United States of America v. Bank of America Account #XXXXXXXX4939 et al
MEMORANDUM-DECISION AND ORDER: DENYING, with prejudice, 38 claimants' motion to dismiss this action pursuant to Fed. R. Civ. P. 12(b)(3) or to transfer the action under 28 U.S.C. § 1406(a); DENYING, without prejudice, claimants; [3 8] motion to transfer the action in the interests of justice, pursuant to 28 U.S.C. § 1404(a). Within 21 days of the date of this order, the claimants shall file an answer or other response to the plaintiff's amended complaint, and wi thin 60 days of the date of this order, counsel for the plaintiff, after consultation with claimants' counsel, shall prepare and submit a proposed Stipulation pursuant to Fed. R. Civ. P. 16(b) and General Order 15. Signed by U.S. Magistrate Judge Andrew T. Baxter on 1/15/2015. (mae)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
UNITED STATES OF AMERICA,
No. 5:14-CV-723 (ATB)
BANK OF AMERICA ACCOUNT
#XXXXXXXX4939, et al.
TAMARA THOMSON, Ass’t U.S. Att’y, for Plaintiff
JACEK W. LENTZ, ESQ., for Claimants
ANDREW T. BAXTER, U.S. MAGISTRATE JUDGE
MEMORANDUM-DECISION AND ORDER
Currently before this court1 is the claimants’ amended motion to dismiss this
civil asset forfeiture action for improper venue or, in the alternative, to transfer the
action to the Central District of California. (Dkt. No. 38). The United States has filed
a response in opposition to the motion (Dkt. No. 40), and the claimants have replied
(Dkt. No. 41). For the reasons stated below, claimants’ motion to dismiss this action
pursuant to Fed. R. Civ. P. 12(b)(3), or to transfer the action under 28 U.S.C. §
On November 12, 2014, Senior District Judge Kahn referred this case to me for all
further proceedings and the entry of judgment, with the consent of the parties, pursuant to 28
U.S.C. § 636(c). (Dkt. No. 37). When this court discovered that the consent form submitted by
the parties did not conform with the current provisions of section 636(c), I directed the parties to
re-submit an amended consent form if they still wanted the case referred to me. Judge Kahn
referred the matter to me, based on the revised consent form, on January 13, 2015. (Dkt. No. 46).
1406(a) is denied with prejudice. Claimants’ motion to transfer the action in the
interests of justice, pursuant to 28 U.S.C. § 1404(a), is denied without prejudice.
Through this action, the government seeks to forfeit almost $2 million in bank
deposits and a Porsche automobile, all allegedly related to the illegal distribution of
synthetic cannabinoids and related money laundering in the Northern District of New
York, the Central District of California, and elsewhere. Sheldon A. Lenter, Daniel J.
Lenter, and Johnny Charles Alroy have filed claims with respect to all but $39,652.40
of the seized assets. Related entities, including Eagle Eye Products, Inc. (“Eagle
Eye”)–associated with Sheldon Lenter–and Canyon Novelty Sales, Inc. (“Canyon”)–
associated with claimant Alroy–are alleged distributors of synthetic marijuana which
operate from the Central District of California. The government alleges that these
entities sold more than $563,000 worth of illegal synthetic cannabinoids to several
“head shops” located in the Northern District of New York, including Zonen LTD
(“Zonen”) and Arizona Traders. The amended complaint details hundreds of financial
transactions involving the defendant bank accounts, which allegedly relate to the
purchase of synthetic marijuana by Zonen, Arizona Traders, and others in the
Northern District of New York from the claimants’ related businesses; the purchase of
The government’s brief recites the details of the procedural history of this civil
forfeiture action, which I will not restate here. (Pl.’s Mem. of Law at 4-5, Dkt. No. 40).
Citations to the records supporting this brief summary of the relevant background are set forth
below where the court discusses the facts relevant to the venue transfer motion in more detail.
such substances by Eagle Eye and Canyon from manufacturers, including Real Feel
Products, Inc. (“Real Feel”), which is located in the Central District of California, and
ZenBio, LLC (“Zen Bio”); and various transfers of funds among and between the
defendant bank accounts associated with the claimants and their related entities.
