ALO, LLC v. Dana Falsetti, et al

Filing 37

MINUTES (IN CHAMBERS) - DEFENDANT'S MOTION TO TRANSFER VENUE (Dkt. 7 , filed January 18, 2018) by Judge Christina A. Snyder: In accordance with the foregoing, the Court DENIES Falsetti's motion to transfer venue to the Western District of Washington. (SEE ATTACHMENT FOR FURTHER DETAILS). (jp)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
2:18-cv-00208-CAS(SKx)
Date
ALO, LLC V. DANA FALSETTI, ET AL.

‘O’
March 15, 2018

Present: The Honorable

CHRISTINA A. SNYDER

Catherine Jeang
Deputy Clerk

Not Present
Court Reporter / Recorder

N/A
Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Not Present

Not Present

Proceedings:
I.

(IN CHAMBERS) - DEFENDANT’S MOTION TO TRANSFER
VENUE (Dkt. 7, filed January 18, 2018)

INTRODUCTION

On December 8, 2017, plaintiff ALO, LLC (“ALO”), a yoga apparel company,
filed this action for defamation and trade libel against defendant Dana Falsetti (“Falsetti”)
and Does 1–10, inclusive, in Los Angeles County Superior Court. Dkt. 1-2 (“Compl.”).
The gravamen of the complaint is that Falsetti, a yoga teacher, defamed ALO on social
media. On January 9, 2018, Falsetti removed the action to this Court on the basis of
diversity jurisdiction, 28 U.S.C. § 1332. Dkt. 1 (“Notice of Removal”).
On January 18, 2018, Falsetti filed the instant motion to transfer pursuant to 28
U.S.C. § 1404(a). Dkt. 7 (“Mot.”). Falsetti seeks to transfer and consolidate this action
with a related case brought by ALO’s affiliate, Cody, Inc. (“Cody”), which is currently
pending in the Western District of Washington. See Cody, Inc. v. Falsetti, No. 2:17-cv01833-MJP (W.D. Wash.). On February 12, 2018, ALO filed an opposition. Dkt. 17
(“Opp’n”). On February 20, 2018, Falsetti filed a reply. Dkt. 23 (“Reply”). The Court
held a hearing on March 5, 2018, and directed ALO to file a supplemental submission on
March 9, 2018. Dkt. 35 (“Supp.”). Although the tentative indicated the Court’s intention
to transfer this action, after reviewing ALO’s submission, the Court concludes that
transfer is inappropriate.
II.

BACKGROUND

Falsetti, a resident of Philadelphia, Pennsylvania, is an internationally known yoga
teacher and advocate for the health and wellness of large-bodied persons. Compl. ¶ 5;
Dkt. 14, Declaration of Dana Falsetti (“Falsetti Decl.”) ¶ 8. On August 1, 2016, Falsetti
entered into a Talent and License and Release Agreement (the “License Agreement”)
with Cody, a company based in Seattle, Washington that produces online health and

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
2:18-cv-00208-CAS(SKx)
Date
ALO, LLC V. DANA FALSETTI, ET AL.

