124 F. Supp.2d 16 (2000) | Cited 0 times | D. Massachusetts | November 16, 2000



This case involves a contract dispute between VeryfineProducts, Inc. ("Veryfine"), a Massachusetts corporation engagedin manufacturing fruit juices and other beverages under its ownlabel and for sale under the labels of other companies, and PhloCorporation ("Phlo"), a Delaware corporation with a principalplace of business in New York City engaged in the business ofselling iced teas, lemonades and fruit flavored beverages underthe label "McCoy's."

The issue that was before this Court on oral hearing onFebruary 3, 2000, concerned the existence of a duplicativelawsuit filed by the Defendant Phlo against Veryfine on October26, 1999, in the New York State Supreme Court, exactly one dayafter this action was filed by Veryfine here in the United StatesDistrict Court for the District of Massachusetts. TheNew York State action was subsequently removed by Veryfine to theUnited States District Court for the Southern District of NewYork (the "Southern District"). Subject matter jurisdiction inboth suits is premised on the diversity of the parties.

Phlo has brought this Motion to Dismiss, Transfer or Stay theaction before this Court primarily on the grounds that venue ismore appropriate in the Southern District of New York. OnFebruary 3, 2000, after oral argument, this Court DENIED theMotion to Dismiss, Transfer or Stay. This memorandum sets out thereasons for that ruling.


The following facts are taken from the Complaint, unlessotherwise indicated. On April 27, 1999, Veryfine and Phlo enteredinto a written Contract Manufacturing & Packaging Agreement (the"Agreement") under which Veryfine agreed to manufacture andbottle beverages for Phlo using materials, ingredients, andsupplies provided by Phlo and manufactured in accordance withPhlo's specifications. See Compl. ¶¶ 8-9. Pursuant to theAgreement, Phlo was required to provide a firm schedule of ordersfor the following month's production of its products (i.e. onemonth in advance). Once such a schedule was furnished toVeryfine, it could only be altered by mutual written agreement.The Agreement mandated a minimum production order of 200,000cases per month. See id. ¶ 3. If Phlo did not order the minimumnumber in a given month, it remained liable for the manufacturingfee for the unordered cases unless Veryfine was able to replaceall or part of the production (in which case the fee would bewaived or reduced). Payments were due within 14 days ofVeryfine's invoice date and Veryfine had no obligation tomanufacture products for Phlo during any period of time in whichpayments were overdue. The term of the Agreement was one yearbeginning April 27, 1999. The Agreement provided that it was tobe construed and enforced in accordance with the laws of theCommonwealth of Massachusetts applicable to agreements made andto be performed entirely within Massachusetts.

Veryfine's Complaint alleges that Phlo breached the Agreementalmost from its inception. Among the alleged repeated problemsencountered were failure or refusal to provide productionscheduling orders by the deadline, late provision of suchscheduling orders, production orders that were well below theminimum (e.g. a May production order of only 39,000 cases), andrepeated manufacturing disruption due to problems in delivery ofPhlo's supplies to Veryfine's facility. These failures allegedlycaused Veryfine to produce only a limited number of cases ofproduct by the monthly deadlines. In particular, production inJune had to be rescheduled several times, causing disruption toother scheduled production runs for Veryfine's other customers.The Complaint sets out a pattern of late production orders orsituations in which Phlo tried to reschedule (delay) delivery ofportions of the product in each monthly period. Furthermore,there was allegedly a complete failure to schedule any productionruns in September or October within the time specifications ofthe Agreement. Phlo also allegedly failed or refused to payVeryfine's invoices.

On September 14, 1999, Veryfine sent a letter to Phlo's GeneralCounsel, Anne Hovis, notifying her of the alleged breaches ofcontract and threatening to terminate the agreement if ongoingnonpayment of invoices was not cured within 30 days. As of thedate of the Complaint, those payments were never made.

