UNITED STATES OF AMERICA v. H&R BLOCK, INC. et al

Filing 40

MEMORANDUM re 35 MOTION for Preliminary Injunction filed by UNITED STATES OF AMERICA by UNITED STATES OF AMERICA. (Attachments: # 1 Exhibit Exhibit 1, # 2 Exhibit Exhibit 2, # 3 Exhibit Exhibit 12, # 4 Exhibit Exhibit 13, # 5 Exhibit Exhibit 30, # 6 Exhibit Exhibit 37, # 7 Exhibit Exhibit 40, # 8 Exhibit Exhibit 42, # 9 Exhibit Exhibit 43, # 10 Exhibit Exhibit 56, # 11 Exhibit Exhibit 112, # 12 Exhibit Exhibit 114, # 13 Exhibit Exhibit 115, # 14 Exhibit Exhibit 116, # 15 Exhibit Exhibit 123, # 16 Exhibit Exhibit 124, # 17 Exhibit Exhibit 139, # 18 Exhibit Exhibit 157)(Buterman, Lawrence)

Exhibit
157

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
______________________________________
UNITED STATES OF AMERICA
U.S. Department of Justice
Antitrust Division
450 Fifth Street, NW, Suite 7100
Washington, DC 20530
Plaintiff,
v.
H&R BLOCK, INC.
One H&R Block Way
Kansas City, MO 64105;
2SS HOLDINGS, INC.
5925 Dry Creek Lane NE
Cedar Rapids, IA 52402; and
TA IX L.P.
64 Willow Place
Suite 100
Menlo Park, CA 94025,
Defendants.

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Civil Action No. 1:11-cv-00948 (BAH)

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT
OF DEFENDANTS’ MOTION TO TRANSFER VENUE

TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES ......................................................................................................... iii
INTRODUCTION ...........................................................................................................................1
FACTUAL AND PROCEDURAL BACKGROUND.....................................................................2
A.

The Transaction .......................................................................................................2

B.

The DOJ Investigation .............................................................................................3

ARGUMENT...................................................................................................................................5
A.

The Applicable Standard Under § 1404(a) ..............................................................5

B.

The Western District of Missouri Is Unquestionably An
Appropriate Forum In Which To Adjudicate The DOJ’s
Claims ......................................................................................................................7

C.

The Balance Of Private And Public Interests Weighs
Strongly In Favor Of Transfer To The Western District of
Missouri ...................................................................................................................8
1.

Plaintiff’s Choice of Forum Should Be Afforded
Little to No Deference .................................................................................9

2.

The Western District of Missouri Is The Most
Appropriate Venue.....................................................................................10

3.

The Facts Underlying this Case Transpired in
Missouri and Iowa......................................................................................11

4.

The Convenience of the Parties and Witnesses
Weighs in Favor of Transfer ......................................................................12

5.

Ease of Access to Sources of Proof Weighs in Favor
of Transfer..................................................................................................16

6.

The Transferee Court’s Familiarity with Governing
Laws Is A Neutral ......................................................................................17

7.

The Relative Congestion of the Calendars of the
Potential Transferor and Transferee Courts Weighs
in Favor of a Transfer, And Denial of Transfer
Threatens to Set a Precedent that May Inundate This

i

TABLE OF CONTENTS—Continued
Page
Court ..........................................................................................................17
c.

The Local Interest in Deciding Local Controversies
at Home Is a Neutral Factor .......................................................................19

CONCLUSION..............................................................................................................................19

ii

TABLE OF AUTHORITIES
Page

CASES:
Aftab v. Gonzalez, 597 F. Supp. 2d 76 (D.D.C. 2009)...................................................................17
Devaughn v. Inphonic, Inc., 403 F. Supp. 2d 68 (D.D.C. 2005) .................................................6, 7
Franklin v. S. Ry. Co., 523 F. Supp. 521 (D.D.C. 1981) .................................................................9
FTC v. Arch Coal, Inc., 12 F. Supp. 2d 34 (D.D.C. 2004) ..............................................................1
FTC v. Cardinal Health, 551 F. Supp. 2d 21 (D.D.C. 2008)...........................................................1
FTC v. CCC, 605 F. Supp. 2d 26 (D.D.C. 2009).............................................................................1
FTC v.Cephalon, Inc., 551 F. Supp. 2d 21 (D.D.C. 2008) .................................................... passim
FTC v. Equitable Res., Inc., Docket No. 07-00490 (W.D. Pa. Apr. 13, 2007)................................8
FTC v. Freeman Hosp., 911 F. Supp. 1213 (W.D. Mo. 1995) (same) ...........................................8
FTC v. Inova Health Sys., Docket No. 08-460 (E.D. Va. May 12, 2008) .......................................8
FTC v. Laboratory Corp. of Am., et al., 10 Civ. 2053 (D.D.C. Dec. 3, 2010) ...................... passim
FTC v. Tenet Healthcare, 17 F. Supp. 2d 937 (E.D. Mo. 1998) .....................................................8
FTC v. Watson Pharms., Inc., 611 F. Supp. 2d 1081 (C.D. Cal. 2009)................................. passim
In re Apple, Inc., 602 F.3d 909 (8th Cir. 2010), petition for cert. filed (U.S. Sept. 28,
2010) (No. 10-615) .......................................................................................................... passim
In re Genentech, Inc., 566 F.3d 1338 (Fed. Cir. 2009)..................................................................14
In re Hoffman-La Roche Inc., 587 F.3d 1333 (Fed. Cir. 2009) .....................................................17
Intrepid Potash-N. Mex., LLC v. Dept. of Interior, 669 F. Supp. 2d 88 (D.D.C. 2009)................12
Montgomery v. STG Int'l, Inc., 532 F. Supp. 2d 29 (D.D.C. 2008) .............................................8, 9
New Hope Power Co. v. U.S. Army Corps of Engineers, 724 F. Supp. 2d 90 (D.D.C.
2010) ..........................................................................................................................................7
Schmidt v. Am. Inst. of Physics, 322 F. Supp. 2d 28 (D.D.C. 2004)...................................... passim

