United States District Court, N.D. California
September 30, 2005.
FLEXIBLE FUNDING, LLC, Plaintiff,
IRON MOUNTAIN INFORMATION MANAGEMENT, Defendant.
The opinion of the court was delivered by: JEFFREY WHITE, District Judge
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S IRON
MOUNTAIN'S MOTION TO DISMISS AMENDED COMPLAINT OR, IN THE
ALTERNATIVE, MOTION FOR CHANGE OF VENUE
This matter comes before the Court upon consideration of
Defendant Iron Mountain Information Management's ("Iron
Mountain") Motion to Dismiss Amended Complaint or, In the
Alternative, Motion for Change of Venue.
Iron Mountain moves to dismiss this action pursuant to Federal
Rules of Civil Procedure 12(b)(3) and 12(b)(6) on the grounds
that Plaintiff Flexible Funding, LLC ("Flexible") filed this
action in an improper forum and that Flexible's amended complaint
fails to state a claim on which relief can be granted. In the
alternative, Iron Mountain moves for a change of venue to the
United States District Court for the District of Massachusetts.
Having considered the parties' pleadings and relevant legal
authority, the Court finds this matter suitable for disposition
without oral argument. See N.D. Civ. L.R. 7-1(b). The Court
HEREBY DENIES the motion to dismiss for failure to state a claim.
The Court GRANTS the motion to transfer.
FACTUAL AND PROCEDURAL BACKGROUND
According to Flexible's Amended Complaint, on or about January
13, 2003, Flexible and L&L Temporaries, Inc. ("L&L") signed and
executed an Accounts Receivable Financing Agreement (the
"Agreement"), whereby Flexible obtained rights in L&L's accounts
receivable. (Am. Compl., ¶ 5, Ex. A.) L&L granted Flexible a
security interest in all of L&L's accounts, accounts receivable,
contract rights, deposit accounts, bank accounts, and books,
records, and computer programs relating to the accounts. (Id.,
¶ 5.) This security interest was perfected by a UCC-1 Financing
Statement filed with the Secretary of State for the State of
Massachusetts. (Id.) Flexible thereafter would advance L&L
funds on invoices and received individual assignments from L&L on
those invoices. (Id., ¶¶ 5-8.)
L&L's accounts receivable for Iron Mountain were covered by the
Agreement. (Id., ¶ 10.) On March 21, 2003, October 22, 2003,
and December 9, 2004, Flexible sent letters to Iron Mountain's
accounts payable department. (Id., Exs. B, C, D.) The first
letter states that L&L "has contracted to Flexible . . . to
provide financing services," and directs that current outstanding
and future invoices due should be mailed to L&L/Flexible at a
post office box in California. (Id., Ex. B.) The second two
letters state that L&L has assigned its accounts receivable to
Flexible and direct that payments on current outstanding invoices
be mailed to the same post office box. (Id., Exs. C, D.)
Flexible alleges that Iron Mountain paid certain invoices
directly to L&L in contravention of the letters described above,
which it contends are notices of assignment and which require
Iron Mountain to remit all payments on the invoices subject to
the assignments to Flexible.
On April 13, 2005, Flexible filed a complaint against Iron
Mountain in the Superior Court of the State of California, County
of San Francisco.
On May 11, 2005, Iron Mountain filed an interpleader action in
the United States District Court for the District of
Massachusetts, Iron Mountain Management v. L&L Temporaries,
Inc., et al., 05-10979 DPW. On May 20, 2005, Iron Mountain filed a notice of removal on the
basis of diversity jurisdiction, and Flexible's state court
action was removed to this Court.
On July 25, 2005, in response to a motion to dismiss, Flexible
filed its amended complaint. On August 23, 2005, Iron Mountain
filed the instant motion to dismiss.
A. Motion to Dismiss for Failure To State A Claim.
A motion to dismiss is proper under Rule 12(b)(6) where the
pleadings fail to state a claim upon which relief can be granted.
Fed.R.Civ.P. 12(b)(6). A Rule 12(b)(6) motion should not be
granted unless it appears beyond a doubt that a plaintiff can
show no set of facts supporting his or her claim. Conley v.
Gibson, 355 U.S. 41, 45-46 (1957); see also De La Cruz v.
