LEONETTI'S FROZEN FOODS, INC. v. REW MARKETING, INC.

Filing 13

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE MARK A. KEARNEY ON 9/30/2015. 9/30/2015 ENTERED AND COPIES E-MAILED.(sg, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

LEONETTl'S FROZEN FOODS, INC.

C.A. NO. 15-4169

Plaintiff
v.

CREW, INC. d/b/a REW
MARKETING, INC.
Defendant

MEMORANDUM
KEARNEY,J.

September 30, 2015

Many have suffered embarrassment from the all-too-familiar issue in business emails of
hitting "reply-all" to an email including comments not intended to be read by everyone on the
email chain. The substantive legal issue here is the effect of an errant "reply-all" email which
allegedly causes an unintended recipient/potential customer to stop working towards a business
relationship with Plaintiff.

We will not decide the substantive issues as both the defendant

sender and third party unintended recipient/potential customer are located in Bentonville,
Arkansas and venue more properly resides in the Western District of Arkansas.
The Southwest Philadelphia Plaintiff asked Defendant business broker in Bentonville,
Arkansas to help it place its custom stromboli products in Sam's Club also headquartered in
Bentonville. Plaintiffs claims arise from the Arkansas Defendant's agent sending a "reply-all"
email with a copy to Sam's Club's agents in Arkansas suggesting Plaintiff may be selling
stromboli to Sam's Club's lead competitor Costco.

Sam's Club officials in Arkansas thereafter

decided, for reasons presently unknown, to stop any further testing of Plaintiffs stromboli for
placement in its stores. As this dispute arises from conduct involving decisions made by a third

party Arkansas citizen based on an email representation made by another Arkansas citizen, we
transfer venue to the Western District of Arkansas where all of the witnesses reside and the
district court may exercise personal jurisdiction over all of Plaintiff's claims.

I.

FACTS
Philadelphia Plaintiff Leonetti's Frozen Foods Inc. ("Leonetti") develops frozen food

products for sale to businesses under a private label and to consumers under its own label. (First
Amended Complaint, ECF Doc. No. 8,

ii 13). Defendant CREW Marketing INC. ("CREW") of

Bentonville, Arkansas is a marketing services broker located near Walmart headquarters
providing programs for the advertising, solicitation and marketing of products to club-format
stores such as Sam's Club owned by Walmart. 1 (Id. at iii! 6, 21.)
In August 2014, Leonetti director Robert Ippaso met with a senior vice-president of
Sam's Club. (Id. at

ii 14.) Ippaso and Sam's Club discussed developing a custom, ready-to-eat

stromboli product for sale at Sam's Club's cafes ("Cafe Stromboli"). (Id. at

ii 15.) Leonetti

proposed designing and testing the stromboli specifically for sale at Cafe Strombolis. (Id. at

ii 16.) Leonetti offered its own brand of frozen stromboli products ("Leonetti Frozen Stromboli")
for sale in Sam's Club's freezer section. (Id. at ii 17.)
Leonetti then asked CREW for help in pursuing Sam's Club. (Id. at

ii 20.) CREW

already represented Leonetti with Costco warehouse stores since January 2014. (Id. at iii! 22-23.)
Leonetti and CREW limited their relationship to the Costco account and allowed additional
accounts only if agreed in writing. (Id. at

iii! 25-26.) As part of this on-going business

relationship with Costco, CREW met with Leonetti in Philadelphia at unknown times. (Id. at

Sam's Club is a national membership-based warehouse "club store."
2

ii

29.) Leonetti never agreed, ether orally or in writing, to amend the Costco brokerage agreement
to include the Sam's Club account. (Id.

at~

30.)