iii

SEC v. Ernst & Young, 775 F. Supp. 411 (D.D.C. 1991) ...................................................... passim
SEC v. Roberts, No. CIV.A. 07-407 (EGS), 2007 WL 2007504 (D.D.C. July 10, 2007) .......14, 16
Starnes v. McGuire, 512 F.2d 918 (D.C. Cir. 1974)........................................................................3
Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22 (1988)....................................................................8
Trout Unlimited v. United States Dep’t of Agric., 944 F. Supp. 13 (D.D.C. 1996).....................6, 7
United States v. Ass’n of Family Practice Residency Directors, Civ.A.No. 96-575-CV-W2, 1996 WL 557841 (W.D. Mo. Aug. 15, 1996) .................................................................7, 15
United States v. E.I. Du Pont De Nemours & Co., 83 F. Supp. 233 (D.D.C. 1949)......................18
United States v. Gen. Motors Corp., 183 F. Supp. 858 (S.D.N.Y. 1960)......................................15
United States v. Health Choice of Northwest Missouri, Inc., Civil Action No. 95-6171CVSJ6, 1996 WL 773322 (W.D. Mo. Oct. 22, 1996) ........................................................7, 15
United States v. Microsemi Corp., No. 1:08cv1311 AJT/JFA, 2009 WL 577491 (E.D. Va.
Mar. 4, 2009).................................................................................................................... passim
United States v. Oracle., 331 F. Supp. 2d 1098 (N.D. Cal. 2004)...............................................1, 8
United States v. Swift & Co., 158 F. Supp. 551 (D.D.C. 1958) .......................................................9
STATUTES:
15 U.S.C. § 18..................................................................................................................................4
15 U.S.C. § 22..................................................................................................................................7
15 U.S.C. § 23................................................................................................................................15
28 U.S.C. § 1404(a) ............................................................................................................... passim
REGULATIONS:
16 C.F.R. § 803.20 ...........................................................................................................................3
RULES:
Fed. R. Civ. P. 45(e) ......................................................................................................................15

iv

OTHER AUTHORITIES:
Federal Court Management Statistics 2010,
http://www.uscourts.gov/viewer.aspx?doc=/cgi-bin/cmsd2010Dec.pl ...................................18

v

INTRODUCTION
Defendants respectfully submit this memorandum in support of their motion to transfer
this action to the United States District Court for the Western District of Missouri pursuant to 28
U.S.C. § 1404(a). As explained below, all of the relevant factors that are indicative here weigh
in favor of transfer. First, the Western District of Missouri is an appropriate forum for this case.
Second, it is significantly more convenient for substantially all of the non-party and party
witnesses, most of whom are located in or near Kansas City, Missouri. Third, substantially all of
the relevant documents and data are similarly located in or near Kansas City. Fourth, transfer
will facilitate the necessarily expeditious resolution of the action by permitting litigation in a less
congested venue. In contrast, there is nothing that connects this case to this District of Columbia
other than the mere presence of Plaintiff’s attorneys. None of the operative facts of this case
arose in this jurisdiction, and none of the known potential witnesses resides in Washington, D.C.
In this action, the Department of Justice seeks to enjoin the proposed acquisition by H&R
Block, Inc. (“HRB”) of 2nd Story Software, Inc. (“2SS”), alleging that the proposed transaction
violates Section 7 of the Clayton Act. Under the terms of a timing agreement entered into by
HRB, 2SS, and the DOJ, the DOJ must seek and obtain a preliminary injunction prohibiting the
parties from closing after June 22, 2011, which is the last day of a 30-day standstill period during
which the parties agreed not to close the transaction. Resolution of this matter will require a fastpaced period of document discovery, depositions, and a hearing lasting approximately eight to
fifteen days, all of which will take place in a short time period.1 An expedited schedule for
resolving the DOJ’s claims is particularly important in this action because of the business cycle
1

See, e.g., FTC v. CCC, 605 F. Supp. 2d 26 (D.D.C. 2009) (allowing nine days of hearings and testimony of 10
witnesses); United States v. Oracle, 331 F. Supp. 2d 1098 (N.D. Cal. 2004) (hearing 19 days of testimony, at least
20 plaintiffs’ witnesses, and at least seven defendants’ witnesses); FTC v. Arch Coal, Inc., 329 F. Supp. 2d 109
(D.D.C. 2004) (allowing 10 days of hearings and 23 witnesses); FTC v. Cardinal Health, Inc., 12 F. Supp. 2d 34
(D.D.C. 1998) (allowing seven weeks of hearings and at least 27 witnesses).

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in which HRB and 2SS operate, which will require timely integration of the combined
companies in order to realize the anticipated benefits of the merger in time to deliver its new
products to consumers before the next tax season, which begins January 1, 2012.
In light of the expected fast-paced schedule and the imminent need for a hearing before
the Court, the convenience of the non-party and party witnesses, the parties, and the relative
congestion of the proposed venues are factors of heightened importance. Each of those factors
overwhelmingly supports the transfer of this action to the Western District of Missouri. As the
DOJ has investigated the Transaction over the past several months, numerous witnesses from
Kansas City and Iowa have had to travel approximately 1,000 miles to Washington, D.C. for
depositions—including several depositions during the height of tax season. Now that this action
is pending in federal court, this Court has the discretion to choose a more appropriate, convenient,
and just location for the resolution of this matter.
FACTUAL AND PROCEDURAL BACKGROUND
A.

