Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_05-cv-02811/USCOURTS-cand-3_05-cv-02811-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

PRG-SCHULTZ USA, INC., a Georgia

corporation,

Plaintiff,

 v.

GOTTSCHALKS, INC., a Delaware

corporation,

Defendant. /

No. C 05-2811 MMC 

ORDER GRANTING DEFENDANT’S

MOTION TO TRANSFER VENUE;

VACATING HEARING

(Docket No. 14)

Before the Court is defendant Gottschalks, Inc.’s (“Gottschalks”) motion, filed

September 14, 2005, to transfer the above-titled action from the Northern District of

California (“Northern District”) to the Eastern District of California (“Eastern District”),

pursuant to 28 U.S.C. § 1404(a). Plaintiff PRG-Schultz USA, Inc. (“PRG”) has filed

opposition to the motion, to which Gottschalks has replied. Having considered the papers

submitted in support of and in opposition to the motion, the Court finds the motion

appropriate for decision without oral argument, see Civil L.R. 7-1(b), and hereby VACATES

the hearing scheduled for October 21, 2005. For the reasons set forth below, the motion is

GRANTED.

BACKGROUND

In the instant action, PRG seeks damages for breach of a written agreement,
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1

 Fresno is located in the Eastern District.

2

 Manchester Center is located in Fresno, California. (See Jacobson Decl. ¶ 7.)

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entered into June 24, 2003 (“Audit Agreement”), by which PRG agreed to perform an audit

of Gottschalks’ store real estate leases in exchange for thirty to thirty-five percent of all

monies recovered, credits received, or savings recognized from the audit. (See Compl.

¶ 1.) PRG alleges that although Gottschalks has recovered payments from its landlords as

a result of PRG’s audit, Gottschalks has failed to pay PRG all of the fees owed to PRG

pursuant to the parties’ Audit Agreement. (See id.)

PRG is a Georgia corporation with its principal place of business in Atlanta, Georgia. 

(See Pitts Decl. ¶ 2.) PRG alleges that it is in the business of recovery auditing, which, it

states, is the process of reviewing disbursement transactions and related supporting data

to identify and recover overpayments and under-deductions. (See Compl. ¶ 2.) 

Gottschalks is a Delaware corporation, with its corporate headquarters located in

Fresno, California.1

 (See Bradshaw Decl. ¶ 2.) According to PRG, Gottschalks is a retail

department store chain with approximately 74 department stores and 17 specialty stores

located throughout California, Washington, Alaska, Idaho, Oregon and Nevada. (See

Compl. ¶ 3.)

PRG alleges that, pursuant to the Audit Agreement, PRG agreed to conduct an audit

of Gottschalks’ store real estate leases in order to determine whether Gottschalks had

overpaid under any of the leases. (See id. ¶ 8.) PRG further alleges that the Audit

Agreement entitled it to receive 30% of any recovery up to $200,000, and 35% of any

recovery over $200,000. (See id. ¶ 11.) 

PRG alleges it commenced the audit through its contractor, Occupancy Cost Audit

Group (“OAG”), in July 2003. (See id. ¶ 14.) PRG further alleges that as a result of the

audit performed on the Lease Agreement for Manchester Center (“Manchester Center

Lease”),2 Gottschalks recovered $7,151,045, of which PRG’s share, under the Audit

Agreement, was $2,502,866. (See id. ¶ 23.) PRG also alleges that Gottschalks recovered
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 The miscellaneous overcharges relate to leases for stores in Soldotna, Alaska;

West Valley Mall in Tracy, California; Burien, Washington; Crossroads Mall in the state of

Washington; and Lake Forest Park in the state of Washington. (See Compl. ¶ 17; see also

Jacobson Decl. ¶ 7.)

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$333,476 in miscellaneous overcharges relating to other leases,3 of which PRG’s share,

under the Audit Agreement, was $116,717. (See id. ¶¶ 17, 21, 23.)

On September 30, 2003, PRG alleges, Gottschalks’s general counsel served PRG

with a 60-day cancellation notice of the Audit Agreement. (See id. ¶19.) PRG further

alleges that Gottschalks, in the cancellation notice, stated that it intended to honor the Audit

Agreement and that it would compensate PRG when and if it ultimately received

compensation for the overcharges identified by PRG. (See id.) PRG contends that

although it has sent Gottschalks repeated demands for payment, Gottschalks has not paid

PRG the amounts due PRG under the Audit Agreement. (See id. ¶ 22.)

