Zaretsky et al v. Gemological Institute Of America, Inc. et al

Filing 74

OPINION and ORDER granting 28 Motion to Transfer Case to Southern District of New York ***CIVIL CASE TERMINATED. Signed by Judge Faith S. Hochberg on 2/20/14. (jd, ) [Transferred from New Jersey on 2/21/2014.]

NOT FOR PUBLICATION

CLOSED
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

________________________________________
STEVEN ZARETSKY, et al.,
Plaintiffs,
v.
GEMOLOGICAL INSTITUTE OF AMERICA,
INC., et al.,
Defendants.
________________________________________

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Civil Case No. 13-3807
(FSH) (JBC)
OPINION & ORDER
February 20, 2014

HOCHBERG, District Judge:
This matter comes before the Court upon motions to dismiss for improper venue by
Defendant Gemological Institute of America, Inc., and Defendants Eve Goldberg and the
William Goldberg Diamond Corporation [Docket Nos. 16 & 28]. The Court has decided these
motions based upon the submissions of the parties, without oral argument, pursuant to Fed. R.
Civ. P. 78.

I. BACKGROUND
This case involves a dispute over the ownership of a piece of jewelry, a 7.35 carat Pear
Shaped Diamond. (Compl. ¶ 7). Plaintiff Steven Zaretsky and his wife Suzanne Zaretsky
(collectively “Plaintiffs”), both New Jersey residents, contend that they own the diamond. On
December 10, 2012, Plaintiffs brought the diamond to K&D Jewelers in New York. (Compl. ¶

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7). With Plaintiffs’ approval, K&D sent the diamond to Defendant Gemological Institute’s New
York laboratory to obtain an appraisal and certification. (Compl. ¶ 8). After receiving the
Diamond, the Gemological Institute allegedly informed Plaintiffs that the diamond Plaintiffs had
submitted for appraisal had been reported stolen and refused to return it to Plaintiffs. (Compl. ¶¶
10-11).
Years before, in March 2003, Defendant Eve Goldberg had reported the theft,
purportedly of the same diamond, from William Goldberg Diamond Corporation’s New York
location. (Compl. ¶ 30). Defendants contend that the diamond that Plaintiffs submitted for
appraisal should not be returned until the Court determines the rightful owner. Plaintiffs assert
that their diamond is not the same stone that was reported stolen, and that the diamond was
validly purchased in New York City by Ms. Zaretsky’s father in December 2003 from Defendant
Louis E. Newman, a New York corporation. (Compl. ¶ 27). On June 19, 2013, Plaintiffs brought
this action seeking a declaratory judgment finding that Plaintiffs are the owners of the diamond.
They also asserted a number of New Jersey state law claims, including breach of fiduciary duty,
conversion, intentional infliction of emotional distress, and an action for replevin.

II. DISCUSSION
a. Prior Decisions
Plaintiffs request that the Court dismiss Defendant Gemological Institute’s motion based
on its purported failure to properly serve the motion upon Plaintiffs. The Gemological Institute
counters that their motion was properly served but that Plaintiffs failed to timely oppose the
motion, and thus contends that the motion should be deemed unopposed. The Court has already
decided these issues – finding that Plaintiffs were properly served with Defendant’s motion, but

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permitting Plaintiffs additional time to file an opposition [Docket No. 27]. The Court declines to
revisit this decision.

b. Venue
Both the Gemological Institute and William Goldberg move to dismiss pursuant to Fed.
R. Civ. P. 12(b)(3) for improper venue, arguing that a forum selection clause bars venue in this
district. The Supreme Court recently held, however, that venue is proper “so long as the
requirements of § 1391(b) are met, irrespective of any forum-selection clause . . . .” 1 Atl.
Marine Const. Co., Inc. v. U.S. Dist. Court for W. Dist. of Texas, 134 S. Ct. 568, 578 (2013); see
also Nat’l Micrographics Sys., Inc. v. Canon U.S.A., Inc., 825 F. Supp. 671, 678 (D.N.J. 1993)
(finding that Federal Rule 12(b)(3) motion to dismiss is not the correct vehicle for enforcing a
forum selection clause). Thus, to determine whether venue is proper, the Court turns to the venue
statute.
Under 28 U.S.C. § 1391, venue is proper in a civil case if a plaintiff brings the case in a
district that is:
(1) a judicial district in which any defendant resides, if all defendants are residents
of the State in which the district is located; (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) if
there is no district in which an action may otherwise be brought as provided in
this section, any judicial district in which any defendant is subject to the court’s
personal jurisdiction with respect to such action.
The burden to show improper venue is on the moving party. Bockman v. First Am. Marketing
Corp., 459 F. App’x 157, 160 (3d Cir. 2012). In assessing venue, the Plaintiffs’ residence is

