Central States, Southeast and Southwest Areas Health and Welfare Fund et al v. Lewis et al

Filing 84

Opinion and Order Signed by the Honorable Joan H. Lefkow on 8/1/2012:Mailed notice(mad, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

CENTRAL STATES, SOUTHEAST AND
SOUTHWEST AREAS HEALTH AND
WELFARE FUND,
Plaintiff,
vs.
BEVERLY LEWIS and
DAVID T. LASHGARI,
Defendants.

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Case No. 11 C 4845
Judge Joan H. Lefkow

OPINION AND ORDER
Defendants, Beverly Lewis (“Lewis”) and David T. Lashgari (“Lashgari”), have moved
under 28 U.S.C. § 1404(a) to transfer venue to the Northern District of Georgia. The plaintiffs
are Central States, Southeast and Southwest Areas Health and Welfare Fund and one of its
trustees (“Central States”). Central States’s administrative offices are located in Chicago,
Illinois. Defendants are both citizens and residents of Georgia. On October 8, 2008, Lewis
sustained injuries in an automobile accident in Georgia. Central States paid for her medical care,
as she was a covered participant in its health care plan. Central States now seeks to recover a
portion of its expenses from Lewis and her lawyer, Lashgari. Defendants have moved to transfer
the action to Georgia. For the reasons set forth herein, defendants’ motion (Dkt. No. 52) will be
denied.

BACKGROUND
This case arises from a vehicular accident that occurred in Georgia on October 8, 2008,
in which Lewis was injured. Lashgari, an attorney, represented Lewis and her husband in a tort
action filed in Bibb County, Georgia, against the driver of the vehicle, Joseph Hanson (who is
Lewis’s son-in-law), and his employer, the owner of the vehicle, L. E. Schwartz & Son, Inc. The
underlying complaint alleged several counts of negligence against Hanson and Schwartz & Son1
and loss of consortium by Lewis’s husband. Lewis also claimed intentional infliction of
emotional distress based on allegations that Hanson, after the accident, deliberately and
maliciously prevented Lewis’s grandchildren from visiting their severely injured grandmother,
caused his wife and children to cut off all contact with Lewis, failed to apologize to her, and
began to ridicule her to others. They claimed invasion of privacy alleging that Schwartz & Son,
through Hanson, wrongly obtained and disseminated private medical information belonging to
Lewis. On May 4, 2011, after a motion for summary judgment was filed, the Lewises
voluntarily dismissed their complaint without prejudice. Shortly thereafter, the parties reached a
$500,000 settlement. Lashgari took possession of the settlement fund, retained his fee, and
disbursed the remainder to Lewis on June 15, 2011.
Central States has a contractual right under its benefit plan to reimbursement of the
medical expenses it expended for Lewis’s care after the accident.2 In this litigation, filed July

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Schwartz & Son was accused of negligent entrustment of the vehicle; negligent hiring, training,
supervision and retention of Hanson; and respondeat superior liability for Hanson’s negligence.
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See Plan Document § 11.14, Ex. A. to Compl. (Dkt. No. 1-1 at 68 of 129) (“The Fund,
whenever it makes any payment for any benefits on behalf of a Covered Individual or other person related
to any illness, injury or disability (collectively and separately “Disability”) of the person, is immediately
subrogated and vested with subrogation rights (“Subrogation Rights”) to all present and future rights of
recovery (“Loss Recovery Rights”) arising out of the Disability which that person and his . . . attorneys,

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19, 2011, it seeks to recover $180,033.46, the amount of the settlement fund attributable to these
expenses. Defendants are presently under a preliminary injunction, entered May 15, 2012 (Dkt.
No. 42), that requires them to replenish the settlement fund in Lashgari’s control in that amount.
They have not complied, Lashgari having represented to the court that he is financially unable to
do so and seeking relief from the order. Lewis has made no response to the order and has not
sought relief from it.3 Plaintiffs have filed a motion for a finding of contempt of court, which
remains pending.
Defendants contend that the convenience of the parties and witnesses, as well as the
interests of justice, require transfer of the case to the Northern District of Georgia. Central
States opposes the motion, in part, because the motion was made after the adverse ruling on the
motion for preliminary injunction and appears to be an effort to find a more friendly forum.
Central States also argues that defendants cannot show that the convenience of the parties and
witnesses or the interests of justice would be served by transfer.
LEGAL STANDARD
ERISA allows a fund to file in the district where the plan is administered and provides for
nationwide service of process. See 29 U.S.C. §§ 1132(e)(2) & 1451(d). The court, however,
may transfer venue under 28 U.S.C. § 1404(a). See Bd. of Trs., Sheet Metal Workers Nat’l
Pension Fund v. Elite Erectors, Inc., 212 F.3d 1031, 1037 (7th Cir. 2000) (upholding the

