United States District Court, S.D. New York
February 27, 2004.
PATRICK LYNCH, AS TRUSTEE OF THE HEALTH AND WELFARE FUND OF THE PATROLMEN'S BENEVOLENT ASS'N OF THE CITY OF NEW YORK AND THE RETIREE HEALTH & WELFARE FUND OF THE PATROLMEN'S BENEVOLENT ASS'N OF THE CITY OF NEW YORK, on behalf of himself and all other similarly situated Plans, Plaintiff, -against- NATIONAL PRESCRIPTION ADMINISTRATORS, EXPRESS SCRIPTS, INC. AND JOHN DOES 1 THROUGH 25, Defendants
The opinion of the court was delivered by: GEORGE DANIELS, District Judge
Plaintiff Patrick J. Lynch, as trustee of the Health and Welfare Fund
of the Patrolmen's Benevolent Association of the City of New York ("PBA")
and the Retiree Health and Welfare Fund of the PBA (collectively, the
"Funds") brings this suit alleging breach of fiduciary duty in violation
of the Employee Retirement Income Security Act ("ERISA"),
29 U.S.C. § 1001 et. seq. and common law. Defendants moved to transfer the
instant action to the Eastern District of Missouri pursuant to
28 U.S.C. § 1404(a). For the reasons stated below, defendants' motion to
transfer the case to the Eastern District of Missouri is denied.
Plaintiff Patrick Lynch, the Trustee for the Funds of the PBA, retained
defendant National Prescription Administrators ("NPA"), headquartered in
East Hanover, New Jersey, as its Pharmacy Benefit Manager ("PBM") from
1981 to August 2002. In this capacity, NPA worked with prescription drug
plan sponsors, insurance companies and/or third party administrators to
facilitate the supply of prescription drugs to participants whose plans
provide such benefits. Defendant Express Scripts, Inc. ("ESI"), also a
PBM, acquired NPA in April 2002 and served as
the Funds' PBM from April until August 2002. In his complaint,
plaintiff alleges that NPA and ESI breached their fiduciary duty under
ERISA and under common law by benefitting from various "pricing spreads"
and "kickbacks" from the drug manufacturers. Complaint at 2, ¶¶ 3, 4.
According to plaintiff, these activities allowed defendants to "enrich
themselves at the expense of the [Funds]" by receiving discounts and
rebates from drug manufacturers which defendants then converted for their
benefit.*fn1 Plaintiff further alleges that unnamed drug manufacturer
defendants aided and abetted NPA and ESI in breaching their fiduciary
Under 28 U.S.C. § 1404(a), "[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." This statute gives district courts discretion to transfer cases
according to "an individualized, case-by-case consideration of
convenience and fairness." Stewart Organization. Inc. v. Ricoh
Corp., 487 U.S. 22, 29, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988).
The inquiry on a motion to transfer is twofold.
The court must first determine whether the action
sought to be transferred is one that `might have
been brought' in the transferee court. Second, the
court must determine whether, considering the
`convenience of parties and witnesses' and the
interest of justice, a transfer is appropriate.
Wilshire Credit Corp. v. Barrett Capital Management
Corp., 976 F. Supp. 174 (W.D.N.Y. 1997). Plaintiff does not dispute
that the present action could have been brought in the Eastern District
of Missouri, as defendant ESI's principal place of business is located
within that district in St. Louis, Missouri.
In deciding the appropriate choice of forum, courts have looked to both
the "`private interest factors' affecting the convenience of the
litigants" and the "`public interest factors'
affecting the convenience of the forum." Piper Aircraft Co. v.
Reyno, 454 U.S. 235, 241, 102 S.Ct. 252, 258, 70 L.Ed.2d 419 (1981)
(citation omitted).*fn2 The private interest factors include:
(1) the convenience of witnesses; (2) the location
of relevant documents and relative ease of access
to sources of proof; (3) the convenience of the
parties; (4) the locus of operative facts; (5) the
availability of process to compel the attendance
of unwilling witnesses; (6) the relative means of
the parties; (7) the forum's familiarity with the
governing law; (8) the weight accorded the
plaintiffs choice of forum; and (9) trial
efficiency and the interest of justice, based on
the totality of the circumstances.
MBCP Peerlogic LLC v. Critical Path, Inc., 2002 WL 31729626
at *3 (S.D.N.Y.2002) (citing Constitution Reins. Corp. v. Stonewall
Ins. Co., 872 F. Supp. 1247, 1250 (S.D.N.Y. 1995)). See also
Dwyer v. General Motors Corp., 853 F. Supp. 690, 692 (S.D.N.Y. 1994);
Gulf Oil Corp. v. Gilbert, 330 U.S. 501
, 508, 67 S.Ct. 839,
91 L.Ed. 1055 (1947). While courts are to consider the above factors, there
is "no rigid formula for balancing these factors and no single one of
them is determinative." Citigroup, Inc. v. City Holding Company and
City Nat'l Bank, 97 F. Supp.2d 549, 561 (S.D.N.Y.2000) (citations
omitted). In addition, the Court must defer to the plaintiffs choice of
forum unless the balance of convenience and justice weigh heavily in
favor of defendant's proposed forum. Id.; Toy Biz, Inc. v.
