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Ross v. Institutional Longevity Assets LLC

United States District Court, Third Circuit

September 20, 2013



CHRISTOPHER J. BURKE, Magistrate Judge.

Plaintiffs Alan J. Ross and SAVE Associates ("Plaintiffs") filed this action for breach of contract and related causes of action against Defendant Institutional Longevity Assets LLC ("ILA" or "Defendant"). Presently pending before the Court is Defendant's Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404(a) ("Motion to Transfer" or "Motion"). (D.I. 40) For the reasons that follow, the Court recommends that the Motion to Transfer be GRANTED.[1]


A. The Parties

Plaintiff Alan J. Ross ("Ross") is an individual residing in Newton, Massachusetts. (D.I. 34 at ¶ 1) Plaintiff SAVE Associates is a sole proprietorship located in Needham, Massachusetts. ( Id. ) Defendant ILA is a Delaware limited liability corporation with its principal place obtuseness in Chicago, Illinois. ( Id. )

B. Factual and Procedural History

On May 27, 2008, Balshe LLC ("Balshe") and The Simon Law Firm ("SLF") filed a complaint in the Circuit Court of Cook County, Illinois, County Department, Chancery Division, seeking injunctive relief against Plaintiffs. Notice of Removal, Balshe LLC v. Ross, No. 1:08-cv-03256 (D.I. 1 at ¶¶ 1-3) (N.D. Ill. June 5, 2008). The injunctive relief sought stemmed from Plaintiffs' alleged attempt to transfer Patent No. 5, 974, 390 ("the '390 patent") to third parties in violation of contracts between Plaintiffs, Balshe and SLF providing for transfer of the patent from Plaintiffs to Balshe and SLF. Id., ex. A at ¶¶ 2-4. Plaintiffs thereafter removed the case (the "First Northern District Action") to the United States District Court for the Northern District of Illinois ("the Northern District"). Id. at 1.

On June 20, 2008, the Northern District issued a temporary restraining order prohibiting Plaintiffs, inter alia, from transferring any interest in the '390 patent to third parties. Temporary Restraining Order, Balshe LLC v. Ross, No. 1:08-cv-03256 (D.I. 25) (N.D. Ill. June 20, 2008). Thereafter, Balshe, SLF, Plaintiffs and the Meyer-Chatfield Corporation ("MC") reached an agreement regarding the purchase of Plaintiffs' interest in the '390 patent (the "Settlement Agreement"). Balshe LLC v. Ross, No. 08 C 3256, 2010 WL 3522945, at *1 (N.D. Ill. Sept. 2, 2010). Upon the parties' entry into the Settlement Agreement, the Northern District dismissed the First Northern District Action with prejudice on July 1, 2008. Agreed Order of Dismissal with Prejudice, Balshe LLC v. Ross, No. 1:08-cv-03256 (D.I. 31) (N.D. Ill. July 1, 2008).

As part of the Settlement Agreement, the parties agreed to form a new entity called Institutional Pooled Benefits LLC ("IPB"). Balshe, 2010 WL 3522945, at *1. However, negotiations between the parties regarding IPB's operating agreement broke down. Id. This prompted Plaintiffs to file a motion to compel compliance with the Settlement Agreement ("Motion to Compel Compliance") in the Northern District, which was later followed by Balshe and SLF filing their cross-motion to enforce the terms of the Settlement Agreement ("Cross-Motion to Compel Compliance"). Motion to Compel Compliance, Balshe LLC v. Ross, No. 1:08-cv-03256 (D.I. 32) (N.D. Ill. May 20, 2010); Memorandum of Law in Support of Cross-Motion to Compel Compliance, Balshe LLC v. Ross, No. 1:08-cv-03256 (D.I. 38) (N.D. Ill. July 6, 2010). The allegations in these filings related to disputes between the parties regarding the assignment and ownership of the '390 patent, the formation and operation of IPB and the execution of the terms of the Settlement Agreement. Id. Central to the litigation were disputes over the existence or meaning of several Settlement Agreement provisions, including those relating to shared expenses, procedures covering policy lapses, policy purchase rights, a "right to dissuade" clients or potential clients and certain bankruptcy provisions (collectively, the "disputed provisions"). Because the Order dismissing the claims in the First Northern District Action provided that the Northern District retained jurisdiction to enforce the terms of the Settlement Agreement, the parties simply re-opened the original caption of that action in litigating these disputes. (D.I. 13 at 4)

