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United States District Court, S.D. New York

May 5, 2004.


The opinion of the court was delivered by: LAURA TAYLOR SWAIN, District Judge


At issue in this action is a Trademark License Agreement between Plaintiff and Defendant (the "Agreement"). Plaintiff contends that it had an exclusive license under the Agreement with respect to a certain trademark, and that Defendant breached the Agreement by granting other companies rights to use that trademark. Defendant now seeks 1) an order dismissing this case for improper venue; or, 2) an order transferring this case, pursuant to 28 U.S.C. § 1404(a), to the Northern District of Texas; or, 3) an order staying this action pending the outcome of an ongoing arbitration between the parties in Dallas, Texas. The Court has jurisdiction of this matter under 28 U.S.C. § 1332. The Court has considered thoroughly all submissions in connection with the instant motion. For the following reasons, Defendant's motion is granted in part and denied in part.

Venue is Proper

  It is undisputed that Plaintiff is a New York corporation with its principal place of business in New York, and that Defendant is a Delaware corporation with its principal place of business in Texas. (Compl. ¶¶ 1, 2; Def.'s Mot. ¶ 2.) A diversity action may be brought in a judicial district where any defendant resides, and a corporate defendant is deemed to reside in any judicial district where it is subject to personal jurisdiction at the time the action is commenced. 28 U.S.C.A. §§ 1391(a)(1) & (c) (West 1993 & Supp. 2003). Plaintiff has alleged facts supporting the existence of personal jurisdiction. Defendant has not contested personal jurisdiction, and by not raising it in his Rule 12(b) motion, has, pursuant to Rule 12(h)(1)(A) of the Federal Rules of Civil Procedure, waived any lack of personal jurisdiction defense. Accordingly, Defendant's application for dismissal on the basis of improper venue is denied.

  Transfer Application is Denied

  District courts consider the following factors in deciding whether to transfer an action to another district under 28 U.S.C. § 1404(a): 1) the convenience of witnesses; 2) the location of relevant documents and relevant 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 attendance of unwilling witnesses; 6) the relative means of the parties; 7) a forum's familiarity with governing law; 8) the weight accorded a plaintiffs choice of forum; and 9) trial efficiency and the interests of justice based on the totality of the circumstances. Reliance Insurance Co. v. Six Star. Inc., 155 F. Supp.2d 49, 56-57 (S.D.N.Y. 2001). A plaintiff's choice of forum should not be disturbed unless the balance of convenience and justice weigh heavily in favor of defendant's forum. Id. at 57 (internal quotation marks omitted).

  Defendant has not shown that the balance of convenience and justice weighs heavily in favor of Defendant's preferred forum. The factor of relative expense and access to documentary proof is at best equally balanced. The convenience of witnesses is also at best equally balanced, as there are non-party witnesses in Arkansas and New York. See Davis Aff, annexed to Def.'s Mot., ¶ 4; Goldman Aff, annexed to Roth Decl., ¶¶ 10-12. Furthermore, Defendant has not shown that the locus-of-operative-facts factor weighs in its favor: it is undisputed that the Agreement was negotiated and executed by Plaintiff in New York, that a substantial portion of Plaintiff's performance under the Agreement occurred in New York, and that the alleged breaches of the Agreement occurred in connection with alleged agreements between Defendant and at least three New York entities. In addition, the Agreement does not contain a forum selection clause indicating the parties' intent to submit exclusively to the jurisdiction of the courts of the State of Texas. Rather, the Agreement provides that disputes with respect to certain provisions of the Agreement, including the propriety of an attempt to convert an exclusive license to a non-exclusive license, shall be arbitrated by an American Arbitration Association panel in Dallas, Texas. No provision in the Agreement indicates the parties' intent to submit to the jurisdiction of Texas courts in connection with a breach of contract action such as the instant case. Defendant therefore has not shown that the convenience-of-the-parties factor tips in its favor. Because Defendant has failed to sustain its burden of demonstrating the propriety of transfer, Defendant's application for transfer to the Northern District of Texas is denied.

  Instant Action Shall be Placed on Suspense

  Plaintiff commenced an arbitration in Dallas, Texas pursuant to certain provisions of the Agreement on February 11, 2004. See Demand for Arbitration and Statement of Claim, Ex. C to Roth Decl. Under the Agreement, Plaintiff had an exclusive license with respect to certain licensed products. (Agreement, Ex. A to Goldman Aff, ¶ 2(a).) If certain conditions occurred, Defendant could convert the exclusive license to a non-exclusive license. (Id. ¶ 2(b).) Plaintiff contends in the arbitration proceedings that Defendant did not comply with the provisions of the Agreement concerning conversion. See Statement of Claim ¶¶ 30-39.

  In this action, Plaintiff contends that Defendant breached the Agreement by entering into licensing agreements with other jewelers. (Compl. ¶¶ 18-21.) Plaintiff's claims in this action are thus premised on its possession of an exclusive license; the propriety of Defendant's notice of conversion is therefore an issue central to the resolution of Plaintiff's claims.

  Plaintiff contends, Mem. in Opp. at 24, that "regardless of the propriety of the Notice of Conversion, [Defendant] breached the Agreement by authorizing. . . . third-parties to [sell licensed] jewelry before any determination by the arbitrator as to the propriety of the Notice of Conversion." Under ¶ 2(b) of the Agreement, however, if Plaintiff failed to contest a Notice of Conversion within 30 days of receiving one, Plaintiff would be deemed to have accepted conversion. The circumstances of the purported conversion are unclear. In any event, the Agreement provides that "[a]ny controversy or claim arising under Section[] 2(b). . . shall be settled by arbitration[.]" (Agreement ¶ 19.)) Moreover, the arbitrator's determination as to when, if at all, a proper conversion of the license occurred will be relevant to the scope of Plaintiff's damages.

  Judicial economy as well as the manifest intent of the parties would not be served if litigation of the question of whether Defendant breached the Agreement proceeds in this Court prior to the arbitrator's determination, in accordance with paragraph 19 of the Agreement, of the propriety of Defendant's attempt to convert the exclusive license at issue to a non-exclusive license. Accordingly, this action shall be placed on suspense pending the outcome of the Dallas arbitration proceeding. CONCLUSION

  Defendant's motion is granted to the extent that this action is hereby placed on suspense pending the outcome of the Dallas, Texas, arbitration proceeding, and is denied in all other respects. The parties are directed to inform the Court in writing every six months from the date hereof of the status of the arbitration.



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