THE BUSINESS STORE, INC. v. MAIL BOXES ETC., INC. et al
Filing
13
OPINION. Signed by Judge Freda L. Wolfson on 2/16/2012. (gxh)
*NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
____________________________________
THE BUSINESS STORE, INC.,
:
:
:
Plaintiff,
:
:
v.
:
:
MAIL BOXES ETC. and UNITED
:
PARCEL SERVICES, INC.,
:
:
Defendants.
:
____________________________________:
Civil Action No.: 11-3662 (FLW)
OPINION
WOLFSON, District Judge:
The Business Store, Inc. (“Plaintiff”) entered into a series of franchise agreements
(“Franchise Agreements”) with Mail Boxes Etc., Inc. (“MBE”) and United Parcel Service, Inc.
(“UPS”) (collectively “Defendants”), which permitted Plaintiff to operate three UPS franchises
in New Jersey. Based upon alleged breaches of these agreements, Plaintiff initiated this suit in
the Superior Court of New Jersey. After removing this case to this Court, Defendants, in the
instant matter, move to transfer venue to the Southern District of California pursuant to 28
U.S.C. § 1404(a). Defendants contend, inter alia, that the transfer is proper pursuant to a forum
selection clause in the Franchise Agreements. Challenging the validity of that clause, Plaintiff
urges the Court to find that the forum selection clause is presumptively invalid under the New
Jersey Franchise Practices Act (the “NJFPA”). Having weighed the relevant transfer factors, for
the reasons explicated below, the Court DENIES Defendants’ motion to transfer.
BACKGOUND
Plaintiff is a New Jersey corporation, owned by Dana Harris and Jennifer Harris
(collectively, “Owners”). Compl., ¶¶ 41, 120. In late 2003, the Owners were exploring franchise
opportunities with UPS and filled out an online application for information on the UPS store
franchise. 1 Id. at ¶ 41. Following discussions with the area developer of UPS for New Jersey,
Lawrence Dimino (“Mr. Dimino”), the Owners expressed interested in opening and operating a
franchise store in Spotswood, New Jersey (the “Spotswood Store”). Id. at ¶ 42. The Owners
initially sought to purchase an existing store, but invested in the only available store in New
Jersey -- the Spotswood Store -- and entered into a Franchise Agreement with Defendants. 2 Id.
at ¶¶ 45-47. To obtain the franchise and to secure the location, the Owners provided two separate
deposits to Defendants in February 2004. Id. at ¶¶ 50-54. Thereafter, the Owners were
informed that the construction of the store would be completed by the summer of 2004. Id. at ¶
53. However, the construction of the store was not completed as planned, and, during the
pendency of construction, Defendants requested additional payments from the Owners to comply
with the Franchise Agreement. Id. at ¶¶ 55-57. According to the Complaint, having already
invested more than $40,000, the construction of the Spotswood Store remained incomplete in
October 2004. Id. at ¶¶ 57-60. The Owners requested a full refund from Defendants for their
failure to complete the Spotswood Store as specified by the Franchise Agreement. Id. at ¶ 61.
1
Plaintiff alleges that MBE is a subsidiary of UPS, and that franchises sold by MBE conduct
business under The UPS Store name. In addition, Plaintiff alleges that UPS was involved and/or
controlled the MBE franchise system. Compl. ¶¶ 19-37.
2
From the copy of the Franchise Agreement for the Spotswood Store submitted for this Motion,
it appears that Dana and Jennifer Harris signed this particular copy of the Agreement on March
25, 2004. Agreement at 50. While the execution date of that agreement is not pertinent to the
analysis of this motion, Defendants contend that the Spotswood Store Franchise Agreement was
entered into on May 31, 2005.
MBE refused to provide the demanded refund, but promised that the store would be completed
by the summer of 2005. Id. at ¶ 62. Meanwhile, Defendants continued to demand additional
payments for store decoration, exterior design and training. Id. at ¶¶ 63-68. By the end of
October 2005, Plaintiff had invested an estimated $79,635.70 in the Spotswood Store. Id. at ¶¶
50-68.
