Sapp v. FirstFitness International Inc

Filing 21

ORDER granting 14 Motion to Transfer Case. This action is transferred to the United States District Court for the Northern District of Texas, Dallas Division.Ordered by Judge Hugh Lawson on 09/16/09 (mbh)[Transferred from Georgia Middle on 10/1/2009.]

IN THE UNITED STATES DISTRICT COURT F O R THE MIDDLE DISTRICT OF GEORGIA M AC O N DIVISION C H R IS T IN A SAPP, P l a i nti ff, v. F IR S T F IT N E S S INTERNATIONAL, INC., D e fe nd a nt. : : : : : : : : :

C i v i l Action No. 5:09-CV-048

ORDER T hi s matter comes before the Court on Defendant FirstFitness Inte rna ti o na l , Inc.'s Motion to Transfer Venue (the "Motion") and its Memorandum o f Law in Support (the "Brief") (Doc. 14) (the "Motion"). For the reasons set out b e l o w , the Motion is GRANTED. F AC TU AL BACKGROUND T hi s case has a long history spanning several courts, states and federal d i s tri c ts . FirstFitness International, Inc. ("FF") is a Texas corporation with its p ri nc i p a l office in Carrollton, Texas. (Def.'s Br. 6.) FF markets, sells and d i s tri b ute s various nutritional and dietary foods and supplements, which it sells e xc l us i v e l y through its network of authorized distributors and on FF's website. (Def.'s Br. 2.) Plaintiff, Christina Sapp, was formerly an authorized distributor of

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F F products before she terminated her distribution agreement with FF. (Def.'s Br. 2 -3 .) FF filed a complaint against Sapp (the "Texas complaint") in the United S ta te s District Court for the Northern District of Texas, Dallas Division (the "Texas c o urt").1 Among the various claims for relief in the Texas complaint, FF asked the T e xa s court for injunctive relief to prevent Sapp from the unauthorized use of c e rta i n internet domain names and the unauthorized use of certain intellectual p ro p e rty of FF on "any website." (FF's Texas Compl. ¶ 65.) B e fo re trial, FF and Sapp entered into a Settlement Agreement (the "A g re e m e nt") and Agreed Permanent Injunction and Final Judgment (the "Inj unc tio n").2 Germane to this litigation, Sapp agreed to stop permanently the us e of various terms such as 1st Fitness, FirstFitness, and Zavita, among others, "i n the content of any website, on eBay, or otherwise on the Internet or in any p ri nte d matter," and "permanently stop using the name, photograph, likeness, or o the r identifying characteristic of all FirstFitness distributors and distributorships i n connection with the advertisement, sale, or purchase of any product, without the distributor's written consent." (Inj. ¶¶ 1(b) and (f).) Additionally, the Texas c o urt, FF and Sapp agreed that the Texas court would "retain jurisdiction of the p a rti e s for enforcement of the terms of [the Injunction]." (Inj. ¶ 3.)

FF also asserted claims against Sapp's business associate, Fredrick Thomas, in the Texas Complaint. Thomas is not a party to this action.
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Thomas is also a party to the Agreement and the Injunction. 2

O n February 6, 2009, Sapp filed her original complaint, jury demand and a p p l i c a ti o n for permanent injunctive relief (Doc. 1) (the "Complaint") in this Court,3 thus initiating this litigation. In the Complaint, Sapp prayed for: (a) money d a m a g e s for FF's alleged tortious interference with business based on FF's use o f the VeRO (verified rights owner) program to terminate certain auctions initiated b y Sapp to sell FF products on eBay, (Sapp Compl. ¶ 20); (2) a declaratory j ud g e m e nt affirming Sapp's right to lawfully sell FF products on eBay without furthe r interference by FF, (Sapp Compl. ¶ 36); (3) a permanent injunction e nj o i ni ng FF "from any action or conduct which interferes in the Plaintiff's b us i ne s s of reselling genuine FirstFitness products," (Sapp Compl. ¶ 39); and (4) m o ne y damages for deceptive and unfair trade practices based on FF's use of the VeRO program to halt eBay auctions, (Sapp Compl. ¶¶ 41-47). In its Answer (D o c . 5), FF alleged that the doctrines of res judicata and collateral estoppel b a r re d any relief that could be afforded to Sapp. (FF Answer 1-2.) Additionally, F F alleged that all of the claims Sapp raised in the Complaint were barred b e c a us e they were compulsory counterclaims that should have been asserted in the Texas case. (FF Answer 2.) S ho rtl y after FF filed its answer in this case, FF filed, in the Texas case, its