CREW's Jeff Campigli represented Leonetti on the Costco account. (Id.

at~

27.) On

August 14, 2014, CREW orally agreed at an unknown location to (1) represent Leonetti in
interfacing with Sam's Club's head office and food buyers regarding Leonetti Cafe Stromboli
and Frozen Stromboli products; (2) assist Leonetti with preparing forms and other paperwork
required by Sam's Club in pitching and presenting the Cafe Stromboli and Leonetti Frozen
Stromboli products; (3) assist Leonetti in the handling of the sampling, cutting and other product
testing necessary to obtain Sam's Club's approval for the purchase of Leonetti Cafe Stromboli
and Leonetti Frozen Stromboli products; and (4) maintain Leonetti product specifications and
Sam's Club's respective product requirements for the Cafe Stromboli and Frozen Stromboli
products in confidence as is standard within the industry. (Id.

at~

32.)

CREW's Cindy Romines then represented Leonetti with Sam's Club. (Id. at

~

36.)

From August 2014 through January 2015, Leonetti developed the Cafe Stromboli under Sam's
Club's specifications. (Id.

at~

38.) Romines, along with other CREW staff, liaised with Sam's

Club management and buying department regarding the status of Leonetti prototype Cafe
Stromboli and Leonetti Frozen Stromboli products, in addition to presenting and cutting samples
of Leonetti products for testing in Sam's Club's home office test kitchen and in-club testing. (Id.
at~

39.) By December 2014, Sam's Club and CREW confirmed the Cafe Stromboli and Leonetti

Frozen Stromboli products had been progressing favorably through development and testing. (Id.
at~

40.)
On December 10, 2014, Sam's Club agreed to purchase Leonetti Frozen Stromboli

subject to a final panel test in early January 2015. (Id.

3

at~

41.) Sam's Club initially considered

purchasing Leonetti Frozen Stromboli for sale at twenty-six (26) stores in New Jersey,
Pennsylvania, Delaware, and New York in the First Quarter 2015; if Leonetti Frozen Stromboli
sold well, Sam's Club intended to expand the program nationwide. (Id. at

iii! 42-43.) In early

January 2015, Romines attended the final panel test of Leonetti Frozen Stromboli and told
Leonetti the Frozen Stromboli tested beautifully per her conversation with the Sam's Club
employee overseeing the panel's taste test. (Id. at iii! 45-46). With the panel test complete, Sam's
Club's appeared prepared to place orders for Leonetti Frozen Stromboli. (Id. at if 47.)
On December 16, 2014, CREW' s Romines told Leonetti it had passed all tests to date for
the Cafe Stromboli and the only remaining test before Sam's Club moved forward is the "hold
test." (Id. at
(Id. at

if 48.) CREW's Romines attended Sam's Club's "hold test" on January 14, 2015.

if 51.) On the same day, Romines emailed her summary of the hold test to "John and

Jeremy" of Sam's Club:
John and Jeremy good day! I completed the in-club testing this morning at the
Bentonville Sam's Club. Test went extremely well. I used 8 Stromboli's in the test.
The additional samples were used to determine where to start the pans as the
temperature and times were not set at 485 * - 6 minutes. The ovens were set at
500* - 6:30, club associate said they started the pizzas at the entrance of the oven
and recommended we do the same. I found that the top oven cooked hotter than
the 2nd and 3rd oven. While the top oven did not bum the Stromboli they were a
little darker than we like to have. Attached is a recap of the testing. Please let me
know if you have any questions and what our next steps will be.
(Id. at ii 52.)

CREW's Romines copied Leonetti and her colleague Campigli on her January 14, 2015
email to "John and Jeremy" of Sam's Club.

CREW's Campigli "replied all" to Romines'

January 14, 2015 email:
"Nice job Cindy. Robert and I could even use slides 2-5 m our Costco
Presentation next week:)"
(Id. at ii 56.)

4

Leonetti claims "shock" to learn of Campigli's email sent to Sam's Club suggesting
Leonetti would ever take part in using a confidential and proprietary stromboli developed for
Sam's Club to sell to Costco, Sam's Club's largest competitor. (Id.

at~

57.)

