Deloach v. Philip Morris Companies, Inc.

• Decision Date: 30 November 2000
• Docket Number: No. Civ.A. 00-294(GK).,Civ.A. 00-294(GK).
• Citation: 132 F.Supp.2d 22
• Parties: D. Lamar DELOACH, et al., Plaintiffs, v. PHILIP MORRIS COMPANIES, INC., et al., Defendants.
• Court: U.S. District Court — District of Columbia

Page 22

132 F.Supp.2d 22

D. Lamar DELOACH, et al., Plaintiffs, v. PHILIP MORRIS COMPANIES, INC., et al., Defendants.

No. Civ.A. 00-294(GK).

United States District Court, District of Columbia.

November 30, 2000.

Alexander John Pires, Jr., Conlon, Frantz, Phelan & Pires, Washington, DC, Thomas Adam Isaacson, Robert Lamar Green Jr., Robert F. Ruyak, Alan Mitchell Wiseman, Howrey, Simon, Arnold & White, Washington, DC, for plaintiffs.

Douglas Lewis Wald, Arnold & Porter, Washington, DC, for Philip Morris Companies, Inc.

Donna Elizabeth Patterson, Douglas Lewis Wald, Arnold & Porter, Donald L. Flexner, Boies & Schiller, L.L.P., Washington, DC, for defendants.

Peter Joseph Kadzik, Dickstein, Shapiro, Morin & Oshinsky, LLP, Washington, DC, Jeffrey L. Willian, Stephen R. Patton, Kirkland & Ellis, Chicago, IL, Kenneth N. Bass, Kirkland & Ellis, Washington, DC, Donald Flexner, Boies & Schiller, L.L.P. Washington, DC, David Boies, Boies, Schiller & Flexner, L.L.P., Armonk, NY, for Brown & Williamson Tobacco Corp.

Peter Joseph Kadzik, Robert Bruce Holcomb, Dickstein, Shapiro, Morin & Oshinsky, LLP, Washington, DC, for Lorillard Tobacco Co.

MEMORANDUM OPINION

KESSLER, District Judge.

Plaintiffs¹ bring this putative class action on behalf of what they claim to be hundreds of thousands of tobacco growers and quota holders in the Southeast United States and elsewhere, alleging that Defendant tobacco companies² have unlawfully conspired, from before 1996 through the present, to engage in various anti-competitive activities, including bid-rigging, at tobacco auctions sponsored by the United States Department of Agriculture. This matter is before the Court on Joint Defendants' Motion to Transfer this action to the United States District Court for the Middle District of North Carolina. Upon careful consideration of the Motion, Opposition, Reply, and the entire record herein, for the reasons stated below, Defendants' Motion to Transfer is granted.

I. Statement of Facts

Seven named Plaintiffs bring this as a putative class action on behalf of themselves and all other persons and entities who have held a quota to grow, or have sold, flue-cured or burley tobacco in the United States "at any time from February 1996 to the present" Second Am.Compl. ("Compl.") ¶ 19. The putative class includes, but is not limited to, the 5,930 persons named in the original and first amended complaints.³ Id.

The following is a brief description of Plaintiffs' allegations. According to Plaintiffs, all individuals or entities who wish to produce tobacco must hold a "quota," which specifies the amount and type of tobacco that can be grown each year. Plaintiffs allege that this quota is a "property right," and that quota holders may, subject to certain restrictions, sell or lease their right to grow certain types of tobacco. Compl. ¶ 32.

The United States Department of Agriculture ("USDA") sets the quota for both burley and flue-cured tobacco each year based on a rigid three-part formula, with little or no room for discretion, and then allocates a pro rata quota among the individual quota holders. Compl. ¶ 34. Plaintiffs allege that quota holders "generally" sell their tobacco at auctions sponsored by the USDA, which, according to Defendants, occur primarily in Georgia, Florida, Kentucky, North Carolina, South Carolina, Tennessee, and Virginia (i.e., the Southeast United States). Compl. ¶ 36; Mem. of Law in Support of Def.'s Joint Mot. to Transfer ("Def.'s Mem.") at 8. According to Plaintiffs, cigarette manufacturers must bid above a "minimum price" at these auctions, and if no such bid occurs, the unsold tobacco is purchased by an "agricultural co-operative at the minimum price" and is then placed into a reserve. Compl. ¶ 37.

The primary anti-competitive act of which Defendants are accused is "bid rigging." Plaintiffs allege that Defendants — who are all ostensible competitors — "communicate with each other before tobacco auctions to discuss, coordinate, exchange information, including price information, and rig the auction" by agreeing on specific bid prices for Plaintiffs' tobacco, which none of Defendants will exceed. Compl. ¶ 43.B. This results in a "tie-bid" (i.e., all bids being the same amount) Compl. ¶ 43.E. Plaintiffs also allege that Defendants punish, boycott and retaliate against those who refuse to abide by the terms of the bid-rigging scheme. Compl. ¶ 42.I.

