Clayton Williams Energy, Inc. v. Pace Energy Solutions, Inc.
ORDER DENYING 13 Motion to Dismiss for Improper Venue ; DENYING 13 Motion to Transfer Venue Signed by Judge David A. Ezra. (sm)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
CLAYTON WILLIAMS ENERGY,
PACE ENERGY SOLUTIONS, INC., )
CV NO. 7:15-cv-43-DAE
ORDER DENYING MOTION TO DISMISS FOR IMPROPER VENUE AND
DENYING MOTION TO TRANSFER VENUE
Before the Court is a Motion to Dismiss and Motion to Transfer
Venue filed by Defendant Pace Energy Solutions, Inc. (“Defendant”) (Dkt. # 13).
The Court held a hearing on the Motions on May 13, 2015. At the hearing,
Richard E. Booth, Esq., appeared on behalf of Plaintiff Clayton Williams Energy,
Inc. (“Plaintiff”), and Anna E. Brandl, Esq., and Charles S. Liberis, Esq., appeared
on behalf of Defendant. After careful consideration of the supporting and
opposing memoranda and the parties’ arguments at the hearing, the Court, for the
reasons that follow, DENIES Defendant’s Motion to Dismiss for improper venue
and DENIES Defendant’s Motion to Transfer Venue.
In February 2008, Pace Data Corporation (“Pace Data”) entered into a
verbal contract with Plaintiff to provide data analysis and processing services.
(“Kimbrough Aff.,” Dkt. # 13-2 ¶ 4.) Specifically, Pace Data agreed to evaluate
and digitize land title and lease information related to properties owned by Plaintiff
and key the data into an electronic mapping program that would allow Plaintiff to
digitally access the title and lease information through an on-screen map. (“Am.
Compl.,” Dkt. # 10 ¶ 5.) While the substance of the agreement was verbal, the
parties also entered into a written confidentiality agreement on February 14, 2008.
(Kimbrough Aff. ¶ 5; “Uzell Aff.,” Dkt. # 8 at 2).
In December 2010, Pace Data was closed and Defendant assumed its
obligations under the verbal contract. 1 (Kimbrough Aff. ¶ 7.) In the course of
performing under the contract, Defendant received confidential information from
Plaintiff that it used to create the electronic mapping program, which included title
and leasing data as well as accounting, engineering, geological, and banking data.
(Am. Compl. ¶ 8.) Through January 2015, Plaintiff had paid Defendant
approximately $13.5 million for its services. (Id. ¶ 9.)
Plaintiff alleges that in May 2014, it discovered that the system used
by Defendant to store Plaintiff’s confidential information had security issues, and
The parties dispute whether Defendant is also bound by the written
confidentiality agreement. (See Kimbrough Aff. ¶ 8; Am. Compl. ¶ 7.)
hired a third party to design a web-based server to allow Plaintiff to securely
access its confidential information. (Id. ¶ 10.) In August 2014, Plaintiff requested
certain confidential information from Defendant in order to construct the new
system, and Defendant refused to provide the requested information. (Id.)
Plaintiff then demanded the return of its confidential information and the databases
created by Defendant, which Defendant refused. (Id. ¶ 11.) Plaintiff subsequently
attempted to download its databases from the website maintained by Defendant,
which allegedly closed the website portal to prevent Plaintiff from downloading
the data. (Id.) On February 12, 2015, Defendant wrote to Plaintiff and stated that
“the remaining cost to acquire the Pace system” was $10.2 million. (Id. ¶12.)
Plaintiff filed suit in the 441st Judicial District Court of Midland
County, Texas on February 19, 2015. (Dkt. # 1 at 6.) On April 2, 2015, Defendant
removed the case to this Court based on the Court’s diversity jurisdiction. Plaintiff
filed an Amended Complaint on April 21, 2015, bringing claims against Defendant
for breach of contract and conversion. (Am. Compl. ¶¶ 13–20.) Plaintiff seeks
damages, attorney’s fees, and an injunction prohibiting Defendant from altering or
destroying any of Plaintiff’s confidential information and related data and
requiring Defendant to deliver all of Plaintiff’s proprietary information to Plaintiff.
