Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_04-cv-02684/USCOURTS-azd-2_04-cv-02684-0/pdf.json

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

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WO

NOT FOR PUBLICATION

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Steven W. Bluth, 

Plaintiff, 

vs.

Jack L. Johnson; International Health

Management Associates, Inc.; and

Illinois Corporation, 

Defendants. 

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No. CV-04-2684-PHX-SRB

OPINION AND ORDER

Pending before the Court is Defendants' Motion to Transfer Venue pursuant to 28

U.S.C. § 1404(a) from the District of Arizona to the Northern District of Illinois (Doc. 17).

The Court now rules on the motion.

I. BACKGROUND

In January 1994, the Board of Directors of Defendant International Health

Management Associates, Inc. (“IHMA”) wrote and executed a contract at its Illinois office

issuing Plaintiff Steven W. Bluth (“Bluth”) rights to purchase 200 shares of IHMA stock at

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1

 A factual dispute exists with regard to the reason for Plaintiff's change in work

location to Arizona. While Johnson alleges that Plaintiff requested to work in Arizona,

Plaintiff has produced evidence that this move was not voluntary on his part.

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$1.00 per share or 20% ownership of IHMA. In June 1995, Plaintiff tendered a check for

$200.00 to Defendant Jack J. Johnson (“Johnson”), payable to IHMA, for the purchase of

200 shares of IHMA stock. While Defendants held Plaintiff out as a 20% owner in name,

IHMA never issued Plaintiff the 200 shares of IHMA stock. 

From 1993 until 1995, Plaintiff executed his duties as Treasurer and as a director of

IHMA in Illinois. From 1997 until January 2004 he was a full-time employee. However,

between 1996 and 2001, Plaintiff spent about half of his time in Illinois and the other half of

the time in Arizona. In 2001, Plaintiff began working primarily out of his residence in

Arizona.1

 While executing his employment duties in both states Plaintiff began working

primarily out of his house in Arizona to save IHMA the expenses of maintaining an

apartment in Illinois and weekly travel between states. One project Plaintiff worked on while

he was in Illinois and Arizona involved a license for use of drug delivery technology to

Cubist Pharmaceutical, Inc. ("Cubist"). The Cubist project yielded substantial profits for

IHMA. After disagreements between Plaintiff and Johnson over Plaintiff's compensation on

various projects, Plaintiff filed a complaint on November 29, 2004, in this Court alleging

breach of contract, breach of duty of good faith and fair dealing, constructive trust, unjust

enrichment, fraud/misrepresentation, oppression/breach of fiduciary duty, and refusal to

provide equitable accounting of IHMA profits or allow Plaintiff to inspect the records of

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2

 The Court will discuss factors four and five in the same section, as their analysis is

very similar. The Court will do the same with factors six and eight.

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IHMA. On June 22, 2005, Defendants filed a motion to transfer venue from the District of

Arizona to the Northern District of Illinois.

II. LEGAL STANDARDS AND ANALYSIS

Pursuant to 28 U.S.C. §1404(a), “[f]or 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.” Defendants have the burden of establishing this

action should be transferred to the Northern District of Illinois. Moreover, Defendants must

establish: (1) that the transferee district, the Northern District of Illinois, is one where the

case might have been brought; and (2) that the convenience of parties and witnesses and the

interest of justice favor transfer. Hatch v. Reliance Inc. Co., 758 F.2d 409, 414 (9th Cir.

1985). There are multiple factors the Court may consider to determine whether the second

prong of §1404(a) has been satisfied: 

(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 litigating 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.2

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Jones v. GNC Franchising, Inc., 211 F.3d 495, 498 (9th Cir. 2000). Furthermore, "recent

public policy of the forum state, if any, is at least as significant a factor in the § 1404(a)

balancing." Id. at 499. 

A. Appropriate Venue

There is no dispute that this action could have initially been brought in the Northern

District of Illinois. Accordingly, the Court will proceed to the discussion of the second

prong.

B. Convenience of Parties, Witnesses, and Interest of Justice

1. The Location Where Relevant Agreements Were Negotiated and 

 Executed

The first factor looks to the location where relevant agreements were negotiated and

executed. Warfield v. Gardner, 346 F. Supp. 2d 1034, 1044 (D. Ariz. 2004). Here, the

contract in question was negotiated and signed by Defendants and Plaintiff in Illinois.

Therefore, this factor favors transfer to Illinois. 

2. Governing Law

The second factor turns on which court is most familiar with the governing state law.

