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U.S. District Court Examines Requirements to Transfer Venue Under 28 USC § 1404(a).

Mannie and Catherine Jackson Descendant Trust, et al. v. Nancy R. Rizzo, et al.
No. 15-659 (United States District Court for the District of Delaware, October 27, 2015)

by Richard J. Medoff, Law Clerk
Semmes, Bowen & Semmes (www.semmes.com)

Available at:
http://www.ded.uscourts.gov/sites/default/files/opinions/rga/2015/october/15-659_0.pdf

Mannie and Catherine Jackson Descendant Trust, et al. v. Nancy R. Rizzo, et al. involves a motion to transfer a fraud case filed in the United States District Court for the District of Delaware to the District of Arizona based on forum non conveniens principles under 28 USC § 1404(a). In considering the motion to transfer, the Delaware District Court concluded that the relevant private and public interest factors espoused in Jumara v. State Farm Ins. Co., 55 F.3d 873 (3d Cir. 1995) strongly favored transferring the case. Thus, Judge Richard G. Andrews granted Defendant’s motion to transfer the case to the District of Arizona.

By way of factual background, Plaintiffs were the Mannie and Catherine Jackson Descendant Trust, an Arizona trust with a Nevada trustee, and an individual resident in Arizona (collectively, “Plaintiffs”). Defendants were a Delaware corporation (“the Corporation”) and an Arizona resident who was Chairman of the Board of the Corporation (collectively, “Defendants”). The Corporation, described by the Court as a “start-up,” had thirteen (13) employees, all in Arizona.

Plaintiffs filed a three (3) count complaint in the United States District Court for the District of Delaware alleging federal securities fraud, Arizona securities fraud, and Arizona common law fraud. Defendants subsequently filed a motion to transfer the case to the District of Arizona based on forum non conveniens principles, which Plaintiffs opposed. The statutory authority for transferring the case was 28 U.S.C. § 1404(a), which provides: "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.”

The Court began its analysis by noting that in determining whether transfer is appropriate, it must consider the “the private and public interests protected by the language of § 1404(a),” and that it is the movants’ burden to establish the need for transfer. Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995). The Court explained that the relevant private interests included:

(1) plaintiffs forum preference as manifested in the original choice; (2) the defendant's preference; (3) whether the claim arose elsewhere; (4) the convenience of the parties as indicated by their relative physical and financial condition; (5) the convenience of the witnesses-but only to the extent that the witnesses may actually be unavailable for trial in one of the fora; and (6) the location of books and records (similarly limited to the extent that the files could not be produced in the alternative forum).

Jumara, 55 F.3d at 879. The Court further explained that the relevant public interests included:

(7) the enforceability of the judgment; (8) practical considerations that could make the trial easy, expeditious, or inexpensive; (9) the relative administrative difficulty in the two fora resulting from court congestion; (10) the local interest in deciding local controversies at home; (11) the public policies of the fora; and (12) the familiarity of the trial judge with the applicable state law in diversity cases.

Id. at 879-80.

The Court noted that there was no dispute that the case could have been brought against the Defendants in the District of Arizona, as the Corporation's principal place of business was in Arizona, and the individual Defendant was a citizen of Arizona. In considering the relevant public and private interests, or “Jumara factors,” the Court concluded that none favored retaining the case in Delaware other than the first factor, that Plaintiffs chose Delaware, and that the remaining factors were either neutral or favored transfer. While the Court noted that Plaintiffs’ forum choice was “an important consideration,” the Court explained that it must give consideration to the other relevant factors.

Regarding the second and third factors, the Court found that they favored transfer because Defendants preferred Arizona and the claims arose in Arizona. The Court also found that the fourth factor favored transfer because the Corporation had no income and only continued to exist based on financing, while Plaintiffs had “very substantial assets,” and thus, Plaintiffs were better able to afford litigation in whichever venue litigation took place.

According to the Court, the fifth and six factors were “close to neutral” because essential third-party witnesses had not yet been identified, and it was likely that all relevant "books and records" would be able to be produced in Delaware. The parties agreed that the seventh and ninth factors were neutral, and the Court accepted that agreement.

The Court found that the eighth factor favored transfer because the majority of the witnesses would be coming from Arizona, and thus, would be required to travel across the country to go to trial in Delaware, which would entail substantial time away from work and family. The Court also found that the ninth factor favored transfer because the dispute had “some elements of a local controversy,” given that it concerned a dispute between Arizona citizens about the management and actions of an Arizona-based business.

The Court found that the tenth factor was neutral because Delaware had an interest in the management of Delaware corporations, however, the claim in the case was fraud, and Arizona had an interest in protecting its citizens against fraud. Finally, the Court found that the last factor favored transfer because Arizona federal judges would have greater familiarity with Arizona law than Delaware federal judges. Under these circumstances, the Court concluded that the case clearly should be transferred to the District of Arizona. Thus, the Court granted Defendants’ motion to transfer.


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