LS Parry Inc. v. Tepeyac, LLC

Background

LS Parry, Inc. sued Tepeyac, LLC and Leslie Guzman. The complaint asserted breach of contract, unjust enrichment, quantum meruit, fraud, conversion, violation of New York General Business Law § 349, constructive trust, and tortious interference with contract.

According to the complaint, LS Parry and Tepeyac entered into a Client Agreement on November 1, 2017. LS Parry agreed to provide sales-representation, business-development, marketing, trade-show, and related services for Tepeyac’s Lupita doll and associated products. LS Parry alleged that its work helped Tepeyac obtain an exclusive distribution agreement with Target, but that the defendants failed to pay commissions allegedly owed under the agreement. LS Parry also alleged that Guzman intentionally damaged its working relationship with the defendants.

Motions

The defendants moved to dismiss under Federal Rules of Civil Procedure 12(b)(2), 12(b)(3), and 12(b)(6), which address personal jurisdiction, improper venue, and failure to state a legally sufficient claim. Alternatively, they asked the court to transfer the case to the United States District Court for the Southern District of Ohio.

The court chose to address venue first. It explained that a court may transfer a case even if it has not resolved a personal-jurisdiction challenge, particularly when the transferee court would likely have jurisdiction over the defendants and transfer would make the New York jurisdiction issue unnecessary to decide.

Venue ruling

The court held that venue in the Southern District of New York was improper. The complaint did not allege that either Tepeyac or Guzman resided in New York. The court also found that LS Parry had not shown that a substantial part of the events or omissions giving rise to its claims occurred in the district.

The court rejected LS Parry’s reliance on its additional office in White Plains, New York. It stated that venue generally depends on the defendants’ acts, rather than the plaintiff’s activities or economic injury. The complaint did not allege that the defendants’ relevant actions occurred in New York.

The court also considered facts LS Parry raised in its briefing but had not alleged in the complaint, including shipments of Lupita toys to Target stores in New York and the defendants’ attendance at a Toy Fair in New York. The court found those facts insufficient to establish that a substantial part of the relevant events occurred in the district. It stated that the alleged shipments were incidental to LS Parry’s claims and that the Toy Fair attendance was too weakly connected to the claims.

Transfer and disposition

Although the court found that dismissal for improper venue would be warranted, it exercised its discretion to transfer the case instead. It found that LS Parry had pursued its claims diligently, had not apparently selected New York in bad faith, and had not objected to venue in Ohio. The court concluded that transfer was in the interests of justice because dismissal would deprive LS Parry of an opportunity to litigate its complaint on the merits.

Judge Nelson S. Roman therefore denied the defendants’ motion to dismiss and granted their motion to transfer venue to the United States District Court for the Southern District of Ohio. The clerk was directed to terminate the motion and transfer the action. The opinion did not decide the merits of LS Parry’s claims or resolve the personal-jurisdiction issue.