Summary
transferring case where transferor court lacked jurisdiction over one party, and thus could not afford complete relief to all of the parties involved in dispute
Summary of this case from Quorum Health Res., LLC v. Lexington Ins. Co.Opinion
Case No. 2:00-CV-355
January 4, 2001
OPINION AND ORDER
Plaintiff brings this action for patent infringement under the Patent Act of 1952, 35 U.S.C. § 1 et seq. This matter is now before the Court on defendant's motion to transfer this action to the United States District Court for the District of New Jersey pursuant to 28 U.S.C. § 1404(a).
I. Background
Marion Steel Company ["Marion Steel"] designs, manufactures and sells breakaway devices for use with steel highway signposts under the trademark Lap SpliceTM. Complaint, ¶ 3. The ultimate users of these products are state and local highway departments. Declaration of Frederick Mauer Attached to Defendant's Motion to Transfer Venue, ¶ 4. Mark Granger is a former employee of defendant Marion Steel. Id., ¶ 5. Mark Granger and his present company, Granger Associates, Inc. ["Granger Associates"], sell breakaway coupling systems for highway signposts in competition with Marion Steel. Id. Garden State Highway Products, Inc. ["Garden State"], a New Jersey corporation, serves as a distributor for both Marion Steel and Granger Associates. Id. The New Jersey Department of Transportation ["NJDOT"] has purchased from Garden State both Lap SpliceTM coupling systems and the Granger coupling systems. Id., ¶¶ 4-5. Plaintiff alleges that, on August 18, 1998, U.S. Letters Patent No. 5, 794, 910 ["Patent '910"] was issued to Mark Granger concerning a "stress transfer, spacer bar, with threaded holes to receive bolts of a special grade, which is to be situated between two overlapping U-channel signpost[s] so that the sign it supports will break away when struck by an errant motor vehicle, but which will, nevertheless, withstand requisite wind loading for signs erected upon the posts." Complaint, ¶ 10. Plaintiff also contends that, on March 30, 1999, U.S. Letters Patent No. 5, 887, 842 ["Patent '842"] was issued to Mark Granger. Id., ¶ 11. That patent is directed to a "stress transfer, spacer bar as described . . . in the aforementioned patent albeit with partially threaded holes to receive and engage with special grade bolts having a threadless shank and a threaded region there below" and to the "methods for manufacturing said bar and erecting posts with which the bar is used." Id. In June 1992, U.S. Letters Patent No. 5, 125, 194 ["Patent '194"] was issued to Mark Granger and assigned to Marion Steel. Id., ¶ 13. The parties agree that U.S. Letters Patent No. 5, 957, 425 ["Patent '425"] was issued to Steven Conway and Frederick Mauer and assigned to Marion Steel on September 28, 1999. Id., ¶ 14; Mauer Declaration, ¶ 3.
On March 16, 2000, Marion Steel filed a lawsuit in the District of New Jersey against Mark Granger, Granger Associates, and Garden State for infringement of Patent '425 and for trademark infringement. On March 23, 2000, Granger Associates filed this action against Marion Steel in the Southern District of Ohio for infringement of Patents '910 and '842. Granger Associates also seeks a declaration that it has not infringed Marion Steel's Patents '194 and '425, that Patent '425 is invalid, and that Marion Steel is precluded by principles of laches and estoppel from asserting the validity of Patent '425 against Granger Associates. Marion Steel now asks that this action be transferred to the District of New Jersey.
II. Transfer of Venue
A. Standard
Defendant seeks to transfer venue of this case to the District of New Jersey pursuant to 28 U.S.C. § 1404(a). Section 1404(a) 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."
The threshold consideration under § 1404(a) is whether venue would be proper in the United States District Court for the District of New Jersey. An action "might have been brought" in a transferee court if:
a. The court has jurisdiction over the subject matter of the action b. Venue is proper there, and c. The defendant is amenable to process issuing out of the transferee court.Continental Grain Co. v. Barge F.B.L.-585, 364 U.S. 19 (1960); Neff Athletic Lettering Co. v. Walters, 524 F. Supp. 268, 271 (S.D. Ohio 1981).
