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RHODES v. BARNETT

December 15, 1953

RHODES
v.
BARNETT (No. I). BROWN v. PENNSYLVANIA GREYHOUND LINES, Inc. (No. II). McHONEY et al. v. MARINE TRANSPORT LINES, Inc. (No. III)



The opinion of the court was delivered by: MURPHY

Each of these three separate actions involves a motion by defendant for a change of venue under 28 U.S.C.A. § 1404(a) on the grounds of convenience of parties, witnesses and the ends of justice: (I) is a breach of contract action brought by plaintiff as a citizen of New York against defendants as citizens of California; (II) is a tort action brought by plaintiff as a citizen of New York against defendant, a Delaware corporation, licensed to do business in New York, for injuries sustained in Pennsylvania; and (III) is a tort action brought by plaintiffs as citizens of South Carolina against defendant, a Delaware corporation, doing business in New York, for injuries sustained in South Carolina. The three cases are unconnected except for the identical question of law in each of them. This common ingredient makes it convenient to treat all three of them in a single opinion.

In each of the three cases it is conceded that the venue statute of the United States permitted the plaintiffs to commence their actions in the Southern District of New York and empowered the United States District Court there to entertain them. 'A civil action * * * may, except as otherwise provided by law, be brought only in the judicial district where all plaintiffs or all defendants reside.' *fn1" This venue statute can supply the basis for maintaining the actions in cases (I) and (II). The statute further provides in part: 'A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes.' *fn2" This statute can supply the basis for maintaining the action in case (III). No question of jurisdiction as to parties or subject matter is raised in any of the three cases.

 But conceding jurisdiction and venue, the question remains whether this court must entertain the suit. In 1948 a statute was enacted which provides in part that, '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.' *fn3" There is no question that the statute is based on the doctrine of forum non conveniens. *fn4" Prior to its enactment it was possible to transfer a suit between divisions of the same district when the parties so stipulated. *fn5" While such transfers are still preserved the statute makes possible a discretionary transfer of civil actions from one district to another which was not possible before its enactment. *fn6" Prior to the enactment of the transfer statute, a suit brought in an inconvenient federal forum had to be dismissed. *fn7" It could not be transferred to another district as, for example, in local State practice. *fn8"

 With reference to the transfer statute, the Court of Appeals in this circuit has observed that, 'Congress did not alter the standard theretofore embodied in the doctrine of forum non conveniens, despite the fact that that section is applicable to types of actions to which that doctrine did not previously apply.' *fn9" The classic statement of what factors ought to be considered by a federal forum in applying forum non conveniens prior to the enactment of the transfer statute has been made by Jackson, J., in Gulf Oil Corp. v. Gilbert. *fn10" (A) As private interest of the litigant, these factors are enumerated: (1) access to proof; (2) availability of compulsory process for unwilling witnesses; (3) cost of obtaining attendance of witnesses; (4) possibility of view of premises; and (5) enforceability of judgment if one is obtained. (B) As factors of public interest, there are listed: (1) congested calendars; (2) burden of jury duty; (3) local interest in localized controversy; and (4) desirability of having the forum apply the State law of the State in which it sits. These factors are presumably illustrative and not exhaustive.

 The burden of establishing this inconvenience is emphatically that of the defendant. 'But unless the balance is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed.' *fn11"

 In the light of these principles we shall examine the three cases in order.

 I

 In Rhodes v. Barnett, the first case, defendant operated a clock advertising business involving permission of theater owners for the installation on their premises of clocks bearing legends advertising the products or services of other persons. Under written agreement entered into in March, 1950, plaintiff became defendant's exclusive agent in a territory embracing an area comprising Connecticut, New York and Pennsylvania. Plaintiff contends that defendant unlawfully terminated this agreement on October 13, 1951, and claims damages totalling $ 232,121.01. Defendant denies plaintiff's claim and counterclaims for injunctive relief and damages totalling $ 157,878.99 on the grounds that plaintiff breached the agreement by violating a negative covenant which it contained.

 In balancing the conveniences involved, consideration should first be given to those factors which are weighted in favor of retention of the cause in this district and against its removal to the Southern District of California.

 (1) Nature of action. This is an action in contract. A sharp line of demarcation has been drawn by the State Courts in New York between tort and contract cases in the application of the doctrine of forum non conveniens. It has been said that power to refuse to entertain jurisdiction under certain circumstances in tort cases does not extend to actions based upon contract. *fn12" And such has apparently been the practice of trial courts of this State. *fn13" This tendency to retain jurisdiction in contract cases is followed in State Courts elsewhere. *fn14" The distinction between tort and contract actions is based on the consideration that there is not the same probability that the amount of recovery will vary with the place of trial because the rules of damage are more restrictive in contract than in tort. Moreover, this distinction between tort and contract in refusing to entertain jurisdiction may well be part of the federal rule. 'The law of New York as to the discretion of a court to apply the doctrine of forum non conveniens, and as to the standards that guide discretion is, so far as here involved, the same as the federal rule.' *fn15" Accordingly the fact that this is a contract action is a consideration favorable to its retention in this forum.

 (2) Locus of transaction. The contract involved was to be performed in an area comprising Connecticut, New York and Pennsylvania, and presumably was made in New York. Under the choice of law rule of the State of New York which this court is constrained to apply, *fn16" the substantive law of contracts of New York and not that of California may well govern the issues to be tried in this case. In such event there is at least some circumstantial probability that both counsel and court will exhibit more familiarity with the governing law of this case if it is tried in New York rather than in California.

 (3) Nature of issues involved. There is no denial of the existence and terms of the written contract. The issues raised by complaint, answer and counterclaim relate to its breach. And the facts under those issues arise from plaintiff's conduct in the eastern area in which the contract was to be performed. Indeed the counterclaim of defendant, insofar as it is possible to characterize it as having a principal geographical reference point, relates to the same area.

 (4) Appearance and participation in this forum by defendant. We think it significant that defendant himself in connection with proceedings in this action has already resorted to this forum on numerous occasions. He removed this action from the State Court in which it was originally brought to this forum. He conducted his pre-trial examination pursuant to orders of this court. He appeared in this court and successfully opposed plaintiff's application for a preference and he secured a temporary injunction restraining plaintiff in connection with this action in this court. If a litigant by dint of bringing an action in a State court has so submitted himself to its jurisdiction that the court retains jurisdiction over him, even after dismissal of his complaint, for purposes of defendant's cross-claim which was filed without service upon the plaintiff, then it appears that resorting to a forum by a litigant should at least have some significance in resolving the proprieties of a transfer of the action. *fn17"

 (5) Delay in making motion. We think that weight should be given to the fact that this action was commenced on October 22, 1951, and that defendant makes the motion for transfer for the first ...


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