MEMORANDUM OPINION
Plaintiff Lawrence Treppel (“plaintiff’) brings this verified shareholder derivative action against Norfolk Southern Corporation (“Norfolk Southern”) and current and former members of Norfolk Southern’s Board of Directors and Audit Committee (collectively, “defendants”), alleging violations of Virginia state corporate law, including breach of fiduciary duty, waste of corporate assets, and unjust enrichment. Now before the Court is defendants’ motion to dismiss plaintiffs complaint for improper venue, and, in the alternative, to transfer this case to the United States District Court for the Eastern District of Virginia. Upon consideration of the parties’ submissions, and for the reasons set forth below, the Court will deny defendants’ motion to dismiss and grant defendants’ motion to transfer. Accordingly, this case will be transferred to the Eastern District of Virginia.
BACKGROUND
Norfolk Southern is a Virginia corporation with its principal executive offices located in Norfolk, Virginia. Compl. ¶ 24. Along with four other railroad companies, Norfolk Southern controls more than 90% of all railroad tracks in America. Id. ¶ 2. In his complaint, plaintiff alleges that Norfolk Southern’s former Chief Executive Officer (“CEO”) David R. Goode and its current CEO Charles W. Moorman IV participated in a series of meetings of the American Association of Railroads (“AAR”), in which representatives of several of the leading railroad companies allegedly conspired to coordinate and raise fuel surcharge prices. See id. ¶¶ 5, 11, 12.
The AAR is a private institutional body headquartered in Washington, D.C. that serves as the primary governing body of the railroad industry.
See id.
¶ 3; Pl.’s Opp’n to Defs.’ Mot. to Dismiss (“Pl.’s Opp’n”) [Docket Entry 30] at 1. Moorman is the current chairman of the AAR and has been a member of the organization since 2005; Goode is a former AAR member and chairman.
See
Compl. ¶¶ 11-12. Beginning in 2003, the AAR allegedly developed a new pricing system for railroad services that allowed participating railroads to charge artificially high fuel surcharge prices.
See
Compl. ¶¶ 43-46. This supposed coordination of railroad fuel sur
From 2003 through 2007, the Norfolk Southern Board of Directors met on thirty occasions. See Defs.’ Mot. to Dismiss (“Defs.’ Mot.”) [Docket Entry 27], Ex. 1, Aff. of Howard D. McFadden (“McFadden Aff.”) ¶ 3. Twenty-one of those meetings occurred in the Eastern District of Virginia, and none of the meetings took place in the District of Columbia. See id. ¶¶ 3A. Aso during this time period, Norfolk Southern’s Audit Committee met on several occasions in the Eastern District of Virginia, but never in the District of Columbia. Id. ¶ 5. The Norfolk Southern Board of Directors is alleged to have approved of the AAR fuel surcharge arrangement at some point during its meetings. See Compl. ¶ 5 (noting that the Board “ratified” the agreements made by Moorman and Goode with Norfolk Southern’s competitors at the AAR).
Norfolk Southern made significant profits from its alleged price fixing arrangement, which prompted the filing of at least thirteen different antitrust class actions against the company. See Compl. ¶¶ 47-48, 53; see also Pl.’s Opp’n at 2. On November 6, 2007, these separate antitrust actions were coordinated and consolidated in the District of Columbia by the Judicial Panel on Multidistrict Litigation (“JPML”). Compl. ¶ 53. Following consolidation by the JPML, an amended class action complaint was filed in the District of Columbia charging Norfolk Southern and several of its competitors with price fixing in violation of § 1 of the Sherman Act. See Pl.’s Opp’n at 2-3; see also Consol. Am. Class Action Compl. (“Class Action Compl.”), In re Rail Freight Fuel Surcharge Antitrust Litigation, Misc. No. 07-489 (D.D.C. filed Apr. 15, 2008). None of Norfolk Southern’s officers or directors were individually named as defendants in the consolidated antitrust class action. See Class Action Compl.; see also Defs.’ Mot. at 3.
On September 28, 2010, plaintiff, a California citizen and Norfolk Southern shareholder, filed this shareholder derivative suit on behalf of Norfolk Southern against the company and thirteen of its current and former executives, alleging breach of fiduciary duty, waste of corporate assets, and unjust enrichment. Compl. ¶¶ 1, 10, 57. In his complaint, plaintiff contends that the company’s agreement to coordinate fuel surcharge prices with its competitors has “irreparably damaged Norfolk Southern’s corporate image and goodwill” and forced the company to spend significant funds “investigating and defending” against the class action. Id. ¶ 55. The thirteen individual defendants named in plaintiffs complaint include Moorman and Goode, as well as other Norfolk Southern directors and Audit Committee members. Id. ¶¶ 11-23. Of the thirteen individuals named, four are citizens of Virginia, and one is a citizen of Washington, D.C. Id.
Aong with his complaint, plaintiff filed a “Notice of Designation of Related Civil Cases” pursuant to Local Civil Rule 40.5,
1
in which he noted that his case was related to the consolidated antitrust class action pending in this Court before Judge Friedman.
