Stanley Works v. Kain

• Decision Date: 20 September 1993
• Docket Number: Case No. 3:93-CV-515 (JAC).
• Citation: 833 F. Supp. 134
• Parties: The STANLEY WORKS v. Barry KAIN, Don Kain, Michael Laney, Robert Merkow, Renee Merkow and Ronald Scheinman.
• Court: U.S. District Court — District of Connecticut

833 F. Supp. 134

The STANLEY WORKS v. Barry KAIN, Don Kain, Michael Laney, Robert Merkow, Renee Merkow and Ronald Scheinman.

Case No. 3:93-CV-515 (JAC).

United States District Court, D. Connecticut.

September 20, 1993.

Robert W. Allen, Tyler Cooper & Alcorn, New Haven, CT, for plaintiff.

William J. Doyle and Jeffrey R. Babbin, Wiggin & Dana, New Haven, CT, for defendants.

RULING ON MOTION FOR TRANSFER OF VENUE

JOSÉ A. CABRANES, Chief Judge:

This action arises under the 1934 Securities and Exchange Act, 15 U.S.C. § 78a et seq. ("1934 Act"), and Securities and Exchange Commission Rule 10b-5, 17 C.F.R. § 240.10b-5 ("Rule 10b-5"). Pending before the court is the defendants' Motion for Transfer of Venue (filed May 10, 1993).

BACKGROUND

The plaintiff, The Stanley Works ("Stanley"), is a Connecticut corporation with its headquarters in New Britain, Connecticut, and the six individual defendants are all residents of California. The defendants sold to the plaintiff, pursuant to a Stock Purchase Agreement dated December 17, 1991, their stock in Wondura Products, Inc. d/b/a Monarch Mirror Door Company, Inc., a New Jersey corporation with its principal place of business in California. The plaintiff alleges that the defendants have breached the agreement and that the defendants' actions rise to the level of fraudulent misrepresentations and omissions in violation of section 10(b) of the 1934 Act, 15 U.S.C. § 78j(b), and Rule 10b-5.

The defendants have moved, pursuant to 28 U.S.C. § 1404(a), to have this case transferred from this court to the United States District Court for the Central District of California. After full briefing, the court heard oral argument on September 10, 1993.

In support of their motion, the defendants argue that a California forum would be more convenient and cost effective for the witnesses and parties; that all of the relevant documents are located in California; that many of the witnesses and documents are beyond the subpoena power of this court; that a judgment in this action will require the interpretation and application of California law; and that the plaintiff has extensive operations in California. While the defendants do not dispute the jurisdiction and venue of this court, they claim that transferring this case would best serve the interests of justice by maintaining the balance of fairness between the parties and by allowing a speedier resolution of the action due to the relative docket conditions in the two districts.

In opposing the defendants' motion, the plaintiff asserts that its choice of forum is entitled to substantial deference and should be honored absent a clear showing that convenience and justice for all parties demand that the litigation proceed elsewhere. The plaintiff invokes the recent case of The Stanley Works v. Labounty, et al., Civil Action No. 3:93-114 (AVC) (D.Conn. June 22, 1993) ("Labounty"), in which Judge Covello denied the defendants' motion to transfer based on the considerable deference owed to the plaintiff's choice of forum and the broad venue provision contained in § 27 of the 1934 Act, 15 U.S.C. § 78aa. The plaintiff further argues that, despite the defendants' assertions that the case centers on individuals, businesses, and transactions within the state of California, most of the review, analysis, and due diligence with respect to the transaction at issue was performed by the plaintiff's high-level employees within the state of Connecticut. According to the plaintiff, therefore, most of the relevant documents and many important witnesses are available in Connecticut. In sum, the plaintiff contends that the defendants have over stated the inconvenience to themselves were this action to proceed in Connecticut, and have under estimated the inconvenience to the plaintiff were the action to proceed in California.¹

DISCUSSION

I.

The defendants fully concede that jurisdiction and venue in this court are proper. Their motion to transfer, therefore, rests entirely on 28 U.S.C. § 1404(a), which provides: "For the convenience of the 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." A determination of whether to grant a change of venue "requires a balancing of conveniences, which is left to the sound discretion of the court." Filmline (Cross Country) Productions, Inc. v. United Artists, Corp., 865 F.2d 513, 520 (2d Cir. 1989). There are many factors to be considered in such a weighing of the interests, including "the convenience of the parties and the witnesses; the relative ease of access to sources of proof; the cost of obtaining the attendance of witnesses and other practical problems that make trial of a case more expeditious and inexpensive; and the interests of justice." SEC v. Electronics Warehouse, Inc., 689 F.Supp. 53, 74 (D.Conn. 1988), aff'd sub nom. SEC v. Calvo, 891 F.2d 457 (2d Cir.1989) (per curiam), cert. denied, 496 U.S. 942, 110 S.Ct. 3228, 110 L.Ed.2d 674 (1990).