agents and other representatives (individually and collectively called the “Covered Individuals”) may
have. The Fund’s Subrogation Rights extend to all Loss Recovery Rights of the Covered Individual.”)
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On June 12, 2012, Lewis moved to dismiss for lack of personal jurisdiction based on a
representation that service was not properly made. (Dkt. No. 58). Lashgari entered an appearance on
Lewis’s behalf on October 11, 2011, and filed numerous documents for her. (Dkt. No. 17.) Bradley
Wartman entered an additional appearance for her on July 17, 2012. (Dkt. No. 71.) His name is not on
the reply brief filed in support of the motion to dismiss.

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constitutionality of ERISA’s venue and process provisions, but acknowledging that transfer of
venue may occur in an appropriate case).4 Section 1404(a) provides that “[f]or the convenience
of parties and witnesses, in the interest of justice, a district court may transfer any civil action to
any other district or division where it might have been brought . . . .” 28 U.S.C. § 1404(a). The
moving party must show that venue is proper in the this district and in the transferee district; (2)
that transfer serves the convenience of the parties and witnesses, and (3) that transfer is in the
interests of justice. See Gueorguiev v. Max Rave, LLC, 526 F. Supp. 2d 853, 856 (N.D. Ill.
2007) (citing Bryant v. ITT Corp., 48 F. Supp. 2d 829, 832 (N.D. Ill. 1999)). As summarized by
Judge Plunkett,
In a motion for transfer, the defendant bears the burden of overcoming the strong
presumption that the plaintiff’s forum of choice is the most convenient. To meet this
burden, a defendant must show that the private interests of the parties and the public
interests of the court are best served in an alternative forum. Private interest factors
to be considered include: (1) the plaintiff’s choice of forum; (2) the situs of material
events; (3) the relative ease of access to sources of proof in each forum, including the
courts’ power to compel the appearance of unwilling witnesses and the costs of
obtaining the attendance of witnesses; and (4) the convenience to the parties, their
residences and their abilities to bear the expense of trial in a particular forum. Public
interest factors include: (1) the relationship between the forum community and the
subject of the litigation; (2) the court’s familiarity with applicable law; and (3) the
congestion of the respective court dockets.
Finley v. Dun & Bradstreet Corp. No. 05 C 5134, 2006 WL 861920, at *1 (N.D. Ill. Mar. 30,
2006) (internal citations omitted); but see Cent. States, Se. & Sw. Areas Pension Fund v. Gelock

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Defendants cite Sheet Metal Workers for the Seventh Circuit’s statement that the transfer
provisions of 28 U.S.C. § 1404(a) protect defendants’ interests in not having to defend a case in an
inconvenient forum. Defs’ Brief at 9–10 (Dkt. No. 52). There, an Indiana resident who had been served
in Indiana defaulted in a case filed in Virginia, where the fund had its administrative offices. The
reference to § 1404(a) merely pointed out the availability of transfer where convenience of the parties
warrants it. See Bd. of Trs., Sheet Metal Workers Nat’l Pension Fund, 212 F.3d at 1037 (“Defendants’
legitimate interests are protected by 28 U.S.C. § 1404(a).”) The holding of the case, however, means that
the Lewises can be required to litigate in Illinois unless § 1404(a) justifies transfer.

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Transfer Line, Inc, No. 90 C 4317, 1991 WL 36919, at *3 (N.D. Ill. Feb. 26, 1991) (“[W]here the
convenience of the parties somewhat favors transfer and the convenience of the witnesses
strongly favors transfer, the interest in simplifying ERISA collections is not decisive.”). Since
the weighing of factors for and against transfer necessarily involves a large degree of subtlety
and latitude, the decision to transfer is committed to the sound discretion of the trial court.
Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219 (7th Cir. 1986); see also Van Dusen v.
Barrack, 376 U.S. 612, 622, 84 S. Ct. 805, 11 L. Ed. 2d 945 (1964) (noting that the remedial
purpose of § 1404(a) requires “individualized, case-by-case consideration of convenience and
fairness”). Each factor should be given the appropriate weight under the circumstances of the
case. Gueorguiev v. Max Rave, LLC, 526 F. Supp. 2d 853, 856–57 (N.D. Ill. 2007). The parties
agree that venue is proper both here and in the Northern District of Georgia. They dispute
whether transfer is warranted for the convenience of the parties and witnesses and whether
transfer serves the interests of justice.
ANALYSIS
A.

