Certain Underwriters at Lloyds et al v. National RailRoad Passenger Corporation et al

Filing 198

MEMORANDUM & ORDER: The defendant's motion 174 to change venue is DENIED. Amtrak has not made a clear and convincing showing that this case should be transferred to the District of Columbia. See Accantia, 908 F. Supp. 2d at 441([A] court should not disturb a plaintiffs choice of forum unless the defendants make a clear and convincing showing that the balance of convenience factors defendants choice.). Ordered by Judge Frederic Block on 3/13/2015. (Innelli, Michael)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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CERTAIN UNDERWRITERS AT
LLOYD’S LONDON, et al.,
Plaintiffs,
-against-

MEMORANDUM AND ORDER
14-CV-04717 (FB) (CLP)

NATIONAL RAILROAD PASSENGER
CORPORATION, et al.,
Defendants.
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Appearances:
For the Plaintiffs:
MARK J. LEIMKUHLER, ESQ.
1899 Pennsylvania Ave., NW, Suite 600
Washington, D.C. 20006

For the Defendants:
DAVID L. EKLIND, ESQ.
1152 15th St., NW
Washington, D.C. 20005

BLOCK, Senior District Judge:
On August 8, 2014, Plaintiffs Certain Underwriters at Lloyd’s, London and
Certain London Market Companies (collectively, “London Market Insurers” or
“LMI”) commenced this declaratory judgment action against Defendant National
Railroad Passenger Corporation (“Amtrak”) and dozens of companies that insured
Amtrak to determine the parties’ rights and obligations in connection with liability
insurance policies issued to Amtrak between 1972 and 1986. On August 11, 2014,
Amtrak filed a competing action in the United States District Court for the District of
Columbia (“D.C. Action”).1 Amtrak now moves to transfer this action to the District

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Amtrak has agreed to dismiss the D.C. Action if the Court denies its transfer motion.

of Columbia pursuant to 28 U.S.C. § 1404(a). For the reasons that follow, Amtrak’s
motion is denied.
I.
Amtrak – a corporation headquartered in Washington, D.C. – has functioned
as the United States’ national rail operator since 1971.

Amtrak’s nationwide

operations have resulted in myriad environmental damage and bodily injury claims
(collectively, “Liability Claims”) against it. From 1972 to 1986, Amtrak had
insurance policies with various insurers – including LMI – to protect itself from
liabilities incurred as a result of its business activities. Amtrak maintains that these
insurers are responsible for providing coverage for the Liability Claims.
For nearly a decade, Amtrak and its insurers attempted to resolve these
coverage claims. To that end, they entered into standstill agreements designed to
forestall coverage litigation. The standstill agreement between Amtrak and LMI
included the following termination clause:
Either party may terminate this Agreement by giving written notice to the other
by facsimile and certified mail. The effective date of any such termination shall
be at 11:59 a.m. (Eastern Time) on the fifteenth business day following the date
that such notice is sent. . . . Upon termination . . . of this Agreement, each of
the parties will be free to institute a lawsuit or other proceeding against the
other with respect to coverage for the Liability Claims.
Rawlings Decl., Ex. 3. On July 19, 2014, Amtrak provided written notice to its
insurers – including LMI – of its termination of the standstill agreement. LMI filed
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this action on August 8, 2014, the day that its standstill agreement with Amtrak
expired. Amtrak filed the D.C. Action on August 11, 2014.
II.
“For 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. . . .” 28 U.S.C. § 1404(a). Section 1404(a) motions require
a two-part inquiry: “(1) whether the action could have been brought in the transferee
court, and (2) whether the interests of justice and convenience of the parties and
witnesses will be served by the transfer.”2 JetBlue Airways Corp., v. Helferich Patent
Licensing, LLC, 960 F. Supp. 2d 383, 398 (E.D.N.Y. 2013) (Weinstein, J.).
Relevant factors in deciding whether transfer is warranted include:
(1) the convenience of the witnesses; (2) the convenience of the parties; (3)
the location of relevant documents and relative ease of access to sources of
proof; (4) the locus of operative facts; (5) the availability of process to
compel the attendance of unwilling witnesses; (6) the relative means of the
parties; (7) the forum’s familiarity with governing law; (8) the weight
accorded to plaintiff’s choice of forum; and (9) trial efficiency and the
interests of justice based on the totality of the circumstances.
Id. “District courts have broad discretion in making determinations of convenience
under Section 1404(a) and notions of convenience and fairness are considered on a
case-by-case basis.” D.H. Blair & Co. v. Gottdiener, 462 F.3d 95, 106 (2d. Cir. 2006).

