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ANSCHELL v. SACKHEIM

October 18, 1956

Sidney C. ANSCHELL, Girard Anschell and Grosvenor Anschell, a corpartnership, d/b/a International Gift of the Month Club, Plaintiffs,
v.
Maxwell SACKHEIM, David Margulies, Maxwell Sackheim & Co., Inc. and Around-The-World Shoppers Club, Defendants



The opinion of the court was delivered by: WORTENDYKE

This case is before the Court on plaintiffs' motion for change of venue pursuant to 28 U.S.C.A. § 1404(a). The jurisdiction of this Court is invoked upon asserted diversity of citizenship between the plaintiffs and the defendants. The complaint alleges that the plaintiffs are citizens of the State of Washington; that the individual defendant Sackheim is a citizen of and the corporate defendant Maxwell Sackheim & Co. Inc. is a corporation organized under the laws of the State of New York; and that the defendant Margulies is a citizen of and the corporate defendant Around-the-World Shoppers Club is a corporation of the State of New Jersey.

The plaintiffs seek damages from the defendants, claimed to have resulted, first, from breach of a confidential relationship between Sackheim and the Sackheim Company on the one hand and the plaintiffs on the other, arising upon consultations had between plaintiffs with these defendants, looking to the employment of defendants' services by the plaintiffs in preparing an advertising program for the plaintiffs' business, and, second, from false representations alleged to have been made by Sackheim and the Sackheim company during such negotiations as a means of procuring a disclosure by the plaintiffs of the secrets of their business. Plaintiffs also charge Sackheim and the defendant Margulies with a conspiracy to defraud the plaintiffs, and allege that these individuals, in furtherance of the conspiracy, entered into agreements with foreign suppliers of merchandise, and organized the corporate defendant, Around-the-World Shoppers Club, as a vehicle for the conduct of a business similar to that of the plaintiffs and using plaintiffs' methods and trade secrets secured as aforesaid. Against the latter corporate defendant (hereinafter referred to as Around-the-World) plaintiffs seek an accounting of its profits from the use of plaintiffs' business methods and secrets, and also injunctive relief from a continuance of the activities of Around-the-World.

This action was commenced by the filing of the complaint herein on September 12, 1955. Service of process was effected, within this District (of New Jersey), upon the individual defendant, Margulies, personally, and upon Around-the-World by service upon Margulies as President of that corporation. The defendants so served in this action have appeared by respective answers filed in the cause. No service in this action was effected upon Sackheim or upon the Sackheim company. However, it appears from the affidavit of New York counsel for the plaintiffs that about five months prior to the commencement of this action, to wit in April 1955, a similar action was commenced by the same plaintiffs against the same defendants, in the Southern District of New York, upon an identical complaint, and in that (New York) action, process was served upon the Sackheim company on April 28, 1955, and personally upon the individual defendant Sackheim on May 2, 1955; but that efforts to serve Margulies and Around-the-World in the New York action were unsuccessful. Sackheim and the Sackheim company filed a joint answer in that action and, in the course of discovery proceedings therein, the defendant Margulies testified as to transactions underlying the causes of action set forth in each complaint. Admitting that the New Jersey action was instituted 'to protect a possible bar to plaintiffs' actions by the (New York) Statute of Limitations, * * *' and having, accordingly, selected the District of New Jersey as the forum, plaintiffs now move, pursuant to the section of the Code above cited, for a transfer of this action to the United States District Court for the Southern District of New York. More specifically, the present motion is for a change of venue from the District of New Jersey to the Southern District of New York or, in the alternative, for a transfer to the latter District and for a consolidation of this action with the similar action pending in the proposed transferee Court. Affidavits have been filed in support of and in opposition to the motion, and oral argument and briefs in behalf of all parties have been heard and considered.

 In substance, plaintiffs assert (in addition to the fact that Sackheim and the Sackheim company are citizens of New York and have been served and have appeared in the pending New York action) that Margulies also is a resident of the State of New York, but that a present attempt to serve Margulies in the pending New York action 'would grant to the said defendant a possible defense of the Statute of Limitations as a bar to the action.' Plaintiffs further assert that, although Around-the-World is a New Jersey corporation, and has been served in the District of New Jersey, that corporate defendant was, at the time of the commencement of the present action, and still is, doing business in and therefore is amenable to the service of process in the State of New York and in the pending New York action. Plaintiffs therefore represent that a transfer of this action to the Southern District of New York 'would afford a more convenient forum for a single trial of the entire action (sic), against all of the named defendants' since the same evidence and witnesses will be required in support of and by way of defense to the complaint in each of the actions.