Plaintiffs allege that the conduct described above (the bid rigging and general anti-competitive conduct) allows Defendants to limit their purchases at auctions, which causes more tobacco to be placed into the "discounted reserve program." Compl. ¶ 45. Plaintiffs further allege that Defendants' anti-competitive acts have allowed them to "lower their purchase intentions submitted to USDA each year since 1997," which in turn lowers Plaintiffs' yearly tobacco quota. Compl. ¶ 46. According to Plaintiffs, the goal of Defendants is to destroy or eliminate the USDA tobacco program, an outcome that would permit Defendants to exercise greater monopsony power. Compl. ¶ 47. Based on Defendants' alleged anti-competitive actions, Plaintiffs bring two claims under the Sherman Antitrust Act, 15 U.S.C. §§ 1 and 2.

II. Legal Standard

Defendants seek to transfer this case pursuant to 28 U.S.C. § 1404(a), which provides that "[f]or 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." The burden is on the moving party to demonstrate that transfer would be proper. Reiffin v. Microsoft Corp., 104 F.Supp.2d 48, 50 (D.D.C.2000) (citing Air Line Pilots Ass'n v. Eastern Air Lines, 672 F.Supp. 525, 526 (D.D.C.1987)). However, this Court retains substantial "discretion" as to whether to grant a motion to transfer, and should adjudicate such motions "`according to individualized, case-by-case consideration of convenience and fairness.'" Hawksbill Sea Turtle v. FEMA, 939 F.Supp. 1, 3 (D.D.C.1996) (quoting Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 27, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988)); Chung v. Chrysler Corp., 903 F.Supp. 160, 164 (D.D.C.1995).

III. Analysis

The present lawsuit may be transferred to the Middle District of North Carolina only if it could have been brought there. 28 U.S.C. § 1404(a). Accordingly, the threshold question is whether this suit could have been brought in the proposed transferee district. Kafack v. Primerica Life Ins. Co., 934 F.Supp. 3, 5 (D.D.C. 1996) (citing Van Dusen v. Barrack, 376 U.S. 612, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964)); Chung v. Chrysler Corp., 903 F.Supp. 160, 162 (D.D.C.1995). The present suit is based on federal question jurisdiction, see Compl. ¶ 2, and therefore may be brought in "a judicial district where any defendant resides, if all defendants reside in the same State." 28 U.S.C. § 1391(b)(1). As it is uncontested that because each Defendant transacts business in the Middle District of North Carolina, it is subject to personal jurisdiction there, see Def.'s Mem at 12, each Defendant is deemed to be a resident of that district for diversity purposes. 28 U.S.C. § 1391(c). Accordingly, "all defendants" reside in North Carolina, and venue is proper in the Middle District of that state.

Before considering the traditional transfer factors, it is important to note that although a plaintiff's choice of forum is ordinarily accorded a significant degree of deference, numerous cases in this Circuit recognize that such a choice receives substantially less deference where the plaintiffs, as here, neither reside in, nor have any substantial connection to, that forum. See Reiffin, 104 F.Supp.2d at 52; Hawksbill Sea Turtle, 939 F.Supp. at 3; Chung, 903 F.Supp. at 165; Comptroller of Currency v. Calhoun First Nat'l Bank, 626 F.Supp. 137, 140 n. 9 (D.D.C.1985); Islamic Republic of Iran v. Boeing Co., 477 F.Supp. 142, 144 (D.D.C.1979) (noting that plaintiff's choice of forum is accorded "diminished consideration" where that forum "has no meaningful ties to the controversy and no particular interest in the parties or subject matter") (citations omitted).

For the following reasons, the Court concludes that the customary deference is not warranted in this case. First, none of the named Plaintiffs or identified class members reside in the District of Columbia. See Def.'s Mem. at 4. Only a relatively tiny number of unidentified class members resides in the District. of Columbia. See Pl.'s Mem. of Points and Auth. in Opp'n to Def.'s Joint Mot. to Transfer ("Pl.'s Mem.") at 14 (stating that approximately 516 quota holders, and apparently no tobacco growers, reside in the District of Columbia).

Second, the only real connection this lawsuit has to the District of Columbia is that a federal agency headquartered here (USDA) is charged with generally regulating and overseeing the tobacco auction process, and Defendants are allegedly acting in a way that undermines the applicable USDA regulatory scheme. See Pl.'s Mem. at 15, 34-36.

Significantly, Plaintiffs have not indicated that the USDA or any of its employees have a significant day-to-day role in observing, managing or running these auctions. Nor have they demonstrated that the District of Columbia has a stronger interest in the outcome of this lawsuit than it would have in any other complex litigation which in some manner implicates a federal regulatory scheme.

Upon examination of Plaintiffs' most recent complaint, this case appears to be, above all else, an antitrust lawsuit accusing one group of entities of colluding against a large number of individuals and organizations. It is the tobacco growers and quota holders, not the USDA, that are and would continue to be harmed by Defendants' alleged unlawful actions. Accordingly, since only a minuscule number of putative class members resides in the transferor forum, Plaintiffs' choice in this case is accorded little, if any,...