Opinion
99 C 3939
February 29, 2000
MEMORANDUM OPINION AND ORDER
Plaintiff PepsiCo, Inc. ("PepsiCo"), a North Carolina Corporation, filed a complaint seeking declaratory relief to terminate its contract with Defendant Marion Pepsi-Cola Bottling Company ("Marion Pepsi"), a Missouri Corporation, for breach of its Appointments Contract. In addition, PepsiCo alleges that the Illinois Soft Drink Act, a statute under which Marion Pepsi claims legal rights, violates various provisions of the U.S. and Illinois Constitutions. Marion Pepsi moves to dismiss for improper venue under the Federal Rules of Civil Procedure 12(b)(3) or, in the alternative, to transfer this case to the Southern District of Illinois pursuant to 28 U.S.C. § 1404(a). For the reasons set forth below, the court denies Marion Pepsi's motion for improper venue and grants its motion for transfer of venue.
Background
PepsiCo is a North Carolina corporation with its principal place of business in Purchase, New York. (Compl. ¶ 4.) PepsiCo's Central Division office is located in Itasca, Illinois. (Id.) This office is responsible for "oversee[ing], manag[ing], implement[ing], and adminster[ing] PepsiCo's agreements with [Midwestern] distributors," which includes Marion Pepsi. (Id.) The Itasca office is located in the Northern District of Illinois. (Id.)
Marion Pepsi is a Missouri corporation with its principal place of business in Marion, Illinois. (Id. ¶ 5.) Marion Pepsi's chief executive and principal shareholder is Harry L. Crisp II ("Crisp"). (Id.) Marion Pepsi processes, packages, sells, and distributes PepsiCo's fountain beverages in southern Illinois and adjacent portions of the states of Missouri, Kentucky, Tennessee, and Arkansas (the "Territory") based on established agreements with PepsiCo. (Id.) Marion Pepsi has 644 employees, of which 486 reside in southern Illinois. (Rains Aff. ¶ 11.) Of the remaining 158 employees, 95 are located in Missouri. (Id.) Marion Pepsi's production facilities and employees are located in the Southern District of Illinois. (Id.)
For almost 40 years, PepsiCo has contracted with Marion Pepsi under a "Syrup and Bottling Appointments Contract" (the "Appointments Contract") to exploit PepsiCo's trademark within the Territory. (Compl. ¶¶ 8, 10.) The Appointments Contact grants Marion Pepsi the right to process, distribute, and sell PepsiCo's fountain beverage syrup and can and bottled carbonated beverages within the Territory. (Id. ¶ 8.) In exchange, the Appointments Contract requires Marion Pepsi to maintain high quality standards and to vigorously promote PepsiCo's beverage products through advertising, sale promotions, and campaigns. Moreover, Marion Pepsi is prohibited from selling or promoting any competitive beverage products. (Id. ¶ 11.) If Marion Pepsi fails to meet these terms, PepsiCo reserves the right to terminate the Appointments Contract. (Id. ¶ 12.)
This dispute arose out of the rights that each party claims under the Appointments Contract. PepsiCo alleges that the Appointments Contract grants Marion Pepsi the right to process, distribute, and sell fountain beverage syrup and cans and bottled carbonated beverages in the Territory to all customers other than PepsiCo's national account customers. (Id. ¶ 8.) PepsiCo argues, however, that it retained the right to sell beverage syrup to customers "with outlets located both within the Territory and in one or more territories, such as fast food and entertainment chains." (Id. ¶ 18.) Meanwhile, Marion Pepsi believes that the Appointments Contract grants it exclusive distribution rights within its Territory. (Mot. at 3.)
Marion Pepsi contends that in 1997 PepsiCo requested independent bottlers, like Marion Pepsi, to sign a new syrup agreement that waives their right to prevent commissary deliveries to national account customers within their territory. (Crisp Aff. ¶ 5; Ex. 3.) Marion Pepsi refused to sign the new appointment provisions because it believed that the new terms would be highly detrimental to its contractual distribution rights. (Crisp Aff. ¶ 5; Compl. ¶ 24.) Marion Pepsi points to a 1997 letter written by PepsiCo's New York based counsel, acknowledging that Marion Pepsi reserves the right to prevent commissary deliveries of beverage syrup to national account customers. (Crisp Aff. ¶ 4.) Marion Pepsi states that it agreed to grant PepsiCo limited waivers on a case-by-case basis to customers who explicitly express interest in commissary delivery. (Mot. at 3.) When the commissary delivery provision was introduced to the independent bottlers, both PepsiCo and Marion Pepsi's representatives met repeatedly, in Chicago and other locales, to resolve the issue, but the parties reached an impasse. (Compl. ¶ 24.)
