Quixtar Inc. v. Signature Management Team, LLC

• Decision Date: 07 July 2008
• Docket Number: No. 3:07-CV-505-ECR-RAM.,3:07-CV-505-ECR-RAM.
• Citation: 566 F.Supp.2d 1205
• Parties: QUIXTAR INC., Plaintiff, v. SIGNATURE MANAGEMENT TEAM, LLC d/b/a Team, Defendant.
• Court: U.S. District Court — District of Nevada

566 F.Supp.2d 1205

QUIXTAR INC., Plaintiff, v. SIGNATURE MANAGEMENT TEAM, LLC d/b/a Team, Defendant.

No. 3:07-CV-505-ECR-RAM.

United States District Court, D. Nevada.

July 7, 2008.

Bradley L. Smith, James Cleland, and James R. Sobieraj, Brinks Hofer Gilson & Lione, Ann Arbor, MI; Brian Masternak and Edward J. Bardelli, Warner Norcross & Judd, Grand Rapids, MI; Cedric C. Chao, San Francisco, CA; Dominic P. Zanfardino, Chicago, IL; James M. Schurz and William L. Stern, Morrison & Foerster, San Francisco, CA; John J. Frankovich and Miranda M. Du, McDonald Carano Wilson, LLP, Reno, NV, for Plaintiff.

Daniel J. LaCombe, Morley Witus, and Sharon M. Woods, Barris, Sott, Denn & Driker, P.L.L.C, Detroit, MI; Joanne Geha Swanson, Ricardo J. Lara, and William A. Sankbeil, Kerr, Russell & Weber, PLC, Detroit, MI; William C. Bundren, Wm. Charles Bundren & Associates, Frisco, TX; Adam K. Bult, Kirk B. Lenhard, Molly Malone Rezac, and Wayne O. Klomp, Jones Vargas, Reno, NV, for Defendant, Signature Management Team, LLC d/b/a Team.

Michael Y. McCormick, McCormick, Hancock & Newton, Houston, TX; Evan Beavers, Minden, NV, for Subpoena Respondents.

Daniel A. O'Brien, O'Brien Legal Services, Walled Lake, MI, Molly Malone Rezac, Wayne O. Klomp, and Adam K. Bult, Jones Vargas, Reno, NV, for Respondent, Benjamin L. Dickie, III.

ORDER

EDWARD C. REED, District Judge.

Plaintiff Quixtar is a company that was formerly known as Amway. Defendant Signature Management TEAM ("TEAM") is a company that was started by former "Independent Business Operators" ("IBOs") with Quixtar. Plaintiffs Complaint (#1), filed on October 23, 2007, states causes of action against Defendant for (1) violation of the Lanham Act, (2) trade secret misappropriation, (3) tortious interference with existing contracts, (4) tortious interference with advantageous business relations, and (5) a declaratory judgment regarding the viability of claims brought against Quixtar in Collin County Texas. Defendant's Counter-claim (# 15), filed on November 14, 2007, states causes of action for (1) tortious interference with existing and advantageous business relations, (2) defamation, and (3) a declaratory judgment both that TEAM is not in violation of the Quixtar rules of conduct and that Quixtar's "IBO" contracts are unenforceable.

Currently pending before the Court is Defendant's Motion to Transfer the Case to the Eastern District of Texas, Sherman Division, Based on 28 U.S.C. § 1404(a)(# 22). Also pending is Benjamin Dickie's Objection to [the] Magistrate Judge's April 7, 2008 Order (# 124). Defendant TEAM has concurred (# 125) in that objection. For the reasons stated below, the motion (#22) to transfer is DENIED and Dickie's objection (# 124) is SUSTAINED in part.

I. Defendant TEAM's Motion to Transfer

Defendant TEAM moves the Court to transfer this case to the Eastern District of Texas. "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 burden of demonstrating that transfer is appropriate under section 1404(a) falls on the movant. Commodity Futures Trading Comm'n v. Savage, 611 F.2d 270, 279 (9th Cir.1979).

The basic framework for deciding whether to transfer a case pursuant to section 1404(a) requires weighing (1) the convenience of the parties, (2) the convenience of the witnesses, and (3) the interests of justice. Miracle Blade, LLC v. Ebrands Commerce Group, LLC, 207 F.Supp.2d 1136, 1155-56 (D.Nev.2002). A non-exclusive list of related considerations includes (1) the plaintiffs choice of forum; (2) the parties' contacts with the forum, and the extent to which the contacts are related to the pending action; (3) access to proof; (4) the cost of litigating in the two forums; (5) the availability of compulsory process, (6) judicial economy; (7) the court's familiarity with the governing law; and (8) the public policy of the forum state. See Jones v. GNC Franchising, Inc., 211 F.3d 495, 498-99 (9th Cir.2000); Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir.1986).