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The parties do not dispute that this action could have been brought in the District of
Columbia.
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The moving party must establish that transfer is warranted “by clear and convincing
evidence.” New York Marine & Gen. Ins. Co. v. Lafarge N. Am., Inc., 599 F.3d 102,
114 (2d Cir. 2010).
A.

First-Filed Rule

Generally, “where there are two competing lawsuits, the first suit should have
priority.” Id. at 112. There are two exceptions to the first-filed rule: “(1) where the
balance of convenience favors the second-filed action, and (2) where special
circumstances warrant giving priority to the second suit.” Emp’rs Ins. of Wausau v.
Fox Entm’t Grp., Inc., 522 F.3d 221, 274-75 (2d. Cir. 2008). “The factors relevant to
the balance of convenience analysis are essentially the same as those considered in
connection with motions to transfer venue pursuant to 28 U.S.C. § 1404(a).” Id.
1.

Special Circumstances

Amtrak petitions the Court to transfer this action to the District of Columbia
under the special circumstances exception to the first-filed rule because it was: (1)
improperly anticipatory, and (2) motivated solely by forum shopping. The Court will
address each argument in turn.
Amtrak argues that this action was improperly anticipatory because LMI filed
it after Amtrak provided notice that it was terminating the standstill agreement. This
argument fails. “[I]n order for a declaratory judgment action to be anticipatory, it must
be filed in response to a direct threat of litigation that gives specific warnings as to
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deadlines and subsequent legal action.” Fox, 522 F.3d at 276. No such threat existed
here. Amtrak only gave notice of its intent to terminate the standstill agreement. It did
not threaten litigation, provide deadlines or identify a venue for an impending lawsuit.
Moreover, the adversarial nature of the parties’ dealings prior to LMI’s filing of this
action does not render it improperly anticipatory. See id. at 277 (“Although litigation
was clearly on the horizon, evidenced by the parties’ retention of coverage counsel and
the general tenor of the communications leading up to the action . . . there was no notice
letter or other communication conveying a specific threat of litigation.”).
Amtrak further maintains – without any support – that this action was motivated
solely by impermissible forum shopping because insurers perceive New York as a more
favorable forum for coverage disputes. This argument is unavailing. For forum
shopping to constitute a special circumstance, “the first-filing plaintiff must engage in
some manipulative or deceptive behavior, or the ties between the litigation and the first
forum must be so tenuous or de minimis that a full balance of convenience analysis
would not be necessary to determine that the second forum is more appropriate than the
first.” Id. at 276 (internal quotations omitted). Amtrak has offered no evidence that
LMI engaged in manipulative or deceptive behavior in selecting a New York forum.
Moreover, the connection between this action and New York is not so weak that a
balance of convenience analysis is unnecessary. As such, transfer is not warranted
under the special circumstances exception.
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2.

Balance of Convenience

Amtrak also contends that the balance of convenience analysis favors the D.C.
Action. As discussed below, the balance of convenience factors do not favor departure
from the first-filed rule and transfer of this action to the District of Columbia.
i.

