T. and B. Equipment Company, Inc. v. RI, Inc.
Filing
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MEMORANDUM OPINION. Signed by District Judge James R. Spencer on 8/24/2015. (jsmi, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF VIRGINIA
RICHMOND DIVISION
T. AND B. EQUIPMENT COMPANY, INC.,
Plaintiff,
v.
Civil Action No. 3:15-CV-337
RI, INC.
Defendant.
MEMORANDUM OPINION
THIS MATTER is before the Court on a Motion to Dismiss for Improper Venue and
Incorporated Memorandum of Law (“Motion”) (ECF No. 4), filed by Defendant on July 20,
2015. Plaintiff filed a response in opposition on July 31, 2015 (“Opp’n Mem.”) (ECF No. 6), and
Defendant subsequently filed a reply on August 6, 2015 (“Reply Mem.”) (ECF No. 7). The parties
have not requested a hearing on this matter, and the Court finds that oral argument is
unnecessary. See E.D. Va. Loc. Civ. R. 7(J). For the reasons that follow, the Court DENIES the
Motion.
I.
BACKGROUND
This action for declaratory judgment stems from an agreement to purchase a new
outdoor seating system. Defendant RI, Inc. d/b/a Seating Solutions (“Defendant” or “RI”) is a
New York Corporation with its principal place of business in Commack, New York. Defendant
specializes in the sale, rental, installation and removal of custom designed spectator seating.
Plaintiff T. and B. Equipment Company, Inc. (“Plaintiff” or “T&B”), a Virginia corporation,
specializes in indoor and outdoor event seating solutions, including but not limited to temporary
seating for golf tournaments, concerts, shows and graduations.
In or around March 2012, Plaintiff initiated discussions with Defendant because it was
interested in purchasing a new seating system, specifically the “Box Seat 901” system
(hereinafter, the “901 Box Seats”). Plaintiff claims that prior to its discussions with Defendant,
Plaintiff had been made aware of the existence of the 901 Box Seats as early as 2010 through
displays at industry trade shows, including the Stadia Design & Technology Expo at the Javits
Center in New York City, New York. In response to Plaintiff’s interest, Defendant sent Plaintiff a
written quote on March 14, 2012, (Compl. Ex. A), and again on April 19, 2012, (id. at Ex. B).
Also in the spring of 2012, Defendant approached Plaintiff about a possible acquisition of
Defendant’s equipment rental business. In conjunction with Plaintiff’s possible acquisition, the
parties executed a Mutual Non-Disclosure Agreement (the “NDA”) on April 24, 2012. (Id. at Ex.
C). The NDA is governed by and construed in accordance with New York law. (Id. at ¶ 17.) After
Plaintiff sent Defendant a due diligence checklist on April 24, 2012, there were no further
discussions between the parties.1
On June 29, 2012, Plaintiff received an unsolicited email from The Product People Int’l
Pty Ltd (“The Product People”) offering to sell the 901 Box Seats to Plaintiff. The Product People
is the developer and manufacturer of the seats. Defendant reports that it became aware that
Plaintiff purchased approximately 10,690 901 Box Seats from The Product People.
In December 2012, Plaintiff received a letter from Defendant claiming that Plaintiff’s
purchase of the 901 Box Seats from The Product People was a violation of the NDA, on the basis
that Defendant had shared information regarding the 901 Box Seats while there was a
“nondisclosure non-compete in place” and further claiming that Plaintiff was only aware of the
901 Box Seats “because of” the NDA. (Id. at Ex. D.) In February 2015, Plaintiff received a
demand letter from Defendant claiming that Plaintiff breached the NDA by purchasing the Box
Seats from The Product People, and demanding that Plaintiff pay Defendant thirty dollars for
each seat purchased, for a total of $320,700. (See id. at Ex. E.)
In its opposition memorandum, Plaintiff submits that after receiving the executed NDA and the due
diligence checklist, Scott Suprina, President of RI, called Plaintiff and indicated that he did not wish to
provide certain information that Plaintiff needed in order to proceed with the acquisition of Defendant’s
equipment rental business. (Opp’n Mem. at 2.)
