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PYROCAP INTERNATIONAL CORP. v. FORD MOTOR CO.

March 31, 2003

PYROCAP INTERNATIONAL CORP. PLAINTIFF,
v.
FORD MOTOR CO., ET AL. DEFENDANT.



The opinion of the court was delivered by: Emmet G. Sullivan, United States District Judge.

MEMORANDUM OPINION AND ORDER

Plaintiff, Pyrocap International Corporation ("Pyrocap"), a manufacturer of fire extinguishing chemicals and equipment, commenced this action against defendant Ford Motor Company, a motor vehicle manufacturer, and its employee, Hank E. Budesky, alleging racial discrimination in violation of 42 U.S.C. § 1981, commercial disparagement, and tortious interference with prospective economic advantage. Presently pending before the Court is defendant's motion to dismiss for failure to state a claim, or in the alternative, to transfer the case to the Eastern District of Michigan. For the reasons stated below, defendant's motion to transfer is hereby GRANTED, and this case shall be transferred to the District Court for the Eastern District of Michigan.

I. BACKGROUND

Plaintiff is an African American owned and managed Virginia corporation. Its principal place of business is located in Springfield, VA. Compl. ¶ 1. Plaintiff also conducts business within the District of Columbia. Compl. ¶ 1. Since 1991, Pyrocap has manufactured, sold, and distributed fire suppression chemicals and equipment, including an environmentally safe fire suppression chemical known as PYROCAP B-136 concentrate, invented by a Native American Pyrocap board member and stockholder, John States. Id. at ¶¶ 8-9. Plaintiff alleges that PYROCAP B-136 has been successfully used by the Fire Departments of the cities of Detroit, MI, Roosevelt, NY, Atlanta, GA, Columbus, GA, and Fresno, CA, as well as the City of Detroit Water and Sewage Department. Id. at ¶¶ 10-22. Additionally, research studies conducted by private laboratories, as well as government agencies, have found PYROCAP B-136 to be both safe and effective. Id. at ¶¶ 17-18.

Plaintiff alleges that in the fall of 1994, Mr. Elliot Hall, a Ford executive officer located in Washington, D.C., forwarded to Derrick A. Humphries, Pyrocap's "Master Salesman/Distributor for PYROCAP B-136 in Michigan," a copy of a document written by Ford Fire Protection Engineer Hank E. Budesky entitled "Review of Pyrocap B-136." Id. ¶ 23. Plaintiff contends that statements made therein, including allegations that the Detroit Fire Department only used PYROCAP B-136 on a single occasion and that its use by that Department led to an increase, rather than a decrease, in the size of a fire, that PYROCAP B-136 had a short shelf-life of two (2) years, and that greater amounts of the product were needed to extinguish fires, thereby increasing the overall cost of its use, were false. Id. ¶ 26. Plaintiff alleges, on information and belief, that Mr. Hall received the report from Dr. Ray Jensen, Director of Ford's Minority Supplier Development program, who in turn received it directly from Mr. Budesky. Id. ¶ 25. Accordingly, plaintiff asserts that Mr. Budesky was aware that Pyrocap was a "minority managed company." Id. ¶ 29.

From 1994 to 1998, members of Pyrocap's sales and marketing staff made repeated efforts to contact Ford, forward product information and research reports to the company, and secure the withdrawal of the allegedly false statements made in the "Review of Pyrocap B-136" document. Id. ¶¶ 27, 32, 33, 36-41. On one such occasion, in November of 1998, Pyrocap salesman Brian Sulzer made a sales call on Mr. Budesky to solicit sales of PYROCAP B-136 two-and-a-half gallon hand-held fire extinguishers, which had been approved for purchase by Ford, and which were already being used by General Motors. Id. ¶ 33. During their conversation, plaintiff alleges that Mr. Budesky repeated the false and disparaging information about PYROCAP B-136 contained in the "Review of Pyrocap B-136" document, and suggested that Pyrocap stick to the "South" where its product "would enjoy more success," presumably referring to Pyrocap's African American management and ownership. Id. ¶ 34.

In February of 1999, Mr. Sulzer made a sales call at Ford's Monroe, MI plant to solicit sales of PYROCAP B-136 concentrate and fire extinguishers, and met with Mr. Tony Selk, the Supervisor of Safety and Security for the plant. Id. ¶¶ 36-37. At the conclusion of the meeting, during which Pyrocap Marketing Manager Jean Bolden participated by telephone, Mr. Selk demonstrated an interest in purchasing plaintiff's products. Id. ¶¶ 38-39. Plaintiff promptly provided Mr. Selk with requested information, and subsequently contacted Mr. Budesky, leaving a message on his voice mail advising him that Ford's Monroe, MI plant had expressed an interest in purchasing PYROCAP B-136. Id. at ¶¶ 39-41.

On or about February 24, 1999, Mr. Budesky sent an e-mail message prohibiting any Ford employee or plant from purchasing plaintiff's products, and advising unknown persons, whose e-mail addresses are listed as "external," not to purchase PYROCAP B-136. Id. ¶ 42. It appears from a hard copy of the e-mail that more than 50 persons received Mr. Budesky's message. Id. at ¶ 43. Despite numerous efforts by Pyrocap's CEO and General Counsel, Theodore A. Adams III, to discover the identities of the parties "external" to Ford who received the e-mail message, Ford has refused to disclose the information or respond to plaintiff's concerns regarding the February 24, 1999 e-mail message. Id. ¶¶ 48-50.

Plaintiff commenced this action on February 22, 2002, and seeks compensatory damages of $10 million plus interest, costs, and reasonable attorney's fees, as well as punitive damages. Id. ¶¶ 51-54.

The Court will first address the threshold question of venue raised by defendant's motion to transfer.

II. MOTION TO TRANSFER

Defendants move in the alternative to transfer this case to the Eastern District of Michigan, arguing that there is "absolutely no basis for the Plaintiff's choice of forum and no reason under District of Columbia law to honor its choice."

The venue statute, 28 U.S.C. § 1391, stipulates that a case presenting a federal question may be brought only in

(1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of the property that is the subject of the action is situated or (3) a judicial district in which any defendant may be found, if there is no district in which the action may otherwise be brought.
Plaintiff relies on the second section of this provision, asserting that a ...

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