T. and B. Equipment Company, Inc. v. RI, Inc., No. 3:2015cv00337 - Document 8 (E.D. Va. 2015)
Court Description: MEMORANDUM OPINION. Signed by District Judge James R. Spencer on 8/24/2015. (jsmi, )
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T. and B. Equipment Company, Inc. v. RI, Inc. Doc. 8 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF VIRGINIA RICHMOND DIVISION T. AND B. EQUIPMENT COMPANY, INC., Plaintiff, v. Civil Action No. 3:15-CV-337 RI, INC. Defendant. MEMORAN D U M OPIN ION THIS MATTER is before the Court on a Motion to Dism iss for Im proper Venue and Incorporated Mem orandum of Law (“Motion”) (ECF No. 4), filed by Defendant on J uly 20 , 20 15. Plaintiff filed a response in opposition on J uly 31, 20 15 (“Opp’n Mem .”) (ECF No. 6), and Defendant subsequently filed a reply on August 6, 20 15 (“Reply Mem .”) (ECF No. 7). The parties have not requested a hearing on this m atter, and the Court finds that oral argum ent is unnecessary. See E.D. Va. Loc. Civ. R. 7(J ). For the reasons that follow, the Court DENIES the Motion. I. BACKGROU N D This action for declaratory judgm ent stem s from an agreem ent to purchase a new outdoor seating system . Defendant RI, Inc. d/ b/ a Seating Solutions (“Defendant” or “RI”) is a New York Corporation with its principal place of business in Com m ack, New York. Defendant specializes in the sale, rental, installation and rem oval of custom designed spectator seating. Plaintiff T. and B. Equipm ent Com pany, Inc. (“Plaintiff” or “T&B”), a Virginia corporation, specializes in indoor and outdoor event seating solutions, including but not lim ited to tem porary seating for golf tournam ents, concerts, shows and graduations. In or around March 20 12, Plaintiff initiated discussions with Defendant because it was interested in purchasing a new seating system , specifically the “Box Seat 90 1” system Dockets.Justia.com (hereinafter, the “90 1 Box Seats”). Plaintiff claim s that prior to its discussions with Defendant, Plaintiff had been m ade aware of the existence of the 90 1 Box Seats as early as 20 10 through displays at industry trade shows, including the Stadia Design & Technology Expo at the J avits Center in New York City, New York. In response to Plaintiff’s interest, Defendant sent Plaintiff a written quote on March 14, 20 12, (Com pl. Ex. A), and again on April 19, 20 12, (id. at Ex. B). Also in the spring of 20 12, Defendant approached Plaintiff about a possible acquisition of Defendant’s equipm ent rental business. In conjunction with Plaintiff’s possible acquisition, the parties executed a Mutual Non-Disclosure Agreem ent (the “NDA”) on April 24, 20 12. (Id. at Ex. C). The NDA is governed by and construed in accordance with New York law. (Id. at ¶ 17.) After Plaintiff sent Defendant a due diligence checklist on April 24, 20 12, there were no further discussions between the parties. 1 On J une 29, 20 12, Plaintiff received an unsolicited em ail from The Product People Int’l Pty Ltd (“The Product People”) offering to sell th e 90 1 Box Seats to Plaintiff. The Product People is the developer and m anufacturer of the seats. Defendant reports that it becam e aware that Plaintiff purchased approximately 10 ,690 90 1 Box Seats from The Product People. In Decem ber 20 12, Plaintiff received a letter from Defendant claim ing that Plaintiff’s purchase of the 90 1 Box Seats from The Product People was a violation of the NDA, on the basis that Defendant had shared inform ation regarding the 90 1 Box Seats while there was a “nondisclosure non-com pete in place” and further claim ing that Plaintiff was only aware of the 90 1 Box Seats “because of” the NDA. (Id. at Ex. D.) In February 20 15, Plaintiff received a dem and letter from Defendant claim ing that Plaintiff breached the NDA by purchasing the Box Seats from The Product People, and dem anding that Plaintiff pay Defendant thirty dollars for each seat purchased, for a total of $ 320 ,70 0 . (See id. at Ex. E.) 1 In its opposition m emorandum , Plaintiff subm its that after receiving the executed NDA and the due diligence checklist, Scott Suprina, President of RI, called Plaintiff and indicated that he did not wish to provide certain inform ation that Plaintiff needed in order to proceed with the acquisition of Defendant’s equipm ent rental business. (Opp’n Mem . at 2.) 