BlueEarth Biofuels LLC v. Hawaiian Electric Company Inc et al, No. 1:2009cv00181 - Document 55 (D. Haw. 2009)

Court Description: Memorandum Opinion and Order granting 4 , 7 , 11 , 32 , 35 Defendants' Motion to Transfer. This case is transferred to the District of Hawaii pursuant to 28 USC Section 1404(a). (see order) (Ordered by Magistrate Judge Jeff Kaplan on 4/3/2009) (axm) . [Transferred from Texas Northern on 4/22/2009.]

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IN THE LINITEDSTATESDISTRICTCOURT NORTHERNDISTRICTOF TEXAS DALLAS DIVISION LLC BLUEEARTHBIOFUELS" Plaintiff, VS. HAWAIIAN ELECTRIC COMPANY. INC.. ET AL. Defendants. MEMORANDUM $ $ $ $ $ $ $ $ $ $ NO.3-08-CV-r779-L OPINION AND ORDER Defendants Hawaiian Electric Company, Inc. ("HECO"), Maui Electric Company, Ltd. ("MECO"), andKarl E. Stahlkopf("Stahlkopf'), collectivelyrefenedto asthe "HECO Defendants," motions to transferthis diversity and DefendantAloha Petroleum,Ltd. ("Aloha") havefiled separate action to a federal district court in Hawaii. For the reasonsstatedherein, the motions are granted. I. In March 2006,Plaintiff BlueEarthBiofuels,LLC ("BlueEarth"),aNevada limited liability company headquarteredin Texas, entered into negotiations with HECO and its wholly-owned subsidiary,MECO, for the joint developmentof a biodieselproduction facility on the Hawaiian island of Maui ("the Maui Project"). (HECO App. at 2, n q. During the course of those negotiations, plaintiff entered into separateMutual Non-Circumvention and Non-Disclosure ofconfidential information ("NDAs") with HECO andMECO to facilitatetheexchange Agreements asthe partiesworked toward their mutual goal of developing "renewableenergyopportunities." (Id. at2,\ 5; see alsoPlf. First Am. Compl.,Exhs.A & B). The NDAs prohibitedthe partiesfrom, inter alia,disclosing confidential information to third parties,using confidential information forpurposes umelatedto the Maui Project,and soliciting or accepting business from sources madeavailableby (Plf.First.Am.Compl.,Exh.Aatl,3&Exh. theotherpartywithoutexpresswrittenauthorization. B at l, 3). After months of additional negotiations,plaintifl HECO, and MECO executeda Memorandum of Understanding ("the Project Agreement") outlining the responsibilities of each party in developing the Maui Project, including the mutual obligation to work exclusively with one another in good faith to finalize an investment agreement,to develop the site of the biodiesel 6 production facility, and to negotiatean acceptable tolling agreement. (HECO App. at 2,11 & 9,'lT'17 1-3). Karl E. Stahlkopf signedboth the NDA and the ProjectAgreementin his capacityas Senior of Vice-President HECO. (ld. at 12; Plf. First Am. Compl., Exh. A at 4). Aloha aboutoperatinga fuel storagefacility that would In August 2007, plaintiff approached 5, supportfor the Maui Project. (Aloha App. at 3-4, fltT 7). To provide logisticaland transportation plaintiff and Aloha enteredinto a Mutual Non-DisclosureAgreement facilitate their discussions, which, like the NDAs with HECO and MECO, prohibited the parties from disclosing confidential information to third parties and using confidential information for purposesunrelatedto the project. (See id. at 18-21). After the agreementwas signed, plaintiff introduced Aloha to MECO as a potential operatorof the fuel storagefacility. (SeePlf. First Am. Compl. at 12,n29). An Aloha by then traveledto Iowa to visit a biodieselproductionfacility operated NewMech representative Inc. ("NewMech") that was similar to the facility plannedfor Maui. (Aloha App. at 9, Companies, into yet anotherconfidentiality Prior to that visit, plaintiff, Aloha, andNewMech entered tTlT35-36). agreement to protect the disclosure of confidential information and to prevent one party from from clients of anotherparty("the Aloha NDA"). (Plf. First Am. Compl., Exh. soliciting business Dat1,fll&2,n6.b). The eventsgiving rise to this suit startedto unfold aroundthe time Aloha visited NewMech. According to plaintiff, the HECO Defendantsceasedall efforts to negotiate an acceptabletolling agreementwith investorsand refusedto work in good faith with plaintiff to jointly develop the Maui Project. (Plf. First Am. Compl. at 13,nn 32-34 & l4-l5,ll 38). Instead,the HECO Defendants allegedly promised Aloha a key investment role in the project and the opportunity to purchase plaintiffs majority interest. (Id. at13-14,fl 35). Plaintiff further alleges that the HECO Defendants and Aloha violated their respective confidentiality agreementsby disparaging plaintiff, by using and by soliciting plaintiff s clients. (Id. at l4-l5 , confidential information for unauthorizedpurposes, '||T1T37, 41). and Aloha. In On October6, 2008,plaintiff filed this lawsuit againstthe HECO Defendants part "all or a substantial its complaint,plaintiff allegesthat venueis proper in this district because of the eventsor omissionsgiving rise to the claimsoccurredwithin the Northern District of Texas," executedby the partiesprovide for jurisdiction and venue and the various confidentiality agreements now all in this forum. (Id. at6, fl I l). Defendants, of whom residein Hawaii for venuepurposes, move to transferthis caseto the District of Hawaii.' The transfermotions have beenfully briefed by the parties and are ripe for determination. il. The court begins its analysisby examiningthe relevantvenue statute. Under 28 U.S.C. $ l39l(a), a civil action wherein jurisdiction is founded only on diversity of citizenship must be I The venue issuehas been raised in at leastfour motions filed by defendants, including: (l) Aloha's Rule and Rule l2(bX3) motion to dismissfor impropervenueor, l2(b)(2) motion to dismissfor lack of personaljurisdiction Rule alternatively,motion to transfervenue pursuantto 28 U,S.C. $ la0a(a) (Doc. #4); (2) the HECO Defendants' jurisdiction and Rule 12(bX3)motion to dismissfor impropervenueor, l2(b)(2) motion to dismissfor lack of personal alternatively,motion to transfer venue pursuantto 28 U.S.C. $ la0a(a) (Docs. #7 & ll); (3) Aloha's motion for immediatetransfer of venue pursuantto 28 U.S.C. $ la0a(a) (Doc. #32); and (4) the HECO Defendants'motionto transfervenuepursuantto 28 U.S.C. $ 1a0a(a)(Doc. #35). Only the section 1404(a)motionshavebeenreferredto the judge for determination.(SeeDoc. #46). magistrate resides, all defendants if residein the same brought in: (l) a judicial district where any defendant part of the eventsor omissionsgiving rise to the State;(2) a judicial district in which a substantial claim occuned, or a substantialpart of the property that is the subjectof the action is situated;or (3) a judicial district in which any defendantis subjectto personaljurisdiction at the time the action is commenced,if there is no district in which the action may otherwise be brought. Plaintiff doesnot allege that any of the defendantsresidein the Northern District of Texas. Nor is there any evidence that all or a substantialpart of the eventsor omissionsgiving rise to plaintiff s claims occurredwithin this district. Instead, plaintiff argues that all parties contractually agreedto litigate any dispute involving the Maui Project in a Texas federal court. In particular, plaintiff relies on a forum selectionclausein the Aloha NDA, which provides: Jurisdiction in any action brought in any court, federal or state,shall residewithin the Stateof domicile of the party aggrieved,in any such courthavingsubjectmatterjurisdictionarisingunderthis Agreement. states: (/d, Exh. D at2,lT 8). A similar provision in the HECO and MECO agreements This Agreement is hereto enforceablein any United Statescourt as the exclusivevenue. that this actionshouldbe transferred counter (Id.,Exh A at3,n7 &Exh. B at 3, !f 7). Defendants provide for mandatoryvenue in Texas, and Hawaii is a to Hawaii becausenone of the agreements more convenient forum for the parties and witnesses. A. Forum selectionclausesmay be classifiedeither as mandatory or pennissive. See Von contains Graffenreid v. Craig,246 F.Supp.2d553,560 (N.D. Tex. 2003). Where the agreement forum, the clauseis mandatory. clear languageshowing that venueis appropriateonly in a designated jurisdiction or See id. (citing cases). By contrast,a permissiveforum selectionclauseauthorizes venue in a designatedforum, but doesnot prohibit litigation elsewhere. Seeid. (citing cases). It is important to distinguish betweenjurisdiction and venuewhen interpreting a forum selectionclause. for "Although it is not necessary sucha clauseto use the word'venue'or'forum,' it must do more than establish that one forum will have jurisdiction." City of New Orleans v. Municipal 1396(2005). AdministrativeServices,Inc.,376F.3d50l,504(5thCir.2004),cert.denied,l25S.Ct. No. 6-07-CV-282, 2008 WL Seealso Interactive Music Technologt,LLC v. Roland Corp. U.,S., wi#z 245142at * 3 (8.D. Tex. Jan.29,2008) (" [W]here venueis specifiedin a forum selectionclause mandatory or obligatory language. the clause will be enforced, while where only jurisdiction is specified, the clause will generally not be enforced without some further language indicating the parties' intent to make venue exclusive.") (emphasisin original). at None of the agreements issueprovide for exclusive venue in the Northern District of Texas. In fact, the Aloha NDA does not mention venue at all. Rather, the agreementstatesthat " [jJurisdiction in any action brought in any court, federal or state,shall reside within the State of domicile of the pafi aggrieved[.]" (Plf. First Am. Compl., Exh. D at2, fl 8) (emphasisadded). court, provide for "exclusivevenue"in any United States While the HECO and MECO agreements identifiesthe Northern District of (seeid.,Exh. A at 3, $ 7 & Exh. B at 3, fl 7), neitheragreement Texas as the preferred forum for litigating disputesinvolving the Maui Project. The plain language of this forum selectionclausepermits litigation in any federal district court, including Hawaii. contain clear languageshowing that venue is appropriateonly in Becausenone of the agreements Texas, the forum selectionclausesare permissive,not mandatory. SeeBBC Chartering & Logistic .2d WindPowerA/5,546 F.Supp 437 GmbH & Co. K.G. v. Siemens ,442-43 (S.D. Tex. 2008)(forum selectionclauseproviding that parfy may bring suit in "anyjurisdiction" was permissive). B. Having determinedthat the parties are not contractually obligated to litigate this dispute in Texas,the court must decidewhetherto transferthe actionto Hawaii. Under 28 U.S.C. $ 1404(a): in For the convenience partiesandwitnesses, the interestofjustice, of may transfer any civil action to any other district or a district court division where it might have beenbrought. The purpose of this statute is "to prevent the waste of time, energy, and money and to protect and inconvenience expense."DataTreasury unnecessary litigants,witnesses, the public against and .2d Corp. v. First Data Corp.,243 F.Supp 591,593(N.D. Tex. 2003), quotingAndradev. Choinacki, .817 , S32(S.D. Tex. 1996). In ruling on a motion to transfervenue,the court first must 934 F.Supp determinewhether the plaintiff s claim could have beenfiled in the judicial district to which transfer of is sought. In re Volkswagen America,lnc.,545 F.3d 304, 312 (5th Cir. 2008) (enbanc),cert. must show district,the defendant denied,l29 S.Ct. 1336(2009). If venueis properin the transferee "good cause" for the transfer. Id. at 315. To show "good cause,"the defendantmust satis$ the that a transferis " [f]or the convenienceofparties and statutoryrequirementsand clearly demonstrate witnesses,in the interestofjustice." ./d If the defendantcannotmeet this burden,the plaintiffs choice of forum should be respected. Id.; see also DoubletreePqrtners, L.P. v. Land America at WL 5119599 *4 QII.D.Tex. Dec. 3, 2008). American Title Co.,No. 3-08-CV-1547-O,2008 In deciding a transfermotion, the court must considervarious private and public interest F.3d at 315. The private interestfactors are: (1) the relative ease factors. In re Voll<swogen,545 of the to of to of access sources proof; (2) theavailability of compulsoryprocess secure attendance and (a) all other practicalproblemsthat (3) for witnesses; the cost of attendance willing witnesses; Id.;seealsoVonGraffenreid,246F.Supp.2dat562 makeatrialeasy,expeditious,andinexpensive. difficulties flowing from court (citing cases).The public interestfactorsare: (1) the administrative congestion; (2) the local interest in having localized disputesresolved at home; (3) the familiarity problems of the forum with the law that governsthe action; and (4) the avoidanceof unnecessary 545 F.3d at 315; Von of conflict of laws or in the applicationof foreign law. In re Volkswagen, at562. Whilethesefactorsareappropriateformosttransfercases,they Graffenreid,246F.Supp.2d Moreover,nosingle InreVollcswagen,545F.3dat3l5. arenotnecessarilyexhaustiveorexclusive. factor is entitled to dispositive weight. .Id. l. The court has little difficulty concluding that plaintiff could have brought this action in venuein Texas,Hawaii is clearly Hawaii. Absent a mandatoryforum selectionclauseestablishing as a proper forum for litigating this dispute. Indeed,plaintiff concedes much in its response.