The Smithfield Packing Company Incorporated v. V. Suarez & Co., Inc. et al

Filing 35

MEMORANDUM OPINION & ORDER that 23 Defendants' Motion to Dismiss is DENIED and 25 Defendants' Motion to Transfer is DENIED. Signed by District Judge Raymond A. Jackson on 3/13/2012. (rsim)

IN THE UNITED STATES DISTRICT COUI
FOR THE EASTERN DISTRICT OF VIRGtt

ia

FILED

Norfolk Division

MAR 1 4 2012
CLERK. U.S. DISTRICT COURT

THE SMITHFIELD PACKING COMPANY,

NORPOI K VA

INC.
Plaintiff,

CIVIL ACTION NO. 2:1 Icv294

v.

V. SUAREZ & CO., INC.,

PACKERS PROVISIONS CO. OF
PUERTO RICO, INC.
and

FRESH MARK, INC.
Defendants.

MEMORANDUM OPINION & ORDER

Before the Court is Defendants', V. Suarez & Co. and its subsidiary Packers Provisions Co.

of Puerto Rico, Inc. (collectively "Suarez"), Motion to Dismiss or in the Alternative, to Transfer
Venue, pursuant to Federal Rule of Civil Procedure 12(b)(3) and 28 U.S.C. § 1404(a). Defendant
Fresh Mark, Inc. joins the Motion to Transfer; however, it has not joined Suarez's Motion to
Dismiss. For the reasons stated herein, Defendants' Motion to Dismiss is DENIED and
Defendants' Motion to Transfer is DENIED.

I. FACTUAL & PROCEDURAL HISTORY

Plaintiff, The Smithfield Packing Company, Inc. ("Smithfield") is a Delaware corporation

with its principle place of business in Smithfield, Virginia. Second Am. Compl. K 4. Defendant V.
Suarez & Co., Inc. is a Puerto Rico corporation with its principle place of business in Guaynabo,
Puerto Rico. Defendant Packers Provision Co. of Puerto Rico, Inc. is also a Puerto Rico
corporation with its principle place of business in San Juan, Puerto Rico. Defendant Fresh Mark,

Inc. is an Ohio corporation with its principle place of business in Massillon, Ohio.
Suarez purchased goods from Smithfield for resale in Puerto Rico. Second Am. Compl. |
12. The parties' dispute arises over Smithfield's distribution of the SHORGOOD mark chicken
franks to Suarez. Smithfield claims that it has sold chicken franks under the SHORGOOD mark
for many years. Second Am. Compl. ^ 14. According to Smithfield, Conagra Foods ("Conagra")

initially permitted Smithfield to sell products using the SHORGOOD mark through a licensing
agreement. Second Am. Compl. H 14. Smithfield alleges that in or about 2005, Conagra

abandoned the SHORGOOD brand, and Smithfield became the exclusive seller of the brand.
Second Am. Compl. ^ 15.

In 2009, Smithfield filed a federal trademark application claiming a date of first use as

early as 2006. Second Am. Compl. ^16.' On June 17, 2011, Smithfield contends that the United
States Trademark Registration Numbers 3,978,570 and 3,978,571 for the SHORGOOD mark and

design issued in the name of Smithfield. Second Am. Compl. fflf 17-18.2
Approximately two months earlier on April 7, 2011, Suarez sent Smithfield a
correspondence ordering it to cease production of the SHORGOOD brand because Suarez had

1 Smithfield notes that no party opposed their application after it was published in June 2009. See Second Am. Compl.
1)16.

2 Suarez also claims that it submitted an application to the Puerto Rico Department of State regarding the
SHORGOOD brand. Decl. Clotilde R. Perez Pietri U 19.

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found an "alternate source" for SHORGOOD products. Second Am. Compl. ^ 19. On April 8,

2011, Smithfield, believing Fresh Mark, Inc., was the alternate source, notified Fresh Mark of its
trademark rights to the SHORGOOD brand. Second Am. Compl. K 20. Smithfield refused
Suarez's demand.

On May 16,2011, Smithfield learned that SHORGOOD products that it had not produced
were being sold. Second Am. Compl. U 22. These products were "Packaged for V. Suarez".
Second Am. Compl. U 22. Smithfield claims that it has not consented to any Defendant's use of

the SHORGOOD mark. Second Am. Compl. H 26. Consequently, on May 24,2011,3 Smithfield
filed this action against Suarez, Packers, and Fresh Mark seeking declaratory relief as well as
pursuing multiple claims of trademark infringement pursuant to the Lanham Act, 15 U.S.C. §§

1051 et. seq., including false designation of origin and unfair competition. Smithfield also pursues
trade dress infringement under federal statutory law. Second Am. Compl. J 1.

