Board of Trustees, Sheet Metal Workers' National Pension Fund v. Boeser, Inc. et al
Filing
27
MEMORANDUM OPINION in re 11 Motion to Dismiss and 15 Motion to Transfer Venue. Signed by District Judge James C. Cacheris on 01/28/2015. (jlan)
IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA
Alexandria Division
BOARD OF TRUSTEES, SHEET METAL
WORKERS’ NATIONAL PENSION FUND
Plaintiff,
v.
BOESER, INC., et al.,
Defendants.
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M E M O R A N D U M
1:14cv1458(JCC/TCB)
O P I N I O N
This matter is before the Court on Defendant Lawrence
Boeser’s (“Boeser”) Motion to Dismiss for Lack of Personal
Jurisdiction, or in the alternative, to Transfer Venue [Dkt. 11]
and Boeser, Inc.’s Motion to Transfer Venue [Dkt. 15].
For the
following reasons, the Court will deny both motions.
I. Background
The Board of Trustees, Sheet Metal Workers’ National
Pension Fund (“Plaintiff”) brought this action against Boeser,
Inc., a Minnesota corporation with its principal place of
business in Minnesota (Compl. [Dkt. 1] ¶ 9]), and Boeser, 1 a
Minnesota resident and president and sole shareholder of Boeser,
Inc. (Id. ¶¶ 10-11), alleging violations of the Employment
Retirement Income Security Act of 1974 (“ERISA”) and Minnesota
1
Boeser and Boeser, Inc. are referred to collectively as “Defendants.”
1
state law. 2
Specifically, Plaintiff alleges six counts in its
complaint, all against Boeser unless otherwise noted: withdrawal
liability, in violation of 29 U.S.C. § 1145, against Boeser,
Inc. (“Count 1”); evading or avoiding withdrawal liability, in
violation of 29 U.S.C. § 1392(c) (“Count 2”); shareholder
liability for violation of the trust fund doctrine, subject to
recovery under 29 U.S.C. § 1132(a)(3)(B) (“Count 3”); fraudulent
transfer, under federal common law (“Count 4”); fraudulent
transfer, in violation of Minnesota’s Uniform Fraudulent
Transfers Act (“Count 5”); and breach of fiduciary duty, in
violation of Minnesota common law (“Count 6”).
(Id. ¶¶ 29-74.)
Boeser moves to dismiss for lack of personal
jurisdiction, or in the alternative, to transfer the case to the
District of Minnesota.
(Boeser’s Mot. at 1.)
Boeser, Inc.
moves to transfer venue to the District of Minnesota.
Inc.’s Mot. at 1.)
(Boeser,
Having been fully briefed and argued, this
motion is ripe for disposition.
2
Defendants claim this case is related to a case filed by Plaintiff in this
Court on February 12, 2014 seeking “withdrawal liability” as against Boeser
Sheet Metal, Inc. and Boeser. (Boeser, Inc.’s Mem. in Supp. [Dkt. 16] at 1;
Boeser’s Mem. in Supp. [Dkt. 12] at 2.) Boeser, Inc. was not a party to that
action. (Boeser, Inc.’s Mem. in Supp. at 2.)
Plaintiff sued Boeser and
Boeser Sheet Metal alleging that they were the alter egos of the thenbankrupt Boeser, Inc. and as such were jointly and severally liable for
Boeser, Inc.’s withdrawal liability. (Id.)
On July 11, 2014, this Court
granted the defense’s motion to transfer venue to the District of Minnesota.
(Id.) About a month after transfer, the parties filed a joint stipulation of
dismissal. (Id. at 3.) On August 29, 2014 Judge Patrick J. Schiltz
dismissed the action with prejudice and on the merits pursuant to the joint
stipulation of dismissal. (Id.; see also Boeser, Inc.’s Mem. in Supp., Ex.
2.)
2
II. Analysis
A. Boeser’s Motion to Dismiss for Lack of Personal
Jurisdiction
When personal jurisdiction is properly challenged by
motion under Federal Rule of Civil Procedure 12(b)(2), a
plaintiff bears the burden “to prove grounds for jurisdiction by
a preponderance of the evidence.”
