Kahn Swick & Foti, LLC v. Milberg LLP et al

Filing 24

ORDER & REASONS. It is ORDERED that Milberg, LLP's Motion to Transfer Venue, or in the alternative, to Stay Proceedings (R. Doc. 7 ) is GRANTED IN PART. This case is hereby TRANSFERRED to the Honorable Stanley R. Chesler in the United States District Court for the District of New Jersey. However, the Court DENIES Milberg's request to stay these proceedings pursuant to the Colorado River doctrine. Signed by Judge Carl Barbier. Case transferred to District of New Jersey.(gec)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

KAHN SWICK & FOTI, LLC

CIVIL ACTION

VERSUS

NO: 16-17835

MILBERG, LLP, ET AL.

SECTION: “J”(2)

ORDER & REASONS
Before

the

Court

is

a

Motion

to

Transfer

Venue,

or

alternatively, to Stay Proceedings (R. Doc. 7) filed by Milberg,
LLP (“Milberg”) and an opposition (R. Doc. 15) thereto filed by
Kahn Swick & Foti, LLC (“KSF”). Having considered the motions and
legal memoranda, the record, and the applicable law, the Court
finds that Milberg’s Motion to Transfer Venue, or alternatively,
to Stay Proceedings (R. Doc. 7) should be GRANTED IN PART. 1
FACTS AND PROCEDURAL BACKGROUND
This litigation arises from an attorneys’ fee dispute from
the securities fraud class action (“Vioxx litigation”) against
Merck & Co., Inc. (“Merck”). In short, the plaintiffs in the Vioxx
litigation alleged that Merck made materially false and misleading
statements related to its drug, Vioxx. The Plaintiff in this case,
KSF,

is

a

Louisiana

limited

liability

company

located

in

1 On March 15, 2017, the Court held oral argument on the current motion and
KSF’s Motion to Remand (R. Doc. 10). At oral argument the Court denied
Plaintiff’s Motion to Remand and dismissed KSF’s claims against the Whitehead
Law Firm, LLC and C. Mark Whitehead, III without prejudice. See (R. Docs. 10,
23.)

Madisonville, Louisiana. Defendant Milberg is a New York limited
liability

partnership

with

partners

domiciled

in

Alabama,

California, Michigan, New Jersey, and New York.
In 2003, Milberg approached KSF to serve as its Louisiana
counsel and file a securities fraud class action against Merck.
KSF agreed and filed suit in this Court. That action was randomly
allotted to the Honorable Kurt D. Englehardt. On March 3, 2004,
Judge Englehardt appointed Milberg as Co-Lead Counsel and KSF as
Co-Liaison Counsel. While the Vioxx litigation was originally
tried in this Court, after two years it was transferred to the
United States District Court for the District of New Jersey and
assigned to the Honorable Stanley R. Chesler. After the case was
transferred, Milberg and KSF allegedly created a joint venture
agreement. This agreement allegedly provides that KSF was to
receive its lodestar fee and, if Milberg retained its Lead Counsel
position, Milberg was to pay KSF ten percent of its proceeds from
the Vioxx litigation. Much of the parties’ dispute revolves around
this alleged agreement. 2 The Vioxx litigation ultimately settled
in June of 2016, resulting in a settlement fund of approximately
$1 billion and a fee award of approximately $200 million. At some
point thereafter, Milberg notified KSF that it would not pay KSF

2

The Court makes no determination as to whether there was a contract between
KSF and Milberg, whether Milberg retained its Lead Counsel position, or whether
KSF is entitled to any portion of the funds allegedly owed under the joint
venture agreement.

2

any of its accumulated lodestar, nor ten percent of its proceeds.
Milberg argues, inter alia, that it did not retain its Lead Counsel
position as contemplated by the alleged agreement. In October 2016,
Milberg was awarded $25 million by Judge Chesler, and KSF was
awarded $400,000. KSF argues that this $400,000 was only for it
lodestar, and that it is entitled to at least ten percent of
Milberg’s award.
On November 21, 2016, KSF filed suit in Civil District Court
for the Parish of Orleans, Louisiana (“Orleans Parish Action”).
There, KSF argued that Milberg breached the alleged joint venture
agreement and its fiduciary duty, and KSF sought a temporary
restraining order and permanent injunction to enjoin Milberg from
alienating any portion of the proceeds awarded by Judge Chesler.
On November 28, 2016, Milberg filed summons in the Supreme Court
of the State of New York for the County of New York (“New York
Action”) seeking a declaratory judgment that KSF is not entitled
to any money pursuant to the alleged joint venture agreement. On
December 7, 2016, the Orleans Parish District Court issued a
temporary restraining order prohibiting Milberg from alienating
any of the disputed funds, but KSF’s request for a permanent
injunction was ultimately denied. On December 27, 2016, Milberg
filed a complaint in the New York Action and on the following day
removed the Orleans Parish Action to this Court. Then, on January
16, 2017, Milberg filed the present Motion to Transfer, or in the
3

alternative, to Stay Proceedings. On March 15, 2017, the Court
held oral argument on the present motion and KSF’s Motion to Remand
(R. Doc. 10). During oral argument, the Court denied KSF’s Motion
to Remand. See (R. Doc. 10, 23.) Accordingly, the only remaining
motion before the Court is Defendants’ Motion to Transfer, or in
the Alternative, to Stay Proceedings (R. Doc. 7).
PARTIES’ ARGUMENTS
1.

