Perry v. Floss Bar, Inc.

Background

Joshua Perry sued Floss Bar, Inc., Eva Sadej, and Stuart Allan. Perry alleged that Floss Bar hired him as president as part of its acquisition of his company, later suspended him without pay, constructively discharged him, failed to pay severance, and prevented him from pursuing work through a noncompetition and nonsolicitation agreement. He asserted twelve causes of action, including claims involving alleged fraud, California securities law, unlawful discharge, defamation, severance, and restraint of trade. Perry also moved for a preliminary injunction.

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. They argued that New York was more convenient because the defendants, relevant witnesses, and evidence were there, and because many of the events occurred there. Perry opposed transfer and argued that he had lived and worked in California and that agreements containing Delaware forum-selection clauses made New York improper.

Transfer Analysis

The court concluded that the Southern District of New York had subject-matter jurisdiction over the diversity action, personal jurisdiction over the defendants, and proper venue. All defendants resided in New York, and Floss Bar’s principal place of business was there. The court held that the Delaware forum-selection clauses did not, by themselves, determine whether venue was proper under the federal venue statute. The court noted that the clauses could be considered in deciding whether transfer was appropriate, but neither party was seeking transfer to Delaware as the primary requested result.

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 court also found that although some events occurred in California, many operative events occurred in New York or elsewhere. Convenience for the parties favored transfer because all defendants resided in New York and Perry’s asserted convenience depended primarily on his former California residence. 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 in the San Francisco Bay Area.

The remaining factors were largely neutral. Electronic evidence could be accessed in either venue, court congestion was about the same, and the Northern District of California’s greater familiarity with California law weighed only slightly against transfer. 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.

Ruling

Judge Susan Illston granted the defendants’ motion to transfer under § 1404(a) and transferred the action to the Southern District of New York. Because the case was being transferred, she determined that the transferee court should decide the merits of Perry’s claims. She therefore denied Perry’s motion for a preliminary injunction without prejudice to renewal in the transferee court. The order did not decide the merits of Perry’s underlying claims.