Mylan Laboratories, Inc. v.
Akzo, N.V., 2 F.3d 56, 59–60 (4th Cir. 1993).
Yet, where, as
here, such a motion is decided without an evidentiary hearing,
“plaintiff need prove only a prima facie case of personal
jurisdiction.”
1989).
Combs v. Bakker, 886 F.2d 673, 676 (4th Cir.
And, in deciding whether a plaintiff has proven a prima
facie case, “the district court must draw all reasonable
inferences arising from the proof, and resolve all factual
disputes, in the plaintiff's favor.”
Id.; Wolf v. Richmond
Cnty. Hosp. Auth., 745 F.2d 904, 908 (4th Cir.1984), cert.
denied, 474 U.S. 826 (1985).
To exercise personal jurisdiction over a non-resident
defendant in a federal question case, a federal court must: (i)
initially establish whether defendant is amenable to service of
summons under an applicable statute or rule and (ii) determine
if that service comports with the Fifth Amendment’s due process
principles.
In other words, personal jurisdiction analysis in
federal question cases calls for a two-step inquiry.
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The first
step is to determine whether a defendant is amendable to service
under Federal Rule of Civil Procedure Rule 4(e).
The second
step requires a determination whether the exercise of personal
jurisdiction is consistent with the Due Process Clause of the
Fifth Amendment.
Bd. of Trustees Sheet Metal Workers’ Nat.
Pension Fund v. McD Metals, Inc., 964 F. Supp. 1040, 1044-45
(E.D. Va. 1997) (““[I]t is the Fifth Amendment, not the
Fourteenth Amendment, that controls due process analysis in nondiversity, or federal question, cases.”).
Federal Rule of Civil Procedure 4 governs service of
summons in the federal courts.
“Unless federal law provides
otherwise, an individual . . . may be served in a judicial
district of the United States by following state law . . . [.]”
Fed. R. Civ. P. 4(e).
Where service is authorized by federal
statute, serving a summons or filing a waiver of service
establishes personal jurisdiction over a defendant.
Civ. P. 4(k)(1).
Fed. R.
ERISA contains a nationwide service of process
provision that permits an enforcement action to be brought in
federal court in a district “where the plan is administered” and
process to be “served in any other district where a defendant
resides or may be found.”
29 U.S.C. § 1132(e).
Furthermore, since ERISA authorizes nationwide service
of process, the Fifth Amendment's “national contacts” theory is
applicable here.
Strategic Outsourcing, Inc. v. Commerce
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Benefits Grp. Agency, Inc., 54 F. Supp. 2d 566, 570 (W.D.N.C.
1999) (stating that ERISA’s nationwide service of process has
been interpreted for the purposes of personal jurisdiction as a
“national contacts test”); McD Metals, 964 F. Supp. at 1045.
The national contacts inquiry under the Fifth Amendment asks
whether a defendant has sufficient aggregate contacts with the
United States as a whole.
McD Metals, 964 F. Supp. at 1044. 3
Courts have held that ERISA’s nationwide service provision
comports with the Fifth Amendment’s due process guarantees.
See
Bd. of Trs., Sheet Metal Workers’ Nat’l Pension Fund v. Elite
Erectors, Inc., 212 F.3d 1031, 1037 (7th Cir. 2000) (“[Section]
1132(e) comports with the Constitution and provided the Eastern
District of Virginia with personal jurisdiction over
[defendants] even on the assumption that neither [defendant] has
any ‘contacts’ with Virginia.”); see Weese v. Savicorp, Inc.,
No. 2:13-cv-41, 2013 WL 6007499 (N.D. W. Va. Nov. 13, 2013), at
*3 (collecting Fourth Circuit cases applying national contacts
test where a federal statute authorizes nationwide service of
process).
