Grant v. Kamehameha Schools/Bernice Pauahi Bishop Estate et al

Filing 77

MOTION to Transfer to District of Hawaii by Kamehameha Schools/Bernice Pauahi Bishop Estate, J. Douglas Ing, Nainoa Thompson, Diane J. Plotts, Robert K.U. Kihune, Corbett A.K. Kalama. Motion Hearing set for 10/31/08 at 10:00 AM in Courtroom 2 (FCD) before Judge Frank C. Damrell, Jr. (Attachments: # 1 Memorandum of Points and Authorities, # 2 Declaration of Paul Alston)(Alston, Paul) Modified on 8/25/2008 (Benson, A).

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Alston Hunt Floyd & Ing PAUL ALSTON (Admitted Pro Hac Vice) LOUISE K. Y. ING (Admitted Pro Hac Vice) CLYDE J. WADSWORTH (SBN 118928) [e-mail] [e-mail] [e-mail] 18th Floor American Savings Bank Tower 1001 Bishop Street Honolulu, HI 96813 Telephone: [phone] Facsimile: 808-524-4591 Bingham McCutchen LLP CHARLENE S. SHIMADA (SBN 91407) JOHN D. PERNICK (SBN 155468) ROBERT BRUNDAGE (SBN 159890) [e-mail] [e-mail] [e-mail] Three Embarcadero Center San Francisco, CA 94111-4067 Telephone: [phone] Facsimile: 415.393.2286 Attorneys for Defendants and Cross-claim Defendants KAMEHAMEHA SCHOOLS/ BERNICE PAUAHI BISHOP ESTATE; J. DOUGLAS ING, NAINOA THOMPSON, DIANE J. PLOTTS, ROBERT K.U. KIHUNE, and CORBETT A.K. KALAMA, in their capacities as Trustees of the Estate of Bernice Pauahi Bishop UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA ERIC GRANT, v. Plaintiff, No. 08-00672 FCD-KJM KAMEHAMEHA SCHOOLS DEFENDANTS AND CROSS-CLAIM DEFENDANTS' MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO TRANSFER TO DISTRICT OF HAWAI`I PURSUANT TO 28 U.S.C. § 404 Date: October 31, 2008 Time: 10:00 a.m. Courtroom: 2 Before: Hon. Frank C. Damrell, Jr.

KAMEHAMEHA SCHOOLS/BERNICE PAUAHI BISHOP ESTATE; J. DOUGLAS ING, NAINOA THOMPSON, DIANE J. PLOTTS, ROBERT K.U. KIHUNE, and CORBETT A.K. KALAMA, in their capacities as Trustees of the Estate of Bernice Pauahi Bishop; JOHN DOE; and JANE DOE, Defendants.

And Related Counterclaims and Cross-Claims
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I.

INTRODUCTION This case should be heard in Hawai`i, not California. Plaintiff Eric Grant ("Grant") and

Cross Claimants John and Jane Doe (together, the "Does") allege that a Hawai`i lawyer representing Defendant Kamehameha Schools/Bernice Pauahi Bishop Estate and its trustees ("KS"), a Hawai`i charitable trust estate, threatened to sue the Does, who also reside in Hawai`i, for breach of a confidential settlement agreement (the "Settlement Agreement") that resolved a Hawai`i lawsuit between the Does and KS. The Settlement Agreement was also breached in Hawai`i, where local newspapers and television stations learned from the Does' Hawai`i local counsel certain terms of the Settlement Agreement in blatant violation of the confidentiality provision. Likewise, the alleged threat to sue, which purportedly consisted of a threat to make disclosures in connection with new litigation filed in a Hawai`i court seeking to attach the Does' Hawai`i assets, occurred in Hawai`i in a disputed conversation between KS' Hawai`i counsel and the Does' Hawai`i attorney. Despite Hawai`i's virtually exclusive connection to this action, Grant filed in this Court (the "Eastern District") in a transparent effort to obtain what he considers a more convenient and favorable forum. To rationalize this choice of forum, Grant offers only the argument that he negotiated terms of the Settlement Agreement in California with one of KS' mainland-based lawyers and they then signed the Settlement Agreement "as to form" in California. However, the negotiations have nothing to do with the current dispute. Given the tenuous relationship between this dispute and California, KS has filed motions to dismiss on the ground that this Court has neither jurisdiction over KS nor the claims of Grant and the Does. However, KS is filing this motion because, even if jurisdiction exists, this Court should transfer this case to Hawai`i based on considerations of convenience and the interests of justice, as provided for under 28 U.S.C. §1404(a). Virtually every factor federal courts consider in connection with a Section 1404(a) motion to transfer -- the ease of access to sources of proof, the availability of compulsory process to compel attendance of non-party witnesses, the state that is most familiar with the governing law and the most important factor of all, location of the
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parties and the witnesses -- weigh heavily in favor of transfer to the District of Hawai`i. The one countervailing factor on which Grant and the Does may rely, their choice of forum, is entitled to little weight because the Eastern District has no significant contact with the activities alleged in the action. II. STATEMENT OF FACTS A. The Underlying Litigation and Settlement