The Transaction

Plaintiff challenges the proposed acquisition by HRB, a Missouri corporation with
headquarters in Kansas City, Missouri, of 2SS, a Delaware corporation with headquarters in
Cedar Rapids, Iowa. HRB, through its subsidiaries, provides tax, banking, and business and
consulting services. HRB’s Tax Services segment provides income tax return preparation,
electronic filing, and other services and products related to income tax return preparation to the
general public primarily in the United States.
2SS is the maker of TaxACT, a suite of value-priced computer-based tax preparation
products that allow individual taxpayers to prepare and file their tax returns without the
assistance of a professional (i.e., do-it-yourself or “DIY” tax preparation). Following the merger,

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the four founders of 2SS—Lance Dunn, Camela Greif, Jerome McConnell, and Alan Sperfslage,
all of whom reside in Cedar Rapids, Iowa—will take leadership positions in HRB’s digital tax
division. The new digital tax division of the combined company will be located in Cedar Rapids.
HRB and 2SS negotiated the transaction entirely in Kansas City and Cedar Rapids, where
the two companies have approximately 1,100 and 75 employees, respectively. Affidavit of Tony
Gene Bowen in Support of Defendants’ Motion to Transfer Venue (“Bowen Aff.”), ¶¶ 3, 4.
HRB’s headquarters has been located in Kansas City for HRB’s entire fifty-five year history. Id.
All of HRB’s executives are located in Kansas City, including those responsible for the digital
tax business and the transaction at issue here. Id., ¶ 4. A significant number of former, non-party
HRB employees who have knowledge of the issues in this case and whom the DOJ has either
contacted or sought documents from are located in Kansas City. Id., ¶¶ 8-10. Moreover,
Defendants’ pre-merger analyses and competitive analyses generated in the ordinary course of
business, including much of the documentary evidence cited by the DOJ in its complaint, were
all created in Kansas City. Id., ¶ 3.
B.

The DOJ Investigation

HRB and 2SS filed premerger notifications with the DOJ and the Federal Trade
Commission under the Hart-Scott-Rodino Act (“HSR Act”) on October 25, 2010. On
November 24, 2010, the DOJ issued “Requests for Additional Information Material” (“Second
Requests”) to HRB and TA IX L.P. (a firm with majority ownership of 2SS) pursuant to Section
7A(e)(1) of the Clayton Act, 15 U.S.C. § 18a and Section 803.20 of the Premerger Notification
Rules and Regulations, 16 C.F.R. § 803.20. HRB and 2SS substantially complied with the
Second Requests in February 2011.

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Between February and May 2011, Defendants produced additional documents to the DOJ,
and six of their executives traveled from Kansas City and Cedar Rapids to Washington, D.C. to
appear at the DOJ for depositions. At those depositions, the witnesses explained how and why
the transaction will result in dramatic efficiencies, enhance competition, and benefit consumers.
Specifically, Kansas City-based HRB witnesses explained that HRB’s tax software has
long suffered from high costs and expensive overhead, which has limited HRB’s ability to
challenge the market dominance of Intuit. Witnesses from HRB (Kansas City) and TaxACT
(Cedar Rapids) explained how TaxACT, in contrast to HRB, has an extremely low cost platform
and why HRB believes that it can use that low cost platform post-merger as the backbone for all
of HRB’s consumer products, including its premium products. Similarly, witnesses from both
HRB and TaxACT explained why HRB will be able to take advantage of TaxACT’s lower cost
structure to obtain dramatic efficiencies compared to HRB’s stand-alone costs and how those
savings will enable HRB to invest substantially more capital in challenging Intuit, which has
long dominated the premium segment of this business. Further, witnesses from HRB and
TaxACT explained how HRB’s acquisition of a low-cost, low-price brand will facilitate HRB’s
competing effectively in the low-priced, value segment of the market, something that HRB has
been unable to do successfully to date.
In addition, the parties identified empirical data that showed that HRB’s existing paid tax
software products do not compete closely with those of TaxACT. Those data are located at the
companies’ respective headquarters in Kansas City and Cedar Rapids, as are the witnesses who
can explain them. In sum, all of the relevant evidence that is relevant to the issues presented here
and that directly involve HRB and TaxACT arises from people and documents that reside in
Kansas City, Missouri or Cedar Rapids, Iowa.

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HRB believes that the DOJ’s allegations in this action derive from a premature rush to
judgment based on a misunderstanding of the facts that are relevant and the drawing of unfair
inferences from documents that are not relevant to the issues at hand. In particular, a fair hearing
on the facts will show that HRB could not raise, and has no intention of raising, the price (or
impairing the quality) of TaxACT’s products, which must remain competitive in the value
market segment. Indeed, in attempting to assuage the DOJ’s stated concerns, HRB agreed to
commit for a period of three years post-merger: (1) to continue to offer the TaxACT brand and
TaxACT’s current “free” federal filing for everyone” online business model and (2) to hold
TaxACT’s maximum pricing for tax return preparation products at current (2011) levels. The
DOJ declined that offer, and instead brought the instant action on May 22, 2011. What is most
pertinent for this motion is that the witnesses and documents that relate to the DOJ’s factual
allegations and to the proposed commitments identified above all reside in Kansas City and
Cedar Rapids.
ARGUMENT
Defendants respectfully request that the Court transfer this case to the Western District of
Missouri pursuant to 28 U.S.C. § 1404(a). As explained in detail below, undisputed facts make
clear that the Western District of Missouri in Kansas City is the most appropriate, just, and
convenient venue for this litigation.
A.