(See Plf. Resp.Br. at 10). 2. Next, the court considersthe private interest factors relevant to the section 1404(a)transfer are analysis. The evidencesubmittedby plaintiff showsthat key witnesses locatedin at least 13 different states,including Texasand Hawaii. (SeePlf. App. at7,l2l).2 In addition, at leastone to potential witness residesin London, England. (Id.). It is reasonable infer that many of these possess that arerelevantto the subjectmatterofthis litigation. Where,ashere, documents witnesses witnessesand documentsare spreadacrossthe globe, this factor is neutral. SeeInteractive Music were of Technology,2008WL 245142at * 10 (convenience witnessfactor neutralwherewitnesses Co,, L.P. v. BMJ Foads Puerto Rico, Inc., scatteredacrossthe country); Metromedia Steakhouses 2 Plaintiff objects to and moves to strike evidence contained in a consolidated reply appendix filed by defendants,including evidence that 17 current or former HECO and MECO employeeswho were involved in the Maui Project still reside in Hawaii. Becausethe court has not consideredthis evidencein deciding the transfermotions, 762, plaintiffs motion to strike lDoc. #521isdeniedasmoot. SeeOndovaLtd. v. Manila Industries,Inc.,5l3 F.Supp.2d 768 (N,D. Tex. 2007) (denyingmotion to strike reply appendixas moot where court did not considernew evidencein deciding the underlyingmotion). located 3-07-CV-2042-D,2008WL 794533at *3 (N.D. Tex. Mar. 26,2008) (sameasto documents FastenerCo.,No. 3-02-CV-0308-BD,2002 in different states); Consulting,LLC v. Engineered N2 at WL 31246770 *4 (N.D. Tex. OcL2,2002) (same). Nor are any of the other private interest factors determinative of the transfer issue. Regardlessof whether this action is litigated in Hawaii or Texas,the parties may take advantageof modern technologyto minimize any inconvenienceto themselvesand their witnessesand to control the costs of litigation. See In re Volkswagen,545 F.3d at 3 l6 (due to increasingtechnological to concemsregardingrelative easeof access sourcesof proof have been significantly advances, diminished, though not rendered completely superfluous). Most relevant documents can be of electronically,"making the physical locationof the documents lesserconsequence." exchanged Inc. v. Interactive Music Technology,2008 WL 245142 at *10, citing Symbol Technologies, Inc., 450 F.Supp.2d676, 678 (E.D. Tex. 2006). The partiesmay depose Metrologic Instruments, any witness who is unwilling or unableto travel to Hawaii or Texasfor trial. SeeLevy v. City of Rio Grande Clry, No. 3-04-CV-0381-8, 2004 WL 2847273 at *3 (N.D. Tex. Dec' 9, 2004) (inconvenienceto witnessesdid not requiretransferwhere movant failed to explain why it could not effectively present testimony by deposition); Wash Solutions, L.L.C. v. Auto Spa of Oklahoma, at WL L.L.C.,No.3-06-CV-0437-BD,2006 1348748 *l (N.D. Tex. May 16,2006)(same).Even biodieselproductionfacility is locatedin Hawaii doesnot weigh the fact that the siteofthe proposed Inc., No. 3in favor of transfer. See Ternium International U.S.A.Corp. v. ConsolidatedSystems, 6-G,2009WL464953at *3 (N.D. Tex. Feb.24,2009)(proximityofproposedtransferee 08-CV-081 district to the premisesdid not weigh in favor of transferwherethe moving party failed to establish *4 n. N2 why the ability to view the premiseswas necessary); Consulting,2}}2 WL 3 1246770at 5 (same). 