Aids Service Center of Lower Manhattan, Inc. v. Pharmblue L.L.C.

Filing 21

OPINION AND ORDER re: 11 MOTION to Dismiss or in the Alternative to Transfer Venue. filed by Pharmblue L.L.C. For the reasons set forth in this Opinion and Order, PharmaBlue's motion to dismiss or in the alternative to transfer venue is DENIED in its entirety. The Clerk of the Court is directed to close this motion [Doc. No. 11]. A conference is scheduled for 8/15/2014 at 4:30 p.m. (Signed by Judge Shira A. Scheindlin on 7/30/2014) (tro)

UNIT D STATES DISTRICT COURT
SOUT ERN DISTRICT OF NEW YORK

--------- ----------------------------------------------){.
AIDS ERVICE CENTER OF LOWER
MAN ATTAN, INC. d/b/a AIDS SERVICE
CENT RNYC,

OPINION AND 0

Plaintiff,
- against PHA

BLUE LLC,
Defendant.

--------

SHI
I.

-----------------------------------------------){.
A. SCHEINDLIN, U.S.D.J.:
NTRODUCTION
AIDS Service Center of Lower Manhattan, Inc., doing busin ss as

AIDS ervice Center NYC ("ASCNYC"), brings this diversity action ag inst
lue LLC ("PharmBlue") for multiple causes of action, including: 1)
fraudu ent inducement; (2) negligent misrepresentation; (3) breach of co
breach of implied covenant of good faith; and ( 5) unjust enrichment. Ph
now

Blue

oves to dismiss under the first-filed-case rule or, in the alternative, transfer

venue o the United States District Court for the Western District of Pen ylvania.
For th following reasons, PharmBlue's motion is DENIED in its entiret
1

II.

BACKGROUND1
ASCNYC is a New York non-profit organization with its principal

office in New York City.2 ASCNYC provides comprehensive social and medical
case management services to New York City’s HIV/AIDS community, including
assisting its clients in obtaining necessary medications.3 PharmBlue is a Delaware
limited liability company with its principal place of business in Pennsylvania. 4 In
April 2013, ASCNYC and PharmBlue entered into a Pharmacy Services
Agreement (the “Agreement”),5 under which PharmBlue agreed to act as
ASCNYC’s designated “contract pharmacy” to dispense medications to its clients
for purposes of the 340B Program (“the exclusivity provision”).6 PharmBlue’s
1

The facts below are taken from the Complaint (“Compl.”), unless
otherwise indicated.
2

See Compl. ¶ 7.

3

See id. ¶¶ 1-2. See also 5/30/14 Declaration of Sharen I. Duke,
Executive Director and Chief Executive Officer (“CEO”) of ASCNYC, in
Opposition to Defendant’s Motion to Dismiss or in the Alternative to Transfer
Venue (“Duke Decl.”) ¶ 2.
4

See Compl. ¶ 8.

5

The Agreement is governed by New York law. See id. ¶ 14.

6

Section 340B of the Veterans Health Care Act of 1992, 42 U.S.C. §
256, is a drug pricing program through which prescription drug manufacturers can
offer HIV/AIDS drugs at discounted prices to certain purchasers, as defined by the
Covered Entities statute, that are registered and approved by the Health Resources
and Services Administration (“HRSA”). See Compl. ¶¶ 11-13.
2

duties included providing Eligible Patients, as defined in the Agreement, with
Pharmacy Services, including “dispens[ing] Covered Drugs to Eligible Patients in
accordance with all applicable State and Federal statutes and regulations.”7 Under
the Agreement, “[b]ased on prescriptions from their doctors, ASCNYC would
order medication for 340B Program-enrolled clients at discounted prices and have
the drugs shipped directly to PharmBlue, which would dispense the drugs to
ASCNYC’s clients.”8 PharmBlue would then seek reimbursement for the full cost
of the drugs from the clients’ insurance providers and retain a portion of the
Reimbursement Differential Funds as its fee.9 ASCNYC would receive the
remaining portion to fund its various HIV/AIDS programs.10
Many of ASCNY’s clients receive prescribed medications through
New York’s Medicaid insurance programs.11 ASCNYC alleges that beginning

7

Id. ¶ 21. See also 5/19/14 Declaration of Dianna C. Wyrick,
defendant’s counsel, in Support of Defendant’s Motion to Dismiss or in the
Alternative to Transfer Venue (“Wyrick Decl.”); 4/9/13 Pharmacy Services
Agreement, Ex. 1 to Wyrick Decl., at 4.
8

Compl. ¶ 18.

