NYC Vision Capital, Inc. v. C21FC, LLC

Background

NYC Vision Capital, Inc., Syeda Mondal, Elie Islam, and Wali Mondal sued C21FC, LLC; Alan Singer; Eric Hillman; and Zach Singer. The claims arose from Defendants’ offer and sale of a The Eye Man franchise in 2021. Plaintiffs alleged violations of the New York Franchise Sales Act and the Arizona Consumer Fraud Act, common-law fraud, fraud by omission, negligent misrepresentation, and breach of contract. They sought damages and a declaration that NYC Vision owned the “The Eye Man” trademark.

Plaintiffs filed this action in the Southern District of New York on April 13, 2022, and filed a second amended complaint on April 19, 2022. Defendants later filed an action against Plaintiffs in the District of Arizona involving alleged breaches of the Franchise Agreement, trademark issues, a lien, and the Asset Purchase Agreement.

Motion to Transfer

Defendants moved under 28 U.S.C. § 1404(a), which permits a federal court to transfer a civil action for the convenience of the parties and witnesses and in the interest of justice. Defendants relied primarily on Section 17.11 of the Franchise Agreement. That provision stated that the Franchisor “may institute” an action against the Franchisee in a state or federal court of general jurisdiction in Maricopa County, Arizona, and that the Franchisee waived objections to the jurisdiction or venue of those courts.

The court found that this was a permissive forum-selection clause, not a mandatory one. The word “may” gave the Franchisor the option to sue in Arizona, but the provision did not say that Arizona was the exclusive forum or that Plaintiffs could not sue elsewhere. The provision also did not prevent Plaintiffs from arguing that Arizona was inconvenient.

Because the clause was permissive, the court applied the ordinary transfer analysis rather than the heightened standard used for mandatory forum-selection clauses. The party seeking transfer had to make a strong showing that transfer was warranted.

Reasons for Denying Transfer

The court gave substantial weight to Plaintiffs’ choice of New York. It also applied the first-filed doctrine, which generally gives priority to the first of two competing lawsuits unless convenience or special circumstances favor the later-filed action. Defendants’ Arizona action was filed after Plaintiffs’ New York action.

The court found meaningful connections to New York. NYC Vision is a New York corporation with its principal place of business in New York, and the dispute involved the purchase of a retail eyewear store located in the Southern District of New York. The court found no evidence that Plaintiffs chose New York merely to shop for a favorable forum.

Defendants pointed to Alan Singer’s Arizona residence, the Franchise Agreement’s Arizona choice-of-law provision, and the parties’ agreement that Arizona courts could hear certain disputes. The court determined that these facts did not justify transfer. Defendants provided no evidence about the convenience of witnesses, the location of documents, the location of operative events, the availability of compulsory process, or the parties’ relative financial resources. The court also stated that applying Arizona law, if necessary, would not require transfer to an Arizona court.

Disposition

The court denied Defendants’ motion to transfer under Section 1404(a). It directed the Clerk of Court to close Docket Entry 24. The order addressed venue and did not decide the underlying franchise, fraud, contract, or trademark claims.