While this action was filed in Arizona, that fact alone is not dispositive on the issue of which

state's governing law applies. Where, as here, the events giving rise to the complaint

occurred in more than one state, courts must apply choice of law principles to determine

which state's governing law to apply. In Arizona, courts look to the principles set forth in

the Restatement (Second) of Conflict of Laws to resolve choice of law questions. Bates v.

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Superior Court, 749 P.2d 1367, 1369 (Ariz. 1988) (citations omitted); Swanson v. Image

Bank, Inc., 77 P.3d 439, 441 (Ariz. 2003). At this juncture, the Court need not determine

how the choice of law analysis plays out, as even assuming that this action is governed by

Illinois law (a fact that would weigh in favor of transferring venue), that fact will not affect

the Court's ultimate determination on the issue of whether to transfer venue.

3. Plaintiff's Choice of Forum

A plaintiff's choice of forum is given substantial deference. Holder Co. v. The Main

St. Distrib., Inc., 1987 U.S. Dist. LEXIS 10345, at *23 (D. Ariz. Jan. 16, 1987). "This is

especially true where the forum plaintiff chose is not only his domicile but also has a

significant connection with the subject matter of the case." Id. (citing Pacific Car & Foundry

Co. v. Pence, 403 F.2d 949, 954 (9th Cir. 1968)). 

For example, in Holder Co., the court denied the defendant's motion to change venue

because the plaintiff "reside[d] in the District of Arizona and the District ha[d] a significant

connection with the subject matter of the case." 1987 LEXIS 10345, at *23. 

Like the plaintiff in Holder Co., Plaintiff has demonstrated that the District of Arizona

has a "significant connection with the subject matter of the case." 1987 LEXIS 10345, at *23.

Plaintiff worked for and helped to develop IHMA's business in Arizona. Also, while living

in Arizona, Plaintiff was involved in the development of the Cubist project that yielded

substantial profits for IHMA. While the Northern District of Illinois "may be an alternative

forum, Plaintiff elected to sue the Defendants in Arizona." Warfield, 346 F. Supp. 2d at

1044. The Court finds that because Plaintiff chose to sue in Arizona and the state has a

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3 See also Pacific Car, 403 F.2d at 953 (noting the transfer of records and documents

may play a role in this analysis); Fireman's Fund Ins. Co v. Nat'l Bank for Coops., 1993 WL

341274, *4 (N.D. Cal. 1993) (holding that "[t]he movant must make more than mere

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significant connection with the subject matter of the case, this factor weights against the

transfer of venue.

4. Respective Parties' Contacts with Forum; Contacts Relating

 Plaintiff's Cause of Action in Arizona

These factors examine the extent of the parties' contact with either forum. GNC

Franchising, Inc., 211 F.3d at 499. While Defendants' primary place of business is in the

State of Illinois, Defendants' connections to Arizona are significant. Defendants maintained

an office and transacted extensive business in Arizona. While Plaintiff has very strong ties

to Arizona, Plaintiff has minimal ties to Illinois. Plaintiff is a resident of Arizona and

transacted business in this state. Thus, because Defendants have significant ties to both

forums and Plaintiff only has strong ties to Arizona, this factor favors Arizona as the proper

forum.

5. Differences in the Cost of Litigating in the Two Forums; Ease of 

 Access to Sources of Proof.

A "court will not transfer venue where the transfer will merely shift inconvenience

from one party to the other." Holder Co., 1987 LEXIS 10345, at *23. In making the

determination of which forum is the most convenient, the Court takes into account several

considerations including the convenience to the witnesses, difficulty or ease of transferring

evidence, and the cost of litigation.3

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generalized allegations that there are many important documents in his preferred forum; he

must, at least, explain what these documents are and why they are necessary to the

determination of the issues in this case").

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Here, Defendants have not shown that the cost of litigation would be less if the venue

were transferred to the Northern District of Illinois. Rather, it appears as if the

inconvenience and cost of litigation, travel, and shipping of documents would merely be

shifted from one party to another. See Pacific Car, 403 F.2d at 953 (affirming transfer of

venue where a ruling otherwise would have required the shipment of up to one thousand file

drawers of records). In addition, Johnson has already obtained counsel in Arizona, thus

helping to mitigate the adverse effects of litigating in this forum. 

The convenience of witnesses is a significant factor and "perhaps the critical factor

for a court considering a motion to change venue." Holder Co., 1987 LEXIS 10345, at *24.

