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Ivy Society Sports Group, LLC v. Baloncesto Superior Nacional

July 28, 2009

IVY SOCIETY SPORTS GROUP, LLC, PLAINTIFF,
v.
BALONCESTO SUPERIOR NACIONAL, FEDERACIÓN DE BALONCESTO DE PUERTO RICO, AND FELIX RIVERA, AN INDIVIDUAL, DEFENDANTS.



The opinion of the court was delivered by: Paul G. Gardephe, U.S.D.J.

MEMORANDUM OPINION AND ORDER

Defendants Baloncesto Superior Nacional ("BSN") and Federación de Baloncesto de Puerto Rico (the "Federation") have moved to transfer this action to the District of Puerto Rico, pursuant to Title 28, United States Code, Section 1406(a) or, in the alternative, Title 28, United States Code, Section 1404(a). For the reasons stated below, Defendants' Section 1404(a) motion is GRANTED.

BACKGROUND

Plaintiff Ivy Society Sports Group ("Ivy") is a New York limited liability corporation with its principal place of business in New York. (Cmplt. ¶ 8) BSN and the Federation are not-for-profit corporations organized and existing pursuant to the laws of the Commonwealth of Puerto Rico, each with its principal and only place of business in Puerto Rico. (Transfer Mot. ¶¶ 1, 3) BSN operates a men's professional basketball league in Puerto Rico, while the Federation -- with which BSN is affiliated -- is the rule-making body for organized basketball in Puerto Rico. (Neumann Decl. ¶¶ 3, 5--6)

In October 2005, Ivy and BSN entered into a two-year representation agreement, under which BSN appointed Ivy "as its agent for the purpose of representation and negotiation of licenses (shoe, apparel, and merchandising) originating outside of Puerto Rico." (Cmplt., Ex. A ("Representation Agreement") ¶¶ 1--2) The Representation Agreement requires BSN to pay Ivy a "fee equal to 35% of any agreement [Ivy] consummates on behalf of... BSN or negotiates in principle and [that] BSN then consummates after [Ivy] has been terminated." (Id. ¶ 3)

Ivy has sued BSN for breach of contract. Ivy alleges that it fully performed under the agreement by negotiating in principle a contract that BSN ultimately consummated with Nike USA, Inc. ("Nike") and its Brand Jordan Division,*fn1 and that BSN failed to compensate Ivy. (Cmplt. ¶¶ 44--45)

Ivy has also sued the Federation and Felix Rivera, a former president of BSN, for tortious interference with the Representation Agreement.*fn2 Ivy alleges that these defendants were aware that the Representation Agreement did not expire until at least October 2007, and that they improperly procured BSN's breach of that agreement in September 2007. (Cmplt. ¶¶ 53, 55) Specifically, Ivy alleges that Rivera advised Brand Jordan in September 2007 that Ivy no longer represented BSN. (Id. ¶¶ 32, 53) Additionally, Ivy alleges that the president of the Federation, Hectin Reyes, advised Todd Washington, a consultant for the Federation, to work only with Rivera, not Ivy, when negotiating a sponsorship agreement with Brand Jordan. (Id. ¶¶ 33, 55)

DISCUSSION

Defendants BSN and the Federation argue that this action should be transferred to the District of Puerto Rico under Title 28, United States Code, Section 1406(a) because they are not subject to personal jurisdiction in New York, and venue is improper in New York. Alternatively, Defendants move to transfer pursuant to Title 28, United States Code, Section 1404(a) because this action could have been brought in Puerto Rico and transfer is in the interest of justice. Defendants argue that most of the witnesses for the contract claim and all of the witnesses for the tort claim are in Puerto Rico, and that the locus of operative facts is in Puerto Rico. Plaintiff contends that the action should remain in New York because its choice of forum is entitled to substantial deference, witnesses would be inconvenienced by a transfer, Defendants have greater resources to litigate this action than Plaintiff, and -- given that New York law applies -- this Court's familiarity with the governing law favors retention.

Transfer to the District of Puerto Rico is appropriate here because (1) the case "might have been brought" in that district; (2) the locus of operative facts is in that district; (3) critical non-party witnesses are located in that district; and (4) the remaining "interest of justice" factors are either neutral or do not strongly favor retaining this action in the Southern District of New York.

