Transport Drivers, Inc. et al v. Consolidated Logistics Solutions LLC et al

Filing 45

MEMORANDUM Opinion and Order signed by the Honorable Ronald A. Guzman on 3/23/2015: For the reasons stated below, Defendants' motion to dismiss or, in the alternative, to transfer 25 is granted in part. The clerk is directed to transfer this case to the United States District Court for the Central District of California, Eastern Division. All other pending motions are denied as moot. Civil case terminated. Mailed notice (cjg, )

IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS
Transport Drivers, Inc., T.D.I.
Nationwide, L.L.C., Optimum Staffing,
Inc., d/b/a Optimum Logistic Services,
and Focus Transportation Services, Inc.,
d/b/a TDI Solutions,
Plaintiffs,
v.
Kevin P. Roy, Gilbert Apodaca, CPC
Logistics, Inc., CPC Services, Inc., and
Consolidated Logistics Solutions, LLC,
Defendants.

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Case No: 14 C 8465

Judge Ronald A. Guzmán

ORDER
For the reasons stated below, Defendants’ motion to dismiss or, in the alternative, to
transfer [25] is granted in part. The clerk is directed to transfer this case to the United States
District Court for the Central District of California, Eastern Division. All other pending motions
are denied as moot. Civil case terminated.
STATEMENT
Plaintiffs allege that Kevin Roy and Gilbert Apodaca both worked for Transport Drivers, Inc.
(“TDI”) in high-level positions in its West Coast office and had access to confidential and
proprietary information. (Compl., Dkt. # 1-1, ¶¶ 20-29.) In or about late 2013 and early 2014, Roy
and Apodaca began conspiring to leave TDI to move to CPC Logisitics, Inc. and CPC Services, Inc.,
competitors of TDI. (Id. ¶ 30.) Specifically, in February 2014, CPC Services set up a new limited

liability company, Consolidated Logistics Solutions, LLC (“CLS”),1 organized under Missouri law,
which was to be structured similarly to plaintiff Optimum Logistic Services and would employ Roy
and Apodaca after they left TDI. (Id. ¶ 35.) While still employed by TDI, Roy set up meetings with
clients to convince them to move their business from TDI to CLS, orchestrated the move of two
significant accounts from TDI to the CPC Defendants, and became aware of new business, which
he waited until after his departure to secure for CLS. (Id. ¶¶ 31, 34.) While employed by TDI,
Apodaca secretly communicated with the CPC Defendants regarding his employment with them,
facilitated moving some accounts from TDI to CLS, and did not inform TDI of potential new
business. (Id. ¶ 33.) Roy and Apodaca resigned from TDI in March 2014.
Plaintiffs allege claims for breach of fiduciary duty against Roy and Apodaca (Counts I and
V), trade secrets misappropriation against Roy and Apodaca (Counts II and VI), breach of a noncompete agreement against Roy and Apodaca (Counts III and VII), promissory estoppel against Roy
(Count IV), inducing breach of fiduciary duty by Roy and Apodaca against CPC Logistics, CPC
Services and CLS (Counts VIII and IX), misappropriation of trade secrets against CPC Logistics,
CPC Services and CLS (Count X), civil conspiracy against all defendants (Count XI) and a claim
for injunctive relief against all defendants (Count XII).
Defendants move to dismiss the case for lack of jurisdiction and improper venue, or, in the
alternative, to transfer the case. The Court addresses the motion for improper venue first. The facts
alleged in the complaint are presumed true for the purpose of resolving the pending motion. See
Dixon v. Page, 291 F.3d 485, 486 (7th Cir. 2002). The Court also considers any affidavits or