Generally, the trial court's decision

must turn on the particular facts of each case and ... must consider all relevant factors to determine whether or not on balance the litigation would more conveniently proceed and the interests of justice be better served by transfer to a different forum.

C. Wright, A. Miller and E. Cooper, 15 Federal Practice and Procedure 370 (1986); see also Clisham Management, Inc. v. American Steel Bldg. Co., 792 F.Supp. 150, 152 (D.Conn.1992).

"While courts have broad discretion as whether to transfer a case pursuant to 28 U.S.C. § 1404(a), courts must give plaintiffs considerable deference in their choice of forum." Labounty, slip op. at 5. As a result, there is a strong presumption in favor of the plaintiff's choice of forum and there is a heavy burden on the defendants to establish that the case should be transferred. Indeed, "a plaintiff's choice of forum should rarely be disturbed." Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255, 102 S.Ct. 252, 265, 70 L.Ed.2d 419 (1981).

The breadth of the special venue provision under which the plaintiff has selected a forum in this action, § 27 of the 1934 Act, 15 U.S.C. § 78aa, arguably strengthens this presumption in securities actions.² "The venue provision of the 1934 Act represents an affirmative congressional policy choice to allow plaintiffs in securities cases the widest possible choice of forums in which to sue." SEC v. Electronics Warehouse, Inc., 689 F.Supp. at 74.

II.

The defendants first argue that venue should be transferred to California for the convenience of the witnesses who will testify at trial, claiming that "virtually every witness that will be called at trial resides in the Los Angeles area." Defendants' Memorandum in Support of Motion to Transfer Venue (filed May 10, 1993) (doc. # 17) ("Defendants' Memorandum"), at 17. See Affidavit of William J. Doyle, Attachments 1-4 (filed May 10, 1993) (doc. # 16) ("Attachments to Doyle Affidavit"). The plaintiff, however, has countered with an extensive list of potential witnesses within the state of Connecticut. See Affidavit of Robert W. Allen, Attachments 1-4 (filed June 7, 1993) (doc. # 24) ("Attachments to Allen Affidavit").

The defendants also maintain that the key documents to be used by both sides are largely in California. Defendants' Memorandum at 19; see Attachments to Doyle Affidavit. Again, the plaintiff has responded by contending that Connecticut, Rhode Island, and Pennsylvania house a significant number of relevant documents, and that it will produce any records under its control that are located elsewhere. Plaintiff's Memorandum in Opposition to Transfer (filed June 7, 1993) (doc. # 23) ("Plaintiff's Memorandum"), at 10; see Doyle Affidavit ¶ 6; Attachments to Doyle Affidavit.

The defendants next posit that California is most convenient for the parties. Defendant's Memorandum at 21-23. The defendants claim that while the plaintiff has a substantial presence in California, had purchased a company with its principal place of business in California, and could therefore expect to incur time and expense travelling to and from California, the defendants had no expectation of travelling to Connecticut. The plaintiff, however, asserts that the defendants have gravely underestimated the inconvenience to a large group of Stanley's senior officials — who are located in Connecticut — should this case be transferred to California. Plaintiff's Memorandum at 12. From the plaintiff's perspective, the review, analysis and decisionmaking regarding the transaction in question were conducted in New Britain, Connecticut. Indeed, the defendants cannot persuasively claim that — in negotiating a major corporate transaction with a company headquartered in Connecticut and with corporate representatives who were residents of Connecticut — they had no expectation that they could be subject to suit in Connecticut.

Moreover, the defendants claim that transferring the case to California would best serve the interests of justice. Defendant's Memorandum at 23-27. More specifically, the defendants argue that a court in California should decide issues of California law; that the defendants are decidedly disadvantaged by a Connecticut forum; and that the docket moves more quickly in the Central District of California.

First, regarding the applicability of California law, the defendants rely on Clisham, 792 F.Supp. at 156-58; Air Express International Corporation v. Consolidated Freightways, Inc., 586 F.Supp. 889 (D.Conn.1984); and Kanbar v. U.S. Healthcare, Inc., 715 F.Supp. 602 (S.D.N.Y.1989). All three of these cases, however, present a set of factors — absent here — which strongly militated in favor of transfer.

In Clisham, the plaintiff's cause of action rested in large part on the Texas Deceptive Trade Practices Act and the court declined to entangle itself in a host of first impression issues concerning Texas state law which...