PRG asserts causes of action against Gottschalks for breach of contract, breach of

the covenant of good faith and fair dealing, and an accounting.

LEGAL STANDARD

“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). “Section 1404(a) is intended to place discretion in the

district court to adjudicate motions for transfer according to an individualized, case-by-case

consideration of convenience and fairness.” Stewart Organization, Inc. v. Ricoh Corp., 487

U.S. 22 (1988) (internal quotation and citation omitted). In determining whether to transfer

venue pursuant to § 1404(a), the court may consider factors such as “(1) the location

where the relevant agreements were negotiated and executed, (2) the state that is most

familiar with the governing law, (3) the plaintiff’s choice of forum, (4) the respective parties’

contacts with the forum; (5) the contacts relating to the plaintiff’s cause of action in the

chosen forum; (6) the differences in the costs of litigation in the two forums; (7) the

availability of compulsory process to compel attendance of unwilling non-party witnesses,

and (8) the ease of access to sources of proof.” See Jones v. GNC Franchising, Inc., 211
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 Gottschalks does not argue that venue is improper in the Northern District.

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F.3d 495, 498-99 (9th Cir. 2000).

DISCUSSION

Gottschalks seeks an order transferring the instant action to the Eastern District,

arguing that the Eastern District is a more convenient forum than the Northern District.4 

A. The Case Could Have Been Brought in the Eastern District

As noted, a district “may transfer any civil action to any other district or division

where it might have been brought.” See 28 U.S.C. § 1404(a). It is undisputed that venue

is appropriate in the Eastern District, pursuant to 28 U.S.C. § 1391(a) and (c), because a

substantial portion of the events giving rise to the complaint occurred in Fresno, California,

and Gottschalks’s corporate headquarters are located there. (See Bradshaw Decl. ¶ 5(B).)

Thus, the instant action “might have been brought” in the Eastern District.

B. The Convenience of the Parties and Witnesses

Gottschalks submits evidence that it expects eleven current or former employees to

testify on its behalf concerning the Audit Agreement, the Manchester Lease, Gottschalks’s

lease administration, and the results of the audits conducted by PRG. (See Bradshaw

Decl. ¶ 4(A-K).) Of these witnesses, ten reside in the Eastern District, and one, a former

employee, resides in Texas. (See id.) Additionally, Gottschalks identifies six non-party

witnesses it expects to testify. (See id. ¶ 4(L-Q).) Two of those witnesses reside in the

Eastern District, three reside in the state of Washington, and one resides in Alaska. (See

id.) 

PRG submits evidence that it expects to call at least three current employees to

testify about the negotiation of the Audit Agreement and its enforcement. (See Pitts Decl. ¶

7.) One of those witnesses works for PRG in Atlanta; PRG does not identify the residence

or workplace of the other two employee witnesses. (See id. ¶¶ 6-7.) PRG also expects to

call three OAG employees to testify about the audits done by OAG on behalf of PRG. (See

id. ¶¶ 9-11; see also Jacobson Decl. ¶ 4.) Of the three OAG witnesses, one resides in
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southern California, and the other two work in southern California and presumably reside

there as well. (See Jacobson Decl. ¶¶ 4-5.) Additionally, PRG expects to call a Los

Angeles attorney who represented U.S. Mall Holdings, the landlord of Gottschalks’s

Manchester Center location, who is expected to testify as to the amount recovered by

Gottschalks from U.S. Mail Holdings as a result of PRG’s audit. (See Pitts Decl. ¶ 12.)

None of the potential witnesses identified by the parties is located in the Northern

District. Twelve witnesses, including two non-party witnesses, are located in the Eastern

District and would not need to travel if the Court were to grant the motion to transfer. The

remainder of the witnesses are located distant from both the Northern and Eastern Districts

and would have to travel if the case were litigated in either venue.

PRG’s argument that transferring the case to the Eastern District would merely shift

the inconvenience from Gottschalks to PRG is unpersuasive. Were the case to remain in

San Francisco, all witnesses would have to travel long distances to trial; it is an

inconvenient venue for all witnesses. By contrast, a transfer to the Eastern District would

eliminate the need for numerous witnesses to travel, including two non-party witnesses.

