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Adachi v. Carlyle/Galaxy San Pedro L.P.

January 30, 2009

STEVE ADACHI, ET AL., PLAINTIFFS,
v.
CARLYLE/GALAXY SAN PEDRO L.P., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Hon. Jeffrey T. Miller United States District Judge

ORDER DENYING MOTION TO DISMISS FOR IMPROPER VENUE; GRANTING MOTION TO TRANSFER ACTION TO CENTRAL DISTRICT OF CALIFORNIA

Pursuant to Federal Rule of Civil Procedure 12(b)(3), Defendants move to dismiss the complaint for improper venue or, alternatively, to transfer the action to the Central District of California. Defendants also move to compel arbitration of Plaintiffs's claims pursuant to the Federal Arbitration Act. Plaintiffs oppose all motions and separately move for a protective order barring Defendants' communication with putative class members. Defendants oppose Plaintiffs' motion for a protective order. For the reasons set forth below, the court denies the motion to dismiss for improper venue, grants the motion to transfer to the Central District of California and denies all other pending motions as moot. The Clerk of Court is instructed to transfer this action to the Central District of California.

BACKGROUND

On November 5, 2008 Plaintiffs Steve Adachi, Jeremy Arson, Ericka Gardea, Michael Gardea, Glenn Henderson, Mary Henderson, Steve Henderson, Victoire Havland, Douglas Kim, Imman Mohammadpour, Riye Park, Eileen Peviani, Ted Sumida, and Jessica Vanderlan commenced this federal question action as a purported class action against Defendants Carlyle/Galaxy San Pedro, L.P., Carlyle San Pedro GP, L.L.C., Galaxy San Pedro, L.L.C., Carlyle San Pedro, L.L.C., Carlyle Realty Partners IV L.P., Galaxy Commercial Holding, L.L.C., Raffi Cohen, and Mara Escrow Company. Plaintiffs are purchasers of condominium units in the Vue development located in San Pedro, California (the "Development"). Carlyle/Galaxy San Pedro LP (the "Developer") is the developer of the project.

Each named Plaintiff resides within the Central District of California. (Samek Decl. ¶6). Of the approximately 239 putative class members only one potential plaintiff resides in the Southern District of California. (Id. ¶7).

Each of the seven defendant corporate entities resides in the Central District of California as well as the individual defendant, Raffi Cohen. (Caryle Decl¶1; Cohen Decl. ¶¶1, 2). No Defendant regularly transacts or conducts any substantial or significant portion of their business in the Southern District. (Carlyle Decl. ¶4l Cohen De3cl. ¶5).

In connection with the purchase of their condominium units, each Plaintiff entered into a written Purchase and Sale Agreement and Joint Escrow Instructions (the "Agreement"). The Agreement also contains an arbitration provision which provides, in pertinent part:

By initialing in the space below you are agreeing to have any dispute arising out of the matters unclouded in this Arbitration of Disputes provision, and in the Arbitration of Disputes provision in Paragraph 12 below, decided by neutral arbitration as provided by California law and you are giving up any right you might possess to have the dispute litigated in a court or jury trial. By initialing the space below, you are giving up your judicial rights to discovery and appeal, unless those rights are specifically i8nlcuded in the "Arbitration of Disputes" provision. If you refuse to submit to arbitration after agreeing to this provision, your may be compelled to arbitrate under the authority of the California Code of Civil Procedure. Your agreement to this arbitration provision is voluntary. We have read and understand the foregoing and agree to submit disputes arising out of the matters included in the "Arbitration of Disputes" provision to neutral arbitration. (Defendants Exhs. A-I, ¶11). The arbitrator is "authorized to provide any remedies or relief in law and equity, other than punitive damages." Id.

Plaintiffs allege they signed purchase contracts for condominium units at the VUE. (Compl. ¶13-21). The Vue consists of about 250 condominiums with a price range from $350,000 to $1,400,000. (Samek Decl. ¶5). Based upon conduct associated with Plaintiffs' purchase of the condominiums, Plaintiffs allege seven causes of action for violation of the Interstate Land Sales Full Disclosure Act, violation of the Sherman Act, unfair competition, violation of Cal. Bus. & Prof. Code §17200, fraud, breach of contract, and for constructive trust and equitable lien.

DISCUSSION

The Motion to Dismiss for Improper Venue

Plaintiffs assert venue under 28 U.S.C. §1391 and 15 U.S.C. §15, 22, 26. In federal question actions, venue is proper "only in (1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject o the action is situated, or (3) a judicial district in which any defendant may be found if there is no district in which the action may otherwise be brought.

28 U.S.C. §1391(b). While a corporation is only a citizen, or domicile, of the state of incorporation and the state where it maintains its principal place of business, see 28 U.S.C. §1332(c)(1), a corporation resides, for purposes of venue, "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). In antitrust actions, 15 U.S.C. §22 provides:

Any suit, action, or proceeding under the antitrust laws against a corporation may be brought not only in the judicial district whereof it is an inhabitant, but also in any district wherein it may be found or transacts business; and all process in such cases may be served in ...


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