of See's affiliation with UCI. Id. ¶ 14. For example, UCI made public statements in the news media that UCI had "no evidence" that the Research was conducted at UCI or involved patients of UCI. Id. The PHS was also quoted in the press as denying that it sponsored See's Research. Id. Substantial press criticism of See and Mannatech concerned an article authored by See which appeared in the Journal of the American Nutraceutical Association ("JANA") entitled "An In Vitro Screening Study of 196 Natural Products for Toxicity and Efficacy." Complaint ¶ 15; also JANA Article, attached as Exhibit 4 to Affidavit of Dr. Bill H. Mcanalley in Opposition to See's Motion to Dismiss ("Mcanalley Aff."). After these adverse articles appeared in the public press, See sent a letter to JANA to "correct errors and complete full disclosure regarding that study." Complaint ¶ 16; also Letter From the Editors, attached as Exhibit 5 to Mcanalley Aff. In that letter, See stated that he was not affiliated with UCI at the time of the submission or publication of the article, and that funding from the PHS Grant was not used in the study. Complaint ¶ 16. Mannatech alleges that it was worried that the press coverage and See's retractions and disclosures might have created the perception that the Research or part thereof was fictitious or at least biased and not balanced. Id. ¶ 21. Therefore, it undertook to investigate the allegations against See, but See, through counsel, allegedly refused to respond under oath to the questions submitted to him by Mannatech without a complete release of all claims Mannatech might assert against See in the future. Id. ¶ 18. Mannatech also alleges that See and his wife began soliciting Mannatech employees, in direct violation of See's Agreement with Mannatech. Id. ¶¶ 19-20.
See avers that he was told to retract this statement because PHS was uncomfortable having its research money be associated with natural products research because that was not the primary focus of the research from its perspective. See Defendant's Reply Brief in Support of Motion to Dismiss for Improper Venue and Motion to Transfer this Case to the U.S. District Court for the Central District of California, Southern Division — Santa Ana and Request for Evidentiary Hearing on Disputed Facts ("Reply") at 3.
Mannatech has now brought this suit against See alleging, inter alia, breach of the Agreement and fraud and misrepresentation concerning the study See conducted. Complaint ¶¶ 22-32. See has responded with the instant motion to transfer this case to the federal district court sitting in Santa Ana, California, on the grounds that the dispute between the parties centers on the Agreement that the parties executed, and that the facts surrounding the execution and performance of this Agreement make clear that venue of this case lies in California. See Defendant's Motion to Dismiss for Improper Venue and Motion to Transfer This Case to the U.S. District Court for the Central District of California, Southern Division — Santa Ana ("Motion") at 1.
II. ANALYSIS A. Legal Standard
"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." 28 U.S.C. § 1404(a). The purpose of Section 1404(a) "is to prevent the waste `of time, energy and money' and `to protect litigants, witnesses and the public against unnecessary inconvenience and expense. . . .'" Van Dusen v. Barrack, 376 U.S. 612, 616 (1964) (quoting Continental Grain Company v. Barge FBL-585, 364 U.S. 19, 26-27 (1960)). The defendant has the burden of demonstrating that a change of venue is warranted. Gundle Lining Construction Corporation v. Fireman's Fund Insurance Company, 844 F. Supp. 1163, 1165 (S.D. Tex. 1994). Generally, a plaintiff is afforded some deference in choosing a forum. Lindloff v. Schenectady International, 950 F. Supp. 183, 185 (E.D. Tex. 1996). However, the plaintiff's choice of forum is afforded reduced significance where most of the operative facts occurred outside the district. Id.
In deciding whether to grant transfer, the court should consider: (1) the convenience of the parties, (2) the convenience of material witnesses, (3) the availability of process to compel the presence of unwilling witnesses, (4) the cost of obtaining the presence of witnesses, (5) the relative ease of access to sources of proof, (6) calendar congestion, (7) where the events in issue took place, and (8) the interests of justice in general. Gundle, 844 F. Supp. at 1165.
B. Factors (2), (3) and (4)
The convenience of the witnesses is often regarded as the most important factor to be considered in deciding whether to transfer venue. Gundle, 844 F. Supp. at 1166; Fletcher v. Southern Pacific Transportation Company, 648 F. Supp. 1400, 1401-02 (E.D. Tex. 1986). In support of his motion to transfer venue, See identifies twenty-one non-party witnesses whose presence he could not compel if this trial were held in Dallas. Motion at 11-12. See also avers that many of these witnesses have not cooperated to date with the parties' informal investigation of the dispute and therefore do not appear willing to travel to Texas to testify at trial. Id. at 12; also Declaration of Dr. Darryl See in Support of Defendant's Motion to Dismiss for Improper Venue and Motion to Transfer ("See Declaration") ¶¶ 12, 13, attached to Motion. See notes that the only potential witnesses who live in Texas are employees of Mannatech who are within Mannatech's control and who Mannatech can bring to the trial in California. Motion at 12.
It is true that "[i]t is the convenience of non-party witnesses, rather than that of employee witnesses, . . . that is the more important factor and is accorded greater weight." Gundle, 844 F. Supp. at 1166. This is because when "the key witnesses are . . . employees of the party seeking transfer, their convenience is entitled to less weight because that party will be able to compel their testimony at trial." Continental Airlines, Inc. v. American Airlines, Inc., 805 F. Supp. 1392, 1397 (S.D. Tex. 1992); see also Q West Energy v. General Electric Company, 1998 WL 872705 at *1, n. 3 (N.D. Tex. Dec. 1, 1998); Galonis v. National Broadcasting Company, 498 F. Supp. 789, 793 (D.N.H. 1980) (finding that defendants can compel their employees to testify in another district). The number of non-party witnesses See lists would seem initially to favor the transfer of this case to California. However, this court agrees with Mannatech that it appears that the evidence from the witnesses See offers would be either cumulative or largely irrelevant to the issues in dispute here. Response at 19, ¶ 4.