CLAIMANTS’ MOTION TO DISMISS OR TRANSFER FOR
Motion to Dismiss Under Fed. R. Civ. P. 12(b)(3)
“On a motion to dismiss a complaint under Rule 12(b)(3) for improper venue,
‘the plaintiff bears the burden of establishing that venue is proper.’” Cold Spring
Harbor Laboratory v. Ropes & Gray LLP, 762 F. Supp. 2d 543, 551-52 (E.D.N.Y.
2011) (citation omitted). “‘If the court chooses to rely on pleadings and affidavits, the
plaintiff need only make a prima facie showing of [venue].’” Gulf Ins. Co. v.
Glasbrenner, 417 F.3d 353, 355 (2d Cir. 2005) (citation omitted). In analyzing a
claim of improper venue, a court must view all facts in the light most favorable to the
plaintiff. Phillips v. Audio Active Ltd., 494 F.3d 378, 384 (2d Cir. 2007). Whether to
dismiss an action for improper venue is in the district court’s sound discretion. Cold
Spring Harbor Laboratory, 762 F. Supp. 2d at 551 (citing Minnette v. Time Warner,
997 F.2d 1023, 1026 (2d Cir. 1993)).
Claimants incorrectly suggest that the only statutory provision supporting venue
in this civil forfeiture action is 28 U.S.C. § 1395(a)’s provision allowing a forfeiture to
be prosecuted “in the district where it accrues.” (Claimants’ Mem. of Law at 9, Dkt.
No. 38). However, 28 U.S.C. § 1355(b)(1)(A), also authorizes a civil forfeiture action
to be brought in “the district court for the district in which any of the acts or omissions
giving rise to the forfeiture occurred . . . .” Section 1355(b)(1) “confers both
jurisdiction and venue in civil forfeiture cases.” U.S. v. $198,573.85 in U.S. Currency,
No. 5:13-CV-1180 (DNH), 2014 WL 859137, at *3 (N.D.N.Y. Mar. 5, 2014) (citing
United States v. Contents of Account No. 2033301 in the Name of Freixas, 831 F.
Supp. 337, 339-40 (S.D.N.Y. 1993) (under the 1992 amendments to § 1355(b) & (d),
“a civil forfeiture action now may be brought in the district where the underlying
criminal activity occurred.”).
The United States has clearly alleged that substantial criminal activity
supporting the forfeiture in this action occurred in the Northern District of New York.3
The amended complaint alleges that “[t]he defendant properties are subject to
forfeiture pursuant to 21 U.S.C. § 881(a)(6), pertaining to all moneys, . . . or other
things of value furnished or intended to be furnished by any person in exchange for a
controlled substance or listed chemical in violation of 21 U.S.C. §§ 801 et seq., all
proceeds traceable to such an exchange, and all moneys, negotiable instruments, and
Tellingly, in their reply papers (Dkt. No. 42), the claimants did not respond to the
government’s arguments (see Pl.’s Mem. of Law at 7-11) that venue was proper in this action
under 28 U.S.C. § 1355(b)(1), but focused instead on issues relating to whether a transfer in the
interests of justice was appropriate.
securities used or intended to be used to facilitate any violation of 21 U.S.C. §§ 801 et
seq.” (Am. Compl. ¶ 23, Dkt. No. 31). The amended complaint includes multiple
charts, documenting that the claimants’ businesses accepted hundreds of thousands of
dollars for selling and shipping allegedly illegal synthetic cannabinoids to “head
shops” in the Northern District of New York. (Am. Compl. ¶¶ 36, 40, 54, 57, 64, 66,
68, 75-79). Those allegations clearly support the plaintiff’s contention that the
claimants conducted substantial activities in the Northern District of New York in
furtherance of a conspiracy to distribute controlled substances under 21 U.S.C. § 846,
which, in turn, would support a prima facie showing of venue for this civil forfeiture
action in this district. See, e.g., U.S. v. $198,573.85 in U.S. Currency, 2014 WL
859137, at *3-4 (the government successfully alleged that “any of the acts or
omissions giving rise to the forfeiture action” occurred in this district by stating that
the defendant currency is traceable, at least in part, to drug sales in this district, which
are overt acts in furtherance of a multi-jurisdiction drug conspiracy).