The Spotswood Store opened for business on March 13, 2006. Id. at ¶ 73. Once
operational, Mr. Dimino demanded that, for reasons not pertinent for this motion, the Owners
acquire additional stores to secure the Spotswood Store’s sales. Id. at ¶ 80. Although the
Owners were reluctant to purchase additional stores because they lacked experience in managing
multiple stores, the Owners claim that Mr. Dimino’s relentless pressure and threats forced them
to acquire two more stores. 3 Subsequently, the Sayreville and East Brunswick stores were
opened in April and June 2007, respectively. Id. at ¶¶ 88-89.
In the beginning of 2009, Defendants visited and conducted an audit of Plaintiff’s stores.
Id. at ¶ 100. Several weeks after the audit, Plaintiff received a bill from Defendants, requesting a
payment of an additional $80,000 in royalties. Id. at ¶ 102. Plaintiff contended that the audit
was erroneous and refused to make the payment. Id. at ¶¶ 102-03. However, MBE continued to
demand the payment throughout 2009, and eventually stopped providing franchise services to
Plaintiff in June 2010.
Id. at ¶ 106.
Plaintiff continued to receive written notices from
Defendants, requesting payments and notifying it of a possible termination of the Franchise
Agreements if the payments were not timely made. Id. at ¶ 116. Ultimately, MBE terminated all
three Franchise Agreements in February 2011. Id. at ¶ 123.
3
The parties entered into the Franchise Agreements for Sayreville and East Brunswick Stores on
December 27, 2006, and March 30, 2007, respectively.
On April 13, 2011, Plaintiff commenced this action in the Superior Court of New Jersey,
Law Division, Middlesex County. In its Complaint, Plaintiff alleges that Defendants breached
the Franchise Agreements, breached their implied duty of good faith and fair dealing, tortiously
interfered with Plaintiff’s prospective economic advantage, and committed fraud.
Plaintiff
further asserts that the wrongful termination of the Franchise Agreements violated the NJFPA.
Id. After removing this case to this Court, Defendants now move to transfer this case to the
Southern District of California pursuant to 28 U.S.C. § 1404(a).
DISCUSSION
In diversity cases, federal, not state, laws determine whether to grant a motion to transfer
the case to another district. Jumara v. State Farm Ins. Co., 55 F.3d 873, 877 (3d Cir. 1995); see
Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22, 27-32 (1988). Section 1404(a) vests a
district court with discretion “to adjudicate motions to transfer according to an individualized,
case by case consideration of convenience and fairness.” Stewart Org., 487 U.S. at 23 (quoting
Van Dusen v. Barrack, 376 U.S. 612, 616 (1964)). Specifically, section 1404(a) provides: “for
the convenience of parties and witnesses, in the interest of justice, a district court may transfer
any civil action to any other district . . . where it might have been brought.” 28 U.S.C. § 1404(a).
The purpose of section 1404(a) is to protect litigants, witnesses and the public against
unnecessary inconvenience and expense. Van Dusen, 376 U.S. at 616. When deciding a motion
to transfer venue, “courts have not limited their consideration to the three enumerated factors in §
1404(a) (convenience of the parties, convenience of witnesses, or interests of justice).” Jumara,
55 F.3d at 879. Instead, courts have considered “all relevant factors to determine whether on
balance the litigation would more conveniently proceed and the interest of justice be better
served by transfer to a different forum.” Id.; see Clark v. Burger King Corp., 255 F.Supp. 2d
334, 337 (D.N.J. 2003). Consequently, the “analysis is flexible and must be made on the unique
facts of each case.” Calkins v. Dollarland, Inc., 117 F.Supp. 2d 421, 428 (D.N.J. 2000) (citing
Piper Aircraft Co. v. Reyno, 454 U.S. 235, 249-50 (1981)). Finally, the burden of establishing
the need for transfer rests on the moving party. Jumara, 55 F.3d at 879.
The first step in analyzing a motion to transfer requires determining whether the proposed
transferee district venue would be proper. Clark, 255 F.Supp. 2d at 337. If so, the court must
next establish whether the transfer is in the interest of justice. Id. To make that determination,
the court “must consider both the private and public interests [affected] by the transfer.” Id.; see
Gulf Oil v. Gilbert, 330 U.S. 501, 508-09 (1946) (evaluating private and public interest factors
affected by transfer).