See
Notice of Related Case [Docket Entry 2], Accordingly, plaintiffs case was initially assigned to Judge Friedman, but was reassigned to the undersigned judge
Defendant challenges venue on two grounds. First, he argues that this case should be dismissed because the District of Columbia is not a proper venue pursuant to 28 U.S.C. § 1891(a). Second, defendant argues that even if venue in the District of Columbia is proper, the Court should still exercise its discretionary authority to transfer this case to the Eastern District of Virginia for the convenience of the parties and the witnesses and “in the interest of justice.” See 28 U.S.C. § 1404(a). The Court will address each of these arguments in turn.
DISCUSSION
1. Venue Under 28 U.S.C. § 1391(a)(2)
Defendant first argues that venue is not proper in the District of Columbia and that this case should therefore be dismissed under Federal Rule of Civil Procedure 12(b)(3). When a plaintiff brings suit in an improper venue, the district court “shall dismiss [the case], or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.” 28 U.S.C. § 1406(a);
see also
Fed.R.Civ.P. 12(b)(3). A plaintiff bringing suit in federal court bears the burden of showing that venue is proper,
Varma v. Gutierrez,
WRere, as here, subject-matter jurisdiction is based solely on diversity of citizenship, 2 28 U.S.C. § 1391(a) provides that venue is proper only in:
(1) a judicial district where any defendant resides, if all defendants reside in the same State, (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 the property that is the subject of the action is situated, or (3) a judicial district in which any defendant may be found, if there is no district in which the action may otherwise be brought.
28 U.S.C. § 1391(a)(1)-(3).
In this case, venue cannot lie under section 1391(a)(1) because defendants reside in eight different states.
See
Compl. ¶¶ 11-24. Moreover, section 1391(a)(3) provides no foundation for venue in the District of Columbia, because it is only applicable when “there is no district in which the action may otherwise be brought.” 28 U.S.C. § 1391(a)(3). Plaintiff does not refute that this case could have been brought in the Eastern District of Virginia. Indeed, the Eastern District of Virginia is where most of the “events or omissions giving rise to the claims occurred.” Norfolk Southern is headquartered in the Eastern District of Virginia and the majority of the company’s Board
Plaintiff, however, seeks to evade the requirements of 28 U.S.C. § 1391(a)(2) by emphasizing the relationship between this case and the consolidated antitrust class action currently pending in this Court. According to plaintiff, venue is proper in the District of Columbia because his shareholder derivative claim is “related” to the antitrust cases that were consolidated by the JPML Transfer Order, which “ordered that transactions arising out of substantially similar facts be centralized in this district.”
See
Compl. ¶ 9;
see also In re Rail Freight Fuel Surcharge Antitrust Litigation,
Plaintiff argues that a substantial part of the events giving rise to his claims did, in fact, occur in the District of Columbia because it is through the Washington, D.C.based AAR that Norfolk Southern and its competitors allegedly “coordinated ... to charge similar fuel surcharges and increase the charges in unison.” Compl. ¶¶ 3, 11, 12. Because the AAR is headquartered in the District of Columbia, plaintiff maintains that “[a]t the very least, it can be inferred that certain defendants and other top executives met regularly for AAR meetings in the District of Columbia, in furtherance of their scheme.” See Pl.’s Opp’n at 6-7.
Defendants do not dispute that Moorman and Goode may have attended AAR meetings in the District of Columbia or that these AAR meetings may have at least some relevance to plaintiffs claims; rather, they argue that a more substantial portion of the events giving rise to plain
Here, two of the named defendants allegedly attended and chaired AAJEt meetings in the District of Columbia, and it was supposedly at these meetings that these individuals — on behalf of Norfolk Southern — agreed to coordinate an increase in fuel surcharge prices with representatives from Norfolk Southern’s competitors. Viewing the complaint in the light most favorable to plaintiff, then, the Court finds that, while the most substantial portion of the relevant events giving rise to plaintiffs claims occurred in the Eastern District of Virginia, at least a substantial part of the events did, in fact, take place in this district. Hence, the District of Columbia is a proper venue under 28 U.S.C. § 1391(a)(2) for plaintiffs claims.
II. Transfer Pursuant to 28 U.S.C. § 1404(a)
Even where venue is proper, a district court nonetheless “has ‘broad discretion’ to order transfer” of venue pursuant to 28 U.S.C. § 1404(a).
See Rosales v. United States,
As previously explained, this suit could have been brought in the Eastern District of Virginia because “a substantial part of the events or omissions giving rise to the claim occurred” in that district, see 28 U.S.C. § 1391(a)(2), and defendants would be subject to personal jurisdiction there, see Va.Code Ann. § 8.01-328.1. Therefore, the Court must consider whether defendants have satisfied their burden of showing that the convenience to the parties and witnesses and the interests of justice weigh in favor of transfer.
In evaluating motions to transfer, courts have steadfastly “refused to identify specific circumstances ‘which will
A. Private-Interest Factors
1. Choice of Forum
Regarding the first and second private-interest factors — the parties’ respective choices of forum — plaintiff has chosen to sue in the District of Columbia, while defendants prefer to litigate in the Eastern District of Virginia. As the party bringing suit, plaintiffs choice of forum is ordinarily entitled to deference.
