Opinion
Civ. No. 02-1324 (JEL/JGL)
September 27, 2002
V. John Ella, Esq., appeared for Plaintiff/Counter-Defendant Sick, Inc.
Gregory L. Peters, Esq., appeared for Defendant/Counter-Plaintiff Pilz Automation Safety, Limited Partnership.
ORDER
This matter comes before the Court on Pilz Automation Safety, Limited Partnership's (Pilz) Motion to Transfer the action to the United States District Court for the Eastern District of Michigan. Because Pilz has not demonstrated that transfer would serve the convenience of the parties, the convenience of witnesses, and the interest of justice, the motion is denied.
SUBJECT MATTER JURISDICTION
The Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1332(a)(1), 1441(a) (2000).
BACKGROUND
Pilz is a Michigan limited partnership whose principal place of business is in Michigan. It is engaged in the business of selling, distributing, and servicing automated safety relays and safety systems for industrial applications. In January 2002, two Pilz employees, Donald Lawson and Richard Bewley, resigned and went to work for Sick, Inc. (Sick), a Minnesota corporation whose principal place of business is in Minnesota. Sick designs, manufactures, and distributes sensors, including industrial sensors, safety controls, bar code systems, and measurement systems.
Soon after Lawson and Bewley resigned, Pilz's chief executive officer wrote letters to Lawson, Bewley, and Sick's president. The letters alleged that Lawson's and Bewley's employment contracts contained non-competition agreements that prohibited them from working for a competitor of Pilz for two years. The letters stated that Pilz would enforce the non-competition agreements if it determined that Sick was a competitor. The letter to Lawson also stated that Pilz would "pursue its rights to the full extent of the law, including criminal sanctions if applicable," if Lawson attempted to use Pilz's confidential information or trade secrets.
In May 2002, Sick brought this action against Pilz in Minnesota state court seeking a declaratory judgment regarding the parties' rights and duties under the employment contracts and money damages for Pilz's tortious interference with Sick's business. Pilz removed the action to this Court pursuant to 28 U.S.C. § 1446 (2000), and brought counterclaims against Sick for tortious interference with contract, conversion of confidential business and trade secret information, and violations of the Michigan Uniform Trade Secrets Act, Mich. Comp. Laws §§ 445.1901— 445.1910 (MUTSA). Pilz now moves to transfer the action to the United States District Court for the Eastern District of Michigan.
DISCUSSION
Transfers are governed by 42 U.S.C. § 1404(a) (2000), which 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." As the moving party, Pilz bears the burden of establishing that a transfer is warranted. Terra Int'l, Inc. v. Miss. Chem. Corp., 119 F.3d 688, 691 (8th Cir. 1997); Coast-to-Coast Stores, Inc. v. Womack-Bowers, Inc., 594 F. Supp. 731, 733 (D.Minn. 1984). The decision of whether to transfer an action lies within the discretion of the district court. Everett v. St. Ansgar Hosp., 974 F.2d 77, 79 (8th Cir. 1992); Arkla Exploration Co. v. Tex. Oil Gas Corp., 734 F.2d 347, 353 (8th Cir. 1984). Pilz and Sick agree that this action "might have been brought" in the Eastern District of Michigan, but they disagree with respect to whether transfer would serve the convenience of the parties, the convenience of the witnesses, and the interest of justice. The Court will consider each of these factors in turn.
The parties also spent a considerable amount of time debating whether transfer would be appropriate under the "first-filed rule." Under that rule, when a party moves to stay, dismiss, or enjoin a party from proceeding with an action in one jurisdiction on the ground that a parallel action is pending in another jurisdiction, the first court in which jurisdiction attached has priority to consider the case, absent compelling circumstances. N.W. Airlines, Inc. v. Am. Airlines, Inc., 989 F.2d 1002, 1005 (8th Cir. 1993); U.S. Fire Ins. Co. v. Goodyear Tire Rubber Co., 920 F.2d 487, 488 (8th Cir. 1990); Orthmann v. Apple River Campground Inc., 765 F.2d 119, 121 (8th Cir. 1985). The first-filed rule does not apply in the context of a motion to transfer.
A. Convenience of the parties.
Because this case involves a Minnesota plaintiff and a Michigan defendant, some level of inconvenience is inevitable. If the Court allows the action to proceed in Minnesota, then Pilz will be inconvenienced by having to bear the costs associated with litigating outside of its home state of Michigan. On the other hand, if the Court transfers the action to the Eastern District of Michigan, then Sick will suffer the inconvenience and added costs of litigating outside of its home state of Minnesota. This is not a case in which the financial condition of the parties requires transfer to accommodate the needs of a relatively impoverished defendant. Both Sick and Pilz are large, sophisticated, multinational entities. Under these circumstances, it appears that transfer would merely shift the inconvenience inherent in this diversity action from one party to the other. The Court therefore concludes that this factor does not weigh in favor of transfer.
