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Whitmire Distribution Corp. v. Diamond Drug

June 14, 2004


Dilworth Paxson Llp By: John Lewis Laskey, Esq. Liberty View - Suite 700 457 Haddonfield Road P.O. Box 2570 Cherry Hill, NJ 08002 Counsel for Plaintiff Sternleib & Dowd, Llc By: Peter James Herrigel, Esq. One University Plaza Hackensack, New Jersey 07601 Counsel for Defendant

The opinion of the court was delivered by: Honorable Joseph E. Irenas

This matter having appeared before the Court upon Defendant Diamond Drug, Inc.'s Motion to Dismiss, pursuant to Fed. R. Civ. P. 12(b)(2), the Court having reviewed the submissions of the parties, and it appearing that:

1. Whitmire Distribution Corporation ("Whitmire"), a pharmaceutical distributor doing business as Cardinal Health Pharmaceutical Distribution, brings the present action against the Defendant, Diamond Drug, Inc. ("Diamond"). Whitmire accuses Diamond of breach of contract. Whitmire is a subsidiary of Cardinal Health, Inc. ("Cardinal"), a vendor of pharmaceutical, medical, and surgical products. Diamond presently contests personal jurisdiction and alternatively requests transfer of venue.

2. Diamond operates a single drug store in Gaithersburg, Maryland. Diamond is a member of CARE Pharmacies, Inc. ("CARE"), an organization comprised of many individual pharmacies. On March 25, 2003, CARE entered into a prime vendor agreement with Cardinal. Whitmire is indicated on the prime vendor agreement. (Ejtemai Aff. Ex. 3.) From March 2003 to May 2003, Diamond purchased cyclobenzaprine, atenolol, and minocycline from Cardinal. During this period Cardinal's supplier increased the prices of all three drugs. In response, Cardinal requested that Diamond pay an additional $197,323.20. Cardinal maintains that the request was made pursuant to a "chargeback" reimbursement provision in the prime vendor agreement made with CARE. Diamond refused Cardinal's reimbursement request and Cardinal instituted the present action to recover the disputed sum.

3. Diamond brings the present motion challenging personal jurisdiction and alternatively requesting transfer of venue to the District of Maryland. Diamond argues that: (1) it lacks the minimum contacts necessary to be subject to personal jurisdiction in New Jersey; and (2) that a transfer of venue in the District of Maryland is warranted, pursuant to 28 U.S.C. § 1404(a). The Court's diversity jurisdiction in this action is based upon 28 U.S.C. * 1332. Diamond's motion to dismiss will be denied.

4. Exercise of personal jurisdiction by a federal court sitting in diversity is appropriate where: (1) the long arm statute of the state in which the court sits permits the exercise of personal jurisdiction; and (2) exercise of jurisdiction by the court does not exceed the Constitutional due process limit. See Pennzoil Prods. Co. v. Colelli & Assocs., Inc., 149 F.3d 197, 200 (3d Cir. 1998). In New Jersey the tests are consolidated because New Jersey's long arm statute, N.J. Civ. Prac. R. 4:4-4, permits exercise of personal jurisdiction to the Constitutional limit. See DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 284 (3d Cir. 1981). Once the defendant raises the defense of lack of personal jurisdiction, the plaintiff has the burden of proving that the defendant has purposefully availed itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws. See Hanson v. Denckla, 357 U.S. 235, 253 (1958). *fn1 The plaintiff must prove that the court has personal jurisdiction over the defendant by a preponderance of the evidence. Time Share Vacation Club v. Atlantic Restorts, Ltd., 735 F.2d 61, 66 (3d Cir. 1984).

5. In this case, Diamond has purposely availed itself of the benefits and protections of the laws of New Jersey. Purposeful availment can be established through the course of business dealings between the parties. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 479 (1985); see also Mellon Bank (East) PSFS, Nat'l Ass'n v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992) (finding that payment, documentation and correspondence in forum state constitutes purposeful availment). Diamond was clearly engaged in significant commerce with a New Jersey business and therefore it is subject to personal jurisdiction in New Jersey.

6. Beginning in 2001, all products purchased by Diamond from Cardinal were shipped by Whitmire from Whitmire's location in Swedesboro, New Jersey. (Seklecki Aff. ¶ 4.) Each shipment indicated a New Jersey address. (Bishop Aff. ¶ 3.) Invoices to Diamond also featured the Swedesboro, New Jersey address. (Bishop Aff. ¶ 3.) Whitmire provided notices regarding closing times and changes in administrative procedure to Diamond indicating the New Jersey address. (Bishop Aff. ¶ 6.) To purchase narcotics from Cardinal, Diamond used a written form mailed to Whitmire in Swedesboro, New Jersey. (Bishop Aff. ¶ 7.) Diamond faxed all payments to Whitmire in Swedesboro, New Jersey. (Bishop Aff. ¶ 4.) The above list quite clearly establishes a course of dealing that constitutes purposeful availment by Diamond of the protections and benefits of the laws of the State of New Jersey. *fn2

7. Diamond also requests a transfer of venue to the District of Maryland. Diamond's request to transfer venue will be denied. Transfer of venue under 28 U.S.C. § 1404(a) *fn3 is appropriate when: (1) venue would be proper in the transferee district; and (2) transfer of venue is in the interests of justice. Jumara v. State Farm Ins. Co., 55 F.3d 873, 878-79 (3d Cir. 1995). Section 1404(a) vests "discretion in the district court to adjudicate motions to transfer according to an individualized, case-by-case consideration of convenience and fairness." Stewart Organization v. Ricoh Corp., 487 U.S. 22, 23 (1988) (quoting Van Dusen v. Barrack, 376 U.S. 612, 622 (1964)). The purpose of this section is "to prevent the waste `of time, energy and money' and `to protect litigants, witnesses and the public against unnecessary inconvenience and expense.'" Van Dusen, 376 U.S. at 616 (quoting Continental Grain Co. v. Barge FBL-585, 364 U.S. 19, 26-27 (1960)). The party moving to transfer the case has the burden of showing why the existing forum is inconvenient. Britanico Underwriters v. Raymond E. Wallace Prods., Inc., 56 F.Supp.2d 542, 545 (E.D. Pa. 1999).

8. Diamond fails to show that the balance of factors in the present case strongly favor a transfer. When the amount of inconvenience does not strongly favor the defendant, then there should be no transfer of venue. Shutte v. Armco Steel Corp., 431 F.2d 22, 25 (3d Cir. 1970). Diamond's burden in this Court would be no greater than Cardinal's burden in the District Court of Maryland. *fn4 Venue should not be transferred merely to shift an equivalent inconvenience from the defendant to the plaintiff. See Reyno v. Piper Aircraft Co., 630 F.2d 149, 159 (3d Cir. 1980); see also Robinson v. Giarmarco & Bill, P.C., 74 F.3d 253, 259 (11th Cir. 1996).

Based on the foregoing,

IT IS on this 14th day of June, 2004,


1. Defendant's Motion to Dismiss ...

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