(Id. at 9.)
Defendant filed the instant Motion to Dismiss for improper venue and
Motion to Transfer Venue on May 6, 2015. (Dkt. # 13.) Plaintiff filed a Response
on May 11, 2015. (Dkt. # 15.)
Motion to Dismiss for Improper Venue
Defendant argues that 28 U.S.C. § 1391 governs whether venue is
proper in this action, and argues that venue is improper in the Western District of
Texas because Defendant does not reside in the district and because a substantial
part of the events or omissions giving rise to the claim did not occur in the district.
(Dkt. # 13-1 at 4–5.) In a removed action, however, venue is governed by
28 U.S.C. § 1441(a). Burlington N. & Santa Fe Ry. Co. v. Herzog Servs. Inc., 990
F. Supp. 503, 504 (N.D. Tex. 1998) (citing Polizzi v. Cowles Magazines, Inc., 345
U.S. 663, 665–66 (1953)). Under that provision, “any civil action brought in a
State court of which the district courts of the United States have original
jurisdiction, may be removed by the defendant . . . to the district court of the
United States for the district and division embracing the place in which such action
is brought.” § 1441(a). In is undisputed that this Court has original jurisdiction of
this matter under 28 U.S.C. § 1332, and accordingly, venue is proper in the
Midland-Odessa Division of the Western District of Texas, the district and division
in which the action was pending at the time of removal. The Court therefore
DENIES Defendant’s Motion to Dismiss for improper venue.
Motion to Transfer Venue
For the convenience of parties and witnesses, a district court 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 have consented.
28 U.S.C. § 1404(a). “Section 1404(a) is intended to place discretion in the district
court to adjudicate motions for transfer according to an individualized, case-bycase consideration of convenience and fairness.” Stewart Org., Inc. v. Ricoh
Corp., 487 U.S. 22, 29 (1988) (internal quotation marks omitted). The party
moving for transfer carries the burden of showing good cause. See Humble Oil &
Ref. Co. v. Bell Marine Serv., Inc., 321 F.2d 53, 56 (5th Cir. 1963); see also In re
Volkswagen of Am., Inc., 545 F.3d 304, 314 (5th Cir. 2008) (hereinafter
“Volkswagen II”) (“When viewed in the context of § 1404(a), to show good cause
means that a moving party, in order to support its claim for a transfer, must . . .
clearly demonstrate that a transfer is ‘[f]or the convenience of parties and
witnesses, in the interest of justice.’”) (quoting 28 U.S.C. § 1404(a)).
“The preliminary question under § 1404(a) is whether a civil action
‘might have been brought’ in the destination venue.” Volkswagen II, 545 F.3d at
312. If this requirement is met, “[t]he determination of ‘convenience’ turns on a
number of public and private interest factors, none of which can be said to be of
dispositive weight.” Action Indus., Inc. v. U.S. Fid. & Guar. Co., 358 F.3d 337,
340 (5th Cir. 2004). The private factors include: “(1) the relative ease of access to
sources of proof; (2) the availability of compulsory process to secure the
attendance of witnesses; (3) the cost of attendance for willing witnesses; and (4) all
other practical problems that make trial of a case easy, expeditious and
inexpensive.” In re Volkswagen AG, 371 F.3d 201, 203 (5th Cir. 2004)
(hereinafter “Volkswagen I”) (citing Piper Aircraft Co. v. Reyno, 454 U.S. 235,
241 n.6 (1982)). The public factors include: “(1) the administrative difficulties
flowing from court congestion; (2) the local interest in having localized interests
decided at home; (3) the familiarity of the forum with the law that will govern the
case; and (4) the avoidance of unnecessary problems of conflict of laws of the
application of foreign law.” Id.
A plaintiff=s choice of venue is not an independent factor in the venue
transfer analysis, and courts must not give inordinate weight to a plaintiff=s choice
of venue. Volkswagen II, 545 F.3d at 314 n.10, 315 (“[W]hile a plaintiff has the
privilege of filing his claims in any judicial division appropriate under the general
venue statute, § 1404(a) tempers the effects of the exercise of this privilege.”).
