Because all three factors weighed against exercising jurisdiction in Gordon, the court did not need to strike a balance among them. The instant case, however, presents a somewhat trickier situation. Greathall initiated the 1988 contract by mailing it to Hirsch, and Hirsch executed it in Illinois. The place of performance, however, was in Wisconsin. Moreover, the fact that the contract provided that Wisconsin law would govern, though not specifically included in the Gordon test, certainly weighs against finding that Greathall "sought to avail himself of the benefits and burdens of Illinois law." Gordon, 148 Ill.App.3d at 280.
Illinois cases provide little guidance in balancing these factors. Compare Woodfield Ford, Inc. v. Akins Ford Corp., 77 Ill. App. 3d 343, 32 Ill. Dec. 750, 395 N.E.2d 1131 (1979) (plaintiff initiated; formation in Illinois; performance outside Illinois; no choice of law provision; no jurisdiction) with AAAA Creative, Inc. v. Sovereign Holidays, 76 Ill. App. 3d 514, 32 Ill. Dec. 119, 395 N.E.2d 66 (1979) (defendant initiated; formation in Illinois, performance in Europe; no choice of law provision; jurisdiction).
Such balancing, however, does not become necessary in this case.
In United States Railway Equipment Co. v. Port Huron and Detroit Railroad Company, 495 F.2d 1127 (7th Cir. 1974), the parties had executed a contract in 1961 after the defendant had visited plaintiff's shop in Illinois for the purposes of inspecting the facilities. In 1970, the parties agreed to an extension of the contract, but none of the negotiations surrounding the extension occurred in Illinois. When the plaintiff brought suit in Illinois for breach of contract, the district court declined to exercise jurisdiction on the grounds that "no negotiations concerning [the 1970] agreement were held in Illinois." Id. at 1129.
The Seventh Circuit reversed. It held that "since practically all of the 1961 agreement was incorporated by reference into the 1970 contract,. . . the negotiation and performance of both the 1961 and 1970 contracts may be regarded as a single business transaction for the purposes of long-arm jurisdiction." Id. Based on the defendant's contacts with Illinois in 1961, the district court should have exercised jurisdiction. Id. at 1130.
That case informs the analysis here. The contractual relationship between Greathall and Leonardo originated out of Greathall's transaction of business in Illinois in the early 1980's. Greathall thereafter began severing its ties with Illinois, but with respect to Leonardo, it willingly continued its relationship, with Richard avoiding subsequent trips to Illinois, at least in part, because the parties already had negotiated most of the terms of their relationship. Compare Heil v. Morrison Knudsen Corp., 863 F.2d 546 (7th Cir. 1988). Thus, the earlier contacts figure into the jurisdictional equation. Adding them to Greathall's 1987 Illinois contacts with Leonardo establishes that the contract and fraud claims arose out of -- i.e., lay in the wake of -- Greathall's transaction of business within Illinois. See J. Walker & Sons v. DeMert & Dougherty, Inc., 821 F.2d 399, 403 (7th Cir. 1987). Accordingly, the Illinois long-arm statute reaches the defendants.
The defendants next argue that, even if the statute reaches them, due process prevents the court from exercising jurisdiction. This argument merits little discussion. The Fourteenth Amendment Due Process Clause requires only that a defendant have "certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" International Shoe v. Washington, 326 U.S. 310, 316, 90 L. Ed. 95, 66 S. Ct. 154 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 85 L. Ed. 278, 61 S. Ct. 339 (1940)). In the contractual setting, "parties who 'reach out beyond one state and create continuing contractual obligations with citizens of another state' are subject to regulation and sanctions in the other State for the consequences of their activities." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473, 85 L. Ed. 2d 528, 105 S. Ct. 2174 (1985) (quoting Travelers Health Assn. v. Virginia, 339 U.S. 643, 647, 94 L. Ed. 1154, 70 S. Ct. 927 (1950)). Greathall intentionally sought to obtain Illinois citizens for work at its fair. It advertised and solicited in Illinois, and entered into contracts with Illinois citizens. It thus subjected itself to the jurisdiction of the Illinois courts.
The defendants request a transfer of venue to the United States District Court for the Eastern District of Wisconsin pursuant to 28 U.S.C. § 1404(a).
In order to obtain transfer under this provision, the defendant must establish (1) that venue is proper in the transferor forum, (2) that venue is proper in the transferee forum, and (3) that the transfer is "for the convenience of the parties and the witnesses, in the interest of justice." 28 U.S.C. § 1404(a).
In diversity cases, venue lies "in the judicial district where all plaintiffs reside, or all defendants reside, or in which the claims arose." 28 U.S.C. § 1391(a). Since Leonardo is an Illinois corporation, venue is proper here. See 1391(c). The defendants maintain that Wisconsin also has proper venue because the causes of action arose there. Leonardo does not contest this point, but its failure to do so creates a problem.
Ordinarily, a party may waive objections to venue. See Fed.R.Civ.P. 12(h)(1). The Supreme Court, however, has held that a court may not transfer a case to a district lacking venue, even when the defendant requests the transfer, because such a district is not one "where [the action] might have been brought" for the purposes of the venue statute. Hoffman v. Blaski, 363 U.S. 335, 4 L. Ed. 2d 1254, 80 S. Ct. 1084 (1960).
