Opinion
Civil Action No. 03-6420.
March 15, 2004
ORDER AND MEMORANDUM ORDER
AND NOW, this 15th day of March, 2004, upon consideration of defendants' Motion to Dismiss Plaintiff's Complaint for Improper Venue or, In the Alternative, to Transfer Venue Pursuant to 28 U.S.C. § 1404(a) (Document No. 2, filed December 12, 2003), plaintiff's Motion in Opposition to Defendants' Motion to Dismiss Plaintiff's Complaint for Improper Venue or, In the Alternative, to Transfer Venue Pursuant to 28 U.S.C. § 1404(a) (Document No. 4, filed January 23, 2004), defendants' Supplemental Memorandum of Law in Support of Their Motion to Dismiss Plaintiff's Complaint for Improper Venue or, In the Alternative, to Transfer Venue Pursuant to 28 U.S.C. § 1404(a) (Document No. 6, filed February 11, 2004), and plaintiff's Supplemental Memorandum of Law in Opposition to Defendants' Motion to Dismiss Plaintiff's Complaint for Improper Venue or, In the Alternative, to Transfer Venue Pursuant to 28 U.S.C. § 1404(a) (Document No. 7, filed February 18, 2004), IT IS ORDERED as follows:
1. Defendants' Motion to Dismiss Plaintiff's Complaint for Improper Venue is DENIED;
2. Defendants' alternative Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404(a) is GRANTED. The Clerk of the United States District Court for the Eastern District of Pennsylvania shall TRANSFER the case to the United States District Court for the District of New Jersey; and,
3. Plaintiff's Motion in Opposition to Defendants' Motion to Dismiss Plaintiff's Complaint for Improper Venue or, In the Alternative, to Transfer Venue Pursuant to 28 U.S.C. § 1404(a) is DENIED.
MEMORANDUM
I. BACKGROUNDThis suit arises from events surrounding plaintiff's February 2003 departure from UUU, a band plaintiff formed with, inter alia, defendants Joe Saltalamacchia and Douglas Mackie. Presently before the Court is defendants' Motion to Dismiss Plaintiff's Complaint for Improper Venue or, In the Alternative, to Transfer Venue Pursuant to 28 U.S.C. § 1404(a) and plaintiff's Motion in Opposition to defendants' Motion. Defendants seek in their Motion to dismiss the case or, in the alternative, transfer the suit to the District of New Jersey pursuant to 28 U.S.C. § 1404(a). For the reasons set forth below, the Court grants the Motion to Transfer and transfers the case to the United States District Court for the District of New Jersey. Defendants' Motion to Dismiss and plaintiff's Motion in Opposition to the Motion to Dismiss or Transfer are denied.
A. THE PARTIES
In September of 1995, plaintiff Peter Connors, defendant Joe Saltalamachhia, defendant Douglas Mackie, and Eric Klein (collectively "original members") formed a band called UUU. Compl. ¶ 8. UUU is a rock band that performs at bars, nightclubs, private parties, weddings, and corporate events. Pl.'s Mot. in Opp'n at 2. The original members incorporated the band under New Jersey law on January 7, 1998 as defendant UUU Productions, Inc. ("UUU").
According to plaintiff, UUU was formed pursuant to an oral agreement; a written shareholders' agreement was never executed. Compl. ¶ 13. Plaintiff claims that the original members "verbally agreed" that they were equal shareholders in UUU and that UUU would purchase the shares of any member who decided to leave the band Id. ¶¶ 14-16. "More specifically, it was agreed that the shares of any departing Original Member would be purchased for an equally divided share of the gross assets of UUU at the time of departure, e.g., if four Original Members were still in the band a 25% share." Id. ¶ 16. According to the Complaint, this agreement was honored when Klein departed the band in 2000 — UUU purchased his UUU stock for approximately twenty-five percent of the total value of UUU's assets. Id. ¶¶ 17, 18. Although the parties do not agree on the details of this agreement, defendants assert that the meetings that established and later modified the duties described by plaintiff occurred in New Jersey. Defs.' Supp. Mem. at 4 Ex. A ¶¶ 9-11 (Decl. of Joseph Saltalamacchia Jr.), Ex. 5 (Minutes of January 13, 1998 Organizational Meeting of Board of Directors).
