Wilson v. Directbuy, Inc., Civil Action Nos. 3:09–CV–590 (JCH)

CourtUnited States District Courts. 2nd Circuit. United States District Court (Connecticut)
Citation821 F.Supp.2d 510
Decision Date27 October 2011
Docket NumberCivil Action Nos. 3:09–CV–590 (JCH),3:11–CV–1093 (JCH),3:11–CV–1142 (JCH).
PartiesChristopher WILSON, et al., Plaintiffs, v. DIRECTBUY, INC., et al., Defendants.Janice Harris, et al., Plaintiffs, v. DirectBuy, Inc., et al., Defendants.Brian Vance, et al., Plaintiffs, v. DirectBuy, Inc., et al., Defendants.

821 F.Supp.2d 510

Christopher WILSON, et al., Plaintiffs,
v.
DIRECTBUY, INC., et al., Defendants.Janice Harris, et al., Plaintiffs,
v.
DirectBuy, Inc., et al., Defendants.Brian Vance, et al., Plaintiffs,
v.
DirectBuy, Inc., et al., Defendants.

Civil Action Nos. 3:09–CV–590 (JCH)

3:11–CV–1093 (JCH)

3:11–CV–1142 (JCH).

United States District Court, D. Connecticut.

Oct. 27, 2011.


[821 F.Supp.2d 513]

Jeffrey S. Nobel, Mark P. Kindall, Seth R. Klein, Izard Nobel P.C., West Hartford, CT, James Berman, Jeffrey R. Hellman, Zeisler & Zeisler, P.C., Bridgeport, CT, Jeffrey H. Squire, Lawrence P. Eagel, Bragar Wexler Eagel & Squire, P.C., New York, NY, for Plaintiffs.

C. Joseph Yast, DirectBuy, Inc., Merrillville, IN, Edward Wood Dunham, John Matthew Doroghazi, Joseph C. Merschman, Bradley Wilson Moore, Wiggin & Dana, New Haven, CT, for Defendants.

RULING RE: DEFENDANTS' MOTION TO TRANSFER
( Wilson Doc. No. 264, Harris Doc. No. 14, Vance Doc. No. 9)1
JANET C. HALL, District Judge.I. INTRODUCTION

Christopher Wilson, Regina Ingram, Christian Kalled, Keith Walker, Mabyn Morgan, Daniel Morgan, Raymond Bailey, Shery Bailey, and Robin Varghese (collectively “named plaintiffs”) brought the top-captioned lawsuit (“ Wilson ”) against DirectBuy, Inc. (“DirectBuy”), United Consumers Club, Inc. (“UCC”), and DirectBuy Holdings, Inc. (“DB Holdings”) (collectively, “defendants”). All three defendants are corporations headquartered in Merrillville, Indiana. After this court denied plaintiffs' Motion for Settlement (Doc. No. 134), the two above-captioned cases were filed in this district against the same defendants. One of the related cases was brought by Janice and Lacey Harris, and the other by Brian Vance, Tyrone Gillispie, Thomas Boettcher, Michael Nope, William Fisher, and Joel Machado.

Defendants moved to transfer each of the cases to the Northern District of Indiana. Mots. to Transfer (Doc. Nos. 264, 14, 9). For the following reasons, the Motions are GRANTED.

II. STANDARD

Under 28 U.S.C. § 1404(a), “[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.” 28 U.S.C. § 1404(a). The movant bears the burden of establishing the propriety of transfer by a clear and convincing showing. Excelsior Designs v. Sheres, 291 F.Supp.2d 181, 185 (E.D.N.Y.2003) (citing Ford Motor Co. v. Ryan, 182 F.2d 329, 330 (2d Cir.1950)); see also United Rentals v. Pruett, 296 F.Supp.2d 220, 228 (D.Conn.2003) (placing burden on movant despite presence of forum-selection clause); O'Brien v. Okemo Mountain, 17 F.Supp.2d 98, 102 (D.Conn.1998) (same). “Section 1404(a) reposes considerable

[821 F.Supp.2d 514]

discretion in the district court to adjudicate motions for transfer according to an individualized, case-by-case consideration of convenience and fairness.” Red Bull Associates v. Best Western Int'l, 862 F.2d 963, 967 (2d Cir.1988) (internal citation omitted).

III. PROCEDURAL AND FACTUAL BACKGROUND

DirectBuy, Inc. (“DirectBuy”) is a franchise, members-only, discount shopping club headquartered in Merrillville, Indiana. See Powell Aff. ( Wilson Doc. No. 265–1) ¶ 2. DirectBuy is a wholly-owned subsidiary of United Consumers Club, Inc. (“UCC”), which is a wholly-owned subsidiary of DirectBuy Holdings, Inc. (“DB Holdings”). Id. ¶ 3. DirectBuy has franchise shopping centers throughout the United States. See Defs.' Mem. in Supp. of Mot. to Transfer ( Wilson Doc. No. 265) (“ Wilson Defs.' Mem. in Supp.”) 6. DirectBuy purports to offer its members products at manufacturer's or supplier's prices, resulting in major savings for its members by cutting out the retail markup. See First Am. Compl. (Doc. No. 255) (“ Wilson Am. Compl.”) ¶ 26. The Wilson plaintiffs allege that DirectBuy engaged in fraud by purporting to offer its members products “at the manufacturer's or supplier's price.” Id. ¶ 41. According to plaintiffs, DirectBuy failed to disclose “rebates, discounts, and other payments from manufacturers and suppliers,” which plaintiffs claim amounted to approximately $6 million during the fiscal year ending in 2007, and a total of $45.7 million during the eight year class period. Id. ¶ 43.