Tormey, 582 F.2d 45, 48 (9th Cir. 1978). In ruling on a Rule
12(b)(6) motion, the complaint is construed in the light most
favorable to the non-moving party and all material allegations in
the complaint are taken to be true. Sanders v. Kennedy,
794 F.2d 478, 481 (9th Cir. 1986). The court, however, is not
required to accept legal conclusions cast in the form of factual
allegations if those conclusions cannot reasonably be drawn from
the facts alleged. Cleggy v. Cult Awareness Network,
18 F.3d 752, 754-55 (9th Cir. 1994) (citing Papasan v. Allain,
478 U.S. 265, 286 (1986)).
Taking the facts set forth in the Amended Complaint as true and
construing them in the light most favorable to Flexible, the
Court cannot find that there are no set of facts upon which
relief can be granted. Flexible asserts it notified Iron Mountain
that invoices had been assigned to it and that Iron Mountain
disregarded those notices and paid L&L directly. To the extent
there are questions about the legal sufficiency of the notices,
those questions are best addressed by way of summary judgment. If
Iron Mountain believes a more definite statement is required, it
should so move. The Rule 12(b)(6) motion is DENIED. B. Motion to Transfer Under Section 1404(a).*fn1
Iron Mountain also seeks to have the Court transfer this action
to the District Court in Massachusetts where the interpleader
action is pending. Pursuant to 28 U.S.C. § 1404(a), a district
court may transfer a civil action to any district where the case
could have been filed originally for the convenience of the
parties and witnesses and in the interest of justice.
A motion to transfer venue under § 1404(a) requires the court
to weigh multiple factors to determine whether transfer is
appropriate in a particular case. For example, the court may
consider: (1) the plaintiff's choice of forum; (2) the
convenience of witnesses and the parties; (3) the familiarity of
the forum with the applicable law; (4) the ease of access to
evidence; and (5) the relative court congestion and time of trial
in each forum. See Gulf Oil Co. v. Gilbert, 330 U.S. 501,
508-09 (1947); Jones v. GNC Franchising, Inc., 211 F.3d 495,
498-99 (9th Cir. 2000). As the moving party, Iron Mountain bears
the burden of showing that the inconvenience of litigating in
this forum favors transfer. See E. & J. Gallo Winery v. F. &
P.S.p.A., 899 F. Supp. 465, 466 (E.D. Cal. 1994) (noting that to
meet this burden requires production of affidavits or
declarations identifying key witnesses and anticipated
testimony). If the balance of convenience weighs strongly in
favor of transfer, the Court may accord less deference to a
plaintiff's chosen forum. Id.
There is no dispute that Flexible could have sued Iron Mountain
in the United States District Court for the District of
Massachusetts. Accordingly, the Court weighs the relevant
competing factors to determine which forum is appropriate under
1. Plaintiff's Choice of Forum.
The deference accorded to the Plaintiffs' chosen forum should
be balanced against both the extent of a defendants' contacts
with the chosen forum and a plaintiff's contacts, including those
relating to a plaintiff's cause of action. See Pacific Car and
Foundry Co. v. Pence, 403 F.2d 949, 954 (9th Cir. 1968). "If the
operative facts have not occurred within the forum of original selection and that forum has no particular interest in
the parties or the subject matter, [a] plaintiff's choice is only
entitled to minimal consideration." Id.
Here, Flexible is a California company. Iron Mountain is a
Delaware corporation and it does not dispute that it does
business within California. The invoices and notices at issue in
this litigation, however, were issued to Iron Mountain's office
in Boston, Massachusetts. (See Am. Compl., Exs. B-D.) The
central dispute in this case aries from Flexible's allegations
that Iron Mountain failed to abide by its obligations to remit
payments on those invoices to Flexible in California. If the
Court focuses on that fact alone, the operative facts of the
complaint did occur within the forum. However, Flexible's right
to those payments derives from its Agreement with L&L, a
Massachusetts company, and in turn from L&L's agreement with Iron
Mountain for services provided in Massachusetts. Further,
Flexible's security interest in L&L's accounts receivable was
perfected by a UCC filing in Massachusetts. Iron Mountain's
contract with L&L provides that payments are to be made to L&L at
a California, which comports with the terms of Flexible's
contract with L&L. (See Am. Compl., Ex. A, § 5; Declaration of
Steve Pescia, Ex. A, § 4.)
On balance, the Court concludes that the central facts in
this dispute arise from alleged failure to remit payments
allegedly due to Flexible in California, and because Flexible is
a forum resident, its choice of forum is entitled to more than
minimal deference. This conclusion does not end the Court's
2. Convenience of the Witnesses and Parties.
In addition to considering the Plaintiffs' choice of forum, the
Court will consider the relative convenience to all the parties
involved in the lawsuit of the competing fora when deciding a
motion to transfer. Gulf Oil, 330 U.S. at 508. Iron Mountain
contends that Massachusetts is a more convenient forum because
the majority of the non-party and party witnesses reside there.