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CPC Logistics, Inc., CPC Services, Inc., and CLS are referred to collectively as “the
CPC Defendants.”
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declarations outside of the pleadings. See Felland v. Clifton, 682 F.3d 665, 672 (7th Cir. 2012).
“When a defendant challenges venue, the plaintiff bears the burden of establishing that venue is
proper.” Jackson v. N'Genuity Enterprises, Co., No. 14 C 2197, 2014 WL 4269448, at *6 (N.D. Ill.
Aug. 28, 2014). Title 28 U.S.C. § 1391(b) governs venue, which states that:
b) Venue in general.--A civil action may be brought in-(1) a judicial district in which any defendant resides, if all defendants are
residents of the State in which the district is located;
(2) a judicial district in which a substantial part of the events or omissions
giving rise to the claim occurred, or a substantial part of property that is the
subject of the action is situated; or
(3) if there is no district in which an action may otherwise be brought as
provided in this section, any judicial district in which any defendant is
subject to the court's personal jurisdiction with respect to such action.
28 U.S.C. § 1391(b). The parties agree that subsection (1) does not apply because CLS and the CPC
Defendants reside in Missouri while Roy and Apodaca reside in California. Defendants further
claim that venue here is improper under subsection (2) because none of the alleged conduct occurred
here. As another court in this district recently noted:
The test for determining whether venue is proper under Section 1391(b)(2) is “not
whether a majority of the activities pertaining to the case were performed in a
particular district, but whether a substantial portion of the activities giving rise to the
claim occurred in the particular district.” To meet the substantial portion test, the
events or omissions must have more than “some tangential connection” to the chosen
venue.
Brunswick Corp. v. Thorsell, No. 13 C 9222, 2014 WL 1612668, at *2 (N.D. Ill. Apr. 21, 2014)
(internal citations omitted).
In challenging venue in this Court, Defendants argue that Roy and Apodaca worked for
Plaintiffs in California, resigned their employment in California and took new jobs in California;
CLS only operates in California so assuming Plaintiffs’ allegations are true, Roy and Apodaca could

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only solicit clients in California; and, with respect to the CPC Defendants, they do not service the
allegedly solicited customers in Illinois and have had no interaction or contact with those customers
in Illinois. (Mem. Supp. Mot. Dismiss Transfer, Dkt. # 26, at 10.)
Plaintiffs respond that they are victims of torts in Illinois, Plaintiffs’ contracts with Roy were
based in Illinois, numerous contacts related to this case occurred in Illinois and Roy and Apodaca
agreed to this forum.
The Court addresses the last point first. Plaintiffs note that Apodaca entered into a contract
entitled “Agreement” on October 1, 2010, which contains non-solicitation, non-compete and
confidentiality provisions. It also states that “[a]ll actions to enforce any provision of this
Agreement shall be brought and prosecuted in a court of competent jurisdiction with venue located
in Cook County, Illinois.” (Compl., Dkt. # 1-1, Ex. A.) A forum selection clause is “prima facie
valid and should be enforced unless enforcement is shown by the resisting party to be unreasonable
under the circumstances.” Prof'l LED Lighting, Ltd. v. Aadyn Tech., LLC, No. 14-CV-2440, 2014
WL 6613012, at *5 (N.D. Ill. Nov. 21, 2014) (citation and internal quotation marks omitted).
Apodaca conclusorily contends that he “merely signed off on his employer’s boilerplate choice-oflaw and forum selection language, without arms-length negotiation or equal bargaining power.”
(Reply, Dkt. # 35, at 9.) But he provides no evidence in support of this statement. Therefore,
Apodaca is bound by the forum selection clause with respect to those causes of action against him
related to the Agreement. Thus, under the forum selection clause, venue in this Court is proper as
to Apodaca.
While Plaintiffs also allege that Roy agreed to litigate in this district, they point to no
contract signed by Roy containing a forum selection clause. Attached as Exhibit B to the complaint