The Does, who are Hawai`i citizens, sued KS in June 2003 in the United States District Court for the District of Hawai`i (the "Underlying Litigation"). The Does alleged that KS' policy of giving preference to applicants of native Hawaiian ancestry constituted discrimination on the basis of race in violation of federal civil rights statutes. John and Jane Doe's Cross-Claim ("Does Cross-Claim"), ¶ 4 (filed 4/1/08). The Does sought declaratory relief, a permanent injunction, and compensatory and punitive damages. The Does were represented in the Underlying Litigation by Grant and their local Hawai`i counsel, John Goemans. Does CrossClaim, ¶ 8. After the District Court of Hawai`i and the en banc Ninth Circuit Court of Appeals decided in KS' favor, the Does filed a petition for certiorari. In May 2007, while that petition was pending, the Does and KS entered into the Settlement Agreement. Does Cross-Claim, ¶ 7. All settlement terms, including monetary terms, were made strictly confidential. Does CrossClaim, ¶ 7. B. Goemans' Disclosure of the Settlement Agreement and the Alleged Threats

On February 8, 2008, the Honolulu Advertiser published a story in which it reported that Goemans had revealed details of the Settlement Agreement, including its monetary terms. Does Cross-Claim, ¶ 9. Hawai`i television stations also interviewed Goemans regarding the settlement and his disclosure. Request for Judicial Notice in Support of KS' Motion to Dismiss, filed 7/9/08 ("RJN"), Ex. 13a-13c (filed 7/9/08). Shortly thereafter, one of KS' outside counsel in Hawai`i, David Schulmeister, met with Ken T. Kuniyuki, the Does' current Hawai`i counsel, in Schulmeister's Honolulu office, to discuss the consequences of Goemans' disclosures.
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Supplemental Declaration of Ken T. Kuniyuki in Support of Motion for Temporary Restraining Order and Preliminary Injunction, ¶ 3 (filed 4/15/08) ("Kuniyuki Dec."). According to the Does, during that meeting, Schulmeister said that (1) KS was going to sue the Does on the grounds that they are responsible for Goemans' release of the information about the Settlement Agreement (Does Cross-Claim, ¶ 13); and (2) KS was going to seek a prejudgment attachment order and, in the process of pursuing that relief, the Does' identities might be revealed; and (3) to avoid risk of disclosure, the Does should agree to put $2 million into an escrow account pending resolution of KS's damage claims. (Id.) Schulmeister denies saying that KS had already decided to file suit or threatening that KS would disclose the Does' identities. Declaration of David Schulmeister in Support of Kamehameha Schools Defendants' Opposition to John And Jane Doe's Motion for Preliminary Injunction, ¶ 8 (filed 4/14/08) (Schulmeister Dec.). 1 C. Grant's and the Does' Lawsuits Against KS

