ENTRY ON MOTION TO DISMISS OR TRANSFER

DAVID F. HAMILTON, Judge, United States District Court

This diversity case presents the question of which federal district should be the forum for a contract dispute. Plaintiff Educational Visions, Inc. (d/b/a "E-Visions" and "EVI"), a Georgia corporation, has sued defendant Time Trend, Inc., a Louisiana corporation. EVI contends that it agreed with Time Trend to submit a joint proposal to provide computers and related services to the State of Indiana. EVI alleges that after the State of Indiana selected the parties' joint proposal, Time Trend breached the agreement to squeeze EVI out of the Indiana deal.

Time Trend moved to dismiss the action for improper venue under Federal Rule of Civil Procedure 12(b)(3), or for transfer of this action to the Western District of Louisiana pursuant to 28 U.S.C. § 1404. As explained below, the court denies defendant's motion to dismiss or transfer. The present dispute is not subject to a forum selection clause contained in an earlier written contract between the two parties. Without a binding forum selection clause, venue is governed by 28 U.S.C. § 1391(a) and is proper in this district. In addition, the case should not be transferred. Keeping the case in the Southern District of Indiana should ensure convenient access to most non-party witnesses.

Background

Plaintiff EVI, a Georgia corporation that is authorized to do business in Indiana, sells computer hardware, software, and related services to governments and schools. Cplt. ¶ 1. EVI acted as the sales agent of Inacom, a corporation that distributed computer products. In 1998, EVI and Inacom won the exclusive right to sell IBM personal computer products to Indiana and its agencies under a Quantity Purchase Award. Cplt. ¶ 4; Luther Aff. ¶ 3. Inacom then encountered financial difficulties. Shortly before Inacom filed for bankruptcy in June 2000, it assigned its rights under the Indiana contract to EVI. Cplt. ¶ 4.

With Indiana's permission, EVI assigned to Time Trend Inacom's rights under the contract in September 2000. Luther Aff. ¶ 4. In turn, EVI and Time Trend entered into an agreement (the "Subcontract Agreement") to cover the remaining time of the Indiana Quantity Purchase Award. The Subcontract Agreement contained a forum selection clause providing for exclusive jurisdiction in Louisiana:

This Agreement shall be governed by and construed in accordance with the laws of the State of Louisiana and of the United States of America without reference to any conflicts of law principles; the parties submit themselves to the jurisdiction of the federal and state courts located in Rapids Parish, Louisiana, which shall have exclusive jurisdiction of any disputes arising hereunder, and the parties waive any objection to venue therein.

Pl Ex. B. The Subcontract Agreement also provided a termination date for the contract:

The term of this Agreement shall be the same as the term of the Indiana Contract. The current term of the Indiana Contract terminates on December 28, 2000. Any extensions to the term of the Indiana Contract shall extend the term of this Agreement for the same period of time.

Pl. Ex. B. Around the same time that the parties entered into the Subcontract Agreement, EVI and Time Trend also entered into a Customer Direct Agreement, which governed the parties' business in other states. See Whittington Aff. ¶ 4.

The Indiana Quantity Purchase Award agreement was extended until June 30, 2002. Both parties agree that there were no further extensions, and that both the Quantity Purchase Award and their Subcontract Agreement with the forum selection clause expired on June 30, 2002.

In 2001, before the Quantity Purchase Award expired, Indiana issued a request for proposals for a new contract to provide computers and related services to nearly all state agencies. Time Trend submitted a proposal on August 23, 2001. The complaint alleges and David Luther, President and CEO of EVI, testified that Time Trend and EVI jointly prepared and submitted the proposal to Indiana. Cplt. ¶ 5; Luther Aff. ¶¶ 5, 7. The proposal was submitted in Time Trend's name, but it prominently featured EVI as a partner in making the proposal. For example: "We will join together with IBM and E-Visions to offer [Indiana] the best products, expertise and services. . . ." Pl. Ex. C. Or: "your Time Trend-EVI team really has some particular value to add to the State of Indiana and its end users." Id. Or: "We also have a strategic alliance with EVISIONS (EVI) to provide marketing support and is [sic] the primary customer contact organization." Id. Many pages of Time Trend's business proposal are labeled: "This confidential response is prepared jointly by EVI and IBM."

