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

February 15, 1985


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


Letter-Rite, Inc. ("Letter-Rite") brings this diversity action against Computer Talk, Inc. ("Computer Talk") for breach of contract. Computer Talk has moved under 28 U.S.C. § 1404(a) ("Section 1404(a)") to transfer this action to the United States District Court for the District of Colorado. For the reasons stated in this memorandum opinion and order, Computer Talk's motion is granted.*fn1


Letter-Rite — a small, closely-held Illinois corporation — specializes in the production of business stationery. Early in 1980 Letter-Rite approached Computer Talk — a small, closely-held Colorado corporation-about the possible purchase of a computer-operated stenciling machine. Six months of negotiations followed, culminating in a June 30, 1980 Agreement (the "Agreement") under which Computer Talk was to develop, construct and install such a stenciling machine for Letter-Rite.

Under the Agreement Letter-Rite, at its own expense, was to send a representative to the Computer Talk factory in Colorado to observe the performance of the stenciling machine (when completed) over a two-week period of around-the-clock operation. Assuming the machine performed satisfactorily, Letter-Rite was to accept it and to take delivery F.O.B. the Computer Talk factory. Letter-Rite was then to arrange shipment of the machine to its destination in Illinois, at which point Computer Talk would arrange for proper installation. Final acceptance by Letter-Rite would follow upon satisfactory installation. Half the purchase price was due on or before acceptance at the Computer Talk factory, and the other half was to be paid in ten monthly installments beginning the month after acceptance by Letter-Rite in Colorado.*fn2

Initially the Agreement called for delivery within six to eight months after the June 30, 1980 execution date. On April 25, 1981 the parties signed a modification agreement providing (among other things) (1) that failure to adhere to the original timetable would constitute no breach of the Agreement and (2) for a procedure for setting a new production schedule. It is not clear from the parties' submissions whether such a schedule was set — or what it might have been. In any case Computer Talk has yet to offer a finished product for acceptance and delivery, though it claims work on the product is substantially complete.

Section 1404(a) Principles

Section 1404(a) provides:

  For the convenience of the parties and witnesses,
  in the interest of justice, a district court may
  transfer any civil action to any other district
  or division where it might have been brought.

Section 1404(a) principles are related (but not identical) to those governing forum non conveniens motions, as set out in Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508, 67 S.Ct. 839, 843, 91 L.Ed. 1055 (1947).*fn3 But at least one important difference between the two doctrines is relevant here. As characterized in Gulf Oil, forum non conveniens gives great weight to the plaintiff's choice of forum (id.):

  [U]nless the balance is strongly in favor of the
  defendant, the plaintiff's choice of forum should
  rarely be disturbed.

Under Section 1404(a), though, the plaintiff's right to choose his forum does not weigh so heavily in the balance. Norwood v. Kirkpatrick, 349 U.S. 29, 32, 75 S.Ct. 544, 546, 99 L.Ed. 789 (1955) taught Section 1404(a) was not meant simply to codify the old doctrine:

  [W]e believe that Congress, by the term "for the
  convenience of parties and witnesses, in the
  interest of justice," intended to permit courts
  to grant transfers upon a lesser showing of
  inconvenience. This is not to say that the
  plaintiff's choice of forum is not to be
  considered, but only that the discretion to be
  exercised is broader.*fn4

Under Section 1404(a) plaintiff's choice of forum is not an overriding consideration, but rather one of many factors to be considered. See Rockwell International Corp. v. Eltra Corp., 538 F. Supp. 700, 702 (N.D.Ill. 1982).

This opinion therefore turns to an evaluation of the facts in light of Section 1404(a)'s specific terms. Of course the parties concede this lawsuit "might have been brought" in the Colorado District Court. Venue there is proper both because all defendants reside in Colorado (28 U.S.C. § 1391(a)) and because Computer Talk is licensed to do business in Colorado and plainly transacts business there (28 U.S.C. § 1391(c)). Accordingly disposition of Computer Talk's motion turns on a consideration of the substantive Section 1404(a) criteria: convenience of the parties and witnesses, in the interest of justice.

1. Convenience of the Parties

Each side's forum is really inconvenient for the other. Letter-Rite and Computer Talk are both small corporations — Letter-Rite employs 28 people, Computer Talk only 10 — whose day-to-day operations are very much in the charge of their respective presidents, Russell Brewer and William Barnes. Brewer has stated on behalf of Letter-Rite (R. Brewer Aff. ¶ 10):

  My extended absence from Letter-Rite to testify,
  should this case be transferred to Colorado,
  would cause substantial loss of business to
  Letter-Rite and financial hardship.

Barnes, on behalf of Computer Talk, has predicted very similar consequences for that corporation if the lawsuit is tried in Illinois (W. Barnes Aff. ¶ 15):

  [M]y absence from Computer Talk in order to
  testify at trial in this litigation would result
  in a substantial inconvenience to and hardship on
  Computer Talk.

In addition neither Letter-Rite nor Computer Talk maintains an office outside its home state, and neither has any real business contacts in the home state of its opponent. Even the negotiations leading up to the Agreement, and the discussions since then, reflect no strong leaning toward either Illinois or Colorado. Most communications have been by telephone and mail, or during the course of brief visits by one party to the other's home state. Perhaps the only balance-tipping factor is the fact that the Agreement itself placed the primary burden of travel on Letter-Rite. As this opinion has already said, a Letter-Rite representative was required to travel to Colorado to accept the stenciling machine, and any training of Letter-Rite personnel in the use of the machine was to take place there.

