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OSAN LIMITED v. ACCENTURE LLP

September 30, 2005.

OSAN LIMITED, Plaintiff,
v.
ACCENTURE LLP et al., Defendants.



The opinion of the court was delivered by: RICHARD ROBERTS, District Judge

MEMORANDUM OPINION AND ORDER

In this diversity suit for fraud, plaintiff lodged venue in the District of Columbia. Defendants moved to transfer venue pursuant to 28 U.S.C. § 1404(a), arguing that the balance of convenience to the parties and witnesses and the interest of justice warrant transfer to the Eastern District of New York. Because venue in the District of Columbia is improper, but venue in the Eastern District of New York would be proper, defendants' motion to transfer this case to the United States District Court for the Eastern District of New York will be granted.

BACKGROUND

  This lawsuit concerns a transaction whereby an entity not a party to this action, election.com, sold its assets to defendants Accenture Inc., Accenture LLP, and Accenture Ltd. trading as Accenture eDemocracy Services (collectively, the "Accenture defendants"), on terms memorialized in an Asset Purchase Agreement ("APA") dated May 7, 2003. Defendant Clifford Jury, a resident of Texas, is an associate partner with Accenture LLP who works from Accenture's Dallas office and was involved in valuing the assets to be acquired and negotiating the APA. Defendant Meg McLaughlin, a resident of the District of Columbia, is a partner with Accenture LLP, and was the President of Accenture eDemocracy Services, which is based in Accenture's Reston, Virginia office. Plaintiff Osan Ltd. ("Osan"), a foreign corporation that does not assert residence in the District of Columbia, was a shareholder and a creditor of election.com, and provided a limited guaranty and release of liens associated with the sale of assets, but was not a signatory to the APA.

  Osan alleges that Jury, McLaughlin, and the Accenture defendants conspired to, and then did, misrepresent their buy-out plan for the acquisition of election.com. Specifically, Osan alleges that it relied to its detriment and was defrauded when defendants knowingly misrepresented that they would pay $2,000,000 for election.com's assets, when in fact, defendants paid only $511,762.01. Osan alleges that the misrepresentations occurred during the APA negotiations, which included negotiating a related limited guaranty by Osan and release of certain liens by Osan. The alleged misrepresentations were memorialized in the APA, and thereafter restated in two letters from Meg McLauglin sent to election.com*fn1 in the year following the execution of the APA. (See Compl. ¶¶ 51, 56, 76, 103, 104; Pl.'s Opp'n to Mot. to Transfer ("Pl.'s Opp'n") at 3.) Lawyers from Nixon Peabody LLP's Garden City office served as outside counsel for election.com during these negotiations. (Jury Decl. ¶ 6.) Stephen Glover and others from the Washington office of Gibson Dunn & Crutcher, LLP, served as outside counsel to Osan for the transactions related to the APA. Glover and colleagues never participated in any face-to-face meetings with Accenture related to the APA. (See Glover Decl. ¶ 8 (stating that no Gibson Dunn lawyers traveled to New York for any meetings on this matter); McLauglin Decl. ¶ 4 (implying that all face-to-face negotiations related to the APA occurred in New York); Jury Decl. ¶ 3-6 (same).)

  The APA was negotiated primarily in New York. Face-to-face negotiations occurred in Garden City, New York, but none occurred in the District of Columbia. (Jury Decl. ¶¶ 3-6; McLaughlin Decl. ¶¶ 4, 5.) Negotiations were also conducted by telephone between McLaughlin and Jury, representing Accenture, from their respective Accenture offices in Virginia and Texas, and Mark Prieto and Charles Smith, representing election.com, from the election.com office in Garden City, New York. Charles Smith had a dual role in the negotiations, serving to represent the interests of both election.com and its principal shareholder, Osan. (McLauglin Decl. ¶ 4; Jury Decl. ¶¶ 3-6.) Smith executed the APA, dated May 7, 2003, for election.com while he was out of the country (Smith Decl. ¶ 6); Accenture executed the APA on or before June 1, 2003, in its Chicago offices, and the fully executed copy was faxed to Accenture from the Garden City offices of Nixon Peabody, LLP, counsel for election.com. (McLaughlin Decl. ¶ 6.)

  As contemplated by the APA, McLaughlin sent a letter to election.com six months after the APA was executed, specifying amounts owed pursuant to the terms of the APA. Osan asserts that this letter restates earlier misrepresentations and served to effectuate the fraud. The letter, dated December 12, 2003, was signed by McLaughlin, printed on letterhead for the Accenture office in Washington, D.C., and delivered to the attention of Charles Smith at election.com at its New York address in an envelope with a Washington, D.C. return address. (See Pl.'s Opp'n, Ex. C.) According to McLaughlin's supplemental declaration, the letter was drafted by her in the Virginia office in consultation with colleagues in the Texas office, and was printed for convenience sake at the Washington offices of Accenture. The Washington Accenture office had nothing to do with the underlying transactions, has nothing to do with Accenture eDemocracy Services, and does not maintain letterhead for other Accenture offices. (See McLaughlin Supp. Decl. ¶ 2-4.) As also contemplated by the APA, McLaughlin sent a second letter to election.com one year after the APA was executed, specifying amounts owed pursuant to the terms of the APA. Osan asserts that this letter further effectuated defendants' fraud. This letter, dated June 1, 2004, was signed by McLauglin, printed on letterhead for the Virginia office of Accenture, and delivered to election.com at its New York offices to the attention of Charles Smith. (Pl.'s Opp'n, Ex. E.)

