United States District Court, N.D. New York
February 12, 2004.
EXCELSIOR COLLEGE, Plaintiff, -v- CHARLES M. FRYE, PROFESSIONAL DEVELOPMENT SYSTEMS SCHOOL OF HEALTH SCIENCES, and WEST HAVEN UNIVERSITY, Defendants
The opinion of the court was delivered by: DAVID HURD, District Judge
MEMORANDUM-DECISION and ORDER
Plaintiff Excelsior College ("Excelsior") filed a complaint in this
matter on February 20, 2003, alleging copyright infringement, Lanham Act
violations, false advertising, and various related causes of action. In
lieu of answering defendants Charles M. Frye, ("Frye"), Professional
Development Systems School of Health Sciences ("PDS"), and West Haven
University ("West Haven") (collectively "defendants") moved to dismiss
the complaint for lack
of personal jurisdiction or, in the alternative, to transfer venue
to the Southern District of California.*fn1 Oral argument was heard on
July 25, 2003, in Albany, New York. Decision was reserved.
The following facts are as set forth in the complaint unless otherwise
noted. Excelsior is a New York corporation with its principal place of
business in Albany, New York. Excelsior is chartered by the Board of
Regents of the University of the State of New York. It offers associate,
baccalaureate, and masters degrees in a variety of subject areas
including nursing, which is at issue here. Its associate and
baccalaureate degree programs in nursing are accredited by the National
League for Nursing Accrediting Commission.
Excelsior's degree programs, including its nursing degrees, are
presented in a non-traditional manner. That is, students are provided
with a "content guide" from which they study and testing is done at
regional testing centers. Students receive credit when a test is
complete, and when sufficient credits are accumulated a degree is
conferred. There are no teachers, no classrooms, and no clinical
training. Excelsior's trademarks, content guides, and examinations for
the nursing programs are allegedly protected by copyright.
PDS and West Haven are California corporations, doing business at
Cypress, California. Frye was the sole proprietor of each of these
entities before their incorporation. Frye asserts that the corporate
forms of PDS and West Haven neither conduct business nor have any assets.
Defendants assert that the only business being conducted is by the sole
Defendants also offer various distance-learning degree programs,
including nursing. They offer training programs, including classroom
teaching, in order to prepare students for testing by other entities,
such as Excelsior. Students pay a fee to defendants, as well as enroll
(and pay the tuition fee) in another educational institution from which
the degree will eventually be granted.
Excelsior alleges that defendants used its content guide in developing
PDS and West Haven's nursing curricula, and copied a substantial portion
of the content guide and used it in a submission to obtain approval of
PDS and West Haven programs from the appropriate California higher
education authorities. Excelsior further alleges that PDS and West Haven
University have embedded certain codes into their web sites' source code
so that an internet search for "Excelsior College" yields the PDS and
West Haven web sites. Excelsior contends that these actions infringe its
rights as set forth in the allegations of the complaint.
A. Motion to Dismiss for Lack of Personal
In order to determine whether personal jurisdiction exists, it must be
determined if defendants fall within the reach of New York's long-arm
statute and if so whether such jurisdiction comports with due process, by
meeting the minimum contacts and reasonableness requirements set forth in
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286
, 100 So.
Ct. 559 (1980). Plaintiff need only make a prima facie showing of
personal jurisdiction to defeat a dismissal motion. Editorial
Musical Latino Americana. S.A. v. MAR Int'l Records, Inc.,
829 F. Supp. 62, 64 (S.D.N.Y. 1993). Affidavits may be considered and
the facts must be viewed in the light most favorable to plaintiff.
Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55
, 57 (2d
1. New York's Long Arm Statute
Personal jurisdiction over a defendant is determined by the law of the
jurisdiction in which the district court sits, in this instance, New
York. Id. New York's long arm statute provides in relevant
a court may exercise personal jurisdiction over
any non-domiciliary . . . who in person or through
an agent: 1. transacts any business within the
state or contracts anywhere to supply goods or
services in the state; or 2. commits a tortious
act within the state . . . or 3. commits a
tortious act without the state causing injury to
person or property within the state.