9

See id. Reimbursement Differential Funds is the difference between
the discounted cost of the medications and the amount reimbursed by the insurance
company. See also id. ¶ 15.
10

See id. ¶ 18.

11

See id. ¶ 19.
3

with the execution of the Agreement and through the present, PharmBlue has failed
to dispense Covered Drugs to ASCNYC’s Medicaid-eligible clients because it
lacks the required New York Medicaid licensure.12 ASCNYC further alleges that
PharmBlue made material misrepresentations in the Agreement regarding its
Medicaid licensure and ability to lawfully provide Pharmacy Services to
ASCNYC’s Medicaid-eligible clients, on which ASCNYC relied to its detriment.13
Specifically, ASCNYC alleges that PharmBlue deprived it of the benefits of the
Agreement by preventing ASCNYC from obtaining 340B Program funds.14
On January 21, 2014, ASCNYC asked PharmBlue to amend the
Agreement to eliminate the exclusivity provision. ASCNYC wanted to contract
with a pharmacy with a New York Medicaid license in order to service its
Medicaid-eligible clients.15 PharmBlue rejected this request.16 On March 6, 2014,
Michael Nelson, CEO of PharmBlue, informed Sharen Duke, CEO and Executive
12

See id. ¶ 23.

13

See id. ¶ 24. PharmBlue states that the Agreement does not require it
to have a Medicaid license, but it made efforts to obtain one in order to
accommodate ASCNYC. See Memorandum of Law in Support of Defendant’s
Motion to Dismiss or in the Alternative to Transfer Venue (“PharmBlue Mem.”), at
4.
14

See Duke Decl. ¶ 7.

15

See Compl. ¶ 41.

16

See id.
4

Director of ASCNYC, that PharmBlue had obtained its Medicaid license.17
ASCNYC alleges that this information was also false.18 On March 14, 2014,
ASCNYC provided PharmBlue with a Notice of Termination of the Agreement
due to its continuing failure to render Pharmacy Services to Medicaid-eligible
clients under the Agreement.19 The Notice of Termination informed PharmBlue
that ASCNYC would “continue to utilize PharmBlue’s services for non-Medicaid
eligible patients” for the next ninety days, but “intend[ed] during this 90-day
period to contract with a properly licensed New York Provider” for its Medicaideligible patients.20 It further informed PharmBlue that ASCNYC “intend[ed] to
pursue a claim for all the damages it has sustained as a result of PharmBlue’s
material breaches.”21 On March 19, 2014, PharmBlue’s attorney, Dianne Wyrick,
responded to ASCNYC asserting that PharmBlue had not materially breached the
Agreement and that even if it had, PharmBlue had ninety days from the date of the

17

See id. ¶ 42.

18

See id. ¶ 43.

19

See id. ¶ 44. See also 3/14/14 Letter from Joseph Saltarelli, plaintiff’s
counsel, to Matthew Mohn, defendant’s counsel (“3/14/14 Saltarelli Letter”), Ex. 2
to Wyrick Decl., at 2; 3/14/14 Notice of Termination of the Pharmacy Services
Agreement (“Notice of Termination”), Ex. 2 to Wyrick Decl.
20

3/14/14 Saltarelli Letter at 2.

21

Id.
5

Notice of Termination to cure any alleged material breach before the Agreement
could be terminated.22 Wyrick also disclosed that on February 28, 2014,
PharmBlue had acquired a pharmacy in Brooklyn, New York with a Medicaid
license that could provide the Pharmacy Services to ASCNYC, thereby curing the
alleged breach of the Agreement.23 In light of that development, PharmBlue asked
ASCNYC to withdraw the Notice of Termination so PharmBlue and ASCNYC
could continue their business relationship “without the threat of litigation.” 24 On
March 31, 2014, ASCNYC’s counsel, Joseph Saltarelli, responded that ASCNYC
would not withdraw the Notice of Termination or waive its claim for damages.25
However, ASCNYC would agree to meet with PharmBlue, in the interests of
avoiding litigation, to address a mutually agreeable termination of the Agreement
and appropriate compensation for ASCNYC’s losses.26 In subsequent telephone
conversations with Wyrick on April 4 and April 9, 2014, ASCNYC reiterated that

22

See 3/19/14 Letter from Dianne Wyrick to Joseph Saltarelli (“3/19/14
Wyrick Letter”), Ex. 3 to Wyrick Decl., at 1.
23

See id. at 2.