The United States also contends that “[t]he defendant properties are subject to
forfeiture pursuant to 18 U.S.C. § 981(a)(1)(A) pertaining to any property, real or
personal, involved in a transaction or attempted transaction in violation of 18 U.S.C.
§§ 1956, 1957 or 1960, or any property traceable to such property.” (Am. Compl. ¶
24). The government details how hundreds of thousands of dollars in proceeds from
the sale of synthetic cannabinoids in the Northern District of New York were
deposited in the claimants’ bank accounts in order to fund the purchase by claimants
of more synthetic cannabinoids, from suppliers such as Real Feel and ZenBio, for
resale in this district and elsewhere. (Am. Compl. ¶¶ 29, 34, 36, 40, 54, 57, 59, 64-66,
68-69, 75-79; Pl.’s Mem. of Law at 10-11). These allegations support the plaintiff’s
contention that substantial activity furthering a conspiracy to conduct “promotional”
money laundering under 18 U.S.C. § 1956(a)(1)(A)(I) occurred in this district,4 which
provides the basis for the proposed forfeitures under section 981(a)(1)(A). See, e.g.,
U.S. v. $198,573.85 in U.S. Currency, 2014 WL 859137, at *3-4 (allegations that
Armstrong agreed to ship synthetic drugs to Doe in the Northern District of New York
on at least two separate occasions and that Doe then executed a wire transfer of money
originating from this district established that overt acts in furtherance of a money
laundering conspiracy occurred in this district, supporting venue for the civil
forfeiture action in this district). Thus the government has established a prima facie
case that venue is proper in this district.
Motion to Transfer Pursuant to 28 U.S.C. § 1406(a)
28 U.S.C. § 1406(a) provides that “[t]he district court of a district in which is
filed a case laying venue in the wrong division or district shall dismiss, or if it be in
the interest of justice, transfer such case to any district or division in which it could
“Courts have recognized that ‘[p]ayment for drugs may constitute ‘promotion’ for the
purposes of the money laundering statute when such payment encourages further drug
transactions.’” See, e.g., United States v. Fitzgerald, 496 F. App’x 175, 176, 178-79 (3d Cir.
2012) (shipment of proceeds of drug sales in Delaware to the supplier in Texas in order to buy
more drugs supported the prosecution in Delaware of a promotional money laundering
conspiracy, even though the monetary transactions were also part of the offense being promoted).
have been brought.” “If the original federal forum is a proper venue, transfer of the
action may be ordered under Section 1404(a), and Section 1406(a) is inapplicable.”
14D Charles Alan Wright, Arthur R. Miller, et al., Federal Practice and Procedure §
3827 at 523-26 (4th ed. 2013).5 Having concluded that venue properly lies in this
district, I will analyze claimants’ motion to transfer venue under section 1404(a).
CLAIMANTS’ MOTION TO TRANSFER UNDER SECTION 1404(a)
Pursuant to 28 U.S.C. § 1404(a), a district court may transfer venue, “for the
convenience of the parties and witnesses, in the interest of justice.” The movant bears
the burden of establishing the propriety of transfer by a clear and convincing showing.
Excelsior Designs, Inc. v. Sheres, 291 F. Supp. 2d 181, 185 (E.D.N.Y. 2003). The
moving party must establish that (1) the action is one that “might have been brought”
in the proposed transferee district, and (2) the transfer is appropriate given the
convenience of parties and witnesses and in the interest of justice. Indian Harbor Ins.
Co. v. Factory Mut. Ins. Co., 419 F. Supp. 2d 395, 401 (S.D.N.Y. 2005) (citing, inter
alia, 28 U.S.C. § 1404(a)). The court assesses the balance of convenience and the
interest of justice by weighing factors, including “‘(1) the plaintiff’s choice of forum,
Cf. Corke v. Sameiet M.S. Song of Norway, 572 F.2d 77, 79-80 (2d Cir. 1978)
(concluding that § 1406(a) permits courts to transfer in interest of justice whenever either
personal jurisdiction or venue are improper); SongByrd, Inc. v. Estate of Grossman, 206 F.3d
172, 179 n. 9 (2d Cir. 2000) (citing Corke and recognizing propriety of section 1406 transfer to
cure lack of personal jurisdiction even when venue is proper). Because there is no issue
regarding personal jurisdiction in this district in this action, such cases do not alter my conclusion
that section 1404(a) should be applied to analyze plaintiff’s motion to transfer.