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is an excerpt from the TDI Staff Employee Handbook and a page entitled Employee’s Receipt,
which appears to be signed by Roy on July 26, 2010, acknowledging receipt of the Handbook and
that he has “read and understood” the terms contained in the receipt. But neither the Employee
Handbook, as presented, nor the receipt, contains any direct reference to a forum selection clause
or consent to jurisdiction. The Employee Handbook provides that all candidates for employment
must sign a non-compete form and that “[i]f the Employee does not sign the non-compete prior to
separation of employment, the signed receipt from the Employee [H]andbook will serve as
acceptance of the agreement in its condensed version and will revert all questions or guidelines to
the original non-compete agreement.” (Compl., Ex. B, ¶ I.) But it is not clear what the “agreement
in its condensed version” or the “original non-compete agreement” are. Moreover, Plaintiffs fail to
point to any authority supporting their position that Roy’s signature on the receipt binds him to the
forum selection clause contained in the unsigned non-compete agreement they attach as part of their
Exhibit B to the complaint.
Thus, as to the claims against Roy, CPC Logistics, CPC Services and Consolidated Logistics
Solutions, Plaintiffs must establish that venue is appropriate here. When, as in this case, “multiple
causes of action are joined, venue must be proper as to each one.” Moran Indus., Inc. v. Higdon, No.
07 C 6092, 2008 WL 4874114, at *5 (N.D. Ill. June 26, 2008) (internal quotation marks and citation
omitted). The Court notes, however, that the parties do not discuss venue associated with each cause
of action.
As to the breach of the non-compete against Roy2, “the Court considers a number of factors

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The Court assumes the truth of the allegation that Roy verbally accepted his offer of
employment with Plaintiffs according to the terms and conditions in the non-compete agreement,
which included a one-year non-compete agreement, a non-solicitation provision and an
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including where the conduct underlying the breach occurred and where performance under the
contract was to take place to determine where a substantial part of the acts giving rise to the claim
occurred.” Moran Indus., Inc. v. Higdon, No. 07 C 6092, 2008 WL 4874114, at *5 (N.D. Ill. June
26, 2008) (internal quotation marks and citation omitted). Plaintiffs contend that Roy traveled to
Illinois to negotiate and execute his employment agreement, and allege that he breached his noncompete agreement, including the non-solicitation provision, by taking a job with CLS, soliciting
Plaintiffs’ former, current and potential future clients and using Plaintiffs’ confidential information.
(Compl., Dkt. # 1, ¶ 72.) Significantly, CLS is located and operates exclusively in California, and
does not do any business with customers located or based in Illinois. (Crowell Decl., Dkt. # 26-3,
¶¶ 14-18.) Indeed, Roy attests that he was formerly employed by TDI as its West Coast Regional
Vice-President, resigned his employment with Plaintiffs from his California office, negotiated and
accepted new employment with CLS in California, works only from CLS’s California office, and
all CLS customers he services are located in California. (Roy Decl., Dkt. # 26-1, ¶¶ 5-10.)
With respect to the purported breach of the confidentiality provision of the non-compete
agreement, Plaintiffs allege that Roy “used [P]laintiffs’ confidential information and methodologies
to compete with [P]laintiffs.” (Compl., Dkt. # 1, ¶ 72.) Again, while Plaintiffs contend that Roy
accessed the information from servers located in Illinois and received emails containing confidential
information sent from Illinois, Plaintiffs allege that Roy “improperly utilized and misappropriated
[P]laintiffs’ trade secrets . . . while he was still employed with [P]laintiffs” in California. (Id. ¶ 54.)
Thus, the basis for Plaintiffs’ breach of contract claim lies in conduct that allegedly occurred in

