Youngevity International, Corp. v. Smith et al

Filing 731

ORDER DENYING MOTION 632 MOTION TOTRANSFER. Signed by Judge Barry Ted Moskowitz on 3/10/2020. (sjm)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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Youngevity International, et al.,
Plaintiffs,

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v.

Case No.: 3:16-cv-704-BTM-JLB
ORDER DENYING MOTION TO
TRANSFER

Todd Smith, et al.,
Defendants.

[ECF NO. 632]

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Before the Court is the defendants and counterclaim plaintiffs’ (collectively,

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the “Wakaya Parties”) motion to transfer this matter to the United States District

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Court for the District of Utah (the “Utah District Court”) pursuant to 28 U.S.C. §

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1404(a) and the “first-to-file” rule. (ECF No. 632.) Youngevity International Corp.

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(“Youngevity”) and Wakaya Perfection, LLC (“Wakaya”) are multi-level marketing

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companies that utilize independent distributors to sell their respective products

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directly to consumers. Several of the Wakaya Parties were formerly employees

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and/or distributors of Youngevity. In or around November 2015, several of the

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Wakaya Parties resigned from Youngevity and, together with other Wakaya Parties

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and others, formed or started working with Wakaya and began competing against

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Youngevity. Youngevity and the other plaintiffs (collectively with the counterclaim

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defendants, the “Youngevity Parties”) allege the Wakaya Parties committed

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various torts and breached various agreements with Plaintiffs in connection with
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the formation and operation of Wakaya. Accordingly, on or about February 22,

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2016, Youngevity sent notice to several of the Wakaya Parties that their

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distributorship accounts with Youngevity had been suspended and, if they failed to

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comply with Youngevity’s demands, said accounts would “be terminated

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permanently and all commissions associated with them [would] be forefeited [sic].”

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(ECF No. 643-3 , at 3.)

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On March 17, 2016, six days before Youngevity initiated the instant action,

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Wakaya filed an action against Youngevity in Utah state court alleging that

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Youngevity’s

threatened

and

subsequent

termination

of

Youngevity

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distributorships affiliated with Wakaya constituted tortious interference and unfair

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competition. (See Wakaya Perfection et al. v. Youngevity Int’l et al., Case No.

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2:16-cv-00315-DN (D. Utah) (the “Utah Action”), ECF No. 3, at 2.) Wakaya did not

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serve Youngevity in the Utah Action until April 15, 2016, however, when it served

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Youngevity’s counsel with its first amended complaint filed that same day.1 (Id.)

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On April 19, 2016, Youngevity and the other Utah Action-defendants removed the

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Utah Action to the Utah District Court. (Utah Action, ECF No. 3.) On April 21,

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2016, Youngevity and the other Utah Action-defendants moved to dismiss the

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amended complaint in the Utah Action based upon purportedly-binding arbitration

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agreements, lack of personal jurisdiction, and failure to state a claim upon which

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relief could be granted. (Utah Action, ECF No. 20.) On November 7, 2017, The

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Utah District Court granted dismissal based in part upon the existence of the

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instant litigation and principles of abstention.2 (Utah Action, ECF No. 38, at 6-7,

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Notably, that amended complaint added several of the Wakaya Parties as
plaintiffs – and several of the Youngevity Parties as defendants – in the Utah
Action. (Compare Utah Action, ECF No. 16-1 (original complaint); with Utah
Action, ECF No. 16-4 (first amended complaint).)

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Based upon such dismissal, the Utah District Court declined to reach the issue
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11-13, 15.) On December 11, 2018, the United States Court of Appeals for the

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Tenth Circuit reversed that dismissal, concluding in relevant part that the Utah

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District Court had applied the wrong test in abstaining from hearing the Utah

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Action. (Utah Action, ECF No. 44, at 4-9, 20.) On January 4, 2019, one day after

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the Tenth Circuit issued its mandate remanding the Utah Action to the Utah District

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Court, the Youngevity Parties moved to stay and/or dismiss the Utah Action. (Utah

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Action, ECF Nos. 44-2, 46.) On February 7, 2019, the Wakaya Parties moved for

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leave to file a third amended complaint in the Utah Action. (Utah Action, ECF No.

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52.) On February 28, 2019, the Utah District Court stayed the Utah Action in light

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of the relative chronology of the Utah Action to the instant action and declined to

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reach whether it had personal jurisdiction over the Youngevity Parties or whether

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leave to amend was appropriate.3 (Utah Action, ECF No. 57.) On April 26, 2019,

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the Wakaya Parties filed their instant motion to transfer in this action. (ECF No.

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632.)

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“Under § 1404(a), the district court has discretion to adjudicate motions for

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transfer according to an individualized, case-by-case consideration of convenience

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and fairness.” Jones v. GNC Franchising, Inc., 211 F.3d 495, 498 (9th Cir. 2000)

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(internal quotation marks and citations omitted). Factors to be considered include:

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“(1) the location where the relevant agreements were negotiated and executed, (2)

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the state that is most familiar with the governing law, (3) the plaintiff's choice of

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forum, (4) the respective parties’ contacts with the forum, (5) the contacts relating

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of whether it had personal jurisdiction over the defendants before it. (Utah Action,
ECF No. 38, at 13.)

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Notably, at oral argument held before the Utah District Court on February 26,
2019, the Wakaya Parties “indicated that if the [instant] California action were not
transferred to Utah, then they would move to voluntarily dismiss” the Utah Action.
(Utah Action, ECF No. 57, at 5.)
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to the plaintiff's cause of action in the chosen forum, (6) the differences in the costs

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of litigation in the two forums, (7) the availability of compulsory process to compel

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attendance of unwilling non-party witnesses, . . . (8) the ease of access to sources

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of proof[;] . . . . [(9)] the presence of a forum selection clause[; and] . . . . [(10)] the

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relevant public policy of the forum state, if any . . . .” Id. at 498–99 (internal citations

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and footnotes omitted).