Plaintiff also filed, contemporaneously with the Complaint, a Motion for Permanent Injunction (Doc. 2). Because this Court transfers this case to the Texas court, it is not necessary for this Court to address this Motion. 3

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M o ti o n for Show Cause Hearing to Determine W hy Defendants Frederick T ho m a s and Christina Sapp Should Not Be Held In Contempt (the "Contempt M o ti o n"). In the Contempt Motion, which is still pending in the Texas court, FF a s k s the Texas court to hold Sapp in contempt, and to award FF money damages a s well as its fees and expenses. (Contempt Mot. 5-6.) In support of the C o nte m p t Motion, FF alleges violations of the Agreement and the Injunction by c o nti nue d sales on eBay and by the filing of this action by Sapp for money d a m a g e s and injunctive relief. (Contempt Mot. 1-5.) F i na l l y , FF filed this Motion with this Court on April 16, asking this Court to tra ns fe r this case to the Texas court. D IS C U S S I O N "F o r the convenience of the parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where i t might have been brought." 28 U.S.C. § 1404(a). Determining whether or not to e xe rci s e its discretion and transfer a case to another venue requires that a court a d d re s s two primary issues: whether the case could have been brought in the tra ns fe r e e court, and whether the interests of justice would be served by a tra ns fe r of venue. Id. See also First Fed. Sav. and Loan Ass'n of W a rne r R o b ins , Georgia, v. Berger, 672 F.Supp. 1454, 1456 (M.D. Ga. 1987). In resolving the first issue, a court must consider whether jurisdiction, v e nue and service are appropriate in the transferee court. Martin v. South 4

C a ro l i na Bank, 811 F.Supp. 679, 683 (M.D. Ga. 1992). This case is certainly one tha t could have been brought in the Northern District of Texas. Federal j uri s d i c ti o n exists here because of the complete diversity of the citizenship of the p a rti e s . 28 U.S.C. § 1332. Sapp is a citizen of Georgia and FF is a citizen of T e xa s , and the matter in controversy exceeds $75,000.00. Alternatively, the fe d e ra l courts have subject matter jurisdiction over this case based on the L a nha m Act, 15 U.S.C. § 1121, and 28 U.S.C. § 1331 federal question j uri s d i c ti o n. Additionally, personal jurisdiction, venue and service are all proper w i th regard to FF in the Northern District of Texas because Defendant has its p ri nc i p a l place of business there. Del Monte Food Produce Co. v. Dole Food C o ., Inc., 136 F.Supp.2d 1271, 1281-82 (S.D. Fla. 2001). Therefore, this case is o ne that could have been brought in the Northern District of Texas. D o the interests of justice favor transfer? The Court recognizes three c o ns i d e ra ti o ns with regard to the balancing of interests for transfer: first, that the C o urt must analyze a motion to transfer on a case-by-case, individualized basis, S te w a rt Org. Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988); second, that the burden i s on the moving party to establish a balance of factors in favor of the transfer, In re Ricoh Corp., 870 F.2d 570, 573 (11th Cir. 1989); and third, that courts should a c c o rd a plaintiff's choice of venue considerable deference, In re Ricoh, 870 F.2d a t 573. Nevertheless, the plaintiff's choice of forum is still "only one of several fa c to rs " to consider. Stewart Org., 487 U.S. at 31. See also First Fed., 672 5