Marion Pepsi has traditionally delivered PepsiCo products to its customers through "store-door delivery." Store-door delivery allows a local bottler to deliver fountain beverage syrup to customers within a territory. Commissaries deliveries, on the other hand, allow food service distributors to deliver all the products, including beverage syrup, that customers need in a single delivery.
PepsiCo claims that at the urging of Marion Pepsi, the "Soft Drink Industry Fair Dealing Act" (the "Soft Drink Act") was introduced on the floor of the Illinois legislature. (Id. ¶¶ 27, 28.) The Soft Drink Act provides soft drink distributors with substantive rights and remedies for the public's interest in "fair, efficient, and competitive distribution of soft drink products." 815 ILCS. 730/10(a)(2). The Illinois legislature passed the Soft Drink Act on May 21, 1999. Id. 730/1. Subsequently, Crisp, Marion Pepsi's president, wrote a letter to Nick Giachino, Vice-President for Pepsi-Cola North America's Central Division, that asserted Marion Pepsi's rights under the Soft Drink Act and disallowed commissary deliveries to national account customers within Marion Pepsi's Territory. (Resp. at 6;see also Compl. ¶ 33.)
PepsiCo alleges that if the Soft Drink Act is applied to PepsiCo's present contract with Marion Pepsi, the Act would not only restrict PepsiCo's rights under the Appointments Contract, but it also (1) impedes PepsiCo's contractual right to dissolve its relationship with Marion Pepsi, (2) includes terms outside the present contract with Marion Pepsi without PepsiCo's consent, (3) requires PepsiCo to grant defendant benefits that are contractually barred under the appointment, (4) requires PepsiCo to offer additional Appointments to Marion Pepsi when and if PepsiCo introduces new soft drink products, and (5) forbids PepsiCo from modifying the terms of the parties' existing relationship in order to remain competitive within the soft drink industry. (Id. ¶ 46.) Moreover, PepsiCo's alleges that the Soft Drink Act violates both the U.S. and Illinois Constitutions. (Compl. ¶¶ 47-70.)
PepsiCo further alleges that Marion Pepsi failed to fulfill its contractual obligations. (Id. ¶ 40.) PepsiCo maintains that Marion Pepsi produces a substandard product, has failed to meet performance requirements, and provides inadequate and undependable service to its customers. (Id. ¶¶ 1, 40.) Specifically, PepsiCo cites three occurrences of material breach by Marion Pepsi. First, PepsiCo alleges that a national account customer threatened to switch to PepsiCo's competitor if Marion Pepsi was not immediately replaced. (Id. ¶ 35.) Second, plaintiff alleges that on numerous occasions defendant violated PepsiCo's production standards by cross-contaminating its products with other beverage products. (Id. ¶ 15.) Due to the plaintiff's close association with Marion Pepsi, this alleged contamination damaged PepsiCo's trademark. (Id.) Third, PepsiCo alleges that Marion Pepsi "threatened" to interfere with PepsiCo's efforts to establish "commissary delivery" to its national accounts. (Id. ¶¶ 20, 34.) Marion Pepsi's alleged conduct led PepsiCo to file this action. (Id. ¶¶ 40-42.)
Analysis
I. Improper Venue
Defendant Marion Pepsi argues that venue is improper in the Northern District of Illinois. The venue for a civil action where jurisdiction is not solely based on diversity of citizenship is proper in three places: "(1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions gives rise to the claim occurred, or a substantial part of the property that is the subject of the action is situated, or (3) a judicial district in which any defendant may be found, if there is no district in which the action may otherwise be brought." 28 U.S.C. § 1391(b). Marion Pepsi argues that its operations, sales, and customer outlets are located in the Southern District and portions of adjacent states. Marion Pepsi asserts that PepsiCo cannot prove that Marion Pepsi purposely availed itself of the laws of the Northern District, nor that any alleged breach of the Appointments Contract occurred in this forum. Moreover, defendant argues that this action could have been brought in the Southern District of Illinois.
