Opinion
09 Civ. 9341 (PKC).
July 12, 2010
MEMORANDUM AND ORDER
Defendants Liberty Hardware Manufacturing Corporation ("Liberty") and Masco Corporation ("Masco") seek to transfer this action, pursuant to 28 U.S.C. § 1404(a), to the Middle District of North Carolina where Liberty is headquartered. Plaintiff Penta Hardware Corporation Limited ("Penta"), headquartered in Taiwan, opposes transfer. For the reasons set forth below, the motion to transfer venue for the convenience of the parties and witnesses and in the interest of justice is denied.
Background
Penta brings this action seeking damages for breach of contract and unjust enrichment. Penta alleges that defendants breached the terms of an agreement entered into on or about July 3, 2007 by failing to permit plaintiff to manufacture products for defendants' Basil and Palladium lines of bath products. Penta also alleges that defendants breached an agreement entered into on or around 2006 by failing to agree to accept reasonable price increases for plaintiff's manufacture of products, thereby forcing plaintiff to manufacture products at a loss. Finally, Penta alleges Liberty received Penta's good and valuable services without paying fair value and thus has been unjustly enriched. Penta seeks damages in an amount not less than thirty million dollars.
Plaintiff Penta is a corporation organized under the laws of Taiwan. Penta operates hardware-manufacturing facilities in the People's Republic of China, and has no facilities in the United States.
Defendant Masco is a Delaware corporation with its principal place of business in Michigan. Masco manufactures brand-named products for the home improvement and new construction markets, and operates its business through numerous wholly-owned subsidiary corporations. Masco was not a party to the transactions that are the subject of dispute of this lawsuit.
Defendant Liberty, a Florida corporation with its principal place of business in Winston-Salem, North Carolina, is a distributor of bath and cabinet hardware products. Liberty is a wholly-owned subsidiary of Masco.
Subject matter jurisdiction is premised upon diversity of citizenship. 28 U.S.C. § 1332.
Discussion
Section 1404(a) provides that "[f]or 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 plaintiff's choice of forum should not be disturbed unless the balance of the factors tips heavily in favor of a transfer. See S-FER Int'l., Inc. v. Paladoin Partners, Ltd., 906 F. Supp. 211, 213 (S.D.N.Y. 1995) (citing Dwyer v. General Motors Corp., 853 F. Supp. 690, 692 (S.D.N.Y. 1994)). The burden of demonstrating the desirability of transfer lies with the moving party, who must "make a clear and convincing showing that the balance of convenience favors defendants' choice." Hubbell Inc. v. Pass Seymour, Inc., 883 F. Supp. 955, 962 (S.D.N.Y. 1995). Determinations of convenience under section 1404(a) are made on a case-by-case basis and are within the broad discretion of district courts. D.H. Blair Co., Inc. v. Gottdiener, 462 F.3d 95, 106 (2d Cir. 2006).
The first question is whether this action is one that "might have been brought" in the district to which transfer is sought.TouchTunes Music Corp. v. Rowe Int'l Corp., No. 07-11450, 2009 WL 4884164, at *3 (S.D.N.Y. Dec. 15, 2009). Here, the parties agree the proposed transferee court is a venue where this case might have been brought. The Middle District of North Carolina has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1332. Penta is headquartered in Taiwan and has no offices anywhere in the United States. Liberty is incorporated in Florida and has its principal place of business in North Carolina. Penta's alleged damages of at least thirty million dollars satisfies the amount in controversy requirement. Because Liberty has its principal place of business in Winston-Salem, North Carolina, it is subject to personal jurisdiction in the Middle District of North Carolina. Thus, this action could have been brought in the proposed transferee court.
"Penta does not dispute that the proposed transferee court, the Middle District of North Carolina, is a venue where the case "`might have been brought'." Pl.'s Mem. 6.
Next, the Court considers the following factors in deciding whether to transfer under section 1404(a): "(1) the plaintiff's choice of forum, (2) the convenience of witnesses, (3) the location of relevant documents and relative ease of access to sources of proof, (4) the convenience of the parties, (5) the locus of operative facts, (6) the availability of process to compel the attendance of unwilling witnesses, [and] (7) the relative means of the parties." D.H. Blair, 462 F.3d 95, 106-07 (2d Cir. 2006) (quoting Albert Fadem Trust v. Duke Energy Corp., 214 F. Supp. 2d 341, 343 (S.D.N.Y. 2002)) (alteration in D.H. Blair).
The plaintiff's choice of forum is generally entitled to deference but not controlling weight. In this case, certain facts suggest Penta's choice should be afforded less weight. First, Penta is headquartered in Taiwan, thus a change of venue would not deprive Penta of a day in court on its home turf. Second, while a plaintiff's choice of forum is given deference because it is presumed to be convenient, it is generally less likely the choice was made for convenience when, as here, a foreign plaintiff chooses a forum in the United States. "In such circumstances, a plausible likelihood exists that the selection was made for forum shopping reasons . . . Even if the U.S. district was not chosen for such forum-shopping reasons, there is nonetheless little reason to assume that it is convenient for a foreign plaintiff." Iragorri v. United Tech. Co., 274 F.3d 65, 71 (2d. Cir. 2001) (forum non conveniens analysis).