Instead, “the appropriate way to enforce a forum-selection clause pointing to a state or foreign
forum is through” a motion to transfer under 28 U.S.C. 1404(a). Atl. Marine, 134 S. Ct. at 580.
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irrelevant. Al-Ghena Int’l Corp. v. Radwan, 12-cv-47, 2013 WL 3760929, at *5 (D.N.J. July 16,
2013).
There is no dispute that both venue provisions (2) and (3) are inapplicable to this case,
rather the parties dispute whether venue is established under provision (1), under which venue is
proper if all defendants reside in New Jersey.
There are four Defendants: the Gemological Institute, the William Goldberg Diamond
Corporation, Louis E. Newman, Inc., and Eve Goldberg. The parties dispute whether the first
two Defendants are New Jersey residents, (Compl. ¶¶ 3-4), but the Complaint acknowledges that
the last two are not: Louis E. Newman is alleged to be a New York corporation, (Compl. ¶ 6);
and Eve Goldberg is alleged to be a New York resident, (Compl. ¶ 5). Plaintiffs respond that this
is immaterial because Eve Goldberg was dismissed from this action on November 7, 2013
[Docket No. 44], several weeks after the motion to dismiss was filed. They further assert that all
corporate Defendants are subject to personal jurisdiction – and are thus New Jersey residents for
the purposes of the venue statute – because they have failed to object to personal jurisdiction.2
For venue purposes, a natural person’s residency is determined at the time the action is
commenced. Exxon Corp. v. F.T.C., 588 F.2d 895, 899 (3d Cir. 1978); Lipp v. Janson, 198 F.
Supp. 195, 196-97 (E.D. Pa. 1961); Lawman Armor Corp. v. Winner Int’l, LLC, 02-cv-4595,
2003 WL 22902808, at *4 (E.D. Pa. Dec. 10, 2003) (“The district in which proper venue lies ‘is
determined at the time the complaint is filed.’”) (quoting Horihan v. Hartford Ins. Co. of the
Pursuant to section 1391(c), “[f]or all venue purposes . . . an entity with the capacity to sue and
be sued in its common name under applicable law, whether or not incorporated, shall be deemed
to reside, if a defendant, in any judicial district in which such defendant is subject to the court’s
personal jurisdiction with respect to the civil action in question . . . .” Because the Court grants
the motion to transfer, it does not reach the issue of whether a corporate defendant waives its
properly preserved objection to venue merely by failing to simultaneously object to personal
jurisdiction under Rule 12(b)(2).
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Midwest, 979 F. Supp. 1073, 1076 (N.D. Tex. 1997)). Here, Defendant Eve Goldberg, a nonresident of this district, filed a motion to dismiss based on improper venue on October 10, 2013
[Docket No. 28], along with Defendant William Goldberg Diamond Corporation. About one
month later, after the venue issue had been raised, Plaintiffs voluntarily dismissed its Complaint
against Eve Goldberg [Docket No. 44]. Even though Eve Goldberg was eventually dismissed,
“venue is determined at the outset of the litigation and is not affected by a subsequent change in
parties.” Exxon, 588 F.2d at 899 (citing 3B Moore’s Federal Practice ¶ 25.05, p. 25–167 (2d ed.
1978)). Because Eve Goldberg was not a resident of New Jersey at the time of commencement,
venue is improper. Rather than dismiss, in the interest of justice, this case will be transferred to
the Southern District of New York under 28 U.S.C. § 1406. A substantial part of the events took
place in New York, all Defendant are residents of New York, (Compl. ¶¶ 3-7), and subject to
personal jurisdiction there.