The private interests include: the plaintiff’s forum preference; the
defendant’s forum preference; “whether the claim arose elsewhere; the convenience of the
parties as indicated by their relative physical and financial condition; the convenience of the
witnesses – but only to the extent that the witnesses may actually be unavailable for trial in one
of the fora; and the location of books and records (similarly limited to the extent that the files
could not be produced in the alternative forum).” Jumara, 55 F.3d at 879 (internal citations
omitted). Public factors to be considered include: “the enforceability of the judgment; practical
considerations that could make the trial easy, expeditious, or inexpensive; the relative
administrative difficulty in the two fora resulting from court congestion; the local interest in
deciding local controversies at home; the public policies of the fora; and the familiarity of the
trial judge with the applicable state law in diversity cases.” Id. at 879-80 (internal citations
omitted).
A. Propriety of Venue in Transferee District
First, this Court must consider whether this action could have been brought in the
Southern District of California. Section 1391(a) of Title 28 of the United States Code provides
that a civil action based on diversity may be brought only in
(1) a judicial district where any defendant resides, if all defendants reside in the
same State, (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) a judicial district in which any
defendant is subject to personal jurisdiction at the time the action is commenced,
if there is no district in which the action may otherwise be brought.
28 U.S.C. § 1391(a).
MBE’s principal place of business is in San Diego, and therefore, MBE is deemed to
reside there for venue and jurisdictional purposes. In addition, because UPS also moves to
transfer this case to the Southern District of California, UPS has consented to the venue and
jurisdiction in that district. 4 See Defendants’ Brief in Support at p. 5. Accordingly, I conclude
that this action could have been brought in the Southern District of California. Now, I turn to the
private and public interests to determine if transfer would be in the interest of justice.
B. Private Interests
As noted above, the private interests under Jumara include: the plaintiff’s forum
preference; the defendant’s forum preference; whether the claim arose elsewhere; the
convenience of the parties as indicated by their relative physical and financial condition; the
convenience of the witnesses – but only to the extent that the witnesses may actually be
unavailable for trial in one of the fora; and the location of books and records. Jumara, 55 F.3d at
879. I address the pertinent factors in turn.
4
It appears that the Southern District of California would also have general jurisdiction over
UPS because UPS conducts its business nationwide.
1. The Parties’ Forum Preferences
Plaintiff initiated this action in New Jersey. Courts have considered a plaintiff’s choice
of forum as a significant factor in any determination of a transfer request. Shuttle v. Armco Steel
Corp., 431 F.2d 22, 25 (3d Cir. 1970) (internal quotation marks omitted). A strong presumption
of convenience exists in favor of a domestic plaintiff’s chosen forum.
Windt v. Qwest
Communications Intern., Inc., 529 F.3d 183, 190 (3d Cir. 2008); Koster v. (American)
Lumbermens Mut. Cas. Co., 330 U.S. 518, 522 (1947). This deference may be overcome only
when the balance of the public and private interests clearly favors an alternate forum. Windt, 529
F.3d at 190.
To challenge Plaintiff’s chosen forum, Defendants argue that their preference for the
Southern District of California should be entitled to greater weight because all three of the
Franchise Agreements contain a forum selection clause. The clause provides that “exclusive
venue and jurisdiction of any suit arising [under the Franchise Agreement] shall lie within the
courts of the State of California located in San Diego or within the courts of the United States of
America located within the Southern District of California.” Franchise Agreements at 20.1(b).
The Supreme Court has pronounced that a forum selection clause is prima facie valid and
should be enforced. M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972). The Third
Circuit has consistently adhered to this long-standing legal principle. See Wall Street Aubrey
Golf, LLC v. Aubrey, 189 Fed. Appx. 82, 85 (3d Cir. 2006); Salovaara v. Jackson Nat'l Life Ins.