Century Corp. 990 F. Supp. at 330 (S.D.N.Y.1998); Jannus Group,
Inc. v. Independent Container. Inc., 1998 U.S. Dist. LEXIS 13106 *9
(S.D.N.Y. Aug. 24, 1998).
Defendants advance several theories in favor of transfer. They contend
that this case is related to Minshew v. ESI, a case presently
pending before the United States District Court for
the Eastern District of Missouri, and should therefore be
transferred in the interest of judicial economy. They also contend that
the majority of the witnesses and relevant documents are in the Eastern
District of Missouri. They further argue that in class actions like the
present case, the plaintiffs choice of forum is entitled to minimal
weight. Berman v. Informix Corp., 30 F. Supp.2d 653, 659
A. Convenience of the Witnesses
The first factor, the convenience of witnesses, is considered the
single most important factor in the analysis of whether a transfer should
be granted. Aerotel Ltd. v. Sprint Corp., 100 F. Supp.2d 189,
197 (S.D.N.Y. 2000). The moving party must clearly specify the key
witnesses to be called and must make a general statement of what their
testimony will cover. Factors Etc, v. Four Seasons Hotels.
Ltd., 579 F.2d 215. 218 (1978). Defendants contend that the location
of the primary witnesses favors transfer to the Eastern District of
Missouri. Defendants provide supporting affidavits naming seventeen
members of the ESI Senior Management Team in St. Louis as potential
witnesses, and state that the "management activities" of NPA have been
transferred to ESI in St. Louis. Cordes Affidavit ("Aff."), ¶¶ 1, 3-8;
Zimmerman Aff., ¶ 2. Although the number of witnesses named seem to
favor defendants' argument, "[determining] the convenience of a forum to
witnesses requires more than simply adding up the number of potential
witnesses in the alternative fora. The nature and importance of a
potential witness's testimony also inform the Court's determination."
Gaarrel v. NYLCare Health Plans, Inc. & NYLCare Health Plans of
the Mid-Atlantic, Inc., 1999 WL 459925 (S.D.N.Y.
1999) (citing Vaughn v. American Basketball Assn.,
419 F. Supp. 1274, 1276 (S.D.N.Y. 1976).
Defendants contend that most of NPA's senior employees are no longer
employed by ESI. They deny knowledge of any NPA witnesses in New York.
Despite the defendants'
contentions, plaintiff asserts that former NPA employees comprise
most of the key witnesses and that many of them continue to reside in the
New York New Jersey area.*fn3 Plaintiff further argues that NPA
continues to employ other key witnesses and is still located in East
Hanover, New Jersey, approximately twenty miles from this Court. Because
ESI headquarters are located in St. Louis, at least some records and
witnesses relevant to this case may be found in Missouri. However,
defendants have not established that convenience of the witnesses as a
whole will be increased through transfer of venue. The defendants fail to
consider that NPA, located in New Jersey, served as the pharmacy benefit
manager of the NYC PBA Funds for twenty years prior to its acquisition by
ESI. Moreover, although defendants argue that discovery and trial will be
costly, disruptive and will involve "high-level managers," they fail to
explain precisely in what manner its own employees would be
inconvenienced or their business operations disrupted. Memorandum in
Support of Defendants' Motion for Transfer Under 28 U.S.C. § 1404(a)
("Defendants' Brief) at 10-12. The convenience of the witnesses,
therefore, does not favor transfer of this case from this jurisdiction.
B. Location of Documents and Access to Sources of Proof
Courts have held that "[t]he location of documents factor is neutral
`[in] today's era of photocopying, fax machines and Federal Express,'"
Aerotel, Ltd. v. Sprint Corp., 100 F. Supp.2d 189, 197 n.2
(S.D.N.Y. 2000) (quoting Coker v. Bank of America, 984 F. Supp. 757,
766 (S.D.N.Y. 1997). Here, defendants argue that because ESI's
principal place of business is in St. Louis and NPA "records, practices,
and governance" have been shifted to ESI headquarters, the
cost to them in terms of "time, money and disruption of their
business operations, particularly in arranging for virtually all the
sources of proof in the case to be transported to New York" would far
outweigh the cost to plaintiff in attending trial in Missouri.