c. Transfer
Alternatively, the Court grants Defendants’ motion to transfer, finding that the factors, as
analyzed under 28 U.S.C. § 1404(a), support transferring venue to the Southern District of New
York. Section 1404(a) permits a district court to transfer a civil case to another district where
venue is proper “[f]or the convenience of parties and witnesses, in the interest of justice . . . .”
The purpose of Section 1404(a) is to “prevent the waste of time, energy and money and to
protect litigants, witnesses and the public against unnecessary inconvenience and expense.” Van
Dusen v. Barrack, 376 U.S. 612, 616 (1964) (internal quotations and citations omitted). A
decision to transfer an action under this provision rests within the sound discretion of the District
Court. Stewart Org., Inc. v. Ricoh Corp. 487 U.S. 22, 29 (1988).

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On a motion to transfer pursuant to § 1404(a), the District Court must undertake a
“flexible and individualized analysis,” balancing the factors set forth in the statute as well as a
number of other case specific factors. Courts in the Third Circuit apply the public and private
interest factors outlined in Jumara v. State Farm Ins. Co., 55 F.3d 873, 879-80 (3d Cir. 1995).
These private interest factors include: (1) plaintiff’s choice of forum; (2) defendant’s preferred
forum; (3) where the claim arose; (4) the convenience of the parties as indicated by their relative
physical and financial condition; (5) the convenience of the witnesses, but only to the extent that
the witnesses may be unavailable for trial in one of the fora; and (6) the location of books and
records, but only to the extent that the files could not be produced in one of the fora. Id. at 879.
The public interest factors include: (7) the enforceability of the judgment; (8) practical
considerations that could make the trial easy, expeditious, or inexpensive; (9) the relative
administrative difficulty in the two fora resulting from court congestion; (10) the local interest in
the controversy; (11) the public policies of the fora; and (12) judicial familiarity with the
applicable state law in diversity cases. Id. at 879–80. A case should only be transferred if “the
balance of convenience of the parties is strongly in favor of defendant.” Shutte v. ARMCO Steel
Corp., 431 F.2d 22, 25 (3d Cir. 1970).

1. Plaintiffs’ Choice of Forum and Defendants’ Choice of Forum
The Plaintiffs plainly prefer New Jersey, and the Defendants prefer New York. These
factors balance out, although the Court recognizes that Plaintiff’s choice of forum is entitled to
deference unless the other factors strongly favor transfer. See, e.g., Shutte, 431 F.2d at 25. But
see Tischio v. Bontex, Inc., 16 F. Supp. 2d 511, 521 (D.N.J. 1998) (plaintiff’s choice of forum is

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afforded less deference if that choice “has little connection with the operative facts of the
lawsuit.”).

2. Where the Claim Arose
The parties do not dispute that the facts giving rise to this cause of action occurred, not in
New Jersey, but in New York. The diamond was allegedly stolen in early 2003 from Defendant
William Goldberg’s New York location; sold to Plaintiff’s father in December 2003 by
Defendant Louis Newman in New York City; brought by Plaintiffs to K&D Jewelers be
appraised by Defendant Gemological Institute in New York; and is currently being held in the
Gemological Institute’s New York laboratory. Thus, the primary dispute - whether the diamond
Defendant William Goldberg claims was stolen is the same diamond Plaintiffs produced to the
Gemological Institute – arises entirely in New York. 3 “As a general rule, the preferred forum is
that which is the center of gravity of the accused activity.” NCR Credit Corp. v. Ye Seekers
Horizon, Inc., 17 F. Supp. 2d 317, 321 (D.N.J. 1998). That the operative facts giving rise to the
action occurred in another district weighs in favor of transfer. National Mortg. Network, Inc. v.
Home Equity Ctrs., 683 F. Supp. 116, 119 (E.D. Pa. 1988); Ricoh Co., Ltd. v. Honeywell Inc.,
817 F. Supp. 473, 481-82 (D.N.J. 1993) (“When the central facts of a lawsuit occur outside the
forum state, a plaintiff’s selection of that forum is entitled to less deference.”); see also National
Micrographics Sys. v. Canon U.S.A., 825 F. Supp. 671, 681 (D.N.J. 1993).

