Advanced Reimbursement Management, LLC v. Plaisance et al

Filing 85

MEMORANDUM OPINION. Signed by Judge Maryellen Noreika on 6/17/2019. (dlw)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
ADVANCED REIMBURSEMENT
MANAGEMENT, LLC D/B/A
ADREIMA,

)
)
)
)
Plaintiff,
)
)
v.
)
)
CLAY PLAISANCE, TKC WORKS, LLC
)
F/K/A HCR HEALTHCARE RESOURCES, )
L.L.C., AND TKC PLAISANCE, LLC F/K/A )
PINNACLE HEALTHCARE GROUP OF
)
)
LOUSIANA, LLC,
)
Defendants.
)

C.A. No. 17-667 (MN)

MEMORANDUM OPINION
Carl D. Neff, Kasey H. DeSantis, FOX ROTHSCHILD LLP, Wilmington, DE – Attorneys for Plaintiff
Joanna J. Cline, Christopher B. Chuff, PEPPER HAMILTON LLP, Wilmington, DE – Attorneys for
Defendant

June 17, 2019
Wilmington, Delaware

NOREIKA, U.S. DISTRICT JUDGE:
Before the Court is the motion (D.I. 29) of Defendants Clay Plaisance, TKC Works, LLC
f/k/a HCR Healthcare Resources, L.L.C., and TKC Plaisance, LLC f/k/a Pinnacle Healthcare
Group of Louisiana, LLC (collectively, “Defendants”), pursuant to 28 U.S.C. § 1404(a), to transfer
this case to the Western District of Louisiana. Plaintiff Advanced Reimbursement Management,
LLC d/b/a Adreima (“Plaintiff”) opposes transfer. (D.I. 38). For the reasons set forth below,
Defendants’ motion to transfer will be denied.
I.

BACKGROUND AND PROCEDURAL HISTORY
Plaintiff is a Delaware limited liability company with a principal place of business in

Georgia and is “in the business of accounts receivable and revenue cycle management.” (D.I. 59
¶¶ 1-2). Defendant Plaisance is a resident of Louisiana and worked as a consultant to Plaintiff
from 2015 to 2017. (Id. ¶ 3). Defendants TKC Works, LLC and TKC Plaisance, LLC are
Louisiana limited liability companies and are headquartered in Louisiana. (Id. ¶ 4-5).
In 2014, Plaintiff approached Defendant Plaisance about purchasing the assets of HCR
HealthCare Resources, L.L.C. and Pinnacle Healthcare Group of Louisiana, LLC (collectively,
“HCR”). (Id. ¶ 13). In 2015, Plaintiff and HCR entered into an Asset Purchase Agreement, in
which HCR “sold all or substantially all of their assets to [Plaintiff].” 1 (D.I. 30 at 4). In connection
with the Asset Purchase Agreement, Plaintiff also entered into a Restrictive Covenant Agreement
with HCR and Defendant Plaisance, a Goodwill Purchase Agreement with Defendant Plaisance,
and a Consulting Agreement with CGP Management, LLC, “an entity in which [Defendant]
Plaisance is a member and manager of.” (Id.).

1

Following the execution of the Asset Purchase Agreement, HCR HealthCare Resources,
L.L.C. and Pinnacle Healthcare Group of Louisiana, LLC changed their names to TKC
Works, LLC and TKC Plaisance, LLC, respectively. (D.I. 30 at 3).
1