Once it is determined that the case "could have been brought" in the transferee court, the factors to be considered under § 1404(a) are similar to those weighed by courts in determining forum non conveniens motions; however, transfers pursuant to § 1404(a) may be granted "upon a lesser showing of inconvenience." Norwood v. Kirkpatrick, 349 U.S. 29, 32 (1955). The plaintiffs choice of forum is to be given considerable weight. See Hanning v. New England Mutual Life Ins. Co., 710 F. Supp. 213, 214 (S.D. Ohio 1989); Artisan Development, Div. of Kaiser Aetna v. Mountain States Development Corp., 402 F. Supp. 1312, 1314 (S.D. Ohio 1975).
The moving party has the burden of demonstrating that the case should be transferred to a different forum. Courts are to consider both the private interests of the litigants and the public's interest in the administration of justice. Gulf Oil v. Gilbert, 330 U.S. 501, 508-09 (1947). The litigants' interests include:
The relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing witnesses; possibility of view of the premises, if view would be appropriate to the action; and all other practical problems that make trial of the case easy, expeditious, and inexpensive.Id. at 508. Public interests include docket congestion, the burden of trial to a jurisdiction with no relation to the cause of action, the value of holding trial in a community where the public affected live, and the familiarity of the court with controlling law. Id.
This Court has also considered additional factors when evaluating whether transfer is appropriate under § 1404(a). These additional factors include "the nature of the suit; the place of the events involved;. . . and the residences of the parties." Midwest Motor Supply Co., Inc. v. Kimball, 761 F. Supp. 1316, 1318 (S.D. Ohio 1991).
B. Application
Defendant asks that this Court transfer this action to the District of New Jersey. Plaintiff takes the position, first, that venue is not proper in that district. The Court must first determine whether this litigation could have been brought in the District of New Jersey. 28 U.S.C. § 1404(a).
Granger Associates concedes that the District of New Jersey would be vested with subject matter jurisdiction over the claims asserted in this litigation. Plaintiff's Memorandum contra Defendant's Motion to Transfer, at 5. Plaintiff also concedes that Marion Steel is amenable to service of process in New Jersey. Id. Plaintiff contends, however, that venue is not proper in New Jersey. The general venue provision, 28 U.S.C. § 1391, provides in pertinent part:
A civil action wherein jurisdiction is not founded solely on diversity of citizenship may, except as otherwise provided by law, be brought only in (1) a judicial district where any defendant resides, if all defendants reside in the same State . . . .28 U.S.C. § 1391(b)(1). The statute also provides that "[f]or purposes of venue under this chapter, a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced. . . ." 28 U.S.C. § 1391(c). Given that Marion Steel does not contest that it is subject to personal jurisdiction in the District of New Jersey and, further, that Granger Associates concedes that Marion Steel is subject to personal jurisdiction in that district, this Court concludes that defendant resides in the District of New Jersey for venue purposes and that this action could have been brought in that district, 28 U.S.C. § 1404(a).
The Court must now consider whether the transfer of this action to the District of New Jersey is appropriate. Defendant argues that the District of New Jersey would be a more convenient venue for this action because there is a substantial overlap of issues and evidence in the Ohio and New Jersey litigations, because several of its material witnesses, who are employed by the New Jersey Department of Transportation, reside in New Jersey and would not be subject to the subpoena power of this Court, because many of the events giving rise to both actions occurred in New Jersey, and because Garden State, a defendant in the New Jersey litigation, would not be subject to the subpoena power of this Court. Referring to the "first to file" rule, defendant also argues that, because the New Jersey action was filed prior to this action, this Court should defer to the New Jersey action.
Plaintiff argues that, even if this litigation could have been brought in New Jersey, it should not be transferred to the District of New Jersey. First, plaintiff notes that Granger Associates and Marion Steel are both Ohio corporations. Second, plaintiff maintains that all business records of Granger Associates and Marion Steel are located in Ohio and that all documentary evidence related to plaintiffs claims of patent misappropriation, validity and infringement are located in Ohio. Third, plaintiff contends that many of the material witnesses relative to Granger Associates' complaint are located in Ohio. Fourth, plaintiff contends that Marion Steel's claims in the New Jersey action do not relate to the claims brought by plaintiff in this action. Finally, plaintiff argues that Marion Steel, a large corporation, is in a better position to bear the cost of litigating in a distant forum than is plaintiff
These witnesses are employees who reside in Ohio.