‘O’
March 15, 2018

fitness training videos. Falsetti Decl. ¶ 3; Supp., Ex. B. Falsetti states that Cody’s brand
image is compatible with her brand image representing larger-bodied yogis. Falsetti
Decl. ¶ 3.
Pursuant to the terms of the License Agreement, Falsetti granted to Cody and its
“agents, subsidiaries, affiliates, licensees, successors, and assigns” the right to record and
use Falsetti’s name, likeness, exercise routines and related materials for its online videos.
License Agreement § 1.a. Cody agreed not to use these materials in a manner intended to
harm Falsetti’s reputation. Id. § 1.b. The License Agreement contains a confidentiality
provision by which Falsetti agreed to not to disclose Cody’s or its affiliate entities’
business plans and related information without Cody’s prior written consent. Id. § 5.
The License Agreement also contains a choice-of-law clause providing that it is governed
by the law of the state of Washington in addition to a forum-selection clause providing
that “[e]xclusive jurisdiction of all disputes hereunder will lie in the state and federal
courts sitting in King County, Washington.” Id. § 5.
ALO is a distributor and retailer of yoga apparel based in the City of Commerce,
California. The complaint alleges that ALO’s products “reflect its focus on yoga and
healthy and fit lifestyles commonly associated with California.” Compl. ¶ 7. Falsetti
states she believes that ALO sells fitness apparel to smaller-bodied persons, which is
incompatible with her brand image. Falsetti Decl. ¶ 6. ALO’s co-founder and copresident, Marco DeGeorge (“DeGeorge”), states that on August 28, 2017, ALO
“purchased the stock of Cody.” Dkt. 18, Declaration of Marco DeGeorge (“DeGeorge
Decl.”) ¶ 4. ALO submitted a copy of the relevant Merger Agreement, which indicates
that ALO acquired Cody through a reverse triangular merger governed by Delaware law:
ALO formed a wholly-owned subsidiary, UpDog Sub, Inc., which then merged with
Cody, leaving Cody as the surviving entity and now wholly-owned subsidiary of ALO.
See dkt. 36 (“Merger Agreement”). DeGeorge states that “Cody is still run as a separate,
independent business. Cody exists as a separate legal entity, as does ALO.” Id. ¶ 5.
In the Washington action, Cody alleges that its representative advised Falsetti
about its acquisition by “another entity” on or about September 27, 2017, and that Falsetti
agreed to maintain the confidentiality of this information consistent with her obligations
under the License Agreement. Dkt. 12, Mot., Ex. B (“W.D. Wash. Compl.”) ¶ 13.
Falsetti states she believes that Cody’s sale of its assets to ALO harmed her reputation
because her students and followers began expressing concern and disappointment at what
appeared to be her new affiliation with ALO. Falsetti Decl. ¶ 7. This perceived
affiliation, Falsetti states, was seen by the yoga community as antagonistic to her

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
2:18-cv-00208-CAS(SKx)
Date
ALO, LLC V. DANA FALSETTI, ET AL.

‘O’
March 15, 2018

advocacy efforts. Id. ¶ 8. Falsetti states that she posted an “explanatory statement” on
social media intended to alleviate the concerns of her followers. Id. ¶ 9. 
On December 6, 2017, Cody filed its action against Falsetti in the Western District
of Washington asserting two claims based her social media post: (1) breach of written
contract; and (2) trade libel. See W.D. Wash. Compl. The complaint alleges that Falsetti
breached the confidentiality provision in the License Agreement and her oral promise to
Cody by announcing on social media that Cody had been acquired by “another entity.”
Id. ¶ 16. The complaint further alleges that the following statements in Falsetti’s social
media post are false and defamatory: (1) the “brand perpetuates body shame,” (2) the
brand is elitist, and is a “club that only some can be in,” (3) the brand does not make
clothes for Falsetti or her students, (4) there are “sexual harassment/assault allegations
against one of the owners (multiple counts),” and (5) the brand “lies.” Id. ¶ 20. The
complaint alleges that venue is proper in the Western District of Washington pursuant to
the License Agreement. Id. ¶ 8.
Two days later, on December 8, 2017, ALO filed this action asserting a single
claim for defamation and trade libel against Falsetti. See Compl. ALO alleges that
Falsetti made the following false and defamatory statements in her December 5, 2017
social media post: (1) there are “sexual harassment/assault allegations against one of the
owners (multiple counts)” of ALO; and (2) ALO “lies.” Id. ¶ 10. The complaint alleges
that these defamatory statements have and will continue to result in pecuniary damage in
that ALO will incur a loss of business and its reputation will be damaged. Id. ¶ 15. The
complaint alleges that venue is proper in Los Angeles County because the financial injury
to ALO occurred here. Id. ¶ 4.
III.

LEGAL STANDARD

A court may transfer an action to another district “where it might have been
brought” “[f]or the convenience of the parties and witnesses, in the interest of justice.”
28 U.S.C. § 1404(a). The purpose of § 1404(a) is to “prevent the waste of time, energy
and money and to protect litigants, witnesses and the public against unnecessary
inconvenience and expense.” Van Dusen v. Barrack, 376 U.S. 612, 616, (1964) (internal
citations and quotation omitted). To support a motion for transfer, the moving party has
the burden to establish “that venue is proper in the transferor district; that the transferee
district is one where the action might have been brought; and that the transfer will serve
the convenience of the parties and witnesses and will promote the interests of justice.”
Vu v. Ortho-McNeil Pharm., Inc., 602 F. Supp. 2d 1151, 1155 (N.D. Cal. 2009) (internal

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
2:18-cv-00208-CAS(SKx)
Date
ALO, LLC V. DANA FALSETTI, ET AL.