EVI's Luther also testified that EVI and Time Trend entered into a new "partnering" agreement during their joint efforts to secure the 2002 Indiana computer contract. Luther Aff. ¶ 6. According to Luther, former Time Trend representative Holly Simon accepted EVI's offer to partner with Time Trend and assured EVI that it would be compensated on a pay scale similar to that specified in the Subcontract Agreement. Luther Aff. ¶ 7. Time Trend denies that Simon made these representations and states that even if she had made such statements, she had no authority to do so. Pl. Ex. D.

In April 2002, Indiana announced that it would award the new computer sales contract to Time Trend pursuant to the proposal reflecting the partnership with EVI. Time Trend executed the new contract in May 2002. Indiana executed the contract a month later.

In the meantime, though, other disputes had arisen between Time Trend and EVI. In October 2001, Time Trend filed suit against EVI in the Ninth Judicial District of the State of Louisiana for breach of contract and conversion. The petition alleged that EVI had illegally retained the balance of a customer payment under the parties' Consumer Direct Agreement (for business with states other than Indiana). See Def. Ex. 1. In its response, EVI asserted a "reconventional" demand for penalties and interest that it alleged Time Trend had improperly assessed under the Subcontract Agreement governing their Indiana business. See Def. Ex. 2.

On June 28, 2002, Time Trend informed EVI that there was no "partnering agreement" between the parties in connection with the new Indiana contract, and that if the parties were to continue doing business, EVI's future commissions would have to be cut substantially. Cplt. ¶ 10. On July 24, 2002 Time Trend told EVI: "Currently, no Subcontract Agreement exist [sic] between Time Trend and EVI, meaning there is no contractual agreement between EVI and Time Trend with respect to the new QPA [Quantity Purchase Award] business." Pl. Ex. D. Time Trend further stated:

With respect to reaching an agreement with respect to the new Indiana business, the two threshold questions which must be answered are (I) what is the scope of EVI's services in Indiana and (ii) what should EVI be paid by Time Trend for the performance of those services? Time Trend has informed EVI on several occasions that if a new agreement is to be reached, the scope of services to be provided by EVI in Indiana will significantly decrease, and therefore EVI's compensation will significantly decrease.

. . . .

What role EVI can play under this current situation is something which must be discussed. However, as a Time Trend employee must assume the position of lead sales person in Indiana, EVI's role must be substantially different from the old Subcontract Agreement.

Pl. Ex. D (letter from Upton to Storrs). The next day, on July 25, 2002, EVI filed this suit alleging breach of contract, promissory estoppel, and unjust enrichment.

Discussion

Upon a proper objection to a federal district court's venue in a civil case, a court should dismiss the case or transfer the case to a proper venue. 28 U.S.C. § 1406. Even where venue is proper, a court may transfer a case for the "convenience of parties and witnesses, in the interest of justice" to any district where the case could have been brought. 28 U.S.C. § 1404(a).

I. Venue

When a defendant moves to dismiss for improper venue pursuant to Rule 12(b)(3), the plaintiff bears the burden of proving that venue is proper. Grantham v. Challenge-Cook Bros., Inc., 420 F.2d 1182, 1184 (7th Cir. 1969); Moore v. ATT Latin America Corp., 177 F. Supp.2d 785, 788 (N.D.Ill. 2001). In evaluating a Rule 12(b)(3) motion, a court may consider facts beyond the complaint. Moore, 177 F. Supp.2d at 788. Neither side has asked for an evidentiary hearing on the facts relevant to venue. Accordingly, in ruling on Time Trend's motion to dismiss, the court accepts plaintiff's allegations as true unless controverted by defendant's factual submissions, and the court resolves any factual conflicts in the parties' submissions in the plaintiff's favor. Id. Cf. Szabo v. Bridgeport Machines, Inc., 249 F.3d 672, 676-77 (7th Cir. 2001) (distinguishing between Rule 12(b)(6) motions, which require district court to accept plaintiff's allegations, and motions to dismiss based on lack of personal jurisdiction or venue, which permit district court to hold an evidentiary hearing to resolve factual disputes before allowing a case to proceed).

