Opinion
No. 00-1332.
March 5, 2001.
REPORT AND RECOMMENDATION
This cause comes before the Court on Defendants' motion to dismiss for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3), or to transfer venue pursuant to 28 U.S.C. § 1404(a), or in the alternative to stay this action pending resolution of related matters in the Southern District of Florida.
I. BACKGROUND
Plaintiffs in this action include Vermont Wildflower Farm, Inc. ("Vermont Wildflower") and Foster and Gallagher, Inc. ("FG").
Plaintiffs contend that Defendants American Meadows, Inc., ("American Meadows"), Raymond Allen and Charlotte Allen (collectively "The Allens") sold their interest in a wildflower seed catalog. This included the name, customer records, goodwill and other intellectual property. Plaintiffs assert that Defendants have breached certain promises made in connection with the sale. Specifically, Plaintiffs have asserted the following causes of action: 1) breach of purchase agreement; 2) breach of consulting agreement against Raymond Allen; 3) breach of consulting agreement against Charlotte Allen; 4) federal unfair competition pursuant to the Lanham Act; 5) unfair competition pursuant to the Illinois Uniform Deceptive Trade Practices Act and 6) tortious interference with prospective economic advantage.
American Meadows previously filed suit in Florida against Vermont Wildflower and FG. American Meadows advanced the following causes of action against Vermont Wildflower and FG: 1) breach of contract, 2) anticipatory repudiation and 3) breach of guaranty. That action is now pending in the United States District Court for the Southern District of Florida.
This Court has subject matter jurisdiction in this case based on diversity of citizenship pursuant to 28 U.S.C. § 1332. Plaintiff FG's principal place of business is in Illinois. Plaintiff Vermont Wildflower is a subsidiary of FG with a principal place of business in Illinois. Defendant American Meadows is a Vermont corporation with its principal place of business in Vermont. There is a dispute as to the residency of the Allens. Jurisdiction is also proper as to Count IV under 28 U.S.C. § 1331 and the Lanham Act, 15 U.S.C. § 1125, et. seq. The Court has supplemental jurisdiction over the remaining claims. Plaintiffs assert that venue is proper pursuant to 28 U.S.C. § 1391(b)(2). That section reads in pertinent part that venue is proper in "a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred."
Plaintiffs allege that the Allens are Vermont residents. Defendants contend that the Allens are Florida residents. Whether the Allens are residents of Vermont or Florida, there is complete diversity in this case.
In its entirety, section 1391(b) reads
[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, (2) 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, 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.
II. FACTUAL ALLEGATIONS
In 1981, the Allens found VWF, Inc., a Vermont corporation now known as American Meadows. Through the corporation, the Allens operated the Vermont Wildflower Farm (the "Allen Farm") in Vermont. The Allen Farm was a tourist attraction which included a small six-acre wildflower farm, a gift shop and seed shop. American Meadows soon created The Vermont Wildflower Farm Seed Catalog (the "seed catalog").This was used to solicit the sale of wildflower seeds to customers nationwide.
On February 5, 1996, the Allens sold to FG all of their interest and goodwill in the seed catalog. The Allens each entered into independent consulting agreements to assist FG in the marketing and development of the seed catalog. The agreements provide that the Allens cannot take part in "the marketing and sale of horticultural products by . . . electronic media."
Plaintiffs assert that Defendants have violated these agreements by offering for sale and selling horticultural products over the Internet through the American Meadows website.
Pursuant to an Asset Purchase Agreement (the "purchase agreement"), Plaintiffs contend that FG bought the Vermont Wildflower Farm name and other assets related to the seed catalog for $100,000. The purchase agreement provided that FG was buying all of the intellectual property associated with the Vermont Wildflower Farm name. The Allens retained only the right to operate the Allen Farm, a tourist attraction in Vermont, using the "Vermont Wildflower Farm" name. Nevertheless, Plaintiffs assert that American Meadows established a website on the Internet. The URL for the website is www.americanmeadows.com. The website identifies the Allens as the operators of the Allen Farm, the incorporators of American Meadows and the creators of the website.
Moreover, the Allens solicit the sale of wildflower seed and other horticultural products, inviting customers to buy the products over the Internet. Plaintiffs contend that this constitutes a violation of both the purchase agreement and the consulting agreements. American Meadows and the Allens have refused to stop using the name they sold to FG and have refused to stop their other activities in breach of the promises they made to FG.
Plaintiffs filed a complaint, alleging six different causes of action.
Defendants responded by filing a motion to dismiss for improper venue, or to transfer venue to the Southern District of Florida, or in the alternative to stay this action pending resolution of the proceedings in Florida.
III. ANALYSIS A. Defendants' Motion to dismiss for improper venue
Defendants American Meadows and the Allens move first to dismiss the instant action for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3). Plaintiffs have the burden of establishing proper venue.