Veryfine brought this action on October 25, 1999, allegingbreach of contract and breach of the covenant of good faith andfair dealing, and requesting, in addition to monetary damages,declaratory relief that it is not obliged to furnish any furtherservices to Phlo. Phlo's lawsuit, with its own claims brought onsubstantially the same facts (from Phlo's point of view), wasfiled in the New York State Supreme Court on October 26, 1999.


A. Motion to Dismiss

Phlo seems to have confused venue with jurisdiction, for in itsmotion papers it has asked, in addition to a change of venue, fordismissal of the Massachusetts action in favor of the action inthe Southern District of New York. Issues pertaining to thisCourt's deference to the Southern District of New York are bestanalyzed as a venue matter. Phlo has also questioned the amountin controversy, however, a matter of subject matter jurisdictionwhere dismissal may indeed be the appropriate remedy.

Veryfine's Complaint alleges losses and damages including butnot limited to outstanding overdue invoices in the amount of$56,869.94.1 Veryfine also generally alleges lost production,disrupted scheduling of its production lines, interference withits commitments to other customers, and lost good will. SeeCompl. ¶ 42. Phlo argues, quite correctly, that $56,869.94, withnothing more, fails to satisfy the jurisdictional amountrequirement of $75,000.01. Veryfine rebuts that argument byindicating that the $56,869.94 amount is only one specificallyidentified portion of its damages. According to the SupplementalAffidavit of Mark Thurber, Veryfine's General Counsel, Veryfineis still in the process of calculating its damages."[P]reliminary calculations indicate that the amount of damagesthat Veryfine has suffered as a direct result of Phlo's breachesof the Agreement with Veryfine will exceed $300,000." ThurberAff. ¶ 4.

When faced with a motion to dismiss for failure to show therequisite amount in controversy, a plaintiff may satisfy itsburden of proving jurisdiction "by showing that it does notappear to a legal certainty that its claim is for less than thejurisdictional amount [citation omitted] . . . by amending thepleading or by submitting affidavits which sufficientlysubstantiate the alleged amount in controversy." Hardemon v.City of Boston, 144 F.3d 24, 26-7 (1st Cir. 1998). Theoutstanding invoices alone are alleged to be over $56,000. Thedisruption to the business could easily constitute $19,000, andan affidavit before this Court shows that it could be muchgreater than that.2 Thus it does not appear to a legalcertainty that Veryfine's claim is for less than thejurisdictional amount. The motion to dismiss on this ground wastherefore DENIED.3

B. Motion to Transfer Venue

Phlo asked this Court to transfer this case to the SouthernDistrict of New York, where its own duplicative lawsuit was filedone day after the filing of this suit by Veryfine.

1. Procedural and Factual Posture

Resolution of the venue issue requires an understanding of thetiming and circumstances surrounding procedural events in thiscase. According to Phlo, after the pattern of disruption inproduction, which each party attributes to the other, officersof the two corporations engaged in a series of telephone andwritten communications in an attempt to address the problems.See Def.'s Mot. at 5. On October 25, 1999, Phlo notifiedVeryfine that it intended to file an action in New York StateSupreme Court the following day. Phlo claims that Veryfine didnot indicate any intention to sue Phlo at that time. That sameday, in what Phlo believes to be an apparent effort to reach thecourthouse door first, Veryfine filed the instant action. Phlofiled its New York State action the next day (October 26)alleging breach of contract, tortious misrepresentation, breachof the covenant of good faith dealing, and negligence. See 6. On November 24, 1999, Veryfine filed a Notice of Removalwhich removed the case from the New York State Supreme Court tothe United States District Court for the Southern District of NewYork. On December 2, 1999, Veryfine filed a motion to Dismiss,Transfer or Stay the Southern District action which appeared tobe pending at the time of this Court's ruling.