24

Id.

25

See 3/31/14 Letter from Joseph Saltarelli to Dianne Wyrick (“3/31/14
Saltarelli Letter”), Ex. 4 to Wyrick Decl., at 3.
26

See id. at 4.
6

it would not withdraw the Notice of Termination.27
On April 9, 2014, Saltarelli informed Wyrick that ASCNYC was
prepared to litigate if the parties could not reach a settlement, and thereafter
updated Duke on this conversation.28 The next day, at 12:17 p.m., Wyrick emailed
Saltarelli a copy of the complaint and motion for preliminary injunction that
PharmBlue had filed in the Allegheny Court of Common Pleas (the “Pennsylvania
Action”). ASCNYC was served immediately thereafter.29
PharmBlue states that it based its April 10, 2014 filing on its
discovery that ASCNYC had entered into a January 2014 contract with another
pharmacy, Town Total Health, LLC (“Town Total”), in violation of the exclusivity
provision of the Agreement.30 PharmBlue learned of the Town Total contract from
a publication on the HRSA website.31 On April 15, 2014, PharmBlue amended its

27

See Wyrick Decl. ¶ 10.

28

See 5/29/14 Declaration of Joseph J. Saltarelli in Opposition to
Defendant’s Motion to Dismiss or in the Alternative to Transfer Venue (“Saltarelli
Decl.”) ¶¶ 6-7. See also 4/9/14 Email from Saltarelli to Duke, Ex. C to Saltarelli
Decl., at 1.
29

See Saltarelli Decl. ¶ 9.

30

See Wyrick Decl. ¶ 11.

31

See id. ¶ 12. See also 4/9/14 HRSA Printouts, Ex. 5 to Wyrick Decl.
7

complaint to add Town Total as a defendant.32 The judge in the Pennsylvania
Action held a status conference on April 21, 2014, ordered expedited discovery,
and set hearings for ASCNYC’s expected objections to personal jurisdiction (June
11, 2014) and PharmBlue’s motion for preliminary injunction (June 12, 2014). 33
ASCNYC filed the instant action on April 18, 2014, seeking
rescission of the Agreement and asserting claims for damages.34 On April 30,
2014, ASCNYC removed the Pennsylvania Action to the United States District
Court for the Western District of Pennsylvania,35 and then moved to dismiss the
case for lack of personal jurisdiction, transfer the case to this Court, and/or stay
discovery.36 On May 2, 2014, a telephone status conference was held in the
Pennsylvania Action and an expedited briefing schedule for various procedural
motions was set.37 Those motions were all filed on May 12, 2014 and were fully

32

See Wyrick Decl. ¶ 15. See also 4/10/14 Verified Amended
Complaint, Ex. 6 to Wyrick Decl.
33

See Wyrick Decl. ¶¶ 17-18. See also 4/22/14 and 4/28/14 Court
Orders, Ex. 7 to Wyrick Decl.
34

See Duke Decl. ¶ 8.

35

See Wyrick Decl. ¶ 19.

36

See id. ¶ 20.

37

See id.
8

briefed as of May 23, 2014.38
III.

MOTION TO TRANSFER PURSUANT TO FIRST-FILED RULE
Under the first-filed rule, “[w]here there are two competing lawsuits,

the first suit should have priority.”39 The rule “embodies considerations of judicial
administration and conservation of resources.”40 It applies “where proceedings
involving the same parties and issues are pending simultaneously in different
federal courts.”41 However, the rule is not to be “applied in a rigid or mechanical
way.”42 “[T]he existence of non-overlapping claims or parties does not disqualify
lawsuits from the first-filed rule.”43 Additionally, “where the two actions were

38

See id. ¶ 21. The motions are currently sub judice. See Memorandum
of Law of AIDS Service Center NYC in Opposition to Defendant’s Motion to
Dismiss or in the Alternative to Transfer Venue (“ASCNYC Mem.”), at 4.
39

Employers Ins. of Wausau v. Fox Entm’t Group, Inc., 522 F.3d 271,
274-75 (2d Cir. 2008) (citations omitted).
40

First City Nat. Bank & Trust Co. v. Simmons, 878 F.2d 76, 80 (2d Cir.
1989) (citing Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co., 342 U.S. 180, 183
(1952)).
41

