STMicroelectronics, Inc. v. Lopez

Filing 20

ORDER by Judge Hamilton denying 12 Motion to Dismiss and Alternative Motion to Transfer Venue (pjhlc1, COURT STAFF) (Filed on 12/17/2015)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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STMICROELECTRONICS, INC.,

v.

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ORDER DENYING MOTION TO
DISMISS AND DENYING MOTION TO
TRANSFER

MANUEL LOPEZ,
Defendant.

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United States District Court
Northern District of California

Case No. 15-cv-3919-PJH

Plaintiff,

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Defendant’s motion to dismiss the complaint for improper venue, or in the

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alternative, to transfer venue to the Southern District of California, came on for hearing

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before this court on December 2, 2015. Plaintiff appeared by its counsel Rachel R.

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Davidson, and defendant appeared by his counsel Jayson M. Lorenzo. Having read the

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parties’ papers and carefully considered their arguments and the relevant legal authority,

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the court hereby DENIES the motion to dismiss and DENIES the alternative motion to

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transfer.

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BACKGROUND
Plaintiff STMicroelectronics Inc. ("ST Micro") is a Delaware corporation with its

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corporate headquarters in Texas. Defendant Manuel Lopez ("Lopez") resides in

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Brentwood, Contra Costa County, California.

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This is an action for declaratory relief, arising out of events that led to the filing of a

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lawsuit in the Superior Court of California, County of San Diego, in March 1989. The suit

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was filed by Andarax Technologies Corporation (then an active Canadian corporation),

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Andarax Corporation (then an active New York corporation), and Lopez, against Metaflow

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Technologies Inc. ("Metaflow" – a California corporation) and Val Popescue

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("Popescue"), then-President of Metaflow. The plaintiffs asserted claims for breach of

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contract and specific performance. Complaint (“Cplt”) ¶ 8.

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Lopez was a shareholder in both Andarax entities, and the president of each. He

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was the sole director of Andarax Corporation. He was also a director of Andarax

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Technologies, along with Francisco Lopez (now deceased) and Emilio Lopez (now living

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in Canada).

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The litigation was allegedly resolved by a settlement in August 1990, resulting in
the issuance of promissory notes by Metaflow to Andarax Technologies and Andarax
Corporation (collectively "Andarax"). Both notes were dated October 25, 1990, and both

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United States District Court
Northern District of California

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were signed by Popescue as President of Metaflow. The note issued to Andarax

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Technologies was in the amount of $110,000, with interest on unpaid principal accruing

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at 12% per year, and the note issued to Andarax Corporation was in the amount of

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$5,000, also carrying the 12% rate of interest. Cplt ¶ 9, Exhs. A, B. Neither of the notes

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included any provision regarding a schedule for payment or a deadline for payment.

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The two promissory notes were allegedly executed in accordance with a related

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Escrow Agreement dated October 31, 1990, between Metaflow, Andarax, and Sunwest

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Bank of Albuquerque, NA ("Sunwest" – now part of Bank of America). The Escrow

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Agreement, which Sunwest executed as the escrow agent, provided that payment to

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Andarax by Metaflow would be made pursuant to a December 21, 1989 Product

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Development Agreement between Metaflow, LSI Logic Corporation ("LSI"), and Hyundai

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Electronics America ("Hyundai"). Cplt ¶ 10, Exhs. C, D.

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The Escrow Agreement provided that Andarax would receive a percentage of

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certain incentive payments made under the Product Development Agreement, and

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directed that those payments be made to Sunwest. Id., Exh. C. The Product

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Development Agreement provided that the incentive payments would be due to Metaflow

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for sales resulting from the implementation by LSI and Hyundai of certain technology. Id.

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¶ 11, Exh. D. The term of the Product Development Agreement was December 21, 1989,
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to August 32, 1991. Id.
Lopez claims that he entered into an agreement with Andarax, pursuant to which

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he would receive the first $95,000 of any settlement payment Andarax received from

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Metaflow. He also asserts that in April 1990, Metaflow's Board of Directors assigned him

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all interests it had in the Metaflow promissory notes. Id. ¶ 12, Exh. E. However, Lopez

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contends, he never received any payment on the notes, purportedly because Metaflow

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never had the money to pay. Lopez Declaration in Support of Motion to Dismiss (“Lopez

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Decl.”) ¶¶ 8-9.