See Houk v. Kimberly-Clark Corp., 613 F. Supp. 923, 927-28 (W.D.Mo. 1985) (stating motion to transfer should not be granted if it would merely shift inconvenience from one party to the other); Dangerfield v. Bachman Foods, Inc., 515 F. Supp. 1383, 1390 (D.N.D. 1981) (same); Norval Indus., Inc. v. Superior Cos., Inc., 515 F. Supp. 895, 899 (D.Minn. 1981) (same); Stinnett v. Third Nat'l Bank of Hampden County, 443 F. Supp. 1014, 1017 (D.Minn. 1978) (same); 15 Charles Alan Wright et al., Federal Practice Procedure § 3848 at 385-86 (2d ed. 1986) (same).
B. Convenience of the witnesses.
The convenience of the witnesses is commonly referred to as the "primary" or "most important" factor in the transfer analysis. See Biometics, LLC v. New Womyn, Inc., 112 F. Supp.2d 869, 876 (E.D.Mo. 2000) (stating convenience of the witnesses "is a primary, if not the most important, factor"); United States v. Hartbrodt, 773 F. Supp. 1240, 1243 (S.D.Iowa 1991) ("primary" factor); Midwest Mech. Contractors, Inc. v. Tampa Constructors, Inc., 659 F. Supp. 526, 532 (W.D.Mo. 1987) ("most important" factor); Am. Standard, Inc. v. Bendix Corp., 487 F. Supp. 254, 262 (W.D.Mo. 1980) ("most important" factor); 15 Wright et al., supra, § 3851 at 415 ("probably the most important" factor). A motion to transfer will not be granted based on this factor if the moving party "merely makes a general allegation that witnesses will be necessary, without identifying those necessary witnesses and indicating what their testimony at trial will be." Am. Standard, 487 F. Supp. at 262. Instead, the party seeking the transfer must clearly specify the essential witnesses to be called and must make a general statement of what their testimony will cover. Graff v. Qwest Communications Corp., 33 F. Supp.2d 1117, 1122 (D.Minn. 1999); Nelson v. Master Lease Corp., 759 F. Supp. 1397, 1402 (D.Minn. 1991); Standard Office Sys. of Fort Smith, Ark. v. Ricoh Corp., 742 F. Supp. 534, 538 (W.D.Ark. 1990); Houk, 613 F. Supp. at 928.
In this case, Pilz identified Lawson and Bewley as the "two primary witnesses." According to Pilz, Lawson and Bewley will be inconvenienced if transfer is denied because Lawson is a resident of Michigan and Bewley is a resident of Indiana. Lawson and Bewley do not agree with this assessment. They have submitted affidavits in opposition to Pilz's motion in which they averred that they would not be inconvenienced "in any way, shape or form" by having to attend a deposition or appear for trial in Minnesota. The fact that transfer would not serve the convenience of the two key witnesses weighs heavily against Pilz.
Pilz also identified two general categories of witnesses that it claims will be inconvenienced if the action is not transferred. First, Pilz notes that its "principal place of business [is] in Michigan, and all of the employees (and likely witnesses) who worked with Lawson and Bewley [at Pilz] are located in Michigan." Second, at the hearing on its motion, Pilz stated that there may be some employees and executives of General Motors Corporation in Michigan who have knowledge of the work performed by Lawson, and that Pilz may have to depose or call those individuals as witnesses at trial. In response, Sick argues that "this case may involve witnesses who reside in Minnesota, including Bewley['s] and Lawson's supervisors, as well as the Sick representatives who negotiated the[ir] employment agreement[s]."
The vagueness of the parties' arguments on this point makes it difficult to balance the inconvenience to the witnesses on each side. Without information indicating the nature of the potential witnesses' testimony, the Court is unable to determine the relative importance of the Michigan witnesses as compared to the Minnesota witnesses. It is clear, however, that most of Pilz's witnesses will be inconvenienced if the action proceeds in Minnesota, and that most of Sick's witnesses will be inconvenienced if the action is transferred to Michigan. Given that the burden is on Pilz to demonstrate that transfer is appropriate, and that the two key witnesses will not be inconvenienced if transfer is denied, the Court concludes that transfer would not serve the convenience of the witnesses.