Sotheby’s, Inc. v. Minor, No. 08 Civ. 7964, 2009 WL 73134, at *1
(S.D.N.Y. Jan. 6, 2009).
42

Cephalon, Inc. v. Travelers Cos., Inc., 935 F. Supp. 2d 609, 613
(S.D.N.Y. 2013) (quoting Dornoch Ltd. v. PBM Holdings, Inc., 666 F. Supp. 2d
366, 369 (S.D.N.Y. 2009)).
43

Liberty Mut. Ins. Co. v. Fairbanks Co., No. 13 Civ. 3755, 2014 WL
1796005, at *5 (S.D.N.Y. May 5, 2014).
9

filed within a short span of time, the court may afford a diminished degree of
deference to the forum of the first filing.”44 Application of the first-filed rule is
also “diminished where there has been little progress in the first-filed action.”45
“The Second Circuit recognizes two circumstances that warrant departure from the
first-filed rule: (1) where there are ‘special circumstances,’ and (2) where the
‘balance of convenience’ tilts in favor of the second forum.”46
A.

Special Circumstances
“Special circumstances” include “manipulative or deceptive

behavior” (such as where the first lawsuit is an improper anticipatory declaratory
judgment action) or where “forum shopping alone motivated the choice of the situs
for the first suit.”47
1.

Anticipatory Action

“[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

44

Raytheon Co. v. National Union Fire Ins. Co. of Pittsburgh, PA, 306
F. Supp. 2d 346, 352 (S.D.N.Y. 2004).
45

See Pippins v. KPMG LLP, No. 11 Civ. 377, 2011 WL 1143010, at *
4 (S.D.N.Y. Mar. 21, 2011).
46

Id. at *2 (citing Employers Ins. of Wausau, 522 F.3d at 275).

47

Employers Ins. of Wausau, 522 F.3d at 275-76 (internal quotation
marks omitted).
10

as to deadlines and subsequent legal action.”48 “‘[A] declaratory judgment is
considered anticipatory if filed in response to a demand letter specifically
threatening litigation, but is not anticipatory where it is in response to a negotiating
letter.’”49 A notice letter which fails to inform the defendant of plaintiff’s
“intention to file suit, a filing date, and/or a specific forum for the filing of the
suit”50 is not sufficient to constitute an anticipatory filing. However,
“Where a party is prepared to pursue a lawsuit, but first desires to
attempt settlement discussions, that party should not be deprived
of the first-filed rule’s benefit simply because its adversary used
the resulting delay in filing to proceed with the mirror image of
the anticipated suit. Otherwise, potential plaintiffs would be
discouraged from first attempting to resolve their claims without
resorting to litigation.”51

48

Id. at 276 (citations omitted).

49

Erickson Beamon Ltd. v. CMG Worldwide, Inc., No. 12 Civ. 5105,
2013 WL 5355010, at *5 (S.D.N.Y. Sept. 25, 2013) (quoting Schnabel v. Ramsey
Quantitative Sys., Inc., 322 F. Supp. 2d 505, 511 (S.D.N.Y. 2004)).
50

J. Lyons & Co. Ltd. v. Republic of Tea, Inc., 892 F. Supp. 486, 491
(S.D.N.Y. 1995).
51

Revise Clothing, Inc. v. Levi Strauss & Co., No. 10 Civ. 5843, 2010
WL 4964099, at *3 (S.D.N.Y. Dec. 6, 2010) (quoting Ontel Prods., Inc. v. Project
Strategies Corp., 899 F. Supp. 1144, 1150 (S.D.N.Y. 1995)). Accord Elbex Video,
Ltd. v. Tecton, Ltd., No. 00 Civ. 673, 2000 WL 1708189, at *2 (S.D.N.Y. Nov. 15,
2000) (holding that despite Elbex expressing an interest in pre-litigation settlement,
because it notified Tecton of potential infringement and indicated a desire to
protect its rights, the first-filed suit was an “inappropriate filing resulting from an
improper race to the courthouse”).
11

2.

Forum Shopping

The Second Circuit has made clear that for forum shopping to justify a
departure from the first-filed rule, “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.”52 Thus, to depart from the first-filed rule based on
forum-shopping it is necessary that this “alone motivated that choice of the situs
for the first suit.”53 “A party who appropriately files suit in the forum most
convenient to [it] to resolve a ripe legal dispute is not engaged in forum
shopping.”54
B.

