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United States District Court, S.D. New York

February 27, 2004.


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.

I. Background

  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 Page 2 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 duties.

  II. Discussion

  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' Page 3 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 Page 4 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 (S.D.N.Y. 1998).

 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' Page 5 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 Page 6 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. Page 7

 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 non-transfer.

 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 Page 8 compel the attendance of these witnesses if this case is transferred to the Eastern District of Missouri, this factor also favors non-transfer.

 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 Page 9 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 Page 10 "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 Page 11 APA Excelsior III L.P. v. Premiere Technologies. Inc., 49 F. Supp.2d 664, 667 (S.D.N.Y. 1999).

  III. Conclusion

  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.


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