Plaintiffs assert claims pursuant to the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962, averring that defendants acted in collusion with franchisees to engage in the alleged fraud. Wilson Am. Compl. ¶¶ 49–78. Plaintiffs also assert a claim of common law fraud, id. at ¶¶ 79–85, and a claim under the consumer protection statutes of Arizona, Arkansas, California, Colorado, Connecticut, Florida, Idaho, Illinois, Indiana, Kansas, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Texas, Utah, Virginia, Washington, and West Virginia on behalf of subclasses of plaintiffs who purchased memberships in those states. Id. at ¶¶ 86–92.

Shortly after the Wilson suit was filed in 2009, the parties jointly requested a stay of all deadlines pending settlement negotiations to be mediated by Magistrate Judge Garfinkel, see Joint Mot. for Referral ( Wilson Doc. No. 14), which this court granted. See Order Granting Joint Mot. for Referral ( Wilson Doc. No. 19). For nearly a year and a half, the parties engaged in settlement negotiations. While the settlement negotiations were ongoing, plaintiffs in a similar case in the Southern District of Indiana moved to centralize four actions including the instant case in the Southern District of Indiana. See MDL Panel Order Den. Transfer ( Wilson Doc. No. 41). Defendants opposed centralization before the Panel, and plaintiffs in Wilson opposed centralization and alternatively favored transfer to the District of Connecticut. Id. at 1.

On March 29, 2011, Wilson plaintiffs moved for final approval of the settlement. See Mot. for Final Approval ( Wilson Doc. No. 134). On May 10, 2011, this court held a hearing on the fairness of the proposed settlement, see Minute Entry ( Wilson Doc. No. 239), and on May 16, 2011, 2011 WL 2050537, this court denied plaintiffs' Motion for Final Approval of Class Settlement on grounds of procedural and substantive fairness. See generally Ruling Den. Mot. for Settlement ( Wilson Doc. No 243). Plaintiffs then filed an Amended

[821 F.Supp.2d 515]

Complaint, deleting their claim of unjust enrichment against all defendants and adding the common law fraud and state consumer protection law claims. See Wilson Am. Compl. ¶¶ 79–92; see also Compl. ¶¶ 70–78 ( Wilson Doc. No. 1). Defendants moved to dismiss the case and filed the present Motion to Transfer to the Northern District of Indiana. See Mot. to Dismiss ( Wilson Doc. No. 262); Mot. to Transfer ( Wilson Doc. No. 264).

Following this court's rejection of the proposed class settlement, and before DirectBuy filed its motions, two related cases were filed in this District. In Harris, Janice and Lacey Harris of Missouri bring suit on behalf of Missouri DirectBuy members against DirectBuy, UCC, and DB Holdings for violation of the Missouri Merchandising Practices Act, Mo.Rev.Stat. § 407.020 (2011). Defendants allege that an essentially identical suit is pending in Missouri state court, and that the state court case and the case in this District are both versions of a suit that has been pending in state and federal courts in Missouri since 2008. See Mot. to Transfer 2–3 ( Harris Doc. No. 14). In Vance, plaintiffs bring claims on behalf of DirectBuy members in Ohio, Indiana, Texas, Utah, Oklahoma, and Massachusetts for violation of those states' consumer protection statutes. See Compl. ( Vance Doc. No. 1) (“ Vance Compl.”). Plaintiffs voluntarily dismissed a similar case in the Southern District of Indiana the day before filing in this District. See Indiana Docket Sheet ( Vance Doc. No. 9–1).

Plaintiffs in all three cases are represented by the same law firm and have moved to consolidate the three related cases. See Mot. to Consolidate ( Wilson Doc. No. 272).

IV. DISCUSSION

Defendants argue that Wilson, Harris, and Vance should be transferred to the Northern District of Indiana, Hammond Division, under 28 U.S.C. § 1404(a).2 In determining whether a transfer of venue pursuant to 28 U.S.C. § 1404(a) is appropriate, district courts engage in a two-part inquiry, asking: (1) whether an action “might have been brought” in the proposed transferee forum, and, if so, (2) whether the transfer promotes convenience and justice. See MAK Marketing v. Kalapos, 620 F.Supp.2d 295, 307 (D.Conn.2009); see also Forjone v. California, 425 Fed.Appx. 73, 74 (2d Cir.2011).

A. Whether The Case Might Have Been Brought in the Northern District of Indiana

Defendants assert, and plaintiffs do not deny, that all three cases could have been brought in the Northern District of Indiana. See Wilson Defs.' Mem. in Supp. 6. To decide whether an action “might have been brought” in the proposed transferee forum, the court must first determine whether the defendants are subject to personal jurisdiction in that forum, and whether venue would properly lie there. See generally Farrell v. Wyatt, 408 F.2d 662, 666 (2d Cir.1969). All three defendant corporations are headquartered in the Northern District of Indiana and are subject to general personal jurisdiction there. Venue would thus also be proper in the Northern District of Indiana. See 18 U.S.C. § 1965 (making venue proper in

[821 F.Supp.2d 516]

any district in which a defendant in a RICO claim “is found, has an agent, or transacts his affairs”); 28 U.S.C. § 1391(c) (making venue proper for corporations wherever the corporation is subject to personal jurisdiction when the action is commenced). Plaintiffs do not appear to argue that the cases could not have been brought in the Northern District of Indiana. Therefore, these cases “might have been brought” in the Northern District of Indiana. 28 U.S.C. § 1404(a).

B. ...

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