United States District Court, S.D. New York
November 17, 2005.
DEREK OUBRE, Plaintiff-Counterclaim Defendant,
CLINICAL SUPPLIES MANAGEMENT, INC., Defendant Counterclaim Plaintiff.
The opinion of the court was delivered by: LOUIS STANTON, District Judge
OPINION AND ORDER
Derek Oubre, a New York resident,*fn1 filed a complaint in
New York Supreme Court, New York County, against his former
employer, Clinical Supplies Management, Inc. ("CSM"), a North
Dakota corporation with its principal place of business in Fargo,
North Dakota. CSM removed the case to this court and asserted
several counterclaims. CSM now moves pursuant to
28 U.S.C. § 1404(a) for a change of venue to the United States District Court
for the District of North Dakota.
CSM assists pharmaceutical companies with clinical drug trials.
Oubre alleges that he and CSM signed a written employment contract in November 2001, whereby CSM agreed to
employ him as a financial consultant for thirty-six months at
$50.00 per hour plus an annual stipend for board service and
reimbursement of business expenses. CSM also allegedly granted
him options to acquire 11,112 shares of CSM stock. Oubre claims
CSM breached the 2001 employment agreement by firing him in March
2004 and by failing to pay him his salary and grant him the stock
CSM alleges that Oubre forged the signature of Gerald Finken,
CSM's chief executive officer, on the employment and stock option
contracts. According to CSM, Oubre worked for CSM from November
2001 to September 2003 pursuant to an unwritten agreement, which
did not entitle him to stock options.
In November 2003, while still employed by CSM but allegedly
without its knowledge, Oubre became a director and chief
financial officer of LaGray Chemical Corp., an Illinois
pharmaceutical company based in Chicago and Ghana.
Oubre and CSM acknowledge they made an employment agreement in
December 2003, whereby Oubre became CSM's full-time chief
financial officer and interim chief operating officer as of
September 1, 2003, and CSM granted him ten percent of CSM stock.
In turn, Oubre was to generate a business plan for CSM's
packaging and labeling operation, and prepare CSM's financial statements, among other things. Oubre and CSM each claim that the
other breached the 2003 employment agreement.
Oubre also signed non-competition and confidentiality
agreements in September 2003. CSM claims he breached these
agreements and diverted corporate opportunities from CSM, in
violation of his fiduciary duty of loyalty, while he was employed
by LaGray. Oubre contends that CSM officers were aware of his
relationship with LaGray, and that LaGray does not compete with
II. Motion to Transfer
Section 1404 (a) of title 28 of the United States Code provides
that, "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." The action could have been brought in the District of
North Dakota because venue would be proper and CSM would be
subject to process there.
In determining whether venue should be transferred to the
District of North Dakota for the convenience of parties and
witnesses, the relevant factors include:
(1) the convenience of witnesses; (2) the location of
relevant documents and the relative ease of access to
sources of proof; (3) the convenience of the parties; (4) the locus of
the 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 the governing law; (8) the weight
accorded a plaintiff's choice of forum; and (9) trial
efficiency and the interests of justice, based on the
totality of the circumstances.
Lewis v. CRI, Inc., No. 03 Civ. 651 (MBM), 2003 WL 1900859, at
*2 (S.D.N.Y. Apr. 17, 2003). The court has broad discretion to
balance these factors and to consider the evidence of convenience
and fairness on a case-by-case basis. In re Cuyahoga Equip.
Corp., 980 F.2d 110
, 117 (2d Cir. 1992), citing Stewart Org.,
Inc. v. Ricoh Corp., 487 U.S. 22
, 29, 108 S. Ct. 2239, 2243,
101 L. Ed. 2d 22 (1988).
"Absent a clear cut and convincing showing by defendant that
the balance of convenience weighs strongly in favor of the
transferee court, plaintiff's choice of forum will not be set
aside." Gen. State Auth. (of Pa.) for Benefit of
Crompton-Richmond Co., Inc. v. Aetna Cas. & Sur. Co.,
314 F. Supp. 422, 423 (S.D.N.Y. 1970); see also Ford Motor Co. v.
Ryan, 182 F.2d 329, 330 (2d Cir. 1950) (defendant must make a
strong case for transfer). III. Discussion
A. Convenience of Witnesses
The convenience of witnesses is a major factor in evaluating a
transfer motion. 800-Flowers, Inc. v. Intercontinental Florist,
Inc., 860 F. Supp. 128, 134 (S.D.N.Y. 1994). "When weighing the
convenience of the witnesses, courts must consider the
materiality, nature, and quality of each witness, not merely the
number of witnesses in each district." Royal & Sunalliance v.
