Rahim, Inc. v. Mindboard, Inc. et al

Filing 19

Memorandum Opinion and Order of Tranfer to United States District Court of Maryland. The Defendants' Motion to Transfer Venue is granted and the Motion to Dismiss for Lack of Personal Jurisdiction is mooted (related docs 4 , 5 ). Judge Donald C. Nugent 4/18/16(C,KA)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

RAHIM, INC.,

Plaintiff,
vs.
MINDBOARD, INC., et al.,
Defendants.

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CASE NO. 1:16 CV 262
JUDGE DONALD C. NUGENT

MEMORANDUM OPINION
AND ORDER OF TRANSFER

This case is before the Court on the Motion of Defendants, Mindboard, Inc., Tarak
Shah and Abhijit Verekar to Transfer Venue to either the Eastern District of Virginia or the
District of Maryland pursuant to 28 U.S.C. § 1406(a)1. (ECF #5). Also before the Court is
the Motion of Defendant Jody Moscaritolo to Dismiss for Lack of Personal Jurisdiction.
(ECF #4). For the reasons set forth below, the Defendants have met their burden of
showing that the considered factors weigh strongly in favor of transfer. The Defendants’
Motion to Transfer Venue is, therefore, granted and the Motion to Dismiss for Lack of
Personal Jurisdiction is mooted.
BACKGROUND
Plaintiff, Rahim, Inc., filed this action on May 12, 2015, in the Court of Common
Pleas for Cuyahoga County, Ohio against Defendants Mindboard, Inc., and its employees
Abhijit Verekar, Tarak Shah, Andrew Hayes, Gergana Boneva and Jody Moscaritolo. All

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Defendants “clarified” in their reply brief that they seek transfer pursuant to 28 U.S.C.
§1404(a) not § 1406(a).

of the individual defendants were former employees of Plaintiff Rahim, Inc. and are now
employees of Defendant Mindboard. The gist of Plaintiff’s numerous claims is that
Defendants allegedly stole Plaintiff’s trade secrets and confidential information and
conspired to transfer Plaintiff’s contracts to Mindboard. and to decimate Plaintiff
financially so that it would not be able to pursue its claims to the stolen contracts.
Specifically, Plaintiff asserts the following claims in its Verified Complaint:
Misappropriation of Trade Secrets (Count One); Punitive Damages for Misappropriation of
Trade Secrets (Count Two); Injunctive Relief (Count Three); Breach of Fiduciary Duty
(Count Four); Tortious Interference with Contracts (Count Five); Tortious Interference
with Business Relationships (Count Six); Unjust Enrichment (Count Seven); Civil
Conspiracy (Count Eight); Breach of Employment Agreement (Count Nine); and Wrongful
Disclosure of Confidential Information (Count Ten). A choice of law provision in the
Employment Agreement provides that the Agreement shall be governed by Ohio law.2
There is no forum selection clause in the Agreement.
Plaintiff Rahim, Inc. is an Ohio corporation who had its principal place of business
in Cleveland Ohio. Rahim, a management consulting company, is now defunct, with no
income and insufficient assets to pay its creditors or existing debts. Plaintiff’s owner,
Rahim Rahim, is purportedly a resident of North Carolina. In any event, there is no
allegation that he is a resident of Ohio. Defendant Mindboard is a Virginia corporation
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Plaintiff attaches copies of what appears to be the same Employment Agreement signed
by former employees Hayes, Boneva and Moscaritolo as exhibits to the Verified
Complaint. The Complaint states that the Employment Agreements signed by
Defendants Verekar and Shah are missing from Plaintiff’s files. Defendants Andrew
Hayes and Gergana Boneva have been dismissed.
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with its principal place of business in Sterling Virginia. It is also a management consulting
company, or as described by Mindboard in its Motion to Transfer Venue, it is “an
enterprise modernization firm which provides technology strategy, business process
advisory and technology product lines to businesses.” Individual Defendants Verekar,
Shah and Moscaritolo are former employees of Rahim. Specifically, Mr. Verekar was an
employee of Plaintiff from 2006 until February 2014 and held positions of Consultant,
Senior Consultant, Manager, Senior Manager and President and Chief Executive Officer
during his employment at Rahim. Defendant Shah was an employee of Rahim from 2006
until July 2014 and held the positions of Consultant, Senior Consultant, Manger, Senior
Manager and Vice President. Defendant Moscaritolo was an employee of Plaintiff from
May 2013 to March 2014 and held the position of Project Manager. While employed with
Plaintiff, Defendants Verekar and Shah worked in Cleveland Ohio. Now as employees of
Mindboard, both Mr. Verekar and Mr. Shah reside in Maryland. Mr. Moscaritolo is also a
resident of Maryland and has never lived or worked in Ohio, even while employed by
Plaintiff. He was hired by Plaintiff through email and phone conversations for a position
with Baltimore County to be staffed through Rahim, Inc. Mr. Moscaritolo states that the
contact he had with Rahim was mainly limited to clarifications of the timesheets he
submitted for work performed for Baltimore County. The only Rahim client that Mr.
Moscaritolo ever worked for was Baltimore County and he states that he never had contact
with any or Rahim’s other clients. See Moscaritolo Affidavait, ECF #4, Ex. 2.
Defendants removed the action to this Court on February 3, 2016. Defendants filed
their Motion to Transfer Venue on February 5, 2016; the same day that Defendant