On March 28, 2008, Grant filed his Complaint for Declaratory Relief ("Grant Complaint" or "Complaint") in this action because he apparently feared that KS would bring suit against him in Hawai`i for breach of contract. Specifically, Grant alleges that KS threatened to sue him for damages resulting from Goemans' disclosure of the settlement terms. Grant Complaint, ¶ 27. Grant alleges that the Does threatened to sue him as well. Grant Complaint, ¶ 30. Through his lawsuit, Grant seeks a declaration that he is not liable for "any alleged breach of the Doe-KSBE settlement agreement by any person, or for any alleged disclosures of confidential information by John Goemans, or for any related matter." Grant Complaint, Prayer for Relief ¶ (a). In a matter of days and without being formally served, the Does responded by answering and filing a Cross-Claim seeking an injunction prohibiting Kamehameha Schools and its trustees from "disclosing the Does' identities to an[y] third party or in any Court filing." Does CrossClaim, Prayer for Relief, ¶ 1. According to the Does, the news article regarding the settlement On August 6, 2008, KS filed suit against the Does in the Third Circuit Court in Hawai`i. Grant is not a defendant in the case. See Exhibit "A", attached. Since the Does have not yet responded to KS' complaint, it is not known whether Grant, Goemans, or anyone else will be sued by the Does in a crossclaim, counterclaim, or third-party claim.
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terms generated significant interest in the Settlement Agreement and the Does' identities. Does Cross-Claim, ¶ 11 ("There have been 1,551 comments posted by readers to the Honolulu Advertiser's February 8, 2008 article disclosing the terms of the settlement case"). The Does allege that because many of the messages posted on the internet in response to the news articles regarding Goemans' disclosure contained threats, they "fear for their safety if their identities are disclosed. If their identities are disclosed they anticipate that they will have to go into hiding in order to avoid undue harassment and potential physical violence." Does Cross-Claim, ¶ 12. The Does also seek "a declaration from this Court that Goemans' disclosure of the monetary terms of the settlement does not constitute a breach of the confidentiality provision in the Agreement between the Does and the Estate." Does Cross-Claim, ¶ 20. The Does claim they are not liable for Goemans' disclosure because "[t]here is no mention of Goemans in the Agreement and no definition of the term `counsel' that would make the Does liable for any breach of the confidentiality agreement by their former counsel Goemans." Does Cross-Claim, ¶ 10. III. ARGUMENT A. This Case Should Be Transferred to the District of Hawai`i

A district court has broad discretion to transfer a civil action to another district where it might have been brought for the convenience of the parties and witnesses and in the interests of justice. 28 U.S.C. § 1404(a). As the Ninth Circuit explained in Jones v. GNC Franchising, Inc., 211 F.3d 495, 498 (9th Cir. 2000), this Court may consider: (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 costs of litigation in the two forums; (7) the availability of compulsory process to compel attendance of unwilling non-party witnesses; and (8) ease of access to sources of proof. 211 F.3d at 498-499. As explained below, these factors, taken together, weigh heavily in favor of transferring this action to the District of Hawai`i. 2
2

Under Section 1404(a), a case may only be transferred to another district "where it might have

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B.

