Opinion
No. 3-02-CV-0308-BD
October 2, 2002
MEMORANDUM OPINION AND ORDER
Defendant Engineered Fastener Company a/k/a EFC International ("EFC") has filed a motion to transfer venue to the United States District Court for the Eastern District of Missouri pursuant to 28 U.S.C. § 1404 (a). For the reasons stated herein, the motion is denied.
I.
EFC is a distributor of performance enhancing specialty component parts headquartered in St. Louis, Missouri. (Def. Countercl. at 2, ¶¶ 1, 4). In the summer of 2000, EFC requested proposals from 12 companies in an attempt to obtain business-related computer software. ( Id. at 2, ¶ 5). E.coetry, an authorized distributor of the SAP R/3 software system, submitted a written proposal through Plaintiff N2 Consulting, LLC ("N2"), its exclusive implementation consultant for the St. Louis region. ( Id. at 2, ¶¶ 6-8 Exh. A). EFC accepted N2's proposal and paid e.coetry for the SAP R/3 software and licenses. ( Id. at 2, ¶¶ 6, 10). However, when e.coetry refused to guarantee the installation and implementation of the software system and make other changes to the written proposal, the parties terminated their relationship. ( Id. at 2, ¶¶ 9, 10).
On September 27, 2000, EFC and N2 representatives met in St. Louis in an attempt to salvage their consulting contract. At this meeting, the parties entered into an oral agreement for the installation and implementation of the SAP R/3 software system over a 12-month period. ( Id. at 3, ¶ 12). Both parties agree that this contract required EFC to make 11 monthly payments of $12,000, plus certain expenses. ( Id. at 3, ¶ 12; Plf. Sec. Am. Compl. at 3, ¶ 9). However, other terms of the agreement are in dispute. EFC contends it was only required to make one additional payment of $8,000 in the last month of contract. (Def. Countercl. at 3, ¶ 12). N2 alleges that EFC was obligated to pay "the balance of its charges for consultations" and expenses, which totaled $241,799. ( Id. at 3, ¶¶ 9, 10).
N2 alleges that it provided consulting services to EFC valued at $325,750 and incurred $32,803 in expenses. of this amount, only $116,754 has been paid. This leaves a balance of $241,799. (Plf. Sec. Am. Compl. at 3, ¶ 10).
Unable to resolve their differences, N2 sued EFC in Texas state court for breach of contract, quantum meruit, and restitution or unjust enrichment. EFC timely removed the case to federal court, filed a counterclaim for breach of contract and fraudulent misrepresentation, and now seeks to transfer venue to the Eastern District of Missouri. The motion to transfer has been briefed by the parties and is ripe for determination.
Federal jurisdiction is proper because the parties are citizens of different states and the amount in controversy exceeds $75,000, exclusive of interest and costs. See 28 U.S.C. § 1332 (a)(1).
II.
Federal law permits a district court to transfer venue to any other proper judicial district "for the convenience of the parties and witnesses or in the interest of justice." 28 U.S.C. § 1404 (a). The court should consider: (1) the availability and convenience of the witnesses and parties; (2) the availability of process to compel the attendance of unwilling witnesses; (3) the cost of obtaining attendance of witnesses; (4) the relative ease of access to sources of proof; (5) the place of the alleged wrong; (6) the possibility of delay and prejudice if the case is transferred; and (7) the plaintiff's right to choose its forum. See State Street Capital Corp. v. Dente, 855 F. Supp. 192, 197 (S.D. Tex. 1994); Dupre v. Spanier Marine Corp., 810 F. Supp. 823, 825 (S.D. Tex. 1993). The movant must demonstrate that the balance of convenience and justice weighs heavily in favor of transfer. Dente, 855 F. Supp. at 197.
EFC suggests that the Eastern District of Missouri is a more convenient forum in which to litigate this case because: (1) its witnesses, documents, and sources of proof are located in St. Louis, Missouri; (2) the dispute arose in Missouri; and (3) federal courts in the Eastern District of Missouri are less congested than federal courts in the Northern District of Texas. The court will address these arguments in turn.
A.
As a preliminary matter, the court notes that EFC did not file its motion to transfer venue until June 10, 2002 — six months after this case was filed and four months after the action was removed to federal court. Although a motion to transfer venue under 28 U.S.C. § 1404 (a) is not subject to the pleading requirements of Rule 12(h), it still must be filed with "reasonable promptness." Peteet v. Dow Chemical Co., 868 F.2d 1428, 1436 (5th Cir.), cert. denied, 110 S.Ct. 328 (1989). A court may take delay into account in determining whether transfer is warranted. Id.
Rule 12(h) provides, in pertinent part:
A defense of . . . improper venue . . . is waived (A) if omitted from a motion in the circumstances described in subdivision (g), or (B) if it is neither made by a motion under this rule nor included in a responsive pleading or an amendment thereof permitted by Rule 15(a) to be made as a matter of course.