N.Y. C.P.L.R. § 302(a) (McKinney 2001) ("CPLR"). "Under [CPLR
§ 302], a single transaction of business is sufficient to confer
jurisdiction, even if the defendant never entered New York, `so long as
the defendant's activities [in New York] were purposeful and there is a
substantial relationship between the transaction and the claim
asserted.'" Motorola Credit Corp. v. Uzan, 274 F. Supp.2d 481,
575 (S.D.N.Y. 2003) (quoting Kreutter v. McFadden Oil Corp.,
71 N.Y.2d 460, 467; 527 N.Y.S.2d 195, 198-99; 522 N.E.2d 40, 43 (1988)).
Defendants contend that plaintiff cannot satisfy the requirements of
New York's long arm statute. However, Excelsior points to the defendants'
web site to show that they transact business within the state of New
York, with students who reside here. West Haven has had at least three
students and PDS has had at least seven students who resided in New York
State. The web site provides chat rooms for student communications, a
study hall, and on-line training sessions. It permits students to log in
to their personal account and conduct transactions relating to that
account including enrollment, payment of fees, and obtaining course
materials. These facts constitute a prima facie showing that defendants
transact business within the state. See Citigroup Inc. v. City
Holding Co., 97 F. Supp.2d 549, 565-66 (S.D.N.Y. 2000) (finding
specific personal jurisdiction under CPLR § 302(a)(1) where
defendant's web sites were interactive, allowing, for example, customers
in New York to apply for loans and chat on-line). Moreover, if, as
plaintiff alleges, defendants' nursing study guides infringe plaintiff's
work, then offering them for sale in New York (via the web site) is
sufficient to confer personal jurisdiction over the defendants. See
Editorial Musical Latino Americana. S.A., 829 F. Supp. at 64-65;
see also Citigroup Inc., 97 F. Supp.2d at 567 (finding that an
on-line chat "transmission of messages that contain allegedly infringing
marks to New York residents" was an attempt to pass off the offending
mark within New York State, therefore supporting jurisdiction under CPLR
§ 302(a)(2)). Finally, PDS and West Haven admit that they have
enrolled ten New York residents in programs. Further, they derive
significant income in interstate commerce, through the interactive web
site. Thus they are subject to jurisdiction under the contract anywhere
to provide goods and services within the state clause of CPLR §
302(a)(3). See Editorial Musical Latino Americana. S.A.,
832 F. Supp. at 65. Defendants are subject to personal jurisdiction under the
New York long-arm statute.
2. Compliance with Due Process
After determining that the Northern District of New York may exercise
personal jurisdiction over defendants via New York's long arm statute,
further analysis of whether such an exercise of long-arm jurisdiction
comports with due process is required. Two requirements must be met in
order to satisfy due process.
First, the defendant must have "certain minimum
contacts [with the forum] . . . such that
maintenance of the suit does not offend
traditional notions of fair play and
substantial justice." U.S. Titan, Inc. v.
Hua Shipping Co., 241 F.3d 135, 152
(2d Cir. 2001). Second, "the assertion of personal
jurisdiction [must] comport with traditional
notions of fair play and substantial justice
that is, . . . it [must be] reasonable
under the circumstances of the particular case."
Bank Brussels Lambert v. Fiddler Gonzalez
& Rodriauez, 305 F.3d 120, 129 (2d Cir.
Motorola Credit Corp. v. Uzan, 274 F. Supp.2d at 576.
a. Minimum Contacts Requirement
As to the first requirement, "it is well established that New York's
long arm requirement of doing business is more restrictive than the
requirement of minimum contacts." Purdue Pharma L.P. v. Impax Labs.,
Inc., No. 02 Civ. 2803(SHS), 2003 WL 22070549, at * 4 (S.D.N.Y.