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The Wakaya Parties argue that transfer to the Utah District Court is

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appropriate because “Utah is the most convenient forum for most of the parties

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and witnesses.” (ECF No. 632-2, at 7.) They argue that “seven parties” and

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“eighteen third-party witnesses are located in or have substantial ties to Utah,”

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while only “five parties are located in or have substantial ties to San Diego” and

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“three third-party witnesses are located in San Diego.” (ECF No. 632-2, at 14 n.3

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& n.4.) Yet the Wakaya Parties fail to specifically identify the testimony each such

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witness would provide at trial, the relative importance of such testimony at trial,

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and the relative costs the parties and witnesses will incur in attending trial in the

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Utah District Court versus this Court. And while the Wakaya Parties further argue

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that the Youngevity Parties have “purposefully directed business activities and

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tortious conduct at Utah knowing that these activities would cause harm in Utah,”

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(id. at 14-15), the Wakaya Parties ignore their own conduct directed at this forum

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that is the basis of the Youngevity Parties’ claims in this action. Moreover, the

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Wakaya Parties ignore that California law governs several of the claims asserted

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by both sides in this action and that this Court is intrinsically more familiar with

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such law than the Utah District Court. Finally, the Court notes that the Utah District

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Court has yet to decide whether it has personal jurisdiction over Youngevity and

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all the other defendants in the Utah Action. Thus, weighing all relevant factors, the

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Court concludes that the Wakaya Parties have failed to demonstrate that transfer

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is appropriate under § 1404(a).

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Alternatively, the Wakaya Parties argue that transfer is appropriate under the
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“first-to-file” rule, which “allows a district court to stay [or transfer] proceedings if a

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similar case with substantially similar issues and parties was previously filed in

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another district court.” Kohn Law Grp., Inc. v. Auto Parts Mfg. Mississippi, Inc.,

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787 F.3d 1237, 1239 (9th Cir. 2015). “When applying the first-to-file rule, courts

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should be driven to maximize economy, consistency, and comity.” Id. at 1240

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(internal quotations and citations omitted). “Courts should analyze three factors in

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deciding whether to apply the first-to-file rule, namely chronology of the lawsuits,

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similarity of the parties, and similarity of the issues.” Id.

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Here, there is no meaningful dispute regarding the similarity of the parties

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and issues in this action and the Utah Action. Nevertheless, the Court concludes

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that a transfer of this matter is not appropriate under the first-to-file rule in light of

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the actions’ relative chronology.

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pleadings stage, the instant action has progressed substantially. The parties have

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completed discovery and summary judgment briefing on the Wakaya Parties’

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counterclaims in this action, and this Court has ruled on numerous other motions

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for summary judgment and other substantive motions (including the grant of a

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preliminary injunction). Indeed, it is somewhat telling that, at present, there are

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over ten-times as many docket entries in this action (729) compared to the Utah

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Action (58). Further, this Court has set several of the Youngevity Parties’ claims

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for trial and the parties have briefed numerous motions in limine and made several

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other substantive filings in relation thereto. Transferring this action to the Utah

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District Court would inevitably delay these proceedings and waste the time and

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resources of the parties and the courts.

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efficiency would not be served by transferring or staying this action under the first-

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to-file rule. See Alltrade, Inc. v. Uniweld Prod., Inc., 946 F.2d 622, 625 (9th Cir.

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1991) (“The first-to-file rule was developed to serve the purpose of promoting

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efficiency . . . .”) (internal quotations and citations omitted).

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While the Utah Action has remained in the

Simply put, judicial economy and

Further, equity does not necessarily favor transfer, because while Wakaya
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filed the Utah Action six days before Youngevity filed the instant action, Wakaya

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did so in anticipation of the instant action. Indeed, Wakaya’s original complaint in

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the Utah Action explicitly states that Youngevity “ha[d] threatened litigation against

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both the former Younevity distributors . . . and against Wakaya,” (Utah Action, ECF

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No. 16-1, ¶ 16), and the relative thoroughness and sophistication of Youngevity’s

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initial complaint in this action to that of Wakaya’s initial complaint in the Utah Action

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is revealing. (Compare ECF No. 1; with Utah Action, ECF No. 16-1.) And, the

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record is unclear as to whether the Utah District Court would have had personal

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jurisdiction over all of the Wakaya Parties on all of the Youngevity Parties’ claims

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in this action were it originally brought in the Utah District Court. See In re Bozic,

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888 F.3d 1048, 1054 (9th Cir. 2018) (“Although the first-to-file rule guides the

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district court's exercise of discretion in handling related cases, the requirements of

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§ 1404(a) cabin the exercise of that discretion.”); see also Hoffman v. Blaski, 363

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U.S. 335, 344 (1960) (“If when a suit is commenced, plaintiff has a right to sue in

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that district, independently of the wishes of defendant, it is a district ‘where (the

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action) might have been brought’ [under § 1404(a)].” (citations omitted)). In light

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of the foregoing, the Court declines to transfer (or stay) this action based upon the

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first-to-file rule. See Alltrade, 946 F.2d at 628 (“The most basic aspect of the first-

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to-file rule is that it is discretionary[.]”).

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Accordingly, the Wakaya Parties’ motion to transfer (ECF No. 632) is
DENIED.
IT IS SO ORDERED.
Dated: March 10, 2020

______________________________
Honorable Barry Ted. Moskowitz
United States District Judge

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