Veryfine admits that threats of litigation were contained inthe various discussions between the principals and counsel of thecorporations in their efforts to resolve their differences. SeePl.'s Opp'n at 6. Veryfine claims that such threats were made onmore than one occasion and were taken as a negotiation tacticrather than notification of an imminent lawsuit. See id. at 12.Thus, Veryfine sees the timing of the lawsuits either ascoincidence or as Phlo's rapid next-day response to its actuallyhaving been sued in Massachusetts.

2. Theory of Implied Waiver

Veryfine's Notice of Removal to the Southern District reads,"Veryfine removes this case to this court and requests that thisCourt assume jurisdiction of the case and take all further actionas may be required to determine this controversy." Def.'s Mem. atEx. E at 2. Phlo argues that this sentence in the Notice ofRemoval expresses Veryfine's assent to venue in the SouthernDistrict and that Veryfine cannot claim that venue is moreappropriate here.

Phlo has misunderstood the concept of venue. Veryfine's requestto the Southern District may evidence a consent to jurisdictionin the Southern District. Venue, however, is not a jurisdictionalissue. When Veryfine requested that the Southern District takecharge of the case, it implicitly included in that request thatthe Southern District be empowered to make decisions respectingvenue of the case. State court defendants should not be requiredto include in their Notice of Removal a phrase that reads,"Defendants reserve and do not waive the right to challengevenue," in order to preserve that right after removal.

As the Second Circuit has noted, "[a] party who removes anaction from state to federal court does not, in so doing, waivethe defense of improper venue as to the underlying state courtaction." PT United Can Co. Ltd. v. Crown Cork & Seal Co., Inc.,138 F.3d 65, 72 (2d Cir. 1998) (citing Moss v. Atlantic CoastLine R.R. Co., 157 F.2d 1005, 1006 [2d Cir. 1946] [A "defendantis not precluded from having the suit dismissed because itsmotion to remove was in any sense the waiver of a right, for ithas waived nothing by taking that action"]); Greenberg v.Giannini, 140 F.2d 550, 553 (2d Cir. 1944). As Learned Handfurther explained:

At times courts have indeed spoken as though removal to a federal court "waived" some defect of venue. . . . When a defendant removes an action from a state court in which he has been sued, he consents to nothing and "waives" nothing; he is exercising a privilege unconditionally conferred by statute, and, since the district court to which he must remove it is fixed by law, he has no choice, without which there can be no "waiver."

Greenberg, 140 F.2d at 553 (citations omitted).

This Court appears to have disagreed with this conclusion inJMTR Enter., L.L.C. v. Duchin, 42 F. Supp.2d 87, 99 (D.Mass.1999). Therein, this Court wrote, "removal of an action to aproper forum under § 1441(a) frequently has been considered awaiver or cure of any defect in the original venue of the removedaction. . . . The Daikon Group removed this action from theMiddlesex Superior Court. The District of Massachusetts is theproper venue for an action removed from Middlesex Superior Court.. . . Thus, the Daikon Group cannot now argue that venue in theDistrict of Massachusetts is improper." Id. at 99. Thatconclusion, however, was reached by this Court when sitting inconsideration of an action removed to this Court itself. Theproper forum for the question in the Veryfine case is theSouthern District, which must consider whether the challenge tovenue was waived by Veryfine's removal. This Court's review ofthe Second Circuit precedent suggests that the answer to thatquestion is in the negative. Regardless, the implied waiver ofimproper venue in another forum says nothing about whether venueis proper here. The real question is whether discretionarytransfer should occur as between two jurisdictions vested withproper venue. That question is analyzed infra.

3. Timeliness of Motions Filed

Phlo argues that Veryfine failed to make a timely motion in theSouthern District objecting to venue there and thus has waivedits claim that venue is more appropriate here. The petition toremove was filed on November 24, 1999, resulting in a five-dayextension of time to respond to the Complaint under Fed.R.Civ.P.81(c). Veryfine did not file its motion to dismiss until December2, 1999, which is eight full days after the removal petition.See Def.'s Mot. at 3.

