United States District Court, N.D. California, San Jose Division
September 30, 2005.
Vitria Technology, Inc., Plaintiff,
Cincinnati Insurance Company, Defendant.
The opinion of the court was delivered by: JAMES WARE, District Judge
ORDER DENYING DEFENDANT'S MOTION TO DISMISS FOR IMPROPER VENUE
AND GRANTING DEFENDANT'S MOTION TO CHANGE VENUE TO THE SOUTHERN
DISTRICT OF OHIO
Vitria Technology, Inc. ("Plaintiff" or "Vitria") brings this
action against Cincinnati Insurance Company ("Defendant" or
"CIC"), alleging breach of contract of Plaintiff's software
Currently before this Court is Defendant's Motion to Dismiss
for Improper Venue pursuant to Fed.R.Civ.P. 12(b)(3), or in
the Alternative, Motion to Change Venue under
28 U.S.C. §§ 1406(a) and 1404(a). The Court considered the parties' pleadings
and finds the matter to be suitable for disposition without oral
argument. See Civ. L.R. 7-1(b). For the reasons set forth
below, this Court DENIES Defendant's Motion to Dismiss for
Improper Venue, but GRANTS Defendant's Motion to Transfer Venue
to the Southern District of Ohio. II. BACKGROUND
Plaintiff is a Delaware corporation with its principal place of
business in Sunnyvale, California. Plaintiff has a permanent
license to operate in Ohio. Plaintiff's principal office per the
filing of its permanent license is at 650 W. Lake Center, 4555
Lake Forest Drive, 6th Floor, Cincinnati, Ohio. Defendant is a
corporation organized and existing under the laws of Ohio, with
its principal place of business in Fairfield, Ohio.
Plaintiff alleges that it entered into a software license and
services agreement with Defendant in which Defendant has breached
by impermissibly using their software. Plaintiff brings suit in
the Northern District of California based solely on diversity
jurisdiction pursuant to 28 U.S.C. § 1332. Plaintiff asserts
venue in the Northern District of California based on the fact
that a substantial part of the events giving rise to the claim
occurred in this district. Defendant contends that Plaintiff
fails to support such an assertion with any facts to substantiate
its claim. (Motion at 2:2-6.)
It is undisputed that the relationship between Plaintiff and
Defendant began when Defendant solicited Plaintiff's business at
its headquarters in Sunnyvale, California. It is also undisputed
that portions of the contract were negotiated via telephone and
other means from California by Plaintiff. Plaintiff also sent
agents to negotiate the contract in Ohio. Upon the execution of a
licensing agreement, Plaintiff's employees were sent to Ohio to
set-up their work system and for other support issues.
Defendant contends that the complaint should be dismissed for
improper venue because: (1) the substantial part of the events
leading up to the consummation of the contract did not occur in
the Northern District of California; (2) the alleged breach did
not occur in the Northern District of California; and (3) the
alleged creation of an obligation or liability in the Northern
District of California is not sufficient to establish venue
pursuant to § 1391(a)(2).
In the alternative, Defendant contends that the complaint
should be transferred to the Southern District of Ohio because:
(1) the Southern District of Ohio is a district where a civil
action might have been brought; and (2) the factors weigh in
favor of transfer to the Southern District of Ohio.
Plaintiff contends that venue is proper in the Northern
District of California because Defendant, as a corporation doing
business in California, is subject to personal jurisdiction in
the Northern District of California. Ultimately, Plaintiff
contends that it would be inconvenient for Plaintiff to litigate
in Ohio. III. STANDARDS
Under 28 U.S.C. § 1391(a), where federal subject matter
jurisdiction is based solely on diversity of citizenship, venue
is proper in the following judicial districts and no others; 1)
if all defendants reside in the same state, a district where any
defendant resides; or, 2) a district in which a "substantial part
of the events or omissions on which the claim is based occurred,
or where is located a substantial part of the property that is
the subject of the action"; or, 3) if there is no district in
which the action may otherwise be brought, a district in which
any defendant is subject to personal jurisdiction at the time the
action is commenced. 28 U.S.C. §§ 1391(a)(1)-(a)(3).
