Opinion
CASE NO. 3:23 CV 1227
10-05-2023
FIRST FINANCIAL BANK, Plaintiff, v. Denis KNAPSCHAEFER, et al., Defendants.
Robert D. Shank, Jackson Lewis, Cincinnati, OH, for Plaintiff. Jonathan B. Allison, Freking & Betz, Cincinnati, OH, for Defendant Denis Knapschaefer. Ariana E. Bernard, Christine M. Snyder, Tucker Ellis, Cleveland, OH, for Defendant Novus Advisors, LLC.
Robert D. Shank, Jackson Lewis, Cincinnati, OH, for Plaintiff. Jonathan B. Allison, Freking & Betz, Cincinnati, OH, for Defendant Denis Knapschaefer. Ariana E. Bernard, Christine M. Snyder, Tucker Ellis, Cleveland, OH, for Defendant Novus Advisors, LLC.
MEMORANDUM OPINION AND ORDER
James R. Knepp II, UNITED STATES DISTRICT JUDGE
INTRODUCTION
Currently pending before the Court is Defendants Denis Knapschaefer and Novus Advisors, LLC's Motion to Transfer Venue to the District of South Carolina (Doc. 9). Plaintiff First Financial Bank opposes (Doc. 13) and Defendants reply (Doc. 15). Jurisdiction is proper under 28 U.S.C. § 1332. See Doc. 1, at ¶ 8; Doc. 8, at ¶ 8.
For the reasons set forth below, the Court denies Defendants' motion.
BACKGROUND
This is an action by Plaintiff First Financial Bank to enforce a non-compete and non-solicitation agreement against Defendants Denis Knapschaefer (Plaintiff's former employee) and Novus Advisors, LLC (Knapschaefer's current employer and Plaintiff's competitor). (Doc. 1).
Knapschaefer worked for First Financial from 1996 to 2022, most recently as a "Wealth Advisor III"; his office was "in this judicial district in Northwest Ohio" and his territory "was the entire Northern Ohio market". (Doc. 1, at ¶¶ 15-18). In March 2018, he was awarded a restricted stock award; in exchange, he signed an "Agreement for Restricted Stock Award." Id. at ¶¶ 21-23; Doc. 1-1 (Agreement). The Agreement contained a one-year non-solicitation of clients clause and a one-year non-solicitation of employees clause. (Doc. 1, at ¶¶ 23-45). It further contained a provision regarding the non-disclosure of confidential information. Id. at ¶¶ 25-26.
In July 2022, Knapschaefer told First Financial he was retiring. Id. at ¶ 29. He then resigned, moved to South Carolina, and took a job with Novus, where he works as an Investment Advisor and Senior Vice President. Id. at ¶¶ 31-34.
At the time of Knapschaefer's retirement, he worked with another employee (Stephen Semer) who was a "Wealth Advisor II" and had been employed by First Financial for approximately three years. Id. at ¶ 30. In August 2022, Semer resigned from First Financial and shortly thereafter began working for Novus as a Senior Vice President. Id. at ¶¶ 35-36. Semer works in Van Wert, Ohio. Id. at ¶ 37; (Doc. 1-2).
The Complaint alleges at least 87 clients have moved from First Financial to Novus after Knapschaefer solicited them to do so. Id. at ¶¶ 40-46.
The Complaint asserts two causes of action: (1) breach of contract against Knapschaefer and (2) tortious interference with contract against Novus. (Doc. 1, at 10-13).
Novus brings a Counterclaim against First Financial. (Doc. 8, at 11-14). It brings a single claim of tortious interference with business relationships, in which it asserts the clients who moved from First Financial to Novus did so independently and without any solicitation and that First Financial attempted to interfere with those transfers. Id.
STANDARD OF REVIEW
28 U.S.C. § 1404(a) governs the transfer of civil actions between federal district courts. It provides:
For 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 or to any district or division to which all parties have consented.28 U.S.C. § 1404(a).
When deciding whether to transfer a case, the "threshold consideration" is whether the action "might have been brought" in the transferee district. Worthington Metal Fabricators, LLC v. Burgess Steel Fabricators, LLC, 2014 WL 4792796, at *5 (N.D. Ohio) (citing Hoffman v. Blaski, 363 U.S. 335, 339-40, 80 S.Ct. 1084, 4 L.Ed.2d 1254 (1960); Martin v. Stokes, 623 F.2d 469, 474 (6th Cir. 1980)).
If so, the Court then considers "whether on balance, a transfer would serve 'the convenience of the parties and witnesses' and otherwise promote 'the interest of justice.' " Atl. Marine Const. Co. v. U.S. Dist. Ct. for W. Dist. of Texas, 571 U.S. 49, 63, 134 S.Ct. 568, 187 L.Ed.2d 487 (2013) (citing 28 U.S.C. § 1404(a)). District courts balance multiple often-competing factors when weighing a motion to transfer venue: the convenience for witnesses, the location of operative facts, the ability to compel unwilling witnesses, the interests of justice, the ease of accessing sources of proof, the convenience of the parties, and the plaintiff's choice of forum. See Means v. United States Conf. of Cath. Bishops, 836 F.3d 643, 651 (6th Cir. 2016) (declining to reverse district court's venue decision based on consideration of these factors). In weighing the factors, "if a change of venue serves merely to shift the inconvenience from one party to another, a change of venue is generally not warranted." Siegfried v. Takeda Pharms. N. Am., Inc., 2011 WL 1430333, at *2 (N.D. Ohio) (citations omitted).
