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F.H.G. Corp. v. Green Wave, Inc.

United States District Court, D. Utah

June 23, 2017

F.H.G. CORPORATION, a Florida corporation, d/b/a CAPSTONE NUTRITION Plaintiff,
v.
GREEN WAVE, INC., a California corporation, Defendant.

          MEMORANDUM DECISION AND ORDER DENYING DEFENDANT'S MOTION TO CHANGE VENUE

          Jill N. Parrish, United States District Court Judge

         Before the court is Defendant Green Wave, Inc.'s Motion to Change Venue pursuant to 28 U.S.C. § 1404(a). (Docket No. 8).[1]

         BACKGROUND

         This lawsuit arises out of a contractual dispute between a supplier of raw materials for nutritional products and a manufacturer of nutritional supplements. The supplier, Green Wave, Inc. ("Green Wave"), is a California corporation with its principal place of business in La Mirada, California. Green Wave imports raw ingredients for dietary supplements, foods, drinks, cosmetics, and pet products from China and other locations, and then sells those ingredients to manufacturers across the United States. The company maintains warehouses in both La Mirada, California and Edison, New Jersey.

         The manufacturer, F.H.G. Corporation, operating as Capstone Nutrition (“Capstone”), is a Florida corporation with its principal place of business in Ogden, Utah.[2] Capstone manufactures nutritional supplements and sports drinks for sale to distributors throughout the United States. Until early last year, Capstone maintained manufacturing facilities and offices in both Utah and Tennessee. After recapitalization in April 2016, the company divested itself of its Tennessee facilities and relocated its entire manufacturing operation, staff, and corporate structure to Utah.

         On June 15, 2015, Capstone ordered a significant amount of agmatine sulfate, a common ingredient in certain nutritional supplements, from Green Wave. Green Wave purchased the requested ingredient from a “separate but affiliated entity” known as Gulin Bio located in Shanghai, China. (Docket No. 8, at 3). Gulin Bio, in turn, procured the product from another Chinese supplier, known as Chang Zhou Aide Biology Technology Company (“Chang Zhou”).

         Once the ingredient arrived in the United States, it was processed by Green Wave in its California and New Jersey warehouses. Capstone representatives picked up 875 kilograms of the ingredient from the California warehouse and 750 kilograms from the New Jersey warehouse. Capstone then used the ingredient to manufacture a powdered nutritional supplement at its facilities in Tennessee and Utah. Capstone sold the completed product to a Colorado-based distributor known as MusclePharm. Shortly after receipt of the product, MusclePharm notified Capstone that its own quality control testing of the product had detected traces of 1, 3 dimethylbutylamine (“DMBA”), a substance banned by the U.S. Food and Drug Administration and many major sporting organizations. As the presence of DMBA rendered the product unsaleable, MusclePharm returned the entire shipment to Capstone without payment. Capstone soon completed additional testing, which confirmed the presence of DMBA and allegedly identified the ingredient supplied by Green Wave as the source of the adulteration. The adulterated product was stored at Capstone's facilities in Tennessee until sometime in early 2016, when it was moved to Capstone's Utah warehouse as part of Capstone's recapitalization.

         Capstone filed an action in diversity against Green Wave in the District of Utah on October 6, 2016. (Docket No. 2). Capstone's complaint alleges that Green Wave breached certain warranties and contractual obligations by supplying the purportedly tainted ingredient and seeks $1.3 million in damages. (Id.). On December 5, 2016, Green Wave filed the instant Motion seeking a transfer of the action to the Central District of California pursuant to 28 U.S.C. §1404(a). (Docket No. 8). On January 7, 2017, Capstone filed its memorandum in opposition to the Motion. (Docket No. 14). Green Wave replied on January 30, 2017. (Docket Nos. 20, 21). At the request of Green Wave, oral argument was held on the Motion June 19, 2017. (Docket No. 25). The court now considers the arguments of the parties under jurisdiction granted by 28 U.S.C. § 1332(a).

         DISCUSSION

         As explained above, Green Wave requests transfer of this case to the Central District of California pursuant to 28 U.S.C § 1404(a). Under that section, this court “may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented.” 28 U.S.C § 1404(a). However, the court may make such an order only upon a showing that “the convenience of parties and witnesses” and “the interest of justice” justify transfer. See id.; Atl. Marine Const. Co. v. U.S. Dist. Court, 134 S.Ct. 568, 580 (2013) (explaining that § 1404(a) codified “the doctrine of forum non conveiens for the subset of cases in which the transferee forum is within the federal court system”). Thus, any party moving for a transfer under § 1404(a) must clearly demonstrate “that: (1) the transferee court is a proper forum in which the action could have been brought originally; and (2) the transfer will enhance the convenience of the parties and witnesses, and is in the interest of justice.” Cmty. Television of Utah, LLC v. Aereo, Inc., 997 F.Supp.2d 1191, 1205 (D. Utah 2014) (citing Van Dusen v. Barrack, 376 U.S. 612, 616, 634 (1964)).

         Here, neither party disputes that the Central District of California is an appropriate transferee forum under § 1404(a). Accordingly, the court need only evaluate whether the requested transfer will materially “enhance the convenience of the parties and witnesses, and is in the interest of justice.” See Id. Again, “[t]he ‘party moving to transfer a case pursuant to § 1404(a) bears the burden of establishing that the existing forum is inconvenient.'” Emp'rs Mut. Cas. Co. v. Bartile Roofs, Inc., 618 F.3d 1153, 1167 (10th Cir. 2010) (quoting Scheidt v. Klein, 956 F.2d 963, 965 (10th Cir. 1992)); see also Tex. Gulf Sulphur Co. v. Ritter, 371 F.2d 145, 147 (10th Cir. 1967). In evaluating the relative inconvenience of this forum and the interest of justice, the court must consider

the plaintiff's choice of forum; the accessibility of witnesses and other sources of proof, including the availability of compulsory process to insure attendance of witnesses; the cost of making the necessary proof; questions as to the enforceability of a judgment if one is obtained; relative advantages and obstacles to a fair trial; difficulties that may arise from congested dockets; the possibility of the existence of questions arising in the area of conflict of laws; the advantage of having a local court determine questions of local law; and all other considerations of a practical nature that make a trial easy, expeditious[, ] and economical.

Emp'rs Mut. Cas. Co., 618 F.3d at 1167 (brackets omitted) (quoting Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d 1509, 1516 (10th Cir. 1991)). The parties here focus their arguments on (1) the weight accorded Capstone's choice of forum; (2) the accessibility of witnesses and other sources of proof in Utah and California; (3) the relative cost of making necessary proof in each forum; and (4) the relative congestion of court dockets in each forum. The court addresses each of these factors below and concludes that the balance of factors weigh decidedly against transfer of this case to the Central District of California.

         I. PLAINTIFF'S CHOICE OF FORUM

         The court finds that the first factor-the plaintiff's choice of forum-weighs heavily against transfer. “Unless the balance is strongly in favor of the movant, the plaintiff's choice of forum should rarely be disturbed.” Emp'rs Mut. Cas. Co., 618 F.3d at 1168 (brackets and quotations omitted) (quoting Scheidt v. Klein, 956 F.2d 963, 965 (10th Cir. 1992)). Thus, the court must normally accord “great weight” to the plaintiff's choice of forum. KCJ Corp. v. Kinetic Concepts, Inc., 18 F.Supp.2d 1212, 1214 (D. Kan. 1998). But, “where the facts giving rise to the lawsuit have no material relation or significant connection to the plaintiff's chosen forum, ” the court treats plaintiff's choice of forum with significantly less deference-assigning it ...


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