B. Transfer of Venue
Title 28 U.S.C. § 1404(a) provides that the Court may transfer
any civil action to any other district where it might have been
brought for the "convenience of the parties and witnesses, in the
interest of justice." Section 1404(a) transfers are vested in the
sound discretion of the Court. Decker Coal v. Commonwealth
Edison Co., 805 F.2d 834, 842-43 (9th Cir. 1986). Normally,
however, the plaintiff's choice of forum is to be given great
weight. Florens Container v. Cho Yang Shipping,
245 F. Supp. 2d 1086, 1092 (N.D. Cal. 2002). Under section 1404(a), the moving
party has the burden of showing that the balance of conveniences
weighs heavily in favor of the transfer in order to overcome the
strong presumption in favor of the plaintiff's choice of forum.
See Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834,
843 (9th Cir. 1986); Piper Aircraft Co. v. Reyno, 454 U.S. 235,
A. The Northern District of California is the proper venue
for this action.
Pursuant to Fed.R.Civ.P. 12(b)(3), a defendant may move to
dismiss a case for improper venue. Venue is proper in a district
where a defendant resides. 28 U.S.C. § 1391. For purposes of
venue under 28 U.S.C. § 1391, "a defendant that is a corporation
shall be deemed to reside in any judicial district in which it is
subject to personal jurisdiction at the time the action is
commenced." 28 U.S.C. § 1391(c). Since this is not a motion to
dismiss for lack of personal jurisdiction, the Court need not
explicate its analysis of whether CIC has sufficient minimum
contact with California. CIC is a corporation. It purposefully
availed itself to California when it solicited the software
license and service agreements with Vitria in California. Thus, CIC is subject to specific personal
jurisdiction in the state of California. See McGee v.
International Ins. Co., 355 U.S. 220 (1957) (upholding
jurisdiction over claim arising out of a single contract
solicited in the state).
Continuous but limited activity in the forum state, such as the
ongoing business relationship in will also support specific
jurisdiction, that is, jurisdiction over claims arising out of
that continuous activity. Burger King Corp. v. Rudzewicz,
471 U.S. 462 (1985). It is undisputed that there was an ongoing
business relationship between CIC and Vitria, giving rise to the
breach of contract claim. Since Defendant is subject to specific
personal jurisdiction in the state of California, venue is proper
under § 1391(c). Therefore, Defendant's Motion to Dismiss for
Improper Venue is DENIED.
B. For the convenience of the parties and witnesses, and in
the interest of justice. the Southern District of Ohio is the
more suitable venue.
Factors supporting transfer under 28 U.S.C. § 1404(a) include
when venue is proper because a "substantial part" of the events
or omissions occurred locally. Other factors may support a
discretionary transfer based on the convenience of parties and
witnesses, the interests of justice, and the risks or burdens of
defending in the chosen forum. 28 U.S.C. § 1404(a).
1. A Substantial Part of the Events Giving Rise to the
Action Occurred in the Southern District of Ohio
In determining whether venue is proper under
28 U.S.C. § 1391(a)(2), only those events and omissions that directly give
rise to the claim are relevant. Jenkins Brick Co. v. Bremer,
321 F.3d 1366, 1372 (11th Cir. 2003). Relevant factors to be
considered in a contract action are where the negotiations took
place, where the contract was signed, where performance or breach
occurred, or the place where parties acted or were engaged in
business. Bates v. C & S Adjusters, Inc., 980 F.2d 865, 867 (2d
Cir. 1992); Myers v. Bennett Law Offices, 238 F.3d 1068, 1076
(9th Cir. 2001).
