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House of Spices (India), Inc v. Lt Foods Ltd

March 15, 2011

HOUSE OF SPICES (INDIA), INC., PLAINTIFF,
v.
LT FOODS LTD., DEFENDANT.



The opinion of the court was delivered by: Levy, United States Magistrate Judge:

MEMORANDUM AND ORDER

Defendant LT Foods Ltd. ("defendant" or "LT Foods") moves pursuant to 28 U.S.C. § 1404(a) to transfer venue in this action from this district to the Central District of California. The parties have consented to magistrate jurisdiction. (See Dkt. Entry #10.) On February 11, 2011, I heard oral argument on the motion. For the reasons stated below, defendant's motion is denied.

BACKGROUND AND FACTS

Plaintiff House of Spices (India) ("plaintiff" or "House of Spices") commenced this diversity action on June 17, 2010, alleging breach of contract and seeking both damages and declaratory relief. (See Complaint, dated June 17, 2010 ("Compl.").) The case arises out of a written distribution agreement that the parties entered into on April 1, 2005 ("the Agreement").*fn1

Under the Agreement, defendant appointed plaintiff "as the sole distributor for the US ethnic trade, for all Daawat and all brands using the Daawat Trade Name,*fn2 for a term of 10 years, ending April 1, 2015." (Daawat Distributor Agreement ("the Agreement"), annexed as Ex. 1 to Declaration of Gorhandas L. Soni, dated Dec. 16, 2010 ("G. Soni Decl.").) The Agreement also provided, inter alia, that: (a) if plaintiff failed to purchase forty-five containers of rice a year, plaintiff would pay defendant a penalty of $25,000; (b) the parties would work together to promote the Daawat brand and develop marketing programs to increase sales; (c) defendant would allocate a yearly marketing and advertising budget of $50,000 or five percent of Daawat sales; and (d) plaintiff would aggressively promote the brand and work to identify sub-distributors to enter new ethnic channels. (Id.)

In 2007, defendant, through a wholly-owned subsidiary, acquired Kusha, an importer and distributor of basmati rice in the United States. (Compl. ¶ 13.) Plaintiff alleges that after defendant acquired Kusha, it made business decisions "to fulfill Kusha's demand for basmati rice by shifting production away from LT's Daawat brand" and "to increase its distribution of basmati rice through Kusha at the expense of its distribution of basmati rice through [House of] Spices." (Id. ¶¶ 17, 18.) According to plaintiff, after purchasing Kusha, defendant changed its manner of marketing basmati rice in the United States, began requiring plaintiff to place its rice orders with Kusha, and stopped fulfilling plaintiff's orders for rice. (Id. ¶¶ 19--21.) Plaintiff also contends that defendant violated the Agreement by selling Daawat rice to other distributors for the U.S. ethnic trade and by failing to work with plaintiff to promote the Daawat brand. (Id. ¶¶ 24--28.)

Defendant denies that it violated the Agreement but instead accuses plaintiff of doing so. It has asserted counter-claims against plaintiff for breach of contract and account stated. (See Answer and Counterclaim, dated Sept. 16, 2010 ("Answer").) According to defendant, plaintiff violated the Agreement by purchasing and selling other companies' basmati rice.*fn3 (Id. at 7.) Defendant also alleges that plaintiff breached the Agreement by, inter alia, failing to (a) maintain the business at a minimum rate of forty-five containers a year, (b) aggressively promote the Daawat brand, and (c) pay for goods that defendant supplied. (Id. ¶¶ 7, 9, 14.)

Defendant now moves to transfer venue to the Central District of California. It alleges that this court is "inconvenient to the parties and witnesses involved in this action," and that the Central District of California would be a more appropriate forum. (Defendant's Memorandum of Law, dated Nov. 17, 2010 ("Def.'s Mem."), at 1.)

DISCUSSION

28 U.S.C. § 1404(a) provides 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." Section 1404(a) strives "to prevent waste of time, energy and money and to protect litigants, witnesses and the public against unnecessary inconvenience and expense." Van Dusen v. Barrack, 376 U.S. 612, 616 (1964) (internal quotations and citations omitted).

In determining whether transfer of venue is appropriate under § 1404(a), courts engage in a two-step inquiry. First, the court asks whether the action "might have been brought" in the requested transferee court. Frasca v. Yaw, 787 F. Supp. 327, 330 (E.D.N.Y. 1992). "If the proposed venue is proper, the court then considers whether the transfer will serve the convenience of witnesses and parties and is in the interests of justice." Kroll v. Lieberman, 244 F. Supp. 2d 100, 102 (E.D.N.Y. 2003). Motions for transfer "lie within the broad discretion of the district court and are determined upon notions 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 (1988)). The defendant "has the burden of making out a strong case for a transfer," Ford Motor Co. v. Ryan, 182 F.2d 329 (2d Cir. 1950), with "clear and convincing evidence." New York Marine & Gen. Ins. Co. v. Lafarge N. Am., Inc., 599 F.3d 102, 114 (2d. Cir 2010) (citations omitted).

In opposition to the motion, plaintiff argues that it could not have brought the present action in the Central District of California because that court would have lacked personal jurisdiction over defendant. (Plaintiff's Memorandum of Law, dated Dec. 16, 2010 ("Pl.'s Mem."), at 4--7; see also Oral Argument Transcript, dated Feb. 11, 2011 ("Oral Arg. Tr."), at 7, 13.) However, it is unnecessary to decide this question because, as explained infra, defendant has failed to meet its burden under the second prong of the § 1404(a) test.*fn4 In considering whether this prong is satisfied and the proposed transfer will serve the convenience of witnesses and parties, courts should look to a number of factors, including (1) convenience of witnesses; (2) convenience of parties; (3) locus of operative facts; (4) availability of process to compel the attendance of unwilling witnesses; (5) location of relevant documents and other sources of proof; (6) relative means of the parties; (7) relative familiarity of the forum with the governing law; (8) weight accorded to the plaintiff's choice of forum and (9) the interests of justice.

Cool Wind Ventilation Corp. v. Sheet Metal Workers Int'l Assoc., Local Union No. 28, 216 F. Supp. 2d 81, 85 (E.D.N.Y. 2002) (citations omitted). However, "there is no rigid formula for balancing these factors and no single one of them is determinative." Fed. Ins. Co. v. Bax Global Inc., No. 09-CV-2739, 2010 WL 3738033, at *4 (E.D.N.Y. Sept. 24, 2010) ...


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