agreement to keep confidential Plaintiff’s trade secret information. (Compl., Dkt. # 1, ¶¶ 60-61.)
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California; Roy did not violate the confidentiality provision simply by obtaining confidential
information in or from Illinois. See Pioneer Surgical Tech., Inc. v. Vikingcraft Spine, Inc., No.
2:09-CV-271, 2010 WL 2925970, at *3 (W.D. Mich. July 21, 2010) (finding venue in Michigan
improper on conversion claim even where plaintiff was headquartered in Michigan, executed
relevant agreement and manufactured products there, defendant traveled to Michigan on several
occasions pursuant to agreement, defendant had weekly communications with plaintiff in Michigan,
and plaintiff suffered injury in Michigan based on defendant’s wrongful acts in California because
conversion occurred in California); Abramoff v. Shake Consulting, L.L.C., 288 F. Supp. 2d 1, 4–5
(D.D.C. 2003) (holding that the District of Columbia was not the proper venue for a contract action
based on a breach that occurred in Florida, though the contract was executed in and plaintiff suffered
the impact of the breach in the District of Columbia). That Plaintiffs were injured in Illinois is not
persuasive. Fin. Mgmt. Servs., Inc. v. Coburn Supply Co., Inc., No. 02 C 8928, 2003 WL 255232,
at *2 (N.D. Ill. Feb. 5, 2003) (“[I]f economic harm to a plaintiff were really enough to satisfy
Section 1391(a)(2), . . . a plaintiff could always bring suit at its home base on the premise that it has
suffered harm there[,]” thus “eviscerating . . . [the other] part[s] [that] Congress has prescribed in
the venue statute.”).
As to the propriety of venue with respect to the other claims against Roy, CLS, and the CPC
Defendants, Plaintiffs, who bear the burden of establishing proper venue, do not specifically address
them. Plaintiffs briefly assert that this Court should exercise its discretion and apply the doctrine
of pendent venue over the other claims. Pendent venue “allows a court to hear a claim where venue
is otherwise lacking if the claim arises out of a common nucleus of fact as the claims where venue
is proper.” Hyatt Corp. v. Personal Commc’ns Indus. Ass'n, 04 C 4656, 2004 WL 2931288, at *5

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(N.D. Ill. Dec. 15, 2004). To determine whether pendent venue is appropriate, the Court must
consider judicial economy, the convenience of the parties and fairness. Id. As an initial matter,
Plaintiffs do not address these factors. Second, some courts have questioned the propriety of
extending the pendent jurisdiction doctrine to cases brought under the Court’s diversity jurisdiction.
Bond Safeguard Ins. Co. v. LR Buffalo Creek, LLC, No. 1:08CV434, 2009 WL 2601211, at *18
(W.D.N.C. Aug. 21, 2009) (noting some commentators recognize pendent jurisdiction where
pendent claim arises from the same nucleus of operative facts as “properly venued federal claim”
but questioning extending doctrine to cases solely under court’s diversity jurisdiction) (emphasis
added). Pursuant to the Court’s analysis, while judicial economy favors deciding the case in one
court and this forum is convenient to Plaintiffs, the Court has concluded that the majority of the
claims against the majority of the defendants are not brought in the proper venue. Accordingly,
convenience to Defendants and fairness to them weigh in favor of not exercising pendent jurisdiction
over the remaining claims. For these reasons, the Court declines to apply pendent jurisdiction in the
instant case.
Defendants ask the Court to transfer the case to the Central District of California. The Court
may, if venue is improper and “if it be in the interest of justice, transfer such case to any district or
division in which it could have been brought.” 28 U.S.C. § 1406(a); see also Cote v. Wadel, 796
F.2d 981, 985 (7th Cir. 1986) (“Under either section [(28 U.S.C. § 1404(a) or 28 U.S.C. § 1406(a))],
the district court has broad discretion to grant or deny a motion to transfer the case”). Transfer of
the claims against Roy, CLS and the CDC Defendants under § 1406 while retaining the suit against
Apodaca in this district would not further judicial economy and would be prejudicial to the corporate
parties by requiring them to litigate in two different districts. Plaintiffs do not dispute that venue

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in the Central District of California is appropriate. Therefore, in the interests of justice and the
efficient administration of judicial and party resources, the Court, in its discretion, transfers the
whole case to the United States District Court for the Central District of California, Eastern
Division. Giuliano v. CDSI I Holding Co., Inc., No. 13 C 2776, 2014 WL 1032704, at *3 (E.D. Pa.
Mar. 17, 2014) (in similar circumstances, finding that “the interest of justice and the convenience
of the parties will be served by the transfer of all claims to the District of Delaware” because “[t]o
do otherwise would force all parties to litigate the claims in two different courts, requiring a
duplication of effort both by the parties and the courts involved that would provide no appreciable
benefit whatsoever, and many drawbacks.”).
For the reasons stated above, Defendants’ motion to dismiss or, in the alternative, to transfer
is granted in part. The clerk is directed to transfer this case to the United States District Court for
the Central District of California, Eastern Division. Civil case terminated.

Date: March 23, 2015

_______________________________________
Ronald A. Guzmán
United States District Judge

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