Meyer et al v. Grady et al
MEMORANDUM OPINION AND ORDER Signed by the Honorable Robert M. Dow, Jr. on 6/6/2017. Mailed notice(cdh, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
MICHAEL MEYER, CHRISTOPHER
MEYER, and MICHAEL MEYER CAPITAL
EVERETT GRADY, KATHRYN GRADY,
Case No. 17-cv-289
Judge Robert M. Dow, Jr.
MEMORANDUM OPINION AND ORDER
Before the Court is Defendant Kaegem, Corp.’s motion to transfer venue to the Central
District of Illinois under 28 U.S.C. § 1404 . For the reasons set forth below, Defendant’s
motion  is denied. This case is set for further status on July 6, 2017, at 9:00 a.m.
This case involves the operations and financial health of Defendant Kaegem, Corp., a
nonpublic Illinois corporation that created compliance management software. Defendant Everett
Grady is an Illinois citizen and Kaegem’s President. [1, ¶ 11.] Defendant Kathryn Grady is an
Illinois citizen and Kaegem’s Secretary. Id. ¶ 12. Plaintiff Michael Meyer is a Missouri citizen
and owns 15,000 shares of Kaegem common stock. Id. ¶ 7. Plaintiff Christopher Meyer is an
Oklahoma citizen and owns 5,000 shares of Kaegem common stock. Id. ¶ 8. Plaintiff Meyer
Capital Group, LLC (“Meyer Capital”) is a Missouri limited liability company and both of its
members (Bryan and Jeff Meyer) are Missouri citizens. Id. ¶¶ 9–10. Meyer Capital owns
10,000 shares of Kaegem common stock. Id. ¶ 9.
Plaintiffs have sued Defendants under the Illinois Business Corporations Act and for
breach of fiduciary duty, common law fraud, and unjust enrichment.
Plaintiffs argue that
Defendants misrepresented Kaegem’s financial condition and capitalization in an effort to secure
Plaintiffs’ investments in 2013 and 2014. During most of the events underlying the complaint,
Kaegem’s principal place of business was in Mundelein and Libertyville, Illinois—both of which
are in Lake County and fall within the Northern District of Illinois. [1, ¶ 13.] By the time
Plaintiffs filed their complaint in January 2017, Kaegem had moved its operations to
Jacksonville, which is in Morgan County, Illinois and the Central District of Illinois.
Defendant Kaegem—but not Defendants Everett or Kathryn Grady—filed the instant motion to
transfer venue to the Central District of Illinois . Defendant opted not to file a reply in
support of its motion.
28 U.S.C. § 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 or to any district or division to which all parties have
consented.” 28 U.S.C. § 1404(a). This provision authorizes courts to transfer matters based on a
“case-by-case consideration of convenience and fairness.” Stewart Organization, Inc. v. Ricoh
Corp., 487 U.S. 22, 29 (1988). The Seventh Circuit “grant[s] a substantial degree of deference to
the district court in deciding whether transfer is appropriate.” Research Automation, Inc. v.
Schrader-Bridgeport Int’l, Inc., 626 F.3d 973, 977–78 (7th Cir. 2010). The party moving to
transfer venue (here, one Defendant) “has the burden of establishing, by reference to particular
circumstances, that the transferee forum is clearly more convenient.” Coffey v. Van Dorn Iron
Works, 796 F.2d 217, 219–20 (7th Cir. 1986). Courts may transfer a case under Section 1404(a)
when “(1) venue is proper in the transferor district; (2) venue is proper in the transferee district;
(3) the transfer will serve the convenience of the parties and witnesses; and (4) the transfer will
serve the interests of justice.” Hanover Ins. Co. v. N. Bldg.. Co., 891 F. Supp. 2d 1019, 1025
(N.D. Ill. 2012). The Court considers these factors in turn.
Is venue proper in the transferor and transferee districts?
As to the first two factors, Plaintiffs and Defendant Kaegem agree that venue is proper
both in this district and in the Central District of Illinois. [1, ¶ 5; 17, at 2.] Under 28 U.S.C. §
1391(b), “[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.” Venue is proper in the Central District under subsection (1) because Kaegem’s principal
place of business is Jacksonville and all three Defendants are Illinois residents. See 28 U.S.C.
§ 1391(c)(2) (stating that entity-defendants “shall be deemed to reside * * * in any judicial
district in which such defendant is subject to the court’s personal jurisdiction”). Venue is proper
in the Northern District under subsection (2) because, as alleged in the complaint, “a substantial
part of the events or omissions” giving rise to Plaintiffs’ fraud-related claims occurred in this
district while Defendant’s principal place of business was in Lake County. Therefore, the Court
agrees that venue would be proper in both the Central and Northern Districts of Illinois.
Will transfer serve the convenience of the parties and witnesses?