Co., 246 F.3d 289, 297-98 (3d Cir. 2001); Demodulation, Inc. v. Applied DNA Scis., Inc., 2011
U.S. Dist. LEXIS 147126, at *5-7 (D.N.J. Dec. 22, 2011). Accordingly, such a clause has been
considered as a significant factor that “figures centrally in the district court’s calculus.” Stewart
Org., 487 U.S. at 29. While other factors might “conceivably” militate against a transfer, the
other 1404(a) factors rarely outweigh the forum defined in a forum selection clause because that
forum represents the parties’ agreement as to the most proper forum. Id. Therefore, courts will
place great weight on valid forum selection clauses “unless the resisting party makes a strong
showing that the clause is unreasonable.” Jumara, 55 F.3d at 880; Bremen, 407 U.S. at 10;
Cadapult Graphic Systems, Inc. v. Tektronix, Inc., 98 F.Supp. 2d 560, 564 (D.N.J. 2000). To
show that a forum selection clause is unreasonable, the resisting party must establish:
(1) that it is the result of fraud or overreaching, (2) that enforcement would violate
a strong public policy of the forum, or (3) that enforcement would in the
particular circumstances of the case result in litigation in a jurisdiction so
seriously inconvenient as to be unreasonable.
Cadapult, 98 F.Supp. 2d at 565 (quoting Coastal Steel Corp. v. TilghmanWheelabrator Ltd., 709
F.2d 190, 202 (3d Cir. 1983)); Union Steel America Co. v. M/V Sanko Spruce, 14 F.Supp. 2d
682, 686 (D.N.J. 1998).
Here, relying on the public policy rationale set forth by the New Jersey Supreme Court in
Kubis & Persyzky Assoc., Inc. v. Sun Microsystems, Inc, 146 N.J. 176 (1996), Plaintiff argues
that the Court should deem the forum selection clause invalid because its enforcement would
violate New Jersey public policy in light of the NJFPA. In Kubis, the plaintiff brought a claim
against a franchisor in New Jersey state court alleging a violation of the NJFPA. Id. at 180. That
violation arose from the wrongful termination of the parties’ agreement by the franchisor. Id.
Although the franchise agreement contained a forum selection clause, the Court refused to
enforce it based on public policy grounds. Id. at 207-08. The Court reasoned:
a forum-selection clause can materially diminish the rights
guaranteed by the Franchise Act because the franchise must assert
those rights in an unfamiliar and distant forum, with an out-of-state
counsel, and bear the added expense of litigation in the
franchisor’s designated forum . . . .
In such an event, the inevitable result would be to limit severely
the availability of New Jersey courts as a forum for the
enforcement of franchisee’s claims under the Act, a result the
legislature assuredly would find intolerable….
The added expense, inconvenience, unfamiliarity of litigating
claims under the Act in a distant forum could, for some marginally
financed franchisees, result in the abandonment of meritorious
claims that could have been successfully litigated in a New Jersey
court. Although the legislature expressly has prohibited the use of
forum-selection clauses only in motor-vehicle agreements, we
entertain little doubt that the legislature would prefer to extend that
prohibition to other franchisees rather than to permit forumselection clauses to thwart the vindication of franchisees’ rights
under the Act.
Id. at 194-96. With these concerns in mind, the Court held that in cases related to the NJFPA,
forum selection clauses are “presumptively invalid because they fundamentally conflict with the
basic legislative objectives of protecting franchisees from the superior bargaining power of
franchisors and providing swift and effective judicial relief against franchisors that violate the
Act.” Id. at 193.
Importantly, after Kubis, courts have applied its rationale only in NJFPA cases where a
plaintiff asserts a valid claim under the NJFPA, particularly in the context of a claim for
wrongful termination of a franchise agreement. See Cadapult, 98 F.Supp. 2d at 566; Bonanno v.
Quiznos Master LLC, No. 06-01415, 2006 U.S. Dist. LEXIS 85131 (D.N.J. 2006); Goldwell of
N.J., Inc. v. KPSS, Inc., 622 F.Supp. 2d 168 (D.N.J. 2009); Anytime Fitness, Inc. v. Reserve
Holdings, LLC, No. 08-4905, 2008 U.S. Dist. LEXIS 123209, at *9 (D. Minn. Sep. 12, 2008);
Forum Selection Clauses in Contracts Governed by the New Jersey Franchise Practices Act Are
Presumptively Invalid, 28 Seton Hall L. Rev. 213 (1997).
