MEMORANDUM OPINION
Pending before the Court are several motions filed by Defendants:
I. BACKGROUND
A. The Parties
Plaintiff, James R. Zazzali (“Plaintiff’ or “Zazzali”), is the court-approved Trustee for the DBSI Estate Litigation Trust and the DBSI Private Actions Trust.
Defendant Douglas Swenson is a citizen and domiciliary of Idaho. (D.I. 62 at ¶ 12) He is the former President and CEO of DBSI, an Idaho real estate investment firm. (D.I. 71 at 2)
Defendant Hassard presently resides in Utah. (D.I. 43, Ex. 1) At all times relevant to this case, Mr. Hassard was a citizen and domiciliary of Idaho. (Id.) Mr. Hassard served as an officer and/or director of various DBSI entities. (D.I. 62 at ¶ 13)
Defendant Mayeron is a citizen and domiciliary of Texas. (Id. at ¶ 14; D.I. 43, Ex. 1) Mr. Mayeron served as an officer and/or director of various DBSI entities. (Id.)
Defendant Var Reeve is a citizen and domiciliary of Idaho. (D.I. 62 at ¶ 18; D.I. 43, Ex. 1) Mr. Var Reeve served as an officer and/or director of various DBSI entities. (Id.)
Defendant Bringhurst is a citizen and domiciliary of Utah. (D.I. 50, Ex. 2 at ¶ 1) At all times relevant to this action, Mr. Bringhurst was a resident of Idaho. (Id. at ¶ 2) Mr. Bringhurst served as a director and/or officer of various DBSI entities. (Id. at ¶ 7; D.I. 62 at ¶ 19)
Defendant Jeremy Swenson is a citizen and domiciliary of Idahо. (D.I. 62 at ¶ 20) He served as an officer and/or director of DBSI entities. (Id; D.I. 50, Ex. 3 at ¶ 5)
Defendant David Swenson is a citizen and domiciliary of Idaho. (D.I. 62 at ¶ 21) He served as an officer and/or director of DBSI entities. (Id.; D.I. 50, Ex. 1 at ¶ 4)
Defendant Bryan S. Mick is a citizen and domiciliary of Nebraska. (D.I. 62 at ¶ 24) He is the President of Mick & Associates. (D.I. 69, Ex. 2 at ¶ 1)
Defendant Mick & Associates is a Nebraska corporation with its principal place of business in Nebraska. (D.I. 62 at ¶ 23) Mick & Associates has never done business in Delaware. (D.I. 69, Ex. 2 at ¶ 4)
Defendants John Doe 1-50 and XYZ Corporation 1-50 are fictitious names representing one or more persons and/or entities who were associated with or acted in concert with Defendants in connection with the alleged illegal activities. (D.I. 62 at ¶¶ 22, 25)
On November 5, 2010, Plaintiff, in his capacity as Trustee for the DBSI Estate Litigation Trust and as Trustee for the DBSI Private Actions Trust, filed this action against Dеfendants, alleging violations of federal and Idaho racketeering statutes (“RICO claims”), violations of federal and Idaho securities laws, breaches of fiduciary duties, and other common law violations. (D.I. 1) Plaintiff filed a First Amended Complaint (D.I. 62 and, hereinafter, the “Amended Complaint”) on March 17, 2011. The pending motions were all filed on May 2, 2011. The parties completed briefing on these motions on July 11, 2011. The Court held argument on the pending motions on November 9, 2011. {See Motions Hr’g Tr., Nov. 9, 2011 (D.I. 142) (hereinafter “Tr.”))