1. Plaintiff's Choice of Forum
"The plaintiffs choice of forum is to be given considerable weight and the balance of convenience, considering all of the relevant factors, should be strongly in favor of a transfer before such will be granted." Hanning, 710 F. Supp. at 214 (citing Nicol v. Koscinski, 188 F.2d 537 (6th Cir. 1951)). See also United States v. Cinemark USA, Inc., 66 F. Supp.2d 881, 887 (N.D. Ohio 1999); Picker Int'l v. Travelers Indem. Co., 35 F. Supp.2d 570, 573 (N.D. Ohio 1998); Central States, Southeast Southwest Area Health Welfare Fund v. Guarantee Trust Life Ins. Co., 8 F. Supp.2d 1008, 1010 (N.D. Ohio 1998); United States ex rel. Grand v. Northrop Corp., 811 F. Supp. 330, 332 (S.D. Ohio 1992); Midwest Motor Supply Co. v. Kimball, 761 F. Supp. at 1318; Cincinnati Milacron Indus., Inc .v. Aqua Dyne, Inc., 592 F. Supp. 1113, 1118 (S.D. Ohio 1984); Priess v. Fisherfolk, 535 F. Supp. 1271, 1279 (S.D. Ohio 1982); Artisan Dev. v. Mountain States Dev. Corp., 402 F. Supp. at 1314. Because Granger Associates chose Ohio as the forum in which to file its lawsuit, the Court will not transfer the action to the District of New Jersey unless the relevant factors weigh strongly in favor of transfer.
2. Comprehensive Relief
Among the defendants in the New Jersey action is Garden State, a New Jersey corporation, Declaration of Mark Granger attached to Plaintiff Memorandum contra Defendant's Motion to Transfer, ¶ 29, who is not a party to this action. The absence of Garden State from this litigation prevents this Court from affording complete relief to the parties, defendant contends. Moreover, defendant argues, this Court could not properly exercise personal jurisdiction over Garden State.
Generally, the avoidance of piecemeal litigation is a factor that weighs in favor of transferring an action to a district in which all parties can be joined in a single action. 'The ability of a party to implead as a third-party defendant an entity which cannot be subjected to the jurisdiction of the transferor court may thus be an appropriate reason for granting a transfer; however, this factor is not determinative and will not outweigh other factors militating against transfer.'Preston v. Missouri-Nebraska Express, Inc., 91-0056-CV-W-6, 1991 WL 626751, at 3 (W.D. Mo. Oct. 16, 1991).
Although plaintiff does not dispute this proposition, plaintiff contends that Garden State falls within this Court's jurisdiction because it "has . . . purposefully availed itself of the laws of Ohio such that it is subject to personal jurisdiction in an Ohio court." Plaintiff's Memorandum contra Defendant's Motion to Transfer, at 14 n. 6. in this regard, plaintiff asserts that Garden State "has purchased over $5,000,000.00 worth of goods from [Marion Steel] over the last five years." Granger Declaration, ¶ 29. Plaintiff appears to take the position that this Court can exercise general jurisdiction over Garden State by reason of its business dealings in this state and that, with the joinder of Garden State in this action, this litigation could afford complete relief to the parties.
However, "purchases, even if occurring at regular intervals, are not enough to warrant a State's assertion of in personam jurisdiction over a nonresident corporation in a cause of action not related to those purchase transactions." Helicopteros Nacionales de Colombia, S.A., v. Hall, 466 U.S. 408, 418 (1984). Moreover, the fact that Garden State purchases goods from both Marion Steel and Granger Associates does not demonstrate that Garden State has "continuous and systematic" contacts with Ohio sufficient to sustain general jurisdiction. See Kerty Steel, Inc. v. Paragon Indus., Inc., 106 F.3d 147, 152 (6th Cir. 1997). Furthermore, no evidence has been presented that Garden State has applied for a license to do business in Ohio or that it maintains a place of business or employees in Ohio. Therefore, Granger Associates has not established that Garden State's contacts with Ohio are such that a court sitting in Ohio could constitutionally maintain general jurisdiction over that company.
The Supreme Court concluded that Texas lacked general jurisdiction over defendant Helicopteros Nacionales de Colombia even in light of the fact that the company had purchased over $4,000,000.00 worth of goods and services from Bell Helicopter, which was located in Texas, had sent personnel to Fort Worth, Texas, for training, and had negotiated a contract in Houston. See Helicopteros, 466 U.S. 408.