Defendants' Brief at 10-11. However, defendants do not specify the nature
and extent of relevant documents located in Missouri. They also fail to
demonstrate that the amount of physical evidence situated in Missouri is
so overwhelming that it is impractical and unduly burdensome to ship it
back to, New York. Moreover, defendants ignore plaintiffs assertion that
some evidence is still located in NPA's East Hanover, N.J. offices. Since
documents can be transmitted to New York, and it is possible that many
documents may still be retained by NPA in New Jersey, this factor does
not favor transfer.
C. Convenience of the Parties
Plaintiff argues that the NYC PBA Funds and their material witnesses
are located in or near the Southern District of New York. Defendants
contend that ESI employees are "likely" to be primary witnesses and that
their testimony is "likely" to be "central" to this case. Defendant's
Brief at 10. Defendants further contend that it would be both expensive
and disruptive for ESI's employees to attend two separate trials, one
"halfway across the country" from ESI headquarters. Id.
Defendants have not established that they shoulder a greater burden in
litigating this case in plaintiffs chosen venue than plaintiff would if
this case were litigated in Missouri. Given that plaintiff Lynch is in
his home forum and NPA, plaintiff pharmacy Benefit Manager of two
decades, is within twenty miles of this District, a transfer to Missouri
would "merely switch the burden of inconvenience from one party to the
other." Schieffelin & Co. v. Jack Co. of Boca, Inc.
725 F. Supp. 1314, 1322 (S.D.N.Y. 1989). The convenience of the parties,
therefore, if not neutral, does not clearly swing in defendants' favor.
D. Locus of Operative Facts
"The location of the operative events is a primary factor in
determining a § 1404(a) motion to transfer." ZPC 2000. Inc. v.
SCA Group. Inc., 86 F. Supp.2d 274 (S.D.N.Y. 2000) (quoting
Smart v. Goord, 21 F. Supp.2d 309 (S.D.N.Y. 1998). Although
defendants argue that `Virtually all of the `operative facts' of this
lawsuit occurred in Missouri and elsewhere, but not in New York,'*fn4
many of the facts necessary to determine whether NPA and ESI were,
fiduciaries, arose in New York. Memorandum of Law in Opposition to
Defendants' Motion to Transfer ("Plaintiffs Brief") at 10. Furthermore,
plaintiff argues that the policies and practices of NPA that are in
question were allegedly implemented in New York, where the NYC PBA Funds
are located. Id. This factor, therefore, also favors
E. Availability of Process
The fifth factor, the availability of process to compel the attendance
of unwilling witnesses, also favors the plaintiffs choice of forum.
Defendants in this case do not directly argue that process to compel
unwilling witnesses is an issue. Plaintiff, on the other hand, asserts
that the key non-party witnesses are primarily former NPA employees. They
cannot be compelled to testify in an Eastern District of Missouri action
under Fed.R.Civ.P. 45, since the majority of these non-party witnesses
reside outside of that district. Plaintiff identifies specific non-party
witnesses, who, because they reside within 100 miles of the Southern
District of New York, are subject to subpoena by this Court pursuant to
Fed.R.Civ.P. 45(c)(3) and can thus be compelled to appear pursuant to
Fed.R.Civ.P. 45(c)(3)(A)(ii).*fn5 As there is no process to
compel the attendance of these witnesses if this case is
transferred to the Eastern District of Missouri, this factor also favors
F. Relative Means of the Parties
"Where a disparity exists between the means of the parties, a court may
consider the relative means of the parties in determining venue."
Everest Capital Ltd. V. Everest Funds Mgmt., L.L.C.,
178 F. Supp.2d 459, 467 (S.D.N.Y. 2002) (quoting Aerotel, Ltd. v. Sprint
Corp., 100 F. Supp.2d 189, 197 (S.D.N.Y. 2000)). Defendants do not
offer any argument as to this factor. Plaintiff argues that he is Trustee
for a health benefits fund serving the PBA, which represents both active
and retired New York City Police Officers. Plaintiff maintains that a
large disparity exists in this case. In contrast to the PBA, a non-profit
organization, ESI is a multi-billion dollar corporation that grossed over
$820 million in profits in 2002. Plaintiffs Brief at 13. It is
uncontested, therefore, that defendants' resources are greater than
plaintiffs and that litigation in the Eastern District of Missouri would
pose a much greater relative financial burden on plaintiff than the
burden on defendants to litigate in this district. Id. at
467-68 (finding that the relative means factor weighed against the party
with the greater resources).*fn6
G. Forum's Familiarity with Governing Law
Plaintiff argues that because they have asserted violations of New York
state law, the chosen forum of New York would best be able to apply that
law. Plaintiffs Brief at 12. Defendants, however, dispute that New York
law would apply to all of these claims, arguing that because the case has
been presented as a class action, the laws of numerous states may apply.