Under § 1391(b)(1), PepsiCo must establish that Marion Pepsi "resides" in this district for venue purposes. Because Marion Pepsi is a corporate entity and Illinois is a state with multiple federal judicial districts, PepsiCo asserts that Marion Pepsi "resides" in the Northern District under the special residency standards set forth under § 1391(c). Section 1391(c) states that "for purposes of venue" a corporate defendant shall reside in:
any judicial district in which it is subject to personal jurisdiction at the time the action is commenced. In a State which has more than one judicial district and in which a defendant that is a corporation is subject to personal jurisdiction at the time an action is commenced, such corporation shall be deemed to reside in any district in that State within which its contacts would be sufficient to subject it to personal jurisdiction if that district were a separate State, and, if there is no such district, the corporation shall be deemed to reside in the district within which it has the most significant contacts.28 U.S.C. § 1391(c). Under this provision, the court evaluates venue in the Northern District of Illinois as if it were a separate state. To determine if Marion Pepsi resides in the Northern District under § 1391(c), PepsiCo must demonstrate that Marion Pepsi maintains sufficient contacts in the Northern District for the court to exercise personal jurisdiction over defendant.
When a court is deciding a motion for personal jurisdiction or improper venue, it must accept all plaintiff's well-pleaded facts in the complaint as true, unless they are expressly contradicted by defendant's affidavits. See Saylor v. Dyniewski, 836 F.2d 341, 342 (7th Cir. 1988); Selzer v. County of Allegan, No. 98 C 4120, 1998 WL 749436, at *4 (N.D. Ill. Oct. 23, 1998). Any factual disputes must be resolved in a light most favorable to the plaintiff. See id. When a defendant challenges venue, the plaintiff must prove that venue is proper. See Trowbridge v. Empire of America Realty Credit Corp., No. 93 C 5507, 1995 WL 311425, at *4 (N.D. Ill. May 18, 1995).
Although this case is based in part on federal question jurisdiction, personal jurisdiction is governed by the state in which this court sits — Illinois. See Janmark Inc. v. Reidy, 132 F.3d 1200, 1201 (7th Cir. 1997); accord Fed.R.Civ.P. 4(k)(1)(A); Omni Capital Int'l, Inc. v. Rudolf Wolff Co., 484 U.S. 97 (1987); Dark Horse Trading Co. v. Walt Disney Co., No. 98 C 5251, 1999 U.S. Dist. LEXIS 7896, at *9 (N.D. Ill. May 14, 1999). A court may exercise personal jurisdiction over a defendant in a nondiversity case if the defendant's contacts with the forum state comply with due process requirements. Dark Horse Trading Co., 1999 U.S. Dist. LEXIS 7896, at *9. Consequently, the court must turn to the Illinois Long Arm Statute to determine whether it may exercise personal jurisdiction over Marion Pepsi.See Janmark, 132 F.3d at 1202; Dark Horse Trading Co., 1999 U.S. Dist. LEXIS 7896, at *9 As explained below, the Illinois Long Arm Statute reaches the full extent permissible by federal due process. See 735 ILCS 5/2-209(c).
A. Federal Due Process
Under the Due Process Clause of the Fourteenth Amendment, a federal court may exercise personal jurisdiction over a nonresident defendant if (1) the defendant has "certain minimum contacts" with the forum state, and (2) maintaining the suit does not offend 'traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. 310, 316, (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, (1940)); accord Beveridge v. Midwest Management, Inc., No. 98 C 4689, 1999 WL 691857, at *3 (N.D. Ill. Aug. 25, 1999) (to be reported at 78 F. Supp.2d 739). If the plaintiff establishes that the defendant "purposefully avails itself of the privilege of conducting activities within the forum state [in this case the Northern District]," the defendant has invoked the benefits and protections of the state's laws. See Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 109 (1987) (citations omitted);accord Vandeveld v. Christoph, 877 F. Supp. 1160, 1165 (N.D. Ill. 1995). If the defendant "purposely avails" itself of the benefits of the forum [district], the defendant should reasonably anticipate that it may be haled into court there. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, (1980); accord Beveridge, 1999 WL 691857, at *4. The "purposeful availment" requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of "random, fortuitous, or attenuated" contacts. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985) (citations and footnote omitted). Personal jurisdiction over a nonresident corporate defendant is determined by "the relationship among the defendant, the forum, and the litigation." Deluxe Ice Cream Co. v. R.C.H. Tool Corp., 726 F.2d 1209, 1212 (7th Cir. 1984) (quoting Shaffer v. Heitner, 433 U.S. 186, 204 (1977)). It would be unreasonable to assert jurisdiction over a corporate defendant with which the state has no contacts, ties, or relations. See World-Wide Volkswagen, 444 U.S. at 294.