Phlo's calculation is incorrect. Rule 6(a) of the Federal Rulesof Civil Procedure provides that "[w]hen the period of timeprescribed or allowed is less than 11 days, intermediateSaturdays, Sundays, and legal holidays shall be excluded in thecomputation." Thanksgiving Day is a legal holiday, and November27th and 28th were weekend days. Therefore, using the guidelinesin Rule 6(a), Veryfine timely filed its motion on the fifth day,within the limit. Phlo's motion on this ground was thereforeDENIED.

4. Standards for Transfer of Venue

If venue is deemed proper in Massachusetts, Phlo seeks transferof venue pursuant to 28 U.S.C. § 1404(a), which reads: "For theconvenience of the parties and witnesses, in the interest ofjustice, a district court may transfer any civil action to anyother district or division where it might have been brought.""Section 1404(a) is a codification of the doctrine of forum nonconveniens." Albion v. YMCA Camp Letts, 171 F.3d 1, 2 (1st Cir.1999).

"Where identical actions are proceeding concurrently in twofederal courts, entailing duplicative litigation and a waste ofjudicial resources, the first filed action is generally preferredin a choice-of-venue decision." Cianbro Corp. v. Curran-Lavoie,Inc., 814 F.2d 7, 11 (1st Cir. 1987). See also Nowak v. Tak HowInvestments, Ltd., 94 F.3d 708, 719 (1st Cir. 1996) (there is a"strong presumption in favor of a plaintiff's forum choice,[against which] the defendant must bear the burden of proving . .. that considerations of convenience and judicial efficiencystrongly favor litigating the claim in the alternative forum").In Nowak, the First Circuit quoted the Supreme Court's decisionin Koster v. Lumbermens Mut. Cas. Co., 330 U.S. 518, 524, 67S.Ct. 828, 91 L.Ed. 1067 (1947) for the proposition that aplaintiff should not be deprived of the advantages of its ownchoice of jurisdiction except upon a clear showing of facts whicheither "(1) establish such oppressiveness and vexation to adefendant as to be out of all proportion to plaintiffsconvenience, which may be shown to be slight or nonexistent, or(2) make trial in the chosen forum inappropriate because ofconsiderations affecting thecourt's own administrative or legal problems." 94 F.3d at 720.Thus, the fact that Veryfine filed its suit first ordinarilywould preclude a transfer of venue to the court of the secondfiling. There are, however, certain exceptions.

5. Special Circumstances

Courts have recognized that there may be an exception to the"first filed" rule when there are "special circumstances"justifying a transfer. These circumstances are usually found insituations in which one party has won a race to the courthouse byjumping the gun and filing a declaratory judgment action in aforum that has little relation to the dispute.

In Davox Corp. v. Digital Sys. Int'l, Inc., 846 F. Supp. 144(D.Mass. 1993) (Wolf, J.), Judge Wolf declined to exercisejurisdiction over Davox's patent infringement suit in favor of aduplicative suit in the Western District of Washington. "Ratherthan responding to the invitation to enter into discussions toresolve the matter, as Davox represented it would, Davox filedthis action in an evident effort to obtain a forum moreconvenient to it than the Western District of Washington." 148. In reaching this conclusion, Judge Wolf wrote, "Davoxshould not be permitted to take advantage of the fact that DSIresponsibly deferred filing potentially protracted and expensivelitigation and, indeed, was perhaps misled into believing itwould not be prejudiced by doing so by Davox's responses to itsletters." Id. See also Factors, Etc. v. Pro Arts, Inc.,579 F.2d 215, 219 (2d Cir. 1978) ("When the declaratory judgmentaction has been triggered by a notice letter, this equitableconsideration may be a factor in the decision to allow the laterfiled action to proceed to judgment in the plaintiffs' chosenforum.").4 The pattern that emerges from the cases indicatesthat transfer may be appropriate where a party has won the raceto the courthouse by misleading his opponent into staying hishand in anticipation of negotiation; or by reacting to notice ofimminent filing by literally sprinting to the courthouse the sameday. The first-filed suit is particularly suspect where a party,as in Davox, has brought a declaratory judgment action fornon-infringement. The true underlying claim, of course, waspatent infringement, and in cases such as this the circumstancesdemonstrate that the winner of the race to the courthouse shouldnot enjoy the presumption of preferable venue.