Convenience of the parties and witnesses
Before convenience can be fairly assessed, the issues for disposition of this case need to

be identified. See Cent. States, Se. & Sw. Areas Pension Fund v. Brown, 587 F. Supp. 1067,
1070 (N.D. Ill. 1984) (“In considering the convenience of potential witnesses, the Court must
consider. . . the nature and quality of [the witnesses’] testimony in relationship to the issues of
the case.”). There is no dispute that Lewis was a covered individual under Central States’s
welfare benefit plan and that the plan required her to reimburse Central States for the full amount
of its outlay before she received any proceeds in full or partial satisfaction of the loss that gave

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rise to the medical costs. Thus, the sole liability issue is whether the settlement fund was created
in full or partial satisfaction of the loss that gave rise to the medical costs. (Defendants also
indicate they may challenge whether all of the medical payments were attributed to the accident
as opposed to treatment for other conditions.)
1. The plaintiff’s choice of forum
In general, the plaintiff’s choice of forum should be respected. (quoting In re Nat’l Presto
Indus., Inc., 347 F.3d 662, 664 (7th Cir. 2003); see Caudill v. Keller Williams Realty Int’l, Inc.,
No. 2:11-CV-428, 2012 WL 2856105, at *2 (N.D. Ind. July 11, 2012). “‘[U]nless the balance is
strongly in favor of the defendant, the plaintiff’s choice of forum should rarely be disturbed.’”
Nat’l Presto Ind., Inc., 347 F.3d at 664 (7th Cir. 2003) (quoting Gulf Oil Corp. v. Gilbert,
330 U.S. 501, 508, 67 S.Ct. 839, 91 L.Ed. 1055 (1947)). See Schumacher v. Principal Life Ins.
Co., 665 F. Supp. 2d 970, 977 (N.D. Ind. 2009) (“A plaintiff’s choice of forum is entitled to
substantial deference, particularly where the chosen forum is the plaintiff’s home forum.”)
(internal quotation marks omitted). In cases arising under ERISA, this factor weighs even more
in the plaintiff’s favor because Congress’s purpose in permitting a plan to file in its own district
was to protect the financial integrity of benefit plans. See United Food & Commercial Workers
Int’l Union-Industry Pension Fund v. Spartan Stores, Inc., No. 92 C 3345, 1992 WL 309545, at
*2 (N.D. Ill. Oct. 20, 1992) (collecting cases) (“The congressional philosophy behind ERISA’s
venue provision [was] . . . to allow a plan to proceed in the district where it is administered so
that the plan could maintain its financial integrity and conserve its assets.”)

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2. The situs of material events
Despite the preference for a plaintiff’s choice of forum, “when the plaintiff’s choice of
forum is not the situs of the material events, plaintiff’s choice is entitled to less deference.”
Caudill, 2012 WL 2856105, at *2. Defendants propose to demonstrate that Hanson did not
cause the accident and that, since he is not liable, the post accident medical expenses were not all
attributable to Lewis’s medical costs. They would call Lewis’s physicians to demonstrate that
Lewis had pre-existing physical conditions that caused her disability and pre-existing anxiety
and depression that were exacerbated by Hanson’s intentional conduct after the accident.
Defendants also would call witnesses to the accident to demonstrate that Hanson was not
negligent and therefore was not liable for the accident, thus the negligence claims were
worthless. All of these witnesses are residents of Georgia.
Central States believes the proof necessary for equitable relief is simply the settlement
document, “General Release and Indemnity Agreement,” which, inter alia, releases Hanson and
Schwartz & Son from all claims or liabilities of any kind to date which the Lewises had against
them, specifically including all claims made in the Bibb County litigation.5 As such, Central
States argues, the material events occurred in northern Illinois, where Central States processed
and paid nearly 175 claims for Lewis’s medical expenses. Further, Central States contends that
any relevant documents can readily be transported through digital imaging which is no more
costly than delivering them across town. See Rabbit Tanaka Corp USA v. Paradies Shops, Inc.,
598 F. Supp. 2d 836, 840 (N.D. Ill. 2009).
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The Lewises and Lashgari further agreed “to indemnify and hold harmless” a number of
potential claimants, including “[a]ny claim asserted by any third-party administrator or other organization
for subrogation,” Dkt. No. 64-6 at 4, a clause indicating that Central States’s claim was known and
anticipated.