Defendant Time Trend bases its motion on the forum selection clause in the old Subcontract Agreement between the parties. Each side is trying to walk a relatively fine line. Time Trend itself asserts that the Subcontract Agreement between the parties expired, and it takes the position on the merits that it has no binding contract of any kind to include EVI in the new 2002 Indiana computer contract. Time Trend seeks to pin EVI on the horns of dilemma, however, arguing that EVI has pled that the parties agreed "to continue the same relationship as the parties had under the Subcontract Agreement." Cplt. ¶ 5. Time Trend argues that if there was any contract, then "the same relationship" necessarily includes the forum selection clause in the Subcontract Agreement.

In response, EVI agrees with Time Trend that the Subcontract Agreement expired. EVI alleges that the parties entered into a new agreement in conjunction with the proposal they jointly prepared and submitted to Indiana. That new agreement, which EVI calls the "partnering agreement," appears not to have been reduced to writing. If it exists, it must be established by the parties' oral and other communications, and it may also be reflected in the "team" and "partnership" and "alliance" language in Time Trend's proposal to the State of Indiana for the 2002 computer agreement.

EVI argues that the new partnering agreement does not contain a forum selection clause, and EVI denies that the new agreement is identical to the old Subcontract Agreement. Rather, according to EVI, the phrase "continue the same relationship as the parties had under the Subcontract Agreement" from its pleadings means that the parties were to continue in their capacity as seller/distributor. Pl. Br. at 10.

Forum selection clauses in commercial contracts between sophisticated businesses are ordinarily honored in accordance with their terms. M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 12 (1972). "When a case is in federal court on the basis of diversity jurisdiction, federal law governs whether to give effect to a forum-selection clause." Deans v. Tutor Time Child Care Systems, Inc., 982 F. Supp. 1330, 1331 (S.D.Ind. 1997), citing Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22, 28 (1988). A forum-selection clause "should control unless there is a `strong showing that it should be set aside.'" Heller Financial Co., Inc. v. Midwhey Powder Co., Inc., 883 F.2d 1286, 1290-91 (7th Cir. 1989), quoting M/S Bremen, 407 U.S. 1; see also Northwestern National Ins. Co. v. Donovan, 916 F.2d 372, 375 (7th Cir. 1990). In other words, a forum selection clause will be enforced absent a showing that it was procured by fraud or overreaching or that enforcement of the clause would be a grave inconvenience. M/S Bremen, 407 U.S. at 12, 15, 17-18.

The question here is whether a forum selection clause applies to, or even exists with respect to, the parties' current dispute. The forum selection clause in the Subcontract Agreement provided for exclusive jurisdiction in Louisiana for "any disputes arising hereunder." The dispute between the parties in this case did not arise under the Subcontract Agreement. Both parties agree that the old agreement had expired, and that the 2002 Indiana computer contract presented a new business relationship. Accordingly, EVI's claims in this case did not arise under the Subcontract Agreement and are not subject to the forum selection clause.

It remains to be seen whether EVI can prove the existence of a contract that is specific enough to be enforceable, especially since EVI has decided to eschew any argument incorporating all the terms of the old Subcontract Agreement, which would include the forum selection clause. That question can be addressed another day. But whether EVI will be able to prove its case on the merits does not control the venue issue.

In the absence of an applicable forum selection clause, venue in this case is governed by 28 U.S.C. § 1391(a), which provides in part that an action in which jurisdiction is founded solely on diversity may properly be brought 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. . . .

