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BRIERWOOD SHOE CORP. v. SEARS

November 9, 1979

BRIERWOOD SHOE CORPORATION, Plaintiff,
v.
SEARS, ROEBUCK AND CO., Defendant.



The opinion of the court was delivered by: BRIEANT

MEMORANDUM AND ORDER

By motion docketed October 23, 1979, and heard November 7, 1979, defendant moves alternatively to (1) transfer this action to the United States District Court for the Northern District of Illinois (Eastern Division) in the interests of justice and for the convenience of witnesses pursuant to 28 U.S.C. § 1404(a); or (2) to stay proceedings in this action pending trial of a pending action in that court under docket No. 79 C 2217 in which the parties are reversed.

 Defendant, hereinafter occasionally referred to as "Sears," is a nationwide mercantile chain, incorporated under the laws of New York, and having its office in the City of New York, in accordance with its restated certificate of incorporation, verified May 15, 1978. Its principal office within the "nerve center" definition, is in the Sears Tower, Chicago, Illinois. Plaintiff ("Brierwood") is a Pennsylvania corporation, having its principal office at Kutztown, near Philadelphia. Twenty percent of the stock of Brierwood is owned by Sears, and the balance by Kleinert's, Inc. Its directors meet regularly in New York.

 Familiarity with the amended complaint docketed in this action on October 23, 1979 is assumed. The controversy arises out of a long history of contractual relationships between the parties, whereby Brierwood manufactured shoes for sale by Sears to the public. The amended complaint pleads nineteen separate claims in 146 numbered paragraphs, not counting the prayer for relief. A jury trial is demanded. The amended complaint raises federal questions as well as state law claims.

 Informal efforts were made to adjust the controversy before suit was filed. Attorneys of two local New York City law firms representing the respective parties conferred at length. Ultimately, on May 23, 1979, when discussions appeared to have reached a stalemate, Brierwood's New York counsel informed Sears' New York counsel by letter that a directors' meeting of Brierwood to be held in New York the following day would vote on a resolution, "pursuant to which counsel would be instructed to commence appropriate legal proceedings against Sears . . . as of June 5, 1979."

 Although the same letter offered to continue discussions towards resolving the dispute, sending the letter in effect threw out the starter's flag by which the unseemly but commonplace race to the Courthouse began.

 Sears won the race by two days. It filed an action on May 30, 1979 in N.D.Ill. under docket number 79 C 2217 against Brierwood and its fellow shareholder Kleinert's, Inc. It was not until June 1, 1979 that Brierwood commenced this action in this District.

 Although Brierwood characterizes the two cases as merely "related," and asserts that the passage of events has mooted some of the claims sued on in N.D.Ill., this Court regards the two lawsuits as presenting controversies which should ordinarily be resolved in a single lawsuit. Any claims presently asserted in either action will probably become compulsory counterclaims when that plaintiff files its answer in the action in which it is defendant.

 Kleinert's is not a party to the New York case, but the principal allegation pleaded against it in N.D.Ill. is found in Count VII of that complaint. There, Sears alleges "upon information and belief," that Kleinert's intentionally and tortiously interfered with Brierwood's contractual relations with Sears and induced Brierwood to breach and repudiate its contracts with Sears. This claim against Kleinert's appears to this Court to be frivolous on its face, since Kleinert's owns 80% Of the stock of Brierwood. As such shareholder, it had an existing economic interest in the affairs of Brierwood which it was privileged to attempt to protect when it "interfered," if it did so. No malice is shown or pleaded. The case seems clearly within the rule of Felsen v. Sol Cafe Mfg. Corp., 24 N.Y.2d 682, 687, 301 N.Y.S.2d 610, 249 N.E.2d 459 (1969) and the cases therein cited, which regard such "interference" as privileged, and not actionable absent a showing of malice. If a valid amended pleading could be filed against Kleinert's, it could be brought in this District or in the New York State courts, as the tort, if there was one, was committed here. See § 302(a)(2) of the New York Civil Practice Act and Rules, applicable here under Rule 4(d)(7) and (e)(1), and 28 U.S.C. § 1391(a). If Kleinert's interfered, it did so in New York through its employees who control Brierwood's board, and the claim arose here.