Phlo cites Firmani v. Clarke, 325 F. Supp. 689, 693 (D.Del.1971) for the proposition that a plaintiff's choice of forum isnot entitled to great weight when it involves simply "winning therace to the courthouse door." Firmani was a case, however, thatinvolved a putative securities class action lawsuit where threerelated suits were to merge into one for convenience of the classaction. The courts thus had to select the venue for theconsolidated case. The court did not attach weight to the firstparty to reach the courthouse door because the conveniences ofwitnesses and other parties suggested that one of the other twowas the best venue for the case. Firmani was thus a case abouttransfer as among multiple cases brought by different plaintiffs,not about transfer as between a first-to-file plaintiff and asecond-to-file defendant. The Firmani court chose among severalplaintiffs; it did not choose between the plaintiff and thedefendant. Firmani thus cannot act to overcome the presumptionthat a plaintiff is entitled to his forum choice as against asubsequent duplicative suit brought in another venue by theoriginal defendant.

Although a suit initiated immediately in response to a threatof suit may raise the question of whether the emergingplaintiff merely won a race to the courthouse, the analysis isdifferent when negotiations are ongoing and both sides are awarethat litigation could occur at any time, brought by either side.When the negotiations are long-term and ongoing and there is nofalse implication that a party will refrain from litigationduring those negotiations, the first-filed presumption may remainintact. See GT Plus, Ltd. v. Ja-Ru, Inc., 41 F. Supp.2d 421,425-7 (S.D.N.Y. 1998) (where parties had communicated for severalmonths without resolving their dispute, the first-filed actiondid not cut off a promising dialogue, nor did the plaintifftherein falsely imply that it would refrain from litigation).That is to say, the emerging plaintiff is not said to have"jumped the gun" by racing to the courthouse ahead of an opponentwho has indicated an ongoing and continuous threat of litigation.

According to the Affidavit of Anne P. Hovis, Phlo's ExecutiveVice President and General Counsel, the parties were involved innegotiations in early October 1999. See Hovis Aff. ¶¶ 3-9.Sometime during the middle of October, after an unproductivetelephone call with Veryfine's General counsel Mark Thurber, AnneHovis spoke to James Hovis, President and CEO of Phlo, and theydecided to file a complaint. That complaint was drafted duringthe next couple of days, and on October 25, a "courtesy copy" wassent to Thurber informing him that the complaint would be filedthe next day. There was, however, no documentary evidence, suchas a cover letter, of this courtesy copy in the record beforethis Court. According to Anne Hovis, on October 26, she receiveda facsimile transmission from Robert Ciociola, enclosing a copyof the Veryfine complaint which he stated had been filed byVeryfine on October 25 at 2:39 p.m. (The court's filing receiptshows 2:46 p.m.) After she received the fax, Anne Hovis spokewith Mr. Ciociola by telephone and informed him that she hadauthorized the filing and service of Phlo's New York Complaintthe previous day. Phlo's Complaint, however, was filed on October26, 1999 at 3:08 p.m.5