As a threshold issue, to qualify for the NJFPA’s protections, the following requirements
specified in N.J.S.A. 56:10-4a must be met: (1) the performance of the franchise must require the
franchisee to establish or maintain a place of business within the State of New Jersey; (2) where
gross sales of products or services between the franchisor and franchisee shall have exceeded
$35,000 for the past 12 months; and (3) where more than 20% of the franchisee’s gross sales are
derived from the franchise.
N.J.S.A. 56:10-4a.
Here, Plaintiff maintained its businesses
exclusively in New Jersey. Compl. at ¶¶ 2, 120. In addition, Plaintiff asserts that the gross sales
of products or services of all three stores had exceeded $35,000 for the past 12 months, more
than 20% of which were derived from the franchise. Id. Based on these factual assertions, the
NJFPA governs the Franchise Agreements at issue. Significantly, this conclusion has not been
disputed by Defendants.
Having determined that the agreements at issue here are subject to the NJFPA, the Court
finds that Plaintiff has asserted valid NJFPA claims. While Plaintiff has asserted common law
causes of action, the genesis of Plaintiff’s case is Defendants’ alleged breaches of the Franchise
Agreements which amount to various violations of the NJFPA. Indeed, Plaintiff specifically
alleges that Defendants violated the NJFPA by failing to provide a notice of termination, that
Defendants improperly interfered with Plaintiff’s attempts to sell its stores, and that Defendants
made false statements to induce Plaintiff to invest in MBE franchises. See Compl. ¶¶ 38, 119134, 136.
Plaintiff further alleges that Defendants breached the Franchise Agreements by
inflating certain royalties. Following these alleged breaches, Plaintiff maintains that Defendants
ultimately terminated the franchise relationship. Based on these averments, Plaintiff has clearly
asserted NJFPA violations – vis à vis a wrongful termination of the Franchise Agreements.
Compl. ¶¶123-35; compare Bonanno, 2006 U.S. Dist. LEXIS 85131 at *13 (because plaintiffs
withdrew their claims under the NJFPA (Count Eight), the court found that Kubis did not apply);
Anytime Fitness, 2008 U.S. Dist. LEXIS 123209 at *9 (same holding). Accordingly, I find that
Plaintiff has satisfied its burden of showing that the enforcement of the forum selection clause is
against New Jersey public policy. As set forth in Kubis, this clause is considered presumptively
invalid.
This presumption, however, can be overcome if the franchisor can satisfy “the burden of
proving that such a clause was not imposed on the franchisee unfairly on the basis of its superior
bargaining position.” Kubis, 146 N.J. at 195. In that connection, the Kubis court opined:
a franchisor could sustain its burden of proof by offering evidence
of specific negotiations over the inclusion of the forum-selection
clause and that it was included in exchange for specific
concessions to the franchisee. Absent such proof, or other
similarly persuasive proof demonstrating that the forum-selection
clause was not imposed on the franchisee against its will, a trial
court should conclude that the presumption against the
enforceability of forum-selection clauses in franchise agreements
subject to the [NJFPA] has not been overcome.
Id. at 627-28.
Seeking to rebut this presumption, Defendants rely on a recent case, Innovative Tech.
Distribs., LLC v. Oracle Am., Inc., No.11-1371, 2011 U.S. Dist. LEXIS 44930 (D.N.J. Apr. 25,
2011), wherein the district court granted a motion to transfer venue to the Northern District of
California based on a similar forum selection clause.
However, Defendants’ reliance is
misplaced. In Innovative Tech, the plaintiff, a New Jersey entity, filed a lawsuit against a
California corporation alleging violations of the NJFPA. Relying on Kubis, the plaintiff there
argued that the forum selection clause was unenforceable. The court disagreed and found that
the defendant franchisor had established that the clause was valid. Crucially, in making that
determination, the court made certain factual findings -- which are decidedly absent in this case - that when the agreement was executed, the plaintiff was a $100 million company, represented
by company’s general counsel who negotiated favorable terms that were valuable to the plaintiff.
Id. at *6. Based on these specific conclusions, the court found that the defendant had satisfied
the burden of rebutting the presumption. As a result, the court found that the forum selection
clause in that case valid and transferred the matter to the Northern District of California. Id at
*7.