Transfer to the District of Hawai`i Would Serve the Convenience of the Witnesses

The convenience of witnesses is the most important factor in any transfer of venue analysis. L.A. Memorial Coliseum Comm'n v. Nat'l Football League, 89 F.R.D. 497, 501 (C.D. Cal. 1981). 3 In this case, with but perhaps two exceptions -- Grant and perhaps Goemans -- all witnesses are located in Hawai`i. The Does are citizens of Hawai`i, as are KS, its five trustees and all of its employees. Grant Complaint, ¶¶ 5, 6, 8. The two participants in the conversation that produced the purported threat, Schulmeister and Kuniyuki, are also citizens of Hawai`i, 4 as are the Hawai`i reporters to whom Goemans disclosed information about the settlement in violation of a confidentiality provision. RJN, Exs. 10, 11, 12, 13a-e, 14. Goemans himself, according to Grant, also appears to be in Hawai`i or was at one time. Declaration of James J. Banks in support of Motion to Compel, ¶ 2 (filed 4/22/08 in Grant v. Goemans) (attached as Ex. B). In contrast, the only potential witnesses residing elsewhere are Grant (who resides in the Eastern District) and perhaps Goemans, whose present whereabouts are unknown. Declaration of Paul Alston, attached. Their residency is entitled to minimal weight because (1) none of the rules governing jurisdiction or venue turns on the plaintiff's place of residence, and (2) this action grows out of the Underlying Litigation, which Grant and Goemans elected to file and prosecute in Hawai`i, for Hawai`i clients. See T.M. Hylwa, M.D., Inc. v. Palka, 823 F.2d 310, been brought." Grant could have certainly brought his action in the District of Hawai`i. That Court would have jurisdiction over the Does and KS because they are citizens of Hawai`i. If this Court has subject matter jurisdiction over the claims in this action, then the District of Hawai`i would as well. Additionally, venue would be proper in the District of Hawai`i under 28 U.S.C. § 1391(a)(2) because, as described above, a substantial part of the events giving rise to Grant's claims occurred in Hawai`i. See also In re Yahoo! Inc., 2008 U.S. Dist. LEXIS 20605 at *8-13 (C.D. Cal. Mar. 10, 2008) ("The convenience of the witnesses is usually the most important factor to consider in deciding whether to transfer an action") (citation omitted); Saleh v. Titan Corp., 361 F. Supp.2d 1152, 1160-1161 (S.D. Cal. 2005) ("[t]he relative convenience to the witnesses is often recognized as the most important factor to be considered in ruling on a motion under §1404(a)") (internal citation omitted); David v. Alphin, 2007 U.S. Dist. LEXIS 3095 at *15-16 (N.D. Cal. Jan. 4, 2007) ("this order places considerable weight on the fact that so many trial witnesses are in [the transferee state]").
4 3

Schulmeister Dec., ¶¶ 1, 2, 4, 5.

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314-15 (9th Cir. 1987) (out-of-state accountant who performed work for California resident and periodically traveled to California "deliberately created continuing obligations between himself and residents of the forum" and "should reasonably anticipate being haled into court there"); Stratagene v. Parsons Behle & Latimer, 315 F. Supp. 2d 765, 769 (D. Md. 2004) (refusing to transfer case to out-of-state lawyers' home state where lawyers had traveled to Maryland to represent party in underlying litigation and were subject to personal jurisdiction in Maryland). Accord, Trinity Indus., Inc. v. Myers & Assoc., 41 F.3d 229, 230 (5th Cir.), cert. denied, 516 U.S. 807 (1995) (out-of-state lawyer who voluntarily represented Texas client in litigation in Texas federal court for eight months "availed himself . . . of the opportunity to represent a Texas resident" and could be required to litigate resulting dispute in Texas); Streber v. Hunter, 221 F.3d 701, 718-19 (5th Cir. 2000) (out-of-state attorney who gave tax advice for use by Texas client and who appeared in mediation in Texas could be required to litigate resulting dispute in Texas). C. Transfer to the District of Hawai`i Would Greatly Ease the Parties' Ability to Obtain and Present Evidence at Trial

Ease of proof, including convenient access to books and records, and the availability of compulsory process, are additional compelling reasons to transfer this case to Hawai`i. In re Horseshoe Entertainment, 337 F.3d 429, 434 (5th Cir. 2003); Reed v. Fina Oil & Chem. Co., 995 F. Supp. 705, 714 (E.D. Tex. 1998). The vast majority of the documents relevant to this action are in Hawai`i. Any documents the Does or KS possesses are in Hawai`i. The documents relating to Goemans' service as the Does' counsel are also, according to Goemans, in Hawai`i. Memorandum in Support of Motion to Compel Further Responses to Form Interrogatories and Request for Production of Documents and for Evidentiary and Monetary Sanctions, at 2 (filed 4/22/08 in Grant v. Goemans) (attached as Ex. C). Further, the Does' claim that they will suffer harm if their identities are disclosed is dependent on facts which are local to Hawai`i and which will likely involve testimony from people in Hawai`i. Does Cross Claim, ¶¶ 11, 15. Finally, Schulmeister, Kuniyuki, the journalists who heard Goemans' disclosures, and any witnesses to any alleged threats made to or against the Does are all non-party witnesses in Hawai`i. The
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Hawai`i court's compulsory process power over those witnesses is a significant factor in favor of transfer. D. The Hawai`i Court's Familiarity With Hawai`i Law Weighs in Favor of Transfer