"The Court must consider the effect of transfer on the availability of certain witnesses and

their live testimony at trial." Id. at *23. Additionally, parties should "specify the key

witnesses it planned to call and outline the scope of their testimony." Id.

In Holder Co., the court held that convenience of the parties and witnesses favored

Plaintiff's choice of forum because:

[P]laintiffs submitted the affidavits of witnesses who could testify to the

alleged trademark and copyright infringement. In these affidavits, the

witnesses testified to the inconvenience of testifying in New York. These

witnesses reside in Arizona and would be beyond the Eastern District of New

York's subpoena power under Fed. R. Civ. P. 45(e). In contrast, [the

defendant] submitted only the affidavit of its president regarding the

inconvenience of appearing in Arizona. It failed to specify the key witnesses

it planned to call and outline the scope of their testimony.

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Id. at *24-25.

Neither party has provided an affidavit of witnesses who could "testif[y] to the

inconvenience of testifying" in either venue, but based on the evidence the Court does have

before it, it is clear that the inconvenience would be shared equally by both parties. 

In reaching this conclusion, the Court took into consideration the health of Johnson's

daughter. While the Court recognizes the difficulty of Johnson leaving his daughter to testify

should this case go to trial, this fact alone is insufficient to tip the balance of inconvenience

in Defendants' favor.

6. The Availability of Compulsory Process to Compel Attendance

of Unwilling Non-Party Witnesses

Whenever possible, a court should facilitate the "live" presence of material nonparty

witnesses. Kendall U.S.A., Inc. v. Dayton Steele Rule & Die Co., 666 F. Supp. 1264, 1264

(N.D. Ind. 1987). A defendant must show that transferring venue would "appreciably expand

the pool of potential witnesses." Ashmore v. Northeastern Petroleum Div. of Cargill, Inc.,

925 F. Supp. 36, 39 (D. Me. 1996). In addition, "[a] defendant's motion to transfer under

section 1404(a) may be denied when the witnesses are employees of the defendant and their

presence can be obtained by the party." Id. at 38. Finally, an Arizona nonparty witnesses

could not be compelled to testify if this case were transferred to the Northern District of

Illinois. Fed. R. Civ. P. 45(e) (providing that a nonparty cannot be compelled to attend trial

unless served within the district or 100 miles of the place of trial). 

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4

 Defendants have identified three nonparty witnesses; one of which resides outside

the 100 mile radius of Illinois jurisdiction. Fed. R. Civ. P. 45(e).

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Here, Defendants have presented evidence that their key nonparty witnesses could not

be compelled to testify in Arizona. However, Defendants have failed to demonstrate that the

transfer of the case from the District of Arizona to the Northern District of Illinois would

significantly expand their witness pool or increase their access to evidence.4

 While Plaintiff's

witness pool would not be seriously affected by a change in venue, an important witness for

Plaintiff could not be compelled to testify in the Northern District of Illinois. Therefore, the

Court finds that this factor favors retaining venue in Arizona.

7. State's Interest

"[T]he relevant public policy of the forum state, if any, is at least as significant a

factor in the § 1404(a) balancing." GNC Franchising, 211 F.3d at 495. Because Arizona has

a public policy to provide a protective forum for its residents, this factor favors Arizona as

the proper forum. See Brink v. First Credit Res., 57 F. Supp. 2d 848, 861 (D. Ariz. 1999)

(holding that "[t]he state of Arizona maintains a strong interest in providing an effective

means of redress for its residents").

III. CONCLUSION

After balancing the relevant factors, the Court finds that Defendants have failed to

demonstrate that this case would be better litigated in the Northern District of Illinois than

in the District of Arizona. Even though the contract in dispute was negotiated and executed

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in Illinois, and even though Illinois law may govern this action, these considerations are

outweighed by the deference the Court must pay to Plaintiff's choice of forum, the strong

connections shared by Plaintiff and Defendants to Arizona, the fact that many of the events

giving rise to the Complaint occurred in Arizona, and the fact that Arizona has an interest in

providing a judicial forum for its citizens. Also tipping the scales against a transfer of venue

is Defendants' failure to show that such a transfer would lower the costs of litigation, reduce

the inconvenience of witnesses, or improve access to sources of proof. As such, the Motion

to Transfer Venue is denied.

IT IS ORDERED denying Defendants' Motion to Transfer Venue to the United

States District Court, Northern District of Illinois (Doc. 17).

DATED this 17th day of October, 2005.

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