Opinion
No. 00C 7300.
April 10, 2001
MEMORANDUM OPINION AND ORDER
Plaintiff provided consulting and development services to defendant relating to the creation of an e-commerce web site. The Agreement was entered into effective March 15, 2000, with possible work assignments during the following two years. The work that was assigned was allegedly completed by September 1, 2000, and defendant ceased assigning any new work. Defendant, according to plaintiff, paid $2,229,349, but that still leaves a balance due and owing of $2,700,886, plus late charges. It seeks recovery of what is allegedly owed, asserts that defendant continues to use the benefits of plaintiff's work without paying for them, and contends that it, not defendant, owns the intellectual property involved because defendant had rights to that property only if it paid its bills.
Defendant now moves to dismiss, claiming that the dispute is subject to binding arbitration. Alternatively, it moves to transfer the action to the Central District of California. Plaintiff opposes both.
We are inclined to believe that the dispute is not subject to arbitration. We are mindful that federal law favors arbitration and "any doubts concerning the scope of arbitrable issues
Plaintiff has its main office in this district, the Agreement is to be governed by Illinois law, some relevant financial and other records may be located here, and plaintiff may want one of its executives and perhaps others to testify about the absence of any complaints by defendant at a meeting in Chicago and in telephone conversations. Those persons are, however, subject to plaintiff's direction.
In contrast, defendant is located near Los Angeles. The Agreement was negotiated by defendant's personnel and one or two of plaintiff's employees, both of whom are located in plaintiff's Los Angeles office. The entire performance was in California. The program manager for plaintiff, Michael Macy, is an independent contractor not subject to plaintiff's direction. He is located in the Los Angeles area. Defendant, like many dot com companies, has apparently fallen upon hard times. Those of the personnel who were involved with the project have, with the exception of Marc Von Arx, its executive vice-president and general counsel, left the company although they remain in the area. They number six and, we are told, each was substantially involved, one way or another, in what was being done or not done and what worked and what did not. And Von Arx is also there. Since the evidence in this case is likely primarily to center on what happened in California and the key witnesses are largely centered there as well and not subject to the subpoena power of this court, we think that all the considerations stated in 28 U.S.C. § 1404 (a) dictate that this case be transferred to the Central District of California.