LEONARD D. WEXLER, District Judge.
Before the Court are the following motions: (1) Defendant's motion to dismiss the Plaintiff's Complaint, pursuant to Federal Rules of Civil Procedure 12(b)(3) and 12(b)(6), and (2) Plaintiff's motion to disqualify Defendant's counsel, Milberg & De Phillips, P.C. For the following reasons, Defendant's motion to dismiss is granted in part and denied in part. Plaintiff's motion to disqualify Defendant's counsel is denied without prejudice.
In or around 2008, the Plaintiff, Andrew Blauschild ("Blauschild"), and the Defendant, Joel Tudor ("Tudor"), decided to form Kookbox Surfboards, Inc. ("Kookbox"), a New York corporation that designs, manufactures and sells unique surfboards, surfing apparel and wetsuits. (Compl. ¶ 25.) While Blauschild was in charge of operating the corporation, Tudor — a world-renowned surfer — was responsible for promoting and advertising Kookbox and its products. (Compl. ¶ 2.) Blauschild and Tudor each own fifty percent (50%) of Kookbox. (Comp'. ¶¶ 8, 11.)
In 2008, Tudor represented to Blauschild that he would register the Kookbox Surfboards Inc. trademark (the "Mark") with the United States Patent and Trademark Office ("USPTO") on behalf of Kookbox. (Compl. ¶ 48.) In or about April 2008, Tudor, through his counsel, filed an application with the USPTO to register the Mark. (Compl. ¶ 49.) On November 2, 2010, the Mark was registered with the USPTO. (Compl. ¶ 49.) However, rather than naming Kookbox as the owner of the Mark in the trademark application, Tudor named himself as the owner. (Comp. ¶ 50.) Tudor similarly registered the Mark in his own name in Japan as well. (Comp'. ¶ 50.)
In 2013, disagreements between Blauschild and Tudor began over the direction the corporation should take. (Compl. ¶ 53.) In the spring of 2013, Tudor approached a Kookbox manager (the "Manager") in San Diego, California and demanded corporate money for a separate business endeavor. (Compl. ¶ 54.) The Manager told Tudor to speak with Blauschild, but Tudor refused. (Compl. ¶ 54.)
On May 19, 2013, Blauschild received a frantic telephone call from the Manager, advising that Tudor had again come to the San Diego warehouse and was yelling at and physically threatening the Manager over money. (Compl. ¶ 55.) Tudor then telephoned Blauschild, yelling, using profanity and threatening Blauschild. (Compl. ¶ 56.) During that conversation, both Tudor and Blauschild purported to terminate each other from Kookbox and the two have not spoken since. (Compl. ¶¶ 56-57.)
Following this incident, Tudor continued to threaten the Manager. (Compl. ¶ 58.) Tudor also contacted all of Kookbox's vendors, falsely stating that he was now in control of the corporation and that he had fired all of the other employees, including Blauschild. (Compl. ¶ 58.)
On May 23, 2013, after obtaining a key to the San Diego warehouse from a former Kookbox employee, Tudor again visited the warehouse. (Compl. ¶ 60.) After verbally and physically threatening the Manager, Tudor proceeded to remove numerous surfboards and other Kookbox merchandise from the warehouse. (Compl. ¶ 60.)
The following morning, the Manager returned to the warehouse and found it completely empty and vandalized. (Compl. ¶ 61.) Plaintiff alleges that Tudor, or someone acting on his behalf, removed all of the surfboards and merchandise from the warehouse. (Compl. ¶ 61.)
Thereafter, Tudor continued to make false statements about Kookbox to vendors, damaging its reputation and causing it to suffer significant losses in revenue. (Compl. I 65-73.)
Blauschild commenced this derivative action on behalf of Kookbox on November 19, 2013, asserting claims for trademark infringement and fraudulent procurement of a trademark, pursuant to the Lanham Act, 15 U.S.C. §§ 1051 et
Tudor moves to dismiss Blauschild's Complaint pursuant to Federal Rule of Civil Procedure 12(b)(3) for improper venue, as well as pursuant to Rule 12(b)(6) for failure to state a claim. Blauschild cross-moves to disqualify Tudor's counsel, Milberg & De Phillips, P.C., pursuant to Rules 3.7(a) and 1.9 of the Rules of Professional Conduct.
