DAVID S. CAYER, Magistrate Judge.
This matter was referred to the undersigned Magistrate Judge on December 8, 2011, pursuant to 28 U.S.C. § 636(b)(1) and these Motions are now ripe for consideration.
Having fully considered the arguments, the record, and the applicable authority, the Court
Plaintiff BSN Medical, Inc. ("BSN") is a corporation organized under the laws of the State of Delaware with its principal place of business in Charlotte, North Carolina. Defendant American Medical Products, LLC ("AMP") is a limited liability company organized under the laws of the State of New Jersey with its principal place of business in Eatontown, New Jersey. Defendant Sean McKeown is a resident of the State of New Jersey. Defendant William Michalski is a resident of the State of New Jersey.
BSN is a global supplier of casting, bandaging, traditional wound care, orthopedic soft goods, braces and compression stockings. FLA Orthopedics ("FLA"), a company acquired by BSN in 2007, is involved in the design, manufacture, distribution and sales of spinal bracing products. FLA is the owner of U.S. Patent No. 5,267,948 (the "`948 Patent") for "Body Jacket Closure." FLA marketed and sold a spinal brace incorporating the '948 Patent under the name Cinch-Loc.
In July 2005, Defendants Sean McKeown and William Michalski were hired by FLA and entered into Employment Agreements containing certain restrictions regarding competition with FLA and the use of trade secrets and proprietary materials. Both of the Employment Agreements included a two year non-compete clause and stated that confidential information would remain the exclusive property of FLA. The Agreements further provided that failure to return such information would constitute theft of FLA's trade secrets. Both Agreements inure to FLA's successors and assigns and specifically provide for a transfer of rights and obligations in the event of a merger or sale of assets by FLA.
Defendants Michalski and McKeown's duties included the promotion and sale of FLA products including the Cinch-Loc spinal brace. In 2007, BSN acquired FLA and all of its assets including the `948 Patent and other intellectual property. Defendants Michalski and McKeown's Agreements with FLA inured to BSN.
BSN created documents relating to the Cinch-Loc spinal brace and applied for copyright registration for them. Defendants Michalski and McKeown were provided samples of these documents for use in promoting and selling the Cinch-Loc product. Additionally, Defendants Michalski and McKeown were provided confidential information regarding FLA and BSN's customer lists, pricing, mailing lists and other information that BSN considers trade secrets.
In October 2008, Defendants Michalski and McKeown tendered their resignations. A year later on October 8, 2009, Defendants Michalski and McKeown created AMP as a limited liability company in the State of New Jersey. In November 2010, BSN discovered that Defendants were offering spinal bracing products which are allegedly identical to the Cinch-Loc spinal brace and infringe upon BSN's `948 Patent. Defendants' brochures and application instructions are allegedly identical to BSN's promotional materials and application instructions.
BSN filed suit in this Court on February 22, 2011. On June 1, 2011, BSN filed its "First Amended Complaint," Doc. 7. Specifically, BSN asserts the following claims against all three Defendants: (1) patent infringement of the `948 Patent; (2) copyright infringement of BSN's promotional materials and instructions; (3) breach of contract; (4) misappropriation of trade secrets pursuant to N.C. Gen. Stat. § 66-153 et seq; and (5) unfair competition pursuant to N.C. Gen. Stat. § 17-1.1 et seq.
Defendants have moved under Rule 12(b)(2) and 12(b)(3) of the Federal Rules of Civil Procedure to dismiss this action for lack of personal jurisdiction and improper venue. In the alternative, Defendants have moved pursuant to 28 U.S.C. § 1404, to transfer this matter to the United States District Court for the District of New Jersey for the convenience of the parties and witnesses and in the interests of justice.
While a court typically decides the question of personal jurisdiction over a defendant before considering venue, the Supreme Court has held that "when there is a sound prudential justification for doing so, . . . a court may reverse the normal order of considering personal jurisdiction and venue."
Ultimately, the question of transfer under section 1404(a) is committed to the sound discretion of the district court.