“In evaluating the convenience of the parties and witnesses, courts weigh the following
factors: (1) the plaintiff’s choice of forum; (2) the situs of the material events; (3) the relative
ease of access to sources of proof; (4) the convenience of the witnesses; and (5) the convenience
to the parties of litigating in the respective forums.” Hanover Ins. Co., 891 F. Supp. 2d at 1025.
“When evaluating the convenience of a forum to the parties and witnesses, we may consider, for
example, the length and cost of travel, the number of witnesses to be called, the nature of
witnesses’ testimony, and witness travel time.” Hutchinson v. Fitzgerald Equip. Co., 2016 WL
878265, at *4 (N.D. Ill. Mar. 8, 2016).
First, the “plaintiff’s choice of forum is generally given substantial weight, particularly
when it is the plaintiff’s home forum.” Aldridge v. Forest River, Inc., 436 F. Supp. 2d 959, 960–
61 (N.D. Ill. 2006). That choice is entitled to less deference when “another forum bears a
stronger relationship to the dispute or the plaintiff’s choice of forum has no connection to the
material events in question.” Id. Here, no Plaintiff resides in this district; they reside in either
Missouri or Oklahoma. The Central District is geographically closer to Missouri than this
District. That said, Plaintiffs filed their complaint in the district where they were allegedly
induced to acquire Defendant’s shares and remain as shareholders. Thus, Plaintiff’s choice of
forum is entitled to some, but not substantial, weight given this forum’s connection to the
material events of this suit.
Second, both sides agree that the situs of material events is the Northern District. [17, at
3; 22, at 2–3.] Defendant’s principal place of business when the alleged misrepresentations were
made and Plaintiffs purchased Defendant’s shares was the Northern District. That situs has not
changed simply because Kaegem moved out of the district after those events took place.
Third, Defendant asserts that its business records are now in Jacksonville and that this
factor should weigh in favor of the Central District. [17, at 3.] “An assertion that most of the
documentary evidence exists in one location, in and of itself, is insufficient to tip the balance in
favor of transfer to that location.” Cont’l Cas. Co. v. Staffing Concepts, Inc., 2009 WL 3055374,
at *5 (N.D. Ill. Sept. 18, 2009). “In this day and age, transferring documents from one district to
another is commonplace and, given the widespread use of digital imaging in big-case litigation,
no more costly than transferring them across town.” Rabbit Tanaka Corp. USA v. Paradies
Shops, Inc., 598 F. Supp. 2d 836, 840 (N.D. Ill. 2009). Indeed, “documents are presumed to be
easily transportable.” Carter v. Arise Virtual Sols., Inc., 2017 WL 192374, at *2 (N.D. Ill. Jan.
18, 2017). Many of the documents attached to the complaint are emails or other electronic
documents. [See, e.g., 1-5.] Defendant offers no reason that its documents cannot be easily
transferred to both districts. It is, after all, a software company. Accordingly, this factor does
not weigh in favor of either district.
Fourth, “[t]he convenience of witnesses is generally viewed as the most important factor”
because party witnesses are within a party’s control whereas non-party witnesses “are not
assumed to appear in court voluntarily.” Cont’l Cas., 2009 WL 3055374, at *6. Defendant fails
to identify a single non-party witness. [17, at 3.] Instead, its arguments focuses exclusively on
the convenience to party witnesses—Everett and Kathryn Grady and the Plaintiffs (id.)—which
is a different factor. “The party requesting the transfer has the burden of demonstrating who its
witnesses are, the nature of their testimony, and how important that testimony will be to the
case.” Landis, 2010 WL 5373664, at *4 (citation and internal quotation marks omitted). In fact,
Defendant was “obligated to clearly specify the key witnesses to be called and make at least a
generalized statement of what their testimony would have included.”
Heller Fin., Inc. v.
Midwhey Powder Co., 883 F.2d 1286, 1293 (7th Cir. 1989). Defendant entirely failed to meet
its burden, “suppl[ying] nothing in the way of affidavits, depositions, stipulations, or any other
type of document containing facts tending to establish who (specifically) it planned to call or the
materiality of that testimony.” Id. at 1293–94. This failure weighs against transfer.1
Fifth, “the Court considers the parties’ residences and their ability to bear the expense of
litigating in each forum.” Carter, 2017 WL 192374, at *3. However, “[t]he Court gives less
weight to the convenience of party witnesses, who the Court presumes would appear voluntarily
at trial in this district.” Id.; accord Qurio Holdings, Inc. v. Comcast Cable Commc’ns, LLC,
2015 WL 535981, at *3 (N.D. Ill. Feb. 9, 2015) (“[T]he overwhelmingly predominant view
among district courts in the [Seventh C]ircuit is that because party witnesses are likely to appear
voluntarily, the convenience factor is less significant with regard to party witnesses than nonparty witnesses.”); Cent. States, Se. & Sw. Areas Pension Fund v. Salasnek Fisheries, Inc., 977
F. Supp. 888, 891 (N.D. Ill. 1997) (“Presumably, each party can assure the testimony of its
employees, so the convenience of those witnesses does not weigh in favor or against transfer.”).
