Victoriatea.Com, Inc. v. Cott Beverages, Canada

• Decision Date: 07 January 2003
• Docket Number: No. 02 Civ. 6512.,02 Civ. 6512.
• Citation: 239 F.Supp.2d 377
• Parties: VICTORIATEA.COM, INC., the Torimiro Corporation, Rachael F. Parray, Plaintiffs, v. COTT BEVERAGES CANADA a/k/a/ Cott Beverages, Inc., Cott Beverages, Inc. a/k/a/ Cott Beverages USA, Cott Corporation, Universal Flavors-Canada Incorporated, and Universal Foods Corporation a/k/a/ Sensient Technologies Corporation, Defendants.
• Court: U.S. District Court — Southern District of New York

239 F.Supp.2d 377

VICTORIATEA.COM, INC., the Torimiro Corporation, Rachael F. Parray, Plaintiffs, v. COTT BEVERAGES CANADA a/k/a/ Cott Beverages, Inc., Cott Beverages, Inc. a/k/a/ Cott Beverages USA, Cott Corporation, Universal Flavors-Canada Incorporated, and Universal Foods Corporation a/k/a/ Sensient Technologies Corporation, Defendants.

No. 02 Civ. 6512.

United States District Court, S.D. New York.

January 7, 2003.

Sam O. Maduegbuna, Madu, Edozie & Madu, P.C., New York, NY, Victor Ekperigin, Maduebuna, Cooper & Ekperigin, New York, NY, for Plaintiffs.

Steven Francis Napolitano, Jay B. Kasner, Skadden, Arps, Slate, Meagher & Flom, L.L.P., New York, NY, Thomas G. Bailey, Jr., John E. Tardera, Winston & Strawn, New York, NY, for Defendants.

DECISION AND AMENDED ORDER

MARRERO, District Judge.

Plaintiffs VictoriaTea.com, Inc. ("VTI"), the Torimiro Corporation ("Torimiro") and Rachael F. Parray ("Parray") (collectively "Plaintiffs") commenced this action under the Court's diversity jurisdiction against defendants Cott Beverages Canada, Cott Beverages, Inc., Cott Beverages USA, Cott Corporation (collectively "Cott" or the "Cott Defendants") and Universal Flavors-Canada, Inc., Universal Foods Corporation and Sentient Technologies Corporation (collectively the "Sentient Defendants"). Plaintiffs allege breach of contract and tort claims arising from defective manufacturing and packaging of a beverage that was the subject of an agreement between Torimiro and Cott Beverages Canada. The Cott and Sentient Defendants both moved to dismiss the action on the ground of forum non conveniens. By Order dated December 27, 2002, the Court granted the motions and indicated that its reasoning would be set forth in a separate Decision and Order.

I. FACTS

Torimiro, a Canadian corporation based in Ontario, packages and sells beverages using the brand names "VictoriaTea" and "The Victorian Iced Tea" (collectively "Victoria Tea") to wholesale and retail outlets in Canada, the United States and the Caribbean. Parray, a citizen and resident of Ontario, Canada, is the owner of the Victoria Tea trade names and trade marks. VTI, the licensee of the Victoria Tea trade names and trade marks, asserts that it is a New York corporation with its principal place of business at an address at the 26th Floor of 521 Fifth Avenue, in Manhattan.¹

Cott, a Canadian corporation based in Ontario, Canada, produces and supplies a brand of various beverages. Cott conducts business in the United States through a wholly-owned subsidiary, Cott Beverages Inc., which is incorporated in Georgia and headquartered in Florida. Sentient Flavors Canada Inc., formerly known as Universal Flavors Canada, Inc., is a Canadian corporation engaged in manufacturing food flavors and other ingredients. Sentient owns Sentient Technologies Corporation (formerly known as Universal Foods Corporation), a United States subsidiary headquartered in Wisconsin.

In July 1999, following discussions in Ontario, Torimiro and Cott Beverages Canada entered into an agreement (the "Agreement") under which Cott undertook to manufacture and package an iced tea product (the "Product") based on a concentrate formula provided by Torimiro. Plaintiffs contend that the Product was to be distributed primarily in the United States market and that all Defendants were so aware. The Agreement was negotiated and executed in Ontario. Torimiro engaged Universal Flavors-Canada to produce the flavor concentrate for the Product. This arrangement was also entered into in Canada. Cott employed the facilities of a division of its United States subsidiary located in Georgia to perform testing of the concentrate.

Plaintiffs contend that because Cott does not produce any powder form of tea concentrate in Canada, the final formulation of the Product was actually developed and approved in the United States by Cott Beverages USA. There is no dispute that Cott manufactured the Product at its facilities in Ontario and beginning in March 2000 shipped it from there to Torimiro's distribution center in Buffalo, New York, and other locations in the United States, Canada and the Caribbean specified by Torimiro.