On July 20,2011, Defendants filed their own action in the United States District Court for
the District of Puerto Rico alleging similar claims against Smithfield. Then, on September 19,
2011, Defendants responded to Smithfield's Complaint in this case by filing the instant Motion to

Dismiss or, in the Alternative, to Transfer Venue, alleging venue in this district is improper. If the
Court does not dismiss this action, Defendants contend that the Court should transfer the case to
the United States District Court for the District of Puerto Rico as the interest of justice mandates
transfer. Defs'. Mot. Dismiss or Transfer 2. On March 7,2012, the Court held a hearing on the
instant motion.

3 Smithfield filed the Second Amended Complaint on August 12, 2011.
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II. LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(3) permits a defendant to move for dismissal when

the court in which a case is filed is an inappropriate venue for the action. "When a defendant

objects to venue under Rule 12(b)(3), the plaintiff bears the burden of establishing that venue is
proper." Flexible Benefits Council v. Feltman, l:08cv371,2008 U.S. Dist. LEXIS 46626, at *16
(E.D. Va. June 16, 2008) (citing Bartholomew v. Va. Chiropractors Ass 'n, Inc., 612 F.2d 812, 816

(4th Cir. 1979)), aff'd and rev 'd in part on other grounds, 424 F. App'x 228 (4th Cir. 2011). If the
court finds that venue does not lie in the district where the case is filed, the court may dismiss it or,
if it would be in the interest of justice, transfer it to a district where it could have been brought in
the first instance. 28 U.S.C. § 1406(a).

When venue is not founded solely upon diversity of citizenship,4 it is governed by 28
U.S.C. § 1391(b) which provides, in pertinent part, that venue is proper only "in a judicial district
in which a substantial part of the events or omissions giving rise to the claim occurred

" Id. at

§ 1391(b)(2).s Generally, the court must have proper venue for each separate claim in a
complaint. See Greenberry's Franchising Corp. v. Park et al, No. 3:10cv0045,2010 U.S. Dist.
LEXIS 131065, at *7 (W.D. Va. Dec. 10, 2010).

The plaintiffs forum selection is given considerable weight especially in cases where the
plaintiff files the action in its home state. See, e.g., Collins v. Straight, Inc., 748 F.2d 916, 921 (4th

Cir. 1984); Capital One Fin. Corp. v. Drive Fin. Sen's., 434 F. Supp. 2d 367, 375 (E.D. Va. 2006).
However, "[e]ven when the plaintiff sues in its home forum, that fact is not by itself controlling

4 Plaintiff's claims are based on federal law. Therefore, diversity is not the sole basis for federal jurisdiction. As no
special venue provision applies to this case, the general venue statute, 28 U.S.C. § 1391 applies.

5 It should be noted that on December 7, 2011, 28 U.S.C. § 1391 was amended. However, these amendments only

apply to actions filed on or after December 7, 2011. See Pub. L. No. 112-63, 125 Stat. 763 (2011). This action was
commenced on May 24,2011.

4

and the weight of that factor depends on the nexus tying the case to the forum." Gebr. Brasseler
GmbH & Co. KG ("GBL ") v. Abrasive Tech., No. 1:08cvl246,2009 WL 874513, at *2 (E.D. Va.
Mar. 27,2009) (citation omitted). Consequently, "unless the balance is strongly in favor of the
defendant, the plaintiffs choice of forum should rarely be disturbed." Collins, 748 F.2d at 921.

Further, in a case where the same parties are involved in multiple actions, the court may

apply the first-to-file rule. The first-to-file rule states that "when multiple suits are filed in
different federal courts upon the same factual issues, the first or prior action is permitted to
proceed to the exclusion of another subsequently filed." Titan Atlas Mfg., Inc. v. Sisk, No.
l:llcv00012,2011 WL 3665122, at *15 (W.D. Va. Aug. 22,2011) (citing Allied-Gen. Nuclear

Servs. v. Commonwealth Edison Co., 675 F.2d 610,611 n. 1 (4th Cir. 1982)) (internal citations
omitted). This rule, however, is discretionary as "the court must balance the convenience between
the two actions before deciding whether application of the first-to-file rule is appropriate in a given
situation." Titan Atlas, 2011 WL 3665122, at *15.
When a court finds that it is the proper venue for an action, it may "[fjor the convenience of
parties and witnesses, in the interest of justice ... transfer any civil action to any other district or
division where it might have been brought." 28 U.S.C. § 1404(a). The decision to transfer an
action to another district is within the district court's sound discretion. In re Ralston, 726 F.2d
1002, 1005 (4th Cir. 1984); S. Ry. Co. v. Madden, 235 F.2d 198, 201 (4th Cir. 1956), cert, denied,
352 U.S. 953 (1956).