But even if those matters could be viewed as implying Letter-Rite was less inconvenienced than Computer Talk by out-of-state dealing, they do not alone tip the balance in Computer Talk's favor. Even after Norwood, the plaintiff's choice of forum remains a relevant consideration — one perhaps sufficient here to balance (though certainly not to outweigh) any evidence favoring Computer Talk's position.*fn5

2. Convenience of the Witnesses

Because the interests of the principal witnesses — Barneses and Russell and Sue Brewer ("Brewers") — so significantly overlap those of Letter-Rite and Computer Talk, the "convenience of witnesses" analysis is close to that in the preceding section. Wherever this case is tried, either Russell Brewer or William Barnes will be inconvenienced. And as the earlier discussion suggests, neither would suffer less inconvenience than the other. Each man is the president of a small closely-held corporation in which he holds the dominant (or with his wife the entire) interest, and each claims his presence is necessary to oversee day-to-day operations. To the extent either's absence impairs the functioning of his company, the consequences of the impairment are likely to fall principally on him.

As for Sue Brewer and Tamsin Barnes, the competing interests are not quite as evenly balanced. Each woman serves as corporate secretary-treasurer, though it is not clear how actively either participates in day-to-day operations. Tamsin Barnes expressly says she does not "participate in the business of Computer Talk, Inc." (T. Barnes Aff. ¶ 4), while Sue Brewer provides no description of the duties attending on her corporate office. Both of course would suffer the general inconvenience of having to travel some distance from home to testify. That would plainly be a heavy burden on Tamsin Barnes, because she is principally employed by a company unrelated to Computer Talk. It is less clear whether Sue Brewer's daily affairs — whatever they may be — merit like deference.

Moreover, as Computer Talk argues, Sue Brewer is not as necessary a witness as Tamsin Barnes. This Court has been provided nothing to indicate how Sue Brewer was involved in the events giving rise to the dispute between Letter-Rite and Computer Talk. She does not appear to have participated in negotiation of the Agreement or to have dealt with Computer Talk in any other way than through her husband. By contrast, Tamsin Barnes was present at many of the meetings leading up to and following the execution of the Agreement. Accordingly her inconvenience should weigh more heavily in the balance than Sue Brewer's.

3. Interest of Justice

In sum, then, the aggregate impact of the first two factors favors Computer Talk to some extent. Nonetheless their weighting alone does not clearly override the concept that a transfer will not be ordered "if the result is merely to shift the inconvenience from one party to another." 15 Wright, Miller & Cooper, Federal Practice & Procedure: Civil § 3848, at 246.

Consequently the disposition of Computer Talk's motion turns upon the "interest of justice" — a grab-bag of sorts that has come largely to encompass the factors enumerated in Gulf Oil (see n. 3). Associated Mills, Inc. v. Rush-Hampton Industries, 588 F. Supp. 1164, 1167 (N.D.Ill. 1984). When those factors are taken into account the Section 1404(a) balance tips decidedly toward Computer Talk.

First, the Agreement was to be performed substantially in Colorado. While Computer Talk had an obligation to install the completed stenciling machine in Illinois, Letter-Rite was first to accept and take delivery of the equipment in Colorado. In addition Letter-Rite was responsible for shipping the completed product to its installation point. Certainly all the aspects of performance primarily at issue in this lawsuit were to take place in Colorado:

    1. Both the machine itself and any
  documentation detailing the progress of its
  development and manufacture are located

    2. So too are any Computer Talk employees whose
  testimony may be relevant to the question of
  Computer Talk's efforts to meet its obligations
  under the Agreement.

    3. Because Letter-Rite claims Computer Talk
  lacked the capacity to perform as contemplated by
  the Agreement, an examination of its production
  facilities in Colorado may well be appropriate.

Second, even were defendants' motion denied, this Court would appear obligated to resolve the dispute under Colorado law. Under Klaxon Corp. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941), Illinois conflict-of-law rules apply here. Illinois has traditionally looked primarily to the law of the place of performance in contract cases, but more recently there has been some evidence of movement toward a "most significant contacts" approach, akin to the approach adopted for torts cases in Ingersoll v. Klein, 46 Ill.2d 42, 48, 262 N.E.2d 593, 596 (1970). See Overseas Development Disc Corp. v. Sangamo Construction Co., 686 F.2d 498, 510 n. 43 (7th Cir. 1982); WICO Corp. v. Willis Industries, 567 F. Supp. 352, 355 n. 4 (N.D.Ill. 1983). Under either the older rule or some version of a more flexible bent, Colorado law should provide the rule of decision. And under Van Dusen v. Barrack, 376 U.S. 612, 639, 84 S.Ct. 805, 820, 11 L.Ed.2d 945 (1964), the transferee court "must be obligated to apply the state law that would have been applied if there had been no change of venue." Under such circumstances, Gulf Oil, 330 U.S. at 509, 67 S.Ct. at 843, teaches it makes sense to hold the trial "in a forum that is at home with the state law that must govern the case."

Finally, a comparison of the dockets for the District of Colorado and the Northern District of Illinois indicates the propriety of transfer. Judges in this District have a heavier average caseload than their Colorado counterparts. More importantly, this District has consistently ranked in the top three of all District Courts nationally in terms of weighted case filings per judge (and was third nationally in that respect for the twelve months ended June 30, 1984). Statistics as to "average time from filing to disposition" are always misleading, because they deal with all types of case dispositions. More significant in real-world terms are percentages of cases over three years old, and there too this District ranks behind its Colorado counterpart. Measured in terms of docket congestion and prospects for an earlier trial, the District of Colorado is clearly the preferable forum.*fn7


While the convenience of the parties and witnesses favors transfer only marginally, the relevant considerations under the "interest of justice" heading weigh heavily in favor of transfer. Computer Talk's Section 1404(a) motion is therefore granted. This action is transferred to the United States District Court for the District of Colorado.

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