See Envtl. Def. v. U.S. Dep’t of Transp.,
Civ. A. No. 06-2176,
2. Where the Claim Arose
The third private-interest factor weighs strongly in defendants’ favor, as plaintiffs claims arose not in the District of Columbia but in the Eastern District of Virginia. To be sure, Moorman’s and Goode’s alleged participation in AAR meetings in the District of Columbia does constitute a “substantial event” for purposes of 28 U.S.C. § 1391(a)(2). But that does not mean that the District of Columbia is where plaintiffs claims “arose” for purposes of 28 U.S.C. § 1404(a). Courts in this district have held that claims “arise” under 28 U.S.C. § 1404(a) in the location where the corporate decisions underlying those claims were made,
see, e.g., Berenson,
Moreover, plaintiff has brought claims against thirteen individual defendants— only two of whom are alleged to have attended AAR meetings in the District of Columbia. See Compl. ¶¶ 3, 5. To the extent that the remaining individual defendants breached their fiduciary duties, engaged in corporate waste, or committed unjust enrichment, those actions would have occurred during Board or Audit Committee meetings held outside this district. Because the majority of Norfolk Southern’s meetings during the relevant time-frame transpired in the Eastern District of Virginia — and because plaintiffs suit is based on actions allegedly taken (or not taken) during those meetings — plaintiffs claims arose in the Eastern District of Virginia, not in the District of Columbia.
3. Convenience of the Parties and Witnesses
The fourth and fifth private-interest factors — the convenience of the parties and the witnesses — do not weigh heavily in favor of either venue, given the close proximity of the District of Columbia and the Eastern District of Virginia.
See, e.g., Lagor,
The District of Columbia is no more convenient for plaintiff than the Eastern District of Virginia. Plaintiff is a citizen of California, and he “made clear [his] willingness ‘to forego the convenience of a geographically nearby forum’ ” when he filed this suit in the District of Columbia.
See id.
at *4 (quoting
Dean v. Eli Lilly & Co.,
4. Access to Sources of Proof
Turning to the last private-interest consideration — the difference between the two venues with respect to access to sources of proof — this, too, does not weigh heavily in favor of either forum. Defendant correctly points out that because Norfolk Southern’s corporate headquarters is located in the Eastern District of Virginia, the bulk of its corporate records, meeting minutes, and company memoranda are likely to be found there. However, “technological advances have significantly reduced the weight of the ease-of-access-to-proof factor.”
Nat’l R.R. Passenger Corp. v. R & R Visual, Inc.,
Civ. A. No. 05-822,
B. Public-Interest Factors
Although the balance of the private-interest factors thus weighs in favor of transfer, it is arguable that consideration of the private-interest factors alone would not be sufficient to “overcome the presumption in favor of plaintiffs choice of forum,” given the close proximity between the two venues.
See, e.g., Modaressi,
1. Familiarity with the Governing Laws
Regarding the first public-interest factor — the transferee court’s familiarity with
Plaintiff counters by noting that “the District of Columbia
routinely
hears derivative cases involving corporations organized under the laws of other states.” PL’s Opp’n at 13. That is undoubtedly true, but the proper analysis of this public interest factor focuses on the
transferee
court’s familiarity with the governing laws, not on the
transferor
court’s ability to apply those laws.
See, e.g., Trout Unlimited,
2. Relative Congestion of the Courts
A comparison of the relative docket congestion in the District of Columbia and the Eastern District of Virginia also supports transfer. The D.C. Circuit has explained that while “congestion alone is not sufficient reason to transfer, relative docket congestion and potential speed of resolution is an appropriate factor to be considered” by district courts in the motion to transfer analysis.
See Starnes v. McGuire,
3. Local Interest
Finally, the Eastern District of Virginia has a strong interest in having plaintiffs claims “resolved in the locale where they arise.”
Trout Unlimited,
CONCLUSION
For the foregoing reasons, the Court will deny defendants’ motion to dismiss for improper venue under Rule 12(b)(3) but grant defendants’ motion to transfer this action to the United States District Court for the Eastern District of Virginia pursuant to 28 U.S.C. § 1404(a). A separate Order accompanies this Memorandum Opinion.
Notes
. Local Civil Rule 40.5(c)(1) provides that ''[w]here the existence of a related case in this court is noted at the time the indictment is returned or the complaint is filed, the Clerk shall assign the new case to the judge to whom the oldest related case is assigned.” D.C. Local Civ. Rule 40.5.
. Subject-matter jurisdiction over plaintiff's claim is founded on diversity of citizenship: plaintiff is a citizen of California, and defendants are citizens of Virginia, Pennsylvania, New York, the District of Columbia, Missouri, Georgia, Florida, and Connecticut. Moreover, the amount in controversy in this case exceeds $75,000. See 28 U.S.C. § 1332(a)(1); Compl. ¶¶ 7, 10-24.