Satisfying the minimum contacts requirement is not easily established with a bright line rule, but "must rest on a consideration of what is fair and reasonable in the circumstances of each particular case." See Deluxe Ice Cream Co., 726 F.2d at 1213. Travel to Illinois to transact business is an activity that invokes the benefits and protections of Illinois law. See id.; Vandeveld, 877 F. Supp. at 1165. Even one visit to the state is sufficient to establish the minimum contact necessary to support personal jurisdiction, if the cause of action arose out of the defendant's conduct during that visit. See Vandeveld, 877 F. Supp. at 1165.
In the present case, PepsiCo alleges that the Chicago meetings, the oral and written communication between PepsiCo's personnel and Marion Pepsi and its Chicago based counsel regarding the commissary delivery issue, and PepsiCo's Central Division headquarters regular business dealings with Marion Pepsi during their nearly forty years contractual relationship sufficiently meets the minimum contacts requirement. Marion Pepsi asserts that "occasional" communications between Marion Pepsi and PepsiCo over the years does not sufficiently satisfy the minimum contacts necessary to impose jurisdiction. Moreover, Marion Pepsi contends that this dispute centers on "product quality, sales, customer service, and Pepsi's desire to utilize commissary delivery of Pepsi products notwithstanding Marion Pepsi's contractual right to deliver to all customers located in its territory." (Mem. at 10.) Therefore, defendant argues that none of the issues in this case arose in or relates to this District.
Nevertheless, as noted above, the court must accept as true plaintiff's statements and affidavits that over their forty year contractual history Marion Pepsi and PepsiCo's Central Division office "regularly" communicated with each other concerning "marketing, funding and customer relations issues." (Resp. at 11.) Between late 1995 and 1998, Robert Aicklen states that as Vice President of Central East Franchise Business Unit he frequently spoke in Itasca and the greater Chicagoland area with Crisp and other Marion Pepsi representatives. (Aicklen Aff. ¶¶ 2, 4.) These communications included personal visits, telephone calls, and correspondence about their contractual relationship. (Id. ¶ 4.) Therefore, Marion Pepsi's contacts with the Northern District were neither "random" nor "attenuated."
The facts viewed in their entirety demonstrate that Marion Pepsi has purposely availed itself of conducting business in the Northern District with PepsiCo. In their forty year relationship there has been a continuous business relationship between PepsiCo and Marion Pepsi. This business relationship requires the parties to regularly contact each other through various forms of communication. Because PepsiCo is located in this forum, many of Marion Pepsi's communications were directed toward PepsiCo's Central Division Office.
The court must next determine if defendant's contacts comply with the "fair play and substantial justice" test. See Burger King, 471 U.S. at 476. The court considers several factors to determine if it is reasonable to exercise personal jurisdiction over a nonresident defendant: (1) the burden on the defendant, (2) the interests of the forum state, (3) the plaintiff's interest in obtaining relief, (4) the interstate judicial system's interest in obtaining the most efficient resolution of controversies, and (5) the interstate interests of the several states in furthering fundamental substantive policies. See Asahi, 480 U.S. at 113. In Asahi, the Court recognized the great burden placed on a foreign defendant when traveling long distances to defend a suit in a foreign judicial system. See 480 U.S. at 114;accord Mid-America Tablewares Inc. v. Mogi Trading Co., 100 F.3d 1353, 1362 (7th Cir. 1996). However, the Court also noted that "when minimum contacts have been established, often the interests of the plaintiff and the forum in the exercise of jurisdiction will justify even the serious burdens placed on an alien defendant." Asahi, 480 U.S. at 114. In the instant case, the court finds that it will not be unduly burdensome for Marion Pepsi to defend a suit in the Northern District. Marion Pepsi is not a foreign corporate defendant that is required to travel great distances or present its defense in a foreign judicial system. It has shown, through the actions of its president, that it can readily defend itself in the Northern District. Marion Pepsi has retained legal representation in the Chicago area and its president has previously flown to this forum to discuss business issues. PepsiCo has a significant interest in adjudicating this case in this forum because PepsiCo is a corporation located in this district and PepsiCo's interest in seeking convenient and effective relief is reasonable. See Maxtec Int'l Corp. v. Dietz Co. Inc., No. 97 C 2133, 1997 U.S. Dist. LEXIS 15269, at *8 (N.D. Ill. Aug. 29, 1997); Fountain Mktg. Group, Inc. v. Franklin Progressive Resources, Inc., No. 96 C 2647, 1996 U.S. Dist. LEXIS 10025, at *10 (N.D. Ill. Jul. 12, 1996). It is reasonable for Marion Pepsi to defend a suit in this forum. Accordingly, the court finds that exercising personal jurisdiction over Marion Pepsi does not offend traditional notions of fair play and substantial justice, and, therefore, exercising jurisdiction over defendant does not violate federal due process. Consequently, for purposes of venue, Marion Pepsi resides in the Northern District. The court, however, must continue its analysis.