Given that Garden State has not had "continuous and systematic" contacts with Ohio sufficient to establish general personal jurisdiction over it, there must be a showing of specific personal jurisdiction if any party were to pursue a claim against it before this Court. The United States Court of Appeals for the Sixth Circuit has established a three-part test for determining whether specific personal jurisdiction exists:
First, the defendant must purposely avail [it]self of the privilege of acting in the forum state or causing a consequence in the forum state. Second, the cause of action must arise from the defendant's activities there. Finally, the acts of the defendant or consequences caused by the defendant must have a substantial enough connection with the forum state to make the exercise of jurisdiction over the defendant reasonable.Southern Machine Co. v. Mohasco Indus., Inc., 401 F.2d 374, 381 (6th Cir. 1968). Jurisdiction over the defendant must comport with this due process analysis. Even if Garden State has, by its purchase of goods from Marion Steel, "purposefully availed itself of the laws of Ohio such that it is subject to personal jurisdiction in an Ohio court," Plaintiff's Memorandum contra Defendant's Motion to Transfer, at 14 n. 6, the claims against it do not, apparently, arise from those purchases. Therefore, Granger Associates has not established that Garden State's contacts with Ohio are such that a court sitting in Ohio could constitutionally maintain specific jurisdiction over it. Consideration of this factor therefore weighs in favor of transfer.
3. Witnesses
Marion Steel argues that this action should be transferred to the District of New Jersey because certain individuals — who are not identified except as employees of the NJDOT and potential witnesses in this action — are not subject to the subpoena power of this Court. Declaration of William Speranza attached to Defendant's Motion to Transfer, ¶ 6. Granger Associates argues that Ohio is a more convenient forum for witnesses because 10 of the 16 individuals whom it intends to call as witnesses reside in Ohio, while another potential witness travels to Ohio several times a year in connection with his employment with Marion Steel. Declaration of Bruce Hadden, ¶ 4.
a. Amenability of Witnesses to Compulsory Process
The amenability of potential witnesses to compulsory process is a factor that the Court must weigh in a § 1404 analysis. See Mead Data Central, Inc. v. West Publ'g., 679 F. Supp. 1455, 1466 (S.D. Ohio 1987); AMF, Inc. v. Computer Automation, Inc., 532 F. Supp. 1335, 1341 (S.D. Ohio 1982). Although Granger Associates contends that the testimony of NJDOT employees, while relevant to the New Jersey litigation, is not relevant to the claims in this action, the fact remains that plaintiff seeks in this action a declaration of non-infringement of Marion Steel's '425 patent. It therefore appears that evidence regarding Marion Steel's claim of patent infringement may be relevant to both the New Jersey action for patent infringement and this action.
Marion Steel's case for infringement of the Marion Steel '425 Patent by Granger Associates and its principal Mark S. Granger (collectively "Granger") will in substantial part be based upon contributory infringement under 35 U.S.C. § 271(c) and inducement of infringement under 35 U.S.C. § 271(b). As such, essential witnesses on these causes of action will be the end users of the Granger coupling systems, namely and predominately, the State of New Jersey Department of Transportation and individuals within its employ, who are expected to testify with respect to their assembly of signpost constructions using the Granger coupling systems and with respect to the assistance and directions of Granger in that regard.Speranza Declaration, ¶ 6. Given that testimony from NJDOT employees is relevant to the claims brought by both Marion Steel in the New Jersey action and Granger Associates in the Ohio action and the evidence that employees of NJDOT do not reside within 100 miles of Columbus, Ohio, Id., the Court concludes that this factor weighs in favor of transfer.
b. Convenience of the Parties
The Court now considers Granger Associates' contention that Ohio is a more convenient forum for its potential witnesses than is New Jersey. Mark Granger, an Ohio resident, Id., ¶ 4(a), and president of Granger Associates, may be "presumed to be willing to testify in either forum despite any inconvenience." See Hillard v. Guidant Corp., 76 F. Supp.2d 566, 570 (M.D. Pa. 1999); Ultimate Resource, Inc. v. Goss, No. 99-1826, 2000 WL 295107, at 4 (E.D. Pa. March 17, 2000); Gundle Lining Construction Co. v. Fireman's Fund Ins. Co., 844 F. Supp. 1163, 1166 (S.D. Tex. 1994); Commercial Solvents Corp. v. Liberty Mut. Ins. Co., 371 F. Supp. 247, 250 (S.D.N.Y. 1974). Granger Associates also intends to call as witnesses two employees of Marion Steel. Although Steven Conway, an officer of Marion Steel, Hadden Declaration, ¶ 4(b), resides in Ohio, he is subject to the control of his employer, who seeks to transfer this litigation to New Jersey. Furthermore, Frederick Mauer, the General Sales Manager of Marion Steel who resides in New Hampshire, Id., ¶ 4(c), is also subject to the control of Marion Steel. Given that Marion Steel seeks the transfer, the Court cannot conclude that Ohio is a more convenient forum for these witnesses.