See Grantham v. Challenge-Cook Bros., Inc., 420 F.2d 1182, 1184 (7th Cir. 1969). In deciding whether Plaintiffs have met their burden, the Court will take the allegations of the complaint as true unless contradicted by Defendants' affidavits. The Court will resolve any conflicts in the affidavits in Plaintiffs' favor. See Emjayco v. Morgan Stanley Co., Inc., 901 F. Supp. 1397, 1400 (C.D.Ill. 1995); Turncock v. Cope, 816 F.2d 332, 333 (7th Cir. 1987). Plaintiffs here maintain that venue is proper in that "a substantial part of the events or omissions giving rise to the claim occurred" in this District. See 28 U.S.C. § 1391(b)(2).
Plaintiffs contend that the events which gave rise to this claim occurred in this District. The litigation stems from a breach of contract between Illinois — based company FG and Defendants. The relevant agreements were signed at a brief meeting in Peoria, Illinois. Plaintiffs contend that they engaged in extensive contract negotiations from Illinois.
Plaintiffs also note that they have performed their obligations under the agreements in Peoria, and the effects of Defendants' breach of promises are felt primarily in this District. Moreover, Plaintiffs and their principals reside in Illinois, including Lyle Dickes. Dickes is the FG executive who signed the agreements in Peoria. Finally, Plaintiffs note that most of their documents which are relevant to the case are found in Illinois. Thus, Plaintiffs argue that the underlying facts are closely connected to this District.
Defendants assert that a substantial part of the events did not occur in Illinois. Defendants maintain that the agreements were negotiated in Florida and were performed in Florida and Vermont. Moreover, Defendants note that a case based upon a related agreement that the parties negotiated has already commenced in Florida.
The dispute in the instant action essentially involves Defendants' continued use of the Vermont Wildflower Farm Catalog name and the continued marketing and sale of horticultural products on the website.
Plaintiffs assert that this constitutes a violation of the Purchase Agreement and the Consulting Agreements. The breach of the agreements as alleged against the Allens may have occurred in Florida, where the Allens indicate they are residents. The breach of the agreements as alleged against American Meadows may have occurred in Vermont, where American
Meadows is located. However, this does not mean that a substantial part of the events giving rise to the action did not occur in Illinois. "If the selected district's contacts are `substantial,' it should make no difference that another's are more so, or the most so." See Chemical Waste Management, Inc. v. Sims, 870 F. Supp. 875 (N.D.Ill. 1994) (citations omitted). Thus, in determining whether venue is proper, it is not relevant that the contacts with Florida may be "substantial" so long as this District is one "in which a substantial part of the events or omissions giving rise to the claim occurred."
Here, the agreement was signed in Peoria. Moreover, Illinois was the site of significant negotiations by Plaintiffs. Plaintiffs also contend that they performed their obligations pursuant to the agreement in Peoria. The Court therefore finds that venue is proper in this District. See Sims, 870 F. Supp. at 875 (noting that venue is proper in the District where the agreement was negotiated, finalized and memorialized even if defendants' activities were more extensive elsewhere).
Accordingly, I recommend Defendants' motion to dismiss for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3) be denied.
B. Defendants' Motion to transfer venue to the Southern District of Florida
Defendants move alternatively to transfer this action to the Southern District of Florida pursuant to 28 U.S.C. § 1404(a), which provides that "[f]or 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." Accordingly, transfer is appropriate pursuant to the statute only when the movant has established that 1) venue is proper in both the transferor and the transferee court; 2) transfer is for the convenience of the parties and witnesses; and 3) transfer is in the interests of justice. The movant must specifically show that "the transferee forum is clearly more convenient." See Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219-20 (7th Cir. 1986); Heller Financial Inc. v. Midwhey Power Co., Inc., 883 F.2d 1286, 1293 (7th Cir 1989). A plaintiff's choice of forum is another consideration. See Roberts Schaeffer Co. v. Merit Contracting Inc., 99 F.3d 248, 254 (7th Cir. 1996).
Plaintiffs contend that few if any facts connect this dispute to Florida.
Plaintiffs note that the Allens were Vermont residents when they sold their catalog business in 1996. Plaintiffs assert that the Allens remain Vermont residents. However, the Court finds that the Allens are Florida residents.
Raymond Allen submitted a declaration pursuant to 28 U.S.C. § 1746 which indicated that he and his wife had been Florida residents since 1997.
Plaintiffs have submitted nothing to rebut the declaration which has the same effect as an affidavit. Accordingly, because Defendants have controverted Plaintiffs' allegations, the Court finds that the Allens are Florida residents. See Emjayco, 901 F. Supp. at 1400. The Allens do business in both Vermont and Florida.
Defendants assert that in addition to being Florida residents, there are other connections between this case and Florida. Defendants negotiated with Plaintiffs via telephone from Florida. Moreover, Defendants' accountant and attorney both live in Florida and assisted in negotiating the agreement from Florida. Defendants' signatory traveled to Florida to finalize the agreements. Moreover, Defendants maintain that there is little which connects this case to Illinois. Specifically, Plaintiff Vermont Wildflower does little business in Illinois, nor did it when the agreement was signed.
