Summary
severing claims prior to partial transfer under § 1406
Summary of this case from Abuhouran v. NicklinOpinion
Case No. 2:07-cv-1164.
February 22, 2008
OPINION AND ORDER
On February 21, 2008, the captioned case came on for a telephone conference in which the Court and counsel for the parties addressed the outstanding issues identified in the February 7, 2008 Opinion and Order. (Doc. # 45.) Three basic areas warranted attention: (1) the stayed transfer of those claims against Defendant Timothy McGowan; (2) the stayed dismissal of those claims against the remaining individual defendants; and (3) the stayed transfer of those claims against Defendant Kimball Midwest. This Court shall describe each topic in turn.
Timothy McGowan. In its prior decision, the Court concluded that a transfer of all claims against Defendant McGowan was appropriate under 28 U.S.C. § 1404(a) because the Southern District of Ohio constituted an inconvenient forum. At the conference, counsel for Defendant McGowan sought to continue the stay of the transfer while the parties continued settlement talks, although counsel conceded that transfer to the Northern District of Kentucky was warranted should settlement fail. Counsel for Plaintiff in turn represented that they agreed to the dismissal without prejudice of all claims against Defendant McGowan so that Plaintiff could refile in state or federal court in Kentucky. Defense counsel did not suggest the basis for such a dismissal, given that § 1404(a) provides only 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 remaining individual defendants. In the prior decision, this Court stayed the 28 U.S.C. § 1406(a) dismissals without prejudice to refiling in the appropriate districts of all claims against the remaining individual defendants. During the conference, all counsel indicated that they agreed to the dismissal of all claims against all of the remaining individual defendants so that Plaintiff could refile in the appropriate districts.
Kimball Midwest. The Court also indicated in its previous decision that, although venue was proper in this District, all claims against Defendant Kimball Midwest should be transferred for inconvenient forum pursuant to § 1404(a). The Court explained that "it would be unfair to Defendant McGowan to force him to litigate in this District when the interest of justice and issues of convenience and practicality favor transfer. The related claims against Defendant Kimball Midwest logically follow suit and inform this Court's exercise of its discretion." (Doc. # 45, at 13.)
Anticipating a potential issue, the Court provided in a footnote in its prior decision that it would "discuss with Plaintiff at the status conference . . . whether Plaintiff seeks to proceed against only Defendant Kimball Midwest in this District." (Doc. # 45, at 13 n. 4.) The issue indeed arose when counsel for Plaintiff asserted during the telephone conference that it did not wish to transfer the claims against Defendant Kimball Midwest and that it wanted to pursue those claims in this District while concurrently pursuing claims against the individual defendants in other forums. After entertaining argument and discussing with the parties the problems of litigating the same basic issues on multiple fronts, the Court took the matter under advisement.
Cognizant of the foregoing discussions, the Court revisits its stayed February 7, 2008 decision and necessarily concludes that it must transfer all claims against all defendants.
In that prior decision, the Court directed the parties to the case of Overland, Inc. v. Taylor, 79 F. Supp. 2d 809, 813 (E.D. Mich. 2000). In Overland, another district court addressed the issue of what to do when venue was proper against one defendant but not the remaining defendants. That court recognized three options:
(1) dismiss this action pursuant to 28 U.S.C. § 1406(a), (2) transfer the entire case to another district where venue is proper for all Defendants pursuant to 28 U.S.C. § 1406(a), or (3) sever the claims in the case, retain jurisdiction over the Defendant for whom venue is proper, and transfer the other claims.Id. at 813. The judicial officer in Overland concluded that transfer of the entire case was necessary because "`[w]hen the conduct of a co-defendant as to whom venue is proper is central to the issues raised by the plaintiff against those subject to transfer, the grant of a severance would not ordinarily be consistent with the sound exercise of discretion.'" Id. (quoting Cottman Transmission Sys., Inc. v. Martino, 36 F.3d 291, 296 (3d Cir. 1994)).
The Cottman decision on which Overland relies is notably instructive. In Cottman, the Third Circuit Court of Appeals addressed whether claims against a defendant that waived any objection to venue should have been transferred along with the claims against a defendant against whom venue was improper. 36 F.3d at 296. The Third Circuit explained:
In the situation where venue is proper for one defendant but not for another and dismissal is inappropriate, the district court has a choice. One option is to transfer the entire case to another district that is proper for both defendants. Another alternative is to sever the claims, retaining jurisdiction over one defendant and transferring the case as to the other defendant to an appropriate district. See In re Fine Paper Antitrust Litig., 685 F.2d 810, 819 (3d Cir. 1982); 15 Charles Alan Wright et al., Federal Practice Procedure § 3827, at 275-76 (1986 Supp. 1994).