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ST Micro alleges that Andarax Technologies was terminated in September 1994,
and that Andarax Corporation was dissolved in September 1992. Cplt ¶ 13. ST Micro

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United States District Court
Northern District of California

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asserts that the California Secretary of State has no records showing that either Andarax

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entity was ever registered to do business in California. Id. In May 1997, ST Micro's

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predecessor, SGS-Thompson Microelectronics acquired a majority interest in Metaflow

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pursuant to a stock purchase agreement. In June 2001, Metaflow merged into ST Micro.

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Id. ¶ 14.

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Lopez claims that on March 25, 2015, almost 14 years after Metaflow merged into

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ST Micro, Bruce Lightner, the former VP of Metaflow, told him that various development

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and/or licensing agreements had been structured in a fashion whereby certain cross-

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licensing agreements were in place, which deprived Andarax, and thus, Lopez, from

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receiving payments on the notes. Lopez Decl. ¶ 10. Also on March 25, 2015, Lopez

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contacted ST Micro's VP of Investors' Relations with a demand that ST Micro pay him the

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amounts outstanding on the Metaflow promissory notes. He asserted that he had located

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the notes in a New Mexico trust account in 2010. Cplt ¶ 15, Exh. F.

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ST Micro claims it informed Lopez it had no knowledge of the two promissory

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notes, nor any knowledge of his relationship with Metaflow. ST Micro also asserted that

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even if the promissory notes and escrow agreement were valid, they were not made in

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Lopez's individual capacity, and moreover, that any enforcement action on the notes

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would be time-barred. Id. ¶ 16, Exh. G. In May 2015, Lopez renewed his demand for
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payment, stating that he would accept $440,000 in full payment of principle and accrued

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interest; and ST Micro followed up by filing this action. Cplt. ¶ 17, Exhs. H, I.
On August 27, 2015, ST Micro filed the complaint in the present action, alleging

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that on August 18, 2015, Lopez threatened to sue ST Micro for breach of contract on two

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promissory notes that Lopez claims were assigned to him more than 25 years ago, by

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now defunct companies. ST Micro seeks a judicial declaration that there is no contract or

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breach; that Lopez lacks standing to sue ST Micro on the notes; that Lopez is not entitled

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to any payment for breach of contract because of failure to satisfy contractual terms or

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conditions precedent; and that any action on the promissory notes is time-barred.
Lopez now seeks an order dismissing the case for improper venue, or in the

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United States District Court
Northern District of California

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alternative, transferring the case to the Southern District of California.
DISCUSSION

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A.

Legal Standard
"The district court of a district in which is filed a case laying venue in the wrong

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division or district shall dismiss, or if it be in the interest of justice, transfer such case to

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any district or division in which it could have been brought.” 28 U.S.C. § 1406(a). If a

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defendant files a motion pursuant to Federal Rule of Civil Procedure 12(b)(3) to dismiss

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for improper venue, it is the plaintiff's burden to establish that venue is properly in the

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district where the suit was filed. Piedmont Label Co. v. Sun Garden Packing Co., 598

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F.2d 491, 496 (9th Cir. 1979).

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In addition, “[f]or the convenience of parties and witnesses, in the interest of

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justice, a district court may transfer any civil action to any other district or division where it

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might have been brought . . . " 28 U.S.C. § 1404(a). The party moving for transfer for the

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convenience of parties and witnesses the burden of demonstrating transfer is

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appropriate. Commodity Futures Trading Comm'n v. Savage, 611 F.2d 270, 279 (9th Cir.

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1979). In considering a § 1404(a) motion to transfer, the court must look at each of the

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enumerated factors – whether the action could have been brought in the proposed

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transferee district, the convenience of the parties, the convenience of the witnesses, and
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the interests of justice. Hatch v. Reliance Ins. Co., 758 F.2d 409, 414 (9th Cir. 1985).
If the action could have been brought in the transferee venue, the court then must
determine if the defendant has made a “strong showing of inconvenience to warrant

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upsetting the plaintiff‘s choice of forum” by considering private factors relating to “the

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convenience of the parties and witnesses” and public factors relating to “the interest of

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justice,” including “the administrative difficulties flowing from court congestion and [the]

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local interest in having localized controversies decided at home.” Decker Coal Co. v.

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Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986) (internal quotation marks

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omitted).