One of the central purposes of statutory venue is to ensure that a defendant is not "haled into a remote district having no real relationship to the dispute." Selzer, 1998 WL 749436, at *5. It is within the discretion of the district courts to determine venue, but the court's decision must be supported by defendant's conduct that bears "a 'substantial connection' with the forum state." See Burger King, 417 U.S. at 474 (quoting McGee v. International Life Ins. Co., 355 U.S. 220, 223 (1957)); accord Beveridge, 1999 WL 691857, at *7. A substantial connection is established by showing a "real relationship to the dispute not an "attenuated"or "tangential" circumstance. See Trowbridge, 1995 WL 311425 at *4.
This lawsuit centers on PepsiCo's allegation of Marion Pepsi's breach of the Appointments Contract. PepsiCo alleges that due to Marion Pepsi's opposition to PepsiCo providing national account customers with commissary delivery, Marion Pepsi will interfere with PepsiCo's national account relationships within Marion Pepsi's territory. Marion Pepsi's alleged failure to perform its contractual duty gave rise to this breach of contract claim. Venue is proper even though Marion Pepsi's activities in another forum might be more significant. See Vandeveld, 877 F. Supp. at 1166; Fountain, 1996 U.S. Dist. LEXIS 10025. at *14. Although the Southern District may have a closer relationship to the claim than this district, the continuing communications between PepsiCo and Marion Pepsi bear a substantial relationship to the events giving rise to this dispute. Appropriately, venue is proper in this district under § 1391(b)(2). The court need not consider § 1391(b)(3) because this suit could have been brought in the Southern District. Therefore, the court denies Marion Pepsi's motion to dismiss for improper venue.
B. Illinois Due Process
Under the due process clause of the Illinois Constitution, jurisdiction over a defendant may be exercised by a state court "only when it is fair, just, and reasonable to require a nonresident to defend an action in Illinois, considering the quality and nature of the defendant's acts which occur in Illinois or which affects interests located in Illinois." Rollins v. Ellwood, 565 N.E.2d 1302, 1366 (Ill. 1990). An Illinois court may exercise jurisdiction over a nonresident defendant under the long arm statute if (1) the minimum contacts required by federal due process are present, and (2) jurisdiction is authorized under the Illinois Long Arm Statute. See Vandeveld, 877 F. Supp. at 1164. The "catch all" provision of the Long Arm Statute permits jurisdiction to apply as far as constitutionally permissible under federal due process. See id. at 1163. Typically the courts look to the federal due process clause to construe the Illinois due process clause. See id. For the same reasons expressed in the federal due process analysis under the Fourteenth Amendment, this court finds that the acts of Marion Pepsi are sufficiently substantial to satisfy the due process requirements of the Illinois Constitution.
II. Motion to Transfer Venue
Marion Pepsi also moves the court to transfer venue to the Southern District of Illinois under 28 U.S.C. § 1404(a). Section 1404(a) provides that "[a] district [court] may transfer a civil action for the convenience of the parties and witnesses [and] in the interest of justice . . . to any other district or division where it might have been brought." 28 U.S.C. § 1404(a). The court may transfer the case if (1) venue was proper in transferor court; (2) venue and jurisdiction would be proper in the transferee district; and (3) the transfer will serve the convenience of the parties and the witnesses as well as the interest of justice. See Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219 n. 3 (7th Cir. 1986). The moving party bears the burden of showing that the transferee forum is "clearly more convenient." See id. at 220. The task of weighing factors for and against transfer "involves a large degree of subtlety and latitude" and it is a decision within the discretion of the trial judge. See Coffey, 796 F.2d. at 219; accord Heller Financial, Inc. v. Midwhey Powder Co., 883 F.2d 1286, 1293 (7th Cir. 1989). For the reasons explained below, the court grants Marion Pepsi's motion to transfer venue to the Southern District of Illinois.
Marion Pepsi presents several arguments to support its position that transferring this matter to the Southern District is proper. Defendant first asserts that this action could have initially been brought in the Southern District under § 1391(b). Next, defendant argues that the Southern District is a more convenient forum for the parties and witnesses. Moreover, the defendant asserts that the principal situs of relevant events, the location of evidence, and the interests of justice favors transfer to the Southern District. The court must consider each argument separately to decide if transferring venue to the Southern District is appropriate.