FED. R. CIV. P. 12(h)(1). Unlike a motion to dismiss for improper venue under Rule 12(b)(3), a motion to transfer venue under 28 U.S.C. § 1404 (a) is not a "defense" that must be raised in a responsive pleading.
Here, EFC did not seek a change of venue until after the parties exchanged initial disclosures, submitted a joint status report, and conducted preliminary discovery. Significantly, venue is not even mentioned as a contested issue in the joint status report. The court already has issued a scheduling order requiring the parties to complete discovery by December 6, 2002 and file dispositive motions by January 3, 2003. Under these circumstances, the timing of EFC's motion creates a substantial possibility of undue delay if the case is transferred. See FTC v. Multinet Marketing, LLC., 959 F. Supp. 394, 395-96 (N.D. Tex. 1997) (denying motion to transfer venue where defendant failed to raise issue in answer or joint status report and where "change in venue now is likely to upset the discovery and trial schedule and waste judicial resources"); American Airlines, Inc. v. Rogerson ATS, 952 F. Supp. 377, 384 (N.D. Tex. 1996) (denying motion where transfer would disrupt existing scheduling order).
B.
N2, a Texas limited liability corporation headquartered in Addison, Texas, chose to file this action in Texas. Ordinarily, the "[p]laintiff's privilege to choose, or not to be ousted from, his chosen forum is highly esteemed." Aguero v. Christopher, 481 F. Supp. 1272, 1275 (S.D. Tex 1980), quoting Time, Inc. v. Manning, 366 F.2d 690, 698 (5th Cir. 1966) (internal citation omitted). While the plaintiffs choice of forum is no longer reflexively accorded the decisive weight it once enjoyed under the doctrine of forum non conveniens, it still is a significant factor that must be considered. See, e.g. Gundle Lining Construction Corp. v. Fireman's Fund Insurance Co., 844 F. Supp. 1163, 1165 (S.D. Tex. 1994); Continental Airlines, Inc. v. American Airlines, Inc., 805 F. Supp. 1392, 1395 (S.D. Tex. 1992) (where plaintiff's chosen forum is its place of incorporation and principal place of business, the importance of this factor is heightened). Thus, N2's decision to file suit in Texas weighs against transfer.
C.
The crux of EFC's argument is that its witnesses, documents, and sources of proof are all located in Missouri. The convenience of witnesses is often regarded as the most important factor to be considered in deciding whether to transfer venue. See Continental Airlines, 805 F. Supp. at 1396. A party seeking a transfer on that basis "must specifically identify the key witnesses and outline the substance of their testimony." Dupre, 810 F. Supp. at 825.
EFC identifies five current employees, one former employee, and various unnamed software consultants and experts who are key witnesses in this case. Jim Laarman, President of EFC, Doug Adams, CEO of the company, and Nathan Wolf, former IT Director, all were "involved in the purchasing, contracting, negotiating and review of legal documents related to the purchase and installation of the software system." (Def. App. at 15, ¶ 20). EFC believes these witnesses would likely testify about discussions and meetings with e.coetry, N2, and SAP America. ( Id.). Three other employees — Melissa Parsons, Carol Gallagher, and Tom Manshold — will testify regarding deficiencies in the work performed by N2 and its failure to successfully complete the project. ( Id. at 15, ¶¶ 21-22). EFC further alleges that:
Other anticipated key witnesses for EFC include various software consultants and experts who assisted EFC during and after the period in which N2 provided services on behalf of EFC. These consultants and experts are all located in the Eastern District of Missouri and have no dealings with N2 in the State of Texas. It is anticipated that the consultants and experts would testify to deficiencies in the performance of N2's work and N2's failure to complete performance.
( Id. at 15, ¶ 23).
By contrast, N2 identifies four employees and three non-party witnesses who may testify in the case. William Urech, Vice-President of Professional Services, Sue Hollingsworth, Business Manager, John Lenhardt, Project Manager, and Bryan Sircely, a consultant who installed the SAP R/3 software, have knowledge of the terms of the agreement with EFC, the work performed by N2, and the amount due and owing on the contract. (Plf. App. at 6-7, ¶¶ 7-9, 11). Phil Vick, a former N2 software consultant, implemented the financial module of the software program and provided general customer support to EFC. Vick will testify regarding the services performed by N2. ( Id. at 6, ¶ 10). Similar testimony is anticipated from Raymond Jennings and Haunaman Chittern, two independent contractors hired by N2 as consultants on the EFC project. ( Id. at 7, ¶ 12). All these witnesses are located in Texas.