On January 21, 2003, plaintiff asserts that he sent an e-mail informing UUU, through Saltalamacchia, that he planned to leave the band in thirty days. Compl. ¶¶ 20-21. He subsequently asked Saltalamacchia, as UUU's president, that UUU purchase his stock in the company pursuant to the (presumably oral) shareholders' agreement. Id. ¶ 22. According to plaintiff, at that time his stock was worth approximately $95,000. Id. ¶¶ 23-24. Plaintiff alleges that UUU refused to purchase his stock in violation of the shareholders' agreement. Id. ¶¶ 25-27.
Plaintiff's request that UUU purchase his stock apparently led to further disagreements between the band members. Plaintiff claims defendants Saltalamacchia and Mackie began "wasting, dissipating, and converting" UUU's assets to "ensure that UUU [would] have limited assets to purchase" his stock. Id. ¶¶ 28, 37, 38. Plaintiff also alleges that, after receiving his resignation, Saltalamacchia defamed him. Specifically, according to plaintiff, Saltalamacchia told plaintiff's wife and her family, inter alia, that he had a video of plaintiff engaging in sexual relations with women other than his wife and that plaintiff paid for a woman who was not his wife to have an abortion. Id. ¶ 31.
B. PLAINTIFF'S COMPLAINT
Plaintiff filed a Complaint in the Court of Common Pleas of Montgomery County on November 19, 2003. In the Complaint, plaintiff asserted claims for: breach of contract (Count I) — related to defendants' alleged violation of the UUU shareholders' agreement; breach of fiduciary duty (Count II) — related to Saltalamacchia and Mackie's alleged wasting of UUU assets; and defamation (Count III). In Count IV, plaintiff asked the court to appoint a custodian for UUU to prevent the alleged wasting of its assets.
On November 24, 2003, defendants removed the case to this Court pursuant to 28 U.S.C. § 1441. On December 12, 2003, they filed the instant Motion to Dismiss Plaintiff's Complaint for Improper Venue or, In the Alternative, to Transfer Venue Pursuant to 28 U.S.C. § 1404(a).
In his opposition to this motion, plaintiff claimed Saltalamacchia was a Pennsylvania resident. According to the Complaint, plaintiff is a resident of Shohola, Pennsylvania, which is located in the Middle District of Pennsylvania. Compl. ¶ 1. Defendants based removal on diversity of citizenship. Notice of Removal ¶ 9. Thus, if Saltamacchia and plaintiff were both Pennsylvania citizens when the Complaint was filed, the Court would not have subject matter jurisdiction over this case based on diversity of citizenship. As a result, the Court requested supplemental briefing from the parties on the issue of subject matter jurisdiction. II. SUBJECT MATTER JURISDICTION
Under 28 U.S.C. § 1441, a defendant may remove any civil action filed in state court to the federal district court for the district "embracing the place where such action is pending" if the federal court has original jurisdiction. Because Montgomery County is located in the Eastern District of Pennsylvania, removal to this Court was appropriate if this Court has original jurisdiction. 28 U.S.C. § 118(a).
The Court's original jurisdiction is based on diversity of citizenship. Under 28 U.S.C. § 1332(a), this Court has diversity jurisdiction only if each plaintiff is a citizen of a different state than each defendant. Norman v. CNF, Inc., No. 01-5677, 2002 U.S. Dist. LEXIS 8818 (E.D. Pa. May 15, 2002). The relevant time for determining the status of a party's citizenship for the purpose of diversity jurisdiction is the time the suit is filed.Id. (citing Texas v. Florida, 306 U.S. 398 (1939)).