The Applicable Standard Under § 1404(a)

Section 1404(a) vests the Court with discretion to transfer an action to any other district
where it could have been brought “[f]or the convenience of parties and witnesses, in the interest
of justice.” 28 U.S.C. § 1404(a). There is no doubt that traditional Section 1404(a) standards

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apply in antitrust cases brought by the government. See United States v. Nat’l City Lines, Inc.,
337 U.S. 78, 84 (1949).
Indeed, in the past two years, federal antitrust agencies have filed several cases in
inconvenient fora for obvious strategic reasons, and the district courts have repeatedly
transferred them to more convenient venues pursuant to Section 1404(a). See, e.g., FTC v. Lab.
Corp. of Am., et al., 10 Civ. 2053 (D.D.C. Dec. 3, 2010) (Order and Transcript of Oral Argument
(“Tr.”)),2 (hereinafter “LabCorp”) (transferring a merger challenge filed by the FTC in the
District of Columbia to the Central District of California, where the parties were based);
Cephalon, Inc., 551 F. Supp. 2d at 27-29 (transferring action from the District of Columbia to the
Eastern District of Pennsylvania in part because the FTC’s antitrust case had “no meaningful
connection” to Washington, D.C.); United States v. Microsemi Corp., No. 1:08cv1311 AJT/JFA,
2009 WL 577491, at *10 (E.D. Va. Mar. 4, 2009) (transferring merger challenge brought by DOJ
in Virginia to California for the convenience of witnesses, regardless of the fact that there was no
related proceeding pending in California, and not providing deference to the government’s
choice of forum where the operative facts took place in California); FTC v. Watson Pharm., Inc.,
611 F. Supp. 2d 1081, 1089-90 (C.D. Cal. 2009) (noting FTC’s “choice of forum, while taken
into account, is not a sufficiently strong factor to deny the motion to transfer” and transferring
the case to the Central District of Georgia).
Defendants must make two showings to justify transfer. First, “the action at issue must
be one that could appropriately have been brought in the requested transferee forum.” SEC v.
Ernst & Young, 775 F. Supp. 411, 413 (D.D.C. 1991); see also Devaughn v. Inphonic, 403 F.
Supp. 2d 68, 71-72 (D.D.C. 2005); Trout Unlimited v. United States Dep’t of Agric., 944 F. Supp.

2

The Court’s decision in LabCorp was set forth in a one page Order referring back to the reasoning provided by the
Court at oral argument. The relevant Order and Transcript are attached hereto at Exhibit A.

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13, 16 (D.D.C. 1996). Second, Defendants must demonstrate that considerations of convenience
and the interests of justice weigh in favor of a transfer. New Hope Power Co. v. U.S. Army
Corps of Engineers, 724 F. Supp. 2d 90, 93 (D.D.C.); Devaughn, 403 F. Supp. 2d at 72; Trout
Unlimited, 944 F. Supp. at 16. The Court may consider materials outside the pleadings in
considering a motion to transfer under section 1404(a). See, e.g., Starnes v. McGuire, 512 F.2d
918, 933-34 (D.C. Cir. 1974).
B.

The Western District of Missouri Is Unquestionably An Appropriate Forum
In Which To Adjudicate The DOJ’s Claims

This lawsuit could have been filed initially in the Western District of Missouri. The
Clayton Act’s venue provision provides, in relevant part, that “[a]ny suit, action, or proceeding
under the antitrust laws against a corporation may be brought… in the judicial district whereof it
is an inhabitant [and] any district wherein it may be found or transacts business.” 15 U.S.C. § 22.
HRB “may be found” and “transacts business” in the Western District of Missouri, where it is
incorporated and headquartered. 2SS similarly “transacts business” in that District through
online sales and advertising. The Western District of Missouri is thus a proper venue for this
action under the Clayton Act. See, e.g., Cephalon, Inc., 551 F. Supp. 2d at 25 (finding it “plainly
evident” that the FTC could have filed its suit in the Eastern District of Pennsylvania where
Cephalon transacted business).
Antitrust regulatory agencies have often instituted enforcement proceedings in the district
where one or both of the parties are located, further demonstrating that such a forum is
appropriate. See, e.g., United States v. Health Choice of Nw. Mo., Inc., Civil Action No. 956171-CVSJ6, 1996 WL 773322 (W.D. Mo. Oct. 22, 1996) (DOJ filed complaint in the Western
District of Missouri, where both Defendants had operations); United States v. Assoc. of Family
Practice Residency Dirs., Civ.A.No. 96-575-CV-W-2, 1996 WL 557841 (W.D. Mo. Aug. 15,

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1996) (same for complaint filed by FTC); FTC v. Freeman Hosp., 911 F. Supp. 1213 (W.D. Mo.
1995) (same); U.S. v. Oracle Corp., 331 F. Supp. 2d 1098 (N.D. Cal. 2004) (DOJ filed complaint
in Northern District of California, where Defendant was based); FTC v. Inova Health Sys.,
Docket No. 08-460 (E.D. Va. May 12, 2008) (FTC filed complaint in the Eastern District of
Virginia, where the defendant’s office was located); FTC v. W. Refining, Inc., Docket No. 0700352 (D.N.M. Apr. 12, 2007) (FTC filed complaint in New Mexico, where the defendant was
headquartered); FTC v. Equitable Res., Inc., Docket No. 07-00490 (W.D. Pa. Apr. 13, 2007)
(FTC filed complaint in the Western District of Pennsylvania, where the defendant had its
offices); FTC v. Tenet Healthcare, 17 F. Supp. 2d 937 (E.D. Mo. 1998) (FTC filed complaint in
the Eastern District of Missouri, where both defendants had operations). Given this precedent,
the Western District of Missouri—where both companies transact business and where the
acquiring company resides—is clearly an available forum in this case.
C.