Transfer from one proper forum to another is dependent upon the Court weighing a number
of factors to determine the appropriate venue for an action. These factors include, but are not

limited to, "(1) ease of access to sources of proof; (2) the convenience of parties and witnesses; (3)

the cost of obtaining the attendance of witnesses; (4) the availability of compulsory process; (5) the
possibility of a view; (6) the interests in having local controversies decided at home; and (7) the
interests of justice." AFA Enters., Inc. v. American Slates Ins. Co., 842 F. Supp. 902, 909 (S.D. W.

Va. 1994) (citations omitted). If venue is proper in the plaintiffs chosen forum, the party moving
for transfer of venue bears the heavy burden of proving that transfer is warranted. Beam Laser

Sys., Inc. v. Cox Commc'ns, Inc., 117 F. Supp. 2d. 515, 518 (E.D. Va. 2000).
III. DISCUSSION

A. The Eastern District of Virginia is a Proper Venue for this Action

Venue is proper in this Court under 28 U.S.C. § 1391 (b). Defendants dispute venue by
arguing that in trademark actions, injury occurs in the state where the tort occurs. Defs.' Mem.
Supp. 8. In other words, Defendants believe the relevant inquiry for the Court is where the alleged

passing off of the product takes place: "Unlike a patent infringement case, where the infringement
often predates the sale of the products, infringement in trademark cases only occurs once the
allegedly infringing products are injected into the stream of commerce and a likelihood of
confusion can be demonstrated." USA Labs., Inc. v. Bio-Engineered Supplements & Nutrition,

Inc., No. 1:09cv47,2009 U.S. Dist. LEXIS 37797, at *8 (E.D. Va. May 4, 2009) (citing Tefal, S.A.
v. Products Int 7 Co., 529 F.2d 495,496 n.l (3d Cir. 1976)); see also Vivant Pharms., LLC v.
Clinical Formula, IIC,No. 10-21-537-CIV-COOKE/BANDSTRA, 2011 U.S. Dist. Lexis 37343,

at *17 (S.D. Fla. Mar. 31, 2011) ("A 'substantial part' of the events giving rise to a trademark
claim occur in any district where customers are likely to be confused by the accused goods,
'whether that occurs solely in one district or many.' ").

Smithfield claims venue is proper here because the central question before the Court is

ownership of the trademark, not trademark infringement. Smithfield is pursuing a declaratory
judgment action, and Smithfield argues that, at a minimum, a substantial part of the events giving
rise to this claim occurred in this district. Thus, this Court is a proper venue for Smithfield's
claims. Suarez has never argued that this Court is an improper venue for the declaratory judgment
action, but merely that it is an improper venue for the trademark infringement claims. Because the
Court believes there exists a substantial nexus between this forum and Smithfield's claims, the
Court will lay out those events as they relate to the declaratory judgment action.
Smithfield declares that Suarez initiated this litigation when it sent Smithfield a cease and
desist letter. After receiving this letter in Virginia, Smithfield filed the instant action. PL's Resp.
Mem. Opp'n Defs.' Mot. Dismiss or Transfer 15. Smithfield is headquartered in Virginia. All

documentation and witnesses related to Smithfield's ownership of the trademark are located in this

district. Id. Furthermore, the Court is mindful of the importance of the preexisting relationship
between Conagra and Smithfield as it relates to determining the proper ownership of the
trademark. Any evidence which relates to the Smithfield-Conagra relationship and Conagra's
abandonment of the SHORGOOD mark would be found here. Smithfield manufactures and

distributes its product here. In order to establish ownership of the trademark, Smithfield will be
relying almost entirely on documents and witnesses located in this forum. Therefore, the Court
reasons that a substantial part of the events giving rise to Smithfield's claim occurred in the
Eastern District of Virginia.
Therefore, the question becomes whether the existence of the declaratory judgment action

alone makes the Eastern District of Virginia a proper venue for this case. Despite the nexus

between the declaratory judgment action and this forum, Suarez seeks to have this action dismissed
or moved to the District of Puerto Rico because Suarez only sold the SHORGOOD mark in Puerto