3
This is broader than the parallel clause in the Fourteenth Amendment, which
asks whether a defendant has sufficient minimum contacts with a particular
forum state. McD Metals, 964 F. Supp. at 1044. The difference between the
national contacts and minimum contacts tests makes sense given the purposes
served by the respective due process clauses of the Fifth and Fourteenth
Amendments. Id. The Fourteenth Amendment addresses state sovereignty and
federalism concerns not operative under the Fifth Amendment. Id. at 1044-45.
5
In this case, the Plan is administered at Plaintiff’s
principal place of business in Fairfax, Virginia.
(Compl. ¶ 3.)
Boeser is a citizen of Minnesota and was served there.
(Boeser’s Mem. in Supp. [Dkt. 12] at 5; see also [Dkt. 10].)
As
a Minnesota resident, Boeser has sufficient contacts with the
United States to be subject to suit in this country.
Accordingly, this Court has personal jurisdiction over Boeser
under the national contacts theory.
See Denny’s, Inc. v. Cake,
364 F.3d 521, 524 (4th Cir. 2004) (stating a district court in
South Carolina had personal jurisdiction over California
defendant where plan was administered in South Carolina).
Therefore, Boeser’s motion to dismiss for lack of personal
jurisdiction is denied. 4
B. Boeser and Boeser, Inc.’s Motions to Transfer Venue
Defendants seek to transfer venue to the District of
Minnesota.
1404.
Motions to transfer are governed by 28 U.S.C. §
The relevant portion of the statute instructs: “For the
convenience of the parties and witnesses, in the interest of
4
This Court has personal jurisdiction over Boeser for both the federal and
state law claims asserted in the complaint by virtue of the pendent personal
jurisdiction doctrine. The federal and state law claims arise from a common
nucleus of operative fact and therefore this Court may adjudicate the state
law claims as well. See ESAB Grp., Inc. v. Centricut, Inc., 126 F. 3d 617,
628 (4th Cir. 1997) (“When a federal statute authorizes a federal district
court to exercise personal jurisdiction over a defendant beyond the borders
of the district and the defendant is effectively brought before the court, we
can find little reason not to authorize the court to adjudicate a state claim
properly within the court's subject matter jurisdiction so long as the facts
of the federal and state claims arise from a common nucleus of operative
fact.”).
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justice, a district court may transfer any civil action to any
other district or division where it might have been brought.”
28 U.S.C. § 1404(a).
of this statute.
There are two prerequisites to application
First, § 1404(a) only applies where venue is
proper in the transferor forum.
Bd. of Trs. v. Sullivant Ave.
Prop., LLC, 508 F. Supp. 2d 473, 476 (E.D. Va. 2007).
Second,
the proposed transferee forum must be one where the suit might
have been brought.
Id.
Both prerequisites are met here.
Venue
is proper in this Court because Plaintiff administers the fund
here.
29 U.S.C. § 1132(e)(2).
Venue would also be proper in
the District of Minnesota, both because Defendants reside there
and that is the place of the alleged breach.
Id.
The District
of Minnesota has personal jurisdiction over the Defendants for
the same reasons.
Thus, this Court must consider whether transfer is
appropriate.
In making such a determination, the Court must
consider: (1) a plaintiff's choice of venue; (2) witness
convenience and access; (3) convenience of the parties; and (4)
the interest of justice.
476.
Sullivant Ave., 508 F. Supp. 2d at
Each factor will be addressed in turn.
1. Plaintiff’s Choice of Venue
While Plaintiff's choice of venue is entitled to
substantial weight in determining whether transfer is
appropriate, the amount of weight varies depending on the
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significance of the contacts between the venue chosen by a
plaintiff and the underlying cause of action.
Sullivant Ave.,
508 F. Supp. 2d at 477; see Bd. of Trs., Sheet Metal Workers’
Nat’l Fund v. Baylor Heating and Air Conditioning, Inc., 702 F.
Supp. 1253, 1256 (E.D. Va. 1988).
Naturally, the stronger the
contacts between a plaintiff's chosen venue and the cause of
action, the greater weight given to a plaintiff's choice of
venue.
Sullivant Ave., 508 F. Supp. 2d at 477.