F .S up p . at 1456. Among the host of factors a court should consider in d e te r m i ni ng whether the interests of justice require transfer, the two most i m p o rta nt are the location of the key witnesses and whether other actions i nv o k i ng the same or substantially similar subject matter are pending in the tra ns fe re e district. First Fed., 672 F.Supp. at 1456-57; Samsung, 386 F.Supp. at 7 1 8 and 721-22. Regarding the location of key witnesses, FF argues that five of its key w i tne s s e s , who have knowledge of and are likely to testify about Plaintiff's a c ti o ns , Plaintiff's relationships with other distributors, the means by which P l a i nti ff acquired Defendant's products, the Plaintiff's websites, the damages s uffe r e d by Defendant, and the Settlement Agreement and Injunction in the first c a s e , are all located in the Northern District of Texas. (Def.'s Br. 11.) Sapp does no t challenge FF's assertion regarding witnesses, nor does Sapp argue that her w itnes s (e s ) would be similarly inconvenienced by a transfer. Thus, it appears tha t the more appropriate venue with regard to key witnesses is in the Northern D i s tri c t of Texas. A no the r crucial consideration is whether related actions are pending in the tra ns fe re e district. Samsung, 386 F.Supp. at 721. If there are such pending a c ti o ns , "the interest of justice is generally thought to `weigh heavily' in favor of tra ns fe r " because litigating the actions in the same court "avoids duplicative l i ti g a ti o n where one court has already invested `substantial time and energy' in a 6

c a s e ." Id. at 721-22. The interests of justice "strongly support a transfer" in c a s e s , such as this one, where the transferee court "reviewed and decided the p ri o r litigation between the parties . . ., especially [when the] case turns on the p re c l us i v e effect of that court's judgment." W e i nb e rg e r, 391 F.Supp.2d at 245. See also Nolte v. Bellsouth Telecommunications, Inc., 2007 W L 2253561, at *3 (N .D . Ala. 2007) ("The court finds that, because prior similar litigation has o c c urre d and the present action turns on the preclusive effect of [the transferee c o urt's ] Order [dismissing the prior case], the interests of justice would be served b y transferring this case to the court that reviewed and decided [the prior case]."); S a m s ung , 386 F.Supp.2d at 722 ("[W ]he r e a party has previously litigated a case i nv o l v i ng similar issues and facts[,] `a court in that district will likely be familiar w i th the facts of the case. As a matter of judicial economy, such familiarity is hi g hl y desirable."); Reiffin v. Microsoft Corp., 104 F.Supp.2d 48, 58 (D.D.C. 2000) ("`T o permit a situation in which two cases involving . . . the same issues are s i m ul ta ne o us l y pending in different District Courts leads to the wastefulness of ti m [e ], energy and money that § 1404(a) was designed to prevent."). In this case, FF argues that all of the claims Sapp asserts in her Complaint w e re raised in one form or another in her answer to FF's Texas complaint, and thus are precluded. (Def.'s Mot. 8.) FF further argues that, to the extent Sapp did not raise these claims in the previous litigation, they were compulsory c o unte rc l a i m s that should have been raised in the previous litigation. (Def.'s Mot. 7

9 .) Sapp obviously disputes this and argues that the issues she raises are distinct fro m those raised in the Texas case. (Pl.'s Resp. 2.) In addition to the concerns about claim preclusion, res judicata and c o m p ul s o ry counterclaims, and perhaps more significantly, FF has filed a C o nte m p t Motion against Sapp in the Texas court involving the claims Sapp a s s e rts in this litigation. W ha t is more, the Texas court, in the Injunction, e xp l i c i tl y retained jurisdiction of "the parties for enforcement of the terms of [the Inj unc ti o n.]" (Inj. ¶ 3.) In light of all the foregoing, this Court believes that the Texas court is in a b e tte r position to determine which claims were raised in the litigation before it, a nd what issues were decided in the Injunction. The interests of justice would be b e tte r served by transferring this case to the court most familiar with the previous l i ti g a ti o n, and with a motion addressing the same issues pending before it. F o r the above reasons, Defendant's Motion to Transfer Venue is G R A N T E D , and this action is transferred to the United States District Court for the Northern District of Texas, Dallas Division. S O ORDERED, this the 16th day of September, 2009.

/s / Hugh Lawson HUGH LAW S O N , JUDGE jch

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