Defendant American Meadows is a Vermont corporation headquartered in Vermont. Additionally, Defendants assert that the documents involved in the case are located in Miami.
The Court will now consider the relevant factors. First, the Court must determine whether venue is proper in the transferor and transferee Districts.
It has already determined that venue is proper in this District. As for the Southern District of Florida, the connection appears to be that Defendants and their agents negotiated the agreements from Florida. Moreover, Defendants assert that any breach as alleged of the consulting or purchasing agreements would have occurred in Florida or Vermont. Of course, it was the alleged breach of those agreements that gave rise to this litigation. The Court therefore finds that venue may also be appropriate in the Southern District of Florida.
The Court will now analyze the convenience of the parties and witnesses. Factors to consider include: 1) the Plaintiffs' choice of forum; 2) the situs of material events; 3) the relative ease of access to resources of proof in each forum; and 4) convenience of the parties — specifically, their respective residences and abilities to bear the expense of trial in a particular forum. See Symons Corp. v. Southern Forming Supply, Inc., 954 F. Supp. 184 (N.D.Ill. 1997).
The Court has already noted the importance of Plaintiffs' choice of forum. See Robert Schaeffer Co., 99 F.3d at 254. Indeed, that choice is entitled to substantial weight especially when it is also Plaintiffs' home forum. See Vandeveld v. Christoph, 877 F. Supp. 1160, 1167 (N.D.Ill. 1995). The fact that Plaintiffs have brought this action in the Central District of Illinois therefore weighs heavily against transfer.
As for the situs of material events, the Court has already engaged in some analysis of this factor. Plaintiffs contend that they performed their parts of the agreements in Illinois. It is clear that Defendants performed or failed to perform in either Florida or Vermont. Defendants contend that another strong factor in favor of transfer is the ongoing litigation in Miami.
However, that litigation is not related to that which is at issue before this Court. The litigation in Florida concerns Vermont Wildflower's alleged failure to purchase a minimum of $270,000.00 worth of seed from American Meadows. That differs substantially from the alleged breach of the purchase and consulting agreements in the instant matter. Accordingly, this factor does not weigh in favor of transfer.
The Court will now assess the relative ease of access to proof in each forum. Defendants contend that all of their documents in this case are found in Florida. Moreover, most of their witnesses are also in Florida.
Plaintiffs contend that most of their evidence and witnesses are in Illinois.
Accordingly, this factor neither militates for nor against transfer.
The Court will now turn to the convenience of the parties. Again, Defendants must establish that Florida is "clearly more convenient." See Coffey, 796 F.2d at 219-20; Heller Financial Inc., 883 F.2d at 1293.
Defendants assert that they are inconvenienced by having to litigate this matter in Illinois. It is clearly the case that Plaintiffs in this case would be inconvenienced by transferring this action to Florida. Thus, transferring this action would merely serve to transfer the inconvenience of one party to another. Hence, it is apparent that Defendants cannot establish that Florida is a "clearly more convenient" forum.
The final inquiry is the "interest of justice" component. This relates to the efficient functioning of the courts. See Coffey, 796 F.2d at 221. This inquiry may be determinative even if other factors call for a different result.
See Id. at 220. Defendants contend that the ongoing litigation in Florida requires transferring this case, asserting that it would be inefficient to burden two courts with essentially the same case. However, this Court has already determined that the issues in Florida differ substantially from those in the instant case. Moreover, in a diversity action, the Court's familiarity with the applicable state law is an important factor to consider before transferring.
See Coffey, 796 F.2d at 221. The Court notes that five of the six counts in Plaintiffs' complaint are Illinois State law claims. Thus, the "interest of justice" component of the transfer statute favors recommending denial of Defendants' motion to transfer.
Accordingly, I recommend Defendants' motion to transfer be denied.
C. Defendants' motion to stay
Alternatively, Defendants contend that this case should be stayed until a motion has been ruled upon in the Southern District of Florida. FG has a motion pending there to transfer that action to the Central District of Illinois.
The Court has already noted that the issues are different in the two cases. If the Court had determined that the motion to transfer venue should be granted, it would then be logical to stay this action to prevent the possibility that the instant case and the Florida matter would be transferred simultaneously. However, because the Court has decided otherwise, there is no need to issue a stay. Accordingly, I recommend that the motion to stay be denied.
IV. CONCLUSION
Therefore, it is my recommendation that Defendants' motion to dismiss for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3), or to transfer this case to the United States District Court for the Southern District of Florida pursuant to 28 U.S.C. § 1404(a), or in the alternative to stay this matter until motions in the Florida action have been ruled upon (d/e 13) be DENIED in its entirety.
The parties are advised that any objection to this Report and Recommendation must be filed in writing with the Clerk of the Court within ten working days after being served with a copy of this Report and Recommendation. See 28 U.S.C. § 636(b)(1). Failure to file a timely objection will constitute a waiver of objections on appeal. See Video Views, Inc. v. Studio 21, Ltd., 797 F.2d 538, 539 (7th Cir. 1986). See Local Rule 72.2.