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Nottenkamper v. Modany

United States District Court, D. Delaware

April 29, 2015

JANICE NOTTENKAMPER, derivatively on behalf of ITT EDUCATIONAL SERVICES, INC., Plaintiff,
v.
KEVIN M. MODANY, DANIEL M. FITZPATRICK, JOHN F. COZZI, JOHN E. DEAN, JAMES D. FOWLER, JR., JOANNA T. LAU, THOMAS I. MORGAN, SAMUEL L. ODLE, VIN WEBER, JOHN A. YENA and LLOYD G. WATERHOUSE, Defendants, and ITT EDUCATIONAL SERVICES, INC., Nominal Defendant.

MEMORANDUM OPINION

GREGORY M. SLEET, District Judge.

I. INTRODUCTION

On May 27, 2014, plaintiff Janice Nottenkamper ("Nottenk:amper"), on behalf of ITT Educational Services, Inc. ("ITT"), filed a derivative action against the above-captioned defendants, who are certain members of ITT's Board of Directors and executive officers (collectively, the "Defendants"). (D.I. 1.) Nottenkamper alleges claims for breach of fiduciary duty, abuse of control, unjust enrichment, and gross mismanagement. ( Id.) On January 13, 2015, the Defendants filed a motion to transfer this case to the Southern District of New York, pursuant to 28 U.S.C. § 1404(a). (D.I. 11.) For the reasons that follow, the court will grant the Defendants' motion.

II. BACKGROUND

This is the third lawsuit to be filed concerning similar facts and circumstances relating to corporate management of ITT. Two prior lawsuits, one securities class action (the "Securities Action") and one derivative action (the "New York Derivative Action"), were filed in the Southern District of New York in 2014.[1] Both of those cases are currently pending before Judge J. Paul Oetken.

As described in the Complaint, Nottenkarnper is a current shareholder of ITT and has held ITT stock since 1994. (D.I. 1, ¶ 35.) She is a citizen of Arkansas. ( Id. ) ITT is a Delaware corporation with its principal executive offices located in Indiana. ( Id. ¶ 36.) ITT provides accredited, technology-oriented undergraduate and graduate degree programs through ITT Technical Institutes and Daniel Webster College. ( Id. ) Nottenkarnper alleges calms of breach of fiduciary duty, abuse of control, unjust enrichment, and gross mismanagement against the Defendants.

III. STANDARD OF REVIEW

"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 or to any district or division to which all parties have consented." 28 U.S.C. § 1404. This provision affords district courts "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 (3rd Cir. 1995). In this assessment, the court undertakes a two-step inquiry to determine whether a motion to transfer should be granted. First, the court must establish whether the action is one that could have originally been brought in the proposed transferee forum. See Shutte v. Armco Steel Corp., 431 F.2d 22, 24 (3rd Cir. 1970). Second, the court must then weigh whether transfer would best serve the interests of convenience and justice. See Jumara, 55 F.3d at 879. The burden rests on the defendant to show that transfer is appropriate at each step. Id. (citing Shutte, 431 F.2d at 22). "Unless the balance of convenience of the parties is strongly in favor of [the] defendant, the plaintiff's choice of forum should prevail." Shutte, 431 F.3d at 25 (citing Owatonna Mfg. Co. v. Melore Co., 301 F.Supp. 1296, 1307 (D. Minn. 1969)).

IV. DISCUSSION

A. The Propriety of the Transferee Forum

The proposed transferee forum must be one in which the action might have originally been brought. 28 U.S.C. § 1404(a). Accordingly, the court only grant the Defendants' motion to transfer if "the transferee court (1) would have been a proper venue and (2) would have had personal jurisdiction over the defendant had the case been filed there initially." See 15 Wright and Miller, Federal Practice and Procedure§ 3841 (4th ed. 2014) (citing Hoffman v. Blaski, 363 U.S. 335 (1960)). The parties do not appear to dispute that Nottenkamper's lawsuit could have originally been filed in the Southern District of New York.[2] As such, the court proceeds to the second step to analyze the relevant interests at stake.

B. The Jumara Analysis

The court must next consider whether transferring this action to the Southern District of New York would serve the interests of convenience and justice. See Mitel Networks Corp. v. Facebook, Inc, 943 F.Supp.2d 463, 468 (D. Del. 2013). The Third Circuit has instructed that courts should perform a case-by-case analysis, rather than apply a "definitive formula." See Jumara, 55 F.3d at 879. This assessment should take into account the various public and private interests protected and defined in§ 1404(a). The private interests may include:

[P]laintiff's forum preference as maintained in the original choice; the defendant's preference; whether the claim arose elsewhere; the convenience of the parties as indicated by their relative physical and financial condition; 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 the location of books and ...

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