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GOLD EAGLE CO. v. LI

United States District Court, Northern District of Illinois, E.D


March 17, 1980

GOLD EAGLE CO., PLAINTIFF,
v.
BERNARD A. LI AND OTHER PARTNERS, DOING BUSINESS AS EAGLE ONE INDUSTRIES, DEFENDANTS.

The opinion of the court was delivered by: Crowley, District Judge.

MEMORANDUM OPINION AND ORDER

This cause comes before the Court on defendant's motion to stay or, alternatively, to transfer pursuant to 28 U.S.C. § 1404(a) to the United States District Court for the Central District of California for consolidation with a pending action.

Gold Eagle Company brought this action against Bernard A. Li and other partners*fn1 d/b/a Eagle One Industries on April 19, 1979. The complaint alleges trademark infringement, unfair competition and false representation. Jurisdiction is asserted under 15 U.S.C. § 1221 and 28 U.S.C. § 1338. Five months later, on September 12, 1979, Eagle One filed a declaratory judgment action in the Central District of California. The California action involves parties and issues identical*fn2 to the Illinois action. Since both parties agree that the controversy should proceed in one court, the issue is which court is the proper forum.

Gold Eagle, a manufacturer and distributor of automotive chemical products, is an Illinois corporation. Its products are sold under two registered trademarks.*fn3 According to Gold Eagle's allegations, Eagle One, a California partnership, is selling similar products under a similar trademark. Eagle One, operating from its sole place of business in California, sells its products throughout the United States.

Eagle One supports its motion to stay or transfer with several arguments. First, it states that although Gold Eagle filed its action in April, Eagle One was not served until after its California action was initiated. Eagle One implies that Gold Eagle filed the original action merely to harass Eagle One and charges that Gold Eagle did not prosecute its suit diligently until the second suit was filed. In contrast, Eagle One avers that its desire for a prompt resolution of the controversy motivated it to file the second action.

Next, Eagle One claims that California is the district in which: 1) the defendant resides; 2) where all Eagle One's business records and witnesses are located; and 3) where the alleged tort was initially committed. It contends that its Illinois contacts are de minimus because Illinois sales amount to less than 1 1/2% of its total sales since February, 1978. Further, Eagle One asserts that it has no bank accounts, personal or real property, business offices or employees in Illinois. Finally, it maintains that because a trademark infringement action is transitory, proper venue is determined by applying the "weight of contacts" test and reasons that there is no basis for venue in the Northern District because only an insubstantial part of the alleged misconduct occurred here.*fn4 Defendant contends that the interest of justice can best be served by staying the Illinois action or transferring it to California.

In response, Gold Eagle asserts that the controversy should be tried in the court first acquiring jurisdiction and charges that the California lawsuit was filed in an attempt to deprive plaintiff of the right to choose the forum. Gold Eagle alleges that any delay in the Illinois action was caused, not by its lack of diligence but by Eagle One's efforts to avoid service.*fn5

Gold Eagle alleges that under 28 U.S.C. § 1391(b) venue is proper in the Northern District as the place where the claim arose. It bases its contentions on the fact that Eagle One advertised in national publications which were circulated here and sold products, accepted merchandise orders and participated in an automotive trade show in this district. Additionally, Gold Eagle alleges that Eagle One distributed business cards at the trade show listing Chicago as one of its places of business. Gold Eagle asserts that its choice of forum should not be disturbed because it filed first and because Eagle One's percentage of business in Illinois exceeds Gold Eagle's percentage of business in California.

A civil action not founded solely on diversity of citizenship may be brought in the district where all the defendants reside or in which the claim arose. 28 U.S.C. § 1391(b). While the meaning of the word "claim" has not been precisely defined, it is clear that "the claim should not be deemed to have arisen in a district in which the defendant has had only miniscule contact . . ." Honda Associates, Inc. v. Nozawa Trading, Inc., 374 F. Supp. 886, 892 (S.D.N.Y. 1974). Accord Tefal, S.A. v. Products International Co., 529 F.2d 495 (3rd Cir. 1974). Thus, under Section 1391(b), venue in a "transitory" cause is proper only in those districts in which the trademark infringer has had significant activities. The mere fact that the infringer sent goods or sales literature bearing the infringing mark into the district cannot be the basis of venue. See Transamerica Corp. v. Transfer Planning, Inc., 419 F. Supp. 1261 (S.D.N.Y. 1976).

Eagle One has had more than "miniscule contact" with the Northern District. Not only has it caused advertisements to be circulated in this district, but it is undisputed that Eagle One has negotiated sales, participated in a major trade show and solicited orders in Chicago. These activities constitute more than a "mere vestige of venue". Hindu Incense v. Meadows, 439 F. Supp. 844, 847 (N.D.Ill. 1977). See also Dairy Industries Supply Association v. La-Buy, 207 F.2d 554 (7th Cir. 1953). Accordingly, venue is proper in the Northern District.

Despite the fact that venue is proper in this district, under 28 U.S.C. § 1404(a), the Court may, in its discretion, transfer this action to any other district where it might have been brought for the convenience of the parties and witnesses, in the interest of justice. A determination of whether transfer is appropriate requires that equal consideration be given to availability of compulsory process for attendance of unwilling witnesses, the cost of obtaining witnesses' attendance, the place where the wrong occurred, ease and expense of trial and the pendency of another lawsuit. Coats Co., Inc. v. Vulcan Equipment Co., Ltd., 459 F. Supp. 654 (N.D.Ill. 1978), Lase Co., Inc. v. Wein Products, Inc., 365 F. Supp. 911 (N.D.Ill. 1973).

Since the sole defendant resides in California, the threshold requirement of the proposed transferee district is met. The next consideration is the convenience of the parties and witnesses. An affidavit submitted in support of defendant's motion states that all Eagle One's records and witnesses, as well as its sole place of business, is in California. Similarly, Gold Eagle states that it has no contacts with California and that its employees, records, witnesses and manufacturing operations are all in Chicago. Under these circumstances the convenience of the parties is a neutral factor.

Thus, the interest of justice is the determining factor here. Absent unusual circumstances, the party filing first should be free from "the vexation of concurrent litigation." Martin v. Graybar Electric Co. Inc., 266 F.2d 202 (7th Cir. 1959). Accord, Ellicott Machine Corp. v. Modern Welding Co., Inc., 502 F.2d 178 (4th Cir. 1974); Galco Food Products, Ltd. v. Goldberg, 171 U.S.P.Q. 379 (N.D.Ill. 1971). Eagle One has alleged no unusual circumstances to justify shifting the burden of inconvenience. In view of the fact that Gold Eagle filed first in Illinois where it has substantial contacts, and diligently effected service of process, it is entitled to litigate its cause in this forum.

Accordingly, defendant's motion to stay or transfer is denied.


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