4. While the private interestfactorsareneutral,the public interestfactorsweigh heavily in favor of transfer. Most importantly, Hawaii has a significant connection to the subject matter of this litigation, which arisesout of a failed endeavorto construct a biodiesel fuel production facility on the island of Maui for the benefit of Hawaii residents.The conductof which plaintiff complains-secretmeetings betweenthe HECO Defendantsand Aloha in furtheranceof an alleged conspiracy to oust plaintiff from the Maui Project--occurredin Hawaii. Not only do all the defendantsreside in Hawaii, but plaintiff has strong connectionsto that forum. BlueEarth Biofuels, LLC was formed purposeof developingthe Maui Project. (SeePlf. App. at3-4,114, in March 2006 for the express 6). From March 6,2007 to July 22,2008, plaintiff maintainedits principal place of businessin in Hawaii. (Id. at 4, fl,li5, g & 7, fl 20). Plaintiff also registered the Stateof Hawaii as a foreign the limited liability company. (Id. at4, fl 5). Conversely, NorthernDistrict of Texashasabsolutely no interest in this litigation. None of the eventsor omissionsgiving rise to this suit occurredin this district and plaintiff doesnot residehere'3 In addition, Hawaii law likely will govern at least part of this dispute. The Project by, providesthat it "shall be governed Agreementsignedby plaintiff, HECO, and MECO expressly with the laws of the Stateof Hawaii." (Plf' First Am. Compl., construedand appliedin accordance Exh. C at 6, !f 6). Such choice-of-law clauses are presumptively valid and generally upheld "if reasonablyrelated to the transaction,and the chosenlaw is not contrary to the fundamentalpolicy of the forum." CK DFW Partners Ltd, v. City Kitchens,Inc., No. 3-06-CV-1598-D,2007 WL 2381259at*7 n.l7 (N.D. Tex. Aug. 17,2007); seealso El Pollo Loco, S,A.de C.V. v. El Pollo Loco, 3 Plaintiffnow maintainsits principalplaceofbusiness Frisco,Texas,which lieswithin the Sherman Division in District of Texas. (SeePlf. App. at 3,n4 &7,n22). of the Eastern lnc.,344 F.Supp.2d986,987 (S.D. Tex, 2004). This public interestfactor weighs in favor of a LLC v. Lehman Bros., 1nc., 3-05-CV-2036-D,2006WL 2051030 No transfer.SeeNDC Investments at *5 (N.D. Tex. JuI.21,2006). argumentsregarding docket congestion Finally, the court rejects plaintiffs unsubstantiated and its inability to receive afair trial in Hawaii. First, federal courts in the District of Hawaii, where each judge had an averageof 207 pending caseslast year, are less congestedthan courts in the Northem District of Texas, where eachjudge had an averageof 325 pending casesduring the same That time period. Seehttp://www.uscourts.gov/cgi-bin/cmsd2008.pl. courtsin theNorthernDistrict than courtsin the District of Hawaii of Texashave a slightly fasterdispositiontime for civil cases particularlysincethe dispositiontime differs by only four-months. SeeSanchez is inconsequential, *2 of WL 1040469 (S.D.Tex. Apr. 2,2007) (possibility brief No. G-06-CV-718,2007 v. Rawlings, the transfer). Second, fact that Hawaii jurors might be customers delaydoesnot weigh for or against of HECO or MECO and have a financial interest--or at least a perceivedinterest--in the outcomeof meanthey will be biasedagainstplaintiff. SeeIn re Wyoming this litigation does not necessarily utility customers F.Supp .561,563 (D. Kan. 1988)(speculationthat Antitrust Cases,723 Tight Sands will benefit from any recovery by the utility companydoesnot weigh in favor of transfer); Virginio 568, 571 (D.C' Ya.1975) & Electric & Power Co. v. SunShipbuilding Dry Dock Co.,389 F.Supp. (same). If the caseproceeds trial, the court and the lawyerscan useproven voir dire techniques to outweighthe otherpublic to eliminatepotentialjurors with any actualbias. None of theseconcerns interest factors which favor transferring this caseto Hawaii. CONCLUSION that Hawaii hasa significant relationshipto the parties Defendantshaveclearly demonstrated and an interest in the subject matter of this litigation. This district has no such relationship or interest. Accordingly,defendants'motionstotransfervenue[Docs.#4,7,11,32&35]aregranted. to This case hereby is to transferred theDistrictof Hawaiipursuant 28 U.S.C.$ 1404(a).4 SO ORDERED. DATED: April 3, 2009. STATES IVIACISTRATE JUDGE 4 Although the court doesnot decidethe Rule l2(bX2) motionsto dismissfor lack of personal jurisdiction and it filed by defendants, is likely thosemotionswill be moot once the Rule l2(b)(3) motionsto dismissfor impropervenue the case is transferredto Hawaii.

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