According to Plaintiffs, beginning in April 2000, within weeks of Cott's initial shipment of the Product, Torimiro began receiving complaints from its customers that containers of the Product were exploding in the customer's warehouses in various parts of the United States, Canada and the Caribbean. Torimiro informed Cott of these reports. Cott then retained two Canadian companies, Gelda Scientific and Crown Cork & Seal Canada Inc. to investigate the problem. At Torimiro's request, Cott also had the Product tested by BCN Research Laboratories in Knoxville, Tennessee ("BCN"), which prepared a report in July 2000, indicating that the Product contained a yeast contamination. Torimiro then recalled its inventory of the Product from customers to its distribution center in Buffalo, and alleges that 95 percent of it was located in the United States. Cott asserts that it reimbursed Torimiro for freight and product costs related to the defective shipments of the Product that Torimiro returned to Cott in Canada.

Plaintiffs claim that on account of these events, they were unable to sell any more of the Product after April 2000. In January of 2002 Torimiro and Cott sought to negotiate a new packaging agreement. These efforts were unsuccessful. Torimiro, which was then involved in a receivership proceeding, had not paid Cott for certain inventory of the Product and was sued by Cott in Canada under the terms of the Agreement. In that action, which also named VTI, Torimiro asserted as an affirmative defense that Cott owed Torimiro money and that VTI was not a real party to the action.

Plaintiffs commenced the instant litigation in May 2002 in State Supreme Court, New York County, contending that by reason of Defendants' wrongful conduct they lost the value of their trade names and trade marks and their market position. Specifically plaintiffs assert: (1) on behalf of Torimiro, contract claims of breach of contract, breach of implied warranties and breach of implied covenant of good faith, each arising out of alleged failure on the part of the Cott Defendants to perform properly under the terms of the Agreement; (2) negligence claims on behalf of Torimiro based on Defendants' alleged wrongful performance of their underlying obligations to Torimiro; (3) a negligence claim on behalf of Parray and VTI, as the intended beneficiaries of the relationships between Torimiro and the Defendants; (4) a prima facie tort claim; and (5) a distinct request for attorney's fees. Defendants removed the case to this Court and moved to dismiss on the ground of forum non conveniens. The Cott Defendants moved alternatively for dismissal for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(B)(2) or for transfer of venue to another district pursuant to 28 U.S.C. § 1404(a).

II. DISCUSSION

Courts employ a two-part test to analyze an invocation of the forum non conveniens doctrine. Initially, the court determines whether there exists an adequate alternative forum. See Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 506-07, 67 S.Ct. 839, 91 L.Ed. 1055 (1947). If so, the Court assesses the appropriateness of litigating the action in the plaintiffs choice of forum, as opposed to the alternative venue, by balancing the private interests of the litigants and the public interest concerns of the court in accordance with the factors articulated by the Supreme Court in Gilbert. See id. at 508-09, 67 S.Ct. 839; see also Moscovits v. Magyar Cukor Rt, No. 00 Civ. 0031, 2001 WL 767004, at *2 (S.D.N.Y. July 9, 2001), affd, 34 Fed.Appx. 24 (2d Cir.2002); Ilusorio v. Ilusorio-Bildner, 103 F.Supp.2d 672, 673 (S.D.N.Y.2000), affd, 2001 U.S.App. Lexis 17157 (2d Cir. March 23, 2001). The analysis asks whether in the interest of justice and all other relevant concerns the action would best be brought in another forum. A threshold inquiry is the degree of deference that should be accorded to the plaintiffs choice of forum. See Moscovits, 2001 WL 767004, at *5; see also New Hampshire Ins. Co. v. Sphere Drake Ins. Ltd., No. 01 Civ 3226, 2002 WL 1586962 (S.D.N.Y. July 17, 2002), affd in relevant part, vacated in part by 51 Fed.Appx. 342 (2d Cir.2002).

A. DEFERENCE TO PLAINTIFF'S FORUM

Generally, there is a strong presumption in favor of the plaintiffs choice of forum. See Piper Aircraft Co. v. Reyno, 454 U.S. 235, 250, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981); DiRienzo v. Philip Servs. Corp., 294 F.3d 21, 28 (2d Cir.2002); Iragorri v. United Technologies Corp., 274 F.3d 65, 70-71 (2d Cir.2001). In consequence, defendants have the burden of overcoming this presumption by establishing that the balancing of the Gilbert private and public interest factors "tilt strongly in favor" of the alternative forum. Reyno, 454 U.S. at 255-56, 102 S.Ct. 252; Iragorri, 274 F.3d at 71-72; R. Maganlal & Co. v. M.G. Chem. Co., 942 F.2d 164 (2d Cir. 1991). Deference to plaintiffs forum becomes a stronger consideration where plaintiff is an American citizen, especially in cases in which the underlying claims arose under United States law or seek to enforce or promote significant American policy interests. See Reyno, 454 U.S. at 256, 102 S.Ct. 252 (emphasizing that this rule is not intended to disadvantage foreign plaintiffs but rather reflects a realistic prediction of the ultimate convenience of the forum); Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 103-104 (2d Cir. 2000); DiRienzo, 294 F.3d at 31; see also Murray v. British Broadcasting Corp., 81 F.3d 287, 290 (2d Cir.1996).

But where the local claimant is only nominally American, as in the case of an assignee of a foreign corporation, the "courts have generally refused to give special deference" to plaintiffs choice of forum. Pain v. United Technologies Corp., 637 F.2d 775, 797-98 (D.C.Cir.1980) (finding that the domestic forum choice...