United States District Court, S.D. New York
In re CHANNELADVISOR CORPORATION Securities Litigation.
MEMORANDUM & ORDER
ALISON J. NATHAN, District Judge.
Before the Court is Defendants ChannelAdvisor Corp., Scot Wingo, David Spitz, and John Baule's motion to transfer this case to the United States District Court for the Eastern District of North Carolina pursuant to 28 U.S.C. § 1404(a). For the reasons provided below, the motion is GRANTED.
This action is a putative securities class action brought against a Delaware corporation based in Morrisville, North Carolina and some of its executive officers who also work or live in and around Morrisville, North Carolina. Declaration of Diana Allen ¶¶ 5-6. Plaintiffs allege that the Defendants made public statements about ChannelAdvisor's revenue guidance for the fourth quarter of 2014 that were false and misleading because they failed to disclose that (1) ChannelAdvisor's shift in customer base away from smaller clients to larger clients posed a risk to the company's financial performance and (2) larger clients were given a discount that results in lower revenue for the company. Compl. ¶¶ 1, 27-30.
"For the convenience of parties and witnesses, in the interests of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented." 28 U.S.C. § 1404(a). As a preliminary matter, both parties agree that this case could have been brought in the Eastern District of North Carolina. Defs.' Br. 4; Opp'n Br. 3. To determine whether convenience of parties and witnesses favors transfer, courts generally examine the following non-exhaustive list of factors: "(1) the plaintiff's choice of forum, (2) the convenience of witnesses, (3) the location of relevant documents and relative ease of access to sources of proof, (4) the convenience of parties, (5) the locus of operative facts, (6) the availability of process to compel the attendance of unwilling witnesses, and (7) the relative means of the parties.'" N.Y. Marine & Gen. Ins. Co. v. Lafarge N. Am., Inc., 599 F.3d 102, 112 (2d Cir. 2010) (quoting D.H. Blair & Co., Inc. v. Gottdiener, 462 F.3d 95, 106-07 (2d Cir. 2006)). Weighing these considerations and the interests of justice, the Court concludes that transferring this case to the Eastern District of North Carolina is appropriate.
A. Plaintiff's Choice of Forum
Plaintiff rests much of his opposition to Defendants' motion to transfer on the fact that a plaintiff's choice of forum is generally entitled to deference. See, e.g., ESPN, Inc. v. Quiksilver, Inc., 581 F.Supp.2d 542, 547 (S.D.N.Y. 2008) ("[P]laintiff's choice of forum should be accorded deference in the event that other factors do not weigh strongly in favor of transfer."). While this is generally true, such deference is diminished under certain circumstances.
First, "[t]his factor is less compelling where, as here, plaintiffs choose a forum that is not their home district." Coen v. Hoffman-La Roche, No. 06 Civ. 13497 (RMB)(RLE), 2007 U.S. Dist. LEXIS 23132, at *10 (S.D.N.Y. Mar 21, 2007) (citing Intira Corp. v. Intira Corp., No. 00 Civ. 7198 (AGS), 2000 U.S. Dist. LEXIS 17039, at *30 (S.D.N.Y. Nov. 27, 2000)). Plaintiff resides in Washington, Dkt. No. 2 at 2,  not New York. Second, "a plaintiff's choice of forum is afforded little weight' in a purported class action, as here, where numerous plaintiffs [are] each possibly able to make a showing that a particular forum is best suited.'" Id. at *10 (quoting Eichenholtz v. Brennan, 677 F.Supp. 198, 202 (S.D.N.Y. 1988)).
Therefore, although Plaintiff's choice of forum is generally entitled to deference, because Plaintiff does not reside in this district and because this is a purported class action, this deference is greatly diminished. Thus, this factor is neutral.
B. Convenience of Parties and Witnesses
Courts have often noted that "[c]onvenience of both the party and non-party witnesses is probably the single-most important factor in the analysis of whether transfer should be granted.'" ESPN, Inc., 581 F.Supp.2d at 547 (quoting Fuji Photo Film Co., Ltd. v. Lexar Media, Inc., 415 F.Supp.2d 370, 373 (S.D.N.Y. 2006)). Plaintiff does not dispute that the primary witnesses in this case are the executives of ChannelAdvisor Corp. (many of whom are individual Defendants) who all live and work in and around the company's headquarters in Morrisville, North Carolina. Defs.' Br. 8-9. Indeed, "[i]t is well known that trials in securities class actions focus almost entirely on the defendants' conduct." In re Nematron Corp. Sec. Litig., 30 F.Supp.2d 397, 402 (S.D.N.Y. 1998). Instead, Plaintiff argues that, if the case remains in New York, these witnesses can be deposed in North Carolina and Defendants "have not demonstrated that the S.D.N.Y. would be unduly inconvenient as North Carolina is only a short flight from New York." Opp'n Br. 7. But even if Plaintiff agrees to depose the party witnesses in North Carolina, these witnesses would still have to travel to New York for trial. Moreover, Defendants correctly note that the inquiry is not whether the party witnesses could easily get to New York; the inquiry is which of the two forums is more convenient. CYI, Inc. v. Ja-Ru, Inc., 913 F.Supp.2d 16, 24 (S.D.N.Y. 2012). Because ChannelAdvisor's executives, who are likely to be the primary witnesses in this action, all reside in and around the company's headquarters, North Carolina is more convenient for these witnesses than New York.
Plaintiff also does not dispute that the other likely witnesses in this case are Defendants' investor relations consultants with ICR, Inc.-Timothy Dolan and Garo Toomajanian-who reside or work in or near Boston, Massachusetts, Allen Decl. ¶¶ 16, 18, and Plaintiff himself, who lives in Washington. Because these additional witnesses would have to travel to either New York or North Carolina, the Court assumes that either forum is equally convenient to them.
Finally, Plaintiff contends that the location of the parties' attorneys is a relevant consideration to the Court's analysis. Because both parties' attorneys are located in New York, Plaintiff argues, New York is a more convenient forum. But as this Court has previously noted, this argument is "unavailing, as the convenience of counsel is not an appropriate factor to consider on a motion to transfer.'" Fuji Photo Film Co., 415 F.Supp.2d at ...