(2) the convenience of witnesses, (3) the location of relevant documents and relative
ease of access to sources of proof, (4) the convenience of parties, (5) the locus of
operative facts, (6) the availability of process to compel the attendance of unwilling
witnesses, [and] (7) the relative means of the parties.’” D.H. Blair & Co., Inc. v.
Gottdiener, 462 F.3d 95, 106-07 (2d Cir. 2006) (citation omitted). “‘There is no rigid
formula for balancing these factors and no single one of them is determinative.’”
Indian Harbor Ins. Co., 419 F. Supp. 2d at 402 (citations omitted).
The government has conceded that this case could have been brought in the
Central District of California, so the court must focus on whether the claimants have
made a “clear-cut showing” that the transfer of this case from the Northern District of
New York would promote the interests of justice and the convenience of the parties.
Indian Harbor Ins. Co., 419 F. Supp. 2d at 401. Because the “notions of convenience
and fairness” relevant to a venue transfer motion must be assessed on a “case-by-case
basis,” id., I will consider the most pertinent of the factors listed above in an order that
facilitates the analysis of the motion in this particular case.
Plaintiff’s Choice of Forum and Related Factors
The plaintiff’s choice of forum is generally “given great weight.” D.H. Blair &
Co., Inc., 462 F.3d at 107 (citation omitted). The claimants cite authority from
another circuit, holding that where the plaintiff is the government, the deference in
favor of the plaintiff’s home forum is lessened, particularly where the government’s
forum choice has “little connection to the operative facts of the lawsuit.” U.S. v.
$776,670.00, No. 2:13-CV-4108, 2014 WL 3866427, at *2 (D.N.J. Aug. 6, 2014)
(citing U.S. ex rel. Hollander v. MTD Products, Inc., Civ. Action No. 09-5507, 2011
WL 3501749, at *2 (E.D. Pa. Aug. 9, 2011)). However, other authority indicates that
when “the inconvenience of the alternative venues is comparable there is no basis for
a change of venue . . . even when one of the parties is a federal agency that will suffer
inconvenience if forced to litigate in the defendant’s district.” In re National Presto
Industries, Inc., 347 F.3d 662, 665 (7th Cir. 2003) (“[w]hen government lawyers and
investigators incur time and travel costs to litigate in a remote forum, the burden falls
on the taxpayer, who finances the federal government and who is no less worthy of the
protection of the law than corporate officers, shareholders, and employees”).6
In a reply declaration, claimants’ attorney states that he has been retained on a
“pure contingency basis” because “I am informed and believe, the Government has
wiped out all of the bank accounts and cash reserves available to Claimants Alroy and
Sheldon Lenter. . . . I am informed and believe that the Claimants’ ability to continue
to defend this action is very much in doubt.” (Lentz Reply Decl. ¶¶ 2-3, Dkt. No. 421). Claimant Sheldon A. Lenter makes the conclusory statement that “[i]t would be an
unimaginable hardship for my company [Eagle Eye] to be involved in civil litigation
“When plaintiff and defendant are in different states there is no choice of forum that will
avoid imposing inconvenience; and when the inconvenience of the alternative venues is
comparable there is no basis for a change of venue; the tie is awarded to the plaintiff, as the cases
cited earlier make clear.” Id. (citing, inter alia, Wyndham Associates v. Bintliff, 398 F.2d 614,
620-21 (2d Cir. 1968)).
in Syracuse, New York” because of the transportation costs and the negative impact of
the employees’ absences from work to attend depositions and trial. (Lenter Decl. ¶ 6,
Dkt. No. 38-2). However, Sheldon Lenter also states that Eagle Eye is a “successful
and popular seller of a wide variety of goods . . . [including to] “major retailers such as
Target, K-Mart and Wal-Mart” (Lenter Decl. ¶ 1). He makes no sworn statement, nor
provides any supporting documentation with respect to whether he, and/or Eagle Eye,
actually have available financial resources beyond the $1.2 million dollars seized from
various business, personal, and retirement accounts. Claimants Alroy, who has
claimed $558,219.35 of the defendant assets, and Daniel Lenter, who claims $177,000
(Lentz Decl. ¶ 3, Dkt. No. 38-1), have provided no declaration or documentation
regarding their financial positions or ability to pursue their claims in this district.