The Restrictive Covenant Agreement, Goodwill Purchase Agreement, and Consulting
Agreement each contained non-competition and non-solicitation provisions that prohibited
Defendants from competing with Plaintiff and soliciting Plaintiffs’ employees. (D.I. 38 at 4-5; see
also D.I. 59 ¶¶ 15-19, 22-24, 27-31). The parties’ agreements also contained choice-of-law
clauses, in which the parties agreed that Delaware law would govern. (D.I. 38 at 5-6; see also
D.I. 59, Ex. A ¶ 10.12, Ex. B ¶ 5.9, Ex. C ¶ 5.9, Ex. D ¶ 14(h)). Furthermore, the Asset Purchase
Agreement and Consulting Agreement contained forum-selection clauses that provided that any
legal disputes arising from the agreements must be brought in a Delaware state or federal court.
(D.I. 38 at 5-6; see also D.I. 59, Ex. A ¶ 10.13, Ex. D ¶ 14(h)).
On June 1, 2017, Plaintiff filed this action, alleging that Defendants breached the noncompetition and non-solicitation provisions of the parties’ various agreements. (D.I. 59 ¶¶ 6-7).
Following the execution of the parties’ agreements, Plaintiff alleges that, in 2017, Defendants
began “tak[ing] substantial steps to compete with [Plaintiff], as well as solicit employees from
[Plaintiff].” (Id. ¶ 34). Specifically, Plaintiff alleges that Defendants “form[ed] a new company
to compete with [Plaintiff], Avail Revenue Solutions.” (Id. ¶ 35). Plaintiff also alleges that
Defendants “have solicited and hired former employees of [Plaintiff] to work at or for Avail
Revenue Solutions.” (Id. ¶ 36). On August 16, 2017, Defendants moved to dismiss or transfer
this action for lack of personal jurisdiction and improper venue. (D.I. 12). On September 8, 2017,
after finding venue to be improper in the District of Delaware under 28 U.S.C. § 1391(b), the court
granted Defendants’ motion and transferred this action to the Western District of Louisiana,
Lafayette Division. (D.I. 23). On October 5, 2017, Plaintiff filed a Petition for Writ of Mandamus
with the U.S. Court of Appeals for the Third Circuit. (D.I. 38 at 2).

2

On July 31, 2018, the Third Circuit granted Plaintiff’s petition and issued a Writ of
Mandamus, vacating the court’s order that transferred the case to the Western District of Louisiana.
(D.I. 44, Ex. A at 2). The Third Circuit determined that the parties’ forum-selection clause
provided a basis for venue in the District of Delaware. (Id.). Moreover, the Third Circuit specified
that “[a]bsent a determination that Defendants have met their burden of showing . . . that [the]
public interest factors overwhelmingly disfavor the preselected forum under a § 1404(a) transfer
analysis, the parties’ settled expectations as embodied in the forum-selection clause should not be
disrupted.” (Id. (internal footnotes omitted)). Following the Third Circuit’s order, the case was
reopened in this court on October 2, 2018. On October 17, 2018, the case was reassigned to the
undersigned judge. Defendants filed the instant motion on November 9, 2018. (D.I. 29).
II.

LEGAL STANDARD
District courts have the authority to transfer venue “[f]or the convenience of parties and

witnesses, in the interests of justice, . . . to any other district or division where it might have been
brought.” 28 U.S.C. § 1404(a). However, “[a] plaintiff, as the injured party, generally ha[s] been
‘accorded [the] privilege of bringing an action where he chooses,’” Helicos Biosciences Corp. v.
Illumina, Inc., 858 F. Supp. 2d 367, 371 (D. Del. 2012) (quoting Norwood v. Kirkpatrick, 349 U.S.
29, 31 (1955)), and this choice “should not be lightly disturbed,” Jumara v. State Farm Ins. Co.,
55 F.3d 873, 879 (3d Cir. 1995).
The Third Circuit has recognized that:
[i]n ruling on § 1404(a) motions, courts have not limited their consideration to the
three enumerated factors in § 1404(a) (convenience of parties, convenience of
witnesses, or interests of justice), and, indeed, commentators have called on the
courts to “consider all relevant factors to determine whether on balance the
litigation would more conveniently proceed and the interests of justice be better
served by transfer to a different forum.”

