Smith v. Vella

Background

Anthony Smith, James Welsh, and Alan Sacks, who were proceeding without lawyers, sued Thomas Vella, Wesley Zlotoff, Dominic Ricsobono, and Jack Thomas Riccobono. The plaintiffs invoked the court’s authority over disputes between citizens of different states and alleged that the defendants breached a contract for the sale of industrial hemp. They requested a declaration concerning the contract and millions of dollars in damages. The complaint also identified the plaintiffs’ company, Eastern Industries, LLC, and the defendants’ company, Earthco Enterprises, LLC.

The plaintiffs alleged that the defendants lived in Scottsdale and Queen Creek, Arizona, and that Earthco Enterprises, LLC, was located in Chandler, Arizona. They alleged that shipments of industrial hemp were received at a facility controlled by the defendants’ company and that, after some payments were made, the defendants attempted to change the contract’s terms without the plaintiffs’ consent. The plaintiffs asserted that the case belonged in New York because the contract was executed there.

Venue analysis

The court explained that federal law generally permits a civil case to be filed where all defendants reside, where a substantial part of the events occurred, or, if neither applies, where a defendant is subject to the court’s authority. Based on the complaint, the court concluded that Arizona was a proper venue because all defendants resided there and the industrial hemp was shipped there.

The court also said it was unclear whether venue was proper in the Southern District of New York. Sacks resided in Staten Island, and Eastern Industries, LLC, resided in Shelter Island; those locations are in the Eastern District of New York, not the Southern District. The complaint referred to the contract being executed in “New York,” but did not establish that it was executed in the Southern District. The complaint also did not identify other underlying events occurring there.

Transfer ruling

Under 28 U.S.C. § 1404(a), a court may transfer a case to another federal district where it could have been brought when doing so would serve the convenience of the parties and witnesses and the interests of justice. The court considered Arizona more convenient because the underlying events occurred there, all defendants resided there, and the plaintiffs’ product was shipped there. It therefore transferred the action to the United States District Court for the District of Arizona.

The court did not decide whether the defendants breached the contract or resolve the plaintiffs’ other requested relief. It directed the Clerk of Court to transfer the action, stated that summonses would not issue from the Southern District of New York, and closed the action in that court. It left the question of whether the plaintiffs could continue without prepaying filing fees to the Arizona court. It also certified that an appeal would not be taken in good faith and denied permission to appeal without prepaying fees.

Uncertainty

The caption spells the second plaintiff’s name “James Welsh,” while one passage of the opinion refers to “Plaintiff Welch.” This summary follows the caption.