The next day, Leonetti responded to CREW's Campigli and Romines: "Ouch Jeff.... " (Id.
at~

~

59.) CREW's Campigli responded: "I am so sorry guys ... writing email to John now." (Id. at

66.) CREW's Campigli immediately emailed John at Sam's Club:
John, I AM SO SORRY. This was a very poor attempt at humor and meant for
Cindy only. We would never share testing, conducted exclusively for you, with
any customer. .. especially your #1 competitor.
Cindy, Robert and Beth have worked so hard to meet your expectations. I can
only hope that you won't hold this stupid, stupid error as a negative against a
fantastic product and profitable program for Sam's Club.

As the person responsible for the Costco account in our brokerage company, I'd
like to assure you that the product Leonetti's has developed with you over the past
several years is exclusive to Sam's. Any work we have been asked to do for
Costco does not include this specific product.
I'm traveling on Friday, but if you'd like to discuss this in further detail, please
don't hesitate to contact me@ [REDACTED]
(Id.

at~61.)

Sam's Club responded furiously to CREW's Campigli's email, did not believe him and
now believed Leonetti to be an untrustworthy business partner. (Id. at
concluded to not do business with Leonetti. (Id. at

~

~~

62-64.) Sam's Club

65.) In late January 2015, Sam's Club

advised it would not purchase any of Leonetti stromboli. (Id.

at~

67.) After learning of Sam's

Club's decision, CREW's Romines called Leonetti and informed him the Cafe Stromboli passed
the final test and Leonetti Frozen Stromboli performed exceptionally well at the focus group
testing according to Sam's Club personnel present during the testing. (Id.

at~~

68-69.) CREW's

Romines said Campigli's email is the only possible reason for Sam's Club's decision. (Id. at
~

69.) Leonetti alleges CREW's Campigli's January 14, 2015 "reply- all" email is the sole

5

reason for Sam's Club decision not to move forward. (Id.

at~

70.) Having lost the Sam's Club

opportunity, Leonetti sued CREW for damages alleging professional negligence; breach of an
oral contract; breach of a fiduciary duty; and, trade libel.
II.

ANALYSIS

CREW moves to dismiss arguing this Court lacks personal jurisdiction or is otherwise an
improper venue, and if we retain the case, Leonetti fails to state a claim. As we find transfer of
this matter to the Western District of Arkansas is warranted, we decline to review CREW' s
arguments under Rules 12(b)(2) and 12(b)(6). 2
Transfer to the Western District of Arkansas is warranted under Jumara.

CREW removed this case from the Court of Common Pleas of Philadelphia County,
Pennsylvania in this District. (Id.,

~~

7, 9). Venue is presumptively proper here. "Section 1441(a)

expressly provides that the proper venue of a removed action is 'the district court of the United
States for the district and division embracing the place where such action is pending."' Polizzi v.

2

"Courts generally consider the question of personal jurisdiction before addressing the
issue of proper venue." Cumberland Truck Equip. Co. v. Detroit Diesel Corp., 401 F. Supp. 2d
415, 419 (E.D. Pa. 2005) (citing Leroy v. Great W United Corp., 443 U.S. 173, 180 (1979)). "A
court may, however, first analyze the question of venue when "the resolution of the venue issue
'resolves' the case before [the] Court." Cumberland, 401 F. Supp. 2d at 419 (citing Lamanna v.
Black, 285 F.Supp.2d 637, 640 (E.D.Pa.2003)).
"A court has the power to transfer a case pursuant to venue transfer statutes without
possessing personal jurisdiction over the defendants." Cumberland, 401 F. Supp. 2d 415 at 419
(footnote omitted) (citing Goldlawr, Inc., v. Heiman, 369 U.S. 463, 466 (1962)). In United States
v. Berkowitz, 328 F.2d 358 (3d Cir. 1964), the Court of Appeals for the Third Circuit held "[t]he
district court believed that it was without power to transfer this case under § 1404(a) in the
absence of jurisdiction over the person of the defendant. But Goldlawr, Inc. v. Heiman, [],
conclusively settled that question. It is true that Goldlawr involved an interpretation of§ 1406(a).
Nevertheless, we think that its rationale applies equally to § 1404(a), for these are companion
sections, remedial in nature, enacted at the same time, and both dealing with the expeditious
transfer of an action from one district or division to another." 328 F.2d at 361 (citing Goldlawr,
369 U.S. 463 (1962)). Accordingly, we may transfer a case pursuant to § 1404(a) despite lacking
personal jurisdiction over the persons. Berkowitz, 328 F.2d at 361.
6