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Plaintiff filed the Complaint in the above-styled case on June 4, 2015. The one-count
Complaint seeks a declaratory judgment that Plaintiff did not breach the NDA by purchasing the
901 Box Seats from The Product People, and requests the Court to declare that Plaintiff has no
liability, monetary or otherwise, to Defendant. Defendant then filed the present Motion on July
20, 2015, arguing that the Court should dismiss the case for improper venue, or alternatively
transfer the action to the United States District Court for the Eastern District of New York where
Defendant is located.
II.
LEGAL STANDARD
A motion to dismiss for improper venue pursuant to Rule 12(b)(3) of the Federal Rules of
Civil Procedure is a defense pleaded in the first responsive pleading or made by motion filed by a
defendant. Douglas v. D.B. Va., LLC, No. 4:10CV80, 2010 WL 5572830, at *2–3 (E.D. Va. Dec.
13, 2010). When a defendant challenges proper venue, the plaintiff bears the burden of
establishing that venue is proper. Id. at 3 (citations omitted). But if no evidentiary hearing is
held, “the plaintiff need only make a prima facie showing of venue.” Mitrano v. Hawes, 377 F.3d
402, 405 (4th Cir. 2004) (citation omitted). The court need not accept the pleadings as true, but
instead may consider outside evidence. Id. However, the Court must still draw all inferences in
favor of the plaintiff. Silo Point II LLC v. Suffolk Const. Co., 578 F. Supp. 2d 807, 809 (D. Md.
2008). “If venue is found to be not proper in the judicial district, the court may dismiss the
action, or transfer the action to a district where it otherwise could have been brought in the
interest of justice.” Douglas, 2010 WL 5572830, at *3 (citing 28 U.S.C. § 1406(a)).
III.
DISCUSSION
(1) Motion to Dismiss
Federal Rule of Civil Procedure 12(b) permits a party to assert improper venue as a
defense to a claim for relief. Fed. R. Civ. P. 12(b)(3). Venue is proper in
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(1) a judicial district in which any defendant resides2, if all defendants are
residents of the State in which the district is located; (2) a judicial district
in which a substantial part of the events or omissions giving rise to the
claim occurred, or a substantial part of property that is the subject of the
action is situated; or (3) if there is no district in which an action may
otherwise be brought as provided in this section, any judicial district in
which any defendant is subject to the court’s personal jurisdiction with
respect to such action.
28 U.S.C. § 1391(b).
Specifically with regards to the second prong, “in determining whether events or
omissions are sufficiently substantial to support venue . . ., a court should not focus only on
those matters that are in dispute or that directly led to the filing of the action,” but instead
“should review the entire sequence of events underlying the claim.” Mitrano, 377 F.3d at 405
(citations and internal quotation marks omitted). For a contract dispute, “courts have
recognized that particular attention should be paid to those core aspects of any contract dispute,
including where the contract was negotiated or executed, where it was to be performed, and
where the alleged breach occurred.” Wye Oak Tech., Inc., v. Republic of Iraq, No. 1:09cv793,
2010 WL 2613323, at *10 (E.D. Va. June 29, 2010). Additionally, a court may consider, “the
event that allegedly entitled the plaintiff to the payment [now] sought under the contract.”
Mitrano, 377 F.3d at 406. In Mitrano, the Fourth Circuit considered a breach of contract action
for nonpayment of attorney’s fees. See id. at 404. The Court held that the performance of the
legal services at issue was the event that allegedly entitled the plaintiff to the payment sought
under the contract. Id. at 405–06. “Indeed, it was [plaintiff’s] work that allegedly created his
entitlement to the payment he now seeks. For that reason, depending on the amount of work
that [plaintiff] completed in the Eastern District, that work alone may be sufficient to justify
venue there.” Id. at 406.
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When a defendant is a corporation, it resides “in any judicial district in which such defendant is subject
to the court’s personal jurisdiction with respect to the civil action in question.” 28 U.S.C. § 1391(c).