In this case, the in-person contract negotiations between
Plaintiff and Defendant took place in Ohio. More importantly, the
performance, and the breach occurred in Ohio. While the Court
agrees with Plaintiff's contention that California is the proper
venue for this action since negotiations and execution of the contract were conducted in California, in-person negotiations
occurred in Ohio, as well as on-site demonstrations. Mere
execution of a contract does not weigh heavily in determining
which forum state is more convenient or proper.
The improper use of the software license is the alleged breach
of contract which is the subject of the dispute here. The
location of this breach would be where instruments facilitating
this breach, such as servers are located. As all computer systems
and alleged improper use of the software license occurred in
Ohio, Ohio would be a location of the substantial part of the
events which are the subject of this suit.
2. The Convenience of the Parties and the Witnesses
Plaintiff has its main office in Ohio. Plaintiff has had
employees providing on-site services such as set up and support
for Defendant in Ohio. In sending agents and support staff to
Ohio to foster the contract currently in dispute, it does not
appear to this Court that it would be burdensome for Plaintiff to
resend the same people involved in the dispute to Ohio for the
purpose of litigation. Plaintiff contends that since all of its
corporate documents are located in California, Plaintiff would be
inconvenienced if the action is litigated in Ohio. The Court is
not convinced that Plaintiff will be inconvenienced since
Plaintiff also has offices in Ohio. Additionally, with today's
technological advances, the Court does not believe that Plaintiff
would have any difficulty transporting those corporate documents
to Ohio for the purpose of litigation.
In contrast, the Northern District of California would be
inconvenience for the Defendant. Defendant's main business is in
Ohio. Material evidence, such as Defendant's servers and
equipment, are all located in Ohio. There is likely to be
significant examination of such bulky equipment which is
difficult to transport. Additionally, it will be burdensome for
Defendant to terminate use of those equipments because it is
likely that the equipments are being used for current business
activities. These factors clearly weighs in favor of a transfer
of venue to Ohio.
In weighing the convenience of the witnesses, the Court
considers not only the number of witnesses involved, but also the
materiality of the expected testimony. E. & J. Gallo Winery v.
F.& P. S.p.A., 899 F. Supp. 465, 466 (E.D. Cal. 1994)
(suggesting materiality is a factor by requiring disclosure of
anticipated testimonies). The convenience of expert witnesses is
given little weight. Williams v. Bowman, 157 F. Supp. 2d 1103, 1108 (N.D. Cal. 2001). Plaintiff does not dispute
Defendant's contention that witnesses and parties who are: (1)
responsible for the negotiation and execution of the Agreement,
and the implementation of the software; and (2) knowledgeable
about whether the alleged breach is a breach, all live in Ohio.
Plaintiff merely contends that of the 33 individuals that
Plaintiff has identified as having "involvement" on Plaintiff's
behalf in the negotiation and performance of the License
Agreement, 17 live within the Northern District of California. On
balance, it appears that the materiality of the expected
testimony weighs in favor of the Defendant because most of the
key witnesses live in Ohio. Thus, venue is more proper in the
Southern District of Ohio for the conveniences of the majority of
the anticipated witnesses in this litigation.
3. The Interest of Justice
The "interest of justice" prong of § 1404(a) covers more than
just the quest for a fair trial. Plaintiff's argument that as
Defendant insures California residents, Defendant's alleged
breach of contract is of substantial local interest is flawed.
While Defendant's businesses with California residents may
subject Defendant to personal jurisdiction in the state,
Defendant's alleged breach of contract of a licensing agreement
with Plaintiff has little to do with Defendant's insured. In
engaging in contract negotiations and indeed ongoing businesses
with Defendant, Plaintiff has had sufficient minimum contacts
with the state of Ohio to facilitate a transfer that does not
offend traditional notions of fair play and substantial justice.
For the reasons set forth above, this Court DENIES Defendant's
Motion to Dismiss for Improper Venue and GRANTS Defendant's
Motion to Transfer Venue to the Southern District of Ohio.
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