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Lomax v. Meracord LLC

United States District Court, Third Circuit

October 16, 2013

REGINA LOMAX, on behalf of herself and others similarly situated, Plaintiff,
MERACORD LLC, and JOHN DOES 1-5, Defendants.


STANLEY R. CHESLER, District Judge.

This matter comes before the Court upon the motion filed by Defendant Meracord LLC ("Defendant" or "Meracord") to transfer venue pursuant to 28 U.S.C. § 1404(a). Plaintiff Regina Lomax ("Plaintiff" or "Lomax") has opposed the motion. The Court has considered the papers filed by the parties and proceeds to rule on the motion without oral argument, pursuant to Federal Rule of Civil Procedure 78. For the reasons discussed below, the Court will grant Meracord's motion and transfer this action to the United States District Court for the Western District of Washington.


This putative class action arises out of Plaintiff Lomax's subscription to the "Debt Settlement System" offered by third party P&E Solutions and her agreement to receive the payment processing services of Defendant Meracord in connection therewith. Lomax, a resident of New Jersey, retained the debt settlement services of P&E, which, according to the First Amended Complaint, agreed to negotiate with her creditors. To make the monthly payments required under her agreement with P&E, Plaintiff signed a "Signup Agreement" with Defendant Meracord, authorizing Meracord to debit Lomax's bank account and disburse the money to creditors. Defendant Meracord is Delaware limited liability company, whose sole member is a citizen of the State of Washington. Meracord maintains its principal place of business in Washington.

The "Signup Agreement" states that Meracord (formerly known as "NoteWorld") would provide Lomax with services subject to the Agreement's "Terms and Conditions." Among the listed "Terms and Conditions" is a forum selection clause. It provides as follows:

Acceptance; Governing Law; Venue. NoteWorld shall not be bound by the Signup Agreement and no contract will exist until NoteWorld acknowledges acceptance, renders for Customer any of the Services subscribed for herein, or otherwise indicates its acceptance. The Signup Agreement shall be deemed to have been accepted, if at all, by NoteWorld in the state of Washington. The Signup Agreement will be governed by the laws of the State of Washington. Any and all legal action must be transacted or brought in a court located in the State of Washington.

(Signup Agreement, Terms and Conditions, ¶ 8, attached to First Amended Complaint as Ex. B.)

On November 7, 2012, Plaintiff initiated her lawsuit in New Jersey state court, asserting three causes of action pursuant to New Jersey statutes. She filed it as a putative class action, on behalf of other New Jersey residents. On March 27, 2013, Defendant removed the action to this Court, on the grounds that this Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332(d).


Meracord moves to transfer this action to the Western District of Washington pursuant to 28 U.S.C. § 1404(a). That provision states: "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 or to any district or division to which all parties have consented." 28 U.S.C. § 1404(a). To transfer an action under § 1404(a), venue must be proper both in the transferor court and the transferee court. Osteotech, Inc. v. GenSci Regeneration Scis., Inc. , 6 F.Supp.2d 349, 357 (D.N.J.1998). The party seeking to transfer must show that the alternative venue is not only adequate, but also more convenient than the current one. Jumara v. State Farm Ins. Co. , 55 F.3d 873, 879 (3d Cir.1995); Ricoh Co., Ltd. v. Honeywell, Inc. , 817 F.Supp. 473, 480 (D.N.J.1993). The Third Circuit has held that "[s]ection 1404(a) transfers are discretionary determinations made for the convenience of the parties and presuppose that the court has jurisdiction and that the case has been brought in the correct forum." Lafferty v. St. Riel , 495 F.3d 72, 76-77 (3d Cir. 2007).[1]

Meracord's motion to transfer venue properly falls within the purview of § 1404(a), as both the District of New Jersey and the proposed transferee district would serve as proper venues for this action. The statute governing venue, 28 U.S.C. § 1391, provides that a civil action may be brought in "a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located." 28 U.S.C. § 1391(b)(1). The only Defendant named in this lawsuit, Meracord, resides in the State of Washington, making the federal district courts of Washington appropriate venues. The statute also provides that a civil action may be brought in "a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred." 28 U.S.C. § 1391(b)(1). Lomax, who resided in New Jersey at all relevant times, executed the Signup Agreement and generally received, or was supposed to receive services from Meracord in New Jersey with regard to her debts and accounts.

To determine whether, in its discretion, the Court should order a transfer of the action pursuant to § 1404(a), it must balance various private and public interests. Jumara , 55 F.3d at 879. In Jumara, the Third Circuit provided a list of factors a district court should consider. The private interest factors are: (1) plaintiff's forum preference as manifested in the original choice; (2) the defendant's preference; (3) whether the claim arose elsewhere; (4) the convenience of the parties as indicated by their relative physical and financial condition; (5) the convenience of the witnesses (only to the extent that the witnesses may actually be unavailable for trial in one of the fora; and (6) the location of books and records (only to the extent that the files could not be produced in the alternative forum). Id . The public interest factors are: (1) the enforceability of the judgment; (2) practical considerations that could make the trial easy, expeditious, or inexpensive; (3) the relative administrative difficulty in the two fora resulting from court congestion; (4) the local interest in deciding local controversies at home; (5) the public policies of the fora; and (6) the familiarity of the trial judge with the applicable state law in diversity cases. Id. at 879-80.

Meracord's motion relies heavily on the contractual forum selection clause set forth in the Signup Agreement. The Supreme Court has held that in a federal case grounded in diversity jurisdiction, it is federal law - and particularly § 1404(a) - which governs the district court's enforcement of the forum selection clause in deciding whether to transfer venue. Stewart Org., Inc. v. Ricoh Corp. , 487 U.S. 22, 32 (1988). Thus, the Court must consider this clause within the rubric of the multi-factored analysis the Third Circuit articulated in Jumara. Though a forum selection clause is not dispositive of the question of whether a transfer of venue under § 1404(a) is warranted, it is nevertheless typically given significant weight in the analysis. Id. at 29-31; Jumara , 55 F.3d at 880. The Third Circuit has reasoned that, when balancing the relative convenience of two competing fora in a section 1404(a) transfer analysis, a forum selection clause "is treated as a manifestation of the parties' preferences as to a convenient forum. Hence, within the framework of § 1404, Congress encompasse[d] consideration of the parties' private expression of their venue preferences.'" Jumara , 55 F.3d at 880 (quoting Stewart , 487 U.S. at 29-30)).

Here, the forum selection clause weighs heavily in favor of transferring this action to the Western District of Washington. The clause broadly states that " [a]ny and all legal action must be transacted or brought in a court located in the State of Washington." (Signup Agreement, Terms and Conditions, ¶ 8 (emphasis added)). It applies to the instant legal action, as the Signup Agreement between Lomax and Meracord forms the basis for their relationship and for the services performed by Meracord for Lomax. Thus, though the Complaint states non-contractual theories of recovery, the action has a logical connection to ...

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