Southard v. Kipper Tool Company

Background

Jim Southard, a Georgia resident and former Kipper Tool Company employee, filed this False Claims Act lawsuit on behalf of the United States in 2015. Southard alleged that Kipper submitted false claims for payment or reimbursement and violated federal contracting requirements by selling products to commercial customers at greater discounts than those offered to the government. The opinion states that many allegedly improper sales involved federal agencies in California, but it also states that the alleged activity occurred in Georgia and Kansas City, Missouri.

Kipper is a Georgia corporation with its principal place of business and only location in Gainesville, Georgia. It has 42 employees, all based there, and submitted evidence that it is a certified small business operating at a loss. After the United States declined to intervene, the case was unsealed and Kipper was served. Kipper then moved to dismiss for improper venue, lack of personal jurisdiction, and failure to state a claim. Southard later moved for summary judgment.

Transfer Analysis

The court assumed, without deciding, that venue was proper in the Northern District of California. It also declined to resolve the unsettled question of whether the False Claims Act permits personal jurisdiction based on a defendant’s nationwide contacts or instead requires contacts with the forum district. The court concluded that it could decide the transfer request without resolving either issue.

Under 28 U.S.C. § 1404(a), a court may transfer a civil action to another federal district where the case could have been brought when convenience and the interests of justice favor transfer. The court found that the case could have been brought in the Northern District of Georgia because Kipper was located there, Kipper could be subject to general personal jurisdiction there, and the statute permitted venue where Kipper could be found, resided, or transacted business. Southard also resided in that district.

The court gave Southard’s choice of the Northern District of California only slight weight because he did not reside or work there when he learned the facts underlying the lawsuit, and the court found no particular connection between California and the alleged conduct. The court found that the convenience of Kipper, its current employees and executives, and likely former employees favored Georgia. Southard did not identify any West Coast witness. The court also found that Georgia had a stronger local interest and that transferring the case could reduce Kipper’s litigation costs as a small, financially struggling business.

Rulings

The court granted Kipper’s motion to transfer the action to the Northern District of Georgia under § 1404(a). In light of the transfer, it denied as moot Kipper’s motion to dismiss for lack of personal jurisdiction. It denied without prejudice Kipper’s motion to dismiss for failure to state a claim and denied without prejudice Southard’s motion for summary judgment, allowing those motions to be renewed before the transferee court. The order disposed of Docket Nos. 51, 52, and 54.

Judge Corley did not decide whether Southard’s False Claims Act allegations stated a valid claim or whether Southard was entitled to summary judgment. The ruling therefore transferred the case without reaching the underlying merits.