However, “when the transferee venue is not clearly more convenient than the
venue chosen by the plaintiff, the plaintiff’s choice should be respected.” Id. at
Defendant requests that this case be transferred to the Pensacola
Division of the Northern District of Florida pursuant to § 1404(a), arguing that the
location of evidence and potential witnesses in Pace, Florida makes the Northern
District of Florida a clearly more convenient forum. (Dkt. # 13-1 at 8.) There is
no dispute that this case could have been brought in the Northern District of
Florida, where Defendant has its principal place of business and therefore “resides”
for the purpose of 28 U.S.C. § 1391. Defendant must also “clearly demonstrate
that a transfer is for the convenience of parties and witnesses, in the interest of
justice.” Volkswagen II, 545 F.3d at 315.
The first private factor requires a court to determine which of the two
venues provides easier access to relevant sources of proof. Defendant argues that
the sources of proof are primarily found in its Pace, Florida offices, where it keeps
the servers that store the data at issue in this case. (Dkt. # 13-1 at 9.) Defendant
also argues that many of the witnesses involved are its officers and employees,
who reside in the Northern District of Florida. (Id. at 10.) Plaintiff responds that
its own books and records relevant to the parties’ contractual relationship are
located in Midland, and that its officers and employees, based in Midland, would
also be expected to serve as witnesses. (Dkt. # 8 at 7.) While the data stored on
Defendant’s servers is certainly relevant to the parties’ dispute, equally relevant is
the parties’ course of performance under the contracts. Such evidence, which
includes communications between the parties, invoices sent by Defendant to
Plaintiff and records of Plaintiff’s payments to Defendant, and records of office
space and equipment used by Defendant in Midland, is located, at least in part, in
Midland. Given that relevant sources of proof are located in both venues, this
factor does not weigh in favor of transfer.
The second factor addresses the availability of compulsory process to
secure the attendance of witnesses. Under Federal Rule of Evidence 45, a
subpoena may compel a non-party witness to attend a trial more than 100 miles
away from the witness’s residence or place of employment only if the trial is
within the state where the person resides and the witness would not incur
substantial expense to travel to the trial. Fed. R. Civ. P. 45(c)(1). Additionally, a
subpoena may command a non-party to attend a hearing or deposition only if it is
within 100 miles of where the person works or resides. Id.
Here, Brian Kimbrough (“Kimbrough”), Defendant’s President,
attests that Defendant was forced to lay off nearly all of its employees following
the termination of the verbal agreement with Plaintiff, and currently employs only
one employee. (Kimbrough Aff. ¶ 13.) Such former employees, if they continued
to reside in Florida, would be non-party witnesses outside of the Midland-Odessa
Division’s power to subpoena for either deposition or trial. Defendant has not,
however, specified which of its former employees are potential non-party
witnesses, what such witnesses would testify to, or where they currently reside.
The Court is therefore unable, absent additional information regarding Defendant’s
potential non-party witnesses, to find that this factor weighs in favor of transfer.
The third private factor considers the cost of attendance for willing
witnesses, which has been recognized as “the most important factor under
§ 1404(a).” Bascom v. Maxim Integrated Prods., Inc., 534 F. Supp. 2d 700, 704
(W.D. Tex. 2008); 15 Charles Alan Wright & Arthur R. Miller, Federal Practice
and Procedure § 3851 (4th ed. 2008). “When the distance between an existing
venue for trial of a matter and a proposed venue under § 1404(a) is more than 100
miles, the factor of inconvenience to witnesses increases in direct relationship to
the additional distance travelled.” Volkswagen II, 545 F.3d at 317. While the
distance between Pensacola and Midland easily exceeds 100 miles, Defendant has
identified no potential witnesses who would be inconvenienced by trying the case
in Midland. Even if the Court were to assume that Kimbrough will be a witness
for Defendant, his inconvenience would not outweigh the inconvenience of trying
the case in Midland to Plaintiff’s (also unidentified) employee witnesses. This
factor therefore does not weigh in favor of transfer.