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Moscaritolo filed a Motion to Dismiss for lack of Personal Jurisdiction. (ECF #4)
DISCUSSION
Chapter 28 of the United States Code, Section1404(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.” This
provision was intended “to protect litigants, witnesses and the public against unnecessary
inconvenience and expense.” Continental Grain Co. V. Barge F.B.L.-585, 364 U.S. 19, 27
(1960). Under this provision, a district court has broad discretion to grant or deny a motion
to transfer, so long as jurisdiction is proper in either court. Phelps v. McClellan, 30 F.3d
658, 663 (6th Cir. 1994)(citing Cote v. Wadel, 796, F.2d 981, 985 (7th Cir. 1986). See
Hoffman v. Blaski, 363 U.S. 335, 343-344 (1960) ( An action can originally be brought in a
district court if that court has subject matter jurisdiction; the defendants are subject to
personal jurisdiction in that court; and venue is proper.)
In this case, Defendants seek transfer to the Eastern District of Virginia or the
District of Maryland. Both of those courts, as well as this Court, have subject matter
jurisdiction over this matter based upon diversity jurisdiction. However, Defendant
Moscaritolo argues that this Court does not have personal jurisdiction over him because he
lives and works in Maryland, never traveled to Ohio during his employment and Plaintiff’s
limited supervisory actions in Ohio were not sufficient to confer jurisdiction over him.
Invoking this same argument, Plaintiff contends that the Eastern District of Virginia would
not have jurisdiction over Mr. Moscaritolo for the same reasons. The Court recognizes that
there are serious questions concerning whether personal jurisdiction exists over Mr.

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Moscaritolo in this Court or in the Eastern District of Virginia. However, all parties agree
that this action could properly have been brought in the District of Maryland. As such, the
Court must exercise its best discretion in deciding whether to grant the transfer to the
District of Maryland.
The Sixth Circuit has outlined several factors that a district court should consider
when deciding whether or not a transfer under 28 U.S.C. § 1404(a) is warranted, including
the private interests of the parties and other public-interest concerns. Moses v. Business
Card Express, Inc., 929 F.2d 1131, 1137 (6th Cir. 1991). These public and private interests
include the plaintiff’s choice of forum, location of necessary documents, convenience of
witnesses, possibility of prejudice in either forum, and the practical problems associated
with trying the case as expeditiously and as inexpensively as possible. See, USA v.
Cinemark USA, Inc., 66 F. Supp.2d 881, 887 (N.D. Ohio 1999)(citing West American Ins.
Co. v. Potts, 1990 U.S. App. LEXIS 12513, 1990 WL 104034, at *2(6th Cir. July 25,
1990)). In order to warrant transfer, the balance of all relevant factors must weigh strongly
in favor of transfer, and the burden is upon the party requesting the transfer to prove that
this is so. Jeffrey Mining Prods. v. Left Fork Mining Co., 992 F. Supp. 937, 938 (N.D.
Ohio 1997); Picker Int’l, Inc. V. Travelers Indem. Co., 35 F. Supp. 2d 570, 573 (N.D. Ohio
1998).
Overall, based upon the specific facts in this case, the balance of relevant factors
weighs in favor of transfer. While a plaintiff’s choice of forum is usually entitled to
significant weight, that choice is entitled to somewhat less weight when the case is
removed to federal court because the plaintiff is no longer in his or her chosen forum,

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which was state court. Jamhour v. Scottsdale Ins. Co., 211 F. Supp. 2d 941, 947 (S.D. Ohio
2002) citing SKY Technology Partners, LLC, v. Midwest Research Institute, 125 F.Supp.2d
286, 292 (S.D. Ohio 2000); Neff Athletic Lettering Co. v. Walters, 524 F.Supp. 268, 273
(S.D.Ohio 1981). Technically, Plaintiff did not choose this Court, since the action was
originally filed in the Common Pleas Court for Cuyahoga County, Ohio; therefore,
Plaintiff's choice of forum, while relevant to the issue of transfer, is not entitled to the
substantial weight that it otherwise might receive.
Moreover, it appears that most of the material witnesses in this action are in
Maryland or Virginia, or at least are not in Ohio. All of the individual Defendants are
Maryland residents. Mindboard is in Virginia. It appears that the other former employees
who have been dismissed from this action by Plaintiff, but may have knowledge of the
claims presented, reside in Maryland or Virginia. The Plaintiff no longer has office space
or employees or operations in Ohio. The owner of the Company, Mr. Rahim, does not
reside in Ohio. The only material Ohio witnesses identified by Plaintiff in its discovery
responses who have knowledge about the claims and defenses in this case, are its outside
accountant and the person who helped close his business. Plaintiff correctly notes that the
Court should consider the nature and quality of the witnesses’ testimony, not just the
number of witnesses outside Ohio. Based upon the allegations of the Complaint, the
accountant and perhaps the person who helped close the business, are material. The claims
asserted by Plaintiff – the alleged stealing of contracts and client relationships, trade
secrets, falsifying financial reports and sales forecasts to Rahim’s owner, and conspiracy-will rise and fall on the testimony of the Defendants, Mr. Rahim and perhaps some of the