When filing a transfer motion under Section 1404(a), “the movant must support
its motion with a detailed factual affidavit.” Excelsior Designs, Inc. v. Sheres, 291 F.
Supp. 2d at 185. Motions to transfer have been denied when the claimants have not
produced sufficient documentation of the financial hardships of litigating in the
plaintiff’s chosen forum. See, e.g., U.S. v. Thirty-Five Thousand Five Hundred
Dollars in U.S. Currency, No. 09-11556, 2009 WL 4884977, at *2, 4 (E.D. Mich. Dec.
11, 2009) (“Although courts may consider ‘the relative financial strength of the
parties,’ . . . in this case, even if Claimants may be in a weakened financial position
relative to their pre-forfeiture days, they do not produce sufficient documentation for
the Court to find that traveling to [this district] would pose a significant hardship.”)
(citing Thomas v. Home Depot, U.S.A., 131 F. Supp. 2d 934, 937 (E.D. Mich. 2001);
U.S. v. Currency $41,180.97 In the Form of Charter One/Citizens, No. 13-CV-14274 ,
2014 WL 4374372, at *4, 5 (E.D. Mich. Sept. 4, 2014) (recognizing, in the context of
a civil asset forfeiture action filed by the government, that “plaintiff’s chosen forum is
entitled to substantial deference,” and denying a motion to transfer venue
notwithstanding claimants’ conclusory contention “that it would be inconvenient and
cost prohibitive for all of its witnesses to travel to Detroit for trial”).
The Locus of Operative Facts
Through this action, the government seeks to forfeit the proceeds of bank
account totaling $1,985,951.25, in addition to a Porsche, which claimant Sheldon
Lenter values at $60,000. (Lentz Decl. ¶ 3; Lenter Decl. ¶ 9). The claimants claim
ownership of all but $39,652.40 of the defendant assets; no one has filed a claim for
the $39,652.40, which was seized from two accounts of Zonen, a “head shop” in this
district. (Lentz Decl. ¶¶ 3, 5). The businesses controlled by the complainants and
Real Feel–the manufacturer of synthetic cannabinoids “most critical to the allegations
in the Complaint”7–are located in the Central District of California. (Claimants’ Mem.
It appears that the claimants’ emphasis on the significance of Real Feel as the “critical”
manufacturer of synthetic cannabinoids resold by claimants is strongly influenced by that entity’s
location in California. The government alleges that the claimants’ companies made almost $1.5
million in payments to Real Feel, presumably for illegal controlled substances. (Lentz Decl. ¶
18; Am. Compl. ¶¶ 59, 69). However, the government also alleges that Eagle Eye made
$3,750,366 in purchases from ZenBio and related entities–another manufacture of synthetic
cannabinoids. (Am. Compl. ¶¶ 34, 65). Sheldon Lenter has represented that, to the best of his
knowledge, ZenBio was not located in New York; but, presumably, it was not located in
California, or the claimants would have brought that to the court’s attention. (Lenter Decl. ¶ 13).
of Law at 8; Lentz Decl. ¶¶ 2, 16, 19-20). Claimants contend that the government
justifies forfeiture of the “overwhelming majority” of the defendant assets based on
claimants’ payments to manufacturers of synthetic cannabinoids in California and
states other than New York, “rather than what they had obtained from retail sales in
New York or elsewhere.” (Claimants’ Mem. of Law at 8). Based on this and related
facts, the claimants argue that “this case is only tangentially connected to New York”
and should be transferred to the Central District of California under section 1404(a).
(Claimants’ Mem. of Law at 9, 11).