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Jumara, 55 F.3d at 879 (citation omitted). The Jumara court went on to describe twelve (12)
“private and public interests protected by the language of § 1404(a).” Id. The private interests
include:
plaintiff’s forum preference as manifested in the original choice; the defendant’s
preference; whether the claim arose elsewhere; the convenience of the parties as
indicated by their relative physical and financial condition; the convenience of the
witnesses – but only to the extent that the witnesses may actually be unavailable for
trial in one of the fora; and the location of books and records (similarly limited to
the extent that the files could not be produced in the alternative forum).
Id. at 879 (citations omitted). The public interests include:
the enforceability of the judgment; practical considerations that could make the trial
easy, expeditious, or inexpensive; the relative administrative difficulty in the two
fora resulting from court congestion; the local interest in deciding local
controversies at home; the public policies of the fora; and the familiarity of the trial
judge with the applicable state law in diversity cases.
Id. at 879-80.
The party seeking transfer bears the burden “to establish that a balancing of proper interests
weigh[s] in favor of transfer.” Shutte v. Armco Steel Corp., 431 F.2d 22, 25 (3d Cir. 1970).
Moreover, though courts have “broad discretion to determine, on an individualized, case-by-case
basis, whether convenience and fairness considerations weigh in favor of transfer,” Jumara,
55 F.3d at 883, the Third Circuit has held that “unless the balance of convenience of the parties is
strongly in favor of [the] defendant, the plaintiff’s choice of forum should prevail.” Shutte,
431 F.2d at 25.
In cases where “parties have contracted in advance to litigate disputes in a particular forum,
courts should not unnecessarily disrupt the parties’ settled expectations.” Atl. Marine Const. Co.
v. U.S. Dist. Court for the Western Dist. of Texas, 571 U.S. 49, 66 (2013). Thus, “district courts
[must] adjust their usual § 1404(a) analysis in three ways.” In re: Howmedica Osteonics Corp.,
867 F.3d 390, 402 (3d Cir. 2017) (quoting Atl. Marine, 571 U.S. at 63) (internal quotation marks

4

omitted) (alteration in original). First, district courts “must give no weight to the forum preferred
by ‘the party defying the forum-selection clause.’” Id. (quoting Atl. Marine, 571 U.S. at 63).
Second, district courts “must deem the private interests to ‘weigh entirely in favor of the
preselected forum’ because the parties agreed to the preselected forum and thereby waived the
right to challenge it as inconvenient.” Id. Third, district courts “must proceed to analyze only
public interests.” Id. In weighing the factors, district courts may not disrupt parties’ “settled
expectations” unless a court finds that the public interest factors “overwhelmingly weigh against
enforcing the [forum-selection] clause[].” Id. at 409 (internal quotation marks and citation
omitted).
III.

ANALYSIS
As an initial matter, there is no question that this case could have originally been brought

in the Western District of Louisiana. When defendants are all residents of the same state, “[a] civil
action may be brought in[] [] a judicial district in which any defendant resides.” 28 U.S.C.
§ 1391(b)(1). Here, Defendants all reside in Lafayette, Louisiana, which is within the Western
District. (D.I. 59 ¶¶ 3-5). Thus, this case could have originally been brought in the Western
District of Louisiana.
The Court will now consider whether to exercise discretion under § 1404(a) to transfer this
case to that district. As discussed above, in remanding this case, the Third Circuit noted that the
case should remain in Delaware, per the parties’ forum-selection clauses, unless the “public
interest factors overwhelmingly disfavor [Delaware] under a § 1404(a) analysis.” (D.I. 44, Ex. A
at 2). Thus, the Court will find that Jumara’s private factors “weigh entirely in favor of” the
District of Delaware, see Atl. Marine, 571 U.S. at 64, and consider only the public factors in
connection with the transfer inquiry.

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1.

Enforceability of the judgment

Neither Plaintiff nor Defendants address any disparity between the enforceability of the
judgment between the District of Delaware and the Western District of Louisiana in their papers,
and thus the Court finds this factor to be neutral.
2.

Practical considerations

This factor is neutral. The Court must consider “practical considerations that could make
the trial easy, expeditious, or inexpensive.” Jumara, 55 F.3d at 879. Here, Defendants argue that
such considerations “favor transfer because nearly all of the relevant witnesses and evidence is
located in Louisiana.” (D.I. 30 at 20). Further, Defendants note that the “relevant facts took place
in Louisiana” and that “all of the relevant third party witnesses are located in Louisiana and cannot
be compelled to appear at trial here.” (Id.). Plaintiff responds by asserting that the “considerations
set forth by Defendants pertain to private interests, which the Third Circuit has determined are not
properly considered under these circumstances.” (D.I. 38 at 18).
The Court agrees with Plaintiff and finds that the considerations Defendants propose mirror
the private interest factors, which the Court cannot consider in this transfer inquiry because of the
parties’ forum-selection clause. See In re Howmedica, 867 F.3d at 402. Neither party addresses
any broader public benefit to this case proceeding in this Court versus the Western District of
Louisiana. Thus, this factor is neutral. W.R. Berkley Corp. v. Niemela, No. 17-32 (GMS), 2017
WL 4081871, at *4 (D. Del. Sept. 15, 2017) (finding factor to be neutral when “neither party
addresse[d] the broader public costs of proceeding in one district or the other”).

