Hisun Motors Corporation U.S.A. et al v. Automotive Testing and Development Services Incorporated

Filing 18

ORDER denying 7 Motion to Change Venue. Signed by Judge David G Campbell on 11/1/2011.(NVO)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Hisun Motors Corp., U.S.A., a Texas
corporation and Metal Motorsports, Inc., an
Arizona corporation,

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No. CV11-1918-PHX DGC
ORDER

Plaintiffs,

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vs.

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Automotive Testing and Development
Services, Inc., a California corporation,

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Defendant.

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Plaintiffs Hisun Motors Corp. (“Hisun”) and Metal Motorsports, Inc. (“Metal”),

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entered into an oral agreement with defendant Automotive Testing and Development

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Services, Inc. (“ATDS”), in December 2010. Doc. 13, ¶ 9. ATDS, or its employees,

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agreed to obtain valid Environmental Protection Agency (“EPA”) certificates of

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conformity and California Air Resources Board (“CARB”) executive orders (collectively,

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“Certificates”) for Hisun’s entire 2012 model year product line of utility vehicles.

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Doc. 13 at 2.

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Plaintiffs initially filed a complaint against Defendants on September 19, 2011, in

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Arizona state court. Doc. 14 at 1. After removal to this Court, Plaintiffs filed an

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amended complaint against Defendant on October 11, 2011. Doc. 1. The amended

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complaint asserts claims for negligent misrepresentation, breach of contract, breach of the

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implied covenant of good faith and fair dealing, promissory estoppel, and negligent

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supervision. Doc. 13.

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Defendant has filed a motion to transfer venue. Doc. 12. The motion has been

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fully briefed. Docs.12, 15, 16. No party has requested oral argument. For reasons stated

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below, the Court will deny the motion.

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Defendant asks the Court to transfer this case to the Central District of California

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(Eastern Division). 28 U.S.C. § 1404(a) authorizes such a transfer if the action could

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have been brought in the Central District of California and “transfer is warranted by the

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convenience of parties and witnesses and promotes the interests of justice.” Van Dusen v.

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Barrack, 376 U.S. 612, 616, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964). “[T]he purpose of

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[section 1404(a)] is to prevent the waste of time, energy and money and to protect

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litigants and the public against unnecessary inconvenience and expense.” Id. (citation

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omitted).

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The parties do not dispute that this action could have been brought in the Central

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District of California. The Court must determine whether Defendant has made “a strong

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showing of inconvenience to warrant upsetting [Plaintiff's] choice of forum.” Decker

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Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir.1986).

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determination requires the weighing of several factors: (1) Plaintiffs’ choice of forum,

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(2) the convenience of the parties and witnesses, (3) the ease of access to sources of proof

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(4) the presence of a forum selection clause, (5) the state that is most familiar with the

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governing law, (6) the location where the relevant agreements were negotiated and

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executed, (7) the respective parties’ contacts with the forum, (8) the availability of

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compulsory process to compel attendance of unwilling non-party witnesses, (9) the

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relevant public policy of the forum state, and (10) the differences in the costs of litigation

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in the two forums. See 28 U.S.C. § 1404(a); Jones v. GNC Franchising, Inc., 211 F.3d

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495, 498-99 (9th Cir.2000); Sparling v. Hoffman Constr. Co., 864 F.2d 635, 639 (9th

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Cir.1988); Decker Coal, 805 F.2d at 843.

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I.

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This

Plaintiff’s choice of forum
Plaintiffs elected to file their claim in the District of Arizona. There is ordinarily

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“a strong presumption in favor of the plaintiff’s choice of forum,” such that great weight

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and substantial deference is generally afforded to a plaintiff’s choice. Piper Aircraft Co.

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v. Reyno, 454 U.S. 235, 265 (1981); see also Sinochem Intern. Co., Ltd. V. Malaysia

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Intern. Shipping Corp., 549 U.S. 422, 423 (2007); Lou v. Belzberg, 834 F.2d 730, 739

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(9th Cir. 1987); Decker Coal, 805 F.2d at 843. This factor weighs strongly against

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transfer.