Accordingly, the Court finds this factor weighs in favor of transfer.

C. The Location Where the Relevant Agreements Were Negotiated and

Executed

Another relevant factor in determining whether to transfer venue is “the location

where the relevant agreements were negotiated and executed.” See Jones v. GNC

Franchising, Inc., 211 F.3d at 498-99. PRG attests that it executed the Audit Agreement in

Atlanta, and that Gottschalks executed the Audit Agreement in Fresno. (See Pitts Decl. ¶

3). Fresno, as noted, is located in the Eastern District.

Accordingly, this factor weighs in favor of transfer.

D. The State That Is Most Familiar with the Governing Law 

The second of the Jones factors is “the state that is most familiar with the governing

law.” See Jones v. GNC Franchising, Inc., 211 F.3d at 498-99. The parties do not address

this factor, and the Court notes that the Audit Agreement does not include a choice of law
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clause. (See Pitts Decl. Ex. A.) As both the Northern District and the Eastern District are

equally familiar with California law, and equally unfamiliar with the law of any other state,

however, this factor favors neither party.

E. The Plaintiff’s Choice of Forum and the Contacts Relating to the Plaintiff’s

Cause of Action in the Chosen Forum 

The third and fifth of the Jones factors are “the plaintiff’s choice of forum” and “the

contacts relating to the plaintiff’s cause of action in the chosen forum.” See Jones v. GNC

Franchising, Inc., 211 F.3d at 498-99. Generally, the Court accords special weight to the

plaintiff's choice of forum and the defendant “must make a strong showing of inconvenience

to warrant upsetting the plaintiff's choice of forum.” See Decker Coal Co. v.

Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986). The plaintiff’s choice of

forum is not a dispositive factor, however, in considering a motion to transfer. See, e.g.,

Stewart Organization v. Ricoh Corp., 487 U.S. 22, 31 (1988) (citing Norwood v. Kirkpatrick,

349 U.S. 29, 32 (1955)). Indeed, a plaintiff’s choice of forum is given “much less weight”

when the plaintiff is not a resident of the chosen forum or the forum lacks any significant

contact with the activities alleged in the complaint. See William W Schwarzer, A. Wallace

Tashima, James M. Wagstaffe, Federal Civil Procedure Before Trial, § 4:761 (2005) (citing

New Image, Inc. v. Travelers Indem. Co., 536 F.Supp. 58, 59 (E.D. Pa. 1981) and Chrysler

Capital Corp. v. Woehling, 663 F. Supp. 478, 482 (D. Del. 1987)); see also Bryant v. ITT

Corp., 48 F.Supp.2d 829, 832 (N.D. Ill. 1999); cf. Piper Aircraft v. Reyno, 454 U.S. 235,

255-56 (1981) (holding, in discussing doctrine of forum non conveniens, that plaintiff’s

choice of forum “deserves less deference” when plaintiff has chosen not to sue in its home

forum).

As noted, PRG is a Georgia corporation with its principal place of business in

Atlanta. (See Compl. ¶ 2.) There is no allegation that any of the events giving rise to the

instant action took place in the Northern District. It is undisputed, on the other hand, that

much of the work PRG performed pursuant to the Audit Agreement was performed in the

Eastern District. (See Bradshaw Decl. ¶ 5(B).)
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Consequently, the Court finds PRG’s choice of forum is entitled to little deference,

and that the lack of contacts relating to the plaintiff’s cause of action in the chosen forum,

coupled with the existence of such contacts in the Eastern District, favors transfer to the

Eastern District.

F. The Respective Parties’ Contacts with the Forum

The fourth of the Jones factors is “the respective parties’ contacts with the forum.” 

See Jones v. GNC Franchising, Inc., 211 F.3d at 498-99. There is no showing that PRG

has any contacts with the Northern District. Although Gottschalks has at least four retail

locations in the Northern District, in particular, stores in Antioch, Danville, Santa Rosa, and

Scotts Valley, (see Oh Decl. ¶ 2 and Ex. A), there is no evidence that any of Gottschalks’s

Northern California stores are involved in any way in the instant litigation.

