ARTHUR D. SPATT, District Judge.
On May 31, 2016, eighty-nine named Plaintiffs commenced this action, on behalf of themselves and others similarly situated, under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., the New York State Codes Rules and Regulations ("NYCRR"), and the New York Labor Law ("NYLL") against the Defendants First Student Management LLC and First Student Inc. (the "Defendants" or "First Student") for unpaid wages, overtime, and attorneys' fees.
Presently before the Court is a motion by the Defendants to dismiss the complaint for improper venue pursuant to Federal Rule of Civil Procedure ("FED. R. CIV. P." or "Rule") 12(b)(3); or, in the alternative, to transfer it to the Western District of New York (the "WDNY") pursuant to 28 U.S.C. § 1404(a) ("Section 1404(a)); or, in the final alternative, to dismiss the first count of the complaint pursuant to Rule 12(b)(6). For the following reasons, the Defendants' motion is granted to the extent that the Court finds that venue in the EDNY is improper, and therefore in the interest of justice transfers the action to the WDNY pursuant to Section 1404(a).
For the purposes of resolving the Defendants' motion to dismiss for improper venue pursuant to Rule 12(b)(3) or in the alternative to transfer venue pursuant to Section 1404(a), the following facts are drawn from the Plaintiffs' complaint as well as the submissions of both parties. See City of Pontiac Gen. Employees Ret. Sys. v. Dell Inc., No. 14-CV-3644 (VSB), 2015 WL 12659925, at *3 (S.D.N.Y. Apr. 30, 2015) ("In deciding a motion to transfer, a court may consider material outside of the pleadings."); Zaltz v. JDATE, 952 F.Supp.2d 439, 447 (E.D.N.Y. 2013) ("The Court is permitted [] to consider facts outside of the pleadings on a Rule 12(b)(3) motion."); Everlast World's Boxing Headquarters Corp. v. Ringside, Inc., 928 F.Supp.2d 735, 737 n.1 (S.D.N.Y. 2013) ("[I]n deciding a motion to transfer venue, the Court may consider factual submissions, including declarations, by defendants, who have the burden to justify a change of venue."); TradeComet.com LLC v. Google, Inc., 693 F.Supp.2d 370, 375 n. 3 (S.D.N.Y. 2010) (explaining that a court, in deciding a motion to dismiss for improper venue pursuant to Rule 12(b)(3), "may consider evidentiary matters outside the pleadings, by affidavit or otherwise, regarding the existence of jurisdiction" (internal citation and internal quotation marks omitted)).
However, in the event that the Court must decide the Defendants' motion to dismiss pursuant to Rule 12(b)(6), the Court will constrain its analysis to the Plaintiff's complaint. See Brass v. Am. Film Techs., Inc., 987 F.2d 142, 150 (2d Cir. 1993) ("When determining the sufficiency of plaintiff['s] claim for Rule 12(b)(6) purposes, consideration is limited to the factual allegations in [the] complaint, documents attached to the complaint as an exhibit or incorporated in it by reference, matters of which judicial notice may be taken, or documents either in plaintiff['s] possession or of which plaintiff[ ] had knowledge and relied in bringing suit.").
The Plaintiffs, who are all residents of New York State according to the complaint, worked as bus drivers and driver assistants for the Defendants beginning in 2013. The Defendants provide student bus transportation in at least 42 different states. The Defendant First Student Management LLC is an Ohio limited liability company, incorporated under the laws of Delaware, with a principal place of business in Cincinnati, Ohio. The Defendant First Student, Inc. is an Ohio corporation, incorporated under the laws of Delaware, also with a principal place of business in Cincinnati, Ohio.
The complaint lists forty bus yards operated by the Defendants in New York State. The complaint does not state whether the Plaintiffs worked in all of those bus yards or only some of them. However, the Defendants claim that the named Plaintiffs worked "in a handful of locations in Rochester and Auburn, New York (and one named Plaintiff worked in Atlanta, Georgia at some point during her employment." (Def.'s Mem. of Law at 1; Def.'s Ex. 2, Decl. of Islam El-Shamy ("Decl. of El-Shamy") at ¶¶ 6a-6h). Only eleven of the named Plaintiffs ever worked in Auburn; the rest currently work, or were last employed, at locations in Rochester. Rochester is in the WDNY. Auburn is in the Northern District of New York ("NDNY"). None of the named Plaintiffs worked in bus yards located in the EDNY.