Sept. 4, 2003): see Andrulonis v. United States, 526 F. Supp. 183,
189 (N.D.N.Y. 1981). Since Excelsior established the requirements of
the New York long arm statute, it likewise has that defendants have
sufficient minimum contacts with the state of New York to satisfy the
first prong of the due process test.
b. Reasonableness Requirement
In assessing the reasonableness inquiry, five factors must be
(1) the burden that the exercise of jurisdiction
will impose on the defendant; (2) the interests of
the forum state in adjudicating the case; (3) the
plaintiff's interest in obtaining convenient and
effective relief; (4) the interstate judicial
system's interest in obtaining the most efficient
resolution of the controversy; and (5) the shared
interest of the states in furthering social
Metropolitan Life Ins. Co. v. Robertson-Ceco Corp.,
84 F.3d 560, 568 (2d Cir. 1996). Once a plaintiff has established minimum
contacts, jurisdiction will be exercised unless the "defendant presents
`a compelling case that the presence of some other considerations would
render jurisdiction unreasonable.'" Id. (quoting Burger
King Corp. v. Rudzewicz, 471 U.S. 462
, 477, 105 S.Ct. 2174, 2185
Some burden will be imposed upon defendants if they are required to
defend this action in the Northern District of New York. They contend
that appearance of crucial witnesses will be hindered and excessive and
unnecessary legal fees and costs will be incurred. Although defendants
give no specifics, it can be assumed that since Frye resides in and the
businesses are located in California, this factor weighs in defendants'
favor. However, for the same reasons that this forum imposes a burden
upon defendants, plaintiffs will similarly be affected if personal
jurisdiction in New York is found to be improper. Thus, these two factors
Defendant contends that New York has little interest in adjudicating
this matter since the majority of claims are brought pursuant to federal
copyright, trademark, and unfair competition laws. On the other hand,
plaintiff employs hundreds of New York residents, whose livelihood may be
threatened by infringement, and New York has an interest in resolving
matters concerning plaintiff's core business assets, trademarks, trade
secrets, and copyrights. Further, New York has an interest in protecting
college age residents from predatory trade practices. The New York
interest in adjudicating the matter weighs in favor of finding
Resolution of this matter would be of the same efficiency whether here
or in California. Plaintiffs records and witness are here, while
defendants' records and witnesses are there.
Defendants argue that the social policy of freedom of expression is
implicated by this case. Frye alleges that this lawsuit was filed just
sixteen days after he provided testimony criticizing Excelsior before the
California Board of Registered Nursing, which was considering revoking
its approval as an accredited nursing school. Even taking the allegation
as true for
the purposes of this motion, and agreeing with the assertion that
the social policy of freedom of expression is important, it is
inconceivable how accepting jurisdiction in New York would undermine that
social policy. Thus, this factor does not weigh in defendants' favor.
Consideration of the five factors reveals that defendants have failed
to meet their burden of establishing that traditional notions of fair
play and substantial justice would be offended by retaining jurisdiction
Excelsior has established that defendants have sufficient contacts with
this forum such that exercising jurisdiction comports with due process.
Defendants failed to show that exercising jurisdiction would be
unreasonable and therefore offensive to due process.
B. Transfer of Venue to Southern District of
A change of venue may be ordered, at the discretion of the court,
"[f]or the convenience of parties and witnesses, in the interest of
28 U.S.C. § 1404(a); Golconda Mining Corp. v.
Herlands, 365 F.2d 856
, 857 (2d Cir. 1966); Lappe v. American
Honda Motor Co., Inc., 857 F. Supp. 222, 229 (N.D.N.Y. 1994),
aff'd, 101 F.3d 682 (2d Cir. 1996). In determining whether to
transfer an action, the court must consider
"[T]he convenience of the parties; the convenience
of the witnesses; the relative ease of access to
the sources of proof; the availability of the
process to compel attendance of unwilling
witnesses; the cost of obtaining willing
witnesses; practical problems that make trial of a
case easy, expeditious, and inexpensive; and the
interest of justice."
Lappe, 857 F. Supp. at 229 (quoting Aquatic
Amusement Assocs., Ltd, v. Walt Disney World Co., 34 F. Supp. 54, 56
(N.D.N.Y. 1990)). The convenience of non-party witnesses is generally the
most important factor. Id., at 234; Coultman v. Nat'l R.R.