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B.

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United States District Court
Northern District of California

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Lopez, the sole defendant in this case, resides in Brentwood, which is located in

Defendant's Motion

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this judicial district. Nevertheless, he claims that venue is improper in this district.

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Venue in a civil action is proper in

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(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 a substantial part of property that is the subject of the action is
situated: 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).

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Lopez concedes that he resides in this district but argues that "an appropriate
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analysis of venue would have to include [d]efendant's predecessors in interest" – the
Andarax entities – "as those are the rights being enforced and [d]efendant's predecessor

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in interest is the party to the note, not [d]efendant." He claims that because neither of the
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now-defunct Andarax entities was incorporated here or had a principal place of business
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here, § 1391(b) "would not confer jurisdiction in this district."
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Lopez also asserts that venue is not proper in this judicial district because it is not
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the district “in which a substantial part of the events or omissions giving rise to the claim

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occurred." He asserts that because the notes were entered into in San Diego, and
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provide that payment is to be made in San Diego, and because none of the other relevant

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transactions or events relating to the underlying claim occurred in this district, the

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Southern District of California is the proper district.

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The motion to dismiss or transfer for improper venue is DENIED. Rule 12(b)(3)

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and 28 U.S.C. § 1406(a) allow for dismissal only when venue is "wrong" or "improper."

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Atlantic Marine Constr. Co. v. U.S. Dist. Court, 134 S.Ct. 568, 577 (2013). Whether

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venue is “wrong” or “improper” depends on whether the court in which the case was

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brought satisfies the requirements of federal venue laws. Id.
The question whether venue is “wrong” or “improper” is generally governed by 28

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U.S.C. § 1391. That provision states that “[e]xcept as otherwise provided by law . . . this

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United States District Court
Northern District of California

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section shall govern the venue of all civil actions brought in district courts of the United

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States.” Id. § 1391(a)(1) (emphasis added). When venue is challenged, the court must

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determine whether the case falls within one of the three categories set out in § 1391(b).

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If it does, venue is proper; if it does not, venue is improper, and the case must be

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dismissed or transferred under § 1406(a). A case that satisfies § 1391 may not be

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dismissed under § 1406(a) or Rule 12(b)(3). See Atlantic Marine, 134 S.Ct. at 577.
Here, the complaint seeks a judicial declaration that Lopez has no basis upon

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which to seek to recover from ST Micro under the promissory notes. Regardless of the

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validity of that claim, or the details of the events that led to the filing of the action, Lopez

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is the sole defendant named in the case, as it was Lopez who made the demand on ST

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Micro. Lopez resides in this judicial district. Thus, § 1391 is satisfied, and venue is

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proper here.1
As for the alternative motion to transfer the case to the Southern District of

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California for the convenience of parties and witnesses, and in the interests of justice, the

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court finds that Lopez has not met his burden, and that the motion must be DENIED.
The district court has discretion “to adjudicate motions for transfer according to an

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Lopez’s counsel effectively conceded at the hearing on the motion to transfer that
Lopez has no basis for asserting improper venue.
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individualized, case-by-case consideration of convenience and fairness.” Jones v. GNC

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Franchising, Inc., 211 F.3d 495, 498 (9th Cir. 2000) (citing Stewart Org. v. Ricoh Corp.,

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487 U.S. 22, 29 (1988)). Courts ordinarily examine a number of factors, but “[n]o single

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factor is dispositive.” Ctr. for Biological Diversity v. Kempthorne, 2008 WL 4543043, at *2

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(N.D. Cal. Oct. 10, 2008). Instead, the weighing of the factors for and against transfer is

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best left to the discretion of the trial judge.” Ventress v. Japan Airlines, 486 F.3d 1111,

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1118 (9th Cir. 2007).

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United States District Court
Northern District of California

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In this district, courts commonly examine some variation of the following factors to
determine convenience and fairness:
(1) the plaintiff's choice of forum; (2) the convenience of the parties; (3) the
convenience of the witnesses; (4) ease of access to evidence; (5) familiarity
of each forum with applicable law; (6) feasibility of consolidation of other
claims; (7) any local interest in the controversy; and (8) the relative court
congestion and time to trial in each forum.