The Plaintiffs allege that they were not paid minimum wage, or compensated appropriately for working overtime; and that the Defendants failed to keep accurate payroll records. The Plaintiffs allege that these violations of federal and New York State ("NYS") labor laws were willful, and they include allegations of the Defendants' previous violations as evidence of their willfulness.
The Plaintiffs filed their complaint on May 31, 2016. They alleged four causes of action: failure to pay minimum wage for straight time worked under the FLSA; failure to pay overtime wages under the FLSA; failure to pay straight time and keep accurate payroll records under the NYLL and the NYCRR; and failure to pay overtime wages under the NYLL and NYCRR.
The Defendants moved to dismiss the complaint for improper venue pursuant to Rule 12(b)(3), along with requests for alternative relief, on September 7, 2016.
On a motion to dismiss a complaint under Rule 12(b)(3) for improper venue, "the plaintiff bears the burden of establishing that venue is proper." French Transit v. Modern Coupon Sys., 858 F.Supp. 22, 25 (S.D.N.Y. 1994). A court applies the same standard of review in Rule 12(b)(3) dismissals as Rule 12(b)(2) dismissals for lack of personal jurisdiction. Gulf Ins. Co. v. Glasbrenner, 417 F.3d 353, 355 (2d Cir. 2005). "If the court chooses to rely on pleadings and affidavits, the plaintiff need only make a prima facie showing of [venue]." Id. (quoting CutCo Indus. v. Naughton, 806 F.2d 361, 364-65 (2d Cir. 1986)). Whether to dismiss an action for improper venue is in the district court's sound discretion. Minnette v. Time Warner, 997 F.2d 1023, 1026 (2d Cir. 1993).
On such a motion, the plaintiff has the burden of showing that venue in the forum district is proper. Solow Bldg. Co. v. ATC Assocs., Inc., 175 F.Supp.2d 465, 469 (E.D.N.Y. 2001). In analyzing a claim of improper venue, a court must view all facts in the light most favorable to the plaintiff. Phillips v. Audio Active Ltd., 494 F.3d 378, 384 (2d Cir. 2007). Thus, "the Court must accept the facts alleged in the complaint and construe all reasonable inferences in the plaintiff's favor." Matera v. Native Eyewear, Inc., 355 F.Supp.2d 680, 681 (E.D.N.Y. 2005) (quoting Fisher v. Hopkins, *552 No. 02 Civ. 7077, 2003 WL 102845, at *2 (S.D.N.Y. Jan. 9, 2003) (internal quotation marks omitted)).
28 U.S.C. § 1391 ("Section 1391") is the federal venue statute. It states that:
28 U.S.C. § 1391(b). Relevant here, Section 1391 also states that "an entity with the capacity to sue and be sued . . . shall be deemed to reside, if a defendant, in any judicial district in which such defendant is subject to the court's personal jurisdiction with respect to the civil action in question. . . ." Id. at (c)(2). "Essentially section 1391(c) equates jurisdiction with venue for corporate defendants." Laumann Manufacturing Corp. v. Castings USA, Inc., 913 F.Supp. 712, 719 (E.D.N.Y. 1996).
As to states with multiple federal judicial districts, such as New York State, Section 1391 goes on to say:
Id. at (d).
The Second Circuit has held that "the civil venue statute permits venue in multiple judicial districts as long as `a substantial part' of the underlying events took place in those districts. . . ." Gulf, 417 F.3d at 356. The Gulf court went on to say:
Id. at 357 (2d Cir. 2005) (emphasis in original).
Despite the Gulf court's statement that jurisdiction and venue are distinct, it is clear from the statute and the case law that the Court must nevertheless engage in a personal jurisdiction analysis to determine whether venue in the EDNY is proper.