Citizenship of a person for purposes of diversity jurisdiction is synonymous with domicile. Krasnov v. Dinan, 465 F.2d 1298, 1300 (3d Cir. 1972). A person is domiciled in a state if he (1) resides in the state and (2) intends to remain there indefinitely. Id. at 1300-01. "Because both physical presence and intent to remain are required to establish domicile, domicile is not synonymous with residence and a person can reside in one state and be domiciled in another." Doe v. Ross, No. 94-6572, 1995 U.S. Dist. LEXIS 7560, *2 (E.D. Pa. May 26, 1995) (citingMiss. Band of Choctaw Indians v. Holyfield, 490 U.S. 30, 48 (1989)). "In determining the domicile of a party, courts have looked to certain factors including the establishment of one's home, place of employment, location of assets, and generally, the centering of one's business, domestic, social, and civic life in a jurisdiction — including voting registration, driver's license, the residence claimed for tax purposes, and the location of professional and personal attachments." Norman, 2002 U.S. Dist. LEXIS 8818, at *7-8 (citing Juvelis v. Snider, 68 F.3d 648, 654 (3d Cir. 1995)).
28 U.S.C. § 1332 sets forth a different test for the citizenship of a corporation. Under this statute, "a corporation shall be deemed a citizen of any State by which it has been incorporated and of the State where it has its principal place of business." 28 U.S.C. § 1332(c)(1). In the Third Circuit, "the determination of a corporation's principal place of business for purposes of 28 U.S.C. § 1332 is governed by a `center of corporate activities' test. The `center of corporate activities' test is an operational approach which requires courts to ascertain the state where the corporation has its `headquarters of day-to-day corporate activity and management.'" MASH Enters. v. Prolease Atl. Corp., 199 F. Supp.2d 254, 258 (E.D. Pa. 2002) (quoting Mennen Co. v. Atl. Mut. Ins. Co., 147 F.3d 287, 294 (3d Cir. 1998)). In addition to the location of a corporation's headquarters and management, the following factors are relevant: "(1) the location of the physical plants and the like; (2) the location of corporate assets; and (3) the location of employees."Id.
According to the Complaint, plaintiff is a Pennsylvania citizen. Compl. ¶ 1. Defendants based removal on diversity of citizenship, asserting that all defendants were New Jersey citizens. Notice of Removal ¶¶ 4-6, 9. Both parties allege that Mackie is a New Jersey citizen. Compl. ¶ 4, Notice of Removal ¶ 5. Thus, for this Court to have jurisdiction, neither of the two remaining defendants can be a Pennsylvania citizen.
According to defendants' Supplemental Memorandum, Saltalamacchia is a New Jersey resident despite the fact that he maintains a "second residence" in Pennsylvania for "convenience." Defs.' Supp. Mem. at Ex. A ¶¶ 4, 5 (Declaration of Joseph Saltalamacchia, Jr.). In an attached declaration, Saltalamacchia states that "it is and has always been [his] intention to remain a resident of the State of New Jersey." Id. ¶ 4. In support of this statement, he attached W-2 forms he received from UUU and his income tax forms for 2003, 2002, 2001, and 2000 to the supplemental memorandum. Id. at Ex. 1 (W-2 forms) Ex. 2 (State of New Jersey Income Tax — Resident Return Homestead Rebate Applications). All of these forms list Saltalamacchia's address as 176A Dafrack Drive, Lake Hiawatha, New Jersey. Id. He also attached credit card, investment account, bank, and Social Security statements from October of 2003 with the same address. Id. at Ex. 3 (American Express, MBNA, Discover, and Citibank Credit Card Statements; Charles Schwab Investment Account Statement; and Chase Bank Account Statement) Ex. 4 (Social Security Statement). Plaintiff did not respond to Saltalamacchia's assertion of New Jersey citizenship. Pl.'s Supplemental Mem. at 1. The evidence provided by defendants is sufficient to establish that Saltalamacchia resides in New Jersey and intends to remain there indefinitely. Therefore, the Court concludes that Saltalamacchia is a New Jersey citizen.