All See has basically alleged is that the witnesses he lists are familiar with his research. See Motion at 11-12. Mannatech has not alleged that See did not conduct research. Response at 19, ¶ 4. Instead, Mannatech has alleged that See made false statements about his research by claiming (1) that it was funded by a Grant from PHS which specifically approved the research; and (2) that his research was approved by and conducted under the auspices and supervision of UCI. Id. The funding issue does not require the testimony of anybody affiliated with UCI. Either PHS accepted, approved, and funded the research, or it did not. As for the second issue, the court again agrees with Mannatech that it will "hardly take" all of the witnesses that See lists to determine if UCI's records demonstrate its approval and its sanctioning of See's study. Id. at 19-20, ¶ 4. Whether See conducted the Research at UCI is not an issue. Whether the Research was approved, controlled, monitored and subject to peer review by UCI is an issue. At best, it is probable that two or three witnesses will be sufficient to determine if See's Research was sanctioned by UCI, as he allegedly represented. Therefore, the court concludes that the "convenience of the witnesses" factors therefore do not favor transfer of venue in this case.
See also Dupre v. Spanier Marine Corporation, 810 F. Supp. 823, 826 (S.D. Tex. 1993) ("[C]ourts have uniformly `refused to let applications for transfer become a battle of numbers.'") (quoting 15 WRIGHT, MILLER COOPER, FEDERAL PRACTICE PROCEDURE § 3851 at 424-45) (internal quotations omitted).
C. Factors (5) and (7)
Mannatech and See differ dramatically in their accounts of where the operative venue facts in this lawsuit took place. See argues that the key to this dispute is the Agreement that was in effect between the parties from June 1, 1999 until September 25, 1999. Motion at 2; also Reply at 1; Letter Re: Termination of letter of Understanding Regarding Consultancy between Mannatech Incorporated and Darryl See, M.D. dated Effective June 1, 1999, attached to Motion. He contends that to the extent the parties have any duties towards one another, those duties arise out of the Agreement. Motion at 2. From this point he argues that, since all of the relevant events concerning negotiation and performance of the Agreement allegedly occurred in California, then all of the operative venue facts in this case took place in the Central District of California. Id. at 3-5.
Mannatech responds that its complaint is not limited to the period during which the Consultancy Agreement was in effect, but instead extends back to cover the course of See's allegedly fraudulent conduct that began in early 1998. Response at 1-2, ¶¶ 1-2. Mannatech outlines its lengthy dealings with See, which it alleges were initiated by See in the fall of 1997 or 1998, in considerable detail. Id. at 4-10, ¶¶ 6-19. Mannatech also provides some details of the parties' history that See downplays. For example, Mannatech provides details of See's visit to Dallas for about a month in early 1999 to assist in verifying all of the findings in his Study and to provide documentary evidence concerning his PHS Grant. Id. at 8-9, ¶ 13; also Motion at 5. While in Dallas in 1998 and 1999, Mannatech also alleges that See negotiated with Mannatech's President concerning a Consultancy Contract. Response at 9, ¶ 14; also Letter from Darryl See MD to Sam Caster, President, Mannatech Inc, attached as Exhibit 1 to Affidavit of Sam Caster in Opposition to Motion to Dismiss (Venue). Mannatech alleges that the various representations made by See before their final Agreement was signed and that concerned the sources of funding for his research were "extremely material" in determining its willingness to pay See's speaking and research fees in 1998 and 1999. Response at 9-10. This court concludes that Mannatech has provided enough evidence to indicate that a substantial part of the operative facts involved in this case occurred within the Northern District of Texas. Furthermore, limiting the operative venue facts to those relating to the Agreement seems to this court an unnaturally restrictive means of understanding the parties' dealings in this case.
The court expresses no opinion on whether the facts surrounding the formation of the Agreement, if considered by themselves, would indicate that the operative venue facts in this case took place outside of this district.
Factor (8)
In general, a court must exercise a strong presumption in favor of the plaintiff's choice of forum. See, e.g., Continental Airlines, 805 F. Supp. at 1395. See argues that since none of the operative facts involved in this case occurred within the forum of original selection, Mannatech's choice of forum is entitled to only minimal consideration. It is indeed true that the plaintiff's choice of forum is entitled to less deference when the plaintiff does not reside in its chosen forum and no operative facts occurred within that forum. See Robertson v. Kiamichi Railroad Company, L.L.C., 42 F. Supp.2d 651, 656 (E.D. Tex. 1999); Reed v. Fina Oil and Chemical Company, 995 F. Supp. 705, 714 (E.D. Tex. 1998) (holding that "deference [to the plaintiff's choice of forum] disappears when the lawsuit has no connection . . . to the venue chosen"). But Mannatech resides in this district, and it has here provided ample proof that many of the operative facts in this case did occur within this venue. Thus, its choice of forum is entitled to the usual amount of deference.Factor (1)
The "convenience of the parties" factor is neutral here, as See would be best sewed by a transfer of this case, while Mannatech would be best served if the case were litigated here. However, while this factor may be neutral, it is the only factor that does not support Mannatech's opposition to See's motion to transfer venue. Although See has presented evidence in support of his claims of inconvenience, the grounds alleged are insufficient to overcome the presumption in favor of preserving Mannatech's right to select its forum. In this case, whether trial is held in California or Texas, one side or the other will suffer some inconvenience. To grant a transfer would negate Mannatech's right to choose its forum and serve only to shift some of the inconvenience from See to Mannatech.
III. CONCLUSION
For the above reasons, See's motion to transfer venue is DENIED.
SO ORDERED.
March 7, 2000.