On a motion to dismiss for improper venue under Federal Rule of Civil Procedure 12(b)(3), the Court applies the same standard of review as a motion to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2).
The decision whether to dismiss an action for improper venue is committed to the Court's sound discretion.
28 U.S.C. § 1391 provides, in pertinent part:
28 U.S.C. § 1391(b). Plaintiff asserts that venue is proper here under subsection two. (Compl. 24.)
The Second Circuit has instructed that venue may be proper "in multiple judicial districts as long as `a substantial part' of the underlying events took place in those districts."
Accordingly, when a plaintiff relies on § 1391(b)(2) to defeat a venue challenge, the court should engage in a two-part inquiry: (1) "identify the nature of the claims and the acts or omissions that the plaintiff alleges give rise to those claims," and (2) "determine whether a substantial part of those acts or omissions occurred in the district where [the] suit was filed."
Here, with respect to the first prong of the foregoing inquiry — namely, the nature of the claims — the causes of action set forth in Plaintiff's Complaint center around Tudor's alleged fraudulent procurement of the Kookbox trademark and theft of corporate merchandise, all of which occurred in California. Specifically, as found on the USPTO's website, the Kookbox trademark is registered in Tudor's name, using his attorney's address in California.
While Blauschild acknowledges in his Complaint that "certain of Defendant's tortious conduct described in this Complaint may originate outside of New York," (compl. ¶ 19), he maintains that because the conduct caused damages and injury to Kookbox within New York, venue is proper here. (
While some cases have found that "the fact that the Plaintiff suffers harm in a particular judicial district is sufficient to satisfy § 1391(b)(2),"
Moreover, Plaintiff's argument that the tortious conduct of Tudor outside New York caused injury within New York is more akin to a minimum contacts test for purposes of personal jurisdiction. While "[t]he concepts of personal jurisdiction and venue are closely related," they are "nonetheless distinct."
Based on the foregoing, the Court finds that venue is improper here since the significant events pertinent to Plaintiffs claims herein took place in California, not New York. Rather, it appears that Plaintiff's sole basis for filing suit in New York is his residency, which is not enough to support venue here.
While Defendant has asked the Court to dismiss this action and neither party has requested transfer pursuant to 28 U.S.C. § 1404, when venue is improper, a district court may "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). Whether transfer is appropriate lies within the sound discretion of the district court.
Here, the Court finds that the interests of justice warrant transfer to an appropriate forum rather than an outright dismissal. As set forth above, the significant events and omissions underlying this action all took place within the Southern District of California. Moreover, Defendant is a resident of the Southern District of California. Accordingly, venue is proper in that district.
Dismissal of this action would require Plaintiff to file a new action in the Southern District of California, while "transfer will allow this action to proceed in that forum and lead to [an] adjudication on the merits."
Based on the foregoing decision to transfer venue, the Court declines to address that portion of Tudor's motion that seeks a dismissal of the Complaint for failure to state a claim upon which relief may be granted, pursuant to Federal Rule of Civil Procedure 12(b)(6). In addition, the Court finds that Plaintiffs motion to disqualify Defendant's counsel is better addressed by the transferee court. Accordingly, Plaintiff's motion to disqualify is denied, without prejudice to renewal in the Southern District of California.
For the foregoing reasons, Defendant's motion to dismiss Plaintiff's Complaint for improper venue, pursuant to Federal Rule of Civil Procedure 12(b)(3), is granted, without prejudice, and the Clerk of the Court is directed to transfer this action to the Southern District of California. The Court declines to address that portion of Defendant's motion that seeks dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiff's motion to disqualify Defendant's counsel is denied, without prejudice to renewal in the transferee district.
SO ORDERED.