In this case, however, Defendants provide no evidence of the parties’ negotiations or
Plaintiff’s financial status. Rather, Defendants merely argue -- without any evidence -- that
because Plaintiff is not an unsophisticated party, the possibility of litigating in California was
clearly bargained-for in the Franchise Agreements. These bare assertions are insufficient to meet
the standards set forth in Kubis, as mentioned above. The fact that Plaintiff entered into the
Franchise Agreements - which is essentially the only evidence Defendants advance - is not
sufficient to overcome the presumption against the validity of the forum selection clause in this
NJPFA case. Indeed, Plaintiff does not stand in the same shoes as the multi-million dollar
franchisee in Innovative Tech. Without the type of evidence required by Kubis, this Court cannot
find that Defendants have met their burden. Therefore, the forum selection clause, here, will not
be given any weight in the Court’s transfer analysis. 5 Accordingly, having discounted the
effectiveness of the forum selection clause, I will defer to Plaintiff’s chosen forum of New Jersey
unless other Jumara factors weigh in favor of transfer. See Windt, 529 F.3d at 190.
2. Whether the Claim Arose Elsewhere
Defendants argue that Plaintiff’s claims arose in California because the Franchise
Agreements were prepared by MBE employees at MBE’s principal place of business in
5
Defendants further argue that the forum selection clause contained in the three Franchise
Agreements should also be construed as a waiver by Plaintiff of any objection to venue in
California. However, as the clause is considered to be invalid in this case, these clauses will not
be construed as an effective waiver. Finding otherwise would contravene the public policy
concerns underlie the Kubis decision.
California. On a breach of contract claim, this Court has explained that it will “consider several
specific factors that relate to where the claim arose, including (1) where the contract was
negotiated or executed; (2) where the contract was to be performed; and (3) where the alleged
breach occurred.” Advanced Technologies and Installation Corp. v. Nokia Siemens Networks
US, L.L.C., No. 09-6233 (FLW), 2010 U.S. Dist. LEXIS 91370, at *22 (D.N.J. Sep. 2, 2010)
(quotations and citation omitted).
While the contract -- a form contract -- was drafted in California, according to Ms.
Harris, the owner of the Business Store, Inc., the negotiations of the Franchise Agreements took
place in New Jersey with Defendants’ area developer, who was located in New Jersey. See
Harris Decl., ¶¶ 3-11. Plaintiff executed those agreements in New Jersey. Furthermore, there is
no dispute that the performance of these agreements occurred in New Jersey; indeed, Plaintiff
operated its franchise stores exclusively in Middlesex County, New Jersey. Finally, although
Defendants claim that all the corporate decisions regarding the Franchise Agreements were made
in California, the alleged harm as a result of those decisions was felt in New Jersey. Thus, based
upon these reasons, I conclude that this factor weighs in favor of New Jersey.
3. The Convenience of the Parties and Witnesses
The convenience of the parties as indicated by their relative physical and financial
condition must be weighed in determining a motion to transfer. Jumara, 55 F.3d at 879. Here,
while MBE is located in California, it is a national company with an abundance of resources. As
such, the Court has no trouble in finding that employees of MBE would be able to travel to New
Jersey. More compelling, UPS is headquartered in Atlanta, Georgia, and therefore, its location
on the east coast makes it more convenient for employees of UPS, relevant to the defense of this
litigation, to travel to New Jersey than California. Of course, New Jersey is certainly a more
convenient forum for Plaintiff and its Owners.
With respect to witnesses, Plaintiff references over twenty-four witnesses whose
testimony is pertinent to its claims. See Harris Decl. at 7-8. These witnesses all reside in New
Jersey, and Plaintiff indicates that it would be burdensome and expensive for them to travel to
California for this case. Id. Moreover, Plaintiff represents that certain witnesses would be
unavailable to travel to California. On the other hand, Defendants do not provide any reasons
why it would be inconvenient for their witnesses to travel to New Jersey, or that their witnesses
would be unavailable if the litigation remains in New Jersey. In fact, Defendants have not
specifically named any witnesses in their motion. Indeed, it appears that an important witness
for Defendants is Mr. Dimino, UPS’s area developer who negotiated the Franchise Agreements
with Plaintiff, and he presumably still resides in New Jersey. Therefore, based upon these
reasons, I find these factors also weigh in favor of New Jersey.