Passenger Corp., 857 F. Supp. 231, 234 (E.D.N.Y. 1994); Dwyer
v. General Motors Corp., 853 F. Supp. 690, 692 (S.D.N.Y. 1994);
Gilbert v. Wilson, 821 F. Supp. 857, 861 (N.D.N.Y. 1993);
Arrow Elecs., Inc. v. Ducommun Inc., 724 F. Supp. 264, 265
(S.D.N.Y. 1989); Pellegrino v. Stratton Corp., 79 F. Supp. 1164,
1166-67 (N.D.N.Y. 1988). Plaintiffs' choice of forum is ordinarily
given Deference, unless there is little connection between the forum and
the operative facts. Lappe, 857 F. Supp. at 229;
Coultman, 857 F. Supp. at 236; Dwyer, 853 F. Supp. at
694; Arrow Elecs., Inc., 724 F. Supp. at 265, 267. The relative
means of the parties may also be considered. Lappe,
857 F. Supp. at 230. The moving party bears the heavy burden of establishing
that the motion to transfer should be granted. Factors Etc., Inc. v.
Pro Arts, Inc., 579 F.2d 215, 218 (2d Cir. 1978); Lappe,
857 F. Supp. at 229.
Frye resides in the Southern District of California, and the two
corporate defendants have principal places of business there. Excelsior
is located within the Northern District of New York. However, Excelsior,
although based in New York, maintains Regional Assessment Centers in Long
Beach, Orange, and Los Angeles, all located within the Southern District
Defendants' witnesses would be inconvenienced if the venue for this
matter remains in the Northern District of New York. Frye, a party
witness, has been the sole proprietor of the businesses at issue, and his
testimony would be important to both parties. Defendants also
name several non-party witnesses, such as the in-house service
manager, who would testify as to defendants' operations, and who would be
inconvenienced by a trial in New York.
Plaintiffs witnesses, located in New York, would similarly be
inconvenienced by a change of venue to the Southern District of
California. Further, plaintiff argues that litigation in California would
be more costly for all parties due to higher costs generally there than
in central New York. (See Miranda Decl. ¶ 8 (citing the
American Intellectual Property Law Assoc. economic survey published in
2001 for the proposition that the cost of litigating the intellectual
property causes of action in this matter in California would be at least
double the cost of litigation here).)
Likewise, defendants' documents and other sources of proof are located
in California, while plaintiff's documents and other proof are located
here. However, Excelsior does maintain offices and employees in
California, which would facilitate access to its documents and other
sources of proof there.The locus of operative facts appears to be in the
Southern District of California. Defendants reside there, and the alleged
infringement occurred there and allegedly infringing materials were
disseminated from there. Allegedly infringing material was submitted to
the California Bureau for Private Postsecondary and Vocational Education
("Bureau") in California.
Defendants argue that many non-party student witnesses would not be
subject to subpoena to testify in New York. They argue that the testimony
would relate to the alleged infringement and procurement and use of
plaintiffs claimed trade secrets. Defendants also
contend that employees of the Bureau who would testify as to
receipt of allegedly infringing materials could not be compelled to
testify in New York.
The relative means of the parties appears not to weigh on either side,
as both seem to have significant resources. Similarly, both forums have
familiarity with the governing law of copyright and trademark
infringement. It is also noted that plaintiffs choice of forum in the
Northern District of New York would ordinarily be given substantial
weight, except where, as here, there is little connection between the
operative facts and this forum. See Lappe 857 F. Supp. at 229.
In consideration of all the factors as set forth above, and giving due
consideration to the inconvenience to non-party witnesses if venue were
to remain here, it is apparent that in order to promote efficient
resolution of this matter and in the interest of justice, venue should be
transferred to the Southern District of California.*fn3
Personal jurisdiction over defendants is conferred pursuant to New
York's long-arm statute, CPLR § 302. Such jurisdiction comports with
due process in that defendants have sufficient minimum contacts with New
York and exercising jurisdiction is reasonable under the circumstances.
However, given the totality of the circumstances and in the interest of
justice a change of venue to the Southern District of California is
Accordingly, it is
1. Defendants' motion to dismiss for lack of personal jurisdiction is
2. Defendants' motion to transfer venue is GRANTED; and
3. This matter is transferred to the Southern District of California.
IT IS SO ORDERED.