2 Plaintiff filed the Com plaint in the above-styled case on J une 4, 20 15. The one-count Com plaint seeks a declaratory judgm ent that Plaintiff did not breach the NDA by purchasing the 90 1 Box Seats from The Product People, and requests the Court to declare that Plaintiff has no liability, m onetary or otherwise, to Defendant. Defendant then filed the present Motion on J uly 20 , 20 15, arguing that the Court should dism iss the case for im proper venue, or alternatively transfer the action to the United States District Court for the Eastern District of New York where Defendant is located. II. LEGAL STAN D ARD A m otion to dism iss for im proper venue pursuant to Rule 12(b)(3) of the Federal Rules of Civil Procedure is a defense pleaded in the first responsive pleading or m ade by m otion filed by a defendant. Douglas v. D.B. Va., LLC, No. 4:10 CV80 , 20 10 WL 5572830 , at *2– 3 (E.D. Va. Dec. 13, 20 10 ). When a defendant challenges proper venue, the plaintiff bears the burden of establishing that venue is proper. Id. at 3 (citations om itted). But if no evidentiary hearing is held, “the plaintiff need only m ake a prim a facie showing of venue.” Mitrano v. Haw es, 377 F.3d 40 2, 40 5 (4th Cir. 20 0 4) (citation om itted). The court need not accept the pleadings as true, but instead m ay consider outside evidence. Id. However, the Court m ust still draw all inferences in favor of the plaintiff. Silo Point II LLC v. Suffolk Const. Co., 578 F. Supp. 2d 8 0 7, 8 0 9 (D. Md. 20 0 8). “If venue is found to be not proper in the judicial district, the court m ay dism iss the action, or transfer the action to a district where it otherwise could have been brought in the interest of justice.” Douglas, 20 10 WL 5572830 , at *3 (citing 28 U.S.C. § 140 6(a)). III. D ISCU SSION (1) Motion to Dism iss Federal Rule of Civil Procedure 12(b) perm its a party to assert im proper venue as a defense to a claim for relief. Fed. R. Civ. P. 12(b)(3). Venue is proper in 3 (1) a judicial district in which any defendant resides 2 , if all defendants are residents of the State in which the district is located; (2) a judicial district in which a substantial part of the events or om issions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated; or (3) if there is no district in which an action m ay otherwise be brought as provided in this section, any judicial district in which any defendant is subject to the court’s personal jurisdiction with respect to such action. 28 U.S.C. § 1391(b). Specifically with regards to the second prong, “in determ ining whether events or om issions are sufficiently substantial to support venue . . ., a court should not focus only on those m atters that are in dispute or that directly led to the filing of the action,” but instead “should review the entire sequence of events underlying the claim .” Mitrano, 377 F.3d at 40 5 (citations and internal quotation m arks om itted). For a contract dispute, “courts have recognized that particular attention should be paid to those core aspects of any contract dispute, including where the contract was negotiated or executed, where it was to be perform ed, and where the alleged breach occurred.” W y e Oak Tech., Inc., v. Republic of Iraq, No. 1:0 9cv793, 20 10 WL 2613323, at *10 (E.D. Va. J une 29, 20 10 ). Additionally, a court m ay consider, “the event that allegedly entitled the plaintiff to the paym ent [now] sought under the contract.” Mitrano, 377 F.3d at 40 6. In Mitrano, the Fourth Circuit considered a breach of contract action for nonpaym ent of attorney’s fees. See id. at 40 4. The Court held that the perform ance of the legal services at issue was the event that allegedly entitled the plaintiff to the paym ent sought under the contract. Id. at 40 5– 0 6. “Indeed, it was [plaintiff’s] work that allegedly created his entitlem ent to the paym ent he now seeks. For that reason, depending on the am ount of work that [plaintiff] com pleted in the Eastern District, that work alone m ay be sufficient to justify venue there.” Id. at 40 6. 