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3.

Relative administrative difficulty due to court congestion

This factor is neutral. The Court takes judicial notice of the most recent Judicial Caseload
Profiles, 2 as of December 31, 2018, which indicate that the District of Delaware has 596 cases
pending per judgeship while the Western District of Louisiana has 316 cases pending per
judgeship. The December 31, 2018 profile also indicates that the median time between filing and
trial for civil cases is 28.7 months in the District of Delaware and 28 months in the Western District
of Louisiana.
Although “[t]his District’s large caseload has not, in the past, been a sufficient justification
for transfer[,] . . . increased times from filing to . . . trial [is an] important factor[] that do[es]
influence the court’s calculus.” W.R. Berkley, 2017 WL 4081871, at *5 (citing Intellectual
Ventures I LLC v. Altera Corp., 842 F. Supp. 2d 744, 759-60 (D. Del. 2012)). The Court finds the
difference between the two districts’ median times between filing and trial to be insignificant, and
thus, this factor is neutral.
4.

Local interest in deciding local controversies at home

This factor is neutral. Defendants argue that Louisiana “has the strongest interest in this
dispute” because “all of the facts giving rise to this suit occurred there.” (D.I. 30 at 11). In
response, Plaintiff contends that Defendants ignore that Plaintiff is a Delaware entity and that
“Delaware has a strong interest in adjudicating disputes among its corporate citizens.” (D.I. 38 at
11 (quoting Intellectual Ventures I, 842 F. Supp. 2d at 760 (internal quotation marks omitted)).
This Court has previously acknowledged that Delaware’s interest in cases involving only
one Delaware entity “is not necessarily as strong as it would be in litigation solely among Delaware

2

The December 2018 statistics for the District Courts of the United States can be found at:
https://www.uscourts.gov/sites/default/files/fcms_na_distprofile1231.2018.pdf.
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corporations.” Calamos Asset Mgmt., Inc. v. Travelers Cas. & Sur. Co. of Am., No. 18-1510 (MN),
2019 WL 2117647, at *5 (D. Del. May 15, 2019) (quoting Harris v. Lord & Taylor LLC, No. 18521 (MN), 2019 WL 1854562, at *5 (D. Del. Apr. 25, 2019) (internal quotation marks omitted)).
Nonetheless, although this case involves only one Delaware entity, the Court finds that the
existence of the parties’ choice-of-law clauses provides Delaware with a “substantial interest” in
the parties’ dispute. Coface Collections N. Am. Inc. v. Newton, 430 F. App’x 162, 168 (3d Cir.
2011) (“Delaware has a substantial interest in enforcing this voluntarily negotiated contract clause
that explicitly designates Delaware law to govern.”).
As for Louisiana, the Court agrees with Defendants that Louisiana has an interest in the
dispute because it is where Defendants reside and where facts giving rise to the parties’ dispute
occurred. But, given that Plaintiff is headquartered in Georgia and operates nationally (see D.I. 38
at 3), this case is not a “local controversy” in the Western District of Louisiana, such that
Louisiana’s interest is stronger than Delaware’s interest. See Calamos, 2019 WL 2117647, at *5
(finding a local controversy did not exist in the proposed transferee district when both parties did
not reside there). Therefore, given the competing interests of this district and the Western District
of Louisiana, the Court finds this factor to be neutral.
5.

Public policies of the fora

This factor is neutral. Defendants argue that Louisiana has “a strong public policy interest
in regulating non-competition provisions that purport to bind its citizens.” (D.I. 30 at 11). In
response, Plaintiff contends that this factor weighs against transfer because “Delaware ‘encourages
the use by Delaware corporations of Delaware as a forum for the resolution of business disputes.’”
(D.I. 38 at 13 (quoting IpVenture, Inc. v. Acer, Inc., 879 F. Supp. 2d 426, 433 (D. Del. 2012))).
Given the competing public policies of the two districts, the Court will treat this factor as neutral.