Marion Pepsi correctly identifies that PepsiCo could have filed this matter in the Southern District. Under § 1391(b), Marion Pepsi resides in or may be found in southern Illinois and, therefore, the Southern District may exercise personal jurisdiction over the defendant. In addition, a substantial part of the events leading to this lawsuit occurred in the Southern District. The motion to transfer must turn on the third element — convenience and the interest of justice. To determine whether the third element has been satisfied, the court must consider several factors: (a) plaintiff's choice of forum, (b) the convenience of the witnesses and parties, (c) the situs of material events, (d) the location of relevant documents and other sources of proof, and (e) the interest of justice. See United Airlines, Inc. v. Mesa Airlines, Inc., 8 F. Supp.2d 796, 798 (N.D. Ill. 1998); accord Countryman v. Stein, Roe Farnham, 681 F. Supp. 479, 481-84 (N.D. Ill. 1987).
A. Plaintiff's Choice of Forum
The plaintiff's choice of forum is entitled to substantial weight under § 1404(a), especially if it is the plaintiff's home forum. See United Airlines, 8 F. Supp.2d at 798. Hence, other factors must weigh heavily in defendant's favor before plaintiff's choice of venue will be disturbed. See id. PepsiCo is a North Carolina corporation with its principal place of business in Purchase, New York and a regional office located in Itasca, Illinois. Defendant contends that PepsiCo's choice of forum should be given little if any weight because PepsiCo does not reside in the chosen forum and the conduct giving rise to this action did not take place in this district. The court, however, finds that PepsiCo resides in this forum for venue purposes. Therefore, this factor weighs in favor of not transferring the case to the Southern District of Illinois.
B. Convenience of the Witnesses
The court must evaluate several factors when considering convenience of the witnesses. Defendant must clearly specify the key witnesses to be called and summarize their projected testimony. See Heller Financial, 883 F.2d at 1293. The court should examine the "nature and quality of the witnesses' testimony with respect to the issues of the case." See Vandeveld, 877 F. Supp. at 1168. Furthermore, the court should consider whether the nonparty witnesses who are beyond the subpoena power of a particular forum might be compelled to testify without compulsory process. See Countryman, 681 F. Supp. at 483. In addition, the court must consider the cost to willing witnesses of testifying. See id.
Marion Pepsi claims that a majority of witnesses, both party and nonparty, with knowledge of its sales, marketing, and customer service relationships are located in or near the Southern District. Moreover, because of PepsiCo's allegations concerning customer dissatisfaction and requests for commissary deliveries, Marion Pepsi will call witnesses to testify to its high standards of customer service and customer satisfaction. In its affidavits Marion Pepsi lists several potential party and nonparty witnesses who may be called to testify about the quality of Marion Pepsi's customer service record. (Rains Aff. ¶¶ 10-12.) All of Marion Pepsi's witnesses are located in the Southern District, but many are employees of the company. Because parties to this action can assure their employees' testimony, their employees' convenience does not weigh in favor of or against transfer. See United Airlines, 8 F. Supp.2d at 799. However, as for third party witnesses, Marion Pepsi has not indicated that there are any witnesses who would not voluntarily testify for defendant. In this case, the subpoena powers of this court are not at issue because the defendant has not indicated that reluctant third party witnesses exist.
Although the testimony of third party witnesses is relevant to a portion of PepsiCo's breach of contract claim, the central dispute involves the interpretation of the commissary delivery agreement and the constitutionality of the Soft Drink Act. Party witnesses may play a more significant role in this action. The party's interpretation of the Appointments Contract will play a substantial role in the outcome of this case. Courts in either district are qualified to construe the New York laws that pertain to this contract and the constitutionality of the Soft Drink Act. Because Marion Pepsi's witnesses are located in the Southern District and PepsiCo's are in the Northern District and Purchase, New York, one party or the other will be inconvenienced depending on which federal judicial district is chosen. Therefore, the convenience of witnesses does not weigh in favor of either party.
C. Convenience of the Parties
The convenience of the parties considers the residence of the parties and their ability to bear the expense of trial in a particular forum. See United Airlines, 8 F. Supp.2d at 799. Marion Pepsi alleges that if the court transfers this case to the Southern District it will reduce Marion Pepsi's litigation costs. Defendant also asserts that PepsiCo does not have any more substantial connection to the Northern District than it does with any other forum with which it conducts business. Moreover, all of Marion Pepsi's witnesses are located in or near the Southern District.
