ANTHONY W. ISHII, Senior District Judge.
This case was removed from the Kern County Superior Court and arises from a contractual dispute between Plaintiff Critters of the Cinema ("Critters") and Defendant Nestle Purina Petcare Co. ("Nestle"). Critters alleges claims for breach of contract, breach of the implied covenant of good faith and fair dealing, tortious interference with prospective economic advantage, and declaratory relief. Nestle now moves to transfer this matter under 28 U.S.C. § 1404(a) to the Eastern District of Missouri, and also moves to dismiss the complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Per the Court's request under Costlow v. Weeks, 790 F.2d 1486 (9th Cir. 1986), the parties have submitted briefing regarding a § 1404(a) transfer to the Central District of California. For the reasons that follow, the Court will transfer this matter to the Central District of California.
From the Complaint, in 1995, Critters began working with Nestle under various written agreements. Critters was to inter alia train, maintain, make available, and provide cats to Nestle for use in advertising "Fancy Feast" brand cat food. In exchange for these services, Nestle agreed to pay Critters certain fees and expenses.
In March 2010, Critters and Nestle entered into a new service contract ("the Contract"), whereby Critters agreed to make available and provide a minimum of two particular breeds of cats for use by Nestle in its advertising (on camera or personal appearance use) through March 2020. The Contract contains allegedly "one-sided" clauses in favor of Nestle: a "dissatisfaction" and a "cure `satisfaction'" clause. The two clauses provide that, in the event Nestle is dissatisfied with Critters's services, Nestle is to provide Critters with written notice detailing the areas of deficiency. Critters would then have 30 days to cure the deficiency. The clauses provide that, after 30 days, if Nestle determines "in its sole discretion" that Critters has failed to make satisfactory improvement, Nestle can terminate the Contract. The Contract also contains a clause that required Critters to be the owner of the cats. The clause provides that Critters warrants and represents that it is the owner of the cats and has full authority to enter into the Contract and perform all obligations under the Contract.
On December 30, 2013, Critters and Nestle were both named as defendants in a lawsuit filed in the San Francisco Superior Court. This lawsuit was allegedly a sham. The lawsuit falsely alleged that Critters was not the sole owner of the cat Aladdin (a cat Critters provided to Nestle under the Contract), and further falsely alleged that Critters mistreated Aladdin.
On July 31, 2014, Nestle sent Critters a letter in which Nestle provided notice of its intent to terminate the Contract based on Nestle's "dissatisfaction." The letter explained that Nestle was dissatisfied because of the sham lawsuit. Nestle did not want to be associated with Critters when Critters was accused of failing to support standards and values cultivated by Nestle, or utilizing methods which violate the humane ideals that are the criteria by which Nestle operates. Nestle also was dissatisfied with the allegation that Critters did not own Aladdin. Although Nestle gave Critters 30 days to cure the dissatisfaction, Nestle allegedly had no intent to act in good faith because it had already decided to terminate the Contract. The July 31 letter stated that Nestle believed that the deficiencies were incapable of correction. Given this position, Nestle made it contractually impossible to cure under the Contract.
On August 25, 2014, Critters responded in good faith to Nestle. Critters adamantly denied the allegations in the sham lawsuit. Critters denied that it or its employees mistreated any cats or behaved in a manner that compromised Nestle's standards or values. In support of this assertion, Critters provided notarized attestations from several individuals, including a veterinarian. Critters also provided Nestle with evidence that it owned Aladdin.
Despite the allegations of the sham lawsuit, Nestle still hired Critters to perform the exact services it was to perform under the Contract on April 29, 2014, on May 5, 2014, and June 5, 2014.
On September 12, 2014, Nestle sent Critters a letter terminating the Contract. Nestle acknowledged that Critters had cured the alleged deficiencies, but still terminated the Contract based on a "perception," and not based on deficiencies in Critters's services. The decision to terminate was allegedly arbitrary, capricious and unreasonable, in light of the information provided by Critters and Critters' history and years of unblemished service to Nestle. Nestle completely failed to substantiate, investigate, or use the discovery process with respect to the allegations of the sham lawsuit.
On September 18, 2014, the state court dismissed the sham lawsuit. As of January 1, 2016, no appeal of the dismissal had been taken, and the plaintiff in the sham lawsuit has not attempted to re-file her case.