The Northern District considered the disputed issues raised by the parties, including the disputed provisions. Of those disputed provisions, the Northern District ultimately sided with Plaintiffs on only one-agreeing that IPB's operating agreement should not contain a provision barring Plaintiffs' right to dissuade clients or potential clients. Balshe, 2010 WL 3522945, at *3-4. Importantly, the Court ordered Plaintiffs to transfer their remaining interest in the '390 patent to IPB. Id. at *4. Plaintiffs thereafter filed a motion for reconsideration in which they raised a bevy of new issues and sought reconsideration of many issues addressed in the Court's earlier Order. Balshe LLC v. Ross, No. 08 C 3256, 2011 WL 2669225, at *2-8 (N.D. Ill. July 7, 2011). The Northern District denied Plaintiffs' requested relief on every issue except for: (1) their request (unopposed by Balshe and SLF) that one sentence in the previous Order's Statement of Facts be slightly modified in a way that did not affect any prior ruling; and (2) their assertion that the IPB operating agreement required Plaintiff Ross' signature (a requirement the Court labeled "necessary, [but] merely a formality."). Id. Plaintiffs appealed the Northern District's Order to the United States Court of Appeals for the Seventh Circuit. Balshe LLC v. Ross, 441 Fed.App'x 395 (7th Cir. 2011). On December, 8, 2011, the Seventh Circuit vacated the Northern District's decision, stating:

We cannot decide this issue on the merits, however, because the district court's attempt to retain subject-matter jurisdiction over this matter was ineffectual, a point we must raise sua sponte. A district court's original jurisdiction to entertain a lawsuit does not carry over to one party's later claim that the other has breached their settlement of that suit. Thus, when a suit is dismissed with prejudice, it is gone, and the district court cannot adjudicate disputes arising out of the settlement that led to the dismissal merely by stating that it is retaining jurisdiction.... This appeal, then, raises a claim that the district court was powerless to resolve without an independent basis of subject-matter jurisdiction.... This misstep might not have prevented the district court from going forward if a basis for exercising subject-matter jurisdiction was clear. But it was not.... Because the substance of the claim is breach of contract, the only possible basis for jurisdiction is diversity of citizenship, but we do not have complete information about the citizenship of the parties or the amount of money at stake when the parties filed their cross-motions to compel. Id. at 396 (internal quotation marks and citations omitted) (emphasis in original). The matter was remanded to the Northern District with a directive that if a party later filed a new complaint alleging breach of the Settlement Agreement, subject-matter jurisdiction must be determined by the Court. Id. at 397.

On January 30, 2012-one day before the Northern District's scheduled status hearing to discuss the impact of the Seventh Circuit's ruling, (D.I. 13, ex. A at I)-Plaintiffs filed this action. (D.I. 1) According to the Complaint, the breach of contract and other related claims against Balshe, SLF and MC "ar[ose] out of' the First Northern District Action. ( See id. at 1) For example, the Complaint noted the dispute between the parties regarding the existence and meaning of the disputed provisions in the Settlement Agreement. ( Id. at ¶ 20) The Complaint then included six counts of alleged wrongdoing, including breach of contract and related claims, nearly all of which are premised upon Plaintiffs' position as to the meaning or existence of the disputed provisions. ( See id. at¶¶ 24-53)