2 When a defendant is a corporation, it resides “in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question.” 28 U.S.C. § 1391(c). Although Plaintiff’s Com plaint articulates both 28 U.S.C. § 1391(b)(1) and (b)(2) as bases for venue, Plaintiff’s response in opposition notes that “the correct venue provision in this case and the provision under which T&B is proceeding” is § 1391(b)(2). (Opp’n Mem . at 4 n.1.) Therefore, only § 1391(b)(2) will be addressed in this mem orandum opinion. 4 “As a result of the ‘substantial part’ wording of § 1391, it is possible for venue to be proper in several judicial districts.” Pow er Paragon, Inc. v. Precision Tech. USA, Inc., 60 5 F. Supp. 2d 722, 726 (E.D. Va. 20 0 8) (citing Mitrano, 377 F.3d at 40 5). Thus, a plaintiff need not dem onstrate “that his chosen venue has the m ost substantial contacts to the dispute,” but “[r]ather it is sufficient that a substantial part of the events occurred in that venue, even if a greater part of the events occurred elsewhere.” Id. (citations om itted). In the present action, Defendant contends that “[t]here is no allegation in the Com plaint that any event related to the declaratory judgm ent claim occurred in Virginia,” (Mot. at 2), and thus argues that Plaintiff has “provided no connection to Virginia,” (id. at 3.) In its reply, Defendant further asserts that Plaintiff’s “prim ary claim in this m atter is that its alleged prior knowledge of the 90 1 Box Seat that it obtained during a prior visit to New York places the inform ation subsequently disclosed by [Defendant] outside the scope and protections of the NDA, and that therefore [Plaintiff] has no liability thereunder.” (Reply Mem . at 6) (em phasis added). “As a result, because [Plaintiff] alleges that it first observed [Defendant’s] proprietary inform ation in New York in 20 10 , and argues that this prevents it from violating the NDA, the substantial part of events constituting [Plaintiff’s] declaratory judgm ent claim only occurred in New York.” (Id. at 7.) However, upon review of Plaintiff’s Com plaint and the attached docum ents, Defendant’s argum ent is not entirely true. Plaintiff filed its Com plaint seeking a declaratory judgm ent that it did not breach the NDA by purchasing the 90 1 Box Seats from The Product People. (Com pl. ¶ 24.) Plaintiff’s claim is based on several explanations. (See id. at Ex. F.) First, as Defendant contends, Plaintiff claim s that it “knew of the existence of the 90 1 Box Seats, and knew that the 90 1 Box Seats had been developed and m anufactured by The Product People, prior to entering into the NDA with Defendant.” (Id.) But Plaintiff also claim s that “[t]he NDA, by its plain language, acknowledges that T&B m ay enter into transactions with other sim ilar or identical business.” (Id. at ¶ 25.) Plaintiff further asserts that “there m ere existence of the 90 1 Box Seats or the identity of the 5 m anufacturer of the 90 1 Box Seats do not constitute inform ation that was ‘designated as confidential’ by Defendant or that, ‘given the nature of the inform ation or the circum stances surrounding its disclosure, reasonably should be considered as confidential,’ as required by the NDA.” (Id.) Finally, Plaintiff notes that “the specifics of the 90 1 Box Seats had nothing whatsoever to do with T&B’s potential acquisition of Defendant’s rental business.” (Id.) Thus, the Court will not only focus on Plaintiff’s first defense– that being, Plaintiff had prior knowledge of the 90 1 Box Seats before entering into the NDA. Instead, a review of the “entire sequences of events underlying the claim ,” Mitrano, 377 F.3d at 40 5, reveals that a substantial part of the events giving rise to the claim occurred in Virginia, and thus venue is proper here.3 As alleged in the Com plaint, Plaintiff is a Virginia corporation with its principal place of business in Ashland, Virginia. (Com pl. ¶ 2.) In March 20 12, Plaintiff engaged in discussions with Defendant because it was interested in purchasing the 90 1 Box Seats. (Id. at ¶ 8.) In response to Plaintiff’s interest, Defendant sent Plaintiff a written quote by e-m ail on March 14, 20 12, (id. at