Rico. They cite to three cases (including one from this district) where courts have concluded that
trademark infringement occurs where the product is injected into the stream of commerce. Yet, in
the three primary cases to which Suarez cites for that proposition, those courts did not adjudicate
the question of ownership of the trademark. Nor was there a declaratory judgment action at the

center of those controversies. See, e.g., Tefal, 529 F.2d at 496 ("Tefal is the registered owner of
the United States trademark 'T-Fal'...."); USA Labs, 2009 U.S. Dist. LEXIS 37797, at *1 ("This
is a civil action for federal unfair competition, false representation and false designation of origin.
..."); Vivant Pharms., 2011 U.S. Dist. LEXIS 37343, at *1 ("Vivant owns registered and
unregistered trademarks that are associated Vivant products."). This case is quite different from
Tefal, Vivant Pharms., and USA Labs. There is a clear dispute between both parties about the
ownership of this trademark. Smithfield contends in its home forum that it owns the mark. Suarez
contends in its home forum that it has rights to the mark. In fact, at the hearing on the instant
motion, counsel for Suarez argued that it is possible for both parties to have co-ownership of the
SHORGOOD mark. Counsel's argument further buttresses the Court's conclusion that, at some

point, a court must determine the ownership of the SHORGOOD trademark.
The Court concludes that the issue of ownership is at the core of this action. Because this
Court is a proper venue to hear the central claim of this action, judicial economy mandates hearing
Smithfield's entire action in this Court instead of severing the ancillary trademark infringement
claims from the declaratory judgment claim. See e.g., Greenberry's Franchising Corp., 2010 U.S.

Dist. LEXIS 131065, at *13 (After determining that plaintiffs central claims should be heard in

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the Eastern District of Virginia, the Court found that "convenience, efficiency, and justice" also
favored hearing the remaining claims in the Eastern District of Virginia.). The documents and
witnesses which will largely determine Smithfield's ownership of a trademark exist primarily in
Virginia. Put simply, the weight of the declaratory judgment action trumps the weight of the
remaining claims. Once the question of ownership has been determined, then and only then can

the secondary claims be handled. Given the sheer importance of the ownership question to this
litigation, the Court finds that it is a proper venue to hear Smithfield's declaratory judgment claim,
and as a result, the remainder of Smithfield's claims against Suarez.
B. Transfer to the District of Puerto Rico is Improper for this Action

"When a lawsuit is filed in multiple forums, the Fourth Circuit generally adheres to the

'first-filed' rule, which holds that 'the first suit should have priority, absent the showing of [a]
balance of convenience in favor of the second action.' " US Airways, Inc. v. US Airline Pilots
Ass'n, No. 3:1 l-cv-371-RJC-DKC, 2011 WL 3627698, at *1 (W.D.N.C. Aug. 17,2011) (quoting

Volvo Constr. Equip. N. Am., Inc. v. CLMEquip. Co., Inc., 386 F.3d 581, 594-95 (4th Cir. 2004))
(citations omitted). While the Court is tasked with adjudicating the claims Smithfield filed in this
Court, it is still mindful of the claims Suarez has filed in Puerto Rico. Suarez concedes that it has
filed a substantially similar lawsuit to this one in the District of Puerto Rico. Aside from Fresh
Mark, the Puerto Rico litigation involves the same parties. Both actions involve a declaratory
judgment claim, a federal false designation of origin claim, a federal trade dress infringement
claim, and a prayer for injunctive relief. While the Puerto Rico action involves a claim for tortious
interference as well as a claim for violation of Puerto Rico registered trademark rights, the Court

finds that an unquestionable likeness exists between these two actions. It is clear to the Court that

when two parties have filed seemingly identical actions in two separate courts, the first-to-file rule
is applicable. See Titan Atlas, 2011 WL 3665122, at * 15 (citations omitted). The first-to-file rule
is not an "unyielding principle", but the Court declines to find an exception to the rule in a case
where the facts do not necessitate such a finding. See US Airways, Inc., 2011 WL 3627698, at * 1.
Suarez has not provided this Court with sufficient justification for deviating from or finding an

exception to this well-established principle.6
Now that the Court has found venue proper in the Eastern District of Virginia, the Court

may still transfer this action to any district where it might have been brought for the convenience
of the parties and witnesses, and in the interest of justice. 28 U.S.C. § 1404(a). In determining
"whether or not to transfer venue, the courts will consider: (1) the plaintiffs choice of venue,
which is entitled to substantial weight, (2) convenience of the parties and witnesses; and (3) the

interests of justice, which encompasses all of the factors unrelated to witness and party
convenience." Capital One Fin. Corp., 434 F. Supp. 2d at 375 (citing Brown Mfg. Corp. v. Alpha
Lawn & Garden Equip., Inc., 219 F. Supp. 2d 705, 709 (E.D. Va. 2002)).
1.