Balance of Convenience Factors
Even if no “special circumstances” exist, the court may still find that

the balance of convenience weighs in favor of the second forum.55 The “balance
of convenience” factors are “essentially the same as those considered in connection

52

Employers Ins. of Wausau, 522 F.3d at 276.

53

Id.

54

Schnabel, 322 F. Supp. 2d at 514.

55

See Employers Ins. of Wausau, 522 F.3d at 275.
12

with motions for transfer of venue pursuant to 28 U.S.C. § 1404(a).” 56 “‘Because
the factors to be considered by the Court are substantially identical, a single
analysis of the factors will resolve both issues.’”57 These factors include:
“(1) the plaintiff’s choice of forum, (2) the convenience of
witnesses, (3) the location of relevant documents and relative ease
of access to sources of proof, (4) the convenience of the 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.”58
The moving party must prove that the balance of convenience factors favors
transfer, and “[t]he plaintiff’s choice of forum should not be disturbed unless
the balance of the factors tips heavily in favor of transfer.”59
IV.

DISCUSSION
A.

Application of First-Filed Rule
PharmBlue argues that because the Pennsylvania Action was filed

first, the first-filed rule creates a presumption that the instant action should be

56

Id.

57

Liberty Mut. Ins. Co., 2014 WL 1796005, at *7 (quoting AIG Fin.
Prods. Corp. v. Public Util. Dist. No. 1 of Snohomish Cnty., Wash., 675 F. Supp.
2d 354, 368 (S.D.N.Y. 2009)).
58

Tomjai Enter., Corp. v. Laboratorie Pharmaplus USA, Inc., No. 12
Civ. 3729, 2012 WL 3104891, at *4 (S.D.N.Y. Jul. 31, 2012) (quoting Employers
Ins. of Wassau, 522 F.3d at 275)).
59

Liberty Mut. Ins. Co., 2014 WL 1796005, at *7.
13

dismissed.60 ASCNYC contends that because the two actions were filed only days
apart and no progress had yet been made in the Pennsylvania Action, the
presumption in favor of the first-filed action is diminished.61 The Pennsylvania
Action was commenced on April 9, 2014 and the instant action was filed on April
17, 2014, five business days later. This short lapse of time supports a finding of a
diminished degree of deference to the first-filed action in Pennsylvania. 62
Moreover, there has not been significant progress in the Pennsylvania Action. 63 On
May 12, 2014, ASCNYC filed a motion to dismiss the Pennsylvania Action for
lack of personal jurisdiction, or in the alternative, to transfer venue to this District.
PharmBlue also filed a motion seeking to remand the Pennsylvania Action to the
Allegheny Court of Common Pleas. Both motions were fully briefed but remain
sub judice and a status conference scheduled for June 2, 2014 was continued until
further notice. Because the Pennsylvania Action and the instant action were filed
less than a week apart and the Pennsylvania Action has not progressed

60

See PharmBlue Mem. at 8.

61

See ASCNYC Mem. at 14.

62

See Raytheon, 306 F. Supp. 2d at 354 (holding that because the firstfiled action was filed only two days before the second, the filing dates lacked
significance and could be disregarded).
63

See Saltarelli Decl. ¶¶ 11-13.
14

significantly, the first-filed rule is entitled to less deference.
B.

PharmBlue’s Filing of the Pennsylvania Action Was an Improper
Anticipatory Filing
PharmBlue argues that there are no special circumstances which

would justify giving priority to the instant action. 64 ASCNYC contends that
PharmBlue’s filing of the Pennsylvania Action was an improper anticipatory action
as it was done in response to ASCNYC’s direct threat of litigation.65 ASCNYC
argues that the March 14 and March 31, 2014 letters, in combination with the
express statement of intention to file suit during the April 9, 2014 telephone
conversation between counsel, constituted a specific threat of litigation.66
ASCNYC’s March 14 letter to PharmBlue expressed ASCNYC’s intention to
pursue claims “‘for all damages [ASCNYC] has sustained as a result of
PharmBlue’s material breaches of its obligations and representations.’”67
ASCNYC’s March 31 letter also reserved its “‘claim of damages or its right to seek
rescission of the Agreement.’”68 Finally, while Saltarelli informed Wyrick in the

64

See PharmBlue Mem. at 9.

65

See ASCNYC Mem. at 7.

66

See id. at 9-10.

67

Id. at 9 (quoting 3/14/14 Saltarelli Letter at 2).