II. DISCUSSION
A. Venue
Defendants ask the Court to dismiss this case on the grounds that the District of Delaware is an improper venue. {See D.I. 70) Plaintiff argues that Defendants are precluded from challenging venue due to collateral estoppel and res judicata. (D.I. 99 at 6-7) Specifically, Plaintiff argues that Defendants’ venue challenge is impermissible because the Bankruptcy Court’s Confirmation Order requires venue within Delaware for all actions brought on behalf of the DBSI Private Litigation Trust and DBSI Private Actions Trust. {Id. at 6)
Defendants’ venue challenge is not barred by collateral estoppel. Under the doctrine of collateral estoppel, a party is precluded from re-litigating an issue if, among other requirements, “the identical issue was decided in a prior adjudication.” Del. River Port Auth. v. Fraternal Order of Police,
Nor is Defendants’ venue challenge barred by res judicata. Res judicatа, or claim preclusion, prevents a party from asserting claims that were or could have been brought in a prior proceeding. See, e.g., In re Mullarkey,
Therefore, the Court must now turn to whether the District of Delaware is a proper venue for this case.
The Amended Complaint alleges that, in furtherance of their scheme to commit securities fraud, the Non-Mick Defendants
Based on the Court’s finding that venue is proper for the securities fraud claims, the Court also finds that this District is an appropriate venue for the RICO claims asserted against the Non-Mick Defendants. This is because the RICO claims are an alternative avenue of relief to remedy the same wrongs asserted in Plaintiffs securities fraud claims. See Beattie v. United States,
The Amended Complaint alleges RICO violations and securities fraud claims which arise from the same common nucleus of operative fact — namely, Defendants’ fraudulent representations to potential investors. (Compare D.I. 62 at ¶ 630 (alleg
The Non-Mick Defendants did not raisе any specific venue arguments pertaining to any of the other counts of the Amended Complaint.
The Court next addresses whether venue is proper with respect to the Mick Defendants. “Where there is more than one defendant, proper venue must be shown for each defendant.” Kunkler v. Palko Mgmt. Corp.,
The Mick Defendants are not accused of committing securities fraud or RICO violations. Rather, they are alleged to have aided and abetted the Non-Mick Defendants in committing RICO violations and securities fraud. (See D.I. 62 at ¶¶ 768-69) “It is well established that ... venue is proper as to all defendants involved in ... [an] alleged securities fraud even if some of those defendants were not directly involved in the venue-supporting act or transaction within the district.” In re Towner Petroleum Co. Secs. Litig.,
B. Transfer
Having determined that venue is proper within the District of Delaware for all as
Section 1404(a)
Defendants’ request to transfer arises under 28 U.S.C. § 1404(a), which provides: “For the convenience of the parties and witnesses, in the interests of justice, a district court may transfer any civil action to any other district or division where it might have been brought.”
Appropriateness of the Transferee Venue
In determining whether transfer is appropriate, the Court must first determine whether this action could have been brought in the proposed transferee venue, which here is the District of Idaho. “The party moving for transfer bears the burden of proving that the action properly could have been brought in the transferee district in the first instance.” Mallinckrodt Inc. v. E-Z-Em Inc.,
Applicable Legal Standards
As the Third Circuit has explained, Section 1404(a) “was intended to vest district courts with broad discretion to determine, on an individualized, case-by-case basis, whether convenience and fairness considerations weigh in favor of transfer.” Jumara v. State Farm Ins. Co.,
Consequently, the burden rests squarely on the party seeking a transfer “to establish that a balancing of proper interests weighs in favor of the transfer.” Id.; see also Jumara,
Unless the defendant “is truly regional in character” — that is, it operates essentially exclusively in a region that does not include Delaware — transfer is often inappropriate. See Praxair, Inc. v. ATMI, Inc.,
Given the necessarily individualized, fact-specific, case-by-case nature of a decision whether to transfer venue, it is inevitable that the multitude of transfer opinions — including the many issued in this District — will not entirely harmonize with one another. As Chief Judge Slеet has explained:
By definition, a transfer analysis is a thoughtful weighing of interests. And, as an exercise of discretion, this process is, at least to some extent, subjective. Thus, while the Court can look to precedent for guidance, it reminds the parties that the weight which one court might afford to one factor on one day might very well differ from the weight afforded to that same factor by a different court, located in a different district, presiding over a different litigation, between different parties, concerning a different cause of action, involving different facts, different witnesses, and different documents on a different day.