‘O’
March 15, 2018

quotation marks and citation omitted). In analyzing the “interests of justice,” a number of
factors are relevant, including:
(1) the location where the relevant agreements were negotiated and
executed, (2) the state that is most familiar with the governing law, (3) the
plaintiff’s choice of forum, (4) the respective parties’ contacts with the
forum, (5) the contacts relating to the plaintiff’s cause of action in the
chosen forum, (6) the differences in the costs of litigation in the two forums,
(7) the availability of compulsory process to compel attendance of unwilling
non-party witnesses, and (8) the ease of access to sources of proof . . . [9] the
presence of a forum selection clause is a “significant factor” in the court’s §
1404(a) analysis [as is] [10] the relevant public policy of the forum state, if
any.
Jones v. GNC Franchising, Inc., 211 F.3d 495, 499 (9th Cir. 2000); see also Stewart Org.
v. Ricoh Corp., 487 U.S. 22, 29-30 (1988). A motion for transfer lies within the broad
discretion of the district court and must be determined on an individualized basis. Jones,
211 F.3d at 498.
IV.

DISCUSSION

Falsetti moves to transfer this case in order to request consolidation with the
related action filed by Cody. She emphasizes that the two lawsuits involve similar
allegations and claims, and that transferring the case would promote judicial economy,
avoid the risk of inconsistent judgments, and conserve the resources of all parties
involved. Mot. at 5–9. ALO maintains that Cody is “wholly separate” entity and that the
two lawsuits were properly filed according to jurisdictional and venue requirements.
Opp’n at 1, 4. ALO argues that Falsetti has failed to satisfy her burden of demonstrating
that venue is proper and thus this action “might have been brought” in the Western
District of Washington, 28 U.S.C. § 1404(a). Id. at 4–5.
Under the general venue statute applicable to diversity cases, venue is proper in the
following judicial districts: “(1) a judicial district in which any defendant resides, if all
defendants are residents of the State in which the district is located; (2) a judicial district
in which a substantial part of the events or omissions giving rise to the claim occurred . .
. ; or (3) if there is no district in which an action may otherwise be brought as provided in
this section, any judicial district in which any defendant is subject to the court’s personal
jurisdiction with respect to such action.” 28 U.S.C. § 1391(b) (emphasis added). In

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
2:18-cv-00208-CAS(SKx)
Date
ALO, LLC V. DANA FALSETTI, ET AL.

‘O’
March 15, 2018

determining where a “substantial part” of the events or omissions occurred, courts (1)
“examine the nature of the plaintiff’s claims and the acts or omissions underlying those
claims”; and (2) “determine whether substantial events material to those claims occurred
in the forum district.” Employers Mut. Cas. Co. v. Bartile Roofs, Inc., 618 F.3d 1153,
1166 (10th Cir. 2010). In contract actions, “relevant factors to consider are where the
negotiations took place, where the contract was signed, or where performance or breach
occurred.” DSSDR LLC v. Zenith Infotech Ltd., No. C 12-04336 JSW, 2013 WL 57863,
at *2 (N.D. Cal. Jan. 3, 2013); see also Charles Alan Wright et al., 14D Fed. Prac. &
Proc. § 3806 (4th ed.). In tort actions, the relevant factors are where the allegedly
tortious conduct took place and “the locus of the injury.” Myers v. Bennett Law Offices,
238 F.3d 1068, 1075–76 (9th Cir. 2001); 14D Fed. Prac. & Proc. § 3806. Courts look
“not to a single ‘triggering event’ prompting the action, but to the entire sequence of
events underlying the claim.” Uffner v. La Reunion Francaise, S.A., 244 F.3d 38, 42 (1st
Cir. 2001).
According to ALO, this action could only have been filed in Pennsylvania or
California. Id. at 5. Venue is proper in the Eastern District of Pennsylvania because
Falsetti resides there. See 28 U.S.C. § 1391(b)(1). In addition, venue is proper in the
Central District of California pursuant 28 U.S.C. § 1391(b)(2) because “a substantial part
of the events or omissions giving rise” to ALO’s tort claim occurred here, namely, ALO
allegedly suffered financial injury in this district based on Falsetti’s defamatory social
media post. See Myers, 238 F.3d at 1075–76. With respect to Cody’s related action
against Falsetti for breach of contract and trade libel, venue is proper in the Western
District of Washington because the License Agreement contains a forum-selection clause.
See W.D. Wash. Compl. ¶ 8. However, ALO does not allege breach of contract or even
reference the License Agreement in its complaint.
Falsetti argues that venue is proper in the Western District of Washington because
the “Agreement creating the contractual relationship between Cody and Falsetti, and later
between ALO and Falsetti, and which was the basis for Falsetti’s social media [post], is
expressly governed by the law of Washington State.” Mot. at 10. She indicates that
“Cody is a key witness in both lawsuits and is headquartered in Seattle, Washington.” Id.
She also asserts that the “sale of Cody’s assets to ALO is believed, in large part, to have
been negotiated and finalized in Seattle, Washington.” Id. at 10–11. Falsetti further
argues that “[w]hen Cody entered into a business relationship with ALO in or around
September 2017, ALO acquired the Falsetti Content and posted that content on its
website.” Reply at 3–4. Accordingly, she argues that ALO “must have assumed” the
License Agreement. Id. at 4. Falsetti maintains that “[a]s Falsetti’s statement which is