Defendant argues that the Central District is closer to where all parties reside and “[p]resumably,
all [p]arties[’] costs in litigating the Central District would be less based on their respective
locations.” [17, at 4.] Section 1404(a) requires a party to do more than presume the costs and
travel would be easier for all parties. Plaintiffs argue (and Defendants do not contest) that
“Chicago offers the out-of-town Plaintiffs significantly more transportation options compared to
Springfield” and “it will be more convenient for Plaintiffs to fly to Chicago, during which they
would not lose time at work, rather than spend hours driving to Springfield.” [22, at 6.]
Moreover, related parties are already litigating another case in the Northern District. See Meyer
Defendant makes the alternative request to “be provided the opportunity to conduct limited discovery
to” identify non-party witnesses [17, at 4]. Defendant does not justify that request. If Defendant does not
plan to call a single non-party witness on its behalf and cannot come up with a single non-party witness
that Plaintiffs will call to support their claims based on a reasonable investigation of its own records, the
Court is not persuaded that discovery into Plaintiff’s witnesses would be fruitful. Defendant cannot get a
one-sided sneak peek at Plaintiffs’ initial disclosures under Federal Rule of Civil Procedure 26(a)(1)
simply because it filed a motion to transfer without sufficient supporting evidence.
Technology Solutions, LLC v. Kaegem Corp., Case No. 17-cv-281 (N.D. Ill.). Defendant filed an
almost identical motion in that case, which was denied. Given that the districts neighbor each
other, Plaintiff offers little more than speculation to show that one district is less costly and
easier to travel to for all parties. At best, this factor is neutral.2
In sum, factors one, two, and four weigh in favor of this District and factors three and
five are neutral. Thus, considering all five factors, Defendant has failed to satisfy its burden that
the Central District of Illinois is “clearly” a more convenient forum than the Northern District of
Illinois. Coffey, 796 F.2d at 219–20.
Will transfer serve interests of justice?
“In considering the interests of justice, courts weigh additional factors, including: (1) the
speed at which the case will proceed to trial; (2) the court’s familiarity with the applicable law;
(3) the desirability of resolving controversies in each locale; and (4) the relation of each
community to the occurrence at issue.” Hanover Ins. Co., 891 F. Supp. 2d at 1025.
Defendant concedes that the first factor weighs in favor of retention. [17, at 5.] The
median number of months from filing to disposition in the Northern District of Illinois is 6.7
months, while the median number in the Central District is 9.2 months. [17-2, at 3.] The median
number of months between filing and trial in the Northern District is 29 months, while it is 36.7
months in the Central District. Id. Both the Central District and the Northern District are
equally familiar with Illinois law, so this second factor is neutral. Both districts also have an
interest in this dispute since this controversy began and took place in the Northern District, while
The parties’ subscription agreement contains a forum selection clause that reads: “In the event of
litigation resulting from this Agreement, the venue for such litigation shall be the state courts of Lake
County, Northern District of Illinois.” [22-2, at 10.] At a minimum, this provision weighs in favor of the
proposition that Kaegem found Lake County a sufficiently convenient location to litigate disputes related
to the subscription agreement. Defendant does not argue that the extra distance it takes to reach Chicago
meaningfully changes the convenience calculus under Section 1404(a).
the Central District “has an interest in ensuring its corporations receive a fair trial.” Carter, 2017
WL 192374, at *4. Accordingly, both the desirability of resolving the controversy in each locale
and the community’s relation to this case are neutral factors. Thus, three of these factors are
neutral and one weighs in favor of the Northern District. Taken as a whole, justice could be
accomplished in either district, which means that it is not necessary to serve those interests by
transferring this case to the Central District of Illinois.
In sum, the Court concludes that the overall balance of factors warrants retention of this
case in the Northern District of Illinois. No factor clearly warrants transfer to the Central
District, and several factors—including the Plaintiffs’ choice of forum, the situs of material
events, and speed at which this case will proceed to trial—weigh in favor of the Northern District
of Illinois. Defendant’s decision not to respond to any Plaintiff’s arguments (or offer much
support for its own) reinforces the conclusion that it will not be materially inconvenienced by
litigating here. Therefore, the Court denies Defendant’s motion to transfer .
For these reasons, Defendant Kaegem, Corp.’s motion to transfer venue to the Central
District of Illinois pursuant to 28 U.S.C. § 1404  is denied. This case is set for further status
on July 6, 2017, at 9:00 a.m.
Dated: June 6, 2017
Robert M. Dow, Jr.
United States District Judge
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