UUU was incorporated in New Jersey and is therefore a citizen of that state. UUU is also a citizen of the State where it has its principal place of business. In the Complaint, plaintiff alleged that UUU was incorporated in New Jersey and had "a place of business" in New Jersey. Compl. ¶ 2. However, plaintiff also noted in his Supplemental Memorandum that, over the last year, ninety-one percent of the band's performances were in Pennsylvania, with fifteen percent of these shows occurring in the Eastern District of Pennsylvania. Pl.'s Supp. Mem. at 6. According to Saltalamacchia, UUU's principal place of business is his home in Lake Hiawatha, New Jersey. Defs.' Supp. Mem. at Ex. A ¶ 7 (Declaration of Joseph Saltalamacchia, Jr.). All corporate documents and documents relating to this case are maintained at this location. Id. ¶¶ 7-9. All board meetings were also held in New Jersey. Id. Ex. 5-8 (Minutes of Board of Directors Meetings). Specifically, defendants assert that the meetings that established and later modified the duties of UUU shareholders occurred in New Jersey. Defs.' Supp. Mem. at 4 Ex. A ¶¶ 9-11 (Decl. of Joseph Saltalamacchia Jr.), Ex. 5 (Minutes of January 13, 1998 Organizational Meeting of Board of Directors). In addition, UUU files federal and state taxes in New Jersey and maintains its corporate bank and investment accounts in New Jersey. Id. Ex. A ¶ 14. Although UUU conducts a significant percentage of its concerts in Pennsylvania, the evidence establishes that the corporation's day-to-day management occurs in New Jersey. As a result, the Court concludes that, based on the "center of corporate activities" test, UUU's principal place of business is in New Jersey. Because all three defendants are New Jersey citizens, the court has subject matter jurisdiction over this case based on diversity of citizenship.
III. VENUE
A. MOTION TO DISMISS
Defendants moved to dismiss the Complaint or, in the alternative, to transfer the instant case based on improper venue. The decision to transfer or dismiss a case based on alleged improper venue is "governed either by 28 U.S.C. § 1404(a) or 28 U.S.C. § 1406. Section 1404(a) provides for the transfer of a case where both the original and the requested venue are proper. Section 1406, on the other hand, applies where the original venue is improper and provides for either transfer or dismissal of the case. Thus, while either statute could theoretically provide a basis for the transfer of a case, only Section 1406 can support a dismissal." Jumara v. State Farm Ins. Co., 55 F.3d 873, 878 (3d Cir. 1995).
Although defendants acknowledge that, under Polizzi v. Cowles Magazines, Inc., 345 U.S. 663 (1953), 28 U.S.C. § 1441(a) governs federal venue in a removal case, they argue that improper venue in the underlying state action can be challenged in the federal court after removal. Defs.' Supp. Mem. at 5. According to defendants, "§ 1391(a) provides the standard by which the challenge is entertained." Id. at 6.