  DISCUSSION

  The federal general venue statute provides that
(a) A civil action wherein jurisdiction is founded only on diversity of citizenship may, except as otherwise provided by law, 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 is subject to personal jurisdiction at the time the action is commenced, if there is no district in which the action may otherwise be brought.
28 U.S.C. § 1391(a). If a case is filed in a judicial district that does not satisfy the requirements of § 1391, then a district court is empowered under 28 U.S.C. § 1406(a) to either dismiss or transfer the case to a district where it could have been brought in accord with § 1391. Under 28 U.S.C. 1404(a), a court may "for the convenience of the parties and witnesses, in the interest of justice" transfer the case "to any other district or division where it might have been brought."

  In a § 1404(a) transfer, the burden is on the moving party to show that transfer is warranted. DeLoach v. Philip Morris Cos., Inc., 132 F. Supp. 2d 22, 24 (D.D.C. 2000). The threshold question in a § 1404(a) determination is whether venue would be proper in the transferee district. When deciding a transfer motion under § 1404(a), a court considers and balances case-specific factors, including the private interests of the parties and witnesses and the related public interests. See Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 30 (1988); Trout Unlimited v. U.S. Dep't of Agric., 944 F. Supp. 13, 16 (D.D.C. 1996). Ultimately, if the balance of private interests and public interests favors transfer of venue, then the transferor court is within its discretion to grant a transfer. In this case, venue in the District of Columbia is improper and the interests of the parties and the interest of justice warrant transfer of venue to the Eastern District of New York.

  I. VENUE IN THE DISTRICT OF COLUMBIA

  The record does not establish that all defendants are residents of the District of Columbia. Osan has pled no facts demonstrating that either defendants Jury or Accenture Ltd. is a resident of the District of Columbia. As a consequence, plaintiff has not established venue in this district pursuant to § 1391(a)(1).

  Venue in the District of Columbia cannot be premised on § 1391(a)(2) either, because plaintiff has not established that a "substantial part of the events or omissions giving rise to the claim" occurred in the District of Columbia. 28 U.S.C. § 1391(a)(2). Plaintiff rests venue in this district on two facts. First, Osan points to the December letter and notes that it was printed on letterhead for the Accenture office in Washington, D.C. (See Pl.'s Opp'n at 3.) McLaughlin's declarations, however, establish that her December letter had no meaningful connection to the District of Columbia, and that the letterhead was nothing more than a consequence of her use of a convenient office in which to print the letter. Second, plaintiff notes that its outside counsel during the negotiations and execution of the APA and related legal instruments worked from offices in Washington, D.C., and argues that the alleged fraudulent statements were "directed to Osan's counsel in the District of Columbia." (Pl.'s Opp'n at 3.) The evidence does not support plaintiff's argument. Defendants' representations were directed to the principal, election.com, in Garden City, New York, not to the attorneys for the principal's guarantor and shareholder. Cf. Abramoff v. Shake Consulting, LLC, 288 F. Supp. 2d 1, 4 (D.D.C. 2004) (finding venue improper because a substantial part of the events did not occur in the District of Columbia, despite the fact that local attorneys negotiated and executed the contract on behalf of the plaintiff in this district). Plaintiff does not controvert Jury's statement that "Charles Smith was the only agent of Osan with whom Accenture had significant direct contact." (Jury Decl. ¶ 3; McLaughlin Decl. ¶ 4.) Smith is a New York resident who works in Garden City. (McLaughlin Decl. ¶ 4; Smith Decl. ¶ 3-4.) Nothing in Osan's factual submissions establishes that Osan's counsel ever had any direct communication at all with defendants. Plaintiff has not produced any written communication from defendants directed to Osan's counsel. The Glover declaration establishes that Osan's counsel did not engage in any face-to-face meetings with defendants related to the APA. Such attenuated facts fall short of establishing that "a substantial part of the events or omissions giving rise" to the fraud claim occurred in the District of Columbia. § 1391(a)(2). Plaintiff itself acknowledges that "the Reston, Virginia offices are the focal point of activities associated with the purchased assets." (Pl.'s Opp'n at 4.)

  Venue in the District of Columbia cannot be premised on § 1391(a)(3) because the evidence demonstrates that in accord with § 1391(a)(2) venue could rest in another district. Therefore, venue pursuant to § 1391(a)(3) is not available. Because venue in the District of Columbia is not proper, this case is subject to being dismissed or transferred to a district where venue would ...


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