The final private factor covers all other practical problems. Here,
Defendant argues that the Court should consider the relative resources of the
parties, characterizing itself as a “small, private mom-and-pop outfit” that is
“struggling to stay solvent and remain open,” and stating that it would be subject to
severe hardship if required to litigate in the Western District of Texas. (Dkt.
# 13-1 at 9; Kimbrough Aff. ¶ 16.) Plaintiff, by contrast, is “a publicly traded
energy company.” (Dkt. # 13-1 at 9.) Defendant’s financial circumstances, while
regrettable, are not relevant to the venue analysis under § 1404(a). Defendant
essentially argues that its preferred venue should be favored because Plaintiff is
better able to bear the additional costs associated with litigating in a distant
location. In general, however, “a transfer should not be made where the only
practical effect is to shift inconvenience from the moving party to the non-moving
party.” Zurich Am. Ins. Co. v. Tejas Concrete & Materials Inc., 982 F. Supp. 2d
714, 726 (W.D. Tex. 2013). The Court thus finds that none of the private interest
factors weigh in favor of transfer.
Public Factors 2
The first public factor considers the relative congestion of the courts
in question. “Generally, this factor favors a district that can bring a case to trial
faster.” Frito-Lay N. Am. v. Medallion Foods, Inc., 867 F. Supp. 2d 859, 871
(E.D. Tex. 2012). While the median time from filing to trial in the Northern
District of Florida is five months faster than the median time to trial in the Western
District of Texas, 3 court congestion is considered the “most speculative” factor
because “case-disposition statistics may not always tell the whole story.” In re
Genentech, 566 F.3d 1338, 1347 (Fed. Cir. 2009) (applying 5th Circuit law). The
Court thus does not place undue weight on these statistics, and the difference of
five months weighs only lightly in favor of transfer.
The second public factor considers the local interest in the litigation.
“Jury duty is a burden that ought not to be imposed upon the people of a
community which has no relation to the litigation.” Volkswagen I, 371 F.3d at
206. The focus of the inquiry is the relative connection of the localities to the
events giving rise to this suit and their corresponding interests in the resolution of
Defendant’s Motion does not address any of the public interest factors relevant to
the venue transfer analysis under § 1404(a). The Court will consider them
U.S. Courts, Federal Court Management Statistics, December 2014, available at
this controversy. See Volkswagen II, 545 F.3d at 318. Given that each party’s
respective headquarters is located in its preferred venue, the negotiation of the
contracts took place in Midland, and performance of the contracts occurred in both
the Western District of Texas and the Northern District of Florida, neither venue
has a significantly greater local interest in the litigation relative to the other. This
factor is therefore neutral.
The third and fourth public factors consider familiarity with governing
law and avoidance of unnecessary conflicts of law. The confidentiality agreement
is governed by Texas law, and Plaintiff has represented that “the parties agreed that
Texas law will apply.” (Dkt. # 8 at 7, Ex. A ¶ 8.) Because the Western District of
Texas is more familiar with Texas law than a Florida court, this factor weighs
against transfer. The parties have not pointed to any potential issues regarding
conflicts of law, and this factor is therefore neutral.
Based on its analysis of the private and public factors, the Court finds
that Defendant has failed to clearly demonstrate that the Pensacola Division of the
Northern District of Florida is a more convenient venue. None of the private
factors weigh in favor of transfer. Of the public factors, the relative congestion of
the courts weighs only lightly in favor of transfer, the familiarity with governing
law weighs against transfer, and the remaining public factors are neutral. The
Court therefore DENIES Defendant’s Motion to Transfer Venue.
For the foregoing reasons, the Court DENIES Defendant’s Motion to
Dismiss for improper venue and DENIES Defendant’s Motion to Transfer Venue
(Dkt. # 13).
IT IS SO ORDERED.
DATED: Midland, Texas, May 19, 2015.
David Alan Ezra
Senior United States Distict Judge
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