Courts may exercise either specific or general jurisdiction over a defendant. Daimler AG v. Bauman, ___ U.S. ___, 134 S.Ct. 746, 754, 187 L.Ed.2d 624 (2014). "General jurisdiction renders a defendant amendable to suit on all claims." Cortlandt St. Recovery Corp. v. Deutsche Bank AG, London Branch, No. 14-CV-01568 JPO, 2015 WL 5091170, at *2 (S.D.N.Y. Aug. 28, 2015) (citations omitted). Specific jurisdiction subjects a defendant to suit only on claims that "arise from conduct related to the forum." Id. "In litigation arising under federal statutes that do not contain their own jurisdictional provisions, such as the [FLSA] under which suit is brought in the case at bar, federal courts are to apply the personal jurisdiction rules of the forum state." Penguin Grp. (USA) Inc. v. Am. Buddha, 609 F.3d 30, 35 (2d Cir.), certified question accepted, 15 N.Y.3d 744, 933 N.E.2d 205 (2010), and certified question answered, 16 N.Y.3d 295, 946 N.E.2d 159 (2011). Therefore, this Court will examine jurisdiction under New York State law.
Under New York law, "a foreign corporation is subject to general personal jurisdiction in New York if it is `doing business' in the state." Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 95 (2d Cir. 2000) (citation omitted). A corporation is "doing business" in New York when it conducts business in the state "not occasionally or casually, but with a fair measure of permanence and continuity." Id. (internal citation omitted). Plaintiffs who make a showing of such sustained business activity satisfy the requirements of New York law. Cortlandt, 2015 WL 5091170, at *3.
However, the Supreme Court's decision in Daimler has cast serious doubt on the extent to which a court can exercise general jurisdiction, especially under New York law. From Daimler, the proposition emerged that it "would be inconsistent with due process" to exercise general jurisdiction where a plaintiff "has not alleged that [the defendant] is headquartered or incorporated in New York, nor has it alleged facts sufficient to show that [the defendant] is otherwise `at home' in New York." Cont'l Indus. Group v. Equate Petrochemical Co., 586 F. App'x 768, 769-770 (2d Cir. 2014) (summary order).
Thus, "[t]he Supreme Court's decision in Daimler . . . changed the law of general jurisdiction, making it substantially more difficult to establish that type of personal jurisdiction." Bertolini-Mier v. Upper Valley Neurology Neurosurgery, P.C., 2016 WL 7174646, at *4 (D. Vt. Dec. 7, 2016) (citing Brown v. Lockheed Martin Corp., 814 F.3d 619, 627 (2d Cir. 2016) (reading Daimler as implementing a "restrictive" test); Gucci Am., Inc. v. Weixing Li, 768 F.3d 122, 135 (2d Cir. 2014) (articulating the change in the law effected by Daimler, and finding that a New York court could not exercise general jurisdiction over a bank with branches in New York which was incorporated elsewhere and did not have contacts so continuous and systematic to render it at home in New York); Weiss v. Nat'l Westminster Bank PLC, 176 F.Supp.3d 264, 274 (E.D.N.Y. 2016) (noting that Daimler "narrowed the law on general jurisdiction"); Hood v. Ascent Med. Corp., 2016 WL 1366920, at *8 (S.D.N.Y. Mar. 3, 2016) ("[i]n the recent cases of Daimler and Goodyear, the Supreme Court made clear that the constitutional standard for finding a corporation to be `essentially at home' in a foreign jurisdiction is a stringent one")(quoting Daimler, 134 S. Ct. at 760); Cortlandt, 2015 WL 5091170, at *3("[I]t is uncertain if New York's `doing business' jurisdiction remains viable in light of Daimler." (citing Reich v. Lopez, 38 F.Supp.3d 436, 454-55 (S.D.N.Y.2014) (collecting cases)). "[A]lthough Daimler and Goodyear `d[o] not hold that a corporation may be subject to general jurisdiction only in a forum where it is incorporated or has its principal place of business,' those cases make clear that even a company's `engage[ment] in a substantial, continuous, and systematic course of business' is . . . insufficient to render it at home in a forum." Sonera Holding B.V. v. Cukurova Holding A.S., 750 F.3d 221, 226 (2d Cir.), cert. denied, ___ U.S. ___, 134 S.Ct. 2888, 189 L. Ed. 2d 837 (2014) (quoting Daimler, 134 S. Ct. at 760)).