I. PERSONAL JURISDICTION

In moving to transfer venue, Defendants BSN and the Federation suggest that this Court may lack personal jurisdiction over the Federation (and Rivera). (See Defs. Br. ¶ 21) The Federation has not moved to dismiss for lack of personal jurisdiction, however. See Notice of Motion, Docket No. 24 (seeking only transfer under 28 U.S.C. § 1406(a) or 28 U.S.C. § 1404(a)). Because the Federation has chosen not to litigate the issue of personal jurisdiction, there is no basis for this Court to find that it lacks jurisdiction over the Federation. See Zito v. Leasecomm Corp., No. 02 Civ. 8074 (GEL), 2003 WL 22251352, at *21 n.8 (S.D.N.Y. Sept. 30, 2003) (declining to rule on personal jurisdiction where defendants had "asserted lack of personal jurisdiction as a defense in their answers, but ha[d] not moved for dismissal on those grounds at this stage"). Moreover, given that this Court's January 12, 2009 order directed Defendants BSN and the Federation to "move to dismiss, or in the alternative, to transfer this action to the District of Puerto Rico" by "serv[ing] moving papers, if any, by Tuesday, January 20, 2009" (Docket No. 13), and that Defendants BSN and the Federation only filed a motion to transfer, these defendants have waived any personal jurisdiction objections. Fed. R. Civ. P. 12(h)(1)(A) ("A party waives any defense listed in Rule 12(b)(2)-(5) by omitting it from a motion in the circumstances described in Rule 12(g)(2)...."). See Computer Express Int'l, Ltd. v. MicronPC, LLC, No. 01 Civ. 4801, 2001 WL 1776162, at *4 (E.D.N.Y. Dec. 21, 2001) (concluding, where defendant Micron had moved to dismiss or transfer for improper venue, that "[b]y failing to move to dismiss for lack of personal jurisdiction... Micron has conceded that it is subject to personal jurisdiction in this district.") (emphasis in original) (citing Fed. R. Civ. P. 12(g), (h)(1)). See also Pilgrim Badge & Label Corp. v. Barrios, 857 F.2d 1, 3 (1st Cir. 1988) (defendant "waived the defense of lack of personal jurisdiction by failing to raise the defense in his motion to dismiss") (citing Fed. R. Civ. P. 12(g), (h)).

With that backdrop, this Court turns to the transfer motion filed by BSN and the Federation.

II. MOTION TO TRANSFER

Defendants BSN and the Federation have moved to transfer pursuant to Title 28, United States Code, Section 1406(a) or, in the alternative, under Title 28, United States Code, Section 1404(a). Section 1406(a) provides that, "[t]he district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought." 28 U.S.C. § 1406(a). Section 1404(a) states that, "[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." 28 U.S.C. § 1404(a).

Under either venue statute, the threshold inquiry is whether the action could have been brought in the proposed transferee district. Because resolution of the transfer issue under Section 1404(a) is dispositive in this case, this Court need not determine whether transfer is also appropriate under Section 1406(a).*fn3

A. Whether This Action Might Have Been Brought in Puerto Rico

This action could have been brought in the District of Puerto Rico. In Hoffman v. Blaski, 363 U.S. 335, 342 (1960), the Supreme Court ruled that in considering where an action "might have been brought," the district court must look to the state of affairs "at the time of the bringing of the action." That is, subject matter jurisdiction, personal jurisdiction, and venue would have had to have been proper in the transferee court at the time the action was filed. See Posven, C.A., 303 F. Supp. 2d at 401 ("For the purposes of section 1404(a), an action might have been brought in another forum if, at the time the action was originally filed, the transferee court would have had subject matter jurisdiction and personal jurisdiction over the defendants, and if venue would have been proper in the transferee court.").

Under Title 28, United States Code, Section 1332(a), the District of Puerto Rico would have had subject matter jurisdiction over this action due to the parties' diversity of citizenship and because the alleged amount in controversy exceeds $75,000. (Cmplt. ¶ 6) Puerto Rico would also have had personal jurisdiction over all defendants because they are residents of Puerto Rico (Cmplt. ¶¶ 9--11), and their actions, as alleged by Plaintiff, occurred in Puerto Rico. See Daly v. Castro Llanes, 30 F. Supp. 2d 407, 413 (S.D.N.Y. 1998) (finding "no reason why this action could not have been brought in the district of Puerto Rico which (1) would have personal jurisdiction over all the parties, (2) is the district in which at least two of the defendants reside, and (3) is where the funds at issue were supposed to have been maintained"). Further, given that all three Defendants reside in Puerto Rico, venue would have been proper there under Title 28, United States Code, Section ...


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