Critters alleges that the termination by Nestle breached the Contract, and that Nestle's conduct breached the implied covenant of good faith and fair dealing. Critters also alleges that Nestle knew of Critters's business relationship and prospects in the animal training industry. However, Nestle's termination of the Contract, along with Nestle's subsequent conduct and contact with third parties, has effectively blackballed and destroyed Critters's business and reputation. Nestle's conduct has interfered with Critters's business relationships and prospective business relationships.
Nestle argues that the relevant considerations show that this case should be transferred to the Eastern District of Missouri ("EDMO"). First, the contract at issue has a broad choice of law clause that sets Missouri law as the governing law. The EDMO will be more familiar with the governing law than the Eastern District of California ("EDCA").
Second, the EDMO has a strong relationship to the dispute. Nestle, 11 current and retired employees, and at least 3 third party witnesses are all located in the St. Louis area.
Third, the EDMO is less congested than the EDCA. The EDMO has about half the case load as the EDCA, and also has three more judges than the EDCA.
Fourth, there are numerous witnesses for whom the EDMO is a more convenient forum. There are a number of Nestle employees who worked on the television and advertising team involving Critters, and those employees all reside in the Saint Louis, Missouri area. There are third party entities who worked with Critters directly as part of advertising and public relations activities. Avrett, Free, & Ginsberg, LLC is based in New York, and was involved in television advertising and briefing Critters on what the cats would do for photoshoots. MRA Advertising/Production Support Services, Inc. ("MRA") was involved in television advertising costs and budgeting, including the expenses for Critters. MRA is based in Ohio, but the employee who worked with Nestle and Critters resides in Michigan. Thompson Design Group ("TDG") is based in California, and worked with Critters concerning what the cats should do for photoshoots. MSL Group Americas is a New York based public relations firm that communicated with Critters regarding public relations events. Check Mark PR ("CMPR") is a subsidiary of Nestle that communicated with Critters regarding public relations events. CMPR and its 3 employees who worked with Critters are located in the St. Louis area. The nature and quality of these witnesses' testimony is central to the million dollar tortious interference claim. The current and former Nestle employees can all address whether they engaged in the alleged tortious conduct or knew of Nestle employees who did. The third party witnesses can attest to whether they heard anything from their Nestle counterparts that would support Critters's claims. All of the witnesses could be expected to affirm the value of the Fancy Feast brand and the reasons supporting Nestle's cure notice and termination. Given the location of these witnesses, the EDMO is more convenient.
In supplemental briefing, Nestle argues that the Central District of California ("CDCA") is a more appropriate forum than the EDCA. Nevertheless, for the same reasons that the EDMO is a more convenient and appropriate forum than the EDCA, it is also more convenient than the CDCA. There are numerous witnesses in the EDMO, and the EDMO is more familiar with the governing law.
Critters argues that a transfer of venue is unwarranted. California is an obvious forum choice. Critters resides in California, and Nestle maintains a facility in Maricopa, California. The contract at issue was entered into in California, all of the Fancy Feast cats reside in California, all of the cat training occurred in California, and all of the Fancy Feast advertising/filming occurred in California. That is, everything relevant to the complaint occurred in California. California has a strong connection to this case, and the choice to bring this suit in California is entitled to deference.
With respect to Court congestion, this is a relatively disfavored consideration. The EDCA is not so congested that it cannot hear this case.
With respect to witnesses, primary consideration is given to third parties, as opposed to the employees of a party. Those third parties will be inconvenienced by having to travel to another state, be it California or Missouri, and there is no assertion that any third party witnesses are unable to travel to California. There is also no assertion that any particular witness will be unwilling to testify in the absence of compulsory process. Further, Defendants have given only general assertions and explanations of what non-party witnesses might say. There is no description of specific testimony or specific relevance. Defendants have not shown inconvenience, rather there is merely a list of names with generalized descriptions.
Finally, Nestle's resources vastly exceed Critters's resources. Critters is a family owned business that is run by one person. Nestle is the second largest pet food company globally and the largest in the United States.
In supplemental briefing, Critters states it does not oppose a transfer to the CDCA. Critters is "semi-located" in the CDCA, and travel to the CDCA is easier than travel to the EDMO.
28 U.S.C. § 1404(a) provides in relevant part: "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. . . ." 28 U.S.C. § 1404(a). This statute partially displaces the common law doctrine of forum non conveniens.
The "defendant must make a strong showing of inconvenience to warrant upsetting the plaintiff's choice of forum."