However, as the claimants acknowledge, this case arose from an investigation,
started in 2013, of the sale of synthetic cannabinoids by several retailers in the
Northern District of New York, including Zonen and Arizona Traders. (Am. Compl. ¶
27; Lentz Decl. ¶ 6). The government seized, from Zonen and Arizona Traders,
substantial quantities of synthetics cannabinoids, and agents of those “head shops”
stated that these substances were purchased from Eagle Eye. Samples of the seized
product were analyzed by the DEA Northeast Laboratory and many were found to
contain illegal scheduled drugs and/or drug analogues. (Am. Compl. ¶¶ 34-40; Lentz
Decl. ¶¶ 6, 8-9, 11-12). Based upon records that federal agents recovered during the
execution of search warrants and bank records obtained via subpoena, government
investigators estimate that claimants generated at least $563,458.88 in proceeds
through hundreds of sales of illegal controlled substances in the Northern District of
New York. The $563,458.88 in proceeds constitutes more than 27% of the total
amount of currency seized in this civil forfeiture action. (Pl.’s Mem. of Law at 8).8
Thus, while the multi-district drug and money laundering conspiracy providing the
basis for the forfeitures sought by the government may have greater links to the
Central District of California, this action is also substantially connected to transactions
that occurred in the Northern District of New York.
In the sole asset forfeiture case upon which claimants rely to try to overcome
the deference due to the government’s choice of forum, the connections between the
requested forfeitures and the district of filing were far less significant than they are in
this action. The narcotics/money laundering civil forfeiture action in U.S. v.
$776,670.00, was filed in the District of New Jersey, based solely on the fact that one
of about 100 structured deposits made in eight different states was made in New
Jersey. U.S. v. $776,670.00, 2014 WL 3866427, at *2. By contrast, in U.S. v.
Currency $41,180.97, 2014 WL 4374372, at *2, 4, 6, the court deferred to the
government’s choice of venue in the Eastern District of Michigan although the bank
accounts, into which proceeds of alleged prescription drug trafficking were deposited,
were in Pennsylvania; all of the claimants’ officers and employees were in
Pennsylvania; and much of the other conduct supporting the forfeiture occurred in
This total may represent an update of the financial analysis of invoices from the
claimants’ companies by the government since the time of the amended complaint, which
documents approximately $320,000 of purchases of synthetic cannabinoids from the claimants by
“head shops” in this district. (Am. Compl. ¶¶ 74-79). However, the amended complaint also
documents, from bank records, that the New York “head shops” paid more than $820,000 to the
claimants’ companies. (Am. Compl. ¶¶ 36, 40, 54, 57, 64, 66, & 68).
Pennsylvania. Among the factors upon which the court relied to deny claimants’
motion to transfer venue were the fact that the DEA investigation of the online
pharmacy scheme started in Michigan and that online drug sales by “patients,”
including those who appeared in the Pittsburgh store front (which was incorporated in
Michigan), were made through the key pharmacist in Michigan. Id. This court
concludes that the claimants have not met their burden of establishing that the locus of
facts pertinent to this forfeiture action strongly favors venue in the Central District of
California over the forum selected by the government. See Atlantic Recording Corp.
v. Project Playlist, Inc., 603 F. Supp. 2d 690, 697 (S.D.N.Y. 2009) (where the loci of
operative facts lie in two or more venues, this factor becomes neutral in consideration
of the balance of conveniences under 28 U.S.C. § 1404(a)).
The Convenience of Witnesses
“The convenience of non-party witnesses is one of the most important factors in
determining where to transfer a case.” Verilux, Inc. v. Ottlite Technologies, Inc., No.
09-CV-717, 2009 WL 2710222, at *6 (D. Conn. Aug. 20, 2009); DLJ Mortgage
Capital, Inc. v. Cameron Fin. Group, Inc., No. 07 Civ. 3746, 2007 WL 4325893, at *5
(S.D.N.Y. Dec. 4, 2007) (“[T]he convenience of witnesses is typically the most
important factor in a motion pursuant to § 1404(a).”). “[W]here a party seeks to
transfer based on the convenience of witnesses, he must ‘clearly specify the key
witnesses to be called and must make a general statement of what their testimony will
cover.’” Marcotte v. Joyce Beverages, Inc., No. 87 CIV. 7412, 1990 WL 52123, at *2
(S.D.N.Y. Apr. 17, 1990) (citation omitted); Indian Harbor Ins. Co., 419 F. Supp. 2d
at 401 (movant must “‘name the witnesses who will be appearing and describe their
testimony so that the court may measure the inconvenience caused by locating a
lawsuit in a particular forum’”) (citation omitted).
In this case, the government expects that it would require testimony from the
non-party owners and employees of the four or more “head shops” in the Northern
District of New York which purchased synthetic cannabinoids from the claimants’
businesses, and from whom samples of illegal substances were seized. (Am. Compl.