Although Plaintiff’s Complaint articulates both 28 U.S.C. § 1391(b)(1) and (b)(2) as bases for venue,
Plaintiff’s response in opposition notes that “the correct venue provision in this case and the provision
under which T&B is proceeding” is § 1391(b)(2). (Opp’n Mem. at 4 n.1.) Therefore, only § 1391(b)(2) will
be addressed in this memorandum opinion.
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“As a result of the ‘substantial part’ wording of § 1391, it is possible for venue to be
proper in several judicial districts.” Power Paragon, Inc. v. Precision Tech. USA, Inc., 605 F.
Supp. 2d 722, 726 (E.D. Va. 2008) (citing Mitrano, 377 F.3d at 405). Thus, a plaintiff need not
demonstrate “that his chosen venue has the most substantial contacts to the dispute,” but
“[r]ather it is sufficient that a substantial part of the events occurred in that venue, even if a
greater part of the events occurred elsewhere.” Id. (citations omitted).
In the present action, Defendant contends that “[t]here is no allegation in the Complaint
that any event related to the declaratory judgment claim occurred in Virginia,” (Mot. at 2), and
thus argues that Plaintiff has “provided no connection to Virginia,” (id. at 3.) In its reply,
Defendant further asserts that Plaintiff’s “primary claim in this matter is that its alleged prior
knowledge of the 901 Box Seat that it obtained during a prior visit to New York places the
information subsequently disclosed by [Defendant] outside the scope and protections of the
NDA, and that therefore [Plaintiff] has no liability thereunder.” (Reply Mem. at 6) (emphasis
added). “As a result, because [Plaintiff] alleges that it first observed [Defendant’s] proprietary
information in New York in 2010, and argues that this prevents it from violating the NDA, the
substantial part of events constituting [Plaintiff’s] declaratory judgment claim only occurred in
New York.” (Id. at 7.) However, upon review of Plaintiff’s Complaint and the attached
documents, Defendant’s argument is not entirely true.
Plaintiff filed its Complaint seeking a declaratory judgment that it did not breach the
NDA by purchasing the 901 Box Seats from The Product People. (Compl. ¶ 24.) Plaintiff’s claim
is based on several explanations. (See id. at Ex. F.) First, as Defendant contends, Plaintiff claims
that it “knew of the existence of the 901 Box Seats, and knew that the 901 Box Seats had been
developed and manufactured by The Product People, prior to entering into the NDA with
Defendant.” (Id.) But Plaintiff also claims that “[t]he NDA, by its plain language, acknowledges
that T&B may enter into transactions with other similar or identical business.” (Id. at ¶ 25.)
Plaintiff further asserts that “there mere existence of the 901 Box Seats or the identity of the
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manufacturer of the 901 Box Seats do not constitute information that was ‘designated as
confidential’ by Defendant or that, ‘given the nature of the information or the circumstances
surrounding its disclosure, reasonably should be considered as confidential,’ as required by the
NDA.” (Id.) Finally, Plaintiff notes that “the specifics of the 901 Box Seats had nothing
whatsoever to do with T&B’s potential acquisition of Defendant’s rental business.” (Id.) Thus,
the Court will not only focus on Plaintiff’s first defense–that being, Plaintiff had prior knowledge
of the 901 Box Seats before entering into the NDA. Instead, a review of the “entire sequences of
events underlying the claim,” Mitrano, 377 F.3d at 405, reveals that a substantial part of the
events giving rise to the claim occurred in Virginia, and thus venue is proper here.3
As alleged in the Complaint, Plaintiff is a Virginia corporation with its principal place of
business in Ashland, Virginia. (Compl. ¶ 2.) In March 2012, Plaintiff engaged in discussions with
Defendant because it was interested in purchasing the 901 Box Seats. (Id. at ¶ 8.) In response to
Plaintiff’s interest, Defendant sent Plaintiff a written quote by e-mail on March 14, 2012, (id. at
Ex. A; Ellis Aff. at ¶ 7), and again on April 19, 2012, (id. at Ex. B; Ellis Aff. at ¶ 8). Defendant also
sent a prototype of the 901 Box Seat to Plaintiff’s offices in Ashland, Virginia. (Ellis Aff. at ¶ 6.)
