Perry v. Floss Bar, Inc.

Background

Joshua Perry sued Floss Bar, Inc., its chief executive officer Eva Sadej, and its advisor Stuart Allan. Perry alleged, among other things, that Floss Bar suspended him without pay, constructively discharged him without severance, failed to provide promised stock options, and improperly restrained him from working in mobile dentistry through a noncompetition agreement. He asserted twelve causes of action, including claims involving fraud, California securities law, public policy, defamation, severance pay, and restraint of trade.

The defendants moved under 28 U.S.C. § 1404(a) to transfer the case from the Northern District of California to the Southern District of New York. Perry separately moved for a preliminary injunction. The agreements at issue included provisions selecting Delaware courts for lawsuits arising from or relating to certain agreements. The court noted that neither party was seeking to enforce those provisions as the basis for the requested transfer to New York.

Transfer Analysis

Section 1404(a) permits a federal district court to transfer a civil case to another district where it could have been brought when transfer would promote convenience and the interests of justice. The court first concluded that the Southern District of New York had subject-matter jurisdiction and personal jurisdiction and was a proper venue. Perry did not dispute those points. The court explained that the Delaware forum-selection provisions did not, by themselves, make venue in New York improper under the federal venue statute.

The court gave Perry’s choice of the Northern District of California considerably less weight because he had not resided there since at least March or April 2020 and currently lived abroad. The record also showed that he traveled extensively during his employment, spending time in California, New York, Georgia, and overseas. Although some events occurred in California, the court found that many operative events occurred in New York or elsewhere, including alleged conduct at Floss Bar’s New York office.

The convenience of the parties favored transfer because all defendants resided in the Southern District of New York and Perry’s asserted convenience in California rested on his residence there. The convenience of witnesses also weighed somewhat in favor of transfer because most identified third-party witnesses lived on the East Coast, while Perry identified only two third-party witnesses in the San Francisco Bay Area. Most evidence was electronic and available in either venue. California’s greater familiarity with potentially applicable California law weighed slightly against transfer, but not substantially. New York’s local interest weighed slightly in favor of transfer because Floss Bar was headquartered there, Sadej and Allan were New York residents, and many events occurred there. Court congestion and trial timing were neutral.

Ruling

The court concluded that transfer to the Southern District of New York was appropriate under § 1404(a) and transferred the action there. Because the case was being transferred, it left determinations about the merits of Perry’s claims to the transferee court. Judge Susan Illston denied Perry’s motion for a preliminary injunction without prejudice to renewal in the Southern District of New York.