The Balance Of Private And Public Interests Weighs Strongly In Favor Of
Transfer To The Western District of Missouri

The second element of the Section 1404(a) transfer inquiry requires “an ‘individualized,
case-by-case consideration of convenience and fairness’” that “calls on the district court to weigh
in the balance a number of case-specific factors.” Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22,
29 (1988) (quoting Van Dusen v. Barrack, 376 U.S. 612, 622 (1964)). In undertaking this
analysis, courts weigh factors related to “the private interests of the parties and witnesses” and
factors related to “the public interest of justice.” Montgomery v. STG Int’l, Inc., 532 F. Supp. 2d
29, 32 (D.D.C. 2008).
The private interest factors that courts routinely consider include “(1) the plaintiff’s
choice of forum, (2) the defendant’s choice of forum, (3) where the claim arose, (4) the
convenience of the parties, (5) the convenience of the witnesses . . . and (6) the ease of access to

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sources of proof.” Id. at 32-33. The relevant public interest factors are “(1) the transferee’s
familiarity with the governing laws, (2) the relative congestion of each court, and (3) the local
interest in deciding local controversies at home.” Id. at 34.
There is ample precedent, both within this Circuit and beyond, for the transfer of antitrust
actions and merger challenges based on the balance of these private interest and public interest
factors. See, e.g., LabCorp Order and Transcript, attached at Exhibit A; Cephalon, 551 F. Supp.
2d at 32; Watson Pharms, 611 F. Supp. 2d at 1087-89; Microsemi Corp., 2009 WL 577491, at
*10; United States v. Swift & Co., 158 F. Supp. 551, 560 (D.D.C. 1958). In this case, the
majority of the factors supports transfer to the Western District of Missouri.
1.

Plaintiff’s Choice of Forum Should Be Afforded Little to No
Deference

The DOJ’s decision to file this action in the District of Columbia is not entitled to
deference because this matter has no meaningful ties to Washington, D.C. Courts in this District
have made clear that “where the action has little contact with the chosen forum the Plaintiff’s
right to select becomes much less important.” Franklin v. S. Ry. Co., 523 F. Supp. 521, 524
(D.D.C. 1981); see also Montgomery, 532 F. Supp. at 33 (“[W]hen the connection between the
controversy, plaintiff, and the forum are attenuated and lack a meaningful factual nexus, less
deference is given” to plaintiff’s choice of forum ); Schmidt v. Am. Inst. of Physics, 322 F. Supp.
2d 28, 33 (D.D.C. 2004) (“[D]eference [to Plaintiff’s choice of forum] is mitigated . . . [where
the] forum has ‘no meaningful ties to the controversy and no particular interest in the parties or
subject matter.’”) (citations omitted).
Here, the only link between the forum and this matter is the fact that the DOJ and its
attorneys reside in Washington, D.C. However, courts in this District consistently have refused
to give substantial deference to the forum choice made by federal agencies in enforcement

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actions where—as here—the only connection between the case and the District of Columbia is
the presence of the federal agency within the District. The court in Cephalon, for example,
transferred an antitrust enforcement action brought by the Federal Trade Commission in part
because:
Here, apart from the fact that many of the FTC’s prosecuting attorneys are located
in this area, there are no meaningful ties between the District of Columbia and the
events (or parties) that gave rise to this action . . . . To be sure, the FTC ‘resides’
in the District of Columbia in the sense that the agency’s headquarters is located
here. But beyond that, there is essentially no nexus between the District of
Columbia and this controversy.
551 F. Supp. 2d at 26-27.
Consistent with this precedent, the DOJ’s selection of this forum should be given little
weight.
2.

The Western District of Missouri Is The Most Appropriate Venue

In contrast to the DOJ’s choice of forum, Defendants’ proposed location—the Western
District of Missouri—has a close nexus with this action. HRB, the acquiring company, is
headquartered in Kansas City, Missouri, and 2SS is located relatively nearby in Cedar Rapids,
Iowa. Morever, as described in more detail below, all of the material events giving rise to the
challenged Transaction occurred in Kansas City or in close proximity to Kansas City, and
virtually all of the key witnesses reside in Missouri or other states substantially closer to Kansas
City than to the District of Columbia.
Courts in this District have placed great weight on the defendant’s choice of forum in
situations where, as here, the transferee district has significantly greater ties to the case than the
venue in which the action was filed. For example, in LabCorp, where the FTC commenced an
action in this District challenging the acquisition of a California-based corporation, Judge
Roberts held:

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It seems to me that this action’s ties to this district are comparatively insubstantial,
but the ties to California are significant. Most of Westcliff's assets and operations
are situated in California. There’s no dispute about that. The sale agreement, the
asset purchase agreement was reached in California and executed out there, and it
appears that the discussions and the analysis that led to that agreement being
executed occurred in California as well.
LabCorp Tr. at 37-38. Similarly, the Cephalon court concluded that the defendant’s choice of
forum weighed in favor of transfer because:
Cephalon’s primary base of operations is in the Eastern District of Pennsylvania.
It is a Delaware corporation that merely maintains a very small public affairs
office in the District of Columbia. None of the negotiations that led to the
settlement agreements at the heart of this controversy took place in, or were in
any other way related to, the District.
551 F. Supp. 2d at 26. And in Schmidt, the court found that the defendant’s choice of forum was
more appropriate because “a majority of material events occurred” there and because “relevant
documents, witnesses and [defendant’s] corporate offices are in [defendant’s selected forum]
supports [defendant’s] choice of forum.” Schmidt, 322 F. Supp. 2d at 34. Thus, as in these prior
cases, the Defendant’s choice of forum weighs strongly in favor of transfer.
3.