Additionally, under 28 U.S.C. § 1406(a), when a case is filed "laying venue in the wrong division or district," a transfer to "any district or division in which it could have been brought" may be ordered, as an alternative to dismissal, "if it be in the interest of justice." The Fourth Circuit has held that "[w]e have long interpreted that statute [28 U.S.C. § 1406(a)] to authorize transfer where personal jurisdiction is lacking, even though venue might be properly laid."
The Court finds that this case should be transferred to the United States District Court for the District of New Jersey. While Plaintiff's choice of forum is ordinarily accorded considerable weight, that weight is lessened when the conduct giving rise to the complaint did not occur in the forum.
As for the residences of the parties, BSN is a Delaware corporation with its headquarters in Charlotte, North Carolina and is registered to do business in New Jersey. The individual Defendants reside in New Jersey and Defendant AMP is a New Jersey limited liability company.
The Court is persuaded that the bulk of the evidence and witnesses are more likely to be in New Jersey where the alleged patent and copyright infringement, breach of contract, misappropriation of trade secrets and unfair competition occurred. This Court cannot compel non-party witnesses located in New Jersey to attend a trial in this district.
Most importantly to the Court in this case, the interests of justice favor transfer to New Jersey. There is no indication that BSN's access to justice will be impaired by transfer of its claims to the District of New Jersey. Personal jurisdiction over all three Defendants in the Western District of North Carolina is disputed. The interests of justice strongly favor transfer so that any award BSN might ultimately win here will not be subject to a successful appeal challenging this Court's personal jurisdiction over Defendants.
Finally, venue is proper in the United States District Court for the District of New Jersey with regard to all Defendants and all claims.
Alternatively, even if venue is proper in this district, transfer may also be appropriate under section 1406(a) in light of the potential impediment to a decision on the merits.
Having considered the entire record, the convenience of the parties and witnesses, and the interest of justice, this matter would best be resolved in the United States District Court for the District of New Jersey. Accordingly, the Court grants Defendants' Motion to transfer venue.
Anticipating that the Court may order that this action be transferred, BSN filed it's "Conditional Motion by BSN Medical, Inc. To Transfer Action to the United States District Court for the Southern District of Florida," Doc. 37, asserting that if transfer is found appropriate, the Court should transfer the case to the Southern District of Florida because of a forum selection clause contained in the individual Defendants Employment Agreements.
The Fourth Circuit has held that while a valid forum selection clause does not conclusively establish proper venue, it is "a significant factor that figures centrally in the district court's calculus."
In this case, the Court finds that the potential impediment to a decision on the merits with regard to personal jurisdiction and venue again weighs heavily in favor of transferring this case to the District of New Jersey and not the Southern District of Florida. No evidence has been offered that personal jurisdiction and venue would be proper in the Southern District of Florida with regard to every claim and every Defendant. The Court will not transfer a case to a district where the same jurisdictional problems might arise when a district that does not have jurisdictional problems is available. Failure to transfer the entire action would result in a multiplicity of actions, potentially on the same claims, which could lead to inconsistent verdicts.
1. "William Michalski's Motion to Dismiss for Lack of Personal Jurisdiction and Improper Venue, or in the Alternative to Transfer to the District of New Jersey," Doc. 11, "Sean McKeown's Motion to Dismiss for Lack of Personal Jurisdiction and Improper Venue, or in the Alternative to Transfer to the District of New Jersey," Doc. 12, "American Medical Products, LLC's Motion to Dismiss for Lack of Personal Jurisdiction and Improper Venue, or in the Alternative to Transfer to the District of New Jersey," Doc. 13, are
2. BSN's "Conditional Motion by BSN Medical, Inc. To Transfer Action to the United States District Court for the Southern District of Florida," Doc. 37, is
3. The Clerk is directed to send the instant file, including this Memorandum and Order, to the Clerk of Court for the District of New Jersey.
4. The Clerk is directed to send copies of this Memorandum and Order to counsel for the parties;