The reason for this rule is simple. When a plaintiff brings an action in an improper place, the defendant may either object or consent. If he objects, the case goes away. If he consents, then both parties are where they want to be. But if a defendant could obtain transfer to a place where venue is lacking, then the case could land in an improper venue without the plaintiff's consent; the defendant, but not the plaintiff, would have the power to take a case to an improper forum. See id. at 344; see 15 C. Wright & A. Miller, Federal Practice & Procedure, § 3855 at 219 (1976).
These problems, however, do not arise when a plaintiff, following a defendant's motion to transfer, consents to venue in the transferee forum. In such a situation, both parties have acquiesced in the forum, just as they could have done had the case originated there. The "gross discrimination" to the plaintiff prohibited by Hoffman (363 U.S. at 344) does not arise.
Here, the defendants have argued that venue lies in Wisconsin. Leonardo has chosen not to challenge this point. Nothing in Hoffman nor in the policies underlying it compel this court to ignore Leonardo's concession and undertake a unilateral inquiry into the propriety of venue there. For the purposes of this motion, then, venue is proper in the transferee forum.
This leaves the third factor -- whether transfer would be "for the convenience of parties and witnesses, in the interest of justice." 28 U.S.C. § 1404(a). A literal reading of the statute suggests that there are only two elements to the inquiry -- i.e., the convenience of the parties and the convenience of the witnesses -- and that, if they are satisfied, then transfer is, by definition, in the interest of justice. The courts, however, long have rejected this reading and instead have read the statute as requiring analysis of three elements: the convenience of the parties, the convenience of the witnesses, and the interest of justice. See Coffey v. Van Dorn Iron Works, 796 F.2d 217, 221 (7th Cir. 1986). Moreover, although the statute says nothing about the weight to be given to the plaintiff's choice of forum, courts agree that this factor places the burden on the defendant to show "a clear balance of inconvenience" favoring transfer. Waites v. First Energy Leasing Corp., 605 F. Supp. 219, 221 (N.D. Ill. 1985); Coffey v. Van Dorn Iron Works, 796 F.2d at 220 ("clearly more convenient").
The defendants concede that transfer would not reduce the inconvenience to the parties. Since Richard and Bonnie are in Minnesota, they will have to travel either way. Hirsch, on the other hand, would suffer far more inconvenience were he forced to litigate in Wisconsin than he will if the case remains here. The first element thus weighs against transfer.
The defendants argue that the convenience of the witnesses outweighs the parties' inconvenience, and does so enough to warrant transfer. According to them, there are important witnesses in Bristol, Wisconsin who not only would have to travel a substantial distance to a Chicago trial, but who may well fall beyond the subpoena power of the court.
The convenience of the witnesses is an extremely important factor in transfer analysis, particularly if they are material to the litigation and reside beyond the court's power to bring them to trial. See 15 C. Wright and A. Miller, Federal Practice & Procedure, § 3851 (1976). The defendants, however, have missed the mark. That they did not identify the Wisconsin witnesses or describe what their testimony would be is problematic enough; that they did not take the trouble to determine just how far these witnesses are from Chicago calls into question the propriety of their transfer motion.
According to Leonardo's uncontroverted evidence, Bristol, Wisconsin, is less than 60 miles from Chicago and nearly 40 miles from Milwaukee, the location of the transferee court. Thus, these witnesses will have to travel a mere 15 miles further to attend trial here than they would were the case transferred. Moreover, under Rule 45(e)(1), this court may subpoena for trial any witness "within the district, or at any place without the district that is within 100 miles of the place of the hearing or trial," Fed.R.Civ.P. 45(e)(1), so all witnesses will be subject to this court's subpoena power.
The convenience of the witnesses thus lends no support to the defendants' motion.
The final element is the catch-all interest of justice. It encapsulates a host of considerations pertaining to "the efficient functioning of the courts," Coffey v. Van Dorn Iron Works, 796 F.2d 217, 221 (7th Cir. 1986), but only one of them is at issue here: All else equal, there is an advantage to having diversity cases tried in the district most familiar with the applicable state law. Id.; 15 C. Wright & A. Miller, Federal Practice & Procedure, § 3854 at 296 (1976).
Under Van Dusen v. Barrack, 376 U.S. 612, 11 L. Ed. 2d 945, 84 S. Ct. 805 (1964), the transferee court must apply state law in the exact manner in which the transferor court would have. Id. at 639. Thus, the transferee court must look to the choice of law rules of the transferor's state to determine the applicable law.
The defendants correctly note that, given the choice of law provision in the contract, Wisconsin law will govern the contract claim. But any marginal weight this has on the side of transfer -- and it would not be enough in any case -- is offset by the fraud claim. The defendants' assert that Wisconsin law "presumably" would apply to this claim, but their very uncertainty works against them. Since Illinois conflicts rules apply, this court, sitting in Illinois, is the preferable one to resolve the choice of law problem.
In sum, then, each element in the transfer analysis either comes down neutral or militates against transfer. The defendants obviously have not satisfied their burden on a transfer motion.
The defendants' motion to dismiss or transfer is denied.
DATE: May 31, 1989