4. Location of Books and Records
This factor is considered by courts only to the extent that files could not be produced in
the alternative forum. In this current electronic age, it is difficult to imagine that business files -which are stored electronically -- cannot be produced in an alternate forum. Here, both parties
argue that their records are located in their preferred forum; thus, I find this factor neutral
because whether this case is transferred or not, one party would be required to transport their
documents. Accord Mercedes-Benz USA, LLC v. ATX Group, Inc., No. 08-3529, 2009 U.S. Dist.
LEXIS 65023, at *4 (D.N.J. Jul. 27, 2009) (“The location of the disputed records is . . . neutral
since there is nothing to suggest that the records, which are admittedly in electronic form, cannot
be easily transmitted . . . .”).
In sum, I conclude that the private interest factors weigh against transferring this action.
C. Public Interests
The public factors to be considered by courts include: “the enforceability of the
judgment; practical considerations that could make the trial easy, expeditious, or inexpensive; the
relative administrative difficulty in the two fora resulting from court congestion; the local
interest in deciding local controversies at home; the public policies of the fora; and the
familiarity of the trial judge with the applicable state law in diversity case.” Jumara, 55 F.3d at
879-80 (internal citations omitted). Other public factors include, but are not limited to, “the
unfairness of burdening citizens in an unrelated forum with jury duty.” Windt, 529 F.3d at 192
(citing Gulf Oil v. Gilbert, 330 U.S. 501, 508-09 (1946)). “In evaluating the public interest
factors the district court must consider the locus of the alleged culpable conduct, often a disputed
issue, and the connection of that conduct to plaintiff’s chosen forum.” Delta Air Lines, Inc. v.
Chimet, S.P.A., 619 F.3d 288, 300 (3d Cir. 2010) (quoting Van Cauwenberghe v. Biard, 486 U.S.
517, 528 (1988)). In this case, I do not find that any of the public interest factors move the
needle in favor of transfer.
Defendants argue that the public interests weigh in favor of transferring this case because
California law would govern this suit pursuant to the choice of law clause contained in the
Franchise Agreements and therefore, the district court in Southern District of California is better
suited to apply California law. However, in my view, federal courts are accustomed to applying
the law of various states, and Defendants have not raised any additional or special circumstances
why the district court in California is better suited than this Court to apply California state law.
Thus, this factor is in equipoise.
Furthermore, I find that there are no significant court congestion differences between this
District and the Southern District of California.
Neither party provides evidence that the
administrative difficulty resulting from court congestion weighs in favor of one forum over the
other. Without more, I find that this factor is also neutral, considering the heavy caseload carried
by both district courts. In addition, I find that the New Jersey community would not be unfairly
burdened by jury service in this case. The alleged breach took place in New Jersey, and Plaintiff
is a New Jersey corporation, maintaining its business exclusively in New Jersey. Given that the
dispute is local to the community of New Jersey, the burden of jury service will not be unfairly
imposed upon the citizens of New Jersey.
Finally, the public policy factor tips in favor of New Jersey, as explained supra. To
reiterate, the NJFPA demonstrates a strong public policy that New Jersey franchisees have a
forum to litigate against franchisors in New Jersey. See Paradise Enterprise Limited v. Sapir,
356 N.J. Super 96 (App. Div. 2002). Indeed, the NJFPA’s legislative history reflects the concern
that franchise agreements are often adhesion contracts in which franchisors pressure franchisees
into agreeing to disadvantaged terms. As such, the central purpose of the Act is to “protect
franchisees from unreasonable termination by franchisors that may result from a disparity of
bargaining power between national and regional franchisors and small franchisees.” N.J.S.A.
56:10-2. In this case, Plaintiff is the type of franchisee that the NJFPA intends to protect, and in
that connection, New Jersey certainly has an interest in protecting its franchisees from unfair
practices by out-of-state franchisors.
In sum, I conclude that the public factors also weigh in favor of New Jersey.
Accordingly, having weighed all the factors, I find that a transfer to the Southern District of
California is not appropriate.
CONCLUSION
For the foregoing reasons, the Court denies Defendant’s motion to transfer venue.
Dated: February 16, 2012
/s/
Freda L. Wolfson
Freda L. Wolfson, U.S.D.J.
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