Plaintiff's Choice of Forum

Smithfield first filed this action in its home forum, and the Court affords great deference to
its choice. "Even when the Plaintiff sues in its home forum, that fact by itself is not controlling and

6 The Court notes that the factors considered in determining if an exception to the first-to-file rule exists or whether a
transfer of venue is warranted are substantially similar. See US Airways, Inc., 2011 WL 3627698, *at 3. Because the
Court reaches the same conclusion regarding each balancing test, this Memorandum Opinion and Order will only
analyze the convenience factors once. At the hearing, Suarez argued that, pursuant to US Airways, the second-to-file
Plaintiffs forum choice is entitled to deference under the first-to-file factor test. The US Airways court was the
second-filed court, and it held that the second-to-file plaintiff's case had a strong connection to the controversy. Id.
Moreover, both cases to which the US Airways court cites for support of this proposition were the second-filed
forums. See Quesenberry v. Volvo Group N. Am., Inc., No. l:09cv22, 2009 WL 648658, at *1 (W.D. Va. Mar. 10,
2009); United Energy Distributors, Inc. v. Rankin-Patterson Oil Co., Inc., No. 7:07-3234-HMH, 2007 WL 4568997, at
*2 (D.S.C. Dec. 20, 2007). In this case, this Court is the first-filed Court, and it seeks to determine whether to dismiss
the claims of the first-filed Plaintiff, Smithfield. Therefore, the Court declines to follow US Airways and will not give
deference to the second-to-file Plaintiff in the first-filed Court.

10

the weight of the factor depends on the nexus tying the case to the forum." GBL, 2009 WL 874513,
at *2 (citation omitted). There is no evidence that this is a case where a plaintiff forum shopped to
gain an unfair advantage or engaged in some other deceptive practice to disadvantage a defendant.

Smithfield filed in its home forum, and as discussed above, there are substantial ties between this
forum and Smithfield's claims. Therefore, the Court affords substantial weight to the Plaintiffs
choice of forum.

2.

Convenience of the Parties and Witnesses

Regardless of whether this action is held in Virginia or in Puerto Rico, witnesses will have
to travel. The Court will not simply shift that burden from the Plaintiff to the Defendants. The
existence of witnesses who are currently members of the parties is of little consequence to the
Court. Defendants can compel the attendance of party witnesses. The Court may lack power to
compel some nonparty witnesses to testify at trial; however, neither party has presented any

evidence that witnesses would be unwilling to testify voluntarily at trial.7 Even if the convenience
of nonparty witnesses may weigh slightly in favor of Suarez, this does not justify disturbing
Smithfield's choice of forum.
3.

The Interest ofJustice

The interest of justice category encompasses factors such 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 other parties, and the
possibility of harassment." Id. at *5. "Another factor is the interest of having local controversies

7 Aside from possible difficulty compelling witnesses to attend trial in Virginia, Defendants expressed concern that
documents (in both English and Spanish) as they relate to this case are housed in Puerto Rico. Yet, there is no
evidence that Defendants will have any difficulty transporting documents from Puerto Rico to Virginia: "The Court
gives very little weight to the ease of access to sources of proof because '[w]hen documents can be transported [or]
easily photocopied, their location is entitled to little weight." See GBL, 2009 WL 874513, at *3.
11

decided at home." Id. (citations omitted). The Court finds that most of these factors are
inconsequential to this matter or have been addressed previously. It does, however, bear noting
that because this forum is Smithfield's home forum, the Court does have an interest in deciding
this controversy here. Viewed holistically, this factor weighs against transfer.

Defendants have failed to prove that transferring this case to the District of Puerto would
serve any end other than to shift the balance of inconvenience from the Plaintiff to the Defendants.
Suarez has asked the Court to strip Smithfield, a Virginia Plaintiff, of the right to file suit in its

home forum without providing the Court justification for taking away this right. Absent more, the
Court will not transfer this action. The Eastern District of Virginia is a proper forum to adjudicate
these claims.
IV. CONCLUSION

For the reasons stated above, it is ORDERED that Defendants' Motion to Dismiss is
DENIED and Defendants' Motion to Transfer is DENIED.
The Court DIRECTS the Clerk to send a copy of this Memorandum Opinion and Order to
counsel of record.
IT IS SO ORDERED.

Raymond A. Jackson

Norfolk, Virginia

United States DUtrict 3nd&

March $,2012

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