The parties do not dispute that this case could have been filed in either the EDMO or the CDCA. With respect to the EDMO, because Nestle is a Missouri corporation headquartered in St. Louis, Nestle is subject to personal jurisdiction in the EDMO.
It is not clear where the Contract was executed or negotiated. There is no evidence regarding negotiations in general, much less where the negotiations actually occurred or through what medium (face to face, telephone, fax, e-mail, etc.). There is also little evidence regarding where the Contract was executed. A copy of the Contract indicates that it was sent to the CDCA.
The Contract has a broad choice of law clause. "This [Contract] and all matters and issues collateral thereto shall be governed by and determined according to the laws of the State of Missouri, without regard to conflict of law principles."
Generally, a plaintiff's choice of forum is given substantial weight.
Here, Critters clearly chose the EDCA when it filed suit in Kern County. However, Critters's principal place of business is Lake Hughes, California.
Critters argues that Nestle maintains "its business" in Maricopa, California, which is in Kern County and the EDCA. However, according to Nestle's website,
Therefore, because Critters does not reside in the EDCA, and there is no indication that relevant conduct occurred within the EDCA, this factor weighs against a transfer, but in a substantially diminished capacity.
Nevertheless, Critters has stated that the CDCA is a convenient and acceptable forum. Also, as discussed above, Critters resides in the CDCA and relevant conduct occurred in the CDCA. Therefore, this factor will also weigh in favor of a transfer to the CDCA. But, because the CDCA was not Critters's first choice, it weighs in favor of a transfer to the CDCA in a somewhat reduced capacity.
Critters has not shown that it has any contacts with the EDCA. Nestle maintains its "Tidy Cats" manufacturing facility in the EDCA. Nestle's contact with the EDCA is diminished in that the manufacturing facility involves cat litter, not cat food. On balance, this factor weighs against a transfer in a reduced a capacity.
As discussed above under the third factor, no material connection to the EDCA is apparent. Therefore, this factor weighs in favor of transfer out of the EDCA.
With respect to the CDCA, there are substantial contacts with Critters's claims. As to Critters's contract claims, the Contract would have been largely performed by Critters in the CDCA, as this is where Critters would have kept, cared for, trained, and made available the cats. As discussed above, the CDCA is where the breach of contract claim arises.
With respect to the EDMO, the Court can say that the decision to terminate the Contract was made by Nestle in the EDMO.
On balance, this factor weighs in favor of a transfer to the CDCA.
The parties have not submitted evidence regarding the litigation costs in the EDCA, the CDCA, or the EDMO. Therefore, this is a neutral factor.
The parties have not identified any witnesses who are unwilling to testify. Of the witnesses that have been identified, the EDCA and the CDCA could only compel the California witnesses of San Francisco based TDG to testify. The EDMO could only compel the 14 witnesses who live in Missouri to testify. However, these witnesses include 10 current Nestle employees and 3 employees of a Nestle subsidiary. Since Nestle can compel these witnesses to attend any court,
The parties have not submitted evidence on this point. Nestle is the only party to have produced documents, and those documents are not extensive. Furthermore, to the extent that e-mails or electronically stored documents may be involved, such evidence can likely be "transported" and printed without great difficulty.
The parties have not identified a forum selection clause. Therefore, this is a neutral factor.
The parties have not discussed or identified any California public policy that may be implicated by this case. Therefore, this is a neutral factor.
Nestle is a large corporation that has a manufacturing facility within the EDCA. Furthermore, Nestle's supplemental opposition states that the CDCA is a more convenient forum than the EDCA. There is nothing to indicate that Nestle is unable to litigate in the EDCA or the CDCA, or that litigating in the EDCA or CDCA would constitute an unreasonable burden on Nestle.
In contrast, Critters's opposition states that Critters is a family owned business that is run by one person. Because Critters is located in the CDCA, little inconvenience would be involved in the CDCA. Further, although Critters does not appear to have a presence in the EDCA, the EDCA is much closer to Lake Hughes than the EDMO. Critters's Complaint alleges that, because of Nestle's conduct, Critters has been blackballed and had its business and reputation destroyed. These allegations indicate that Critters has diminished resources. Compared to the burden on Nestle of litigating in the EDCA or the CDCA, there would be a greater burden on Critters in litigating in the EDMO.
Because it appears that there would be a greater burden on Critters in litigating in the EDMO, this factor weighs against a transfer to the EDMO. Instead, because Critters is actually located in the CDCA, this factor weighs in favor of a transfer to the CDCA.