The convenience of witnesses is often the most important factor
in determining a motion to transfer. The trial court looks to who
the witnesses are, where they are located, and the relevance of
their testimony. See A.J. Industries, Inc. v. United States
District Court, 503 F.3d 384, 389 (9th Cir. 1974). Iron Mountain provides a declaration
setting forth witnesses who live in or near Massachusetts, which
include witnesses who generated the invoices at issue, the Iron
Mountain representative who approved them, and non-party
witnesses who delivered the notices of assignment. (See
Declaration of Steven Pescia ("Pescia Decl."), ¶ 5.)
As is evidenced by the letters attached to the Amended
Complaint, Flexible sent the alleged notices of assignment to
Iron Mountain's accounts payable department in Massachusetts.
(Am. Compl., Exs. B-D.) Although there are no invoices before the
Court, it is not seriously disputed that the invoices were
generated by L&L in Massachusetts and sent to Iron Mountain
there. Nor has Flexible persuasively countered Iron Mountain's
assertion that the majority of the witnesses would be located in
Massachusetts. (See Opp. Br. at 6.) Furthermore, the record in
this case demonstrates that Flexible has retained counsel in
Massachusetts and is involved in that litigation in
Massachusetts, which undermines its claim that a transfer to that
forum would be seriously inconvenient for it as a party.
The Court finds the convenience of the witnesses and parties
factor weighs in favor of transfer.
3. Familiarity of the Forum With the Applicable Law.
Iron Mountain contends that the resolution of this dispute
primarily will be governed by Massachusetts law, because
Flexible's security interest with L&L was perfected by a UCC
filing in that state. Iron Mountain also states that its
agreement with L&L is governed by Massachusetts law.
Notwithstanding these facts, Iron Mountain asserts that the
alleged notices of assignment are invalid under California law.
Further, Flexible's agreement with L&L is governed by California
law. Because neither party has definitively demonstrated that a
particular forum's law should govern or that one forum would be
more familiar with the law involved, the Court finds this factor
to be neutral.
4. Ease of Access to Evidence.
Access to sources of proof is another factor that favors
transfer. Gulf Oil, 330 U.S. at 508. As noted above, it is not
disputed that the invoices in dispute are likely located in
Massachusetts. Iron Mountain also has submitted a declaration
which shows that documentary evidence relating to L&L's bank records also are located in
Massachusetts. (Declaration of Brendan Macaulay, Ex. B.)
Flexible's records are located in San Francisco, and the post
office box to which invoices were to be submitted is located in
Suisun City, California. (Declaration of Steven Capper, ¶ 3; Am.
Compl., Exs. A-D.) However, the Court concludes that Iron
Mountain has met its burden to show that the majority of the
documentary evidence pertinent to this dispute is located in
Massachusetts. This factor also weighs in favor of transfer.
5. Relative Congestion
Another factor courts consider is the relative court congestion
in each forum. According to available statistics, the Northern
District's docket has a heavier case load than the District of
Massachusetts. Moreover, it appears from the record that the
parties to that action are actively engaged in resolving the
matter in such a way as to resolve this dispute as well. Thus, it
appears that transfer will lead to faster adjudication of the
6. The Scope of the Pending Massachusetts Action
The list of factors set forth above in evaluating transfer is
not exhaustive, and the Court has also considered the scope of
the Massachusetts action currently pending. While mindful of the
fact Flexible's state court action was filed before the
interpleader action was filed in Massachusetts, the
"`first-to-file' rule is not a rigid or inflexible rule to be
mechanically applied, but rather is to be applied with a view of
the dictates of sound judicial administration." See Pacesetter
Systems, Inc. v. Medtronic, Inc., 678 F.2d 93, 95 (9th Cir.
1982) (noting when two courts of concurrent jurisdiction have
identical actions pending, court that first acquired jurisdiction
normally should try case).
The interpleader action includes L&L and a claim by the IRS to
the monies in dispute. Further, Iron Mountain asserts that
involves many, if not all, of the same invoices at issue in this
action. As such, it seems to the Court that a transfer would
serve the interests in judicial economy and efficiency by
permitting all of the claims between all of the various parties
to be resolved in one forum. Because the majority of factors weigh in favor of transfer, the
Court finds that Iron Mountain has met the burden of
demonstrating that the action should be transferred and GRANTS
For the foregoing reasons, the Court DENIES Flexible's motion
to dismiss for failure to state a claim and GRANTS Defendants'
motion to transfer to the United States District Court for the
District of Massachusetts. The Clerk is directed to transfer this
IT IS SO ORDERED.
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