Granger Associates also intends to call certain non-party witnesses who reside outside of Ohio. The Court concludes that the District of New Jersey is a more convenient forum for Bob Green, the president of Garden State who resides in Millville, New Jersey. Id., ¶ 4(p). Furthermore, neither Ohio nor New Jersey is a more convenient forum for the nonparty witnesses who do not reside in either state. "Non-party witnesses who do not reside in or near either the transferor or the transferee district, and thus are not amenable to process in either district, are not given any weight in the transfer analysis." Internal Revenue Serv. v. CM Holdings, Inc., No. 97-695, 1999 WL 459754, at 5 (D. Del. June 10, 1999) (citing Aquatic Amusement Assoc., Ltd. v. Walt Disney World Co., 734 F. Supp. 54, 58 (N.D.N.Y. 1990)).
These witnesses live in such diverse places as Virginia, Illinois, and Texas. Hadden Declaration, ¶¶ 4(f), (k),(l),(o).
In any event, however, it is likely that the same non-party witnesses will be asked to testify in the New Jersey litigation regarding the same matters at issue in the Ohio action. Thus, transfer of this action to the District of New Jersey would be less inconvenient for those witnesses than requiring their testimony in two different forums. Therefore, the Court concludes that the convenience of the witnesses weighs, on balance, in favor of transfer.
4. Judicial Economy
In the New Jersey action, Marion Steel filed suit against Granger Associates, Mark Granger, and Garden State alleging infringement of the '425 patent and trademark infringement. In the Ohio action, Granger Associates seeks a declaration that it has not infringed Marion Steel's '194 and 425 patents, that Patent '425 is invalid, and that Marion Steel is precluded by principles of laches and estoppel from asserting the validity of Patent '425 against Granger Associates. Granger Associates also asserts claims against Marion Steel for infringement of Patents '910 and '842. The claims asserted by Granger Associates in the Ohio action are intimately related to Marion Steel's claim of patent infringement in the New Jersey action. Granger Associates even concedes that
the crux of [its] complaint is that several claims granted under the '910 and '842 Patents interfere with and are virtually identical to those found in [Marion Steel's] '425 Patent. [Granger Associates] brought the present complaint primarily seeking the Court's declaration as to priority of inventorship, misappropriation of invention and validity of the respective interfering patents. . . ."Plaintiff's Memorandum contra Defendant's Motion to Transfer Venue, at 6. Therefore, the Court holds that:
Since the pending action in [New Jersey] involves the same central issue as well as parties and witnesses as the present case, it would be more expeditious to try both cases in the same forum. Consolidation of the cases would promote judicial economy and efficiency, and avoid problems related to duplicative actions in multiple forums.Central Money Mortgage Co., Inc., v. Holman, No. 8:00-CV-11-T-17A, 2000 WL 1796421 (M.D. Fla. Sept. 29, 2000) [citations omitted].
To summarize, the Court concludes that it would lack personal jurisdiction over Garden State and that, consequently, this Court cannot afford complete relief to the parties presently joined in this action; the Court further concludes that material nonparty witnesses in both the New Jersey and Ohio actions, i.e., employees of NJDOT, are not subject to the subpoena power of this Court; finally, given the fact that the New Jersey action concerns issues substantially similar to those involved in this action, it would be most inconvenient for the witnesses in the two actions to expend the time and travel necessary to testify in two different forums. These facts weigh heavily in favor of transferring this case to the District of New Jersey. Defendant's motion to transfer is therefore meritorious.
C. Conclusion
Defendant's motion to transfer the action to the District of New Jersey is GRANTED. This action is hereby ORDERED TRANSFERRED to the United States District Court for the District of New Jersey.