New York State's long-arm statute allows courts to exercise specific jurisdiction over nondomiciled entities under certain circumstances. It states that:
N.Y. C.P.L.R. 302; see also Jonas v. Estate of Leven, 116 F.Supp.3d 314, 323-24 (S.D.N.Y. 2015) ("In addition, a defendant may be subject to New York's long-arm statute, N.Y. C.P.L.R. § 302, if he engages in the [acts enumerated in the statute] either in person or through an agent and such acts relate to an asserted claim. . . ." (emphasis in original)). Therefore, in order to exercise specific jurisdiction over an individual or entity, that non-domiciliary must have engaged in one of the four enumerated acts above, and the causes of action must relate to one of those four acts.
The Plaintiffs seek to invoke both Section 1391(b)(1) as well as Section 1391(b)(2). Therefore, the Court will examine whether venue is proper under either provision.
As an initial matter, Section 1391 clearly states that a corporate entity resides" in any judicial district in which such defendant is subject to the court's personal jurisdiction," and that in states with multiple districts, "such corporation shall be deemed to reside in any district in that State within which its contacts would be sufficient to subject it to personal jurisdiction if that district were a separate State." 28 U.S.C. § 1391(c)—(d). Therefore, it follows logically that any court seeking to examine whether a defendant was subject to its jurisdiction should treat the court's judicial district as if it were its own state, as Section 1391 explicitly provides. However, many federal courts examine whether the defendant would be subject to general jurisdiction in New York State. This Court believes that analysis runs counter to the directives and logic of Section 1391. Nevertheless, the Court will examine whether the Defendants would be subject to general jurisdiction in New York State.
The Defendants argue that this Court cannot exercise general jurisdiction because it is not "at home" in New York State, which is what Daimler requires. The Plaintiffs argue that the Defendants' contacts with the state are so continuous and systematic as to render it at home in New York. The Court finds that it is unable to exercise general jurisdiction over the Defendants.
Daimler and its progeny illustrate that a plaintiff bears a substantial burden when he or she attempts to claim that a foreign defendant is subject to general jurisdiction. In the Court's view, the Plaintiffs have not met that high burden. In the Court's view, the Plaintiffs have not shown that the Defendants, who retain principal places of business in Ohio; are incorporated under the laws of Delaware; and do business in at least 42 different states should be subject to general jurisdiction in New York State. That is, the Plaintiffs have not shown that this is an exceptional case where the Defendants "are essentially at home" in New York State by alleging that they maintain 40 yards in the state. See Minholz v. Lockheed Martin Corp., ___ F. Supp. 3d ___, No. 1:16-CV-154, 2016 WL 7496129, at *7 (N.D.N.Y. Dec. 30, 2016) (finding that Lockheed Martin was not subject to general jurisdiction in New York State where it was a corporation that conducted business throughout the country and the globe, and its New York operations represented a fraction of its business); Pablo Star Ltd. v. Welsh Gov't, 170 F.Supp.3d 597, 606 (S.D.N.Y. 2016), reconsideration denied, No. 15-CV-1167 (JPO), 2016 WL 2745849 (S.D.N.Y. May 11, 2016) ("The Complaint does not allege that any of the [] Defendants are incorporated in, or have a principal place of business in, New York. Nor have Plaintiffs alleged contacts with New York so substantial that this is the `exceptional case' in which a corporation is `essentially at home' in a foreign forum." (internal citations omitted)); SPV OSUS Ltd. v. UBS AG, 114 F.Supp.3d 161, 168 (S.D.N.Y. 2015) (finding that even if the defendant's contacts amounted to "a substantial, continuous, and systematic course of business," the Supreme Court held in Daimler that such contact were insufficient to establish general jurisdiction, because the plaintiffs failed to "establish that this is the `exceptional case' in which a corporation is `essentially at home' in a foreign forum such that the Court may exercise general jurisdiction over it.").