British Airways, 167 F. Supp. 2d 573, 577 (S.D.N.Y. 2001). To
enable the court to make that evaluation, a movant relying on the
convenience of witnesses "must clearly specify the key witnesses
to be called and must make a general statement of what their
testimony will cover." Factors Etc., Inc. v. Pro Arts, Inc.,
579 F.2d 215, 218 (2d Cir. 1978).
(1) LaGray Witnesses
Oubre and CSM both recognize the importance of testimony from
LaGray employees Paul Lartey and Alexandra Graham. However,
because they are both based in Ghana (Lartey Aff. ¶ 8; Graham
Aff. ¶ 8) and will have to travel a long distance to either
proposed venue, they are not considered in the venue transfer
analysis. Varsity Spirit v. I.I.P. Inc., No. 03 Civ. 2069
(LLS), 2003 WL 22772638, at *2 (S.D.N.Y. Nov. 24, 2003) (convenience of witnesses who do not reside in either proposed
forum does not significantly affect the transfer analysis).
(2) CSM's Witnesses
CSM's North Dakota witnesses are four of its officers and
employees, one former officer, its outside counsel and two
accountants from Eide Bailly, CSM's outside auditors.*fn2
Oubre and CSM both recognize the importance of testimony from
at least one Eide Bailly witness regarding Oubre's claims to CSM
stock. That witness will likely be Scott Swanholm, the accountant
principally responsible for Eide Bailly's relationship with CSM.
(Swanholm Aff. ¶ 2.) Since it is not clear what, if anything, the
other Eide Bailly accountant would add to Swanholm's testimony,
his testimony is discounted in the transfer analysis. Factors
Etc., 579 F.2d at 218.
The parties also recognize that Gerald Finken is an important
witness, as is CSM's outside counsel, who was involved in the
negotiation and signing of Oubre's employment contracts.
The testimony of four other CSM witness also seems material.
Jessica Mather, executive assistant to Mr. Finken and Oubre,
would testify to Oubre's alleged failure to fulfill his financial
planning and reporting responsibilities. (Mather Aff. ¶ 3.) Brian Moe, CSM's Vice President of Operations, would
testify to Oubre's alleged unavailability to CSM staff, his
pursuit of a packaging and labeling facility for CSM, and his
work on behalf of LaGray. (Moe Aff. passim.) Brian Keller,
CSM's former finance director, would address Oubre's alleged
mishandling of CSM's finances. (G. Finken July 7, 2005 Aff. ¶
10.) Kathleen Finken, a member of CSM's board of directors, would
testify to whether Oubre and CSM entered the employment and stock
option agreements in 2001. (K. Finken Aug. 30, 2005 Aff. ¶ 3.)
Thus, there are seven material CSM witnesses whose convenience
(3) Oubre's Witnesses
Oubre himself is an essential witness. In addition, Oubre
identifies two material New York witnesses to rebut CSM's claims
that he neglected his duties to CSM and diverted opportunities
from CSM: Phillip McKinley, a former CSM consultant who worked
with Oubre pursuing packaging and labeling and sales
opportunities in the New York area, and Margaret Bogdan, a former
CSM employee who worked on CSM's financing, administration and
contracting processes with Oubre from his New York apartment.
* * * In sum, seven of CSM's material witnesses are located in North
Dakota while only three of Oubre's material witnesses reside in
New York. The disparity is less substantial than the numbers
appear, however, because two of Oubre's witnesses are
non-parties, while four of CSM's seven witnesses are its
employees. Indian Harbor Ins. Co. v. Factory Mut. Ins. Co., No.
05 Civ. 2564 (PKL), 2005 U.S. Dist. LEXIS 17253, at *12 (S.D.N.Y.
Aug. 17, 2005) (convenience of non-party witnesses is accorded
more weight than that of party witnesses). Hence, the convenience
of material witnesses only weakly favors transfer.
B. Location of Relevant Documents
"In today's era of photocopying, fax machines[,] Federal
Express", Coker v. Bank of Am., 984 F. Supp. 757, 766 (S.D.N.Y.