The court initially observes that, where the key witnesses are employees of the party seeking transfer, their convenience is entitled to less weight because the party is able to compel their attendance at trial. See Continental Airlines, 805 F. Supp. at 1397. This neutralizes EFC's argument with respect to Laarman, Adams, Parsons, Gallagher, and Manshold. Nor is the court inclined to consider any alleged inconvenience to unnamed software consultants and experts. EFC's failure to identify these witnesses by name or detail the substance of their expected testimony makes it impossible to determine whether they are crucial to the presentation of any claim or defense. Id. at 1396 ("Where, as here, the moving party has merely made a general allegation that certain witnesses are necessary, without identifying them or the substance of their testimony, the motion must be denied."); see also Barnett v. Kirby Inland Marine, Inc., 202 F. Supp.2d 664, 669 (S.D. Tex. 2002) (motion to transfer venue denied where defendant did not adequately identify witnesses who would be inconvenienced by the transfer or describe their proposed testimony); Multinet Marketing, 959 F. Supp. at 396 (failure to name witnesses who would testify at trial held insufficient to defeat plaintiffs choice of forum).
This leaves Nathan Wolf as the sole non-party witness who may be inconvenienced by traveling to Texas for trial. EFC contends that Wolf, along with Jim Laarman and Doug Adams, were involved in the purchasing, contracting, negotiating and review of legal documents related to the purchase and installation of the software system. (Def. App. at 15, ¶ 20). However, in its counterclaim, EFC alleges that Adams negotiated and entered into the oral agreement with N2. (Def. Countercl. at 3, ¶ 12). Thus, it appears that Adams, not Wolf, is a key witness on this subject. At best, Wolf's testimony is merely cumulative of Adams' and Laarman's. This minimizes his significance as a witness. Since all of N2's witnesses are located in Texas and EFC can compel its employees to appear for trial in this district, transfer is not warranted.
The court rejects EFC's argument that balance of conveniences weighs in favor of transfer because N2's key witnesses regularly traveled to St. Louis to work on the project. (Def. Reply at 6). While this may be helpful in establishing personal jurisdiction over N2 in Missouri, it has little relevance in determining a motion to transfer venue under 28 U.S.C. § 1404 (a).
Nor has EFC established that the documents, records, and other sources of proof weigh in favor of transferring this case to the Eastern District of Missouri. Although certain key documents and evidence are undoubtedly located at EFC's office in St. Louis, Missouri, other relevant materials are kept by N2 in Addison, Texas. The computer software made the basis of this suit can be accessed anywhere via the internet and, while working on the EFC project, N2 regularly accessed the software from Texas. (Plf. App. at 7, ¶ 15). This factor neither militates in favor of or against transfer.
EFC also suggests that "a jury view of the premises and software systems implemented would only be available in Missouri . . ." (Def. Br. at 14). This may be true. However, EFC fails to explain how a jury view would assist the trier of fact is determining any issue in dispute.
D.
EFC further contends that a transfer is warranted because this dispute arose in Missouri. Indeed, the evidence shows that most if not all of the installation services and consulting work performed by N2 were done at EFC's office in St. Louis. (Def. App. at 13, ¶¶ 8-9). Although the place of the alleged wrong may be an important factor in venue determinations, "this factor, like the other factors, is only part of the equation." McGinnis v. Eli Lilly Co., 181 F. Supp.2d 684, 690 (S.D. Tex. 2002), quoting Dupre, 810 F. Supp. at 827.E.
In its final substantive argument, EFC contends that this case should be transferred to the Eastern District of Missouri because the dockets are less congested than those in the Northern District of Texas. While this may be true as a statistical matter, statistics have little relevance in this case. Here, the parties have waived their right to trial by an Article III judge and consented to have a magistrate judge conduct all further proceedings. This court's consent docket presently consists of 41 cases. An initial scheduling order has been issued with a discovery cutoff of December 6, 2002 and a dispositive motion deadline of January 3, 2002. A trial can be scheduled within weeks after summary judgment motions are decided. It is doubtful that more favorable docket conditions exist in the Eastern District of Missouri. Cf. Gundle, 844 F. Supp. at 1166-67 (transfer warranted where Southern District of Texas had four times as many criminal filings and 192 more pending cases per judge than District of New Jersey).
Statistics maintained by the Administrative Office of the United States Courts for the 12-month period ending September 30, 2001 show that there were 4,342 pending cases in the Northern District of Texas, with an average of 362 cases per sitting judge. By contrast, there were 2,583 pending cases in the Eastern District of Missouri, with an average of 323 cases per sitting judge. (Def. App. at 19-20).
CONCLUSION
EFC has failed to establish that the balance of convenience and justice weighs heavily in favor of transfer. While it may be more convenient for EFC to litigate this action in Missouri, a transfer is not appropriate where the only justification is to shift the balance of inconveniences from one party to another. See Dupre, 810 F. Supp. at 826. Accordingly, the motion to transfer venue is denied.
SO ORDERED.