Venue is proper in this district under both provisions.

For purposes of venue under § 1391(a)(1), a corporation resides "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). A federal district court exercising diversity jurisdiction has personal jurisdiction over a non-resident defendant "only if a court of the state in which it sits would have such jurisdiction." RAR, Inc., v. Turner Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir. 1997). In Indiana, personal jurisdiction depends on both whether requirements of the state-long arm statute are met and whether federal due process is satisfied. International Medical Group, Inc. v. American Arbitration Ass'n, 312 F.3d 833, 846 (7th Cir. 2002), citing Anthem Ins. Cos., Inc. v. Tenet Healthcare Corp., 730 N.E.2d 1227, 1232 (Ind. 2000).

Jurisdiction over Time Trend in Indiana is obviously proper and constitutional in this case, and Time Trend does not suggest otherwise. These claims arise from the parties' alleged joint efforts to submit a business proposal to sell a large quantity of computers and related products and services to the Indiana state government. See generally Burger King Corp. v. Rudzewicz, 471 U.S. 462, 479-80 (1985) (upholding long-arm jurisdiction over non-resident party in state where other contracting party was located; non-resident party had purposeful contacts with forum state). Because the exercise of personal jurisdiction over Time Trend is proper in this judicial district, venue is proper here under 28 U.S.C. § 1391(a)(1).

Venue is also proper under § 1391(a)(2) because a substantial part of the events giving rise to this case occurred in the Southern District of Indiana. The parties' dispute centers upon a contract with the State of Indiana that EVI alleges it helped Time Trend secure. EVI alleges that it acted as Time Trend's sales representative and customer contact for the new Indiana Quantity Purchase Award. EVI asserts that it has not been compensated for its role in procuring the contract or for the role that it should currently be playing as Time Trend's partner under the contract.

Section 1391(a)(2) and its parallel provision for federal question cases in Section 1391(b)(2) assume that venue based on key events may be proper in more than one district. Thus, which forum has the most substantial portion of events in a case does not control venue. To establish venue, a plaintiff must demonstrate only that "a substantial part of the events or omissions giving rise to the claim" took place in the forum district, not that a majority of the events took place there. See Pasulka v. Sykes, 131 F. Supp.2d 988, 994 (N.D.Ill. 2001) (finding venue proper under § 1391(a)(2) where plaintiff took actions on behalf of the defendant in the district and had telephone conversations with the defendant in the district concerning their partnership).

To be "substantial," it is enough for EVI to establish that the events that occurred in the Southern District of Indiana are "`part of the historical predicate for the instant suit.'" Master Tech Products, Inc. v. Smith, 181 F. Supp.2d 910, 914 (N.D.Ill. 2002), quoting Uffner v. La Reunion Francaise, S.A., 244 F.3d 38, 42 (1st Cir. 2001). In light of the central role that the Indiana contract plays in this action, EVI has demonstrated that a substantial portion of the events giving rise to his claim for compensation occurred in this district.

In support of its motion to dismiss, Time Trend has also brought to the court's attention the suit that Time Trend filed against EVI in the Ninth Judicial District of Louisiana. Time Trend argues that EVI's suit here and the one that Time Trend filed in Louisiana cover the same subject matter and therefore the present suit, which it contends was filed in an improper forum, should be dismissed. This argument is not at all persuasive. First, Time Trend's claims in that suit have nothing to do with the parties' business relationships with the State of Indiana. Second, EVI filed counterclaims arising under the now-expired Subcontract Agreement, but that contract has little to do with EVI's current claims arising from the parties' joint efforts to secure the 2002 Indiana computer contract. The parties are not required to consolidate all their disputes in the same forum.