Convenience of Witnesses

“The convenience of witnesses is typically the most important factor when
considering a motion to transfer.” AGCS Marine Ins. Co. v. Associated Gas & Oil Co.,
Ltd., 775 F. Supp. 2d 640, 647 (S.D.N.Y. 2011). Amtrak has identified three
employees it expects will testify in this litigation. Two of these employees – Cathy
Rawlings (“Rawlings”) and Na’im Rahmann (“Rahmann”) – work in Washington, D.C.
Absent transfer, these individuals will have to travel from Washington, D.C. to
Brooklyn. However, Rawlings and Rahmann are party witnesses who Amtrak can
require to participate in this action. See Mazuma Holding Corp. v. Bethke, 1 F. Supp.
3d 6, 30 (E.D.N.Y. 2014) (“[T]he convenience of non-party witnesses is accorded more
weight than that of party witnesses.”). Amtrak is also uniquely positioned to provide
them with transportation along the northeast corridor on its high-speed rail line. See
JetBlue Airways Corp., 960 F. Supp. 2d at 399 (“[I]f called to testify in person, JetBlue
employees can be flown to [the transferee district] on the employer’s aircraft.”).
Amtrak is also not forthcoming on the issue of whether other employees with
knowledge of the matters about which Rahmann will testify could conveniently appear
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in this Court. Rather, it vaguely maintains that such individuals “are located outside
the Eastern District of New York.” Rahmann Decl. ¶ 4. Further, the other Amtrak
employee who will testify – Craig Caldwell – works in Philadelphia, which is closer to
Brooklyn than Washington, D.C. On the whole, Amtrak has not demonstrated
sufficient inconvenience to show that transfer is justified under this factor.3
ii.

Convenience of Parties

While Amtrak is headquartered in Washington, D.C., it does significant business,
and maintains a substantial operational presence, in New York. See Leimkuhler Decl.
¶ 4-6, Ex. 1-3. In fact, Amtrak commenced a $500 million coverage action against a
number of insurers in the Southern District of New York as recently as September
2014. See Nat’l R.R. Passenger Corp. v. Ace Bermuda, Ins., Ltd., No. 14-CV-7510
(S.D.N.Y.). Altogether, Amtrak would be minimally inconvenienced – if at all – by
having to litigate this case in New York. As such, this factor is entitled to no real
weight.
iii.

Location of Relevant Documents

Amtrak asserts that relevant documents are located in Washington, D.C. and
ambiguously states that they “may not all exist in easily portable form.” Def. Br. at 12.
“The location of relevant documents is largely a neutral factor in today’s world of

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LMI also lists “potential” non-party witnesses located in New York who “may have
important information” regarding the environmental damage claims. Pl. Br. at 15. However,
these individuals do not factor into the Court’s analysis because LMI has not specified the
content of their testimony or asserted that these witnesses will actually be called.
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faxing, scanning, and emailing documents.” Am. Steamship Owners Mut. Prot. &
Indem. Ass’n, Inc. v. Lafarge N. Am., Inc., 474 F. Supp. 2d 474, 484 (S.D.N.Y. 2007);
see also Eres N.V. v. Citgo Asphalt Refining Co., 605 F. Supp. 2d 473, 481 (S.D.N.Y.
2009) (“[M]any courts have noted that documents may be transferred from one district
to another district across the country with little difficulty, using electronic means of
duplication and transmission.”); ESPN, Inc. v. Quicksilver, Inc., 581 F. Supp. 2d 542,
549 (S.D.N.Y. 2008) (“In an era of electronic documents, easy copying and overnight
shipping, this factor assumes much less importance than it did formerly.”).
Accordingly, this factor is neutral.
iv.

Locus of Operative Facts

“When assessing the locus of operative facts in insurance coverage disputes,
courts typically emphasize the site of negotiations, purchase, and delivery of the policy
in question.” Liberty Mut. Ins. Co. v. Fairbanks Co., 17 F. Supp. 3d 385, 396
(S.D.N.Y. 2014). Amtrak argues that the policies at issue were “purchased and
delivered” in Washington, D.C. Rawlings Decl. ¶ 5. However, Amtrak has not
provided any detailed evidence to support this conclusory assertion. Moreover, the
minimal policy documentation Amtrak has produced does not show that the policies
were purchased and delivered in Washington, D.C. In contrast, LMI has submitted
numerous, detailed declarations from insurance underwriters and company
representatives describing how the policies at issue were negotiated, sold and delivered
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in a variety of locations outside both Washington, D.C. and New York. Consequently,
the circumstances surrounding the execution of the policies do not favor the District of
Columbia over this Court.
New York is also a more suitable loci of operative facts for this litigation than
Washington, D.C. because the occurrences underlying the Liability Claims have a
stronger connection to New York. See Royal Ins. Co. v. Tower Records, Inc., No. 02CV-2612, 2002 WL 31385815, at *8 n. 6 (S.D.N.Y. Oct. 22, 2002) (noting that the
locations of casualties giving rise to an insurance coverage dispute are also “operative
facts”). At least four of the environmental claim sites are located in New York, and
three are in this District.