At the aforementioned status hearing in the Northern District, conducted on January 31, 2012, Plaintiffs, for the first time, notified counsel for Balshe and SLF that they had filed the Delaware Action. ( See D.I. 13, ex. A at 2-3) Nevertheless, at this status conference, Balshe and SLF confirmed that they would file a new complaint against Plaintiffs in the Northern District. ( Id. at 3) On February 10, 2012, Balshe and SLF filed that complaint (the "Second Northern District Action"), premised upon diversity jurisdiction. Complaint, Balshe LLC v. Ross, No. 1:12-cv-0966 (D.I. 1) (N.D. Ill. Feb. 10, 2012).[2] The complaint in the Second Northern District Action once again requests injunctive relief to prevent Plaintiffs from transferring any interest in the '390 patent to third parties, and also seeks remedies based upon Plaintiffs' alleged breach of the Settlement Agreement. See id. On their Civil Cover Sheet, Balshe and SLF indicated that the Second Northern District Action was a "refiling¶¶ of the First Northern District Action. See Civil Cover Sheet, Balshe LLC v. Ross, No. 1:12-cv-0966 (D.I. 2) (N.D. Ill. Feb. 10, 2012). Accordingly, the Second Northern District Action was assigned to the same District Judge who had handled the First Northern District Action. See Docket, Balshe LLC v. Ross, No. 1: 12-cv-0966 (N.D. Ill.).

On February 28, 2012, in the Delaware Action, Balshe, SLF and MC filed a Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404(a), seeking transfer of the Delaware Action to the Northern District. (D.I. 12) Before briefing was complete on this motion, however, Plaintiffs filed an Amended Complaint on March 19, 2012. (D.I. 21)

Plaintiffs¶ Amended Complaint was largely similar to the original Complaint in the substance of its claims and factual allegations. ( Compare D.I. 1, with D.I. 21) The named defendants listed, however, were entirely different. In the place of Balshe, SLF and MC, Plaintiffs listed IPB, ILA and MRB Pooled Benefits LLC ("MRB"). (D.I. 21 at 1) According to the Amended Complaint, Plaintiffs chose these new defendants because they are the "current rightsholders to the Settlement Agreement" at issue. ( Id. at ¶ 1) ILA, according to Plaintiffs, obtained Balshe's interest in the Settlement Agreement in September 2008. ( Id. at¶ 6)

In light of certain jurisdictional issues apparent in the Amended Complaint and). uncertainty regarding Plaintiffs¶ intentions, on August 24, 2012, the Court issued an Order requiring Plaintiffs to file a Second Amended Complaint that clearly indicated which parties Plaintiffs intended to sue and the basis for the Court¶s jurisdiction (and requiring Plaintiffs to file notices of dismissal for those entities not listed in the Second Amended Complaint). (D.I. 32) On September 7, 2012, Plaintiffs filed their Second Amended Complaint, naming ILA as the only defendant, (D.I. 34); they also voluntarily dismissed, without prejudice, the claims against Balshe, SLF, MC, IPB and MRB, (D.I. 33). Despite altering the named defendants, the allegations and causes of actions in the Second Amended Complaint are virtually identical to those found in the original Complaint and the First Amended Complaint. ( Compare D.I. 34, with D.I. 1, and D.I. 21)

After receiving indication that ILA also wished to move to transfer venue, (D.I. 38), the Court thereafter required ILA to file its own motion in that regard, so that a motion in its own name (containing clear indication of what ILA's own arguments were) was clearly set out on the record, (D.I. 39). ILA filed the instant Motion to Transfer on November 13, 2012. (D.I. 40)

In the Motion, ILA seeks a transfer to the Northern District. (D.I. 40 at 1) This Motion explicitly incorporates the arguments made in Balshe, SLF and MC's Memorandum of Law in Support of Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404(a) and reply memorandum, (D.I. 13, 23), ILA's Motion to Extend the Time to Respond to the Second Amended Complaint, (D.I. 37), and ILA's Joinder in Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404(a), (D.I. 38).[3] The parties completed their briefing as to the Motion on November 28, 2012. (D.I. 45)


A. Legal Standard

Section 1404(a) of Title 28 provides the statutory basis for a transfer inquiry. It 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 or to any district or division to which all parties have consented." 28 U.S.C. § 1404(a).

1. Appropriateness of Transferee Venue

The first step in the transfer analysis is to determine whether this action could have been brought in the proposed transferee venue. "The party moving for transfer bears the burden of proving that the action properly could have been brought in the transferee district in the first instance." Mallinckrodt Inc. v. E-Z-Em Inc., 670 F.Supp.2d 349, 356 (D. Del. 2009) (internal quotation marks and citation omitted). Here, there is no dispute that this action could have been properly brought in the Northern District, ILA's principal place of business. (D.I. 44 at 1; D.l. 13 at 10); see also 28 U.S.C. § 1391.