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Plaintiffs assert that the locus of operative facts is not New York because all communications with Defendant
Gemological Institute after Plaintiffs provided the diamond to K&D Jewelers occurred via email. The Court
disagrees and finds that all actions relevant to Plaintiffs’ claims occurred in New York.

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3. Convenience of the Parties and the Location of Witnesses and Evidence
Although all relevant documents and witnesses are located in New York, neither party
has asserted that any witness would be unavailable in either New York or New Jersey, nor that
documents would be unavailable in either fora. Jumara, 55 F.3d at 879-80.

4. Practical Considerations that Make Trial Expeditious or Inexpensive
The Court finds that all non-party witnesses with knowledge probative of ownership of
the diamond likely reside in New York. A central issue is whether the diamond the Plaintiffs
submitted for appraisal is the same diamond that was reported stolen in 2003. Defendants
identify Ivy Cutler and other Gemological Institute gemologists, as well as employees at K&D
Jewelers as possible witnesses. The Gemological Institute employees that originally examined
the diamond before the alleged theft, like the employees that examined the Plaintiffs’ diamond in
2012, are in New York.

The relevant evidence, including records relating to the theft, the

identification of the diamond, and the diamond itself, is located in New York. That all probative
evidence is located in the transferee district would make discovery and trial in New York
expeditious and less expensive. This factor favors transfer because the interests of efficiency
weigh towards litigating this dispute in a location where the non-party witnesses reside and
where relevant documents may be produced most easily. New York Marine and General Ins. Co.
v. Lafarge North America, Inc., 599 F.3d 102, 113 (2d Cir. 2010) (“the locus of operative facts as
well as the interests of efficiency and fairness favor a New York forum.”).

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5. Local Interest in the Controversy
Courts have an interest in deciding local controversies, and consequently, when an action
“involves injuries sustained in a particular locale, the public interest supports adjudication of the
controversy in that locale.” Coppola v. Ferrellgas, Inc., 250 F.R.D. 195, 201 (E.D. Pa. 2008)
(quoting In re Eastern Dist. Repetitive Stress Injury Litig., 850 F.Supp. 188, 195 (E.D.N.Y.
1994)). Here, New York has a local interest in ensuring that the ownership of property allegedly
stolen from a New York business, and submitted for appraisal in New York, be determined by
New York courts. Moreover, “the burden of jury duty is more fairly placed on the [local]
residents . . . who maintain an interest in resolving disputes which arise from [causes of action]
happening within their borders.” Coppola, 250 F.R.D. at 201. The remaining public interest
factors do not weigh for or against transfer. In sum, Plaintiffs’ choice of forum weighs against
transfer, whereas Defendants’ choice of forum, the location of the operative facts giving rise to
this dispute, the local interest in litigating local controversies, and the public interest in litigating
a dispute in an expeditious manner near the relevant witnesses and evidence weighs in favor of
transfer.4 Together, the Court finds that these factors weigh strongly in favor of transfer.
Consequently, in the interest of justice, this matter will be transferred to the Southern District of
New York.

III. CONCLUSION & ORDER
ACCORDINGLY, IT IS, on this 20th day of February, 2014, hereby

Because the Court finds that the transfer factors, as analyzed pursuant to § 1404, support
transfer, the Court does not reach Defendants’ alternative argument that a forum selection clause
signed by a third-party and Defendant Gemological Institute binds Plaintiffs to litigate in New
York based on principles of agency.
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ORDERED that Defendants’ motions to transfer based on improper venue and motion to
transfer in the interest of justice are GRANTED; and it is further
ORDERED that this case is TRANSFERRED to the Southern District of New York;
and it is further
ORDERED that this case is CLOSED.

SO ORDERED

/s/ Faith S. Hochberg__________
Hon. Faith S. Hochberg, U.S.D.J.

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