A decision on whether to transfer lies within the broad discretion of the trial court. Bunting ex rel. Gray v. Gray, 2 F. App'x 443, 448 (6th Cir. 2001). The party requesting the transfer "bears the burden of proof to show the factors weigh 'strongly' in favor of transfer." Timken Gears & Servs. Inc. v. White, 2023 WL 5523947, at *3 (N.D. Ohio) (quoting Picker Int'l, Inc. v. Travelers Indem. Co., 35 F. Supp. 2d 570, 573 (N.D. Ohio 1998)).
DISCUSSION
Defendants move to transfer venue to the District of South Carolina. First Financial opposes. For the reasons set forth below, Defendants' motion is denied.
Preliminarily, the Court notes there is no dispute that this action could have been brought in the District of South Carolina; that court could exercise diversity jurisdiction and Defendants are residents of South Carolina. See Doc. 9-1, at 4; Doc. 13, at 6. Nor do Defendants appear to dispute that venue is also proper in this District. The Complaint asserts the Agreement at issue was negotiated and executed within the District and that Knapschaefer performed his work in this District. See 28 U.S.C. § 1391(b)(2) ("A civil action may be brought in . . . 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."). Thus, the dispute between the parties centers on how to weigh the factors related to a venue transfer.
Plaintiff's Choice of Forum
Defendants argue First Financial's choice of forum is not entitled to weight. In doing so, they point out First Financial originally filed this action in the Southern District of Ohio, which dismissed the case for improper venue. That is, they contend that this Court is not truly Plaintiff's choice of forum. First Financial responds that its choice of the Northern District of Ohio is still entitled to weight.
" '[W]here the plaintiff does not reside in the chosen forum[,] courts assign less weight to the plaintiff's choice.' " Means v. U.S. Conf. of Cath. Bishops, 836 F.3d 643, 651 (6th Cir. 2016) (quoting Means v. U.S. Conf. of Catholic Bishops, 2015 WL 3970046 (W.D. Mich.)). Nevertheless, less weight does not mean no weight. See, e.g., Airgas USA, LLC v. Pro2 Respiratory Servs., LLC, 2016 WL 4408788, at *2 (N.D. Ohio) ("The Court accords significant weight to a plaintiff's choice of forum when considering a motion to transfer. [Plaintiff] chose to file this case in the Northern District of Ohio. While this district is not the Plaintiff's home forum, operative facts giving rise to the Plaintiff's complaint occurred in the Northern District, including the Plaintiff's attempted account collection and property recovery from the Defendant. The Plaintiff has a right to pursue this action in this Court, rather than the Southern District of Ohio.").
Here, as First Financial is located in the Southern District of Ohio, this factor does not weigh as heavily as it might against transfer. Nevertheless, First Financial chose to litigate in this forum where at least some facts underlying this suit occurred, and this factor weighs against transfer.
Convenience for Witnesses / Ability to Compel Unwilling Witnesses
Both parties assert these factors weigh in favor of their preferred forum. Defendants assert the key witnesses for First Financial's claims will be Knapschaefer himself and other employees of Novus, all of whom reside in South Carolina. They further contend that to the extent any of First Financial's employees in Ohio may be witnesses, they are located outside of this District, as First Financial's primary place of business is Hamilton County, within the jurisdiction of the Southern District of Ohio. First Financial responds that all of its witnesses likely to testify "are in Ohio—either in this District, where Knapschaefer's office was located during his employment with First Financial, or in the greater Cincinnati area." (Doc. 13, at 8). It further notes Semer is a key witness who resides within this District. Finally, First Financial notes the allegations in this case involve the solicitation of clients, and asserts that many of these potential-witness clients are in Northern Ohio, as this was Knapschaefer's territory when he worked for First Financial.
First Financial also asserts Knapschaefer, a central witness, maintains a secondary residence in this District in Coldwater, Ohio. For this proposition, they cite his profile on the Novus website itself which states "His primary residence is in North Myrtle Beach, South Carolina where he lives with his wife Angie, with a secondary residence in Coldwater, Ohio." https://www.novusadvisors.com/Denis--Knapschaefer,-CFP,-ChFC,-CLU.e1182957.htm Knapschaefer responds in an affidavit that he listed the Ohio residence for sale in June 2022 and it has since sold. (Doc. 15-2).