In the spring of 2012, Defendant approached Plaintiff regarding a possible acquisition of
Defendant’s equipment rental business. (Compl. at ¶ 10.) Specifically, Scott Suprina, President
of Defendant, visited Plaintiff’s Ashland, Virginia office in the spring 2012 to discuss the
acquisition. (Ellis Aff. at ¶ 10.) This was the only face-to-face meeting between Plaintiff and
Defendant. (Id. at ¶ 21.) In connection with Plaintiff’s possible acquisition of Defendant’s
equipment rental business, the parties executed the NDA. (Compl. at ¶ 11.) Plaintiff executed the
NDA at its offices in Ashland, Virginia. (Ellis Aff. at ¶ 12.) No one from Plaintiff’s offices traveled
to Defendant’s offices in New York. (Id.)
The Court does not comment on whether New York may also be a proper venue for the instant action.
See Power Paragon, Inc., 605 F. Supp. 2d at 726 (venue may be proper in more than one district).
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Plaintiff’s subsequent purchase of the 901 Box Seats from The Product People occurred
in Virginia. (Opp’n Mem. at 8.) After Plaintiff’s purchase of the 901 Box Seats, Plaintiff received
a letter from Defendant at its offices in Ashland, Virginia in December 2012 claiming that
Plaintiff violated the NDA. (Compl. at ¶ 17, Ex. D; Ellis Aff. at ¶ 17.) In February 2015, Plaintiff
received a renewed demand letter from Defendant claiming that Plaintiff breached the NDA by
soliciting and purchasing the 901 Box Seats from The Product People, and demanding that
Plaintiff pay Defendant thirty dollars for each 901 Box Seat purchased. (Compl. at ¶ 19, Ex. E.)
Plaintiff responded by letter dated March 5, 2015, setting forth Plaintiff’s position as to why
Plaintiff’s purchase of the 901 Box Seats from The Product People did not violate the NDA. (Id.
at ¶ 20, Ex. F.) In April 2015, Plaintiff received a second demand letter from Defendant, alleging
that Plaintiff violated the NDA by purchasing items directly from The Product People. (Id. at ¶
21, Ex. G.)
With the foregoing facts in mind, it is clear that a substantial part of the events giving
rise to the instant claim occurred in Virginia. Defendant directed letters, emails, and telephone
calls to Plaintiff’s office in Ashland, Virginia. (See Ellis Aff. ¶¶ 12, 14, 17–19.) Plaintiff executed
the NDA at its offices in Ashland, Virginia. (Id. at ¶ 12.) And the only face-to-face meeting
between the parties occurred in Ashland, Virginia. (See id. at ¶¶ 10, 20.) In sum, Plaintiff’s
offices are in Virginia, and Defendant’s communications with and visit to Plaintiff’s office come
within the “sequence of events underlying the claim” at issue here. See Prod. Group. Int’l, Inc. v.
Goldman, 337 F. Supp. 2d 788, 799 (E.D. Va. 2004). Finally, the event giving rise to the claim at
issue here–i.e., Plaintiff’s purchase of the 901 Box Seats from The Product People–occurred in
Virginia. See Mitrano, 377 F.3d at 406. For those reasons, the Court will not dismiss for
improper venue.4
Defendant also argues that “as in Power Paragon, the parties’ negotiated a clause in the NDA providing
for a choice of law in New York, which should similarly be respected.” (Reply Mem. at 8.) But, Defendants’
argument fails to recognize the difference between Power Paragon and the instant case. The NDA
executed in this case only contains a choice of law provision. (See Compl., Ex. C. at ¶ 17) (“This Agreement
shall be governed by and construed in accordance with the laws of the State of New York without regard to
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(2) Motion to Transfer
Defendant alternatively requests that the Court transfer this action to the United States
District Court for the Eastern District of New York where Defendant is located. (Mot. at 1.)5
However, transfer of this case would also be inappropriate.
