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ENGELS v. EXEL GLOBAL LOGISTICS

April 11, 2005.

FRANK ENGELS, Plaintiff,
v.
EXEL GLOBAL LOGISTICS, INC. and DOES 1-25, inclusive, Defendants.



The opinion of the court was delivered by: MARILYN PATEL, Chief Judge, District

MEMORANDUM AND ORDER Re: Defendant's Motion to Remand; Plaintiff's Motion to Transfer
On August 13, 2004, plaintiff Frank Engels filed a complaint seeking recovery of his unpaid sales commissions in Alameda County Superior Court. On September 17, 2004, defendant Exel Global Systems, Inc. ("Exel") removed the action to this court, asserting jurisdiction based on diversity of citizenship. Now before the court are Engels' motion to remand and Exel's motion to transfer venue to the United States District Court for the Northern District of Texas. Having considered the parties' arguments and for the reasons set forth below, the court enters the following memorandum and order.

BACKGROUND

  Defendant Exel is a supply chain management company that provides freight forwarding, warehousing, distribution services, and other "logistics solutions" to customers in the manufacturing and retail sectors. First Kelly Decl., Exh. F ¶ 6. Until his resignation in February 2004, Engels was employed at Exel's Hayward, California office and served as the company's Director of Sales and Pricing for Latin America and the Carribean. Id. ¶ 9; Notice of Removal, Exh. A ¶ 4. As part of his compensation, Engels received a commission based on "his performance as an employee." Notice of Removal, Exh. A ¶ 4. Engels now asserts that Exel refused to pay him the full amount of the commissions due to him under his contract of employment. Id. ¶ 10.

  Exel disputes its liability for the unpaid commissions and raises a host of claims against Engels, albeit not in this forum. These claims arise out of Engels' relationship with Velocita World Wide Logistics, Inc. ("Velocita"), one of Exel's competitors in the market for logistics management services. First Kelly Decl., Exh. F ¶¶ 6-7. According to Exel, Engels provided Velocita with Exel's confidential marketing and pricing data prior to his resignation from the company, thereby giving Velocita an unfair competitive advantage in the logistics management services market. Id. ¶ 7. Based on these allegations, Exel filed suit against Engels in the District Court of Dallas County, Texas on June 14, 2004, asserting numerous causes of action relating to Engels' alleged misappropriation of confidential business information. See generally id., Exh. A. Exel's Texas action also seeks declaratory judgment as to the amount of commissions owed to Engels. Id., Exh. F ¶¶ 50-53.

  On August 12, 2004, Engels entered a special appearance in the Dallas County District Court for the purpose of challenging that court's exercise of jurisdiction over his person or property. Id., Exh. D. In his pleadings, Engels asserted that he was a resident of California and that his contacts with Texas were insufficient to establish personal jurisdiction over him. Id. ¶¶ 1-7. However, before the Texas court could rule on the merits of his defense of lack of personal jurisdiction, Engels filed a Withdrawal of Special Appearance and Entry of Appearance and thus consented to the court's jurisdiction with respect to the subject matter of Exel's claims. Third Kelly Decl. ¶ 1 & Exh. A. Those claims are currently pending in Dallas County District Court.

  On August 13, 2004, the day after entering his special appearance, Engels filed a complaint in Alameda County Superior Court seeking to recover his unpaid sales commissions. Notice of Removal, Exh. A. In addition to alleging breach of his contract of employment, Engels' complaint asserts causes of action for willful failure to pay wages due in violation of the California Labor Code and unfair business practices in violation of California Business & Professions Code § 17200. Id. ¶¶ 5-16. Engels now alleges that Exel owes him $5 million in unpaid commissions. Id., Exh. B at 1. On September 17, 2004, Exel removed the California action to this court, asserting jurisdiction based on diversity of citizenship. Notice of Removal ¶ 9. Specifically, the notice of removal alleged that Exel is a New York corporation with its principal place of business in Irving, Texas and that Engels is a citizen of the state of California. Id. ¶¶ 5-6. Following the removal of this action, on September 24, 2004, Exel filed a motion to transfer venue pursuant to 28 U.S.C. § 1404(a), arguing that the convenience of the parties and witnesses and the interest of justice favored transferring the instant action to the United States District Court for the Northern District of Texas.