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II.

Convenience of the parties and witnesses

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Plaintiff Hisun is a Chinese corporation with its principal place of business in

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Carrollton, Texas. Doc 15 at 13. Plaintiff Metal is an Arizona corporation with its

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principal place of business in Tempe, Arizona. Id. Plaintiffs have retained Arizona

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counsel. Defendant ATDS is incorporated in California and headquartered in Ontario,

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California, but has an office in Arizona and conducts business here. Doc. 7 at 3, Doc. 15

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at 10.

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litigating in this Court would be less than that suffered by Plaintiffs if the case were

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transferred to the Central District of California.

Given Defendant’s connection with Arizona, any inconvenience caused by

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Plaintiffs’ witnesses reside in Arizona, Texas, and China. Doc. 15 at 10. Metal’s

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employees reside in or around Tempe, Arizona, including CFO Chris Hunter. Doc. 15 at

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11. Plaintiff Hisun’s potential witnesses are located in and around Carrolton, Texas, or in

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China. Id. Potential non-party EPA and Customs witnesses are located in Washington,

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D.C., and Seattle, Washington, respectively, and are inconvenienced in either venue.

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Doc. 7 at 6; Doc. 15 at 11–12. Defendant’s key witnesses are located in California.

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Doc. 7 at 6.

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Transfer of venue from Arizona to California would inconvenience Plaintiff

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Metal, while increasing convenience only for Defendant.

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“merely shifts the inconvenience from one party to another” is not appropriate. Warfield

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v. Gardner, 346 F.Supp.2d 1033, 1044 (D. Ariz. 2004). This factor weighs against

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transfer.

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Transfer of venue which

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III.

Ease of access to sources of proof.

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All data regarding Defendant’s relationship with Hisun and Metal, the testing of

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the Utility Vehicles, and the obtaining of certificates on Plaintiffs’ behalf, as well as any

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other of Defendant’s electronically stored data, physical records, and testing equipment,

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is located in California. Doc. 7 at 6. All of Plaintiff Metal’s records, computers, and

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document files are located in Tempe, Arizona. Doc. 15 at 11. Other records, from

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Plaintiff Hisun, the EPA, or others, are located in their respective states or countries.

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Because the documents relevant to Plaintiffs’ claims are primarily located in California,

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this factor favors transfer.

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IV.

Existence of a forum selection clause.

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Both parties provide a written contract dated July 11, 2011, containing a clause

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which establishes California as the “Governing Law” and provides that “[a]ll disputes

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controversies or differences that may arise between ATDS and the ‘Client’, as a result of

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this contract shall be settled under the laws of the State of California.” (Punctuation and

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capitalization in original).

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Plaintiffs assert that this is not a forum selection clause, but a “choice of law provision,”

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and does not mandate that Plaintiffs bring its claim in the Central District of California.

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Id. at 14–15. Defendants concede that the clause mandates only application of California

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law, not the selection of a California forum. Doc. 16 at 3. This factor is neutral.

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V.

Doc. 15-4, Ex. D, at 7; Doc. 12-1, attachment 1, at 6.

The state most familiar with the governing law.

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Defendant asserts that because Plaintiff Hisun's written contract with ATDS

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requires that California law apply, the case must be transferred to California. Doc. 12 at

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2–3; Doc. 16 at 3. Plaintiffs claim that the choice of law provision does not govern

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Plaintiffs’ breach of contract claims because the alleged breach is not of the written

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contract, but of an oral contract formed between the parties in December 2010 and

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substantiated through written communications between the parties over the next five

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months; certain of Plaintiffs’ claims are based in tort, and would not be governed by a

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contractual forum selection clause; and Plaintiff Metal was not a signatory to the July

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contract and is not bound by it. Doc. 15 at 14. Given these assertions, it appears that a

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choice-of-law decision will be required in this case. Because the issue has not been

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briefed thoroughly, the Court cannot determine at this time whether California or Arizona

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law will apply. As a result, for present purposes, this factor is neutral.

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VI.