The Court rejects defendants' argument. "Because questions of venue . . . are essentially procedural, rather than substantive, in nature, federal law applies [to venue questions] in diversity cases irrespective of Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938)." Jumara v. State Farm Ins. Co., 55 F.3d 873, 877 (3d Cir. 1995). Thus, because defendants removed this action to federal court, federal venue provisions are applicable. UnderPolizzi, Section 1391 has "no application" to removed actions because venue of removed actions is governed by Section 1441(a).Polizzi, 345 U.S. at 665. Although there is conflicting case law on the issue, the Court concludes the better view is that "venue is now governed by the removal statute [, § 1441,] which creates venue in the federal court to which a case is properly removed. Thus, a party in a properly removed action may and must proceed under § 1404(a) to seek and change of venue." Lamusta v. Lawson Mardon Wheaton Inc., No. 99-3931, 2000 U.S. Dist. LEXIS 2708, *4 (E.D. Pa. Mar. 10, 2000); see also Hollis v. Fla. State Univ., 259 F.3d 1295, 1300 (11th Cir. 2001) ("§ 1441(a) establishes federal venue in the district where the state action was pending, and it is immaterial that venue was improper under state law when the action was originally filed."), Chicosky v. Presbyterian Med. Ctr., 979 F. Supp. 316, 319 (D.N.J. 1997); but see Superior Precast, Inc. v. Safeco Ins. Co., 71 F. Supp.2d 438, 442 (E.D. Pa. 1999) ("[Defendant's] removal of the case to this court did not waive its right subsequently to object to this court's venue"), Harrison v. L.P. Rock Corp., No. 99-5886, 2000 U.S. Dist. LEXIS, *2 n. 1 (E.D. Pa. Jan. 6, 2000).
Under Section 1441, venue is properly laid in the Court "embracing the place where such action is pending." Before removal, this case was pending in Montgomery County, Pennsylvania, which is located in the Eastern District of Pennsylvania. 28 U.S.C. § 118(a). Thus, venue was laid properly in this Court pursuant to Section 1441 and any venue issue must be addressed under Section 1404(a). Therefore, dismissal under Section 1406 is inappropriate and the Court will examine the requested transfer under Section 1404(a).
B. MOTION TO TRANSFER
28 U.S.C. § 1404(a) allows a district court to transfer an action to any other district "where it might have been brought" if this transfer is "for the convenience of parties and witnesses" and "in the interest of justice." Defendants ask the Court to transfer this case to New Jersey. It is clear the case could have been brought in New Jersey because all defendants reside in New Jersey. 28 U.S.C. § 1391(a).
Under § 1404(a), defendants have the burden of establishing that, based on a number of private and public interests, the litigation would "more conveniently proceed and the interests of justice be better served by transfer to a different forum."Jumara, 55 F.3d at 879. According to the Third Circuit, these public and private interests are: plaintiff's forum preference as manifested in the original choice; the defendant's preference; whether the claim arose elsewhere; the convenience of the parties as indicated by their relative physical and financial condition; the convenience of the witnesses — but only to the extent that the witnesses may actually be unavailable for trial in one of the fora; the location of books and records (similarly limited to the extent that the files could not be produced in the alternative forum); practical considerations that could make the trial easy, expeditious, or inexpensive; the relative administrative difficulty in the two fora resulting from court congestion; the local interest in deciding local controversies at home; the public policies of the fora; and the familiarity of the trial judge with the applicable state law in diversity cases. Id. at 879-880.
Given the proximity of the Eastern District of Pennsylvania and the District of New Jersey, factors related to the convenience of the parties or witnesses and practical considerations do not render one forum significantly more convenient than the other.Id. at 882.
The remaining relevant factors in this case are: plaintiff's preference, defendants' preference, where the claim arose, the local interest in deciding local controversies, and the familiarity of the trial judge with the applicable state law.
Although plaintiff's choice of venue "generally receives substantial weight," his choice in this case receives "diminished weight" because he chose a forum in which he does not reside and in which none of the conduct giving rise to his claims occurred.Lamusta, 2000 U.S. Dist. LEXIS at *6, Gallant v. Trustees of Columbia Univ., 111 F. Supp.2d 638, 647 (E.D. Pa. 2000). None of the events related to plaintiff's claims occurred in this district. UUU was incorporated under New Jersey law. The shareholders' meetings that established and later modified the duties and obligations of UUU shareholders occurred in New Jersey. Defs.' Supp. Mem. at 4 Ex. A ¶¶ 9-11 (Decl. of Joseph Saltalamacchia Jr.), Ex. 5 (Minutes of January 13, 1998 Organizational Meeting of Board of Directors), Ex. 6 (Minutes of July 11, 2000 Special Meeting of the Board of Directors). Thus, all of the facts relating to the adoption of the shareholders' agreement that is the basis for plaintiff's breach of contract claim occurred in New Jersey.