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6.

Familiarity of the trial judge with the applicable state law in
diversity cases

This factor weighs against transfer. The parties dispute which state’s law should apply –
Defendants argue that this case is governed by Louisiana law, whereas Plaintiff asserts that
Delaware law governs, given the parties’ choice-of-law clauses. (See D.I. 30 at 14; D.I. 38 at 14).
The Third Circuit has acknowledged “that it is only in rare circumstances that Delaware courts do
not honor the choice-of-law provisions agreed to by parties in a binding contract.” Coface, 430 F.
App’x at 166 (citing Abry Partners V, L.P. v. F&W Acquisition LLC, 891 A.2d 1032, 1048 (Del.
Ch. 2006) (“When parties have chosen a state’s contract law to govern their contract, it is illogical
to assume that they wished to have the enforceability of that contract judged by another state’s
law.”)). “In determining whether [a] choice-of-law provision[] will apply, Delaware Courts have
consistently applied § 187 of the Restatement (Second) of Conflicts of Laws.” Sensus USA, Inc.
v. Franklin, No. 15-742 (RGA), 2016 WL 1466488, at *2 (D. Del. Apr. 14, 2016). Section 187
provides that a choice-of-law clause will be enforced unless either:
(a) the chosen state has no substantial relationship to the parties or the transaction
and there is no other reasonable basis for the parties’ choice, or
(b) application of the law of the chosen state would be contrary to a fundamental
policy of a state which has a materially greater interest than the chosen state in
the determination of the particular issue and which, under the rule of § 188,
would be the state of the applicable law in absence of an effective choice of law
by the parties.
Restatement (Second) of Conflict of Laws § 187(2) (1971).
As an initial matter, the parties do not seem to dispute that the first exception does not
apply. Defendants do not address it in their papers and Plaintiff discusses it only briefly. (See
D.I. 38 at 16). Nonetheless, the Court finds that the first exception does not apply here. “The
Third Circuit has held that Delaware has a substantial relationship to a transaction when it is the
location where one of the transacting parties is incorporated.” Sensus, 2016 WL 1466488, at *3

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(citing Coface, 430 F. App’x at 167). Plaintiff is a Delaware limited liability company and is
organized under the laws of Delaware, thus creating a substantial relationship with Delaware.
See Coface, 430 F. App’x at 167 (“When parties choose to form a Delaware entity and utilize
Delaware’s systems of law and dispute resolution, they are bargaining for a valuable array of
reliable services relating to their entity’s internal affairs.” (internal quotation marks omitted)).
Moreover, “the existence of a choice-of-law clause establishes a material relationship between the
chosen state and the transaction.” Change Capital Partners Fund I, LLC v. Volt Elec. Sys., LLC,
No. N17C-05-290 (RRC), 2018 WL 1635006, at *5 (Del. Super. Ct. Apr. 3, 2018); see also
6 Del. C. § 2708 (providing that a choice-of-law clause is “presumed to be a significant, material
and reasonable relationship with [Delaware] and shall be enforced whether or not there are other
relationships with [Delaware]”). Thus, because a substantial relationship with Delaware exists
here, the Restatement’s first exception does not apply.
As for § 187’s second exception, Defendants assert, and Plaintiff does not dispute, that
Louisiana law would govern the parties’ agreements, absent the parties’ choice-of-law clauses.
(See D.I. 30 at 17). Thus, the only issue for the Court to decide is whether Louisiana has a
“materially greater interest” than Delaware. Given the Third Circuit’s holding in Coface, 3 the

