T. & B. Equip. Co. v. Ri, Inc.
| Decision Date | 24 August 2015 |
| Docket Number | Civil Action No. 3:15-CV-337 |
| Court | U.S. District Court — Eastern District of Virginia |
| Parties | T. AND B. EQUIPMENT COMPANY, INC., Plaintiff, v. RI, INC. Defendant. |
THIS MATTER is before the Court on a Motion to Dismiss for Improper Venue and Incorporated Memorandum of Law ("Motion") (ECF No. 4), filed by Defendant on July 20, 2015. Plaintiff filed a response in opposition on July 31, 2015 ("Opp'n Mem.") (ECF No. 6), and Defendant subsequently filed a reply on August 6, 2015 ("Reply Mem.") (ECF No. 7). The parties have not requested a hearing on this matter, and the Court finds that oral argument is unnecessary. See E.D. Va. Loc. Civ. R. 7(J). For the reasons that follow, the Court DENIES the Motion.
This action for declaratory judgment stems from an agreement to purchase a new outdoor seating system. Defendant RI, Inc. d/b/a Seating Solutions ("Defendant" or "RI") is a New York Corporation with its principal place of business in Commack, New York. Defendant specializes in the sale, rental, installation and removal of custom designed spectator seating. Plaintiff T. and B. Equipment Company, Inc. ("Plaintiff" or "T&B"), a Virginia corporation, specializes in indoor and outdoor event seating solutions, including but not limited to temporary seating for golf tournaments, concerts, shows and graduations.
In or around March 2012, Plaintiff initiated discussions with Defendant because it was interested in purchasing a new seating system, specifically the "Box Seat 901" system(hereinafter, the "901 Box Seats"). Plaintiff claims that prior to its discussions with Defendant, Plaintiff had been made aware of the existence of the 901 Box Seats as early as 2010 through displays at industry trade shows, including the Stadia Design & Technology Expo at the Javits Center in New York City, New York. In response to Plaintiff's interest, Defendant sent Plaintiff a written quote on March 14, 2012, (Compl. Ex. A), and again on April 19, 2012, (id. at Ex. B).
Also in the spring of 2012, Defendant approached Plaintiff about a possible acquisition of Defendant's equipment rental business. In conjunction with Plaintiff's possible acquisition, the parties executed a Mutual Non-Disclosure Agreement (the "NDA") on April 24, 2012. (Id. at Ex. C). The NDA is governed by and construed in accordance with New York law. (Id. at ¶ 17.) After Plaintiff sent Defendant a due diligence checklist on April 24, 2012, there were no further discussions between the parties.1
On June 29, 2012, Plaintiff received an unsolicited email from The Product People Int'l Pty Ltd ("The Product People") offering to sell the 901 Box Seats to Plaintiff. The Product People is the developer and manufacturer of the seats. Defendant reports that it became aware that Plaintiff purchased approximately 10,690 901 Box Seats from The Product People.
In December 2012, Plaintiff received a letter from Defendant claiming that Plaintiff's purchase of the 901 Box Seats from The Product People was a violation of the NDA, on the basis that Defendant had shared information regarding the 901 Box Seats while there was a "nondisclosure non-compete in place" and further claiming that Plaintiff was only aware of the 901 Box Seats "because of" the NDA. (Id. at Ex. D.) In February 2015, Plaintiff received a demand letter from Defendant claiming that Plaintiff breached the NDA by purchasing the Box Seats from The Product People, and demanding that Plaintiff pay Defendant thirty dollars for each seat purchased, for a total of $320,700. (See id. at Ex. E.)
Plaintiff filed the Complaint in the above-styled case on June 4, 2015. The one-count Complaint seeks a declaratory judgment that Plaintiff did not breach the NDA by purchasing the 901 Box Seats from The Product People, and requests the Court to declare that Plaintiff has no liability, monetary or otherwise, to Defendant. Defendant then filed the present Motion on July 20, 2015, arguing that the Court should dismiss the case for improper venue, or alternatively transfer the action to the United States District Court for the Eastern District of New York where Defendant is located.