¶¶ 34-40, 75-79) Further, the government would necessarily rely on the officers and
agents who were involved in the investigation in the Northern District of New York,
who generated the extensive analysis of records reflected in the amended complaint.
(Pl.’s Mem. of Law at 24). In his reply declaration, claimants’ counsel states that
“[t]he Claimants do not intend to dispute the fact that they sold “herbal incense” to the
Government’s witnesses” and are “willing to make admissions and enter into
appropriate stipulations” with respect to those witnesses. (Lentz Reply Decl. ¶¶ 4, 5).
However, counsel’s initial declaration points out various issues that claimants have
with respect to the allegations in the complaint attributable to the “head shop”
witnesses; so it is by no means clear that the government would still not need to call
these witnesses at trial. (See, e.g., Lentz Decl. ¶ 8, 15, 17). Unless and until the
claimants make more specific admissions, in an answer to the amended complaint, or
in written stipulations, the court will not discount the convenience of the
government’s non-party witnesses in the Northern District of New York.
In trying to establish who the “key” witnesses will be at trial, the claimants
argue that the critical issues in this action will be “the legality of the various chemical
compounds allegedly contained within the products sold by the Claimants” and
“nature of the product sold by [Real Feel] and the business relationship between [Real
Feel] and Claimants.” (Lentz Decl. ¶¶ 22, 26). Based on this assumptions, claimants’
counsel contends that they key witnesses in this case are all located in the Central
District of California–claimants’ “potential” expert witnesses, all from California;9
witnesses related to Real Feel, “all of whom are presumably based in Southern
California”; the staffs of claimants’ businesses; and claimants’ forensic accountant,
who is from the Central District of California. (Lentz Decl. ¶¶ 22, 26, 28-30).10
Claimants’ counsel represents that his firm “has not identified anyone in the Northern
District of New York who even remotely possesses the experience and qualifications [as experts]
required in this case.” (Lentz Decl. ¶ 22). He also states that he has “been advised” the the
claimants routinely “obtained independent laboratory reports in order to ascertain whether the
products they sold were legal” and that, to his “best knowledge,” none of those laboratories are
located in the Northern District of New York. (Lentz Decl. ¶ 24).
Claimants’ counsel also argues that most of the documents relevant to the two critical
issues he identifies would be located in the Central District of California. However, “the location
of documents is entitled to little weight unless defendant makes a ‘detailed showing of the
burden it would incur absent transfer.’” Indian Harbor Ins. Co. v. Factory Mut. Ins. Co.,
419 F. Supp. 2d at 402. See also Am. S.S. Owners Mut. Prot. & Indem. Ass'n v. Lafarge N. Am.,
Inc., 474 F. Supp. 2d 474, 484 (S.D.N.Y. 2007) (“The location of relevant documents is largely a
neutral factor in today’s world of faxing, scanning, and emailing documents.”). On the other
hand, the government has samples of synthetic cannabinoids seized from “head shops” in this
district and analyzed at the DEA’s Northeast Laboratory. (Am. Compl. ¶¶ 34, 37). The
problems inherent in transporting such illegal substances across the country for use at trial is a
more significant factor, and one that weighs against transferring this case to California.
While it is reasonable to assume that the legality of the substances sold by
claimants will be a critical issue in this case, the government will undoubtedly offer
evidence on that issue through the testimony of the New York “head shop” employees
from which the government seized samples, who can establish whether the claimants
were the source of those samples. (See Am. Compl. 34-35, 37-39). Claimants’
reliance on potential expert witnesses from California, who would testify about the
chemical composition of the substances sold by the claimants, does not provide any
significant support for transferring the action from this district. The government’s
expert witnesses who would testify about the drugs and analogue drugs found in the
substances seized in the Northern District of New York work on the east coast and
would be equally inconvenienced if they were required to travel to California for trial.
(Pl.’s Mem. of Law at 24). Similarly, while the claimants may have a forensic
accountant in California who would be inconvenienced by travel to New York, the
government agents who exhaustively analyzed the records presented in the amended
complaint would be burdened by travel to California if the case was transferred. In
any event, given that expert witnesses are selected by parties in preparation for
litigation and compensated for their time, their convenience is not a weighty factor in
my consideration of the Section 1404(a) transfer motion. See, e.g., Cerussi v. Union
College, 144 F. Supp. 2d 265, 269 (S.D.N.Y. 2001) (“it is well settled that ‘the
location of expert witnesses is irrelevant to a transfer decision’”) (citations omitted).