In Sunbelt Corp. v. Noble, Denton Assocs., Inc., 5 F.3d 28 (3d Cir. 1993), we adopted the position "that [the court] should not sever if the defendant over whom jurisdiction is retained is so involved in the controversy to be transferred that partial transfer would require the same issues to be litigated in two places." Id. at 33-34. (internal quotation omitted). When the conduct of a co-defendant as to whom venue is proper is central to the issues raised by the plaintiff against those subject to transfer, the grant of a severance would not ordinarily be consistent with the sound exercise of discretion. See id. at 34.Id. Such analysis informs the disposition of the claims in the instant case.
Here, the claims against Defendant Kimball Midwest are so intertwined with the claims against the individual defendants that partial transfer or dismissals and refiling against the individual defendants while retaining the claims against Kimball Midwest would invariably require many of the same issues to be litigated in two places, without the benefit of essential parties. For example, the claims against Defendant McGowan would proceed in Kentucky while those select claims against Kimball Midwest that involved McGowan would proceed in this District. But the conduct of both defendant actors is central to the claims against each defendant. This analysis extends to each remaining individual defendant and the related claims against Defendant Kimball Midwest as well.
The potential end result of such piecemeal litigating would be a morass. Thus, the actual end result here is that the parties' positions — specifically Plaintiff's position — compels this Court to revisit aspects of its prior analysis. Previously, the Court concluded that it "can discern no reason why severance and transfer is warranted" when the Court could not find that dismissal would cause prejudice and could not state that the interest of justice required a transfer under § 1406(a). (Doc. # 45, at 14.) But dismissal under § 1406(a) is no longer the more appropriate course under the circumstances now before the Court. The problems posed by redundant litigation that would not involve all necessary parties underscore the prejudice a dismissal as opposed to transfer would cause. The interest of justice therefore mandate transfers under § 1406(a) as to the individual defendants, with McGowan and Kimball Midwest necessarily following suit to the more convenient forums; the problems of piecemeal litigation only compound the inappropriateness of this inconvenient forum. To reach a conclusion contrary to the foregoing and attempt a surgical excision of select claims would be to ignore the realities of the claims and facts asserted, which would invariably constitute an abuse of discretion.
The Court is not unsympathetic to Plaintiff's position, as well as the fact that the preliminary injunction motion needs addressed. But the delay in being able to address that motion is in large part the result of Plaintiff's self-inflicted litigation problems. Prompt transfer rather than refiling will hopefully result in equally prompt disposition of the pending motions.
In light of the foregoing, the Court both amends its prior decision and issues new orders as follows:
(1) The Court GRANTS the identified motions predicated on a lack of venue. (Docs. # 19, 21, 23, 25, 27, 31, 33, 35.) The Court DENIES AS MOOT the parts of those eight motions asserting a lack of personal jurisdiction and alternatively requesting transfer under 28 U.S.C. § 1404(a). The Court in its discretion elects to transfer under 28 U.S.C. § 1406(a) rather than dismiss the claims involved.
(2) The Court DENIES the remaining motions to dismiss predicated on improper venue. (Doc. # 29, 37.) The Court GRANTS the part of those motions alternatively seeking transfer under § 1404(a).
(3) The Court severs the claims against Defendants pursuant to Federal Rule of Civil Procedure 21 and TRANSFERS pursuant to § 1406(a) all the claims except those related claims asserted against Defendant Kimball Midwest and Defendant McGowan. The claims against Kimball Midwest and McGowan are transferred under § 1404(a) for inconvenient forum.
As noted in the prior decision, Rule 21 provides that "[o]n motion or on its own, the court may at any time, on just terms, add or drop a party. The court may also sever any claim against a party." Fed.R.Civ.P. 21. Although the rule is titled "Misjoinder and Non-Joinder of Parties," Rule 21 "`authorizes the severance of any claim, even without a finding of improper joinder, where there are sufficient other reasons for ordering a severance.'" Taylor v. CSX Transportation, Inc., Nos. 3:05 CV 7383 3:06 CV 1116, 2007 WL 120154, at *2 (N.D. Ohio Jan. 10, 2007) (quoting Wyndham Assocs. v. Bintliff, 398 F.2d 614, 618 (2nd Cir. 1968)). "In fact, the language of Rule 21 does not limit its application to joinder, but only limits its use to `such terms as are just.'" Id. Thus, courts have employed Rule 21, even without misjoinder, "to preserve personal jurisdiction, subject matter jurisdiction, and venue, as well as to facilitate transfer to another venue." Id. (citing 4 James W. Moore, Moore's Federal Practice § 21.02[1] (3d ed. 2006)).
(4) To aid in the transfers, Plaintiff shall file with the Court within eleven (11) days of this Order a list of all defendants and the corresponding appropriate transfer district. Plaintiff may elect to submit, but is not required to submit, a proposed order that would effectuate said transfers.
(5) The remaining pending motions now remain pending against all defendants. (Docs. # 3, 4.)