68

Id. (quoting 3/31/14 Saltarelli Letter at 4).
15

April 9, 2014 telephone call that ASCNYC preferred to terminate by mutual
agreement, he also stated that ASCNYC was prepared to litigate if an agreement
could not be reached. At the conclusion of the conversation, Wyrick stated she
would speak with her client, PharmBlue, and “get back to him.”69 Rather than
continuing the discussion, however, PharmBlue filed the Pennsylvania Action later
the same day. PharmBlue asserts that “the single precipitating factor” which
caused it to file suit was its discovery of ASCNYC’s contract with Town Total
hours after the telephone conversation between counsel.70 ASCNYC contends that
because it filed its registration of Town Total with HRSA on January 29, 2014, this
publication had been accessible online for months prior to April 9, raising
significant doubt as to the credibility of PharmBlue’s explanation of its April 9
filing.71 While ASCNYC did not indicate a filing date or forum in which it would
file its lawsuit, it did inform PharmBlue of its intention to file suit.72 While more
than a general threat is required to find a declaratory action anticipatory,73
69

Saltarelli Decl. ¶ 6.

70

See PharmBlue Mem. at 11.

71

See ASCNYC Mem. at 9.

72

“[A] date and forum are not fixed prerequisites, but mere indicia of
notice.” See Cephalon, 935 F. Supp. 2d at 615.
73

See, e.g., Erickon Beamon Ltd., 2013 WL 5355010, at *4 (cease and
desist letter stating that, “[s]hould you fail to comply with our request . . . our
16

ASCNYC should not be deprived of its right to litigate in a forum of its choice
merely because PharmBlue engaged in a race to the courthouse and filed suit the
same day in which it participated in active settlement discussions.74 Not only did
ASCNYC express its desire to amicably resolve the dispute after PharmBlue asked
to avoid the “threat of litigation,” but PharmBlue led ASCNYC to believe this was
possible. Given the suspicious timing of PharmBlue’s filing of the Pennsylvania
Action, I find that the Pennsylvania Action was an improper anticipatory action.
This anticipatory filing overcomes the presumption in favor of the first-filed
forum.
B.

Balance of Convenience Factors
In weighing the totality of the convenience factors, I also conclude

that the Southern District of New York is the appropriate forum for this case.
1.

Plaintiff’s Choice of Forum

“The Second Circuit has consistently held that ‘a plaintiff’s choice of

client is prepared to utilize all legal avenues available to ensure that all such
unauthorized use ceases and that our client is fairly compensated for such past
unauthorized use,” was a general threat that did not rise to the level of special
circumstances).
74

See Elbex, 2000 WL 1708189, at *2.
17

forum is presumptively entitled to substantial deference.’”75 “‘However, the
emphasis placed by a court on this choice diminishes where the operative facts
upon which the litigation is brought bear little material connection to the chosen
forum.’”76 While generally PharmBlue’s choice of filing in Pennsylvania, its
principal place of business, would be given substantial deference, PharmBlue has
not established any significant events that occurred in Pennsylvania. As discussed
below, the operative facts underlying this action took place in New York and have
little, if any, connection to the Western District of Pennsylvania.77 Thus,
PharmBlue’s choice of forum is accorded little or no deference and this factor does
favor a transfer.
2.

Convenience of Witnesses and Ability to Compel
Attendance

“When weighing the convenience of the witnesses, courts must
consider the materiality, nature, and quality of each witness, not merely the number

75

AIG Fin. Prods. Corp., 675 F. Supp. 2d at 368 (citing Gross v. BBC,
386 F.3d 224, 230 (2d Cir. 2004)).
76

Fteja v. Facebook, Inc., 841 F. Supp. 2d 829, 843 (S.D.N.Y. 2012)
(quoting Capitol Records, LLC v. VideoEgg, Inc., 611 F. Supp. 2d 349, 368
(S.D.N.Y. 2009)).
77

See, e.g., Tomjai Enters., Corp., 2012 WL 3104891, at *5.
18

of witnesses in each district.”78 Thus, a party seeking transfer must “‘clearly
specify the key witnesses to be called and must make a general statement of what
their testimony will cover.’”79 Here, PharmBlue does not identify any witnesses,
non-party or otherwise, that could be compelled to testify in Pennsylvania but not
in New York. In contrast, ASCNYC has identified non-party witnesses who are
likely to testify including, “ASCNYC clients who reside in New York City, New
York Medicaid department government officials, and New York Presbyterian
Hospital physicians.”80 ASCNYC lists three physicians, who work and reside in
New York, who are likely to testify “regarding their dealings with PharmBlue and
its inability to bill Managed Medicaid in connection with prescriptions for
ASCNYC’s Medicaid-eligible clients.”81 Because Pennsylvania is over one
hundred miles from New York City, these New York based witnesses could not be
compelled to testify in either the Pennsylvania Action, or the Court of Common