  Engels opposed Exel's motion to transfer, and on December 3, 2004, he filed a motion to remand the instant action to Alameda Country Superior Court. Engels concedes that he was a resident of California at all times during his employment with Exel. Second Engels Decl. at 1. However, after Engels resigned from Exel, he accepted an offer of employment from UTi, Inc. and served as UTi's Vice President of Sales and Marketing for Latin America from April 13, 2004 until September 23, 2004. First Engels Decl. ¶¶ 4-5 & Exh. A. On June 22, 2004, UTi transferred Engels to its office in São Paolo, Brazil. Id. ¶ 3. After his transfer, Engels served as the managing director of UTi's São Paolo office and resided in Brazil until he was fired by UTi on September 23, 2004. Id. ¶¶ 3-5 & Exh. A at 1. Engels subsequently returned to the United States and began working in Chicago, where he is presently employed. Id. ¶ 10.

  Engels now contends that because he resided in Brazil with the intent to remain permanently at the time that this action was filed, he was not a citizen of California or of any other state at that time. Thus, according to Engels, this court lacks subject matter jurisdiction and must remand this action to Alameda County Superior Court. The discussion that follows addresses Engels' motion to remand as well as Exel's motion to transfer venue.

  LEGAL STANDARD

  I. Motion to Remand

  As a general rule, an action is removable to a federal court only if it might have been brought there originally. 28 U.S.C. § 1441(a). The removal statute is strictly construed, and the court must reject federal jurisdiction if there is any doubt as to whether removal was proper. Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996). The defendant bears the burden of proving the propriety of removal. Id. (citing Harris v. Provident Life & Accident Ins. Co., 26 F.3d 930, 932 (9th Cir. 1994)). Thus, where removal jurisdiction is premised upon diversity of citizenship, the defendant must establish that the court would have had original jurisdiction over the action pursuant to 28 U.S.C. § 1332, which grants district courts the authority to entertain any civil action "where the amount in controversy exceeds the sum or value of $75,000 . . . and is between . . . citizens of different States." 28 U.S.C. § 1332(a)(1). For removal purposes, diversity of citizenship must exist at both the time that the action was commenced in state court and at the time of removal. Strotek Corp. v. Air Transp. Ass'n of Am., 300 F.3d 1129, 1131 (9th Cir. 2002) (citation omitted).

  II. Motion to Transfer Venue

  A motion to transfer venue to another federal court may be brought under 28 U.S.C. § 1404, which provides: "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." 28 U.S.C. § 1404(a). In adjudicating a motion to transfer, the court must first determine that venue would be appropriate in the transferee district. Id.; see also Goodyear Tire & Rubber Co. v. McDonnell Douglas Corp., 820 F. Supp. 503, 506 (C.D. Cal. 1992). Once the propriety of venue in the transferee district is established, the court must then consider whether the criteria set forth in section 1404(a) favor adjudicating the plaintiff's claims in that forum. See Goodyear, 820 F. Supp. at 506. The Ninth Circuit has characterized these criteria as embodying an "individualized, case-by-case consideration of convenience and fairness." Jones v. GNC Franchising, Inc., 211 F.3d 495, 498 (9th Cir.) (quoting Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988)), cert. denied, 531 U.S. 928 (2000). Among the factors that a district court may consider in deciding whether transfer is appropriate are: (1) the location where the relevant agreements were negotiated and executed; (2) the state that is most familiar with the governing law; (3) the plaintiff's choice of forum; (4) the respective parties' contacts with the forum; (5) the contacts relating to the plaintiff's cause of action in the ...


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