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“stolen clients.” The other potential and unnamed Ohio witnesses suggested by Plaintiff in
it’s the opposition to the motion to transfer appear to have minimal relevance to the issues
raised in the Complaint. It is unclear where the company’s relevant documents and records
are located now that the company is defunct. Some could be with the outside accountant in
Cleveland, or more likely they are with Mr. Rahim in North Carolina.
Further, Plaintiff’s former contracts identified in the Complaint as now being
clients of Mindboard–Dayton RTA, Castaic Lake Water Agency, Montgomery County
Maryland, Xerox and Baltimore County Maryland, are not present in the Northern District
of Ohio. Similarly, Defendants point to numerous factual allegations in the Complaint
which demonstrate that the alleged situs of material events occurred in other forums,
mainly Maryland. Specifically, in its Complaint Plaintiff asserts that Defendant Verekar,
on behalf of Mindboard, met with Plaintiff’s client, Montgomery County [Maryland], to
solicit them for case management; Verekar, on behalf of Mindboard, attended a pre-bid
meeting with Plaintiff’s client VTA in Santa Clarita, California; Defendants Verekar and
Shah, while employed by Plaintiff, took numerous trips to Baltimore, Maryland between
July 2013 and February 2014; all of Plaintiff’s employees working in Baltimore Maryland,
including Defendant Moscaritolo, left their employment with Plaintiff in March and April
of 2014; Plaintiff paid travel expenses for a number of its employees to go and stay in
Baltimore, Maryland from July 2013 to February 2014.
Defendants assert that the public interest favors transfer because the only
connection Plaintiff has to this venue is that Rahim had its principal place of business here,
two of the individual Defendants worked here and some, but certainly not all, of Plaintiff’s

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creditors, (who are not parties to this action) are located here. Plaintiff no longer operates
in Ohio and has no physical presence or employees here. Thus, Defendants posit, even if
this litigation is successful, there is no indication that Plaintiff would reopen in this forum,
hire any employees here or make payments to any creditors in Ohio.
Plaintiff counters that Ohio has an interest in this litigation because an Ohio
company alleges that it has been ruined by defendants’ actions and that many of its
creditors, such as its former landlord, are located in Ohio. Thus, a verdict for Plaintiff may
well have economic consequences for other entities in Ohio. Further, the choice of Ohio
law in the employment agreement signed by Defendants weighs in favor of not transferring
the action as this Court would have more experience in applying Ohio law than the district
court in Maryland.
Plaintiff’s economic consequences argument regarding its Ohio creditors is
extremely tangential. Defendants note that many of Plaintiff’s creditors are located in
other states and that some of them have already obtained substantial judgments against
Plaintiff effectively negating this speculative “Ohio” interest. The Ohio choice of law
provision in the individual defendants’ employment contracts, while a factor, is not
particularly important in this instance. First the only employment agreement attached to the
Complaint is the one signed by Defendant Moscaritolo. Even assuming that Ohio law
would be the law applied in this action, federal courts routinely apply law from states other
than the state in which they sit. See also, Midwest Motor Supply Co., Inc. v. Kimball, 761
F. Supp. 1316, 1319 (S.D. Ohio 1991)(“although this Court is more familiar with Ohio law
than the Northern District of Georgia, it does not appear that Ohio contract law is so unique

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that this fact alone should strongly militate against transfer.”)
Further, while not as important in the transfer determination, docket congestion
marginally favors transfer in this case. More importantly, the District of Maryland is the
only venue which all of the parties, and this Court, agree has personal jurisdiction over all
of the Defendants. The question of whether this Court has personal jurisdiction over
Defendant Moscaritolo is very close and weighs in favor of transfer. Moreover, many of
the operative actions surrounding Plaintiff’s claims occurred in Maryland and other states
and most of the witnesses material to Plaintiff’s claims reside in Maryland or Virginia.
Plaintiff, as a defunct and non-operating company, no longer has any particular connection
with Ohio. In these circumstances the Court finds that Defendants have met its burden of
showing that the considered factors weigh strongly in favor of transfer. Accordingly,
Defendants’ Motion to Transfer this action to the District of Maryland (ECF #5) is granted.
The Clerk of Courts shall transfer this action to the United States District Court of
Maryland.
IT IS SO ORDERED.

__/s/Donald C. Nugent____
DONALD C. NUGENT
United States District Judge
DATED:__April 18, 2016___

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