Motion for Transfer: A Beacon of Light in the Storm of Class Actions?
Choice of venue is an important aspect of all class action litigation. Since the passage of the Class Action Fairness Act (CAFA), plaintiffs are increasingly filing class actions in federal court. This influx of litigation has increased the need to ensure the best possible venue for these cases.
The Legal Standard
Pursuant to 28 U.S.C. § 1404(a), “[f]or the convenience of the parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.” The first issue in evaluating such a motion to transfer venue is whether the transferee court is a proper venue. This is usually an easy threshold for a defendant to overcome because the analysis is governed by 28 U.S.C. § 1391, which provides that the judicial district where the defendant resides, among other options, is a proper venue.
The second step in the transfer analysis can be more problematic as the court must balance numerous factors while taking into consideration the convenience of the parties and the interests of justice. The party moving for transfer bears the burden of establishing that the suggested venue is a “more convenient forum.” Van Dusen v. Barrack, 376 U.S. 612, 645-46 (1964). The difficulty for the moving party is compounded by the general principle of law that a plaintiff’s choice of forum is to be given considerable deference. “Unless the balance is strongly in favor of the defendant, the plaintiff’s choice of forum should rarely be disturbed.” Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947).
Reduced Deference to a Plaintiff’s Choice of Forum in Class Action Litigation
Despite the general deference to a plaintiff’s choice of forum, courts in most jurisdictions have held that in class action litigation “the weight accorded to plaintiff’s choice of forum is considerably reduced in class and derivative suits.” Koster v. Lumbermens Mut. Cas. Co., 330 U.S. 518 (1947); Donia v. Sears Holding Corp., No. 1:07-cv-02627-KMO, 2008 U.S. Dist. LEXIS 43532, *13 (N.D. Ohio May 30, 2008) (ruling “the importance of the plaintiff’s choice of forum is nonetheless diminished where the plaintiff has intentionally broadened the geographic scope of the action by seeking to certify the class”); Allen v. Sears Roebuck & Co., No. 07-11706, 2007 U.S. Dist. LEXIS 60770, *7 (E.D. Mich. Aug. 20, 2007); Beesley v. International Paper Co., No. 06-cv-703-DRH, 2007 U.S. Dist. LEXIS 62534, *7 (S.D. Ill. Aug. 24, 2007); Goldstein v. RadioShack Corp., No. 6:06-CV-285, 2007 U.S. Dist. LEXIS 32278, *5 (E.D. Tex. May 1, 2007); Jones v. Walgreen Co., 463 F. Supp. 2d 267, 274 (D. Conn. 2006); Lucas v. Family Dollar Stores of Okla., No. CIV-04-536-M, 2005 U.S. Dist. LEXIS 45521, *7 (W.D. Okla. Mar. 9, 2005); Saleh v. Titan Corp., 361 F. Supp. 2d 1152, 1157 (S.D. Cal. 2005) (stating “[t]he Ninth Circuit, like other courts, has noted that the weight to be given the plaintiff’s choice of forum is discounted where the action is a class action”). See also Anderson v. Family Dollar, Inc., No. CIV-04-0210-F, 2004 U.S. Dist. LEXIS 30579, *5 (W.D. Okla. Apr. 30, 2004) (“significantly less deference”); Bolton v. Tesoro Petroleum Corp., 549 F. Supp. 1312, 1314 (E.D. Pa. 1982).
Although it is difficult to predict the exact degree of “reduced” deference in class actions, a few general patterns have emerged.
Deference Greatly Reduced: Nationwide Class Actions and Plaintiffs Who Engage in Forum Shopping
A number of recent cases demonstrate that deference to the plaintiff’s choice of forum is most reduced in the context of nationwide class actions. See, e.g., Gueorguiev v. Max Rave, LLC, 529 F. Supp. 2d 853, 857 (N.D. Ill. 2007); Stock v. Integrated Health Plan, No. 06-CV-002150DRH, 2006 U.S. Dist. LEXIS 86041, *5 (S.D. Ill. Nov. 28, 2006); Berernson v. NationalFin. Services, LLC, 319 F. Supp. 2d 1, 3 (D.D.C. 2004). When class members are scattered throughout the country, deference to venue should be reduced because “each of many potential plaintiffs may claim the right to have the action heard in his home forum,” and “the nominal plaintiff’s role in the litigation is likely to be quite minimal.” Ingram v. Family Dollar Stores of Ala., Inc., No. CV-06-BE-1507-S, 2006 U.S. Dist. LEXIS 96845, *6 n.2 (N.D. Ala. Sept. 29, 2006). Courts therefore rationalize this reduced deference because of the numerous potentially valid forums in which to bring the case and the often weak ties of the class representative to the selected forum.
