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Safe Drain Inc. v. Vito

United States District Court, N.D. California

August 19, 2014

SAFE DRAIN INC., Plaintiff(s),
v.
KATE VITO et al, Defendant(s).

ORDER DENYING MOTION TO DISMISS OR TO TRANSFER VENUE [DOCKET NO. 27]

DONNA M. RYU, Magistrate Judge.

Defendants Kate Vito and SPCC Solutions, Inc. ("SPCC") filed a motion to dismiss for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3) or, in the alternative, a motion to transfer venue to the United States District Court for the Eastern District of California under 28 U.S.C. § 1404(a). [Docket No. 27.] Defendant John Barhaugh joined the motion.[1] [Docket No. 30.] The court held a hearing on the motion on August 14, 2014. For the reasons stated below and at the hearing, the motion is denied.

I. BACKGROUND

Plaintiff makes the following allegations in its Complaint. Plaintiff Safe Drain Inc. is a California corporation with its principal place of business in Stockton. Vito is an individual who resides in Sacramento County and is a former employee and manager of Plaintiff. SPCC is a Nevada corporation with its principal place of business in Sacramento County. Barhaugh is an individual who resides in Alameda County; Barhaugh is a former employee and senior vice-president of sales for Plaintiff. Compl. [Docket No. 1] at ¶¶ 6-9.

Plaintiff holds a federal registration for the trademark SAFE DRAIN in connection with storm drain catch basins. Id. at ¶ 11. Vito was employed by Plaintiff as a vice president from 2001 until 2010, although she continued to perform work for Plaintiff after her resignation in 2010. Id. at ¶ 12. In late 2011, Vito started SPCC, a competitor to Plaintiff. Id. at ¶ 14. Barhaugh was employed by Plaintiff from 2004 until 2013, and subsequently began work for SPCC. Id. at ¶ 13. Plaintiff believes that Vito and Barhaugh "conspired and worked together to unfairly compete with Plaintiff from at least early 2013, " including by contacting Plaintiff's customers (including United Airlines and Mission Foods, who are allegedly located in this district), taking Plaintiff's existing purchase orders (including with United Airlines and CalTrans, allegedly located in this district), converting and using physical property of Plaintiff, presenting to customers that SPCC was affiliated with Plaintiff, diverting payments from Plaintiff to Defendants, using Plaintiff's funds for Defendants' personal expenses, and using images of Plaintiff's product to represent Defendants' products. Id. at ¶¶ 13-16. Plaintiff alleges that Defendants interfered with at least seven of Plaintiff's business relations. Id. at ¶ 10.

On November 18, 2013, Vito terminated her relationship with Plaintiff. According to Plaintiff, at that time, she took with her or destroyed Plaintiff's paper files, took the only copies of digital files of the same, and took a laptop belonging to Plaintiff that held Plaintiff's documents and records. Id. at ¶ 17. Plaintiff repeatedly demanded the return of this laptop, which Vito returned approximately six months later. Id. at ¶ 19. Vito also controlled a bank account she held in her name for the benefit of Plaintiff, and refused to provide Plaintiff access to the account or inform Plaintiff how the funds have been spent. Id. at ¶ 17.

Plaintiff brings nine causes of action against all Defendants, including two federal claims (trademark infringement under 15 U.S.C. § 1114, and unfair competition and false designation of origin under 15 U.S.C. § 1125(a)) and seven state law claims (common law service mark infringement, statutory unfair competition, common law unfair competition, misappropriation of trade secrets, interference with prospective business relations, breach of fiduciary duty, and conversion). Id. at ¶¶ 20-65.

II. MOTION TO DISMISS FOR IMPROPER VENUE

A defendant may move to dismiss a case for improper venue. Fed.R.Civ.P. 12(b)(3). Rule 12(b)(3) authorizes dismissal "only when venue is wrong' or improper.'" Atl. Marine Const. Co., Inc. v. U.S. Dist. Court for W. Dist. of Texas, 134 S.Ct. 568, 577 (2013). "Whether venue is wrong' or improper' depends exclusively on whether the court in which the case was brought satisfies the requirements of federal venue laws" and is "generally governed by 28 U.S.C. § 1391." Id. That statute provides that a civil action may be brought in: (1) a judicial district in which any defendant resides, if all defendants are residents of the state in which the district is located; (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 of the action is situated; or (3) if there is no district in which an action may otherwise be brought as provided in this section, any judicial district in which any defendant is subject to the court's personal jurisdiction with respect to such action. 28 U.S.C. § 1391(b). If the case at issue falls within one of the three categories described in § 1391(b), venue is proper. If it does not, "venue is improper, and the case must be dismissed or transferred." Atlantic Marine, 134 S.Ct. at 577.

It is undisputed that Barhaugh is located in the Northern District and that all Defendants are residents of California. Under these circumstances, venue is proper under 28 U.S.C. § 1391(b)(1). The motion to dismiss for improper venue is therefore denied.

III. MOTION TO TRANSFER VENUE

A. Legal Standards

"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). The purpose of Section 1404(a) is to "prevent the waste of time, energy and money' and to protect litigants, witnesses, and the public against unnecessary inconvenience and expense[.]'" Van Dusen v. Barrack, 376 U.S. 612, 616 (1964) (quoting Continental Grain Co. v. Barge FBL-585, 364 U.S. 19, 26, 27 (1960)). "The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought." 28 U.S.C. § 1406(a).

When determining whether a transfer is proper, a court must employ a two-step analysis. Park v. Dole Fresh Vegetables, Inc., 964 F.Supp.2d 1088, 1093 (N.D. Cal. 2013). A court must first consider the threshold question of whether the case could have been brought in the forum to which the moving party seeks to transfer the case. See id.; see also Hatch v. Reliance Ins. Co., 758 F.2d 409, 414 (9th Cir. 1985). Once the party seeking transfer has made this showing, district courts have discretion to consider motions to change venue based on an "individualized, ...


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