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FINK v. DECLASSIS

June 26, 1990

JACOB J. FINK and PETERSON CORP., INC., f/k/a BRIGHTON PRODUCTS, INC., an Illinois Corporation, Plaintiffs,
v.
RONALD DECLASSIS and L.T. LABORATORIES, INC., a/k/a L.T. CORPORATION, a Massachusetts Corporation, Defendants



The opinion of the court was delivered by: BUA

 NICHOLAS J. BUA, UNITED STATES DISTRICT JUDGE

 Pursuant to 28 U.S.C. § 1404(a), defendants have moved to transfer this diversity case to the United States District Court for the District of Massachusetts. For the reasons stated herein, defendants' motion to transfer is denied.

 I. FACTS

 Defendant L.T. Laboratories, also known as L.T. Corporation ("LT"), is a Massachusetts corporation which markets and distributes health and beauty products. Plaintiff Peterson Corporation, formerly known as Brighton Products, Inc., *fn1" is an Illinois corporation which manufactures beauty aid products and markets them to retailers.

 In 1988, LT expressed an interest in acquiring the assets of Peterson, which consisted primarily of two eye care product lines known as "Eye-Gel" and "Eye-Pac." For approximately six months, representatives of both companies engaged in extensive negotiations. The parties eventually reached an agreement, and the sale was closed on June 21, 1989. After signing the asset purchase agreement, plaintiff Jacob J. Fink, who was the president of Peterson, executed a consulting agreement in which he agreed to provide consulting services in connection with the production and sale of Eye-Gel and Eye-Pac.

 Just one month after closing, the Food and Drug Administration ("FDA") discovered that large quantities of Eye-Gel were contaminated with pseudomonas bacteria. Unfortunately, Peterson had already shipped the contaminated product to various distributors, including LT. The FDA then instituted a nationwide recall of Eye-Gel.

 Due to the product contamination, sales of Eye-Gel decreased dramatically. Consequently, LT filed suit against Fink and Peterson on January 8, 1990, in the District of Massachusetts. LT's complaint asserts claims for fraud, misrepresentation, breach of contract, and breach of warranty.

 II. DISCUSSION

 A district court may transfer a case if: (1) venue is proper in the transferor district; (2) venue is proper in the transferee district; and (3) the transfer is for the convenience of the parties and witnesses and the interest of justice. Ratner v. Hecht, 621 F. Supp. 378, 381 (N.D. Ill. 1985).

 Venue is proper in the transferor district, the Northern District of Illinois, because both plaintiffs reside in this district. See 28 U.S.C. § 1391(a), (c). Whether venue is proper in the transferee district, however, is not as straightforward. Only one of the defendants resides in the District of Massachusetts and, therefore, venue will be proper in Massachusetts only if the claim arose there. See id. § 1391(a).

 The most commonly applied test for determining where the claim arose, and the test employed by this court in the past, is the "weight of contacts" test. See Schubert v. Gay & Taylor, Inc., 716 F. Supp. 1129, 1131 (N.D. Ill. 1989); Trademasters Int'l, Inc. v. Borer, 687 F. Supp. 434, 435 (N.D. Ill. 1988); Heller Financial, Inc. v. Shop-A-Lot, Inc., 680 F. Supp. 292, 294 (N.D. Ill. 1988). Under the "weight of contacts" test, the court must examine defendants' contacts with the Northern District of Illinois and the District of Massachusetts -- the districts which bear the closest connection to plaintiffs' cause of action. Heller Financial, Inc., 680 F. Supp. at 294-95. Plaintiffs' cause of action is deemed to have arisen in the district in which defendants' contacts are most significant. Id. at 295.

 After applying the "weight of contacts" test, the court concludes that defendants' contacts are most significant in the Northern District of Illinois. Although LT maintains its corporate offices in Massachusetts, the subject matter of the asset purchase agreement is located in Illinois. LT took possession of Peterson's assets in Illinois, and the newly acquired equipment and inventory was never transported to Massachusetts. Affidavit of Jacob J. Fink, para. 17. After ...


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