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
2:18-cv-00208-CAS(SKx)
Date
ALO, LLC V. DANA FALSETTI, ET AL.

‘O’
March 15, 2018

the basis of both lawsuits arose out of ALO’s contractual acquisition and uploading of her
content on its website, ALO is bound by the governing law provisions of that contract
and could have brought its lawsuit in Washington State.” Id. at 4.
Although the Court acknowledges that the actions brought by ALO and Cody are
closely related and ALO’s claim has at least some factual nexus to the License
Agreement and ALO’s acquisition of Cody, Falsetti nevertheless has not satisfied her
burden of demonstrating that venue is proper in the Western District of Washington.
First, the Court finds no clear basis for determining that ALO is subject to the forumselection clause in the License Agreement. Although Falsetti argues that ALO assumed
the License Agreement when it acquired Cody, she provides no evidence to support that
factual assertion. For example, there is no evidence in the record or otherwise subject to
judicial notice that ALO posted the Falsetti content to its website and thereby “must have
assumed” the contract. See Reply at 4. There is also no indication based on the Merger
Agreement that ALO assumed the License Agreement when it acquired Cody’s stock
through a reverse triangular merger. See Meso Scale Diagnostics, LLC v. Roche
Diagnostics GmbH, 62 A.3d 62, 83 (Del. Ch. 2013) (noting that “the rights and
obligations of the target are not transferred, assumed or affected” in a reverse triangular
merger) (citation omitted).
Second, Falsetti has not demonstrated that “a substantial part of the events or
omissions giving rise” to ALO’s defamation and trade libel claim occurred in the
Western District of Washington. 28 U.S.C. § 1391(b)(2). Because ALO alleges a single
tort claim, the relevant factors are (1) where the allegedly defamatory statement was
made; and (2) “the locus of the injury.” Myers, 238 F.3d at 1075–76; 14D Fed. Prac. &
Proc. § 3806. These factors have no direct factual nexus to the Western District of
Washington. Although the License Agreement and ALO’s acquisition of Cody could be
considered part of the underlying sequence of events giving rise to ALO’s claim, Falsetti
still has not demonstrated that a “substantial part” of these events occurred in the Western
District of Washington. Although Falsetti asserts, on information and belief, that the sale
of Cody was “negotiated and finalized in Seattle,” she has provided no supporting
evidence. See Mot. at 10–11. To the contrary, ALO indicates that the closing of the deal
was to occur in Los Altos, California pursuant to the Merger Agreement § 1.2. Supp. at
4. Although Falsetti contends that “Cody is a key witness in both lawsuits,” Mot. at 10,
she does not provide authority for the proposition that the location of witnesses is a
relevant factor in determining venue pursuant to 28 U.S.C. § 1391(b)(2).

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
2:18-cv-00208-CAS(SKx)
Date
ALO, LLC V. DANA FALSETTI, ET AL.

‘O’
March 15, 2018

In sum, the Court finds that Falsetti has not satisfied her burden of demonstrating
that venue is proper in the Western District of Washington and thus ALO’s action “might
have been brought” in that district. 28 U.S.C. § 1404(a). Her motion to transfer venue is
accordingly denied.
V.

CONCLUSION

In accordance with the foregoing, the Court DENIES Falsetti’s motion to transfer
venue to the Western District of Washington.
IT IS SO ORDERED.
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Initials of Preparer

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CMJ

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