Transcript of Oral Argument, July 9, 2003 at 33. They further argue that
"[I]n this day of on-line
legal research, a federal judge in Missouri is well equipped to
apply the existing laws" to the present action, under "ERISA or state
law." Defendants Reply Memorandum in Support of Their Motion for Transfer
at 3. This logic applies equally to a federal judge in New York, where,
in the absence of unique complex state law issues, a New York court would
be "capable of applying" the laws of another state. S-Fer Intern,
Inc. v. Paladion Partners, Ltd., 906 F. Supp. 211, 215-16 (S.D.N.Y.
1995) (citing Elite Parfums, Ltd. v. Rivera, 872 F. Supp. 1269
(S.D.N.Y.1995)). Taking as true that the laws of the fifty states will
apply, this factor does not weigh in favor of transferring this case to
Missouri, as both the Missouri and New York courts will be capable of
applying the varying laws of the states.
H. Plaintiffs Choice of Forum
"The plaintiffs choice of forum is ordinarily entitled to `considerable
weight.'" Goggins v. Alliance Capital Management L.P.,
279 F. Supp.2d 228, 232 (S.D.N.Y. 2003)(citing In re Nematron
Corp. Sec. Litig., 30 F. Supp.2d 397, 405 (S.D.N.Y. 1998)).
Defendants argue, however, that plaintiffs choice of his home forum is
weakened both because plaintiff seeks to represent a national class and
because the operative facts of the case have no "material connection with
this district." Defendants' Brief at 9. Plaintiff counters that the
principal events giving rise to the instant case occurred between the NYC
PBA Funds and NPA within a short distance of this District. Plaintiff
also asserts that the choice of his home forum indicates that it is more
likely he has taken pains to avoid inconvenience and annoyance to the
parties. Plaintiffs Brief at 11. Given that NPA was Pharmacy Benefit
Manager to the PBA of the City of New York for more than twenty years,
and the activities of the NPA with respect to the PBA is at issue, it is
clear that a "material connection" exists between New York and the
underlying transactions of this claim. See Berman. 30 F. Supp.2d
at 659 (equating "material connection" to
"significant contact between the forum state and the underlying
events allegedly underlying the claim). Consequently, the possible
certification of this case as a class action creates fewer issues
weighing against according deference to plaintiffs choice of forum. Thus,
because the balance of the factors do not strongly favor defendants at
this point, this factor favors non-transfer. Id. (finding that
plaintiffs choice of forum was outweighed by the factors which
overwhelmingly favored defendant).
I. Trial Efficiency and the Interest of Justice
"The interest of justice is a broad concept which requires the court to
consider the totality of the circumstance presented."
Capital Venture Int'l. v. Network Commerce. Inc., No. 01 Civ.
4390, 2002 WL 417246, at *1 (S.D.N.Y. Mar. 15, 2002) (emphasis added).
Defendants rely heavily on their argument that the instant case is
"related" to Minshew, an action pending in the transferee
court. The two cases are certainly similar in that they share some of the
same factual questions and legal issues. As plaintiffs point out,
however, Minshew does not name NPA as a defendant, does not
involve any employee benefit plans that employed NPA as their PBM, was
brought by an individual participant of a plan, and does not include the
consumer fraud claim or common law claims on behalf of non-ERISA plans.
Moreover, "[w]hile the existence of related litigation in another
district is a factor that favors transfer . . . it is only one factor to
consider and balance with all the other factors on a case-by-case basis."
Queens Legal Ser. Corp. v. Legal Ser. Corp., 2000 WL 1093001 at
*4 (S.D.N.Y. 2000) (quoting Muller v. Walt Disney Productions,
822 F. Supp. 1033, 1037 (S.D.N.Y. 1993)). Here, where "[a] district court
maintains broad discretion in deciding whether to transfer a case `in the
interest of justice,'" and where the totality of the circumstances weigh
in favor of remaining in the plaintiffs chosen forum, any relatedness of
the instant case to Minshew does not compel transfer to the
Eastern District of Missouri. See
APA Excelsior III L.P. v. Premiere Technologies. Inc.,
49 F. Supp.2d 664, 667 (S.D.N.Y. 1999).
In sum, the convenience of the majority of relevant trial witnesses,
the ability to compel the attendance of unwilling witnesses, the
convenience of the plaintiff and relative inconvenience to the defendant,
the locus of operative facts, and the relative means of the parties
supports keeping this case in the Southern District of New York.
Defendant has failed to meet its burden of demonstrating that the
transfer to the Eastern District of Missouri is warranted in the interest
of justice. Defendant's motion to transfer, therefore, is denied.