Milberg’s Arguments

Milberg argues that this case should be transferred to the
District of New Jersey for the convenience of the parties and
witnesses and in the interest of justice. First, Milberg contends
that this action might have been brought in the District of New
Jersey because a substantial part of the events giving rise to
KSF’s claim occurred in New Jersey. Additionally, Milberg argues
that venue is also proper in the District of New Jersey because
Milberg is a resident of New Jersey and subject to both general
and specific jurisdiction in the District of New Jersey. Finally,
Milberg argues

that the Gilbert 3 public and

private interest

factors weigh in favor of transferring this case to the District
of New Jersey. In the alternative, Milberg argues that this action
should be stayed pursuant to the Colorado River 4 doctrine.

3

Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947).
See Colo. River Water Conservation Dist. v. United States, 424 U.S. 800
(1976).
4

4

2.

KSF’s Arguments

KSF first argues that this action could not have been brought
in the District of New Jersey because the District of New Jersey
does not have personal jurisdiction over all of the litigants in
this dispute. Further, KSF contends that convenience and justice
demand that this action be litigated in this Court. KSF asserts
that Louisiana is the most convenient and appropriate forum for
the resolution of this dispute and that the public and private
interest factors weigh against transferring this case to the
District of New Jersey. Finally, KSF contends that a stay of this
action pursuant to the Colorado River doctrine is unwarranted.
LEGAL STANDARD
1.

Transfer of Venue

Pursuant to 28 U.S.C. § 1404(a), “[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.” District courts have broad
discretion when making this decision. In re Volkswagen of Am.,
Inc., 545 F.3d 304, 311 (5th Cir. 2008) (en banc) (Volkswagen II).
The Fifth Circuit applies a two-part test to decide whether a §
1404 transfer is warranted. First, as a threshold issue, a case
can be transferred to a venue only if that venue is one where the
action “might have been brought.” Id. at 312. Second, the party
5

requesting the transfer must demonstrate “good cause”, such that
the requested venue is “clearly more convenient” than the venue
chosen by the Plaintiff. Id. at 315. Where a defendant seeks a §
1404 transfer of venue the plaintiff’s choice of venue is given
less weight than when a defendant seeks dismissal pursuant to forum
non conveniens. See id. at 309, 315.
To determine the relative convenience of the venues, courts
may weigh the private and public interest factors. Id. at 315. The
private interest factors include:
(1) the relative ease of access to sources of proof;
(2) the availability of compulsory process to secure the
attendance of witnesses;
(3) the cost of attendance for willing witnesses; and
(4) all other practical problems that make trial of a
case easy, expeditious and inexpensive.
Id. The public interest factors include:
(1) the administrative difficulties flowing from court
congestion;
(2) the local interest in having localized interests
decided at home;
(3) the familiarity of the forum with the law that will
govern the case; and
(4) the avoidance of unnecessary problems of conflict of
laws [or in] the application of foreign law.
Id. These factors are “not necessarily exhaustive or exclusive,”
and none are dispositive. Id.
DISCUSSION
The threshold issue is whether the instant case “might have
been brought” in the United States District Court for the District
of New Jersey. See id. Milberg would have been subject to the
6

District of New Jersey’s general jurisdiction, as it has at least
one partner who is domiciled there. See Daimler AG v. Bauman, 134
S.Ct. 746, 760 (2014). In addition, Milberg would have been subject
to specific jurisdiction in New Jersey—from approximately 2006 to
2016 the Vioxx litigation, in which Milberg participated, was
conducted in New Jersey, which gives rise to sufficient minimum
contacts with the state. See Burger King Corp., 471 U.S. at 474.
Further, under 28 U.S.C. § 1391(b)(2), venue is proper when in “a
judicial district in which a substantial part of the events or
omissions

giving

rise

to

the

claim

occurred,”

which

is

also

satisfied by the years of litigation in the District of New Jersey.
Moreover, the Court finds that the private and public interest
factors weigh in favor of transferring his case to Judge Chesler
in the District of New Jersey. The outcome of this case hinges on
the facts in the underlying Vioxx litigation and the appointment
and performance of “Lead Counsel.” Most importantly, the Court
finds that having Judge Chesler resolve this dispute, given his
keen familiarity with the intricacies of the Vioxx litigation, the
circumstances surrounding its resolution, and the appointment and
performance of “Lead Counsel”, will be most convenient for the
parties

and

in

the

interest

of

justice.

Additionally,

the

individuals which formed the alleged joint venture agreement were
all involved, or supposed to be involved, in the Vioxx litigation
which occurred in the District of New Jersey, and these individuals
7

are located in New Jersey. Thus, KSF is the only party to the
alleged joint venture agreement located in Louisiana. Accordingly,
resolving this dispute in the District of New Jersey will be more
convenient for the parties involved. Finally, because the Court
finds that transferring this case to the District of New Jersey is
appropriate, Milberg’s request to stay these proceedings pursuant
to the Colorado River doctrine is denied.
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Milberg, LLP’s Motion to Transfer
Venue, or in the alternative, to Stay Proceedings (R. Doc. 7) is
GRANTED IN PART. This case is hereby TRANSFERRED to the Honorable
Stanley R. Chesler in the United States District Court for the
District of New Jersey. However, the Court DENIES Milberg’s request
to stay these proceedings pursuant to the Colorado River doctrine.
New Orleans, Louisiana this 23rd day of March, 2017.

CARL J. BARBIER
UNITED STATES DISTRICT JUDGE

8