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Vu v. Ortho-McNeil Pharm., Inc., 602 F.Supp. 2d 1151, 1156 (N.D. Cal. 2009); Williams

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v. Bowman, 157 F.Supp. 2d 1103, 1106 (N.D. Cal. 2001); see also Jones, 211 F.3d at

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498-99; Decker Coal, 805 F.2d at 843.

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With regard to the convenience of the parties, Lopez argues that Metaflow, ST

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Micro's predecessor, was located in San Diego County, and that his own predecessors-

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in-interest (the defunct Andarax entities) were located in Canada and New York. He

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claims that the proposed transfer "would not be less inconvenient than the current

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District, and in fact, would be more convenient given the location of the key witnesses" –

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and thus, that transfer of this case to the Southern District of California "would not

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severely inconvenience either party."

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The court finds that this factor does not favor transfer. Lopez resides in this

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judicial district, and thus cannot claim that litigating in this district would be inconvenient

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for him. The fact that Metaflow was located in San Diego prior to its merger into ST Micro

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is irrelevant for purposes of determining the convenience of the parties as of the time the

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complaint was filed. ST Micro has corporate offices in this district, and chose to litigate

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here. While the plaintiff’s choice of forum is not dispositive, the court should give it some
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weight when deciding whether to grant a motion to change venue, and “[t]he defendant

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must make a strong showing of inconvenience to warrant upsetting the plaintiff’s choice

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of forum.” Decker Coal, 805 F.2d at 843.
Transfer should not be ordered simply to make it more convenient for the

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defendant, and the venue transfer provisions of § 1404(a) are not intended to merely shift

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the inconvenience to the plaintiff. Schwarzer, et al., § 4:732; See also Lax v. Toyota

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Motor Corp., 65 F. Supp. 3d 772, 776 (N.D. Cal. 2014) (“It is not enough for the

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defendant to merely show that it prefers another forum, and transfer will also not be

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allowed if the result is merely to shift the convenience from one party to another.”); Catch

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Curve, Inc. v. Venali, Inc., 2006 WL 4568799, at *2 (C.D. Cal. Feb. 27, 2006) (defendant

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United States District Court
Northern District of California

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“must demonstrate that the present forum will result in a clear balance of inconvenience

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to him or her”). Here, given that Lopez resides in this district and ST Micro has

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corporate offices here and chose to file suit here, the court finds that the convenience of

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the parties clearly weighs against transfer.
The relative convenience of the witnesses is often the most important factor in the

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§ 1404(a) analysis. Saleh v. Titan Corp., 361 F.Supp. 2d 1152, 1160 (S.D. Cal. 2005).

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The parties should inform the court who the witnesses are, where they are located, what

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their testimony will be, and why such testimony is relevant or necessary. See id. at 1161-

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65; see also Clark v. Sprint Spectrum L.P., 2010 WL 5173872 at *4-5 (N.D. Cal. Dec. 15,

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2010).

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Lopez has identified five witnesses who reside in San Diego County – Popescue

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(former president of Metaflow, who signed the promissory notes), Lightner (a founder of

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Metaflow, not alleged to have been involved in the settlement of the lawsuit), and three

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attorneys who represented either Andarax or Metaflow in the 1989 litigation and the 1990

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settlement. He claims that these witnesses have information about the statute of

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limitations, the interpretation of the agreements, the question whether he (Lopez) has

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standing, and about Metaflow's ability to pay on the notes.

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While he argues that these witnesses can testify regarding the settlement
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agreement and the notes, and regarding whether there were any cross-license

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agreements that prevented any money coming to Andarax, he does not provide any

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details regarding what that information might be. He also makes vague references to the

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testimony of "former Andarax employees," plus the testimony of Emilio Lopez who now

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resides in Canada. However, the motion includes no declarations or affidavits regarding

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the content or relevance of the proposed testimony.

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ST Micro has identified five witnesses who reside in the Northern District of

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California – Kent Marshall (named trustee of the Escrow Agreement); Richard Nakashima

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(former Metaflow employee, who now works for Hynix, successor to Hyundai); corporate
representatives of LSI and Hyundai (now Hynix), both of which were parties to the

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United States District Court
Northern District of California

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Product Development Agreement; and defendant Lopez himself. In addition, ST Micro

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points to Sunwest (the escrow agent, now part of Bank of America), and former Metaflow

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employees Charles Stack and Marcin Nowicki, who reside in the Eastern District of

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California and Austin Texas, respectively.