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Whether Hanson was negligent will never be known. Neither is it relevant. If the
settlement fund was created in full or partial satisfaction of the loss that Lewis suffered as a
result of the accident, Central States has a right of recovery. Since defendants seem to concede
that at least part of the medical expenses were attributable to the accident, the only conceivable
defense would be to present evidence that, despite the coincident timing, the settlement had
nothing to do with the . Those with knowledge of such a fact would be the lawyers who
negotiated the settlement, their clients, and representatives of the liability insurance carriers
involved. The evidence would include these witnesses’ testimony, the lawyers’ work product
and the carriers’ relevant documents.
Thus, the situs of material events giving rise to the pending case is in the Northern
District of Illinois, although the situs of the proffered defense is in the Northern District of
Georgia.
3. The relative ease of access to sources of proof in each forum, including the courts’
power to compel the appearance of unwilling witnesses and the costs of obtaining the
attendance of witnesses
The court agrees with Central States’s argument that the case will not likely be disposed
of by a trial. Indeed, nowadays few federal civil cases—particularly non-jury cases—are
resolved through trial, such that contemporary litigation practices make the choice between one or
the other situs of material events relatively unimportant to laying venue in a civil case. Typically,
one or both parties move for summary judgment, supporting the motion with deposition testimony
and documents, and the response in opposition does the same. This will likely occur here, as
well. Of course, Central States’s counsel will likely have to travel to Georgia to depose
witnesses, but this would still minimize its litigation expenses compared to having to add travel to

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Georgia to attend court hearings. Central States’s evidence, on the other hand, is principally
found in its documents which can be readily electronically transmitted to defendants in their home
state.
The relative ease of access to sources of proof in each forum is likely about equal between
the two districts. The court’s power to compel the appearance of unwilling witnesses is equal
unless the case goes to trial. The costs of obtaining the attendance of witnesses at a trial would
weigh somewhat in favor of defendants; certainly, compelling the appearance of an unwilling
defense witness at trial would require venue to be in Georgia. But even in that instance, transfer
is not necessary because the court may admit the deposition testimony of an unavailable witness.
See Fed. R. Civ. P. 32(a)(4)(B). Overall, this factor does not weigh significantly in either side’s
favor.
4. Convenience to the parties, their residences and their abilities to bear the expense of
trial in a particular forum
Lewis states that she is a disabled individual who has been receiving Social Security
disability benefits since March, 2009 (perhaps not coincidentally beginning less than five months
after the accident). She asserts that it would be financially burdensome and extremely
inconvenient for her individually to litigate in Illinois, and bringing all defendants’ witnesses to
Chicago for a hearing would be far more expensive than requiring Central States to travel to
Georgia. Although the extent of Lewis’s disability is not made of record, the court has little
doubt that Central States has greater resources than defendants to litigate this case, a factor that
weighs in favor of defendants.

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B.

The interests of justice
The interests of justice include the relationship between the forum community and the

subject of the litigation; the respective courts’ familiarity with applicable law; and the congestion
of the respective court dockets. Defendants assert only that the Georgia federal court is more
familiar with Georgia law, which is undoubtedly true. But to the extent state law applies in this
case, under the plan, Illinois law applies. See Plan Document, Ex. A to Compl., § 11.11 (Dkt. No.
1-1, p. 67 of 129). Either federal court is certainly competent to entertain this rather
straightforward case, but familiarity with Georgia law does not add weight to defendants’ side of
the scale.
Central States argues that the timing of this motion, after the court granted a preliminary
injunction against defendants, indicates defendants’ motive is actually to find a more friendly
forum. It cites Edsall v. CSX Transportation, Inc., No. 05-CV-903-WDS, 2006 WL 3302679, at
*2 (S.D. Ill. Nov. 14, 2006), Commercial Union Insurance Co. v. Emery Air Freight Corp., No.
92 Civ. 6513 (LMM), 1995 WL 232757, at *1 (S.D.N.Y. Apr. 19, 1995), and Blumenthal v.
Management Assistance, Inc., 480 F. Supp. 470, 471–472 (N.D. Ill. 1979). These cases
considered delay as a factor, although none entailed a situation where the motion followed on the
heels of an adverse ruling. The timing of the pending motion within less than a year from filing is
not a strong factor against transfer. On the other hand, the filing of the motion after an adverse
ruling suggests forum shopping, which is against the public’s interest in the impartial
administration of justice. As for the congestion of the courts’ respective dockets, the elapsed time