C. Interest of justice.
Approximately one month after Pilz was served with the Summons and Complaint in this action, it brought a separate action against Lawson and Bewley in Michigan state court for breach of contract, misappropriation of trade secrets in violation of the MUTSA, breach of common law duty, and civil conspiracy. Pilz argues that transfer would increase efficiency by eliminating the need to litigate similar claims in different states.
The desire to avoid duplicative litigation is one of the many elements that have been considered by courts under the broad heading of "the interest of justice." 15 Wright et al., supra, § 3854 at 441. As the United States Supreme Court observed in Continental Grain Co. v. The FBL-585, 364 U.S. 19 (1960): "To permit a situation in which two cases involving precisely the same issues are simultaneously pending in different District Courts leads to the wastefulness of time, energy and money that § 1404(a) was designed to prevent." Cont'l Grain, 364 U.S. at 26. Courts in this circuit have generally permitted transfer when it would allow actions involving similar legal and factual issues to proceed in the same forum. See, e.g., In re Nine Mile Ltd., 692 F.2d 56, 60 (8th Cir. 1982) (per curiam); I-T-E Circuit Breaker Co. v. Regan, 348 F.2d 403, 405 (8th Cir. 1965) (per curiam); Skyline Displays, Inc. v. Sweeney, 634 F. Supp. 746, 747 (D.Minn. 1986); Wooldridge v. Beech Aircraft Corp., 479 F. Supp. 1041, 1057-58 (W.D. Mo. 1979); Kansas City Shippers Assoc., Inc. v. Penn. R.R. Co., 182 F. Supp. 42, 43 (W.D.Mo. 1960).
In this case, transferring Sick's action to the Eastern District of Michigan would not place it in the same forum as Pilz's Michigan state court action against Lawson and Bewley.
Furthermore, there is no chance that the Michigan state court action will be removed to the federal courts because it does not involve a question of federal law, and because Pilz and Lawson are both citizens of Michigan. See 28 U.S.C. § 1441(a). Thus, even if the Court transferred Sick's action, there would still be two separate actions proceeding before two separate courts with no possibility of consolidation under Fed.R.Civ.P. 42(a). In addition, the Court notes that, although both actions involve many of the same legal and factual issues, Sick is not a party to the Michigan state court action. On these facts, the savings in time, energy, and money that would be gained by transfer are minimal at best.
Because Lawson is a citizen of Michigan, he could not remove Pilz's action to federal court on diversity grounds even if Pilz was not a citizen of Michigan. See 28 U.S.C. § 1441(b).
Pilz also argues that transfer should be granted because this action requires the application of Michigan law, and a federal court in Michigan is better able to decide issues of Michigan law than a federal court in Minnesota. The Court does not find this argument persuasive for two reasons. First, although some aspects of this case may be governed by Michigan law, other aspects are governed by Minnesota law. Second, to the extent that this case does implicate Michigan law, that law is relatively well-settled and clear. Thus, there would be very little advantage gained by having a Michigan court, rather than this Court, apply Michigan law in this case. See Houk, 613 F. Supp. at 932 (stating "general view" that "this factor is to be given little weight where . . . the foreign law to be applied is neither complex nor unsettled"); 15 Wright et al., supra, § 3854 at 466-67 (stating this factor "seems not to have been given great weight, particularly when the applicable state law appears clear"); cf. Brockman v. Sun Valley Resorts, Inc., 923 F. Supp. 1176, 1182-83 (D.Minn. 1996) (transferring action that raised "novel" issue of Idaho law to District of Idaho).
Pilz's final argument in favor of transfer is that "Michigan has more of an interest in ensuring that the rights of its employers are protected and [in] governing the contractual and business relations within its boundaries." The Court is not convinced that Michigan's interest in protecting the rights of one of its employers is any greater than Minnesota's interest in providing a forum in which its residents may litigate claims against non-residents. Digi-Tel Holdings, Inc. v. Proteq Telecommunications (PTE), Ltd., 89 F.3d 519, 525 (8th Cir. 1996); K-Tel Int'l, Inc. v. Tristar Prods., Inc., 169 F. Supp.2d 1033, 1041 (D.Minn. 2001). Thus, Minnesota has at least as great an interest in this case as Michigan.
CONCLUSION
Based on the foregoing considerations, the Court concludes that Pilz has failed to demonstrate that transfer is warranted under 28 U.S.C. § 1404(a). Therefore, IT IS ORDERED THAT:
1. Defendantr/Counter-Plaintiff Pilz's Motion to Transfer [Docket No. 15] is DENIED.