1997), and electronic document transmission, the location of
documents is entitled to little weight unless the movant makes a
detailed showing of the burden it would incur absent transfer.
Royal Ins. Co. of Am. v. Tower Records, Inc., No. 02 Civ. 2612
(PKL), 2002 U.S. Dist. LEXIS 20109, at *17 (S.D.N.Y. Oct. 22,
There is no such showing here. CSM merely states that it has
documents related to its packaging and labeling operation and to
Oubre's performance at its North Dakota headquarters, and that
Eide Bailly has three or four boxes of documents relevant to Oubre's damages in North Dakota. This factor is therefore
C. Convenience and Relative Means of the Parties
"A transfer should not merely shift the burden of inconvenience
from one party to the other." Dwyer v. General Motors Corp.,
853 F. Supp. 690, 693 (S.D.N.Y. 1994). "Where a disparity exists
between the means of the parties, such as in the case of an
individual suing a large corporation, the court may consider the
relative means of the parties in determining where a case should
proceed." 800-Flowers, 860 F. Supp. at 135; USA Interactive v.
Savannah Air Ctr., LLC, No. 02 Civ. 3659 (LLS), 2002 WL 1808236,
at *2 (S.D.N.Y. Aug. 7, 2002) (relative means of the parties is a
more significant factor when one party is an individual).
Here, CSM is a corporation that does business worldwide (G.
Finken Aug. 30, 2005 Aff. ¶ 21), while Oubre is an individual who
has not been steadily employed since leaving CSM in March 2004.
(Pl.'s Mem. L. Opp'n Mot. Transfer at 25.) Relative to their
resources, Oubre's burden litigating in North Dakota would be
heavier than CSM's burden litigating in New York. The convenience
and relative means of the parties therefore weighs against
transfer. D. Locus of Operative Facts
In determining the locus of operative facts, courts look to the
"site of the events from which the claim arises." 800-Flowers,
860 F. Supp. at 134. Contract disputes arise "where the contract
was negotiated or executed, where it was to be performed, and
where the alleged breach occurred." Prudential Sec. Inc. v.
Norcom Dev., Inc., No. 97 Civ. 6308 (DC), 1998 WL 397889, at *4
(S.D.N.Y. July 16, 1998) (citations omitted).
The employment agreements were apparently negotiated and
executed in both fora. (Oubre Sept. 12, 2005 Aff. ¶ 4; Oubre Aug.
8, 2005 Aff. ¶¶ 4, 15; G. Finken July 7, 2005 Aff. ¶ 4.)
Similarly, Oubre was to work for CSM in New York,*fn3 while
CSM's performance, paying Oubre and issuing him stock and stock
options, would naturally take place at CSM's headquarters in
North Dakota. Thus, Oubre's alleged breach of the employment
agreements occurred in New York, while CSM's alleged breach
occurred in North Dakota.
CSM's counterclaims relate to Oubre's dealings with LaGray.
Oubre likely conducted business with LaGray either at its Chicago offices or from his home in New York. In either case,
there is no showing that he dealt with LaGray in North Dakota.
The locus of operative facts is not concentrated in either the
transferor or transferee forum. Thus, this factor is neutral as
E. Availability of Process to Compel Attendance of Unwilling
A party relying on this factor must show that non-party
witnesses are unwilling to testify at trial. Citigroup Inc. v.
City Holding Co., 97 F. Supp. 2d 549, 562 (S.D.N.Y. 2000).
The only witness whom either party asserts will be unwilling to
testify at trial is Brian Keller, CSM's former finance director,
who can be compelled to testify in North Dakota but not in New
York. Although his testimony may be highly material (the alleged
mishandling of CSM's finances), since both Mr. Finken and Ms.
Mather may testify willingly on those matters, his testimony may
not be essential. Furthermore, CSM acknowledges that Keller's
deposition testimony will be available and gives no reason why
his deposition or videotaped testimony would be insufficient at a
trial in New York, aside from a general preference for live
testimony. (Def.'s Mem. L. Supp. Mot. Transfer at 19-20.);
Dealtime.com v. McNulty, 123 F. Supp. 2d 750, 757 (S.D.N.Y.