Under such circumstances, some courts in the Seventh Circuit have gone so far as to find that a plaintiff’s forum selection should be afforded no weight. Nelson v. AIM Advisors, No. 01-cv-0282-MJR, 2002 U.S. Dist. LEXIS 5101, *15 (S.D. Ill. Mar. 8, 2002) (holding that “where a plaintiff alleges a nationwide class action, plaintiff’s home forum is irrelevant”), citing Georgeouses v. NaTec Res., Inc., 963 F. Supp. 728, 730 (N.D. Ill. 1997); Genden v. Merrill Lynch Pierce Fenner & Smith, 621 F. Supp. 780, 782 (N.D. Ill. 1985).
In addition, deference to a plaintiff’s choice of forum is greatly reduced in class actions when there is evidence of forum shopping. In fact, courts in the Ninth Circuit have ruled, “Where forum shopping is evident . . . courts should disregard plaintiff’s choice of forum.” Foster v. Nationwide Mutual Insurance Co., No. C 07-04927 SI, 2007 U.S. Dist. LEXIS 95240, * 6 (N.D. Cal. Dec. 14, 2007) (emphasis added), citing Italian Colors Rest. v. American Express Co., No. C-03-3719, 2003 U.S. Dist. LEXIS 20338, *4 (N.D. Cal. Nov. 10, 2003).
Deference Somewhat Reduced: Class Action Where Plaintiff Asserts State Law Claims, But Substantially Similar, Nationwide Litigation Is Pending Elsewhere
At first blush, in cases where an in-state plaintiff files a state-wide class action asserting state law claims only, it may seem that plaintiff’s choice of forum would be given great weight. However, where parallel, nationwide class actions are pending, courts have found that judicial economy and convenience of the parties and witnesses justify transfer to the alternative venue. See, e.g., Donia v. Sears Holding Corp., No. 1:07-cv-02627-KMO, 2008 U.S. Dist. LEXIS 43532, *13 (N.D. Ohio May 30, 2008) (granting defendant’s motion to transfer where “the factors strongly favor transfer” because plaintiff’s “lawsuit simply represents a sub-class of the national class action already proceeding in the Northern District of Illinois”). The “pendency of a similar action in the transferee court is a universally recognized reason for granting a change of venue.” Pacific Coast Federation v. Gutierrez, No. C-05-3232, 2006 WL 194507, at *2 (N.D. Cal. Jan. 24, 2006) (quoting Weltmann v. Fletcher, 431 F. Supp. 448, 451 (N.D. Ohio 1976)).
Plaintiff’s Choice of Forum Afforded Most Deference: Certain Statutory Class Actions
In certain class actions, however, courts adhere to traditional rules of deference to a plaintiff’s choice of forum. Specifically, courts have taken this approach in the context of class action litigation involving federal statutes that contain venue provisions, such as ERISA, federal securities statutes, and the FLSA. Both the Federal Exchange Act and ERISA statutory venue provisions have been interpreted to provide plaintiffs with the broadest possible forum choices. See, e.g., In re Amkor Tech., No. 06-298, 2006 U.S. Dist. LEXIS 93931, *11-12 (E.D. Pa. Dec. 28, 2006) (securities law class action), citing SEC v. Elecs. Warehouse, Inc., 689 F. Supp. 53, 74 (D. Conn. 1988); Shanehchian v. Macy’s, Inc., No. 1:07-CV-00828, 2008 U.S. Dist. LEXIS 31484, *13 (S.D. Ohio Apr. 15, 2008) (ERISA class action), citing Winnett v. Caterpillar, Inc., No. 3:06-cv-00235, 2006 U.S. Dist. LEXIS 95973, *5 (M.D. Tenn. June 20, 2006). In addition, the “opt-in” nature of class actions under the FLSA also “suggests that Congress intended to give plaintiffs considerable control over the bringing of an FLSA action.” Hernandez v. Texas Capital Bank, No. 07-0726-CV-W-ODS, 2008 U.S. Dist. LEXIS 8408, *11-12 (W.D. Mo. Feb. 5, 2008), quoting Onyeneho v. Allstate Ins. Co., 466 F. Supp. 2d 1, 6 n.2 (D.D.C. 2006).
The deference afforded to a plaintiff’s choice of forum is significantly reduced in most class action litigation. Some exceptions exist to this general rule, and the practical significance of this “reduced” deference varies from jurisdiction to jurisdiction. However, the emerging body of authority on this topic gives additional options to defendants faced with class action litigation in federal courts.
Gregory R. Farkas
Frantz Ward LLP