In this case, no matter which judicial district is chosen, it will inconvenience one party. The parties will find it necessary to bear lodging and traveling costs for their witnesses no matter which district is chosen. Hence, convenience of the parties does not weigh heavily in favor of one party or the other. However, PepsiCo is a global corporation that has the ability to move its resources anywhere in the world. Although Marion Pepsi has the resources to defend a lawsuit in the Northern District, it is a local corporation with strong ties to the Southern District. Moving this action to the Southern District will greatly reduce Marion Pepsi's litigation costs. Because this dispute involves a local corporation dealing with a local matter, this factor weighs heavily in favor of transferring this case to the Southern District of Illinois.
D. Situs of Material Events
Defendant argues that the material events giving rise to this action support transferring to the Southern District. The subject matter and the performance of the contract strongly point to the Southern District. Although the negotiation of the contract in the Northern District held an important role for the purposes of personal jurisdiction, the Southern District clearly has more of a substantial relationship to the dispute. The alleged substandard performance of Marion Pepsi and its threaten interference with the commissary delivery program all occurred within Marion Pepsi's designated territory. The Appointments Contract was executed within Marion Pepsi's territory. Defendant's alleged conduct that breached the contract occurred within Marion Pepsi's territory. Although PepsiCo asserts that substantial events arose in the Northern District, PepsiCo is not entitled to deference in this instance because the Southern District bears a strong relationship to this dispute. See Countryman, 681 F. Supp. at 484 (ruling that the plaintiff's choice of forum is given less weight if the cause of action "did not conclusively arise in the chosen forum"). Thus, the situs of material events weighs in favor of transfer to the Southern District of Illinois.
E. Location of Documents and Other Sources of Proof
The court must also consider the ease of access to the relevant sources of proof in the respective forums. See id. Marion Pepsi claims that all of its business records are located in southern Illinois and the surrounding area, and, therefore, it is more convenient for defendant to remain in the Southern District. Although it is logical that Marion Pepsi's business records would be found where the corporation is located, it is possible for Marion Pepsi, if necessary, to transport documents relevant to this action. A similar argument could be made by PepsiCo. Consequently, the ease of access to relevant business records does not weigh in favor of or against transfer.
F. The Interests of Justice
The final consideration under § 1404(a) is whether transferring venue would serve the interests of justice. The factors determining the interests of justice include ensuring a speedy trial, trying related litigation together, insuring that the trial judge is familiar with the applicable law, and satisfying the public interest. See Heller Financial, 883 F.2d at 1293;accord Countryman, 681 F. Supp. at 485. These factors focus on the efficient administration of the court system, rather than the private considerations of the litigants. See Vandeveld, 877 F. Supp. at 1169.
Defendant contends that the interest of justice supports transfer because (1) the Southern District has an interest in the enforcement of a contract entered into by its residents, (2) a jury should have an opportunity to observe Marion Pepsi's production facilities and operations to decide if PepsiCo's allegations about unsanitary conditions are correct, and (3) the litigants will receive a speedy trial in the Southern District. PepsiCo argues that the interest of justice does not support transfer because (1) Northern District judges are just as familiar with the federal constitutional law and New York law that are applicable to this case, (2) the time from filing to disposition is shorter in this district, and (3) several judges in the Southern District would find it necessary to recuse themselves due to prior relationships with the parties.
When considering the public's interest in resolving a case, the court must evaluate the citizenship of the parties injured by the alleged misconduct. See Countryman, 681 F. Supp. at 485. PepsiCo is a North Carolina corporation with its principal place of business in Purchase, New York. PepsiCo maintains a regional office in the Northern District. On the other hand, Marion Pepsi is a Missouri corporation with its principal place of business in Marion, Illinois. Marion Pepsi argues that the Northern District has scant interest in this suit, but the Southern District has a vital interest in the enforcement of contracts made by its residents. Although the same argument is applicable to PepsiCo, this dispute clearly involves the interests of the local area. Unlike PepsiCo, Marion Pepsi is a local corporation that conducts business within a specific geographical region. Because defendant is a company that generates a substantial amount of business within southern Illinois and portions of many adjacent states, the outcome of this dispute will likely affect the local economy. The outcome of this case could change the way local businesses in the southern District interact with PepsiCo and Marion Pepsi. Because the outcome of this case will have a substantial effect on the Southern District of Illinois, this factor weighs in favor of transfer.