2000) (availability of compulsory process is neutral given the
option of videotaping testimony of witnesses unwilling to travel); Citigroup,
97 F. Supp. 2d at 561-62. This factor somewhat favors transfer.
F. Forum's Familiarity with Governing Law
Familiarity with the governing law is generally given little
weight in considering motions to change venue. AEC One Stop
Group, Inc. v. CD Listening Bar, Inc., 326 F. Supp. 2d 525, 531
(S.D.N.Y. 2004). That is especially true where the applicable
foreign law is settled. Royal Ins. Co. of Am., 2002 U.S. Dist.
LEXIS 20109, at *24.
CSM asserts without contradiction that its counterclaim under
the faithless servant doctrine, which seeks reimbursement of
salary and expenses for Oubre's breach of his duty of loyalty, is
a matter of first impression under North Dakota law.*fn4
Where, as here, the case involves unsettled law of the transferee
forum, this factor weighs in favor of transfer to that forum as
being more familiar with that body of law. However, it weighs
only slightly in favor of transfer because (a) as noted above,
the whole factor itself has little weight, and (b) if I retain
the case, New York's substantive law on the point is
clear,*fn5 and New York courts presume that the substantive law of another state (when it is unsettled) resembles New York's
and other states' law. See Rogers v. Grimaldi, 875 F.2d 994,
1003 (2d Cir. 1989).
G. Plaintiff's Choice of Forum
On a motion to transfer venue, a plaintiff's choice of forum
will not be disturbed unless the movant makes a clear and
convincing showing that the balance of convenience favors an
alternate forum. Hubbell Inc. v. Pass & Seymour, Inc.,
883 F. Supp. 955, 962 (S.D.N.Y. 1995).
CSM asserts that plaintiff's choice of forum should be given
less deference than usual, because none of the pertinent facts
took place in New York. Oubre alleges, however, that he executed
both employment agreements and negotiated the 2003 agreement in
New York and that he worked for CSM from his New York apartment.
The 2003 non-competition agreement provides that "Derek Oubre
will be living and working" in New York. See fn. 3. These
contacts, coupled with the fact that Oubre resides in this
district, give weight to plaintiff's choice of forum.
CSM argues that Oubre's choice of forum should be accorded less
weight because he originally filed suit in New York state court,
rather than this federal court to which CSM removed it.
Plaintiff's choice of forum is given deference because it is
presumed to be a convenient geographic location in which to
litigate. That presumption is no less valid when, as here, the plaintiff files suit in state court and the defendant later
removes the case to a federal court in the same venue.
Innovations Enter. Ltd. v. Haas-Jordan Co., Inc., No. 99 Civ.
1681 (EHN), 2000 WL 263745, at *2 (E.D.N.Y. Jan. 4, 2000)
("[V]enue is primarily an issue of geography, and plaintiff has
clearly expressed a preference for litigating within the [federal
district that] encompasses the county in which plaintiff
originally filed the action.").
Therefore, plaintiff's choice of forum weighs heavily against
H. Trial Efficiency and the Interests of Justice
CSM argues that North Dakota has a superior local interest in
adjudicating the case because it involves North Dakota corporate
governance laws and a locally owned North Dakota corporation. New
York also has an interest in adjudicating the case, however,
because the alleged breach of the non-competition agreement will
be decided under New York law and the outcome of the case will
affect the rights of a New York resident under employment
agreements signed and to be performed in New York.
CSM asserts that dockets are less congested in the District of
North Dakota than here. While there may be greater overall docket
congestion in this district than in the District of North Dakota,
under our individual calendar system I could likely try this case
as soon or sooner than it would be tried in North Dakota. see Dwyer, 853 F. Supp. at 695 (Motley, J.) (relative
trial calendar congestion did not favor transfer where "this
particular court's docket is not nearly as back-logged as the
majority of the dockets in this District.").
Hence, those factors are neutral as to transfer.
In sum, the convenience and ready availability of material
witnesses and the forum's familiarity with the governing law
weigh somewhat in favor of transfer. The convenience of the
parties favors retaining the action. The decisive factor is
plaintiff's choice of forum. "Absent a clear cut and convincing
showing by defendant that the balance of convenience weighs
strongly in favor of the transferee court, plaintiff's choice of
forum will not be set aside." Gen. State Auth. (of Pa.) for
Benefit of Crompton-Richmond, 314 F. Supp. at 423. There is not
the requisite clear cut and convincing showing that plaintiff's
choice of forum should be set aside.
Defendant's motion to transfer the action to North Dakota is
denied. So ordered.
© 1992-2005 VersusLaw Inc.