 Margulies and Around-the-World, in opposition to plaintiffs' instant motion, present the respective affidavits of Margulies and of their New York counsel, from which it appears that Margulies has been amenable to process in the New York action for substantially all of the period since this action was commenced, and that on more than one occasion his attorney had suggested to New York counsel for the plaintiffs that an appointment be made for the service upon Margulies in the New York action at a time and place to be agreed upon by counsel for the respective parties, but that this offer was never accepted. In his own affidavit Margulies, the president of Around-the-World, states that the corporation 'never qualified to do business in New York * * * never maintained any office of any kind in New York * * * never had any employees who work in New York * * * has never been listed in any New York telephone directory nor has its name ever appeared in any office or building in New York * * * (and it) has never had any salesmen in the State of New York, on either a temporary or a permanent basis.' It is also represented that the corporation has bank accounts in both New York and New Jersey, and uses its New York bank account to facilitate remittances to foreign suppliers of merchandise shipped to its subscribers. Affiant Margulies states further that all of the corporate activities of the Club take place in New Jersey and that its stockholders' and directors' meetings are held and its books and records are kept in that State.

 By newspaper and periodical advertising and direct mail solicitation, Around-the-World invites members of the public at large to 'join' the Club by filling out and forwarding to the corporation's office in New Jersey an 'application' upon a form attached to the solicitation, and to accompany such application by a payment of a sum of money, in return for which Around-the-World undertakes to cause a gift of merchandise to be shipped to the 'applicant' by a foreign supplier. Apparently the 'applicant' for enrollment as a member in the Club pays a sum of money determined by the number of months of membership desired for the privilege of receiving 'each month * * * a surprise package sent (to the member) direct from a different foreign country.' Some comfort is proffered to the enrollee in the Club by the assurance that if he becomes 'displeased in any way' he may 'simply resign membership' and his 'unused payment will be refunded.' It is contended, therefore, that Around-the-World, a New Jersey corporation, not qualified to do business in New York, is not 'doing business' and is not amenable to service of process and, therefore, not 'found' in New York. Moreover, respondents to this motion argue that no justification has been shown by movants for this Court's exercise of the discretionary power delegated by the Code section invoked in the direction sought.

 We may readily dispose, at the outset, of the aspect of the motion which seeks the consolidation of this action with the pending New York action. This Court has no authority to order such a consolidation. If this Court were to order a transfer of this action to the United States District Court for the Southern District of New York, the latter tribunal, and it alone, would have the authority to consolidate this action with the action there pending. Rule 42(a), Rules of Civil Procedure, 28 U.S.C.A.

 28 U.S.C.A. § 1404(a) provides as follows:

 'For the convenience of 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.'

 Various judicial pronouncements heretofore made to the contrary notwithstanding, the foregoing section is not a codification of the doctrine of forum non conveniens. Norwood v. Kirkpatrick, 1955, 349 U.S. 29, 75 S. Ct. 544, 99 L. Ed. 789. The opinion in Norwood, which affirmed the Court of Appeals for the Third Circuit, adopted the viewpoint expressed by that Court of Appeals in All States Freight v. Modarelli, 3 Cir., 1952, 196 F.2d 1010 that a District Judge has a broader discretion in the application of § 1404(a) than he would have under the doctrine of forum non conveniens, and that under the latter doctrine a successful motion works a dismissal of the action with consequent exposure of the plaintiff to a loss of his cause of action through the running of the Statute of Limitations, while a transfer under § 1404(a) does not work such a dismissal but keeps alive the transferred cause of action. The Supreme Court further pointed out in Norwood, 349 U.S. at page 32, 75 S. Ct. at page 546, that in consequence of the harshness of the result of a successful motion under forum non conveniens

 'We believe that Congress, by the term 'for the convenience of parties and witnesses, in the interest of justice,' intended to permit courts to grant transfers upon a lesser showing of inconvenience.'