Anne Hovis' affidavit thus seems to establish a factualscenario in which Veryfine may have had actual notice of a suitto be filed the very next day and managed to file the same dayas the notice, either through the Herculean efforts of its legaldepartment that very same day, or through the submittal of acomplaint drafted in anticipation of an appropriate opportunityfor filing. This Court finds it compelling that Phlo had drafteda complaint and actually sent that Complaint to Veryfine onOctober 25th. Although it would be preferable to see tangibleevidence of that delivery,6 Anne Hovis' affidavit isuncontradicted on the point that she sent the courtesy copy.There is a flaw, however, in her affidavit. It merely indicatesthat she sent the courtesy copy to Veryfine, and does notpurport to confirm that Veryfine actually received notice of theimpending lawsuit. It also does not indicate the method oftransmission — whether it was by instantaneous facsimile or bynormal mail that could take a couple of days. It is quitepossible that the close timing of the lawsuits was merely thecoincidence of two parties in an ongoing commercial dispute. Inthat case, this Court would have no reason to believe thatVeryfine actually raced to the courthouse. Rather, it arrivedthere first on its own, and Phlo happened to follow close behind.

Veryfine did not deny that it had actual notice of Phlo'simpending lawsuit to be filed the next day. It does allege in itsComplaint that it indicated its displeasure with the way thecontract was being performed in a letter of September 14, 1999.See Compl. ¶ 36. This indicates that the threat of litigationwas present for several weeks prior to the lawsuit, but it failsto contradict Phlo's assertion that negotiationswere ongoing and that Veryfine decided to strike when it learnedthat Phlo was about to file suit. Thus Veryfine's revelation,supported by Hovis' own affidavit, supports the conclusion thatnegotiations were ongoing and that this was not a situation inwhich Phlo would have been surprised to find itself sued byVeryfine in early October. This case, at least until October 25,1999, does not qualify for an avoidance of the first-to-file rulebecause no representations were made that litigation ought bestayed pending negotiations.

The question remains as to whether Veryfine's presumption ofpreferable venue resulting from its first-filing status should beoverlooked because it had actual notice of an imminent complaintand literally ran out of door of its office on the very same dayto beat its opponent in order to secure home-court advantage.Hovis' affidavit lends support to that theory but falls short ofbearing Phlo's burden of persuasion on a transfer of venue motionbecause she has not shown that Veryfine actually knew of theimmediately impending suit and then chose to usurp venue by aninstantaneous filing. Perhaps these facts will come to light indiscovery, but at the time of the oral hearing there wasinsufficient evidence to grant a transfer of venue on the basisthat Phlo's General Counsel "sent" a courtesy copy of theComplaint to the prospective opponent. This is especially sowhere no documentary proof has been submitted of thattransmission.

6. The Balance of Conveniences

Finally, Phlo attempts to persuade this Court to transfer thecase to the Southern District on the grounds that the burdens oflitigating here far outweigh any benefits. Under28 U.S.C. § 1404(a), this Court has discretion to transfer a matter toanother District Court by virtue of the convenience of theparties and witnesses and in the interest of justice. Courtsessentially look to the forum non conveniens factors to make thisdecision, and examine the relative convenience to each of theparties, the "relative ease of access to sources of proof," the"availability of compulsory process for attendance of unwilling"witnesses, and the relative availability of documentary andtangible evidence, as well as the public interest in theadministration of justice, including trial efficiency. Gulf OilCorp. v. Gilbert, 330 U.S. 501, 508-09, 67 S.Ct. 839, 91 L.Ed.1055 (1947). Section 1404(a) provides the District Court withsomewhat greater discretion than it had in the traditional forumnon conveniens analysis. See Mercier v. Sheraton Int'l Inc.,935 F.2d 419, 424 n. 4 (1st Cir. 1991), citing Piper AircraftCo. v. Reyno, 454 U.S. 235, 253, 102 S.Ct. 252, 70 L.Ed.2d 419(1981). The balancing analysis remains similar, however.

