472 F.Supp.3d 704
N.D. Cal.2020Background
- Jason Chen sold his membership in Pioneer Oil (Montana) under a 2011 Settlement Agreement that paid him 25% of adjusted EBITDA for 2012–2016 and barred diversion of Pioneer business to other entities.
- Chen alleges Pioneer used a joint venture with Matrix Supply & Distribution (MSD) and Tradegroup Asia (TGA) to divert profits and underpay him; documentary gaps and a written-off debt raised his suspicions.
- Chen’s consultant reviewed Pioneer’s Montana records and found missing or no documentation of transactions with MSD; some potentially relevant evidence appears to be outside Montana (Hong Kong/China and U.S. individuals).
- Chen (now Nevada resident) filed in San Francisco Superior Court in March 2020 because El Dorado County filing was delayed by COVID; defendants removed to federal court (N.D. Cal.) and moved to transfer venue to Montana or, alternatively, to the Eastern District of California (E.D. Cal.).
- Chen consented to transfer to the E.D. Cal.; the court found the Northern District had minimal contacts and granted transfer to the Eastern District of California.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether transfer under 28 U.S.C. §1404(a) should go to District of Montana | Chen argues his preferred forum is E.D. Cal.; Northern District filing was due to COVID; Montana’s convenience does not overcome plaintiff’s forum choice | Defendants argue Montana is most convenient: corporate headquarters, witnesses, and documents are in Montana and Montana law governs | Transfer to Montana denied; transfer granted to Eastern District of California instead |
| Whether transfer to Eastern District of California is appropriate | Chen consents to transfer; E.D. Cal. was his intended forum and has many contacts (contract negotiation, payments, Chen’s former residence) | Defendants favored Montana but offered E.D. Cal. as alternative | Transfer to Eastern District of California granted |
| Weight given to plaintiff’s choice of forum | Chen: filed in N.D. Cal. only because of COVID; actual choice is E.D. Cal., which merits great weight | Defs: N.D. Cal. choice is entitled to little deference because it has minimal ties | Court treated E.D. Cal. as Chen’s true choice and afforded it substantial deference |
| Access to witnesses/evidence and governing law | Chen: many material witnesses/evidence are outside Montana and internationally; Montana’s slight documentary advantage is undermined by missing records | Defs: key witnesses, corporate records, and familiarity with Montana law favor Montana | Court found witnesses/evidence and choice-of-law favor Montana only slightly and not enough to overcome deference to Chen’s chosen forum (E.D. Cal.) |
Key Cases Cited
- Jones v. GNC Franchising, Inc., 211 F.3d 495 (9th Cir. 2000) (lists multi-factor test for §1404(a) transfer analysis)
- Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834 (9th Cir. 1986) (transfer should not merely shift inconvenience between parties)
- Goodyear Tire & Rubber Co. v. McDonnell Douglas Corp., 820 F. Supp. 503 (C.D. Cal. 1992) (setting out burden elements to prevail on transfer)
- Lou v. Belzberg, 834 F.2d 730 (9th Cir. 1987) (plaintiff’s forum choice ordinarily entitled to great weight)
- Pacific Car & Foundry Co. v. Pence, 403 F.2d 949 (9th Cir. 1968) (forum choice gets minimal consideration when forum lacks contacts with dispute)
- Barnes & Noble, Inc. v. LSI Corp., 823 F. Supp. 2d 980 (N.D. Cal. 2011) (articulating typical transfer factors including convenience, local interest)
- Costco Wholesale Corp. v. Liberty Mut. Ins. Co., 472 F. Supp. 2d 1183 (S.D. Cal. 2007) (defendant must make a strong showing of inconvenience to overcome plaintiff’s forum choice)