Sunray Enterprises, Inc. v. David C. Bouza & Associates, Inc.

Citations: 606 F. Supp. 116; 1984 U.S. Dist. LEXIS 21225Docket: 83 Civ. 8408 (JMC)

Court: District Court, S.D. New York; December 14, 1984; Federal District Court

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Defendants, including David C. Bouza and his company, David C. Bouza Associates, Inc., successfully moved to transfer the case from the Southern District of New York to the Eastern District of Louisiana under 28 U.S.C. 1391(b) and 1406(a). The plaintiff, Sunray Enterprises, Inc., a New York corporation, contracted Bouza to be its exclusive representative for athletic footwear sales in the U.S. However, Sunray allegedly failed to secure necessary letters of credit, prompting Bouza to terminate the contract and establish a competing business, Sunbelt Footwear, Inc., also based in Louisiana. Sunray accused Bouza of breaching contract and fiduciary duties by soliciting its employees and customers using confidential information. The case's jurisdiction was founded on diversity of citizenship, and after a hearing, a preliminary injunction was granted. Following the initial proceedings, Sunray amended its complaint to include additional claims, such as trademark infringement and violations under the RICO statute, which necessitated a reevaluation of venue under federal rules. Given these developments, the court found the proper venue to be the Eastern District of Louisiana, where all defendants reside.

Defendants assert that none reside in New York, nor do any claims originate there, specifically noting that individual defendant Bouza does not live in New York. Under Section 1391(b), venue in New York is only appropriate if the claim arose in the state. Federal law is used to determine where claims arose, with courts focusing on the connection between defendants' actions and the forum state, considering the convenience for witnesses and evidence availability. The only relevant actions linked to New York are Bouza's two visits to trade shows, where goods bearing the disputed mark may have been displayed. However, district court precedents require significant contacts beyond mere impacts or occasional solicitations for venue establishment. The minor contacts alleged do not suffice for proper venue, especially since both Sunbelt and Bouza are based in Louisiana, where most infringing acts appear to have occurred. State claims for unfair competition and trademark dilution, which are factually similar, also do not warrant venue in New York. For RICO claims, venue can be established under 18 U.S.C. § 1965(a) or general federal provisions. Without evidence that defendants conduct business in New York beyond attending trade fairs, which is inadequate, there is no proper venue under Section 1965(a). Furthermore, the plaintiff has not shown that any acts relevant to the RICO claim occurred in New York, negating venue under Section 1391(b) for all claims.

The Court determines it need not establish if the tort and breach of contract claims originated in New York. The plaintiff could separate these claims from federal claims and potentially file them based on diversity jurisdiction in this district, thus adhering to Section 1391(a) for proper venue. However, since these claims arise from the same facts and involve similar witnesses, the Court orders their transfer to the Eastern District of Louisiana, where all defendants reside, making it a suitable venue under 28 U.S.C. §§ 1391(a), (b). The defendants' motion to transfer is granted, and they are instructed to submit an order for the transfer within five days. 

The plaintiff's argument that the defendants waived their venue objection is rejected; venue was appropriate in this district under the original complaint, preventing earlier objections. Additionally, the Court notes that the corporate defendants do not qualify as 'residents' of the district since there is no evidence they were doing business in New York at the time the complaint was served. The issue of the individual defendant's residency is not addressed as it is deemed unnecessary. Lastly, even if the venue were appropriate, the plaintiff's RICO claim would still be dismissed due to the lack of alleged predicate acts resulting in criminal convictions.