Ex. A; Ellis Aff. at ¶ 7), and again on April 19, 20 12, (id. at Ex. B; Ellis Aff. at ¶ 8). Defendant also sent a prototype of the 90 1 Box Seat to Plaintiff’s offices in Ashland, Virginia. (Ellis Aff. at ¶ 6.) In the spring of 20 12, Defendant approached Plaintiff regarding a possible acquisition of Defendant’s equipm ent rental business. (Com pl. at ¶ 10 .) Specifically, Scott Suprina, President of Defendant, visited Plaintiff’s Ashland, Virginia office in the spring 20 12 to discuss the acquisition. (Ellis Aff. at ¶ 10 .) This was the only face-to-face m eeting between Plaintiff and Defendant. (Id. at ¶ 21.) In connection with Plaintiff’s possible acquisition of Defendant’s equipm ent rental business, the parties executed the NDA. (Com pl. at ¶ 11.) Plaintiff executed the NDA at its offices in Ashland, Virginia. (Ellis Aff. at ¶ 12.) No one from Plaintiff’s offices traveled to Defendant’s offices in New York. (Id.) 3 The Court does not com m ent on whether New York m ay also be a proper venue for the instant action. See Pow er Paragon, Inc., 60 5 F. Supp. 2d at 726 (venue m ay be proper in m ore than one district). 6 Plaintiff’s subsequent purchase of the 90 1 Box Seats from The Product People occurred in Virginia. (Opp’n Mem . at 8.) After Plaintiff’s purchase of the 90 1 Box Seats, Plaintiff received a letter from Defendant at its offices in Ashlan d, Virginia in Decem ber 20 12 claim ing that Plaintiff violated the NDA. (Com pl. at ¶ 17, Ex. D; Ellis Aff. at ¶ 17.) In February 20 15, Plaintiff received a renewed dem and letter from Defendant claim ing that Plaintiff breached the NDA by soliciting and purchasing the 90 1 Box Seats from The Product People, and dem anding that Plaintiff pay Defendant thirty dollars for each 90 1 Box Seat purchased. (Com pl. at ¶ 19, Ex. E.) Plaintiff responded by letter dated March 5, 20 15, setting forth Plaintiff’s position as to why Plaintiff’s purchase of the 90 1 Box Seats from The Product People did not violate the NDA. (Id. at ¶ 20 , Ex. F.) In April 20 15, Plaintiff received a second dem and letter from Defendant, alleging that Plaintiff violated the NDA by purchasing item s directly from The Product People. (Id. at ¶ 21, Ex. G.) With the foregoing facts in m ind, it is clear that a substantial part of the events giving rise to the instant claim occurred in Virginia. Defendant directed letters, em ails, and telephone calls to Plaintiff’s office in Ashland, Virginia. (See Ellis Aff. ¶¶ 12, 14, 17– 19.) Plaintiff executed the NDA at its offices in Ashland, Virginia. (Id. at ¶ 12.) And the only face-to-face m eeting between the parties occurred in Ashland, Virginia. (See id. at ¶¶ 10 , 20 .) In sum , Plaintiff’s offices are in Virginia, and Defendant’s com m unications with and visit to Plaintiff’s office com e within the “sequence of events underlying the claim ” at issue here. See Prod. Group. Int’l, Inc. v. Goldm an, 337 F. Supp. 2d 788 , 799 (E.D. Va. 20 0 4). Finally, the event giving rise to the claim at issue here– i.e., Plaintiff’s purchase of the 90 1 Box Seats from The Product People– occurred in Virginia. See Mitrano, 377 F.3d at 40 6. For those reasons, the Court will not dism iss for im proper venue.4 4 Defendant also argues that “as in Pow er Paragon, the parties’ negotiated a clause in the NDA providing for a choice of law in New York, which should sim ilarly be respected.” (Reply Mem . at 8.) But, Defendants’ argum ent fails to recognize the difference between Pow er Paragon and the instant case. The NDA executed in this case only contains a choice of law provision. (See Com pl., Ex. C. at ¶ 17) (“This Agreem ent shall be governed by and construed in accordance with the laws of the State of New York without regard to 7 (2) Motion to Transfer Defendant alternatively requests that the Court transfer this action to the United States District Court for the Eastern District of New York where Defendant is located. (Mot. at 1.) 5 However, transfer of this case would also be inappropriate. Pursuant to 28 U.S.C. § 140 6, a district court shall dism iss a case brought in an im proper venue, or if it be in the interest of justice, transfer the case to the district or division in which it could have been brought. 