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from filing to disposition is slightly longer in the Northern District of Illinois, as is the caseload
per judgeship, but these differences are slight and have little bearing on the court’s decision.6
Defendants have cited a number of cases filed to recover employer contributions in which
the court transferred to the defendant’s home district. See, e.g., Cent. States, Se. & Sw. Areas
Pension Fund v. KAW Transport Corp., No. 96 CV 7935, 1997 WL 135680, at *5 (N.D. Ill. Mar.
21, 1997) (where terms of collective bargaining agreement were in dispute as well as the amount
of contributions due, union and employer were located in Missouri, and material witnesses and
relevant documents were in Missouri, convenience of parties and witnesses favored transfer);
Cent. States, Se. & Sw. Areas Pension Fund v. Heid, No. 93 C 5854, 1994 WL 55696, at **2–3
(N.D. Ill. Feb. 17, 1994) (where issue was whether insolvent employer and defendant were a
single employer and the financial disparity of the parties was great, convenience of parties and
witnesses favored transfer.); Cent. States, Se. & Sw. Areas Pension Fund v. Brown, 587 F. Supp.
1067, 1070 (N.D. Ill. 1984) (where amount of that liability would be determined from labor
contracts, negotiations, and employment records were in transferee district, convenience of
parties and witnesses favored transfer). Similarly, Central States cites a number of cases where
the motion was denied. E.g., Rabbit Tanaka Corp. USA, 598 F. Supp. 2d at 841 (denying transfer
and stating, “[w]hen plaintiff and defendant are in different states there is no choice of forum that
will avoid imposing inconvenience; and when the inconvenience of the alternative venues is
comparable there is no basis for a change of venue” (internal quotation marks omitted)); see also
Cent. States, Se. & Sw. Areas Pension Fund v. Ehlers Dist., Inc., No. 11 C 2691, 2012 WL

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See UNITED STATES COURTS, Federal Court Management Statistics Reports September 2011,
http://www.uscourts.gov/Statistics/FederalCourtManagementStatistics.aspx (last visited July 31, 2012).

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581246, at * 4 (N.D. Ill. Feb. 22, 2012) (denying motion to transfer finding inter alia that “the
Fund is located in the Northern District of Illinois, and the interest of justice favors simplifying
the collection of withdrawal liability by administrators of pension funds” (internal quotation
marks omitted)); Cent. States, Se. & Sw. Areas Pension Fund v. Mills Invs., LLC, No. 11 C 3297,
2011 WL 4901322, at *4 (N.D. Ill. Oct. 14, 2011) (denying motion to transfer and noting that “in
ERISA actions, courts have held that the interest of justice is served where the costs of employee
benefits funds are kept to a minimum”); Cent. States, Se. & Sw. Areas Pension Fund v. White,
No. 99 C 1046, 1999 WL 447059, at *2 (N.D. Ill. June 25, 1999) (denying transfer and stating,
“[I]n ERISA cases courts have recognized that a transfer away from the plaintiff fund’s forum
will increase a fund’s litigation costs, dilute its pension assets and encourage employers to
employ §1404(a) as a means of evading their obligation to the fund.” (internal quotation marks
omitted)). Given that Central States is located in this district and both courts are capable of
applying the law and adjudicating the claim on its merits, the interests of justice favor litigating
the case in this district where the fund is administered.
CONCLUSION AND ORDER
Based on an evaluation of the relevant factors, the court concludes that defendants have
failed to demonstrate that the convenience of the parties and the interests of justice weigh in favor
of transfer of this case. The motion is, therefore, denied.
ENTER:

Dated: August 1, 2012

___________________________________
JOAN HUMPHREY LEFKOW
United States District Judge

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