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LYNCH v. NATIONAL PRESCRIPTION ADMINISTRATORS

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

OPINION

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, ...


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