Phlo claims the following facts which it argues indicate eithera burden on it, or a factor of convenience in favoring trial inNew York:

(1) Phlo has six employees, all of whom were involved in the Agreement negotiations and will be witnesses at trial. Litigation in Massachusetts would be a "hardship." Def.'s Mot. ¶¶ 31, 35;

(2) Several key witnesses for Phlo are employees of Technical Flavor and Fragrance, Inc., and Comax Manufacturing Corp., both headquartered in New York State and both having employees residing in the New York City area. Other key witnesses testifying as to damages are from New York, New Jersey, and Pennsylvania. See id. ¶ 32;

(3) Most of the documentary and tangible evidence which Phlo intends to introduce at trial is located in New York City. See id. ¶ 34;

(4) Veryfine is a relatively large company with 426 employees, but only six to eight of them dealt with Phlo on a regular basis. See id. ¶ 36;

(5) The required testimony of Phlo's employees and the continued presence at trial of at least one employee would completely disrupt Phlo's small operation. See Def.'s Mot. ¶ 7. This burden would not be mirrored by the burden on Veryfine if trial were in New York because Veryfine is a large corporation. A trial in Massachusetts will also require the cost of transporting witnesses to Boston; and

(6) The Agreement said only that its terms are to be construed in accordance with the laws of Massachusetts, and did not include a selection of forum or venue. See id. ¶ 11. The New York courts may easily apply Massachusetts law. Furthermore, Massachusetts law will not necessarily govern the non-contract negligence claims in the action.

Phlo urges that these are the circumstances and factors thatindicate the burden of litigating in Massachusetts outweighs thebenefit and public interest in so litigating. Veryfine respondswith its own arguments and examples of factual circumstances insupport of the opposite conclusion:

(1) Some Phlo representative will be likely to attend trial every day regardless of its actual location. The "disruption" is the same;

(2) The burden on third-party witnesses in traveling to Boston instead of to New York is negligible;

(3) While correspondence is in the possession of both parties, the bulk of the documents relevant to disputes at issue are in Littleton, Massachusetts, the site of the plant. These include invoices, storage records, shipment records, delivery records, etc.;

(4) Phlo has charged Veryfine with misrepresentation about the capability of the production line. A "site visit" may be necessary to resolve certain factual issues;

(5) All of the operative events at issue took place in Massachusetts. That is where performance was to occur and where breach is alleged to have occurred. There is thus a nexus between the dispute and Massachusetts;

(6) One of Phlo's key witnesses, Kenneth Venti (the former Vice President and CFO) is now President and CEO of a beverage company in Massachusetts and resides in Needham, Massachusetts, not in New York;

(7) A Massachusetts federal court may be presumed to have greater familiarity with Massachusetts law than a New York federal court. Although there was no forum selection clause in the contract, this presumption weighs in favor of Massachusetts as the forum;

(8) Phlo did nothing in the execution or performance of the Agreement to avail itself of the forum of New York in particular. Phlo is a Delaware corporation that happens to have an office in New York. New York is no more appropriate a place for the suit than any other;

(9) Phlo was fully aware it was entering into an agreement with Massachusetts and its employees regularly traveled to Massachusetts in conjunction with performance of that contract. It delivered the raw materials here. It rented warehouse space near the Veryfine plant to store those materials. It had its customers pick up products from the Massachusetts plant;

(10) No Veryfine employee ever visited New York in connection with this contract or any other dealing between these litigants; and

(11) As noted by this Court in Coady v. Ashcraft & Gerel, 996 F. Supp. 95 (D.Mass. 1998), the difference between Boston and New York is minimal and the District of Massachusetts has a low average caseload and ample judicial resources to handle this case expeditiously.7

This Court DECLINED to transfer the suit to New York. Theseparties have only shown the common "hardships" associated withcivil litigation, namely travel, employee absence, documentproduction, etc. Phlo should not be entitled to deference becauseits operation is small. It is still liable to answer for itsalleged contractual breaches wherever it may be sued upon thosebreaches.