The convenience of the witnesses is "one of the most important factors in determining whether to grant a motion to change venue under § 1404(a)." Thomas v. Home Depot, U.S.A., Inc., 131 F. Supp. 2d 934, 937 (E.D. Mich. 2001). "However, while 'convenience to the witnesses is often recognized as the most important factor to be considered' in deciding a change of venue motion, '[i]t is the convenience of non-party witnesses, rather than employee witnesses . . . that is the more important factor and is accorded greater weight.' " Steelcase, Inc. v. Smart Techs., Inc., 336 F. Supp. 2d 714, 721 (W.D. Mich. 2004) (quoting Gundle Lining Constr. Corp. v. Fireman's Fund Ins. Co., 844 F. Supp. 1163, 1166 (S.D. Tex. 1994)).
The only non-party witnesses that have been identified are Knapschaefer's clients. Defendants correctly point out that many of First Financial's witnesses may be in the Southern District rather than this one. Nevertheless, the burden is on Defendants, not Plaintiff, to establish transfer is appropriate. The Court finds that this factor does not weigh heavily in favor of transfer. Although the District of South Carolina would be more convenient for the Novus witnesses, other witnesses - including potential non-party client witnesses and Semer - are located within this District.
Location of Operative Facts / Ease of Accessing Sources of Proof
Defendants contend these factors weigh in their favor because it is Knapschaefer's actions after moving and working for Novus that form the basis of Plaintiff's allegations. Thus his alleged solicitation of clients and an employee "would have logically occurred primarily in South Carolina where he was living and working." (Doc. 9-1, at 6). Further, it contends Novus's only office is in South Carolina, so any discussions about Knapschaefer's contractual obligations would have occurred in South Carolina and involve individuals there.
First Financial asserts Defendants ignore that the clients Knapschaefer solicited were in Ohio at the time he contacted them and that the solicitation also included in-person lunches with Semer and Knapschaefer "within Ohio." (Doc. 13, at 11). First Financial further asserts that the location of evidence and proof is likely equally distributed between the two states. Much of the information is likely to be electronically stored information, and any physical documentation is likely to be split between Ohio and South Carolina. It further highlights that Novus has brought a Counterclaim, making First Financial employees' actions (and potential testimony) even more relevant.
The Court finds this factor is neutral. The relevant evidence is likely split between South Carolina and Ohio. The Court acknowledges that some of this evidence may be located in the Southern District and not this one. But it also seems likely that much of the relevant evidence is stored electronically, and thus the burden of exchanging such information is not a heavy one. See, e.g., Airgas USA, LLC v. Pro2 Respiratory Servs., LLC, 2016 WL 4408788, at *2 (N.D. Ohio) ("And since any documents requested through discovery will, in all likelihood, be exchanged electronically, the location impact only minimally affects the burden to either party."). As such, the Court finds this factor does not weigh heavily in favor of transfer.
Convenience of the Parties
Litigating in this Court will be inconvenient to some degree to Defendants, and the District of South Carolina would be inconvenient to Plaintiff. This factor does not tip heavily in favor of one party or the other.
Interests of Justice
Defendants further assert the interests of justice support transfer, relying in large part on the same factors cited above (location of witnesses and evidence). First Financial responds that it is an Ohio company doing business in Ohio, Knapschaefer's involvement with the clients at issue originated in this District, and the Agreement at issue has an Ohio choice-of-law provision.
Although it is not yet clear which state's law will apply to the tortious interference claims at issue in the Complaint and Counterclaim, it appears the parties agree Ohio law will apply to at least one of the three claims in this case. This counsels in favor of an Ohio court deciding such a claim. See, e.g., FirstMerit Corp. v. Craves, 2015 WL 151318, at *4 (N.D. Ohio. Jan 12, 2015) ("But FirstMerit is an Ohio corporation, giving Ohio its own significant interest."). And there is no indication the case would be resolved more quickly or more efficiently in the District of South Carolina. See Research Automation, Inc. v. Schrader-Bridgeport Int'l, Inc., 626 F.3d 973, 978 (7th Cir. 2010) ("The 'interest of justice' is a separate element of the transfer analysis that relates to the efficient administration of the court system. For this element, courts look to factors including docket congestion and likely speed to trial in the transferor or potential transferee forums, each court's relative familiarity with the relevant law, the respective desirability of resolving controversies in each locale, and the relationship of each community to the controversy.") (internal citations omitted). The Court therefore finds this factor weighs against transfer.
On balance in weighing the above factors, the Court finds Defendants have not demonstrated "the factors weigh 'strongly' in favor of transfer." Timken Gears, 2023 WL 5523947, at *3 (quoting Picker Int'l, 35 F. Supp. 2d at 573). Although the Court acknowledges there will be inconvenience for Defendants litigating in this District and that some witnesses and sources of proof are located in the Southern District rather than this one, it finds that at best, Defendants have established that transferring to South Carolina "serves merely to shift [that] inconvenience" to Plaintiff. Siegfried, 2011 WL 1430333, at *2. As such, the Court denies the motion to transfer venue.
CONCLUSION
For the foregoing reasons, good cause appearing, it is
ORDERED that Defendants' Motion to Transfer Venue to the District of South Carolina (Doc. 9), be and the same hereby is, DENIED.