By contrast, it is undisputed that Gottschalks’s corporate headquarters are located in

the Eastern District, and, as noted, that much of the work PRG performed pursuant to the

Audit Agreement was performed in the Eastern District.

Accordingly, the fourth Jones factor weighs in favor of transfer.

G. The Differences in the Costs of Litigation in the Two Forums 

The sixth of the Jones factors is “the differences in the costs of litigation in the two

forums.” See Jones v. GNC Franchising, Inc., 211 F.3d at 498-99. Neither party has

submitted any evidence that the cost of litigation will differ at all, let alone significantly,

depending on whether the instant matter is heard in the Northern District or the Eastern

District. Accordingly, the sixth factor weighs in favor of neither party.

H. The Availability of Compulsory Process to Compel Attendance of Unwilling

Non-party Witnesses 

 The seventh of the Jones factors is “the availability of compulsory process to compel

attendance of unwilling non-party witnesses.” See Jones v. GNC Franchising, Inc., 211

F.3d at 498-99. As noted, the parties have identified non-party witnesses in the Eastern

District, Texas, Washington, Alaska, and southern California. The non-California witnesses

are outside the subpoena power of the Court and cannot be subpoenaed for trial regardless
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of whether the action is litigated in the Northern District or the Eastern District. See Fed. R.

Civ. P. 45((c)(3)(A)(ii). The California witnesses are all within the subpoena power of the

Court and can be subpoenaed for trial in either the Northern District or the Eastern District. 

See id.

Accordingly, this factor weighs in favor of neither party.

I. The Ease of Access to Sources of Proof

The final Jones factor is “the ease of access to sources of proof.” See Jones v.

GNC Franchising, Inc., 211 F.3d at 498-99. Gottschalks argues that the Eastern District is

more convenient because Gottschalks stores many of the pertinent documents at its

corporate headquarters and at the Manchester Center location, both of which are located in

the Eastern District. (See Motion at 5; see also Bradshaw Decl. ¶ 5(A).) PRG submits

evidence that its records of payments received by Gottschalks are maintained in southern

California. (See Jacobson Decl. ¶ 6.) The parties do not identify any documents or other

sources of proof that are located in the Northern District.

Neither party contends, however, that any of the relevant records are so voluminous

that it would difficult to transport them as needed. See Reed Elsevier, Inc. v. Innovator

Corp., 105 F.Supp.2d 816, 822 (S.D. Ohio 2000) (noting that “location of documents will

rarely weigh in favor of transfer because documents may be easily photocopied and

shipped to wherever the documents are needed”).

Accordingly, this factor weighs in favor of neither party. 

J. Administrative Difficulties Flowing From Court Congestion

The Ninth Circuit has identified “administrative difficulties flowing from court

congestion” as another factor relevant to determining whether to grant a motion to transfer

pursuant to § 1404(a). See Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d at

843. PRG points out that judges in the Eastern District have a higher case load than

judges in the Northern District, and that cases take longer to get to trial in the Eastern

District than in the Northern District. (See Oh Decl. ¶ 3 and Ex. B). In particular, in 2004,

judges in the Eastern District had an average of 895 cases per judge compared to 519
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pending cases per judge in the Northern District, while civil cases in the Eastern District

took an average of 27.5 months to get to trial, compared to 22.5 months in the Northern

District. (See id.)

Accordingly, this factor weighs against transfer.

K. Summary

In sum, the most probative of the factors discussed above weigh in favor of

transferring the instant action to the Eastern District. The only factor that weighs in favor of

denial is the slightly longer average time for civil cases to get to trial in the Eastern District. 

The Court finds that single factor is outweighed, however, by the Eastern District’s

connection to the events giving rise to the instant action and to at least one of the parties,

as well as many of the witnesses, and that there are no contacts with or connection of any

type to the Northern District.

Accordingly, the Court finds that the relevant factors weigh in favor of transferring

the action to the Eastern District. 

CONCLUSION

For the reasons stated above, Gottschalks’s motion to transfer the instant action to

the Eastern District of California is hereby GRANTED.

The Clerk shall close the file.

IT IS SO ORDERED.

Dated: October 17, 2005 

MAXINE M. CHESNEY

United States District Judge