The Facts Underlying this Case Transpired in Missouri and Iowa

All of the facts relating to the issues that are in dispute in this litigation arose in Missouri
or Iowa:
•

HRB, the acquirer, has its principal place of business in Kansas City, Missouri;

•

2SS has its principal place of business in Cedar Rapids, Iowa;

•

the relevant current and former employees and their evidence are almost entirely
located in Missouri or Iowa; and

•

the acquisition agreement that is being challenged in this action was negotiated,
drafted, and executed in Missouri and Iowa.

In sharp contrast, “no underlying operative facts arose in the District of Columbia.”
Ernst & Young, 775 F. Supp. at 414. The factor of where the underlying issues arose thus

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weighs in favor of transferring this case to Missouri. See Apple, 602 F.3d at 914 (transferring
case to Northern District of California in part because “‘alleged wrongs’ occurred in Northern
California”); Intrepid Potash-N. Mex., LLC v. Dept. of Interior, 669 F. Supp. 2d 88, 95 (D.D.C.
2009) (“Transfer is supported when the material events that constitute the factual predicate for
the plaintiff’s claims occurred in the transferee district.”) (quotation omitted).
4.

The Convenience of the Parties and Witnesses Strongly Supports
Transfer

The Western District of Missouri in Kansas City is a substantially more convenient
location for the non-party and party witnesses in this case as well as for the parties. The
categories of witnesses who would likely be called to testify at a preliminary injunction hearing
include:
•

the negotiators of the acquisition agreement on behalf of HRB and 2SS;

•

HRB and 2SS employees who will testify regarding the business rationale for the
proposed Transaction;

•

HRB and 2SS employees and former employees who will testify regarding the
documentary evidence allegedly supporting the DOJ’s complaint;

•

HRB and 2SS employees who will testify about competition;

•

HRB and 2SS employees who will testify regarding low barriers to entry and
opportunities for existing competitors to expand; and

•

employees of non-party competitors who may be called upon to testify regarding
competition and the relevant market.

The majority of the anticipated witnesses, therefore, will be current employees of HRB
and 2SS. HRB is headquartered in Kansas City, and 2SS is located less than 300 miles away in
Cedar Rapids, Iowa. In contrast, both HRB and 2SS are located approximately 1,000 miles from
the District of Columbia. Maintaining this action in the current forum would be extremely
burdensome, requiring numerous key employees at HRB and 2SS to fly across the country

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repeatedly in order to testify during various phases of the litigation. Particularly in light of the
fast-paced schedule of this action, the extensive travel that would be required for HRB and 2SS
employees to testify in Washington D.C. is likely to lead to a substantial disruption in the
companies’ business. The primary executives responsible for developing and testing the
companies’ digital tax products would be forced to spend much of their time traveling, absent
from their offices, during the time period in which the companies are preparing for the next tax
season. See Bowen Aff., ¶ 13. By minimizing the travel that would otherwise be required of
HRB and 2SS employees involved in this matter, a transfer to the Western District of Missouri
would mitigate the disruption in HRB’s and 2SS’s business resulting from this litigation.
The Western District of Missouri would also be more convenient for most non-party
witnesses. Many of the potential third-party witnesses are former HRB employees who reside
principally in or around Kansas City, Missouri. See Bowen Aff., ¶¶ 8, 9. Other possible thirdparty witnesses are employees of Intuit, located in Mountain View, California, and FreeTaxUSA,
located in Provo, Utah. Bowen Aff., ¶ 11. Direct flights between San Francisco, California (the
closest airport to Mountain View) and Kansas City, Missouri are approximately half as
expensive and about 35% shorter than direct flights between San Francisco and Washington, D.C.
Direct flights between Salt Lake City, Utah and Kansas City, Missouri, are less expensive and
two hours shorter than direct flights between Salt Lake City and Washington, D.C. At the time
of the parties’ meet-and-confer regarding this motion, the DOJ named no potential third-party
witnesses located in Washington D.C for whom a proceeding in the current venue would be more
convenient.
The convenience of witnesses is a key factor in determining whether a case should be
transferred. See, e.g., Apple, 602 F.3d at 913 (“If Apple’s California witnesses were required to