A motion to dismiss for improper venue pursuant to Rule 12(b)(3) of the Federal Rules of Civil Procedure is a defense pleaded in the first responsive pleading or made by motion filed by a defendant. Douglas v. D.B. Va., LLC, No. 4:10CV80, 2010 WL 5572830, at *2-3 (E.D. Va. Dec. 13, 2010). When a defendant challenges proper venue, the plaintiff bears the burden of establishing that venue is proper. Id. at 3 (citations omitted). But if no evidentiary hearing is held, "the plaintiff need only make a prima facie showing of venue." Mitrano v. Hawes, 377 F.3d 402, 405 (4th Cir. 2004) (citation omitted). The court need not accept the pleadings as true, but instead may consider outside evidence. Id. However, the Court must still draw all inferences in favor of the plaintiff. Silo Point II LLC v. Suffolk Const. Co., 578 F. Supp. 2d 807, 809 (D. Md. 2008). "If venue is found to be not proper in the judicial district, the court may dismiss the action, or transfer the action to a district where it otherwise could have been brought in the interest of justice." Douglas, 2010 WL 5572830, at *3 (citing 28 U.S.C. § 1406(a)).
(1) Motion to Dismiss
28 U.S.C. § 1391(b).
Specifically with regards to the second prong, "in determining whether events or omissions are sufficiently substantial to support venue . . ., a court should not focus only on those matters that are in dispute or that directly led to the filing of the action," but instead "should review the entire sequence of events underlying the claim." Mitrano, 377 F.3d at 405 (citations and internal quotation marks omitted). For a contract dispute, "courts have recognized that particular attention should be paid to those core aspects of any contract dispute, including where the contract was negotiated or executed, where it was to be performed, and where the alleged breach occurred." Wye Oak Tech., Inc., v. Republic of Iraq, No. 1:09cv793, 2010 WL 2613323, at *10 (E.D. Va. June 29, 2010). Additionally, a court may consider, "the event that allegedly entitled the plaintiff to the payment [now] sought under the contract." Mitrano, 377 F.3d at 406. In Mitrano, the Fourth Circuit considered a breach of contract action for nonpayment of attorney's fees. See id. at 404. The Court held that the performance of the legal services at issue was the event that allegedly entitled the plaintiff to the payment sought under the contract. Id. at 405-06. Id. at 406.
"As a result of the 'substantial part' wording of § 1391, it is possible for venue to be proper in several judicial districts." Power Paragon, Inc. v. Precision Tech. USA, Inc., 605 F. Supp. 2d 722, 726 (E.D. Va. 2008) (citing Mitrano, 377 F.3d at 405). Thus, a plaintiff need not demonstrate "that his chosen venue has the most substantial contacts to the dispute," but "[r]ather it is sufficient that a substantial part of the events occurred in that venue, even if a greater part of the events occurred elsewhere." Id. (citations omitted).
In the present action, Defendant contends that "[t]here is no allegation in the Complaint that any event related to the declaratory judgment claim occurred in Virginia," (Mot. at 2), and thus argues that Plaintiff has "provided no connection to Virginia," (id. at 3.) In its reply, Defendant further asserts that Plaintiff's "primary claim in this matter is that its alleged prior knowledge of the 901 Box Seat that it obtained during a prior visit to New York places the information subsequently disclosed by [Defendant] outside the scope and protections of the NDA, and that therefore [Plaintiff] has no liability thereunder." (Reply Mem. at 6) (emphasis added). "As a result, because [Plaintiff] alleges that it first observed [Defendant's] proprietary information in New York in 2010, and argues that this prevents it from violating the NDA, the substantial part of events constituting [Plaintiff's] declaratory judgment claim only occurred in New York." (Id. at 7.) However, upon review of Plaintiff's Complaint and the attached documents, Defendant's argument is not entirely true.
Plaintiff filed its Complaint seeking a declaratory judgment that it did not breach the NDA by purchasing the 901 Box Seats from The Product People. (Compl. ¶ 24.) Plaintiff's claim is based on several explanations. (See id. at Ex. F.) First, as Defendant contends, Plaintiff claims that it "knew of the existence of the 901 Box Seats, and knew that the 901 Box Seats had been developed and manufactured by The Product People, prior to entering into the NDA with Defendant." (Id.) But Plaintiff also claims that "[t]he NDA, by its plain language, acknowledges that T&B may enter into transactions with other similar or identical business." (Id. at ¶ 25.) Plaintiff further asserts that "there mere existence of the 901 Box Seats or the identity...
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