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At the hearing, ST Micro asserted that Lopez, who resides in this district, is the

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most important witness, and that the face of the agreements need not be interpreted with

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the aid of witnesses. However, ST Micro indicated that the former Metaflow employees it

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has identified will likely testify on the same subjects as Lopez’s witnesses, and that

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Hyundai and LSI will provide corporate representatives to testify that no payments were

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made under the Product Development Agreement pursuant to the Escrow Agreement,

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although ST Micro could not say exactly who Hyundai and LSI would designate to testify

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as their representatives.

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The court finds that the convenience of the witnesses is essentially a wash, as

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neither party has provided specific details about the substance of any expected witness

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testimony, nor made a strong showing with regard to the nature and quality of the

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anticipated testimony. In particular, since it is Lopez's motion, it is his burden to show

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that transfer is warranted. The type of general testimony that he has described is

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normally not be considered sufficient to sustain a defendant's burden of persuasion on a
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motion to transfer. See E. & J. Gallo Winery v. F. & P. S.p.A., 899 F. Supp. 465, 466

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(E.D. Cal. 1994).

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Nor has Lopez explained how any of the witnesses would be inconvenienced if the

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case remains in this district. Depositions of witnesses must be taken near their

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residences regardless of where the suit is being litigated, and that Lopez has made no

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showing that any of the witnesses would not be able to travel to this district in the unlikely

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event of a trial. At best, a transfer of venue would only shift, not eliminate, any

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inconvenience. However, §1404 provides for transfer to a more convenient forum, “not to

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a forum likely to provide equally convenient or inconvenient.” Hua v. MEMC Electr.

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United States District Court
Northern District of California

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Materials, Inc., 2009 WL 1363545, at *3 (N.D. Cal. May 14, 2009).
Finally, the court finds that Lopez has not met his burden of showing that the

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“interests of justice” warrant transfer to the Southern District of California. As explained

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above, the plaintiff’s choice of forum, while generally not viewed as dispositive, does

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weigh against transfer.

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As for the ease of access to evidence, Lopez contends that the promissory notes

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were created in San Diego and that the attorneys with knowledge of the drafting of the

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notes reside there; and further, that availability of compulsory process to compel

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attendance of non-party witnesses favors transfer, as most of his witnesses reside in San

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Diego. However, this argument ignores ST Micro’s contention that it plans on calling as

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witnesses several former Metaflow employees who now reside in the Northern District or

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in some district other than the Southern District of California.

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Moreover, the availability of non-party witnesses is a relevant factor only when a

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party presents evidence of witnesses unwilling to attend trial, which Lopez has not done.

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Further, he has not shown that access to sources of proof would be easier in the

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Southern District or that evidence would be somehow unavailable if the case remains in

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his home forum (or that the costs of litigating in this district would be higher than the costs

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of litigating in San Diego). Indeed, the relevant documents (promissory notes and other

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agreements) have already been submitted to the court as exhibits in this case, and given
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the length of time that has passed and the fact that the Andarax entities no longer exist, it

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is not clear that other documentary evidence will be found (and Lopez has not argued

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that any exists).

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As for the respective courts’ familiarity with the applicable law, both districts are

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located in California, and both courts will be applying California law. Thus, it seems clear

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that each forum will be equally familiar with the applicable law.

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As for the parties’ contacts with the forum, and the local interest in the controversy,

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while it is true that the relevant agreements were negotiated and executed in San Diego,

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and provided for payment to the Andarax entities (Lopez's alleged predecessors), those
entities no longer exist and the notes were executed nearly 25 years ago. In addition,

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United States District Court
Northern District of California

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given that Lopez resides here and has pointed to no contacts either party has with the

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Southern District – apart from the contacts between Andarax and Metaflow more than 25

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years ago – it appears that the parties have as many contacts with this forum as they do

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with San Diego.

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Lopez has not established that a majority of the “justice” factors favors transfer.

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Added to that, the convenience of the parties weighs against transfer, and the

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convenience of witnesses neither favors nor disfavors transfer. The court finds that this

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showing is not sufficient to satisfy Lopez’s burden as the moving party.
CONCLUSION

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In accordance with the foregoing, the motion is DENIED.

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IT IS SO ORDERED.

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Dated: December 17, 2015

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__________________________________
PHYLLIS J. HAMILTON
United States District Judge

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