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travel to Arkansas, Apple would likely incur expenses for airfare, meals and lodging, and losses
in productivity from time spent away from work,” while the “witnesses will suffer the personal
costs associated with being away from work, family, and community.”) (quotation and citation
omitted); In re Genentech, 566 F.3d at 1345 (“Because a substantial number of material
witnesses reside within the transferee venue and the state of California, and no witnesses reside
within the Eastern District of Texas, the district court clearly erred in not determining this factor
to weigh substantially in favor of transfer.”); Ernst & Young, 775 F. Supp. at 414 (granting
transfer based in part on fact that “for the majority of witnesses, trial in Texas would be less
burdensome than trial [in the District of Columbia]”); Roberts, 2007 WL 2007504, at *4 (holding
that convenience of parties and witnesses “weighs in favor of transfer” because “more relevant
witnesses reside in Northern California than in the District of Columbia.”). Even in cases
involving a much smaller differential in travel distances, courts have granted transfers based, in
part, on witness convenience. See, e.g., Cephalon, 551 F. Supp. 2d at 28 (finding that the
witness convenience factor weighed in favor of transfer from the District of Columbia to the
Eastern District of Pennsylvania); Schmidt, 322 F. Supp. 2d at 31-32 (transferring matter from
the District of Columbia to the District of Maryland based largely on the convenience factor).
Where, as here, the transferee forum would be significantly more convenient for all or nearly all
of the witnesses, this factor weighs heavily in favor of transfer.
Further, courts have found that third-party witness convenience weighs even more
heavily in favor of transfer in antitrust actions because 15 U.S.C. § 23 allows witnesses to be
subpoenaed from “any other district” and thus nonparty witnesses could be forced to travel from
distant forums. See United States v. Gen. Motors Corp., 183 F. Supp. 858, 861-62 (S.D.N.Y.
1960) (noting that “[i]n a Government antitrust suit, the court must consider the welfare of

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nonparty witnesses, because they are without the protection from subpoena to attend at places far
from home normally afforded them by F.R. Civ. P. 45(e)” and because under 15 U.S.C. § 23
“they may be required to travel from any place in the country”); see also Microsemi Corp., 2009
WL 577491, at *10 (“Given the substantial number of non-party witnesses located outside of this
district, and the substantial travel that will be necessary even were this case to remain here, this
district provides no real advantage to the Government with respect to securing the attendance of
non-party witnesses through subpoena.”). Because many of the third-party witnesses who may
be compelled to testify in this matter likely reside in Missouri or locations closer to Missouri
than to Washington, D.C., the convenience of these witnesses even more strongly supports
transfer.
Any inconvenience to the DOJ’s attorneys resulting from litigating this case in the
Western District of Missouri rather than the District of Columbia is irrelevant to the analysis. Cf.
LabCorp Tr. at 12-13 (FTC counsel: “[T]he convenience of counsel isn't really an issue that
weighs in this [transfer] analysis –”; the Court: “Right”). Indeed, the DOJ has proven that it is
fully capable of litigating antitrust actions in the Western District of Missouri. E.g., Health
Choice of Nw. Mo., 1996 WL 773322; Assoc. of Family Practice Residency Dirs., 1996 WL
557841.
In any event, however, any inconvenience to the DOJ’s attorneys will be reduced by the
fact that DOJ has an office in Kansas City, see The United States Attorney’s Office, Western
District of Missouri,, available at: http://www.justice.gov/usao/mow/index.html, and the
Antitrust Division has a field office in Chicago covering both Missouri and Iowa, see
http://www.justice.gov/atr/contact/offices.html. See Microsemi, 2009 WL 577491, at *7 n.11
(noting in transferring a case to the Central District of California in Santa Ana, California that

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the Department of Justice’s “Antitrust Division maintains one of its seven field offices in
California”—specifically in San Francisco, a city almost 400 miles away); see also Ernst &
Young, 775 F. Supp. at 415 (identifying as important the fact that the SEC had an office in Texas
and had easily conducted its investigation in Texas from its main office in D.C.).
In the words of the Roberts court, any “‘minor litigational inconveniences’” the DOJ may
face in litigating this case in the Western District of Missouri are outweighed by the extreme
inconvenience to the employees of HRB, 2SS, and potential third-party witnesses if this case is
litigated in the District of Columbia. Roberts, 2007 WL 2007504, at *3 (quoting Ernst & Young,
775 F. Supp. at 415). This factor thus militates in favor of transfer.
5.

The Ease of Access to Sources of Proof Weighs in Favor of Transfer

Ease of access to relevant evidence also supports transfer of this case. HRB is based in
Kansas City, and many of the original documents and information related to the transaction and
to the evolution of HRB’s digital strategy are located there, as are the witnesses who can
authenticate and explain them. Other original documents and information related to the
transaction are in Cedar Rapids, Iowa, which is substantially closer to the Western District of
Missouri than to the District of Columbia. While DOJ staff have obtained numerous documents
in connection with the Second Request and have transported those documents to Washington,
D.C., “the mere presence of certain documents in Washington does not change the location of the
facts underlying this action.” Ernst & Young, 775 F. Supp. at 415. To the extent that those
documents are now in this forum, it is only because the DOJ “subpoenaed them to its D.C.
office.” Id.; accord In re Apple, Inc., 602 F.3d at 914 (“A Plaintiff may not defeat a motion to
transfer by shipping relevant documents to local counsel in its chosen venue.”) (citing In re

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Hoffman-La Roche Inc., 587 F.3d 1333, 1336-37 (Fed. Cir. 2009)). The ease of access to
sources of proof in Missouri thus weighs in favor of transfer.
6.

The Transferee Court’s Familiarity With Governing Laws Is A
Neutral Factor

The first public interest factor—the transferee court’s familiarity with the governing
laws—is neutral in this case, because the same federal antitrust laws govern regardless of the
jurisdiction in which the litigation proceeds. See, e.g., Aftab v. Gonzalez, 597 F. Supp. 2d 76, 83
(D.D.C. 2009) (“The transferee district is presumed to be equally familiar with the federal laws
governing [Plaintiff’s] claims . . . [therefore] [t]his factor is neutral.”); Sierra Club v. Flowers,
276 F. Supp. 2d 62, 70, n.6 (D.D.C 2003) (“[T]he first public-interest factor is of little
significance . . . [if] the plaintiffs base all of their claims on federal . . . law, and courts follow
‘the principle that the transferee federal court is competent to decide federal issues correctly.’”)
(quoting In re Korean Air Lines Disaster of Sept. 1, 1983, 829 F.2d 1171, 1175 (D.D.Cir 1987)).
7.

