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Mainstay Business Solutions v. Industrial Staffing Services

January 6, 2012



On May 11, 2011, the court heard argument on defendants' motion to transfer venue to the Northern District of Illinois. Ryan Meyer, Green and Hall, appeared for defendants; Michael A. Peart appeared for Mainstay Business Solutions.

I. Background

In November 2010, plaintiff filed a complaint in Sacramento Superior Court, alleging causes of action for breach of contract and common counts. Defendants Industrial Staffing (Industrial) and Modlinski removed the action to this court based on diversity of the parties. ECF No. 1 at 2.

On February 8, 2011, plaintiff filed its first amended complaint (FAC). In that complaint, plaintiff describes itself as a division of the Blue Lake Rancheria Economic Development Corporation, federally chartered under the Indian Reorganization Act. Plaintiff identifies defendant Industrial Staffing, dba Flexible Staffing, as an Illinois Corporation with its principal place of business in Illinois and defendant Modlinski as a principal or director of defendant Industrial Staffing. ECF No. 7 ¶¶ 1-3. Plaintiff alleges that it provides staffing services to clients in California; that it sought to expand its staffing services by acquiring assets of Flexible Staffing, which was defendant Industrial's California operation, and so engaged in negotiations for the asset purchase from September 2009 through May 2010, with the purchase completed on May 28, 2010. Id. ¶¶ 11-13, 17. Plaintiff alleges that defendants failed to disclose certain liabilities during the negotiations and has refused to send certain payments from Flexible's former clients. Id. ¶¶ 15, 17-18, 24. The complaint has six claims: breach of contract, money had and received, breach of the covenant of fair dealing, declaration of constructive trust, constructive fraud and unjust enrichment. Id. ¶¶ 29-54.

The contract for asset purchase includes the following provision: This Agreement and the performance of the parties of their respective duties and obligations are subject to and governed by the laws of California. Any claim arising under this Agreement must be brought in a competent California State Court at Buyer's discretion. The laws of the Tribe shall be controlling and binding on the parties. . . ECF No. 7-1 at 16.

II. Analysis

Under 28 U.S.C. § 1404(a), a court may transfer a case to another district where it might have been brought. "Section 1404(a) provides for transfer to a more convenient forum, not to a forum likely to prove equally convenient or inconvenient." Van Dusen v. Barrack, 376 U.S. 612, 645-46 (1964).

A court considering a motion to transfer venue must determine whether venue is proper in this district; whether plaintiff could have brought the action in the transferee district; and whether the transfer will promote convenience and fairness. Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988); Hoffman v. Bilaski, 363 U.S. 335, 343-44 (1960); Costco Wholesale Corp. v. Liberty Mutual Ins. Co., 472 F. Supp.2d 1183, 1189-90 (S.D. Cal. 2007). In determining whether a transfer will promote convenience and fairness, a court should consider the following factors:

(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 chosen forum, (6) the differences in the costs of litigation in the two forums, (7) the availability of compulsory process to compel attendance of unwilling non-party witnesses, and (8) the ease of access to sources of proof.

Jones v. GNC Franchising, Inc., 211 F.3d 495, 498-99 (9th Cir. 2000); see also Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986). It is defendant's burden to show that transfer is appropriate. Decker Coal Co, 805 F.2d at 843; Commodity Futures Trading Comm'n v. Savage, 611 F.2d 270, 279 (9th Cir. 1980); Johnson v. Walmart Stores, 2010 WL 2902386, at *2 (E.D. Cal. July 22, 2010).

Defendants have submitted the declaration of Gerald Modlinski, ECF No. 10-1, in support of the motion. Plaintiff has not presented counter-affidavits with its opposition, though it does make a number of factual assertions in the body of its memorandum of points and authorities. See, e.g., ECF No. 12 at 4:20-21. Defendants argue that the opposition does not comply with Rule 43(c) of the Federal Rules of Civil Procedure, which requires that motions and oppositions be supported by affidavits or equivalent evidence. ECF No. 15 at 1-2.

Rule 43(c) provides in part that when "a motion relies on facts outside the record, the court may hear the matter on affidavits . . . ." The rule allows the court to use affidavits to resolve questions of fact outside the record, at least when no party has asked for an evidentiary hearing on the issues. Bryant v. Rich, 530 F.3d 1368, 1377 n.16 (11th Cir.), cert. denied., 129 S.Ct. 733 (2008); Ritza v. Int'l Longshoremen's and Warehousemen's Union, 837 F.2d 365, 369 (9th Cir. 1988) (applying Rule 43 to "non-enumerated" Rule 12(b) motions). To the extent plaintiff has made factual assertions not supported by affidavit, the court will disregard them.

Nevertheless, many of the claimed evidentiary lacunae are addressed in the FAC. For purposes of this motion, the court accepts as true the well-pleaded allegations of the complaint, unless they are contradicted by defendants' evidence. Hill-Jackson v. FAF, Inc., 2010 WL 3403882, at *1 (N.D. Ill. Aug. 25, 2010); Detheir v. Nat'l Liquidators, 2010 WL 991573, at *1 (D. Conn. Mar. 18, 2010); Maytag Corporation v. International Union, 2009 WL 350649, at *6 (S.D. Iowa Feb. 11, 2009).*fn1 Accordingly, unless Modlinski's declaration contradicts the complaint, the court will consider the ...

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