The opinion of the court was delivered by: DAVID HURD, District Judge
MEMORANDUM-DECISION and ORDER
Plaintiff Oriska Insurance Company ("Oriska") issued a workers'
compensation insurance policy to plaintiff U.S. Management, Inc. ("U.S.
Management"), a labor contractor. A subsequent agreement between Oriska
and defendant The Power P.E.O., Inc. ("Power"), added Power as an
additional insured. Plaintiffs claim, under the Lanham Act, that Power
misrepresented to its clients that it could issue and bind workers'
compensation policies through its agreement with Oriska.
Defendants move for transfer of venue, pursuant to
28 U.S.C. § 1404(a), to the U.S. District Court, Central District of
California. Plaintiffs oppose. Oral arguments were heard on this matter on
March 22, 2004, in Utica, New York. Decision was reserved.
Oriska is an insurance company that is authorized to transact workers'
compensation business in the state of New York with its principal place
of business in Oriskany, New York. U.S. Management is a New York labor
contractor based out of Brooklyn, New York. On May 1, 2002, Oriska
provided U.S. Management with a workers' compensation policy as a labor
contractor. Power is incorporated in New York, Arizona, and California,
with offices in New York City. It operates as a professional employer
organization providing payroll, tax reporting, and other administrative
services to its clients, including workers' compensation coverage. The
remaining defendants, small businesses located mainly in California, claim to be covered under U.S. Management's
workers' compensation policy through Power.
On June 17, 2002, following discussions between Power and Oriska, Power
was added as an additional insured to the already existing workers'
compensation policy between Oriska and U.S. Management. The contractual
obligations created by adding Power included Oriska's duty to pay the
workers' compensation claims of the employees of Power's clients, such as
the employer-defendants, in California and elsewhere. After Power was
added to the policy, it forwarded all payroll information for all of its
clients in California and Arizona to Oriska and U.S. Management.
Additionally, each month Power remitted premiums and a detailed report on
their clients to Oriska. Requests for certificates of insurance were made
to Oriska and U.S. Management, and each certificate request indicated the
client's name and address. Initially, U.S. Management issued
approximately 80 certificates of workers' compensation insurance to
Power's clients in California and Arizona. Oriska then took the process
in house and issued approximately 200-400 certificates of insurance to
Power's clients in California and Arizona. Oriska claims that Power
issued additional primary certificates of insurance itself, without
Oriska's knowledge, after Oriska provided Power with written guidelines
explaining that only Oriska was to issue primary certificates of
insurance to Power and its clients.
The contract between Oriska and Power also selected Stuart Baron
("Baron"), a California licensed Third Party Administrator
("Administrator"), who was to provide claims adjusting and administrative
On April 1, 2003, the California Department of Insurance issued a Cease
and Desist Order against Oriska and Power ordering them to refrain from
marketing, selling, or collecting premiums on any new or renewal workers' compensation
policies. The order was issued because Oriska, although licensed to write
workers' compensation policies in New York, was not authorized to do so
in California. More specifically, Oriska's unlicensed practice in
California was a violation of California Labor Code § 3700, which
requires that every employer secure workers' compensation insurance from
an insurer duly authorized to write workers' compensation insurance in
On May 7, 2003, the California Department of Insurance clarified its
Cease and Desist Order by explaining in a letter to counsel for Power
that while the order prevented Oriska and Power from selling, marketing,
or collecting premiums for any new or renewal workers' compensation
policy, they were still obligated to pay all workers' compensation claims
that existed prior to the May 1, 2003, expiration of Oriska's policy with
Power. On December 23, 2003, Administrator Baron informed employers and
injured workers who were clients of Power and insured by Oriska that it
was unable to pay injured employee claims and would turn over the claims
to the State of California for administration by the Uninsured Employers
On January 13, 2004, Oriska and U.S. Management filed their amended
complaint in the Northern District of New York under § 43 of the
Lanham Act, 15 U.S.C. § 1125 (a), which makes it unlawful for any
person, in connection with goods or services, to use in commerce any
"false designation of origin, false or misleading description of fact, or
false representation of fact, which is likely to cause confusion . . . or
mistake." Plaintiffs claim that Power, as an additional insured on U.S.
Management's policy, intentionally misrepresented in commerce that it was
authorized to issue and bind workers' compensation insurance provided by
Oriska, collect premiums, issue certificates verifying insurance
coverage, and adjudicate and pay claims when it was not authorized to do so. As a
result of the misrepresentation by Power, plaintiffs claim insureds,
potential insureds, and their employees were mistakenly led to believe
they were insured by Oriska. Plaintiffs further allege that they never
delegated to Power authority to issue and bind workers' compensation
insurance provided by Oriska through the policy issued to U.S.
Management. As a remedy, plaintiffs seek a declaratory judgment that
Power did not have the authority to bind coverage on behalf of plaintiffs
and an order requiring defendants to pay claims arising from certificates
of insurance issued by them.
Defendants move for transfer of venue to the U.S. District Court,
Central District of California, where a lawsuit filed by Power alleging
breach of contract is pending. Defendants essentially claim that transfer
of venue should be granted because the vast majority of communications
regarding the policy between the parties took place in California, and
that ninety-five of the defendants are residents of California, therefore
the convenience of the witnesses would be best served if the case were
transferred to California.
Under 28 U.S.C. § 1404(a), "[for] 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." Lynch v. National Prescription Administrators, No. 03
Civ. 1303 (GBD), 2004 WL 385156, at * 1 (S.D.N.Y. March 1, 2004). In
deciding whether to transfer, courts have considered the private interest
factors, which include:
(1) the convenience of the 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 interests of justice, based on
the totality of the circumstances.
Id., at * 2; see Constitution Reinsurance Corp. v.
Stonewall Ins. Co., 872 F. Supp. 1247, 1250 (S.D. N.Y. 1995). The
plaintiffs choice of forum is controlling unless the balance of