The many issues in this action raising questions of Hawai`i law also weigh heavily in favor of transfer. According to the Does, KS' alleged threat to file attachment proceedings is impermissible because attachment would not be available for a breach of contract claim under Hawai`i law brought by KS against the Does. In support of this argument, the Does (in KS'view, wrongly) cite two District of Hawai`i cases that analyze Hawai`i attachment law: Frank F. Fasi Supply Co. v. Wigwam Investment Co., 308 F. Supp. 59 (D. Haw. 1969) and Vasquez v. Center Art Gallery, 485 F. Supp. 1015 (D. Haw. 1980). Ex Parte Motion for Temporary Restraining Order, at 11-12 (filed 4/3/08) ("TRO Motion"). Similarly, in connection with the declaratory relief claims, the question arises whether Grant and the Does are liable for Goemans' disclosure of the settlement terms. Not surprisingly, given that the parties to the Settlement Agreement (the Does and KS) are Hawai`i citizens, the Does concede in their restraining order papers that the interpretation of the Settlement Agreement is governed by Hawai`i law. See TRO Motion, at 12, n. 4 (citing Standard Mgmt., Inc. v. Kekona, 99 Hawai`i 125, 134 (App. 2001) in support of their argument that they did not intend to include Goemans in the definition of "counsel" in the Settlement Agreement). This also strongly favors Hawai`i because "[t]here is an appropriateness . . . in having the trial of a diversity case in a forum that is at home with the state law that must govern the case, rather than having a court in some other forum untangle problems in conflict of laws, and in law foreign to itself." Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 509 (1947). Because at least two principal issues underlying this action -- KS' right to disclose the Does' identities and the Does' liability for Goemans' disclosure -- are governed by Hawai`i law, the case should be transferred to the District of Hawai`i.

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E.

The Does' Claim for Injunctive Relief Weighs Strongly in Favor of Transfer to Hawai`i

The Does are seeking an order prohibiting KS and its trustees from revealing their identities to any third party or in any court filing. KS, and all of its employees and trustees, are in Hawai`i. So far, the only publication of confidential information about the Settlement Agreement (that disclosed by Goemans) has occurred in Hawai`i. The Does are in Hawai`i, therefore, any attachment proceeding that would potentially result in the release of their names would also occur in Hawai`i. Consequently, if a court were to issue an injunction along the lines the Does request, it would be best if that court were in Hawai`i so that it could more easily monitor compliance with its order. See Law Bulletin Pub. Co. v. LRP Publ'g, Inc., 992 F. Supp. 1014, 1020-1021 (N.D. Ill. 1998) (where injunctive relief is sought, it is important to consider whether one court or the other will be "closer to the action" and better able to monitor compliance with any injunction that may be granted). F. Grant's Choice of Forum Should Be Given Little Weight Given the Eastern District's Lack of Significant Contact With the Activities Alleged in This Action