The claimants suggest that they may introduce proof regarding the legality of
various substances from representatives from Real Feel, but they offer only the
presumption that these witnesses would be from California, without identifying any
particular witnesses. In their reply papers, claimants’ counsel acknowledges that
“their motion has not provided a great deal of specific information with regard to the
identity and substance of the evidence to be provided . . . related to [Real Feel]” and
states that efforts to provide more specific information is continuing. (Claimants’
Reply. Mem. of Law at 5-6; Lentz Reply Dec. ¶ 6). In the absence of more concrete
information about potential Real Feel witnesses, this court cannot find that the
claimants have made an adequate showing that the convenience of any such witnesses
favors transfer of this action to California.11 See, e.g., U.S. v. Thirty-Five Thousand
Five Hundred Dollars in U.S. Currency, 2009 WL 4884977, at *3 (claimants have not
satisfied their burden to justify transfer of the action “inasmuch as they offer no
information regarding the identity of witnesses that they plan to call . . . [n]or an
outline of the material information their ‘potential key witnesses’ may provide”).
Claimant Sheldon Lenter states that “it is fair to assume that all of [the 14
employees and sales representatives who live in the Los Angeles area] would have
some information relating to the government’s allegations and would thus . . . be
The claimants suggest that they might have difficulty compelling third-party Real Feel
witnesses to appear in the Northern District of New York. (Claimants’ Mem. of Law at 15). The
government might have similar problems compelling the “head shop” witnesses from this district
to appear in California. Given the uncertainty as to which set of witnesses may prove to be more
critical as this case develops, and given the option of presenting the evidence of third-party
witnesses through depositions taken near where they reside, this factor is not particularly relevant
to this court’s current analysis of the transfer motion.
relevant to the discovery process.” (Lenter Decl. ¶¶ 3-5). In the absence of more
specific information about what key information particular claimant representatives
would have, the conclusory claims about the cost and inconvenience to claimants of
litigating this case in New York provide little support for their transfer motion. See,
e.g., U.S. v. Currency $41,180.97, 2014 WL 4374372, at *5 (although claimant has
identified numerous witnesses in support of its transfer motion, “its position is
undercut by the fact that it has failed to provide any information regarding their
material testimony or who among those identified may be a key witness”). In any
event, the relative convenience of witnesses of opposing parties is not a significant
factor in evaluating a transfer motion. See Kroll v. Lieberman, 244 F. Supp. 2d 100,
103 (E.D.N.Y. 2003) (“[w]here transfer would merely shift the inconvenience from
one party to the other, plaintiff's choice of forum is not to be disturbed”) (citations
After balancing the factors that are particularly relevant to the motion in this
case, the court concludes that the claimants have not made a convincing showing that
a transfer of this action to the Central District of California would be in the interests of
justice. However, the court denies claimants’ motion under 28 U.S.C. § 1404(a)
without prejudice, because they may be able to produce further evidence with respect
to factors such as the convenience of the critical non-party witnesses and the financial
burden on the claimants to litigate the case in plaintiff’s chosen forum. Concrete
evidence with respect to those issues could materially affect the court’s evaluation of
whether a transfer of venue best serves the interests of justice.
WHEREFORE, it is
ORDERED that claimants’ motion to dismiss this action pursuant to Fed. R.
Civ. P. 12(b)(3) or to transfer the action under 28 U.S.C. § 1406(a) (Dkt. No. 38) is
DENIED WITH PREJUDICE., and it is
ORDERED that claimants’ motion to transfer the action in the interests of
justice, pursuant to 28 U.S.C. § 1404(a) (Dkt. No. 38), is DENIED WITHOUT
PREJUDICE, and it is
ORDERED that, within 21 days of the date of this order, the claimants shall
file an answer or other response to the plaintiff’s amended complaint, and it is further
ORDERED that, within 60 days of the date of this order, counsel for the
plaintiff, after consultation with claimants’ counsel, shall prepare and submit a
proposed Stipulation pursuant to Fed. R. Civ. P. 16(b) and General Order 15.
Dated: January 15, 2015
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