Affymetrix, Inc. v. Synteni, Inc.,
The Jumara Factors
Since two proper venues have been identified, the Court must balance the appropriate considerations and determine whether, under the particular facts of this case, the request to transfer venue should be granted. The Third Circuit has observed that in undertaking such an analysis “there is no definitive formula or list of the factors to consider.” Jumara,
Nevertheless, the Third Circuit has also identified a set of private interest and public interest factors for courts to consider. See id. at 879-80. The private factors to consider include: (1) “the plaintiffs forum preference as manifested in the original choice;” (2) “the defendant’s preference;” (3) “whether the claim arose elsewhere;” (4) “thе 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).” The public interest factors to consider include: (1) “the enforceability of the judgment;” (2) “practical considerations that could make the trial easy, expeditious, or inexpensive;” (3) “the
Private Interest Factors
Plaintiff’s choice of forum
“It is black letter law thаt a plaintiffs choice of a proper forum is a paramount consideration in any determination of a transfer request, and that choice should not be lightly disturbed.” Shutte,
Plaintiff has clearly manifested its preference for Delaware as a forum by filing suit here. In support of the decision to file in Delaware, Plaintiff cites the DBSI bankruptcy cases presently pending in the Bankruptcy Court, Defendants’ decision to file the DBSI bankruptcy in Delaware, and the fact that Plaintiff maintains an office in Delaware. (D.I. 99 at 16; Tr. at 39)
Nevertheless, Delaware is not the “home turf’ for Plaintiff, who is a citizen and domiciliary of New Jersey. (See D.I. 62 at ¶ 11) “The movant’s burden in overcoming the plaintiffs choice of forum is somewhat lessened where, as here, the plaintiff has not filed suit in its ‘home turf.’ ” Angiodynamics,
Here, Plaintiffs decision to file in Delaware relates to legitimate and rational concerns. Thus, Plaintiffs choice of Delaware as its preferred forum is entitled to “significant deference.” Mallinckrodt,
Defendants’ forum preference
All of the Defendants prefer an alternative forum, the District of Idaho. Defendants assert that all material witnesses are located in Idaho and that litigating within the District of Delaware imposes a significant financial burden on them. (D.I. 71 at 11) Defendants present legitimate and rational reasons for their preference of an alternative forum. The specifics of the bases for this preference are addressed further below. Under Third Circuit law, Defendants’ preference for an alternative forum is not given the same weight as Plaintiffs preference.
Location of operative events
Plaintiff asserts that Delaware was the center of the fraud alleged in the Amended Complaint, as 300 DBSI entities and over 2500 special purpose entities were registered in Delaware to further the fraudulent plan. (D.I. 99 at 17) Plaintiff also argues that a “significant amount of misleading communications” were directed at Delaware investors. (Id.) Additionally, several of the defrauded investors are Delaware residents. (See Tr. at 34-35, 37) Defendants disagree and contend that the situs of Plaintiffs claims is Idaho, as DBSI was headquartered in and operated out of Idaho, offering materials and disclosure documents were mailed from Idaho, and most of the events relevant to the Amended Complaint occurred in Idaho. (D.I. 71 at 10)
Convenience of the parties
The next factor to be considered is “the convenience of the parties as indicated by their relative physical and financial condition.” Jumara,
The Court finds Plaintiffs arguments unavailing. The individual Non-Mick
In sum, this factor weighs in favor of transfer.
Convenience for the witnesses
The next factor is “the convenience of the witnesses — but only to the extent that the witnesses may actually be unavailable for trial in one of the fora.” Jumara,
The Court agrees with Chief Judge Sleet, who held that the weight to be accorded to concerns about convenience for the witnesses varies depending on the type of witness at issue:
Party witnesses or witnesses who are employed by a party carry no weight in the “balance of convenience” analysis since each party is able, indeed, obligated to procure the attendance of its own employees for trial. Expert witnessesor witnesses who are retained by a party to testify carry little weight in determining where the “balance of convenience” lies (especially in an action for patent infringement) because they are usually selected [on thе basis] of their reputation and special knowledge without regard to their residences and are presumably well compensated for their attendance, labor and inconvenience, if any. Fact witnesses who possess firsthand knowledge of the events giving rise to the lawsuit, however, have traditionally weighed quite heavily in the “balance of convenience” analysis.