Liberty argues that "[t]here is no reason to assume New York is more convenient for Penta than North Carolina" because Penta does not have an office or conduct business in New York, nor did its cause of action arise in New York. (Def.'s Mem. 6-7.) However, Penta has gone beyond the presumption of convenience and has articulated specific and legitimate reasons to justify its choice of forum. For Penta, traveling from Taiwan or China to New York is more convenient because of the wide availability of direct flights from Asia, whereas traveling to North Carolina would involve the additional inconvenience and expense of arranging a domestic flight following a long international flight.
No suggestion is made that Penta chose this venue to inconvenience Liberty. On the contrary, Penta chose a forum in which Liberty conducts substantial business and one that can be easily reached by all parties and witnesses. That no connection between New York and this case is alleged does not significantly reduce the weight afforded to Penta's choice because the Court is satisfied that Penta's selection was motivated by an interest of convenience and not to achieve some tactical advantage, except, perhaps, to avoid potential local prejudice on Liberty's home turf. Thus, Penta's selection is entitled to considerable weight.
The convenience of both party and non-party witnesses weighs against transfer. It is relatively easy for all witnesses to reach this forum because New York is a major transportation hub. The vast majority of material witnesses — most are located in China and Taiwan and some in North Carolina — can take advantage of the wide availability of direct flights to New York. In addition to these witnesses, Penta has identified three non-party witnesses currently located in New Jersey. It is more convenient for these witnesses to attend a trial in New York. In contrast, North Carolina is only convenient for Liberty's North Carolina based employees. Because there are no direct flights to North Carolina from Asia, most of the witnesses would be required to take an additional flight. Inevitably, someone will be inconvenienced no matter where this action is tried. No showing has been made that litigating in New York would pose an undue hardship for the witnesses in North Carolina, whereas trying this action in New York would be substantially more convenient for those witnesses traveling from New Jersey and Asia. Accordingly, this factor weighs against transfer.
A party making a motion to transfer based on the convenience of the witnesses has an obligation to provide the Court with a list of the witnesses inconvenienced by the current forum and must "make a general statement of what their testimony will cover."Factors Etc., Inc. v. Pro Arts, Inc., 579 F.2d 215, 218 (2d Cir. 1978). Liberty has provided a list of the witnesses inconvenienced and a general indication of their testimony.
The availability of process to compel the attendance of unwilling witnesses weighs against transfer. Penta has identified three third-party witnesses located in New Jersey that are within the subpoena power of this Court but not of the proposed transferee court.
Michael Duggan, Dan Sackerman and Kevin Kennedy are located outside of this district. However, they are subject to this Court's subpoena power because they are located within 100 miles of the forum. See Rule 45(b)(2)(B), Fed.R.Civ.P.
The New Jersey based witnesses are former members of upper management at Liberty's predecessor, Melard Manufacturing Corporation, and participated in the negotiations of an agreement entered into in 1998 (the "Letter Agreement") and its modification in 2003. It is Penta's position that all individual manufacturing orders received by Penta from Liberty, beginning in approximately 2005, were subject to the terms of the Letter Agreement and its 2003 modification. Thus, these individuals' testimony will be important to Penta's main allegations: Liberty breached two contracts, which the parties understood to be subject to the terms and practices of the earlier agreements. Moreover, there are no witnesses within the subpoena power of the proposed transferee court who have been shown to be unwilling to testify in New York. Accordingly, this factor weighs in favor of keeping the action in New York, the venue with the power to subpoena these non-party witnesses.
In 1994, Masco purchased a corporation named Melard Manufacturing Corporation, which eventually conducted business under the name Bath Unlimited. In 2005, Masco merged Bath Unlimited into Liberty, with the merged company retaining the name Liberty.
Liberty disputes that these witnesses can offer any relevant or significant testimony.
The location of relevant documents weighs on the determination of whether to transfer, however, "[i]n an era of electronic documents, easy copying and overnight shipping, this factor assumes much less importance than it did formerly." ESPN, Inc. v. Quicksilver, Inc., 581 F. Supp. 2d 542, 548 (S.D.N.Y. 2008) (citing Angelov v. Wilshire Bancorp, No. 06 Civ. 4223, 2007 WL 2375131, at *4 (S.D.N.Y. Aug. 14, 2007)). Liberty argues that this factor favors transfer because North Carolina is the only United States location where relevant documents are located. However, the documents are almost exclusively in electronic format or are otherwise easily transferable to this district. Accordingly, this factor weighs slightly, but not substantially, in favor of transfer. See Millennium, L.P. v. Hyland Software, Inc., No. 03 Civ. 3900, 2003 WL 22928644, at *4 (S.D.N.Y. Dec. 10, 2003) ("Although it is likely that all relevant documents can be transported from state to state in some fashion, for purposes of deciding transfer, the fact that the documents are all currently located in Ohio favors transfer.").
Most of the operative facts in this case occurred outside the United States. After 2005, further negotiation and performance of the parties' agreements primarily took place in China through Penta's manufacturing facility in China and Liberty's office in China. The agreements were sent to Liberty's office in North Carolina via email, and Penta's representatives made one trip to Liberty's North Carolina headquarters to discuss the transactions at issue. That some events occurred in North Carolina and none occurred in New York weighs slightly in Liberty's favor. However, since the majority of facts occurred in China, on an overall analysis this factor tilts neither in favor of nor against transfer.