28 U.S.C. § 140 6(a). 28 U.S.C. § 140 4 states, “For the convenience of parties and witnesses, in the interest of justice, a district court m ay transfer any civil action to any other district or division where it m ight have been brought.” 28 U.S.C. § 140 4(a). “The decision whether to transfer an action under the statute is com m itted to the sound discretion of the district court.” Heinz Kettler GMBH & Co. v. Razor USA, LLC, 750 F. Supp. 2d 660 , 667 (E.D. Va. 20 10 ) (citing One Beacon Ins. Co. v. JNB Storage Trailer Rental Corp., 312 F. Supp. 2d 824, 8 28 (E.D. Va. 20 0 4)). District courts determ ining whether to grant a m otion to transfer under § 140 4(a) “typically consider[]: (1) plaintiff’s choice of forum , (2) convenience of the parties, (3) witness convenience and access, and (4) the interest of justice.” Id. (citing JTH Tax, Inc. v. Lee, 482 F. Supp. 2d 731, 736 (E.D. Va. 20 0 7)). The m ovant bears the burden of showing that transfer is proper. Id. Here, Defendant fails to satisfy its burden in dem onstrating that transfer to New York is proper. Defendant only asserts that transfer is appropriate because it “is dom iciled in New York and has its principal place of business in Com m ack, New York;” “the NDA is governed by New York law;” and Plaintiff “alleged in the Com plaint that it first learned about the product covered by the NDA in New York.” (Mot. at 3.) Defendant does not allege any inconvenience to the parties or lack of access to witnesses. This Court gives deference to Plaintiff’s choice of forum conflicts of law thereof.”). In contrast, the contract it issue in Pow er Paragon contained a forum selection clause which provided that, “[v]enue shall be the applicable state or federal court in Roanoke, Virginia.” Pow er Paragon, Inc., 60 5 F. Supp. 2d at 728. 5 “Defendant is a New York corporation with its principal place of business in Com m ack, New York.” (Com pl. ¶ 3.) 8 because Virginia is Plaintiff’s hom e forum and also has a substantial connection to the alleged cause of action (as described above). See Bd. of Trs. v. Sullivant Ave. Props., LLC, 50 8 F. Supp. 2d 473, 477 (E.D. Va. 20 0 7). For those reasons, the Court denies Defendant’s request to transfer the action. (3) Attorney ’s Fees Both parties request attorney’s fees pursuant to paragraph 17 of the NDA, which states: “In any action brought to enforce any provisions of this Agreem ent or for breach of this Agreem ent, the prevailing Party shall be entitled to recover its costs including reasonable attorney’s fees.” (Com pl., Ex. C. at ¶ 17) (em phasis added). Defendant argues that if the Court denies its Motion, Plaintiff will not be a “prevailing party” because “[d]efeating a m otion to dism iss for im proper venue will not provide T&B the central relief it sought in the Com plaint, which was to be declared to not have violated the NDA.” (Reply Mem . at 11) (citing Chainani v . Lucchino, 94 A.D.3d 1492, 1492, 942 N.Y.S. 2d 735, 736 (20 12)). The NDA does not define “prevailing party.” However in Chainani, the court held that “[i]n determ ining whether a party is a prevailing party, a fundam ental consideration is whether that party has prevailed with respect to the central relief sought.” 94 A.D.3d at 1494 (citations and internal quotation m arks om itted). Therefore, the court will consider “the true scope of the dispute litigated, followed by a com parison of what was achieved within that scope.” Id. (citations and internal quotation m arks om itted). Here, as Defendant argues, Plaintiff has not achieved the central relief it seeks– that being a declaration that it did not breach the NDA. Therefore, the Court denies Plaintiff’s request for attorney’s fees. IV. CON CLU SION For the foregoing reasons, the Motion is DENIED. In addition, each party’s request for attorney’s fees is DENIED. Let the Clerk send a copy of this Mem orandum Opinion to all counsel of record. // 9 _____________________/s/________________ James R. Spencer Senior U. S. District Judge An appropriate Order shall issue. ENTERED this _ 24th_ _ _ _ day of August 20 15. 10
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