The Plaintiff also argues that the Defendants' registration to do business in New York State subjects it to general jurisdiction. However, this claim has been placed in serious doubt after Goodyear and Daimler. As the Northern District of New York recently said:
Minholz, 2016 WL 7496129, at *9.
Therefore, because of the stringent standard announced in Daimler, the Court finds that it cannot exercise general jurisdiction over the Defendants.
The Defendants argue that they are not subject to specific jurisdiction in the EDNY because none of the Plaintiffs' claims arise out of the Defendants' bus yards in the district. In opposition, the Plaintiffs contend that the Defendants' operation of five bus yards is sufficient; and the fact that the four similarly situated individuals who have opted into the putative class action worked in the Defendants' Shoreham bus yard supply sufficient connection. The Court finds that the Defendants are not subject to specific jurisdiction in the EDNY with regard to the named Plaintiffs' claims.
While it is true that the Defendants operate five bus yards in the EDNY, the Plaintiffs' claims do not relate to those bus yards. None of the named Plaintiffs ever worked in any of the bus yards in the EDNY. Although the Plaintiffs argue that the Court should consider four opt-in Plaintiffs who worked in the Defendants' Shoreham bus yard, the Court finds that is inappropriate at this time to consider those individuals because the Court does not have jurisdiction over those individuals or any claims that they may have. The individuals who are not named Plaintiffs are not technically part of this action, and it is unknown whether they will ever become party of the action. At this point, the action is a putative class action. It has received neither class certification nor conditional class certification. See Baxter v. Palmigiano, 425 U.S. 308, 310 n. 1, 96 S.Ct. 1551, 47 L. Ed. 2d 810 (1976) ("Without such certification and identification of the class [under Rule 23], the action is not properly a class action."); Police & Fire Ret. Sys. of City of Detroit v. IndyMac MBS, Inc., 721 F.3d 95, 112 n.22 (2d Cir. 2013) ("But until certification, the jurisdiction of the district court depends upon its having jurisdiction over the claim of the named plaintiffs when the suit is filed and continuously thereafter until certification because until certification there is no class action but merely the prospect of one; the only action is the suit by the named plaintiffs.") (emphasis added); In re Painewebber Ltd. Partnerships Litig., 147 F.3d 132, 138 (2d Cir. 1998) ("Absent certification by a court and identification of the class, the action is not properly a class action. . . ."); Derbaremdiker v. Applebee's Int'l, Inc., No. 12-cv-01058, 2012 WL 4482057, at *9 n.9 (E.D.N.Y. Sept. 26, 2012), aff'd, 519 F. App'x 77 (2d Cir. 2013) (dismissing only the named plaintiff's claims in a putative class action lawsuit pursuant to a Rule 12(b)(6) motion by the Defendant, because "Plaintiff has not moved to certify this case as a class action, nor has he been designated a class representative," and therefore there were "no other parties or claims" in the action."); Biscone v. JetBlue Airways Corp., 681 F.Supp.2d 383, 386 (E.D.N.Y. 2010) ("As a general rule, until a class action is certified pursuant to Rule 23 of the Federal Rules of Civil Procedure, the claims of potential class members cannot be considered.") (emphasis added); Bowens v. Atlantic Maintenance Corp., 546 F.Supp.2d 55, 76 (E.D.N.Y. 2008) ("[I]n the absence of certification, there is no class action under Rule 23. The unnamed class members are not technically part of the action until the court has certified the class. . . ." (internal citations and quotations omitted)).
Therefore, while the Defendants transact business within the EDNY and use real property within the district, the Plaintiffs claims do not relate to those transactions or that usage. Accordingly, this Court cannot exercise specific jurisdiction over the Defendants, and venue is not proper under Section 1391(b)(1).
The Defendants argue that since none of the events alleged by the Plaintiffs occurred in the EDNY, the Court cannot find that a substantial portion of the events or omissions occurred in the district. The Plaintiffs argue that the claims of the four individuals similarly situated to the Plaintiffs who have opted into the putative class action constitute substantiality.