However, in
ERISA cases where a plaintiff brings suit in the district where
the fund at issue is administered, a plaintiff’s choice of forum
is afforded greater weight than would typically be the case.
Id.; Baylor, 702 F. Supp. at 1257 (citing legislative history
that states a “special goal of ERISA” is to “provide the full
range of legal and equitable remedies available in both state
and federal courts and to remove jurisdictional and procedural
obstacles which in the past appear to have hampered effective
enforcement of fiduciary responsibilities under state law for
recovery of benefits due to participants.”).
Plaintiff’s choice of forum is the district in which
the Plan is administered, but the actions giving rise to the
complaint occurred in Minnesota.
Thus, the nexus between this
district and the cause of action is limited to the
administrative functions carried on by Plaintiff in determining
Defendants' liability with respect to the Plan.
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On the other
hand, the transferee forum is more closely connected with the
cause of action.
Thus, the weight of Plaintiff's choice of
forum is diminished to an extent by lack of connections with
Virginia, but simultaneously bolstered by Congressional policies
favoring Plaintiff's choice of venue in ERISA matters.
As this
Court has previously held, Plaintiff's forum choice in such
circumstances is significant, but “neither dispositive nor
conclusive.”
Sullivant Ave., 508 F. Supp. 2d at 477; Baylor,
702 F. Supp. at 1257.
2. Witness Convenience and Access
Witness convenience is often the most important factor
in considering a potential § 1404(a) transfer, but its influence
may not be assessed without reliable information identifying the
witnesses involved and specifically describing their testimony.
Sullivant Ave., 508 F. Supp. 2d at 477.
“The party asserting
witness inconvenience has the burden to proffer, by affidavit or
otherwise, sufficient details respecting the witnesses and their
potential testimony to enable the court to assess the
materiality of evidence and the degree of inconvenience.”
Koh
v. Microtek Int’l, 250 F. Supp. 2d 627, 636 (E.D. Va. 2003); see
also Baylor Heating, 702 F. Supp. at 1258 (“But the influence of
this factor [witness convenience] cannot be assessed in the
absence of reliable information identifying the witnesses
involved and specifically describing their testimony.”)
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Furthermore, transfer is inappropriate when the result merely
serves to shift the balance of inconvenience from the defendant
to the plaintiff.
Sullivant Ave., 508 F. Supp. 2d at 478
(citing E. Scientific Mktg. v. Tekna–Seal, Inc., 696 F. Supp.
173, 180 (E.D. Va. 1988)).
Defendants anticipate calling the following witnesses
at trial:
the bankruptcy trustee, to testify concerning Boeser,
Inc.’s bankruptcy proceedings in the District of Minnesota;
Local Union 10 representatives, to testify concerning the
union’s proof of claim filed in the bankruptcy proceedings and
its involvement in the former Boeser, Inc. employees’ proofs of
claims; and former Boeser, Inc. employees, to testify concerning
their proofs of claims filed in those proceedings and the
union’s involvement therein.
16] at 11.)
(Boeser Inc.’s Mem. in Supp. [Dkt.
These witnesses “[are] of paramount importance to
one of Boeser, Inc.’s anticipated defenses in this action –
namely, that Plaintiff was on notice of the bankruptcy
proceedings.”
(Id.)
As Defendants note, these non-party
witnesses are within the District of Minnesota who are outside
of the range of this Court’s compulsory process.
See Fed. R.
Civ. P. 45(b)(2)(B).
The Court finds that Defendants have failed to
demonstrate why this testimony is necessary and non-cumulative.
Additionally, Defendants also have not shown why live testimony
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is required.
“Where witness credibility is not an issue, the
use of depositions is an acceptable means of lessening the
importance of witness inconvenience as a factor in the transfer
equation.”
Baylor Heating, 702 F. Supp. at 1258 n.17.
Credibility does not appear to be an issue with the proposed
witnesses.
Beyond stating that live testimony is preferable,
Defendants have not given any reason as to why deposition
testimony would be insufficient at trial.
See Acterna LLC v.