Transfer under section 1404(a) "should not be freely granted." In re Nine Mile Ltd., 692 F.2d 56, 61 (8th Cir. 1982), overruled on other grounds by Mo. Hons. Dev. Comm'n v. Brice, 919 F.2d 1306, 1311 (8th Cir.1990). "The defendant must make a strong showing of inconvenience to warrant upsetting the plaintiffs choice of forum." Decker Coal, 805 F.2d at 843. Indeed, normally the plaintiffs choice of forum is given paramount consideration, Galli v. Travelhost, Inc., 603 F.Supp. 1260, 1262 (D.Nev.1985). Some courts have afforded less deference to a plaintiffs choice of forum where the plaintiff has not chosen its home forum. See, e.g., Bryant v. ITT Corp., 48 F.Supp.2d 829, 832 (N.D.Ill.1999) ("where the plaintiffs chosen forum is not the plaintiffs home forum or lacks significant contact with the litigation, the plaintiffs chosen forum is entitled to less deference"). Cf. Iragorri v. United Technologies Corp., 274 F.3d 65, 72 (2d Cir.2001) (adopting a sliding scale approach towards forum non conveniens).

Here, Defendant TEAM is organized under the laws of the State of Nevada and TEAM is also apparently owned by several Nevada corporations. TEAM'S principal place of business is in Michigan. Plaintiff Quixtar is a Virginia corporation, headquartered in Michigan. Although Plaintiff has not brought this actions in its home forum, Plaintiffs decision to litigate this case in Nevada was not arbitrary. Further, it is readily apparent that this is not a dispute that is local in scope; no forum will be without its inconveniences. The Court finds that Plaintiffs choice of forum in this case is entitled to substantial, but certainly not dispositive weight.

Defendant's principal argument is that this case should be transferred due to ongoing litigation in state and federal courts in Texas, either on the grounds of judicial economy or for the convenience of the witnesses who may be called to testify in those cases. Defendant, however, has not made a substantial showing that judicial economy will be facilitated by transferring this action. With respect to litigation in federal court, one related federal action in Texas (Simmons v. Quixtar, 4:07-CV-389-MHS-DDB) has been referred to arbitration and a second (Simmons v. Quixtar, 4:07-CV-187-MHS-DDB) has been stayed on the basis of the Colorado River doctrine. Consolidation is thus unavailing. Neither has Defendant made any substantial showing that the litigation in Texas state court renders transfer appropriate. Indeed, beyond the obvious fact that state and federal cases cannot be consolidated, one related case in Texas state court was dismissed on the basis of forum non conveniens. The assertion that discovery could be coordinated between state and federal cases is too speculative to be given significant weight. Finally, while Defendant contends that some of its important witnesses reside in Texas, Plaintiff has identified "other witnesses it intends to call who reside in Nevada".¹ See Graff v. Qwest Commc'ns Corp., 33 F.Supp.2d 1117, 1121 (D.Minn.1999) ("[T]ransfer should not be granted if the effect is simply to shift the inconvenience to the party resisting the transfer.") (citing Van Dusen v. Barrack, 376 U.S. 612, 646, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964)), Gherebi v. Bush, 352 F.3d 1278, 1303 (9th Cir.2003) (same), vacated on other grounds, 542 U.S. 952, 124 S.Ct. 2932, 159 L.Ed.2d 835 (2004).

The Court gives significant weight to the fact that Plaintiff seeks a declaratory judgment related to TEAM'S dismissed state law claims in Collin County Texas. Texas courts obviously have more expertise with issue of Texas law than Nevada courts, and this issue on its own makes the matter of whether to transfer this case quite close. By contrast, because no issue of corporate law is pleaded or otherwise apparent in this case, the Court does not give any weight at all to Plaintiffs contention that Defendant has abused Nevada corporate law.

All in all, the balance is close to equipoise. Accordingly, the motion (#22) to transfer this case to the Eastern District of Texas, Sherman Division, is DENIED.

II. Dickie and TEAM'S Objection

Benjamin Dickie and Defendant TEAM object (##124, 125) to the Magistrate Judge's second Order (# 111) granting Plaintiff Quixtar's motion (# 54) to compel. The objection presents novel questions of law and will be sustained to the extent outlined below.²

A. Background

Plaintiff contends that TEAM has waged a wrongful, illegal internet campaign to induce Quixtar's "IBOs" to defect from Quixtar. In connection with Plaintiffs causes of action for tortious interference with business relations and tortious interference with an existing contract, Plaintiff took Benjamin Dickie's deposition on January 18, 2008. (Ex. P to P. Quixtar's Opp. (# 141).) According to Dickie, a part of his duties as a TEAM employee has been to work as a content manager for TEAM'S web sites and blogs.³ Dickie testified that these sites include "www.the-team.biz," "www.chrisbrady.com," "orrinwoodward.com," "www.launching-a-leadership-revolution.com," "orrinwoodward.mindsay.com," "orrinwoodward.tripod.com," and possibly others. When Plaintiffs counsel inquired whether there were other blogs that Dickie had set up, he responded in the affirmative and his counsel objected. Dickie's counsel then instructed Dickie not to answer questions regarding a pending lawsuit in Ottawa County (Michigan) on the basis of First Amendment privilege. The limited record indicates that this lawsuit was filed by Quixtar against unnamed Doe defendants. Dickie refused to answer any questions regarding whether he had any role in establishing or maintaining "freetheibo.com," "drinkxs.biz," "theiborebellion," "qreilly," "freetheibo blog," "quixtarlostmycents," "saveusdickdevos," "teamfoundingfathers," "quixtartoday,...