78

Indian Harbor Ins. Co. v. Factory Mut. Ins. Co., 419 F. Supp. 2d 395,
404 (S.D.N.Y. 2005) (citation omitted).
79

Liberty Mut. Ins. Co., 2014 WL 1796005, at *8 (quoting Factors Etc.,
Inc. v. Pro Arts, Inc., 579 F.2d 215, 218 (2d Cir. 1978) (citations omitted),
overruled on other grounds by Pirone v. MacMillan, Inc., 894 F.2d 579 (2d Cir.
1990)).
80

ASCNYC Mem. at 22 (citing Duke Decl. ¶ 23).

81

Duke Decl. ¶ 23.
19

Pleas if remanded.82 Therefore, this factor weighs against transfer.
3.

Location of Documents and Relative Ease of Access to
Sources of Proof

“The location of relevant documents[,] is a neutral factor in today’s
world of electronic communication and overnight shipping.” 83 PharmBlue’s
documents are located in Pennsylvania. However, ASCNYC’s and Town Total’s
documents are both maintained in New York. ASCNYC identifies numerous
relevant documents located in New York, including ASCNYC’s clients’
prescription records, records of New York Presbyterian Hospital, New York
Medicaid records, and records from the Brooklyn-based pharmacy acquired by
PharmBlue. While generally the location of documents would be a neutral factor,
it does appear that transferring this action would impose a slight burden on
ASCNYC. Therefore this factor weighs against transfer.
4.

The Convenience of the Parties

“[T]he parties’ convenience becomes a neutral factor in the transfer
analysis if transferring venue would merely shift the inconvenience to the other
party.”84 Two of ASCNYC’s senior personnel, who are expected to testify, reside

82

See Fed. R. Civ. P. 45(c).

83

Pippins, 2011 WL 1143010, at *5.

84

AIG, 675 F. Supp. 2d at 370 (citation omitted).
20

in New York City and New Jersey. ASCNYC maintains its headquarters and only
offices in New York City. While PharmBlue has its principal place of business in
Pennsylvania, its senior officers regularly travel to New York for business.
Additionally, Town Total, also resides in and is licensed in New York. This factor
weighs against transfer.
5.

Relative Means of the Parties

“The relative means of the opposing parties may support or
discourage transfer of venue if there is a significant financial disparity between the
parties.”85 PharmBlue alleges that ASCNYC “has significant resources to litigate
in either Pennsylvania or New York, regardless of its status as a non-profit.” 86
ASCNYC, by contrast, has submitted information demonstrating that it operates on
“limited governmental funding and private charitable donations” and is currently
represented on a pro-bono basis.87 PharmBlue has not submitted any evidence of
its own financial means. This factor thus tilts slightly in favor of New York as the
most convenient forum.
6.

The Locus of Operative Facts

85

Herbert Ltd. P’ship v. Electronic Arts Inc., 325 F. Supp. 2d 282, 290
(S.D.N.Y. 2004).
86

PharmBlue Mem. at 14.

87

ASCNYC Mem. at 23.
21

“In an action arising out of a breach of contract, the location of the
operative facts is ‘where the contract was negotiated or executed, where it was to
be performed, and where the alleged breach occurred.’”88 Here, the Agreement
was negotiated and executed in New York. The alleged breach is based on
PharmBlue’s obligation to deliver pharmacy services to ASCNYC’s Medicaideligible clients who primarily reside in New York. Moreover, PharmBlue claims
that any breach was cured by its acquisition of a Brooklyn-based pharmacy.
Because the majority of the operative facts occurred in New York, this factor
weighs against transfer.
7.