Adtech Inc., 129 F. Supp. 2d 936, 939 (E.D. Va. 2001) (noting
that plaintiff did not sufficiently explain why de bene esse
depositions of nonparty witnesses outside the subpoena power
would be inadequate at trial).
Therefore, the Court finds that
convenience to witnesses weighs against transfer.
Should the live testimony of witnesses be necessary,
however, Defendants have not demonstrated that these witnesses
would be unwilling or unable to travel.
comScore, Inc. v.
Integral Ad Sci., Inc., 924 F. Supp. 2d 677, 688 (E.D. Va. 2013)
(stating that in order to prevail on this factor, “the moving
party must demonstrate whether that witness is willing to travel
to a foreign jurisdiction”).
“[M]erely stating potential
witnesses reside beyond a forum’s subpoena power does little to
assist the court in weighing the convenience of the witness and
the necessity of compulsory process.”
internal quotation marks omitted).
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Id. (citations and
Defendants have made no
showing that non-party witnesses would be unwilling or unable to
travel to this district to testify.
The fact that witnesses
remain outside the subpoena power of this Court does not
automatically weigh in favor of transfer, and Defendants have
done nothing to convince this Court otherwise.
Therefore, this
factor weighs against transfer.
3. Convenience of the Parties
The parties' relative convenience is also a factor for
this Court to consider.
However, when a plaintiff files suit in
its home forum, “convenience to parties rarely, if ever,
operates to justify transfer.”
Sullivant Ave., 508 F. Supp. 2d
at 478 (quoting Baylor, 702 F. Supp. at 1259).
In such cases,
transfer would likely serve only to “shift the balance of
inconvenience” from a defendant to a plaintiff.
Id.
In this case, Defendants argue it will be “very
burdensome” to litigate here, as it is over 1,100 miles from
where Defendants and certain relevant files are located.
(Boeser Inc.’s Mem. in Supp. at 12.)
The bulk of evidence in
this case will be documentary evidence, and the Court is not
persuaded that it will be difficult to produce such evidence in
Virginia.
See Quesenberry v. Volvo Grp. N. Am., Inc., No.
1:09cv22, 2009 WL 648658, at *8 (W.D. Va. Mar. 10, 2009) (“[I]n
modern litigation, documentary evidence is readily reproduced
and transported from one district to another.”).
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Furthermore,
Plaintiff filed suit in its home forum and transfer would merely
shift the burden of inconvenience to it.
Therefore, this factor
also weighs against transfer.
4. Interest of Justice
The interest of justice factors include such
circumstances as the pendency of a related action, the Court's
familiarity with the applicable law, docket conditions, access
to premises that might have to be viewed, the possibility of
unfair trial, the ability to join to other parties, and the
possibility of harassment.
Sullivant Ave., 508 F. Supp. 2d at
478 (citation omitted).
The interest of justice factor weighs against transfer
here.
First, Plaintiff has an interest in the uniform
interpretation of ERISA and its Plan documents.
See id. at 479.
Because Plaintiff is based in this district and files the vast
majority of its actions here, retention favors a consistent
interpretation of the law.
For the same reason, the Court must
also reject Defendants’ argument that transfer is appropriate
because of the Minnesota state law claims.
Second, though Defendants claim that the parties’
respective economic resources merit transfer, they “offer no
convincing evidence suggesting that they would be financially
incapable of defending suit in Virginia.”
Id.
While
Defendants’ cost of litigation will be higher in Virginia as
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opposed to Minnesota, Defendants have not sufficiently
demonstrated that litigating here will be “an extreme financial
burden.”
(Boeser Inc.’s Mem. in Supp. at 15.)
Therefore, the
interest of justice favors retaining this litigation.
In sum, considering all of the relevant factors under
§ 1404, transfer is not warranted here.
IV. Conclusion
For the foregoing reasons, the Court will deny
Defendants’ motions.
January 28, 2015
Alexandria, Virginia
An appropriate order will issue.
/s/
James C. Cacheris
UNITED STATES DISTRICT COURT JUDGE
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