In contrast, Amtrak has identified only one site in

Washington, D.C. Additionally, 44% of Amtrak’s environmental liability costs have
been incurred at sites in New York – more than twice the costs incurred in any other
jurisdiction. Furthermore, 18% of the bodily injury claims arose in New York, while
only 9% emanate from Washington, D.C. Consequently, this factor weighs strongly
against transfer.
v.

Familiarity with Governing Law

Amtrak contends that this action should be transferred to the District of
Columbia because the policies at issue are governed by District of Columbia law.
However, this factor is “accorded little weight on a motion to transfer venue because
federal courts are deemed capable of applying the law of other states.” Neil Bros. Ltd
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v. World Wide Lines, Inc., 425 F. Supp. 2d 325, 333 (E.D.N.Y. 2006) (internal
quotations and citation omitted); see also Guardian Life Ins. Co. v. Hernandez, No. 11CV-2114, 2011 WL 3678134, at *4 (S.D.N.Y. Aug. 22, 2011) (“This is one of the least
important factors in determining a motion to transfer, especially where no complex
questions of foreign law are involved.”) (internal citation omitted). Accordingly, this
factor only minimally weighs in favor of transfer.
vi.

Plaintiff’s Choice of Forum

“Unless the balance is strongly in favor of the defendant, the plaintiff’s choice
of forum should rarely be disturbed.” Iragorri v. United Tech. Corp., 274 F.3d 65, 70
(2d Cir. 2001) (internal citation omitted). As explained, New York is a stronger loci
of operative facts for this action than the District of Columbia. See JetBlue Airways
Corp., 960 F. Supp. 2d at 400 (observing that this factor “militates against transfer
when operative facts occurred in the plaintiff’s choice of forum”). As such, LMI’s
choice of forum is entitled to significant deference. See Accantia Grp. Holdings v.
Food Mkt. Merch., Inc., 908 F. Supp. 2d 439, 441 (S.D.N.Y. 2012) (noting that a
plaintiff’s choice of forum is entitled to “considerable deference” when there is “a
material connection between the forum state and the underlying events”).
vii.

Trial Efficiency and the Interests of Justice

Amtrak argues that the D.C. Action is “more comprehensive” than this action
because it includes Amtrak’s damages claims against its insurers. Def. Br. at 15. This
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argument fails because Amtrak has asserted those claims in this action. Amtrak also
contends that the LMI policies contained a Service of Suit clause providing that
coverage disputes would be in a forum of Amtrak’s choosing. However, this clause
only required LMI to “submit to the jurisdiction” of a United States court in the event
of a coverage dispute. Rawlings Decl. ¶ 8, Ex. 1. It did not limit LMI’s ability to select
the forum in which to bring a coverage action. Altogether, Amtrak has failed to show
how considerations of trial efficiency and the interests of justice warrant transfer to the
District of Columbia.
III.
Amtrak has not made a clear and convincing showing that this case should be
transferred to the District of Columbia. See Accantia, 908 F. Supp. 2d at 441(“[A]
court should not disturb a plaintiff’s choice of forum unless the defendants make a clear
and convincing showing that the balance of convenience factors defendants’ choice.”).
Accordingly, its motion is denied.
SO ORDERED.
/s/ Frederic Block
FREDERIC BLOCK
Senior United States District Judge
Brooklyn, New York
March 13, 2015

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