On the other hand, defendant's argument that the jury's ability to view Marion Pepsi's production facilities and operations requires transfer is unpersuasive. Marion Pepsi may just as effectively provide the jury with documentation and witness testimony to counter PepsiCo's allegations that Marion Pepsi's performance was substandard. Moreover, this action is more concerned with resolving which party has rights under the Appointments Contract in relation to the commissary delivery issue and the Soft Drink Act. Although the sanitary nature of Marion Pepsi's facilities and its relationship with its customers are factors in PepsiCo's breach of contract complaint, these issues are not at the center of the dispute.
Marion Pepsi utilizes 1998 federal court statistics to support the contention that litigants receive speedy trials in the Southern District. Defendant argues that the median trial term is four months shorter in the Southern District, and that ten percent of the cases in that district reach trial six months sooner. (Mem. at 19.) PepsiCo argues that the time from filling to disposition is shorter in the Northern District. (Resp. at 19.) Moreover, PepsiCo asserts that short statistical differences in the time to trial in two different locations should not warrant transfer. (Id.) The relevant court management statistics are the median number of months from filing to disposition of civil case and the median number of months from filing to trial.See Vandeveld, 877 F. Supp. at 1169. Because the average number of trials from filing to disposition is shorter in the Northern District, and the median time for the duration of a trial is shorter in the Southern District, this factor does not weigh in favor of either district.
The median time from filing to disposition in the Northern District is 6 months and in the Southern District it is 9 months. The median number of months from filing to trial in the Northern District is 22 months while in the Southern District it is 18 months.
Finally, the court must address PepsiCo's recusal concerns. PepsiCo argues that transfer to the Southern District would be inappropriate because judges sitting in Benton, Illinois have had a prior relationship with defendant. Moreover, plaintiff alleges that the pool of judges available to preside over this case will be even further reduced because a judge in East St. Louis was directly hostile to PepsiCo's counsel in a contentious case. Under 28 U.S.C. § 455(a) a judge should recuse himself whenever a party "asserts a belief that the judge will not be impartial."See National Union Fire Ins. Co. v. Continental Ill. Corp., Nos. 85 C 7080, 85 C 7081, 1987 WL 16597, at *1 (N.D. Ill. Sep. 3, 1987). However, recusal is only justified where the judge's "impartiality might reasonably be questioned." See id. A district judge should not recuse himself without reason. See id. Therefore, the judge may decide if he is obligated to recuse himself. See id. The court will not evaluate recusal based on subjective beliefs, but on objective standards. See Barnett v. City of Chicago, 952 F. Supp. 1265, 1270 (N.D. Ill. 1997). Section 455(a) is not intended to "protect litigants from actual bias in their judge but rather to promote public confidence in the impartiality of the judicial process." Id.
PepsiCo argues that the pool of judges available to hear this case in the Southern District is limited because the parties have had prior relationship with certain judges. This argument is unpersuasive. First, PepsiCo's subjective belief that judges in the Southern District will find it necessary to recuse themselves is irrelevant to this analysis. PepsiCo cannot assume a judge will recuse himself from this case, before it even begins. A lawyer may file a motion for recusal if there is an appearance of impartiality, but PepsiCo has shown no evidence of bias. Furthermore, if a transfer is granted, no one knows which judge will be assigned to this case. In addition, PepsiCo claims that it has a contentious relationship with a judge in East St. Louis and this will further reduce the number of judges available to preside over this action. A judicial expression of impatience or annoyance with an attorney's conduct does not automatically establish bias or partiality. See Barnett, 952 F. Supp. at 1269. Section 455(a) requires that there be an appearance of partiality, not just a dislike for a party's attorney. See id. Because PepsiCo has not presented any evidence of impartiality or bias by a Southern District judge or any other reason why recusal is warranted, the court rejects PepsiCo's arguments.
Upon weighing the applicable § 1404(a) factors the court finds that this action should be transferred to the Southern District of Illinois. Marion Pepsi has demonstrated that the convenience of the parties, the situs of material events, and the public interest weighs more heavily toward the Southern District. Marion Pepsi has met its burden of establishing that the transferee forum is "clearly more convenient." See Coffey, 796 F.2d at 220. Therefore, the court grants defendant's motion for transfer and orders this case transferred to the Southern District of Illinois.
Conclusion
For the foregoing reasons, the court denies Marion Pepsi's motion for dismissal because of improper venue and grants Marion Pepsi's motion to transfer venue to the Southern District of Illinois. Consequently, the court orders this case transferred to the Southern District of Illinois.