The Relative Case Congestion in the District of Columbia Weighs in
Favor of Transfer To The Western District of Missouri

The second public interest factor, which compares the congestion of the proposed venues,
also weighs heavily in favor of transfer. This is particularly so in this case, where an expeditious
trial is required. Although the Western District of Missouri has a somewhat shorter length of
time from filing to disposition for civil cases than the District of Columbia (7.1 months
compared to 8.4 months), it resolves civil cases from filing to trial in less than half the time taken
in the District of Columbia (17.0 months compared to 41.2 months). See Federal Court
Management Statistics 2010, available at
http://www.uscourts.gov/Viewer.aspx?doc=/uscourts/Statistics/FederalJudicialCaseloadStatistics
/2010/tables/C05Mar10.pdf. A difference of two years in the time from filing to trial weighs

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heavily in favor of transfer to the Western District of Missouri. See Parkridge 6, LLC v. U.S.
Dep’t of Transp., No. 09-cv-01478, 2009 WL 3720060, at *3 (D.D.C. Nov. 9, 2009) (holding
that fact that median time to trial was nearly two years less in transferee district weighed in favor
of transfer from the District of Columbia); Publ’ns Int’l Inc. v. HDA Inc., No. 06 C 6148, 2007
WL 1232199, at *4 (N.D. Ill Apr. 18, 2007) (finding that “[a]n eight-month difference certainly
weighs in favor of (transfer)”).
Aside from being more appropriate and efficient for this particular case, transferring this
action from the District of Columbia would also alleviate the inevitable congestion that its courts
suffer because of the presence of the Federal Government. As early as 1949, this district noted
in an antitrust case that “the presence of Government agencies in Washington” created “an
unusually heavy volume of Federal litigation” and “an exceedingly heavy docket” in the
District. United States v. E.I. Du Pont De Nemours & Co., 83 F. Supp. 233, 235 (D.D.C.
1949). Accordingly, the court transferred that case, noting that “[t]o try this law suit here would
be unfair to local litigants, who are waiting to secure a trial of their cases, and who would be
further delayed if this antitrust case were to be tried in the District of Columbia.” Id. As a more
recent decision observed, a denial of transfer in cases like this would give rise to the risk that the
courts in this district will be “inundated” because “every enforcement action, regardless of where
the underlying events took place, would be entertained in this District simply because the agency
is located here.” Ernst & Young, 775 F. Supp. at 415. This continuing burden on the District of
Columbia’s federal courts supports the transfer of this action to the Western District of Missouri
where this matter has its origins, many of the witnesses reside, and much of the evidence is
located.
8.

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The Local Interest in Deciding Local Controversies at Home Is A
Neutral Factor

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The final public interest factor, the local interest in deciding local controversies, is neutral
here because this case does not present an essentially local matter. See Reiffin v.
Microsoft Corp., 104 F. Supp. 2d 48, 52 n.8 (D.D.C. 2000) (holding that “because this
controversy is not entirely or particularly local, this is not a compelling factor in this case.”).
Rather than being an issue unique to either the District of Columbia or the Western District of
Missouri, the permissibility of HRB’s proposed acquisition of 2SS will have a nationwide
impact. See Cephalon, 551 F. Supp. 2d at 30-31 (noting that a case was not a local issue where
the question was not unique to either of the proposed forums and had “nationwide significance,
the resolution of which will have the same effect if rendered by this Court” or the transferee
court”). As a result, this factor is of little weight in the transfer analysis beyond “the minimal[]
interest in deciding issues relating to [HRB] in its ‘home’ federal district court.” Id. at 31.
CONCLUSION
In summary, the relevant private interest and public interest factors this Court must
consider in ruling on a transfer motion under Section 1404(a) weigh heavily in favor of transfer
to the Western District of Missouri. That District is most convenient to the parties, is the
location where almost all of the potential non-party and party witnesses and relevant evidence
are located, and will likely provide the quickest resolution of this action. Because the issues in
this case have no connection to the District of Columbia, there is no cogent rationale for
requiring the parties to litigate in, and non-party witnesses to travel to and from, this
inconvenient forum.
For the foregoing reasons, Defendants HRB and 2SS respectfully request this Court to
transfer this action to the Western District of Missouri pursuant to 28 § U.S.C. 1404(a).

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Dated: May 27, 2011

Respectfully submitted,
/s/ Theodore C. Whitehouse
__________________________________
Theodore C. Whitehouse (DC Bar #298331)
David K. Park (DC Bar #446159)
Willkie Farr & Gallagher LLP
1875 K Street, NW
Washington, DC 20006
Tel: [phone]
Fax: [phone]
Attorneys for Defendant H&R BLOCK, INC.

/s/ J. Robert Robertson
__________________________________
J. Robert Robertson (DC Bar #501873)
(DDC Bar #IL0001)
Corey W. Roush (DC Bar #466337)
Benjamin F. Holt (D.C. Bar No. 483122)
Christian M. Rowan (DC Bar #978124)
Hogan Lovells US LLP
Columbia Square
555 Thirteenth Street, NW
Washington, DC 20004
Tel: [phone]
Fax: [phone]
Attorneys for Defendants 2SS HOLDINGS, INC.
and TA IX L.P.

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