Forum’s Familiarity with Governing Law

Because federal courts are deemed capable of applying the substantive
law of other states, the forum’s familiarity with the governing law is typically “‘to
be accorded little weight on a motion to transfer venue.’”89 “However, while
‘federal courts in other states are capable of construing New York law, especially
in a straightforward contract question, the forum’s familiarity with the governing

88

Mohnsen v. Morgan Stanley & Co., Inc., No. 11 Civ. 6751, 2013 WL
5312525, at *6 (S.D.N.Y. Sept. 23, 2013) (quoting ACGS Marine Ins. Co. v.
Associated Gas & Oil Co., 775 F. Supp. 2d 640, 648 (S.D.N.Y. 2011)).
89

Liberty Mut. Ins. Co., 2014 WL 1796005, at *10 (quoting Astor
Holdings, Inc. v. Roski, No. 01 Civ. 1905, 2002 WL 72936, at *13 (S.D.N.Y. Jul.
17, 2002) (citation omitted)).
22

law may be a factor even in contract cases.’”90 Here, the Agreement at the center
of the dispute has a New York choice-of-law clause. The parties agree that the
substantive question in the action is whether the Agreement required PharmBlue to
be qualified to bill New York Medicaid for ASCNYC’s Medicaid-eligible clients.
It does not appear that this action implicates any complex or novel questions of
state law. Accordingly, this factor weighs against transfer, although only slightly.
8.

Interests of Justice

PharmBlue argues that it would be more convenient to proceed with a
single action in Pennsylvania, where Town Total is also a party, than to litigate two
separate actions in two separate jurisdictions.91 One factor to be considered in
whether a transfer is warranted in the interest of justice is “‘when two cases
involving the same issues are simultaneously pending in different district
courts.’”92 “‘However, where suits are filed in quick succession and/or the court
with the first filed action has done little with respect to it, the rule carries less

90

Mastr Asset Backed Secs. Trust 2007-WMCI, ex rel. U.S. Bank Nat.
Ass’n WMC Mortg. LLC, 880 F. Supp. 2d 418, 423 (S.D.N.Y. 2012) (quoting AIG,
675 F. Supp. 2d at 372) (citations and quotations omitted)).
91

See PharmBlue Mem. at 13.

92

Mastr, 880 F. Supp. 2d at 424 (quoting Barnet v. Elan Corp., 236
F.R.D. 154, 164 (S.D.N.Y. 2005) (citations omitted)).
23

weight.’”93 Here, the instant action was filed only five business days after the
Pennsylvania Action. Given that the Pennsylvania Action has not progressed
significantly, the interest of justice would not be greatly served by transferring this
action. Moreover, the majority of the relevant considerations indicate that a
transfer of venue would be inappropriate in this case. The convenience of
witnesses, the forum’s ability to compel attendance of witnesses, the location of
relevant documents, the convenience and relative means of the parties, the locus of
operative facts, and this Court’s relatively greater familiarity with New York law,
all weigh against transfer. Thus Pennsylvania’s interest in the action is minimal
and the interests of justice weigh in favor of retaining the case in the Southern
District of New York.
V.

ABSTENTION
At the time PharmBlue’s instant motion was filed, there was a

pending motion in the Pennsylvania Action to remand that case to state court. As
an alternative to its motion to dismiss or transfer, PharmBlue has moved this Court
to dismiss this action pursuant to the abstention principles set forth in Colorado

93

AIG, 675 F. Supp. 2d at 372-73 (quoting American Steamship Owners
Mut. Protection and Indem. Ass’n, Inc. v. Lafarge N. Am., Inc., 474 F. Supp. 2d
474, 489 (S.D.N.Y. 2007)).
24

River

ater Conservation District v. United States.

94

However, as the mo ion to

reman is currently sub Judice, a ruling on PharmBlue's motion for abste 10n 1s

VI.

ONCLUSION
For the foregoing reasons, PharmBlue's motion to dismiss or in the

altema ive to transfer venue is DENIED in its entirety. The Clerk of the

ourt is

directe to close this motion [Doc. No. 11]. A conference is scheduled fo August

15, 20 4 at 4:30 p.m.

Sh~ra

A. Scheindlin
U.S.D.J.
New York, New York
July 30, 2014

Dated:

4

424 U.S. 800 (1976).
25

- Appearances For Plaintiff:
Joseph John Saltarelli, Esq.
Patrick L. Robson, Esq.
Hunton & Williams, LLP (NYC)
200 Park Avenue, 52nd Floor
New York, NY 10166
[phone]
For Defendant:
Casey Devin Laffey, Esq.
Reed Smith, LLP (NYC)
599 Lexington Avenue
New York, NY 10022
[phone]
Dianna Calaboyias Wyrick, Esq.
Reed Smith, LLP (Pittsburgh)
225 Fifth Avenue
Pittsburgh, PA 15222
[phone]

26