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." Daniel v. Am. Bd. of Emer. Med., 428 F.3d 408, 432 (2d Cir. 2005) (citing Gulf, 417 F.3d at 357). "`Substantiality' for venue purposes is more a qualitative than a quantitative inquiry, determined by assessing the overall nature of the plaintiff's claims and the nature of the specific events or omissions in the forum, and not by simply adding up the number of contacts." Cold Spring Harbor Lab. v. Ropes & Gray LLP, 762 F.Supp.2d 543, 553 (E.D.N.Y. 2011) (Spatt, J.) (quoting Daniel, 428 F.3d at 432-33).
Here, the nature of the claims and the acts and omissions relate to how eighty-nine individuals were paid in bus yards owned by the Defendants. None of those bus yards are located in the EDNY—they are all located in the WDNY and the NDNY. Therefore, a substantial part of those acts or omissions did not occur in the EDNY.
As stated above, the Court does not believe it is proper to consider the claims of the putative class members because they are not currently parties to this action. However, even if the Court were to find that it was proper to consider non-parties at this point, it would strain reason to find that the events that took place in the EDNY constitute a substantial part of the underlying events. Gulf, 417 F.3d at 356. There are eighty-nine named Plaintiffs, none of whom worked in any of the bus yards located in the EDNY. As of the date of this decision, there are over fifty individuals who have opted into the putative class action. Therefore, out of the approximately one hundred and fifty individuals related to this action, the Plaintiffs argue that the acts or omissions of the Defendants related to four individuals constitute a substantial part of the underlying events. While the Court is mindful that "`[s]ubstantiality' for venue purposes is more a qualitative than a quantitative inquiry [not] determined . . . by simply adding up the number of contacts," Cold Spring Harbor Lab., 762 F. Supp. 2d at 553, the Court is unable to find that the claims of four individuals who are not currently parties to the action constitute a substantial portion of the events. "[W]hen a court examines the question of whether venue in a forum is proper, it must focus on where the defendant's acts or omissions occurred." Id. at 556 (emphasis in original). Here, all of the events alleged by the named Plaintiffs occurred in the WDNY or the NDNY. None of the alleged conduct occurred in the EDNY.
Therefore, the Court finds that venue is not proper under Section 1391(b)(2).
The Court has found that venue is improper. Therefore, it must decide whether to dismiss the case or transfer it in the interest of justice. See Cooney v. Barry Sch. of Law, 994 F.Supp.2d 268, 271 (E.D.N.Y. 2014) ("When venue is improper, it is within the Court's discretion to either dismiss the case or transfer it to a proper venue under 28 U.S.C. § 1406." (citing Daniel, 428 F.3d at 435); see also 28 U.S.C. § 1406 ("The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district division in which it could have been brought.").
The Court agrees with the Plaintiffs that if the Court dismissed the action, the Plaintiffs would expend needless time and money refiling the case in another district. The Plaintiffs asked the Court to transfer the case to the WDNY in the interest of justice if the Court was inclined to grant the Defendants' motion. The Defendants admit that the case could have been brought in the WDNY, and they go so far as to say that it should have been brought in that district. The Court agrees that the interests of justice would best be served by transferring this action to the WDNY. Most of the named Plaintiffs worked for the Defendants in the WDNY. While several worked for the Defendants in the NDNY, the NDNY is closer to the WDNY than the EDNY. All of the acts and omissions occurred in the WDNY or the NDNY. Therefore, witnesses and documents are likely to reside in the WDNY and NDNY. Namely, the locus of operative facts is between the WDNY and the NDNY.
Therefore, for the reasons stated above, the Court grants the Defendants' motion to dismiss for improper venue pursuant to Rule 12(b)(3) to the extent that the Court finds that venue in the EDNY is improper; and that the interests of justice dictate that the case be transferred to the WDNY pursuant to Section 1404(a).
The Clerk of the Court is respectfully directed to effectuate the transfer and close the case.
It is