The convenience of witnesses is often considered the most important consideration in determining whether to transfer a case under § 1404.
Critters has not identified any witnesses, but Nestle has identified 17 witnesses. Of the 17 witnesses, 14 reside near or in St. Louis, Missouri, 2 reside in New York, and 1 resides in Michigan.
With respect to the Missouri witnesses, 10 witnesses are current employees of Nestle, 1 witness is a retired Nestle employee, and 3 witnesses are currently employed by CMPR (a subsidiary of Nestle). For purposes of this motion, the Court views the 3 witnesses employed by CMPR as employees of Nestle, because these witnesses would be under Nestle's control.
Additionally, the Court finds that, as described, the testimony of a number of the Missouri witnesses would be of limited relevance.
In contrast, the remaining four Missouri witnesses appear to be "key witnesses" who have highly relevant testimony.
With respect to the two New York witnesses (Lynne Kruger and Molly Kelly) and one Michigan witness (Larry Haggart), these witnesses appear to be employees of third party public relations/advertising firms who worked on projects with Critters for the Fancy Feast brand.
On balance, Nestle has demonstrated that the EDMO is a more convenient location for the witnesses it has identified. Therefore, this factor favors a transfer to the EDMO. However, the weight that will be given to this factor is substantially reduced either because the witnesses' testimony appears to be of limited relevance, or because the witnesses are "employees" of Nestle.
With respect to the EDCA, there is very little, if any, local interest in this case. Although there is a significant dispute with Nestle, and Nestle has a manufacturing facility within the EDCA, that facility manufactures "Tidy Cats" brand cat litter, it does not manufacture "Fancy Feast" brand cat food.
With respect to the EDMO, Nestle's headquarters are in St. Louis, and it appears that the "Fancy Feast" brand is managed from St. Louis.
With respect to the CDCA, Critters is located in Lake Hughes. Critters appears to be a small business that has had a contractual relationship with Nestle for about 20 years. Because of Nestle's actions, it is alleged that Critters's business and reputation has been all but destroyed. Given the allegations of the damage done to a local business, the CDCA has a significant local interest in this case.
On balance, this factor weighs in favor of a transfer out of the EDCA, and equally supports transfer to either the EDMO or the CDCA.
As of December 31, 2015, the EDCA had 7,630 cases pending, the EDMO had 4,422 cases pending, and the CDCA 12,474 cases pending.
The parties have not identified any claims that may be related to or could be consolidated with this case. Therefore, this is a neutral factor.
Factors 6, 7, 8, 9, 10, and 15 are neutral. Factors 3 and 4 weigh against a transfer, but Factor 3 does so on a significantly reduced basis because Critters does not reside in the EDCA, and it does not appear that the events that form the basis of the Complaint occurred in the EDCA.
The factors that are not neutral show that the EDCA is the least convenient forum of the districts at issue. Only two reduced or "light weight" factors support keeping the matter in the EDCA. The EDMO and the CDCA each have more factors that favor them than the EDCA. As between the EDMO and the CDCA, both districts share Factors 1 and 13 equally. Those factors essentially cancel each other out. Factors 3 and 12 are different, but are generally highly important factors to plaintiffs and defendants, respectively. However, Factors 3 and 12 are given reduced weight, as discussed above. This leaves only Factor 2 fully in favor of the EDMO, but leaves Factors 4, 11, and 14 fully in favor of the CDCA. The Court finds that the totality of the factors shows that the CDCA sufficiently outweighs the EDCA and the EDMO so as to warrant a § 1404(a) transfer to that district. Therefore, this case will be transferred to the CDCA.
On the same day that Nestle filed its § 1404(a) motion to transfer, it also filed a Rule 12(b)(6) motion to dismiss. Because the Court has determined that a transfer to the CDCA is proper, it is appropriate for the CDCA to resolve Nestle's Rule 12(b)(6) motion. The Court expresses no opinions on Nestle's Rule 12(b)(6) arguments.
Accordingly, IT IS HEREBY ORDERED that:
1. Defendant's motion to transfer to the Eastern District of Missouri (Doc. No. 12) is DENIED; and
2. Pursuant to 28 U.S.C. § 1404(a) and Costlow v. Weeks, 790 F.2d 1486 (9th Cir. 1986), this matter is TRANSFERRED forthwith to the Western Division of the Central District of California.