 Following the filing of the two actions, matters proceeded uneventfully. No significant judicial proceedings took place in this District until September 6, 1979 when this Court called a pre-trial conference. At that time counsel for the plaintiff Brierwood appeared and advised that the parties were "on the verge of settlement" of the controversy. New York attorneys appearing for Sears confirmed this representation, and advised this Court that they expected to settle the litigation by October 1st, and that the proposed settlement agreement, which would dispose of the controversy was then in the Ninth draft of revisions. While it staggers this Court's imagination that a settlement agreement prepared by competent lawyers can require nine separate and successive drafts, anything is possible in modern commercial litigation. This Court accepted this joint representation, and adjourned the pre-trial conference until October 12th. On October 12, 1979 it appeared that the case had not been settled and that the issue of venue would be raised, as it has been by the within motion.

 The burden of showing the desirability of a transfer is on the moving party. It was conceded, as indeed it must be, that venue in this District is proper, as Sears is incorporated here. See 28 U.S.C. § 1391(c). Accordingly, to move this case to N.D.Ill., it must appear that the interests of justice and the convenience of parties and witnesses demand a change. Since the plaintiff's choice of forum is entitled to great weight, the movant's task is a difficult one. The Court has great discretion to consider whatever factors it chooses in deciding such motions, but the test usually followed in this Circuit is that formulated by Judge Weinfeld of this Court in Schneider v. Sears, 265 F. Supp. 257, 261-67 (S.D.N.Y.1967). The considerations set forth in that opinion include: (a) convenience to parties; (b) convenience to witnesses; (c) relative ease of access to sources of proof; (d) availability of process to compel attendance of unwilling witnesses (residing outside the 100-mile radius from the courthouse); (e) cost of obtaining willing witnesses; (f) where the case can be tried more expeditiously and inexpensively; and (g) the interests of justice. See generally, Brieant and Scheindlin, Venue in the Second Circuit, 43 Brooklyn Law Review 841, 852 (1977) and cases therein cited.

 This District was chosen by plaintiff as the place for litigation. Plaintiff could have sued in N.D.Ill., E.D.Pa. or in this District. Although its principal activities center in Chicago, Sears has been sued in the state of its incorporation. Neither case is at issue, so that the controverted facts are not yet known to the Court. Brierwood represents that it has its records in Pennsylvania and in New York, and that it will have three witnesses, one of whom is in Chicago, and two in Philadelphia. Sears asserts that it has 13 witnesses in Illinois and 30 additional present or former employee witnesses who "may" have knowledge of the dispute. Of these, 29 reside in Illinois. This Court regards it as highly unlikely that the trial of this case will require 43 witnesses to testify on behalf of the defendant, and believes that much of such proposed testimony may well turn out to be unnecessary, cumulative or directed to facts not seriously disputed.

 Both parties have attempted to enlarge the inquiry as to the proper place of trial in the interests of justice and for the convenience of the witnesses and parties, so as to require a consideration of the merits. This is unnecessary. Plaintiff asserts, among its nineteen claims, violation by Sears of the Robinson-Patman Act (15 U.S.C. § 13) as well as state law (diversity) claims for goods sold and delivered, breach of contract, wrongful cancellation of production orders, and more, including a claim for Prima facie tort, and one for defamation.

 Brierwood's choice of this forum was not captious nor does the selection of this District appear to have been intended to harass defendant in any way. Ordinarily a corporation is properly sued in its state of incorporation and expects to be held accountable for its actions in that state. Brierwood's directors, a group which includes two Sears employees, have met frequently and regularly in New York. Brierwood and Kleinert's share an office in Manhattan at 350 Fifth Avenue. Conferences between representatives of Sears and Brierwood management, concerning the relationship which is under suit, ...


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