Affymetrix,
Here, it appears that the overwhelming majority of material non-party witnesses reside in Idaho. {See D.I. 71, Ex. 2 at ¶ 2) Plaintiff has not pointed to any material non-party witnesses who reside in or near Delaware. The risk of a case going to trial and having crucial witnesses outside of the court’s subpoena power who refuse to testify is one faced by all parties to a case. See Intellectual Ventures I LLC v. CheckPoint Software Techs. Ltd.,
Location of relevant evidence
Next the Court considers “the location of books and records (similarly limited to the extent that the files could not be produced in the alternative forum).” Jumara,
Initially, Defendants conceded that this factor was neutral {see D.I. 71 at 12; Tr. at 18); however, they changed their position in a subsequent letter {see D.I. 128). The Court finds that mere existence of books
Public Interest Factors
Enforceability of judgment
There is no suggestion that a judgment would be unenforceable in either the District of Delaware or the District of Idaho. Defendants admit this factor is neutral. (D.I. 71 at 12)
Practical considerations
The Court also takes account of “practical considerations that could make the trial easy, expeditious, or inexpensive.” Jumara,
Administrative difficulties of getting case to trial
Next the Court turns to the “relative administrative difficulty in the two fora resulting from court congestion.” Jumara,
Local interests in dispute
Defendants argue that Idaho has a stronger interest in deciding this matter because DBSI was a major Idaho employer, the conduct occurred mostly in Idaho, and resolution of the case may have an impact on the residents and businesses of Idaho, as well as development of Idaho law. (D.I. 71 at 13) Plaintiff responds that Delaware has a strong interest in deciding this dispute because Defendants took advantage of Delaware law to create Delaware entities to further the alleged fraud and Delaware investors were injured in the process. (D.I. 99 at 18)
Delaware is usually found to have an interest when a lawsuit is brought against or by its citizens. See, e.g., Simms v. Thomson Reuters Tax & Accounting, Inc.,
The instant case was brought against individuals residing outside of Delaware and was filed by a New Jersey citizen; thus, Delaware’s interest in the lawsuit is somewhat reduced. While several Delaware residents were injured by the alleged fraud, the fraud itself was perpetrated out of the Idaho headquarters by persons having no direct connections to Delaware.
Accordingly, this factor weighs slightly in favor of transfer.
Public policy
Plaintiff argues that the interests of justice favor litigation of related actions in the
The Court agrees with Plaintiff that having one court decide related cases is an important public policy factor in the analysis. See Montgomery v. Schering-Plough Corp.,
The Court recognizes that the progression to date of the large DBSI bankruptcy matter in the Bankruptcy Court has involved an enormous expenditure of judicial resources by this District. This fact is not, however, dispositive. Plaintiffs contention that “[t]he District of Delaware, through its Bankruptcy Court spent years learning the intricacies of the DBSI financial disaster” is far from decisive, given that Judge Walsh’s undoubted knowledge cannot simply be “imputed” to all other judges in the District. (D.I. 125 at 3; see D.I. 128 at 2)
Additionally, the Court recognizes that Idaho has a public policy interest in having this matter adjudicated in its courts because DBSI was an Idaho employer and resolution of this case may impact Idaho residents and the development of Idaho law. The Court also agrees with Defendants that discovery efforts can be coordinated by Plaintiff regardless of where the related cases are pending.
In sum, this factor is neutral.
Judge’s familiarity with state law in diversity cases
Only five of thirty-two counts of the Amended Complaint are based on federal law. (See D.I. 62) Seven counts are explicitly based on Idaho code provisions, and twenty-two counts are based on common law — most likely, Idaho law. (See id.; D.I. 71 at 13) Although there is no reason to
Defendants Have Proven the Factors Strongly Favor Transfer
Overall, the only interest that weighs against transfer is Plaintiffs choice of forum. The following interests weigh in favor of transfer: Defendants’ forum preference, convenience of the parties, convenience of the witnesses, local interests in dispute, and judge’s familiarity with state law. All of the other factors, such as location of operative events, location of evidence, enforceability of a judgement, practical considerations, administrative difficulties, and public policy, are neutral or irrelevant. Considering all of the factors and recognizing the appropriate weight to be accorded to each, the Court concludes that the Defendants have overcome the strong presumption in favor of not disturbing Plaintiffs choice of forum and have demonstrated that transfer to the District of Idaho is appropriate.