Cowles Magazines, Inc., 345 U.S. 663, 666 (1953) (citing 28 U.S.C § 1441). While Leonetti and

Crew discuss the factors under 28 U.S.C § 1391, those factors are not relevant in a removed case.
Despite the presumptive propriety of venue, we may transfer this case after carefully
applying the factors in Jumara v. State Farm Ins. Co. 55 F.3d 873, 879 (3d Cir. 1995). Pursuant
to 28 U.S.C. §1404(a), a district court "[f]or the convenience of parties and witnesses, in the
interest of justice, ... may transfer any civil action to any other district or division where it
might have been brought or to any district or division to which all parties consented." "Section
1404(a) is intended to place discretion in the district court to adjudicate motions for transfer
according to an individualized, case-by-case consideration of convenience and fairness." Stewart
Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988) (internal quotation omitted); see also Jumara,

55 F.3d at 879.
Section 1404(a) requires the alternate venue to be one in which the case "might have been
brought." 28 U.S.C. §1404(a). CREW is an Arkansas corporation, retained by Leonetti to liaise
with Sam's Club in the same town in Arkansas. A substantial part of the events giving rise to
Leonetti claims occurred in the Western District of Arkansas, even though a Pennsylvania
company experienced the harm of conduct emanating from California but not .effected until a
decision by Sam's Club in the Western District of Arkansas.

As CREW is located in the

Western District of Arkansas, general personal jurisdiction may be invoked over it there.

This

action could have been properly brought in the Western District of Arkansas. See id.
"In ruling on § 1404(a) motions, courts have not limited their consideration to the three
enumerated factors in § 1404(a) (convenience of parties, convenience of witnesses, or interests
of justice) .... " Jumara, 55 F.3d at 879. Beyond the three enumerated factors, courts consider
private and public interest factors to determine whether to transfer venue. Id.

7

Leonetti focuses almost entirely on its harm felt in this District.

We appreciate a

Pennsylvania company's loss of a possible relationship allegedly caused by an unfortunate email
sent by an Arkansas company to another Arkansas company. Leonetti focuses on this email and
Sam's Club's reasons to not work with Leonetti. We cannot find authority, and will not find
here, categorically mandating venue in this District when the only connection to this District is a
Pennsylvania plaintiff seeking recovery for an errant email causing an Arkansas company to
make a business decision to not work with the Pennsylvania company, particularly when there is
no directed activity to harm the Pennsylvania citizen. Instead, we must apply Jumara 's private
and public interest factors in determining whether a transfer serves the convenience of the parties
and witnesses and the interests of justice.
Private interest factors.

"The private interests have included: (1) plaintiffs forum preference as manifested in the
original choice; (2) the defendant's preference; (3) whether the claim arose elsewhere; (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 actually be
unavailable for trial in one of the fora; and (6) the location of books and records (similarly
limited to the extent that the files could not be produced in the alternative forum)." Jumara, 55
F.3d at 879 (citations omitted).
Leonetti prefers its home forum in the Eastern District of Pennsylvania, CREW prefers its
home forum in the Western District of Arkansas. "It is black letter law that a plaintiffs choice of
a proper forum is a paramount consideration in any determination of a transfer request, and that
choice 'should not be lightly disturbed.' "Shutte v. Armco Steel Corp:., 431 F.2d 22, 25 (3d Cir.
1970) (citing Ungrundv. Cunningham Brothers, Inc., 300 F.Supp. 270, 272 (S.D. Ill. 1969)).
8