3

Defendants contend that “there have been significant developments in Delaware state
jurisprudence that have clarified this area of law, rendering the Coface decision obsolete.”
(D.I. 44 at 5). For support, Defendants cite to Cabela’s Ltd. Liability Co. v. Wellman,
No. 2018-0607 (TMR), 2018 WL 5309954 (Del. Ch. Oct. 26, 2018) and Ascension
Insurance Holdings, LLC v. Underwood, No. 9897 (VCG), 2015 WL 356002 (Del. Ch.
Jan. 28, 2015), in which the courts found that a “state’s specific interest in regulating noncompete provisions is ‘materially greater’ than Delaware’s general interest in freedom of
contract.” (Id. at 6 (emphasis in original)). Although Defendants’ representation of these
cases’ holdings is accurate, these cases do not address Coface or the Delaware state
jurisprudence on which Coface relies. Thus, the Court is not convinced that the Third
Circuit’s holding in Coface is obsolete. Moreover, these cases are distinguishable from
Coface and the instant case. The Cabela’s and Ascension courts concluded that the
alternative state’s specific interest outweighed Delaware’s general interest after
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Court finds that it does not. In Coface, the parties disputed whether the second exception of § 187
applied, such that Louisiana law would govern the parties’ dispute regarding a non-competition
clause. 430 F. App’x at 167. In “asking whether Louisiana ha[d] a ‘materially greater interest’ in
the particular issue at hand – determining the effect of the non-compete clause – than Delaware,”
the Third Circuit determined that it did not. Id. Although Louisiana had a “substantial interest in
the issue of whether the covenant not to compete should be enforced” because the defendant was
a Louisiana citizen, he signed the agreement in Louisiana, and his allegedly completing business
was headquartered in Louisiana, the Third Circuit found that “these geographical contacts d[id]
not support the conclusion that Louisiana ha[d] a ‘materially greater interest’” than Delaware. Id.
at 168. In coming to its conclusion, the Third Circuit relied on the fact that the case was not solely
between Louisiana citizens as well as the plaintiff’s status as a Delaware corporation. Id.
Moreover, the Third Circuit held that “Delaware ha[d] a substantial interest in enforcing this
voluntarily negotiated contract clause that explicitly designate[d] Delaware law to govern. That
interest [wa]s not overcome by any other state’s materially greater interest.” Id. (citing Abry
Partners, 891 A.2d at 1049-50).
Like Coface, the Court finds that § 187’s second exception does not apply here. Although
Defendants are Louisiana citizens and events surrounding the parties’ agreements occurred in
Louisiana, the Court finds these geographical contacts are insufficient to show that Louisiana has
a “materially greater interest” than Delaware. See Coface, 430 F. App’x at 168; Sensus, 2016 WL
1466488, at *4 (finding Georgia did not have a “materially greater interest” than Delaware, despite
Georgia’s geographical contacts to the parties’ dispute). This is not a case between Louisiana

determining that the alternative state had a stronger, overall interest because all parties
resided in that state. See Cabela’s, 2018 WL 5309954, at *8; Ascension, 2015 WL 356002,
at *5. In the instant case, as well as in Coface, the parties do not all reside in Louisiana.
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citizens – Plaintiff is a Delaware entity, is headquartered in Georgia, and operates throughout the
United States. (See D.I. 38 at 3). Moreover, “[t]he parties voluntarily negotiated the contract
clause expressly designating Delaware law to govern any disputes” and “Delaware has a
fundamental interest in allowing its citizens to use its law as a commercial lingua franca to transact
business across borders.” Sensus, 2016 WL 1466488, at *4. Thus, the Court finds that Defendants
have not shown that Louisiana has a “materially greater interest” than Delaware. 4 The Court will
enforce the parties’ choice-of-law clauses and will apply Delaware law to the parties’ dispute.
Because Delaware law governs the parties’ dispute and this Court is more likely to be
familiar with Delaware law than the Louisiana court, this factor weighs against transfer.
7.

Balancing the public factors

In sum, five factors are neutral, one factor weighs against transfer, and no factors weigh in
favor of transfer. Because the parties’ contracted choice of forum should only be disturbed if the
public interest factors “overwhelmingly weigh against enforcing the [forum-selection] clause[],”
In re Howmedica, 867 F.3d at 409, Defendants’ motion to transfer is denied.
IV.

CONCLUSION
For the foregoing reasons, the Court denies Defendants’ motion to transfer the case to the

United States District Court for the Western District of Louisiana pursuant to 28 U.S.C. § 1404(a).
An appropriate order will issue.

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Because Defendants have not shown that Louisiana’s interest is “materially greater than”
Delaware’s interest, the Court need not reach the question of whether enforcing the parties’
non-competition and non-solicitation clauses would violate a “fundamental policy” of
Louisiana. See Coface, 430 F. App’x at 168; Sensus, 2016 WL 1466488, at *4.
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