II. Transfer

Defendant Time Trend alternatively seeks a transfer of this action to the Western District of Louisiana pursuant to 28 U.S.C. § 1404(a) based on convenience of the parties and witnesses and Louisiana's interest in the litigation. Under § 1404(a) Time Trend has the burden of proving that the Western District of Louisiana is "clearly more convenient" than the Southern District of Indiana. Coffey v. Van Dorn Iron Works, 796 F.2d 217, 220 (7th Cir. 1986).

Time Trend focuses on its own convenience in litigating this matter to demonstrate that a transfer is warranted, arguing that its primary witness is located in Louisiana. Time Trend also argues that EVI, which is based in Georgia, will be inconvenienced regardless of whether the suit is maintained in Louisiana or Indiana, and that it would be more convenient for EVI, Time Trend, and all of their witnesses to litigate all disputes in Louisiana. These are not compelling reasons for transfer.

First, "the effect of a transfer cannot be a mere shift of inconveniences" among the parties. Moore v. ATT Latin America Corp., 177 F. Supp.2d 785, 789 (N.D.Ill. 2001), citing Promatek Med. Sys., Inc. v. Ergometrics, Inc., 1990 WL 19491, *4 (N.D.Ill. 1990). Merely making the litigation more convenient for one party is not a sufficient reason to transfer an action.

Second, it makes no difference that EVI must travel to either Louisiana or Indiana to litigate this case. EVI chose to litigate in this forum. Its evaluation of its own convenience in choosing this forum receives deference.

Third, Time Trend's assertion that EVI "has acknowledged that Louisiana is a convenient forum" by suing Time Trend in Louisiana state court is tenuous at best. See Def. Br. at 9. The suit to which Time Trend refers is the counterclaim that EVI filed in response to Time Trend's suit (on an unrelated matter) that appears to have been subject to the mandatory forum selection clause.

The decisive factor in this case, as in many § 1404(a) decisions, is convenient availability of non-party witnesses — especially employees of the Indiana state government who have been involved in the business relationships here. See Luther Aff. ¶¶ 11, 12; Case Management Plan (identifying eleven potential witnesses who reside in Indiana or near Indiana). Time Trend itself has identified at least six witnesses (of thirteen listed) from the State of Indiana. Time Trend has not identified any non-party witnesses who would be more readily available for a trial in Louisiana than in Indiana.

Time Trend argues that the convenience of these witnesses from Indiana is not as important because their testimony will relate only to peripheral issues. On the present record, the court must disagree. A determination of the parties' relationship in this case will likely hinge on the credibility of witness testimony, in which case non-party testimony could play a pivotal role in the outcome. In Plaintiff's Exhibit D, for example, Time Trend argued that EVI had never contributed much value to the business relationship with Indiana in the first place. Testimony from state government employees could be central to that issue between the parties, which is relevant to motives and credibility. Also, of course, testimony from state government employees may be relevant to Time Trend's presentation of EVI's role in the 2002 contract proposal.

Considerations of the interests of justice also do not weigh in favor of transfer. Transferring this action would not further "such concerns as ensuring speedy trials, trying related litigation together, and having a judge who is familiar with the applicable law try the case." Heller Financial, Inc. v. Midwhey Powder Co., 883 F.2d 1286, 1293 (7th Cir. 1989), citing Coffey, 796 F.2d at 221. The transfer of this case would still result in two different cases being tried in two different courts: one state and one federal.

Time Trend has also argued that the action should be transferred because Louisiana law will govern this action. This argument is based on the same foundation as the forum selection clause — the parties' expired Subcontract Agreement provided that Louisiana law would govern. As with the forum selection clause, though, both parties agree that the Subcontract Agreement has expired, so it should not apply. Time Trend contends there is no contract, and EVI contends the contract has no provision choosing Louisiana law. Also, even if the court could say at this point that Louisiana law should govern, that factor would not outweigh the importance of convenient access to non-party witnesses here.

Conclusion

For the reasons stated above defendant Time Trend's motion to dismiss is denied, and the defendant's alternative motion to transfer is also denied.

So ordered.