III. CONCLUSION
An appropriate Order follows.
ORDER
At Wilmington this 27th day of March, 2012:
For the reasons set forth in the Memorandum Opinion issued this same date,
IT IS HEREBY ORDERED that:
1. Defendants’ Motion to Dismiss for Improper Venue, or alternatively, Motion to Transfer (D.I. 70) is GRANTED to the extent that this action is transferred to the U.S. District Court for the District of Idaho and DENIED in all other respects.
2. Mick Defendants’ Motion to Dismiss for Lack of Jurisdiction Over the Person (D.I. 69) is DENIED WITHOUT PREJUDICE to renew after transfer.
3. Defendants’ Motion to Dismiss Counts Seven Through Thirty-Two of the Amended Complaint (D.I. 73) is DENIED WITHOUT PREJUDICE to renew after transfer.
4. Defendants’ Motion to Dismiss Counts One Through Six of the Amended Complaint (D.I. 75) is DENIED WITHOUT PREJUDICE to renew after transfer.
5. The Clerk of Court is ordered to transfer this case to the U.S. District Court for the District of Idaho.
MEMORANDUM ORDER
At Wilmington, this 9th day of May, 2012:
Pending before the Court is a Motion for Reargument (D.I. 145 and, hereinafter, “Motion”) filed by plaintiff James R. Zazzali, as Trustee for the DBSI Litigation Trust and Trustee for the DBSI Private Actions Trust (“Plaintiff’). By his Motion, Plaintiff asks the Court to reсonsider its March 27, 2012 Order transferring this case to the District of Idaho. (D.I. 144) For the reasons set forth below, the Court will deny Plaintiffs Motion.
I. LEGAL STANDARDS
Pursuant to Local Rule 7.1.5, a motion for reconsideration should be granted only “sparingly.” The decision to grant such a motion lies squarely within the discretion of the district court. See Dentsply Int’l, Inc. v. Kerr Mfg. Co.,
A motion for reconsideration may be granted only if the movant can show at least one of the following: (i) there has been an intervening change in controlling law; (ii) the availability of new evidence not available when the court made its decision; or (iii) there is a need to correct a clear error of law or fact to prevent manifest injustice. See Max’s Seafood Cafe by Lou-Ann, Inc. v. Quinteros,
II. DISCUSSION
Plaintiff presents two grounds for reconsideration. Neither is persuasive.
First, Plaintiff contends that the Court erred in determining that the convenience of the parties factor weighs in favor of transfer. (D.I. 145 at 4) Specifically, Plaintiff argues that although it has the assets of two trusts at its disposal to pay litigation costs, any increased litigation costs only serve to reduce any potential recovery by defrauded investors. (Id. at 5) Additionally, Plaintiff argues that the Non-Mick Defendants’
Second, Plaintiff contends that the Court failed to recognize that the Trustee, a citizen of New Jersey, filed this action in his capacity as the fiduciary of two Delaware trusts and, therefore, is considered a citizen of Delaware for purposes of this litigation. Plaintiff argues that his Delaware citizenship alters two transfer factors: (1) Plaintiffs choice of forum and (2) local
Accordingly, Plaintiffs Motion is DENIED. The Clerk of Court is directed to TRANSFER this action to the District of Idaho.
Notes
. As detailed below, each of the pending motions was initially filed by spеcific defendants, and later joined in by other defendants. The defendants currently remaining in this case are: Douglas L. Swenson, Charles Hassard, John M. Mayeron, Thomas Var Reeve, Gary Bringhurst, Jeremy Swenson, David Swensoh, Mick & Associates PC LLO ("Mick & Associates”), Bryan S. Mick, John Doe 1-50, and XYZ Corporation 1-50 (collectively, "Defendants”).