 In Ex parte Collett, 1948, 337 U.S. 55, at page 58, 69 S. Ct. 944, at page 946, 93 L. Ed. 1207, the Supreme Court, quoting from the Code reviser's notes, pointed out that § 1404(a) "requires the court to determine that the transfer is necessary for convenience of the parties and witnesses, and further, that it is in the interest of justice to do so." Nevertheless, despite the clear breadth of discretion accorded to the trial judge to transfer under § 1404(a), the principles justifying the application of the doctrine forum non conveniens are still implicit in the language of the section. Therefore, the moving party must 'show a great deal more than merely that it would be more convenient to try the case in a different jurisdiction.' Naughton v. Pennsylvania R. Co., D.C.Pa.1949, 85 F.Supp. 761, 763; or, in the language of the Supreme Court in Williams v. Green Bay & W.R. Co., 326 U.S. 549, 554, 66 S. Ct. 284, 287, 90 L. Ed. 311, 'It (the doctrine) was designed as an 'instrument of justice.' Maintenance of a suit away from the domicile of the defendant -- whether he be a corporation or an individual -- might be vexatious or oppressive.' It has been said that the purpose of the section under consideration is 'to afford relief to a defendant by placing him on a footing of equality with a plaintiff in the selection of a forum for the trial of the case', and, therefore, that 'it would be improper to hold * * * that the plaintiff's rights are enlarged thereby and that he may carry the defendant about the country to a forum that best suits his convenience and do so by virtue of the statute.' Barnhart v. John B. Rogers Producing Co., D.C.Ohio 1949, 86 F.Supp. 595, 599. Dufek v. Roux Distributing Co., D.C.N.Y.1954, 125 F.Supp. 716, refused to follow Barnhart in denying a motion for transfer under section 1404(a) made by the plaintiff; but Dufek is factually distinguishable from Barnhart because, as pointed out by District Judge Walsh in Dufek, 'Plaintiff's claim that the convenience of the parties and witnesses and the interest of justice will be served by changing venue is not disputed' and 'neither party has questioned this Court's power to transfer venue under section 1404 * * *.' In the case at bar, the defendants Margulies and Around-the-World emphatically deny that the transfer sought will be for the convenience of the parties and witnesses or in the interest of justice and vigorously contend that, upon the facts disclosed, this Court is without the power to order the transfer.

 It is generally held that a transfer under § 1404(a) is not available to a plaintiff who has voluntarily chosen his own forum. This principle is recognized in Thompson Products, Inc., v. Pennsylvania R. Co., D.C.N.Y.1955, 127 F.Supp. 449, mandamus denied Torres v. Walsh, 2 Cir., 221 F.2d 319, despite the granting of such a plaintiff's motion in that case. But in Thompson Products, after the plaintiff had selected its forum in the action for damages to a shipment over the defendant railroad consigned to the plaintiff, plaintiff learned that the damage had been caused by improper loading by the consignor and therefore sought to join the consignor as a defendant. Since, however, the consignor was not subject to suit in the forum selected by the plaintiff, but both consignor and the railroad could be sued in the District in which the cause of action arose and where most of the witnesses resided, the showing of these circumstances by the plaintiff was held to entitle it to a transfer under the section, because such transfer would operate for the convenience of the parties and witnesses and be in the interest of justice. Thompson Products therefore is not at variance with the principle enunciated in Barnhart that, in the absence of a clear showing of inconvenience to parties and witnesses and of injustice, plaintiff will be held to the forum which he has selected. In McCarley v. Foster-Milburn Co., D.C.N.Y.1950, 89 F.Supp. 643, a plaintiff successfully moved under § 1404(a) but disclosed ample grounds under the criteria specified in the section.

 This Court feels that movant has not shown sufficient justification for the exercise of the Court's discretion to transfer this case from the forum which the plaintiff voluntarily selected. The only affidavits submitted by movants in support of the instant motion are those of Warren L. Schnur, the New York counsel for the plaintiffs, who has appeared in both the New York and the New Jersey actions. Mr. Schnur says that the defendant Margulies is a resident of New York and, therefore, amenable to process in the Southern District of New York, but he adds that 'service upon the said Margulies in the New York action at this time would grant to the said defendant a possible defense of Statute of Limitations as a bar to the action.' Mr. Schnur then concludes, upon the foregoing factual statement, that the venue of the New Jersey action against Margulies should be changed to the Southern District of New York. With respect to Around-the-World, Mr. Schnur concludes that the Southern District of New York would be a more convenient forum for a single trial of the entire action against all of the named defendants because, as he points out, the evidence is the same in both of the pending actions, the witnesses will be identical 'and substantial savings of money and time will enure to all of the parties as well as to this Court.' The deponent then proceeds to review the proceedings which have already been taken in the New York action, points out that Margulies has been present and represented by counsel at most of the discovery depositions therein, and that it was found, after the New Jersey action was commenced, that Margulies actually resided in the State of New York, despite his representations that he resided in New Jersey, and despite the fact that he was personally served in the latter State. In further support of his conclusion that a denial of the motion will cause severe hardship to the plaintiffs, Mr. Schnur says 'This is so, because as Daniel Gersen, Esq., the New York attorney for Margulies so aptly stated to me, by maintaining the two actions, one in New York and one in New Jersey, Margulies in effect 'gets two bites out of the apple'.' Mr. Schnur admits that after unsuccessful attempts to serve Margulies at his alleged residence in New York, the New York attorney for Margulies offered to make his client available for service in that jurisdiction. The plaintiff's representations and contentions may be fairly and more succinctly summarized in the statement that although they first selected the New York forum for the litigation of the claims which ...


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