Where relevant agreements were negotiated and executed.

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Defendant argues that substantial negotiations occurred in California because the

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two ATDS employees involved with Plaintiffs reside in California and performed all of

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the work in obtaining the certificates for Plaintiffs in California.1 Doc. 7 at 5. As the

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negotiations were conducted entirely through electronic correspondence, telephone

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conversations, and written correspondence, they could similarly be said to have taken

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place in Arizona or in Texas. Doc. 15 at 12. This factor is neutral.

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VI.

The parties’ contacts with the chosen forum

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Plaintiff Metal is a long-time Arizona resident. Plaintiff Hisun is located in China

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and Texas, but does business in Arizona as evidenced by its connection with Metal.

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Defendant is registered to do business in Arizona and maintains a facility in Phoenix.

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Doc. 15 at 10. Defendant alleges it had no contact with Plaintiff Metal in Arizona and

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that its contacts here are unrelated to this case. Doc. 16 at 6. Even if true, the parties’

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general contacts with this state weigh against transfer.

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VII.

The availability of compulsory process to compel attendance of witnesses

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Two key witnesses – employees of Defendant who procured the certificates – are

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located outside the subpoena power of this Court. See Doc. 7 at 6; Doc. 16 at 7;

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Fed.R.Civ.P. 45(b)(2). Defendant has terminated both employees. Doc. 16 at 7. There

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are no non-cooperative, non-parties residing in Arizona – all parties located here are

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The parties dispute whether the testing of the vehicles, which took place in
California, is at issue in this litigation. Doc. 15 at 13; Doc. 7 at 5.

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current employees of Plaintiff Metal. Doc. 15 at 11; see also FUL Inc. v. Unified Sch.

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Dist. No. 204, 839 F.Supp. 1307, 1311 (N.D.Ill.1993) (“[I]t is generally assumed that

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witnesses within the control of the party calling them, such as employees, will appear

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voluntarily[.]”); Berry v. Potter, No. CIV 04-2922 PHX RCB, 2006 WL 335841, at *5

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(D. Ariz. Feb.10, 2006) (discounting inconvenience to employee-witnesses). This factor

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favors transfer, although only slightly. Although live testimony is preferable, the Court's

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lack of subpoena power may be solved through the use of deposition or video testimony.

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See Hess v. Gray, 85 F.R.D. 15, 25 (N.D. Ill.1979).

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VIII. Relevant public policy of the forum state

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This factor weighs against transfer because “Arizona has a strong interest in

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ensuring that its citizens are compensated for their injuries.” Gates Learjet Corp. v.

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Jensen, 743 F.2d 1325, 1333 (9th Cir.1984); see also Ochoa v. J.B. Martin & Sons

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Farms, Inc., 287 F.3d 1182, 1193 (9th Cir.2002).

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IX.

Differences in the costs of litigation in the two forums.

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Given the recent advances in electronic communication and document production,

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discovery costs should be about the same in either forum. See Television Events &

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Mktg., Inc. v. Amcon Distrib. Co., 416 F.Supp.2d 948, 971 (D. Haw.2006). At this stage,

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it cannot be determined whether the costs of travel and transportation will be greater if

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the case is tried in Arizona. This factor is neutral.

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X.

Consideration of all the factors.

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The Court concludes that this case should not be transferred to the Central District

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of California. “A court should not lightly disturb a plaintiff's choice of forum.” Holder

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Corp. v. The Main Street Distrib., Inc., No. CV-86-1285-PHX-RCB, 1987 WL 14339, at

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*8 (D. Ariz. Jan.16, 1987) (citing N. Acceptance Trust v. Gray, 423 F.2d 635, 654 (9th

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Cir.1970)).

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upsetting [Plaintiff's] choice of forum.” Decker Coal, 805 F.2d at 843. Defendant has

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not met this burden.

Defendant “must make a strong showing of inconvenience to warrant

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IT IS ORDERED that Defendant Automotive Testing and Development Services,

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Inc.'s motion for change of venue (Doc. 7) is denied.

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Dated this 1st day of November, 2011.

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