The claim for breach of contract may arise in the Eastern District of Pennsylvania or the
Western District of Arkansas. The breach occurred in an email sent from California to Arkansas
and Pennsylvania. The breach, if any, is of CREW's oral agreement (admittedly not permitted
under their written agreement) reached in an unknown location to represent Leonetti in the
Western District of Arkansas.
The tort claims for professional negligence, breach of fiduciary duty, and trade libel
weigh in favor of transfer, as they all arise outside of Pennsylvania. The convenience of the
parties is neutral as one party will need to travel to the other forum regardless of which is
selected. The convenience of witnesses appears neutral, although the Sam's Club representatives
making the decisions and the CREW agents are located in, or work from, Arkansas. There is no
basis to find any witness from either party is not available for a trial in Arkansas but third party
witnesses from Sam's Club are located in the Western District of Arkansas.

The location of

books and records, particularly in this electronic age, is not dispositive as the records can be
produced and transferred with ease from either venue.

If anything, the key documents and

emails involve Sam's Club's internal decision to not hire Leonetti. Those original records and
their custodians, along with CREW' s records, are headquartered in the Western District of
Arkansas.
Public interest factors.

"The public interests have included: (1) the enforceability of the judgment; (2) practical
considerations that could make the trial easy, expeditious, or inexpensive; (3) the relative
administrative difficulty in the two fora resulting from court congestion; (4) the local interest in
deciding local controversies at home; (5) the public policies of the fora; and (6) the familiarity of
the trial judge with the applicable state law in diversity cases." Jumara, 55 F.3d at 879-80

9

(citations omitted)).
A judgment rendered by the district court in Western Arkansas is as equally enforceable
as a judgment from this District, although Leonetti's potential judgment in Arkansas may be
procedurally easier to execute upon local company CREW rather than a transferred judgment
from this District. We are not aware of any CREW assets in this District but Leonetti concedes
CREW is located in the Western District of Arkansas. Practical considerations weigh in favor of
transfer as all witnesses to Sam's Club's decision to cease discussions with Leonetti are located
in Western Arkansas.
We are also mindful, while we do not rule upon personal jurisdiction here, Leonetti has a
difficult argument to sustain specific personal jurisdiction over CREW for its professional
negligence 3 , breach of fiduciary duty4 and trade libel 5claims in Pennsylvania.

Following

3

See Poole v. Sasson, 122 F. Supp. 2d 556, 558 (E.D. Pa. 2000) (personal jurisdiction
could not be exercised in New Hampshire over Florida attorneys representing New Hampshire
residents based on alleged negligence and malpractice where the harm was felt in New
Hampshire but the negligent conduct occurred elsewhere); See also FDIC v. Malmo, 939 F.2d
535, 536-37 (8th Cir.1991) (effects of an attorney's negligence felt in the forum insufficient to
establish personal jurisdiction).
4

Breach of fiduciary duty is an intentional tort, meeting the first element of the effects test
of specific jurisdiction in Calder v. Jones, 465 U.S. 783 (1984). Leonetti felt the brunt of the
harm in Pennsylvania, meeting the second Calder element. However, there is no indication
CREW expressly aimed its conduct at Pennsylvania, and its alleged conduct breaching a
fiduciary duty (the reply-all email) occurred outside Pennsylvania. "[T]he Calder "effects test"
can only be satisfied if the plaintiff can point to contacts which demonstrate that the defendant
expressly aimed its tortious conduct at the forum, and thereby made the forum the focal point of
the tortious activity." IMO Indus., Inc v. Kiekert AG, 155 F.3d 254, 265 (3d Cir. 1998) (emphasis
in original). "Simply asserting that the defendant knew that the plaintiffs principal place of
business was located in the forum would be insufficient in itself to meet this requirement." Id.
(footnote omitted). "The defendant must 'manifest behavior intentionally targeted at and focused
on' the forum for Calder to be satisfied." Id. (citing ESAB Grp., Inc. v. Centricut, Inc., 126 F.3d
617, 625 (4th Cir. 1997)). Without some indication CREW expressly aimed its "reply-all" email
at Pennsylvania, it may be difficult for this Court to exercise personal jurisdiction over CREW
on the breach of fiduciary duty claim.