. The Jurisdiction Motion was filed by Bryan S. Mick and Mick & Associates (collectively, the "Mick Defendants”). (D.I. 69)
. The Venue Motion was initially filed by Douglas L. Swenson. (D.I. 70) Subsequently, all other remaining named Defendants joined in this motion. (See D.I. 72; D.I. 85; D.I. 90)
. The Non-RICO Motion to Dismiss was initially filed by two parties who have since been dismissed from the case, John D. Foster and Walter E. Mott. (D.I. 73) Subsequently, all named Defendants except for the Mick Defendants joined in this motion. (See D.I. 78; D.I. 87; D.I. 88)
. The RICO Motion to Dismiss was initially filed by Farrell Bennett, who has since been dismissed from the case. (D.I. 75) Subsequently, all named Defendants except for the Mick Defendants joined in this motion. (See D.I. 81; D.I. 86; D.I. 89)
. DBSI, Inc. ("DBSI”) and related entities, all of whom are Idaho entities, filed bankruptcy petitions in the United State Bankruptcy Court for the District of Delaware ("Bankruptcy Court”) beginning on November 6, 2008. (D.I. 98, Ex. A) The Bankruptcy Court entered an Order of Confirmation on October 26, 2010, creating the DBSI Estate Litigation Trust and the DBSI Private Actions Trust, as well as appointing Zazzali as Trustee. (D.I. 98, Ex. B)
. In assessing whether venue within the District of Delaware is proper, both parties stated that the Court could consider any relevant evidence in the record and is not limited solely to the face of the Amended Complaint. {See Tr. at 15, 46)
. The “Non-Mick Defendants” are Douglas L. Swenson, Charles Hassard, John M. Mayeron, Thomas Var Reeve, Gary Bringhurst, Jeremy Swenson, David Swenson, John Doe 1-50, and XYZ Corporation 1-50.
. The Court finds it unnecessary to discuss each of the other individual counts of the Amended Complаint in this Memorandum Opinion.
. Although referred to as "co-conspirator venue,” an actual conspiracy does not need to be alleged. See generally Hill v. Turner,
. See generally Intel v. Broadcom:
[Defendant] is a multi-billion dollar company that does business on an internationalscale. Furthermore, the conveniences of modem travel and communication technology have made it more difficult to argue that litigating in a particular forum is inconvenient for the parties and witnesses. Therefore, to meet its burden [defendant] must establish that litigating this case in Delaware will pose a unique or unusual burden on [its] business operations. It has not done so.
. The Mick Defendants are not parties to the bankruptcy action and were not involved in the DBSI entities’ decisions to file for bankruptcy in Delaware.
. The affidavits of numerous Defendants indicate that they were not involved in the decision to file for bankruptcy in Delaware. (See D.I. 43, Ex. 1; D.I. 50, Ex. 1 at ¶ 7; id., Ex. 2 a^ 10; id., Ex. 3 atH 10)
. The parties initially agreed that the public policy factor was aligned with the local inter
. Review of the list of cases pending in this District shows a total of twenty-two cases, twelve of which are pending in the Bankruptcy Court before Judge Walsh, who presided over the DBSI bankruptcy prоceedings. Five of the ten cases pending in the District Court are assigned to the undersigned judge. Review of the dockets for these five related cases shows that they are brought against legal counsel, auditors, and investment advisers of DBSI and that all of the cases are in their early stages. The same appears to be generally true for the other related cases pending before other judges in this District.
. The "Non-Mick Defendants” are Douglas L. Swenson, Charles Hassard, John M. Mayeron, Thomas Var Reeve, Gary Bringhurst, Jeremy Swenson, David Swenson, John Doe 1-50, andXYZ Corporation 1-50.
. Defendants contend that the insurance policy is not a proper basis for reconsideration because Plaintiff was aware of the policy at the time the Court ruled on the Motion to Transfer. (See D.I. 151 at 3) The Court will treat Plaintiff's assertion of the insurance policy as timely.
. The parties dispute whether the insurance policy will cover all litigation expenses. (See D.I. 151 at 4)