According to plaintiff, some of the facts relating to the breach of this agreement, including conversations he had with Saltalamacchia prior to leaving the band, occurred in the Middle District of Pennsylvania. However, there is no evidence that any of these conversations occurred in the Eastern District of Pennsylvania. Plaintiff argues in his Motion that it is "likely" that some of these conversations occurred in the Eastern District, but this assertion does not appear in plaintiff's Declaration. Pl.'s Mot. in Opp. at 9. In addition, some of the events that are relevant to the breach of the shareholders' agreement occurred in New Jersey — the shareholders' meeting during which defendants Saltalamacchia and Mackie decided not to buy plaintiff's shares of UUU occurred in New Jersey. Defs.' Supp. Memo. at Ex. 8 (Minutes of February 24, 2003 Special Meeting of the Board of Directors). Given that defendants Mackie and Saltalamacchia are both New Jersey residents and UUU's corporate bank and investment account are also maintained in New Jersey, any wasting of corporate assets — the basis for plaintiff's allegations in Count II — occurred, in whole or in part, in that state. Id. at Ex. A ¶ 14.
Plaintiff also claims that events related to the defamation alleged in Count III of the Complaint occurred in the Middle District of Pennsylvania. Specifically, it is alleged that plaintiff's wife, Melissa Connors, received a defamatory email at the couple's home in the Middle District. Id. at Ex. F ¶ 6 (Decl. of Melissa Connors). Mrs. Connors contends Saltalamacchia repeated these defamatory comments during a telephone conversation on March 1, 2003 in which both parties to the conversation were in the Middle District of Pennsylvania. Id. ¶ 7, 8, 10, 13. She also states that Saltalamacchia made similar comments to her father and other individuals in her community in the Middle District of Pennsylvania. Given the fact that plaintiff lives in the Middle District and some of the events relating to his lawsuit occurred in that district, venue may be appropriate in the Middle District of Pennsylvania. However, plaintiff opposes a transfer to the Middle District and defendants ask the Court to transfer the case to New Jersey.
Because the remaining Jumara factors weigh in favor of transfer to the District of New Jersey, the Court need only address a transfer to that district. First, defendants prefer a transfer to the District of New Jersey. Second, New Jersey law is applicable to an interpretation of the shareholders' agreement.See Franklin v. SKF USA, Inc., 126 F. Supp.2d 911, 918 (E.D. Pa. 2000) (holding that Pennsylvania court would apply Delaware law to a case involving interpretation of a corporation's bylaws because the corporation was incorporated in Delaware, even though the corporation's principal place of business was in Pennsylvania). Although Pennsylvania law may apply to the defamation claim, this factor is given little weight because this claim does not involve a complex question of Pennsylvania law.Jewish Fed'n. v. Weinberg, No. 01-5138, 2002 U.S. Dist. LEXIS 11274, at *11 (E.D. Pa. Apr. 4, 2002). Moreover, because most of the events related to the breach of the shareholders' agreement occurred in New Jersey, New Jersey courts have a local interest in adjudicating this case.
Based on the foregoing factors, the Court concludes that the private and public interests in this case weigh in favor of transfer of the action to the District of New Jersey. Thus, defendants' alternative Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404(a) is granted and the case is transferred to the District of New Jersey.
IV. CONCLUSION
For the foregoing reasons, the Court denies defendants' Motion to Dismiss and grants defendants' alternative Motion to Transfer Pursuant to 28 U.S.C. § 1404(a). The case is transferred to the United States District Court for the District of New Jersey. Plaintiff's Motion in Opposition is denied.