Pursuant to 28 U.S.C. § 1406, a district court shall dismiss a case brought in an improper
venue, or if it be in the interest of justice, transfer the case to the district or division in which it
could have been brought. 28 U.S.C. § 1406(a). 28 U.S.C. § 1404 states, “For the convenience of
parties and witnesses, in the interest of 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). “The
decision whether to transfer an action under the statute is committed to the sound discretion of
the district court.” Heinz Kettler GMBH & Co. v. Razor USA, LLC, 750 F. Supp. 2d 660, 667
(E.D. Va. 2010) (citing One Beacon Ins. Co. v. JNB Storage Trailer Rental Corp., 312 F. Supp.
2d 824, 828 (E.D. Va. 2004)). District courts determining whether to grant a motion to transfer
under § 1404(a) “typically consider[]: (1) plaintiff’s choice of forum, (2) convenience of the
parties, (3) witness convenience and access, and (4) the interest of justice.” Id. (citing JTH Tax,
Inc. v. Lee, 482 F. Supp. 2d 731, 736 (E.D. Va. 2007)). The movant bears the burden of showing
that transfer is proper. Id.
Here, Defendant fails to satisfy its burden in demonstrating that transfer to New York is
proper. Defendant only asserts that transfer is appropriate because it “is domiciled in New York
and has its principal place of business in Commack, New York;” “the NDA is governed by New
York law;” and Plaintiff “alleged in the Complaint that it first learned about the product covered
by the NDA in New York.” (Mot. at 3.) Defendant does not allege any inconvenience to the
parties or lack of access to witnesses. This Court gives deference to Plaintiff’s choice of forum
conflicts of law thereof.”). In contrast, the contract it issue in Power Paragon contained a forum selection
clause which provided that, “[v]enue shall be the applicable state or federal court in Roanoke, Virginia.”
Power Paragon, Inc., 605 F. Supp. 2d at 728.
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“Defendant is a New York corporation with its principal place of business in Commack, New York.”
(Compl. ¶ 3.)
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because Virginia is Plaintiff’s home forum and also has a substantial connection to the alleged
cause of action (as described above). See Bd. of Trs. v. Sullivant Ave. Props., LLC, 508 F. Supp.
2d 473, 477 (E.D. Va. 2007). For those reasons, the Court denies Defendant’s request to transfer
the action.
(3) Attorney’s Fees
Both parties request attorney’s fees pursuant to paragraph 17 of the NDA, which states:
“In any action brought to enforce any provisions of this Agreement or for breach of this
Agreement, the prevailing Party shall be entitled to recover its costs including reasonable
attorney’s fees.” (Compl., Ex. C. at ¶ 17) (emphasis added). Defendant argues that if the Court
denies its Motion, Plaintiff will not be a “prevailing party” because “[d]efeating a motion to
dismiss for improper venue will not provide T&B the central relief it sought in the Complaint,
which was to be declared to not have violated the NDA.” (Reply Mem. at 11) (citing Chainani v.
Lucchino, 94 A.D.3d 1492, 1492, 942 N.Y.S. 2d 735, 736 (2012)).
The NDA does not define “prevailing party.” However in Chainani, the court held that
“[i]n determining whether a party is a prevailing party, a fundamental consideration is whether
that party has prevailed with respect to the central relief sought.” 94 A.D.3d at 1494 (citations
and internal quotation marks omitted). Therefore, the court will consider “the true scope of the
dispute litigated, followed by a comparison of what was achieved within that scope.” Id.
(citations and internal quotation marks omitted). Here, as Defendant argues, Plaintiff has not
achieved the central relief it seeks–that being a declaration that it did not breach the NDA.
Therefore, the Court denies Plaintiff’s request for attorney’s fees.
IV.
CONCLUSION
For the foregoing reasons, the Motion is DENIED. In addition, each party’s request for
attorney’s fees is DENIED.
Let the Clerk send a copy of this Memorandum Opinion to all counsel of record.
//
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An appropriate Order shall issue.
_____________________/s/________________
James R. Spencer
Senior U. S. District Judge
ENTERED this _24th__ __ day of August 2015.
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