Although courts normally give some weight to plaintiff's choice of forum in deciding a motion to transfer, this consideration is particularly weak here. That is because "where the transactions giving rise to the action lack a significant connection to the plaintiff's chosen forum, the plaintiff's choice of forum is given considerably less weight, even if the plaintiff is a resident of the forum." Farmer v. Ford Motor Co., 2007 U.S. Dist. LEXIS 90289 *7 (N.D. Cal. Nov. 28, 2007) (transferring action to Northern District of Ohio, despite plaintiff's California residency, because "a majority of the operative facts giving rise to this case occurred in Ohio"), citing Schmidt v. American Inst. of Physics, 332 F.Supp.2d 28, 33-34 (D. D.C. 2004) (holding that deference to District of Columbia resident plaintiff's choice of District of Columbia forum is not merited because "the material events that constitute the factual predicate for the plaintiff's claims occurred in Maryland") (citation and internal quotation marks omitted). 5 See also Collins v. JC Penny Life Ins. Co., 2002 U.S. Dist. LEXIS 5676 at *8-10 (N.D. Cal. Mar. 29, 2002) (affording plaintiff's choice of forum little weight where transactions giving rise to the action lack a significant connection to the plaintiff's chosen forum), citing Schwarzer, Tashima, & Wagstaffe, Federal Civil Procedure Before Trial, § 4:284; Joe Boxer Corp. v.
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This case does not have a significant connection to the Eastern District. It arises out of Goemans' disclosure of the settlement terms and KS' alleged threats to bring claims against Grant and the Does and to disclose the Does' identities. Grant's involvement in this action arises out of his decision to represent Hawai`i clients in a Hawai`i lawsuit against Hawai`i defendants. Those events occurred in Hawai`i, not anywhere on the mainland, much less the Eastern District. And, as the Does allege in their Cross-Claim, both the Underlying Litigation and Goemans' disclosure of the settlement terms have generated great interest in Hawai`i. Indeed, the filings in this case are reports by Hawai`i local media. RJN, Exs. 10-14; KS' Notice of Manual Filing, (filed 7/9/08). Therefore, Grant's choice of the Eastern District should not be given any deference, and this action should be transferred to the District of Hawai`i. See, e.g., Ironworkers Local Union No. 68 & Participating v. Amgen, Inc., 2008 U.S. Dist. LEXIS 8740 at *22-23 (C.D. Cal. Jan. 22, 2008) (granting defendant's motion to transfer based, in part, on New Jersey's interest in resolving local controversies and because the Court accords minimal deference to plaintiffs' choice of forum). 6 IV. CONCLUSION All but one of the parties in this action reside in Hawai`i. Almost all of the witnesses and the bulk of the evidence relevant to this action are in Hawai`i. The dispute underlying this action relates to litigation that occurred in Hawai`i and to issues that remain the subject of great interest in Hawai`i. Moreover, the court trying this action will have to resolve issues of Hawai`i law and, if the Does are successful, enforce an injunction against a Hawai`i citizen relating to conduct in Hawai`i. For the convenience of the parties and the witnesses, and in the interests of justice, this R. Siskind & Co., 1999 U.S. Dist. LEXIS 9622 at *25-26 (N.D. Cal. June 1, 1999) (according little weight to resident plaintiff's choice of forum where "center of gravity" of dispute is in another forum). 6 See also United Food & Commer. Workers Cent. Pa. v. Amgen, Inc., 2007 U.S. Dist. LEXIS 85148 at *24-25 (C.D. Cal. Nov. 13, 2007) (same); Sagent Tech. v. Micros Sys., 2002 U.S. Dist. LEXIS 26647 at *5 (N.D. Cal. May 29, 2002) (granting defendants' motion to transfer due to the "public interest factors of having localized controversies decided locally"); Jarvis v. Marietta Corp., 1999 U.S. Dist. LEXIS 12659 at *19 (N.D. Cal. Aug. 12, 1999) (granting defendant's motion to transfer where the actions substantiating the claim occurred in the non-California forum, involve a non-California defendant, and witnesses and evidence are in the other forum, despite California's interest in protecting its citizens).
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case should be transferred to the District of Hawai`i. DATED: August 22, 2008 ALSTON HUNT FLOYD & ING BINGHAM McCUTCHEN LLP By: /s/ Paul Alston_______________________ PAUL ALSTON LOUISE K. Y. ING CLYDE J. WADSWORTH Attorneys for Defendants and Cross-Claim Defendants KAMEHAMEHA SCHOOLS/BERNICE PAUAHI BISHOP ESTATE; J. DOUGLAS ING, NAINOA THOMPSON, DIANE J. PLOTTS, ROBERT K.U. KIHUNE, and CORBETT A.K. KALAMA, in their capacities as Trustees of the Kamehameha Schools/Bernice Pauahi Bishop Estate

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