10

analysis, it is likely this Court may only retain personal jurisdiction over Leonetti' s breach of
contract claim.

Conversely, Leonetti is unlikely to face challenges to either general or specific

personal jurisdiction over CREW in its home district; transferring the whole action to a single
forum with unquestioned personal jurisdiction rather than requiring two trials on largely the
same facts in two fora will make trial easier, more expeditious, and less expensive for all
.

parties.

6

Applying the remaining public interest factors, we find the factors are either neutral or
weigh in favor of the Western District of Arkansas. The parties do not offer comparisons of case
processing between this District and the Western District of Arkansas but, absent some
extraordinary fact, we expect the fine jurists in the Western District of Arkansas who review
cases involving Walmart matters will similarly move this matter to prompt resolution. The
interest in resolving local controversies at home may weigh in favor of retaining venue if the

5

Trade libel is an intentional tort. See George A. Davis, Inc. v. Camp Trails Co., 447 F.
Supp. 1304, 1306 (E.D. Pa. 1978). Similar to our analysis of breach of fiduciary duty, trade libel
meets elements one and two of Calder. Leonetti adduces no basis to find CREW expressly
aimed conduct at Pennsylvania; while CREW sent the email here through a "reply-all'', the
named recipient of the email is Cindy Romines, a CREW employee. (ECF Doc. No. 8 at 8).
While the conduct reached Pennsylvania, it appears to be aimed at Arkansas. "Simply asserting
that the defendant knew that the plaintiffs principal place of business was located in the forum
would be insufficient in itself to meet this requirement." IMO Indus., 155 F.3d at 265 (footnote
omitted). "The defendant must 'manifest behavior intentionally targeted at and focused on' the
forum for Calder to be satisfied." Id. (citing ESAB Grp., Inc. v. Centricut, Inc., 126 F.3d 617,
625 (4th Cir. 1997)). Without some indication CREW expressly aimed its reply-all email at
Pennsylvania, it may be difficult for this Court to exercise personal jurisdiction over CREW on
the trade libel claim.
6

Even if denied transfer under § 1404(a), conducted a personal jurisdiction analysis, and
found no personal jurisdiction over CREW for three of Leonetti's four claims, we would likely
transfer to the Western District of Arkansas under 28 U.S.C. § 1631. Under this procedure, "[a]
court may transfer a case to another district in which the action could have been brought, even
when it lacks personal jurisdiction over the defendants." Manley v. Premium Spray Prods., Inc.,
No. 14-3379, 2015 WL 1475310, *5 (E.D. Pa. Mar. 31, 2015) (citing Goldlawr, 369 U.S. at 46567).
11

majority of witnesses were not located in Arkansas.
Pennsylvania citizen.

Here, the controversy only affected a

All facts and witnesses relating to the errant "reply-all" email, and its

alleged harmful affect upon Sam's Club, are local in the Western District of Arkansas. We find
the public policies of both Pennsylvania and Arkansas recognize the impact of mistaken "replyall" emails and their effect upon an innocent party. We also find the district judge in either state
can apply the applicable law of either Arkansas or Pennsylvania and this factor is also neutral.

III.

CONCLUSION
Taken as a whole, the Jumara private and public interest factors weigh in favor of

transferring venue to the Western District of Arkansas. While Leonetti' s choice of venue is not
lightly disturbed particularly given it felt the effects of CREW' s actions here, we find all of the
remaining Ju mara factors relating to the convenience and location of witnesses relating to Sam's
Club's decision based on CREW's representation arise in, and are more directly related to, the
Western District of Arkansas. We transfer venue to the Western District of Arkansas in the
accompanying Order.

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