The factors I consider relevant in this case are the forum-selection clause contained in the Agreement, the residence of likely witnesses, the site of the operative facts, and plaintiff's choice of forum.
A. Forum Selection Clause
The Supreme Court has held that "the presence of a forum-selection clause . . . [is] a significant factor that figures centrally" in a court's decision to grant or deny a § 1404 transfer motion. Stewart, 487 U.S. 22, 29, 101 L. Ed. 2d 22, 108 S. Ct. 2239 (1988). The general rule is that forum-selection clauses are regularly enforced. See National Sch. Reporting Servs., Inc. v. National Sch. Ltd., 924 F. Supp. 21, 23 (S.D.N.Y. 1996); Elite Parfums, Ltd. v. Rivera, 872 F. Supp. 1269, 1271 (S.D.N.Y. 1995). A party resisting transfer to a forum designated in its contract must demonstrate "exceptional facts" indicating that transfer would be inappropriate. Weiss v. Columbia Pictures Television, 801 F. Supp. 1276, 1279 (S.D.N.Y. 1992).
Here, Counts I, II, and IV of the Complaint are premised on rights allegedly arising from the Agreement. As noted above, the Agreement contains a clause indicating that any controversy or claim arising out of it is to be settled by arbitration in San Raphael, a city located in the Northern District of California. At oral argument, plaintiff asserted that the Estate could not enforce this clause, as it was not directly a party to the contract. It is certainly true that, on its face, the Agreement appears to be between plaintiff and The Art Peddler. However, plaintiff repeatedly alleges in its Complaint that The Art Peddler is merely the Estate's agent with respect to the Agreement. See Cmplt. at PP 17, 32, 37, 45. This allegation, of course, is crucial to plaintiff's declaratory judgment claim: If the Estate were not bound to the terms of the Agreement, there would be little sense to the plaintiff's allegation that the Estate has wrongfully threatened to terminate it. See Cmplt. at PP 31-32. In short, therefore, plaintiff's position is that while the Estate is bound by the substantive terms of the Agreement, plaintiff is not bound by its forum-selection clause. This position is obviously untenable. Thus, only a showing of "exceptional facts" will relieve plaintiff of its obligation to resolve its claims in California.
B. Convenience of Witnesses
The convenience of prospective witnesses is often described as the most important consideration in § 1404 transfer analysis. See, e.g., In re Eastern District Repetitive Stress Injury Litigation, 850 F. Supp. 188, 194 (E.D.N.Y. 1994); Hernandez v. Graebel Van Lines, 761 F. Supp. 983, 988 (E.D.N.Y. 1991). Of the six parties in this case, all but one -- the plaintiff -- are from California. See Cmplt. at PP 1-4. It is at least likely, therefore, that the balance of convenience as to party witnesses tips in favor of transfer. Moreover, it appears that the majority of important non-party witnesses are located on the west coast: Nora Sage, as noted earlier, lives in Oregon, and Mulberry Neckwear is located in California. Plaintiff asserts that it may wish to call unspecified New York area retailers to testify as to the alleged similarity between its ties and those produced by Mulberry Neckwear. Such testimony would be relevant to Count II of the Complaint. However, if both companies sell their neckwear nationwide, as plaintiff asserts, retailers from California would presumably be able to testify on this subject as well. Therefore, the convenience of both party and non-party witnesses would be best served by transfer to California.
C. Operative Facts
Another factor important to the resolution of this motion is where the events that form the basis of the claim occurred. See Morales v. Navieras de Puerto Rico, 713 F. Supp. 711, 713 (S.D.N.Y. 1989). Plaintiff contends that the Agreement was negotiated both in California and New York, and therefore that this factor is neutral. However, the Complaint alleges much more than the mere existence of the Agreement, and the majority of other important events appear to have taken place on the west coast. For example, the alleged act forming the basis of Counts II, III and IV of the Complaint, the Estate's approval of Mulberry neckwear's tie sales, involved only California entities and presumably occurred in California. Similarly, the alleged principal/agent relationship between the Estate and The Art Peddler began when both Jerome Garcia and Nora Sage were residents of California. See Declaration of Deborah Koons Garcia at PP 2, 11, 12. The Estate/Art Peddler relationship -- the nature of which is central to the parties' dispute -- is one between a California entity and a resident of Oregon. This factor therefore tips significantly in favor of transfer as well.
D. Plaintiff's Choice of Forum
It is true that the plaintiff's choice of forum normally deserves "substantial consideration." A. Olinick & Sons v. Dempster Bros., Inc., 365 F.2d 439, 444 (2d Cir. 1966); Dwyer v. General Motors Corp., 853 F. Supp. 690, 694 (S.D.N.Y. 1994). However, the plaintiff's choice merits less deference when a majority of the operative facts occurred elsewhere, see Anadigics, Inc. v. Raytheon Co., 903 F. Supp. 615, 616 (S.D.N.Y. 1995), and much less when the claim arises from a contract with a forum selection clause specifying the proposed transferee district. See Jumara v. State Farm Ins. Co., 55 F.3d 873, 880 (3d Cir. 1995). Because both these qualifications are applicable here, the plaintiff's decision to bring suit in New York carries only moderate weight, certainly not enough to overcome that of the other factors I have discussed.
Because this suit could have been brought in the Northern District of California, and suit there would better serve the interests of convenience and justice, defendants' motion to transfer this action is granted.
Shira A. Scheindlin
Dated: New York, New York
January 13, 1998
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