Furthermore, it is not a hardship to travel from New York toBoston in order to appear for a civil trial.8 Phlo is not astranger to paying the cost of transportation to send its agentsinto Massachusetts to contract with Massachusetts corporation. Itcannot now claim that such transportation is an unreasonableburden simply because the matter at issue is litigationsurrounding one of those contracts. The difference between Bostonand New York is even smaller. Furthermore, the record shows thatPhlo repeatedly sent representatives to Veryfine's facilities inMassachusetts in order to negotiate the contract and examine thefacilities. If those visits were not burdensome at the inceptionof the contract, they cannot be said to be unusually burdensomeafter the contract has been breached, absent other compellingcircumstances. Because this is primarily a contract claim, thedocuments appear to be in the possession of both parties and thusthe relative convenience of an alternative forum is negligible.To the extent that the capabilities of the manufacturing facilityare at issue, the evidence is located entirely in Massachusetts.Finally, this is a case in which a New York company approached aMassachusetts company and engaged in a contract in which therewould be production activities within Massachusetts. Thus thecase concerns the operations and financial interests surroundingproduction of goods within Massachusetts. The Commonwealth has asignificant interest in adjudicating that case within itsborders, and New York has a lesser interest in Phlo, a Delawarecorporation. For these reasons, the motion to transfer wasDENIED.

C. Motion to Stay

Finally, Phlo asks this court to stay the action pending aresolution of the venue issue in the Southern District. Wherethere is a "likelihood of substantial overlap" between twolawsuits pending in two federal courts, "a stay of the secondfiled action" may be "appropriate in order to permit the court ofthe first filing to rule on the motion to transfer." Boston andMaine Corp. v. United Trans. Union, 110 F.R.D. 322, 330 (D.Mass.1986) (Wolf, J.).

This Court is not, however, the court of the second action. Itis the court of the first filed action. Furthermore, motionsappeared to be pending at the time of the oral hearing in theSouthern District that would resolve whether that action is tocontinue in that forum. This Court found no reason to stay itshand in the interim. Indeed, any "staying of the hand" is herethe province of the Southern District. The motion to stay theaction in this forum was therefore DENIED.


For the above reasons, this Court DENIED Phlo's Motion toDismiss, Transfer or Stay.

1. Phlo asserts that this amount is exaggerated and fails totake account of set-offs and reductions for payment make toVeryfine amounting to $11,571.92. See Def. Mem. at 13, n. 5.

2. Although not argued by Veryfine, the $56,869.94 figure alsoseems to fail to take into account Veryfine's lost profits on theremainder of the contract, through April 27, 2000, in which Phloapparently would be obliged to make monthly production requestsof at least 200,000 cases. Oddly, Veryfine's Complaint does notappear to seek expectation damages on the remainder of thecontract. Such damages would add to the showing of thejurisdictional amount.

3. Phlo's separate suit in the Southern District of New Yorkclaims $5,000,000 in damages. Although that action could verywell become a counterclaim in the suit here, it has not beenweighed in determining the jurisdictional amount. The pointremains, however, that Phlo's assertion that this is a "smallpotatoes" case is unsubstantiated.

4. Rev'd on other grounds 652 F.2d 278, cert. denied456 U.S. 927, 102 S.Ct. 1973, 72 L.Ed.2d 442, on remand 541 F. Supp. 231,reh'g denied 701 F.2d 11, stay vacated 562 F. Supp. 304.

5. A time-stamped receipt is in the record.

6. The record did not contain a copy of the courtesy copy.

7. Although Coady was subsequently reversed, 223 F.3d 1, 4(1st Cir. 2000), this Court adheres emphatically to the viewsexpressed in Coady concerning the desirability of allocatingjudicial business where it can be handled most efficiently, 996F. Supp. at 100. The appellate panel's vigorous questioningprompted by this aspect of that opinion, however, makes itprudent to point out that the result here would be the same evenin the absence of this factor.

8. Flying time from La Guardia airport to Logan airport isapproximately 40 minutes, and the new Federal Courthouse inBoston is but a short distance from the airport. Depending ontraffic, that could conceivably be a shorter total time than acommute from certain northern New York City suburbs to theSouthern District courthouse in lower Manhattan.

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