DataCatalyst, LLC v. Infoverity, LLC

Background

DataCatalyst, led by its principal Scott Rompala, provided business-development services to Infoverity from 2017 through 2019. DataCatalyst is based in New York, and Infoverity is an Ohio-based company. The parties entered into a Subcontractor Services Agreement on July 14, 2017, along with Statements of Work describing particular services and payment terms.

Statement of Work No. 008 provided that DataCatalyst would receive 7% of revenue that it sourced or influenced for Infoverity. The parties tracked those opportunities on Salesforce.com, and the payment obligation was to continue after the agreement or Statement of Work ended. Their relationship ended in January 2019. DataCatalyst alleged that Infoverity failed to pay commissions on some opportunities, including revenue connected to InterFace Flooring, and withheld information needed to identify the commissions owed.

DataCatalyst filed claims for breach of contract, violation of Ohio Revised Code § 1335.11, and an accounting in New York state court. Infoverity removed the case to the Southern District of New York and moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which addresses failure to state a legally sufficient claim. In the alternative, Infoverity asked to transfer the case to the Southern District of Ohio under 28 U.S.C. § 1404(a), a statute allowing transfer for convenience and the interests of justice.

Transfer of Venue

The agreement stated that legal proceedings relating to it “may be brought” in a state or federal court in Columbus, Ohio, and that those courts would be considered convenient. Applying Ohio law to interpret the provision, the court held that it was permissive, not mandatory. In other words, it authorized litigation in Ohio but did not make Ohio the exclusive forum.

The court therefore considered the usual transfer factors, including witness and party convenience, the location of documents and relevant events, the parties’ financial means, the forum’s familiarity with the governing law, and trial efficiency. Several factors favored keeping the case in New York. Rompala had maintained his office there, performed work there, and focused on developing business with clients in the Northeast. The court gave greater weight to the likely convenience of non-party witnesses in that region than to the convenience of party witnesses in Ohio. Although convenience to the parties slightly favored Ohio, the other factors did not strongly favor either forum.

The court held that Infoverity had not met its burden of making a strong case for transfer and denied the motion to transfer venue.

Motion to Dismiss

Infoverity argued that DataCatalyst’s claims were too speculative because the complaint did not identify every account for which commissions were allegedly unpaid. The court rejected that argument. It held that the complaint adequately described Infoverity’s obligation to pay commissions, explained how opportunities sourced or influenced by DataCatalyst could be identified, stated why DataCatalyst believed commissions were being withheld, and gave a specific example involving an account whose revenue was allegedly concealed.

The court concluded that the complaint plausibly alleged that Infoverity was liable and that Infoverity demanded more detail than was required at the pleading stage. The court therefore denied the motion to dismiss.

Disposition

The court denied Infoverity’s motion to dismiss or transfer venue. The case will proceed in the Southern District of New York. The court directed Infoverity to answer the complaint within 21 days, terminated the open motion, canceled the scheduled oral argument, and set an initial conference for May 15, 2020.