2. Applicable Legal Standards

"[S]ection 1404(a) was intended to vest district courts with broad discretion to determine, on an individualized, case-by-case basis, whether convenience and fairness considerations weigh in favor of transfer." Jumara v. State Farm Ins. Co., 55 F.3d 873, 883 (3d Cir. 1995) (citing Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 30-31 (1988)). Generally, Section 1404(a) is "designed to prevent: (1) forum shopping' by plaintiffs who seek to avoid prior rulings or governing precedents in other jurisdictions... (2) the waste of time, energy, and money, ' and (3) to protect litigants, witnesses and the public against unnecessary inconvenience and expense.'" MP Vista, Inc. v. Motiva Enters. LLC, C.A. No. 07-099-GMS, 2008 WL 5411104, at *2 (D. Del. Dec. 29, 2008) (quoting VanDusen v. Barrack, 376 U.S. 612, 616 (1964); Yang v. Odom, 409 F.Supp.2d 599, 605 (D.N.J. 2006)).

The United States Court of Appeals for the Third Circuit has emphasized that when considering a motion to transfer venue pursuant to Section 1404(a), "courts normally defer to a plaintiffs choice of forum" and thus "the plaintiffs choice of venue should not be lightly disturbed." Jumara, 55 F.3d at 879-80 (internal quotation marks and citation omitted). This general principle, drawn from the historic respect accorded a plaintiffs choice of venue, suggests that "a transfer is not to be liberally granted." Shutte v. Armco Steel Corp., 431 F.2d 22, 25 (3d Cir. 1970) (internal quotation marks and citation omitted).

In the typical case then, the party seeking a transfer has the burden "to establish that a balancing of proper interests weigh[s] in favor of the transfer[.]" Id.; see also Jumara, 55 F.3d at 879. That burden is a heavy one: "unless the balance of convenience of the parties is strongly in favor of defendant, the plaintiffs choice of forum should prevail." Shutte, 431 F.2d at 25 (internal quotation marks and citation omitted) (emphasis added); see also CNH Am. LLC v. Kinzenbaw, C.A. No. 08-945(GMS), 2009 WL 3737653, at *2 (D. Del. Nov. 9, 2009). Accordingly, "transfer will be denied if the factors are evenly balanced or weigh only slightly in favor of the transfer." Angiodynamics, Inc. v. Vascular Solutions, Inc., C.A. No. 09-554-JJF, 2010 WL 3037478, at *2 (D. Del. July 30, 2010); see also Illumina, Inc. v. Complete Genomics, Inc., Civil Action No. 10-649, 2010 WL 4818083, at *2 (D. Del. Nov. 9, 2010).[4]

The Third Circuit has observed that, in undertaking this transfer analysis, "there is no definitive formula or list of... factors to consider." Jumara, 55 F.3d at 879. Instead, courts must analyze "all relevant factors" to determine whether "the litigation would more conveniently proceed and the interests of justice be better served by transfer to a different forum." Id. (internal quotation marks and citation omitted). Nevertheless, in Jumara, the Third Circuit identified a set of private interest and public interest factors that should be taken into account in this analysis (the "Jumara factors"). The private interest factors to consider include:

[1] [The] plaintiff's forum preference as manifested in the original choice, [2] the defendant's preference, [3] whether the claim arose elsewhere, [4] the convenience of the parties as indicated by their relative physical and financial condition, [5] the convenience of the witnesses-but only to the extent that the witnesses may actually be unavailable for trial in one of the fora... and [6] the location of books and records (similarly limited to the extent that the files could not be produced in the alternative forum).

Id. at 879. The public interest factors to consider include:

[1] [T]he enforceability of the judgment, [2] practical considerations that could make the trial easy, expeditious, or inexpensive, [3] the relative administrative difficulty in the two fora resulting from court congestion, [4] the local interest in deciding local controversies at home, [5] the public policies of the fora, ... and [6] ...

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