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Continental Casualty Co. v. Staffing Concepts

September 18, 2009

CONTINENTAL CASUALTY COMPANY; AMERICAN CASUALTY COMPANY OF READING, PENNSYLVANIA; TRANSPORTATION INSURANCE COMPANY; AND NATIONAL FIRE INSURANCE COMPANY OF HARTFORD, PLAINTIFFS,
v.
STAFFING CONCEPTS, INC.; STAFFING CONCEPTS NATIONAL, INC.; STAFFING CONCEPTS INTERNATIONAL, INC.; SC OF FLORIDA II, INC.; VENTURE RESOURCES GROUP, LLC; ALTERNATIVE MARKETING GROUP, INC.; HUMAN CAPITAL SERVICES, INC.; PRODUCTIVE EMPLOYER CONCEPTS, INC.; HUMAN CAPITAL SOLUTIONS, INC.; AND EPIC STAFF MANAGEMENT, INC., DEFENDANTS.



The opinion of the court was delivered by: Hon. Ronald A. Guzman United States District Judge

Judge Ronald A. Guzmán

MEMORANDUM OPINION AND ORDER

Plaintiffs Continental Casualty Company;American Casualty Company of Reading, Pennsylvania; Transportation Insurance Company; and National Fire Insurance Company of Hartford (herein "the CNA insurers") sued defendants Staffing Concepts, Inc.; Staffing Concepts International, Inc.; SC of Florida II, Inc.; Venture Resources Group, LLC; Alternative Marketing Group, Inc.; Human Capital Services, Inc.; Productive Employer Concepts, Inc.; Human Capital Solutions, Inc.; and Epic Staff Management, Inc. (collectively "the SCI corporations") to recover more than $13 million due under insurance policy programs issued by the plaintiffs. The case is now before the Court on defendants' motion to dismiss for lack of personal jurisdiction and to transfer venue. (Defs.' Mot. Dismiss & Mot. Transfer Venue ("Mot. Transfer").) For the reasons provided herein, the Court grants the motion to transfer venue.

Facts

The CNA insurers have their principal places of business in Chicago, Illinois where they sell and provide property and casualty insurance to their clients. (Compl. ¶¶ 2-6.) The SCI corporations maintain their principal places of business in Florida and manage human resources, personnel responsibilities and employer risks for small to mid-size businesses. (Id. ¶¶ 8-14, 19.) One of the responsibilities that the SCI corporations assume for their clients is managing workers' compensation or other insurance claims. (Id.)

Plaintiffs issued insurance programs to defendants for four consecutive policy periods from 2000 to 2003. (Id. ¶ 26.) Plaintiffs and defendants entered into claims services agreements that obligated defendants to reimburse the CNA insurers for portions of the payments made on each claim. (Id. ¶ 27.) The parties also entered into finance agreements that provide the terms of reimbursement by SCI of losses within the deductibles. (Id. ¶¶ 53, 55-66.) The claims services and financial agreements between the parties were negotiated and signed in Florida or Georgia. (Defs.' Notice Filing Affs. Supp. Mot. Transfer, Ex. 1, Hardin Aff. ¶¶ 6, 7.)

The SCI corporations made workers' compensation claims against these insurance policies, and the CNA insurers issued payment regarding the claims presented. (Compl. ¶¶ 67-87.) However, the SCI corporations did not reimburse the CNA insurers for the deductibles. (Id.) The CNA insurers have sued the SCI corporations for breach of the finance agreements which amounted to monetary losses of $2.7 million in 2001, $9 million in 2002 and $1.8 million in 2003. (Id. ¶¶ 67-87.)

Each finance agreement provides that it will be construed and governed by Illinois law. (Id. ¶¶ 55-66.) For each year, there is a "master" insurance policy that provides workers' compensation coverage to the SCI corporations and their clients in over thirty states. (Id. ¶¶ 29, 36, 42.) Thus, coverage is scattered across the U.S. and the number of individual claims related to this case varies by state. The SCI corporations made premium payments to the CNA insurers' offices and bank accounts in Chicago, Illinois. (Pls.' Resp. 4; id. Ex. 6, 8, Sample CNA Invoices.) It is unclear where defendants' decision not to reimburse the CNA insurers for the deductibles occurred. (Pls.' Resp. 4.)

The SCI corporations argue that the CNA insurers mishandled claims and provided poor claims administration when they and their affiliates decided to exit the professional employer organization market and transfer claims to a special unit for "discontinued" business. (Id. 5; id., Ex. 12, Dep. Charles Boornazian at 32-33; Mot. Transfer 4.) Plaintiffs aver that defendants' non-payment occurred in more than thirty states and at their ten regional offices. (Pls.' Resp. at 5; id. Ex. 13, CNA Designated Claim Handling Teams.) However, on the other hand, defendants have offered evidence that shows a majority of the workers' compensation claims, 2,263 of 4,400, were dealt with by CNA employees in a Florida office. (Mot. Transfer 9-10; id. Ex. E, Johns Aff. ¶¶ 6-8; id. Ex. A, Sullivan Aff. ¶¶ 15, 18; Pls.' Resp. 14; id. Ex. 55, SCI Workers' Compensation Claims List.)

The SCI corporations move to transfer venue to the Middle District of Florida pursuant to 28 U.S.C. § 1404(a). Six of the defendants have moved to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(2).

Discussion

I.Personal Jurisdiction

To begin, it is not abundantly clear that the Court has personal jurisdiction over all of the defendants. Regardless of whether the plaintiff has successfully established a prima facie case of personal jurisdiction, the Court may address a petition to transfer under 28 U.S.C. § 1404(a). Washington Nat'l Life Ins. Co. v. Calcasieu Parish Sch. Bd., No. 05 C 2551, 2006 WL 1215413, at *3 (N.D. Ill. May 2, 2006) (citing Goldlawr, Inc. v. Heiman, 369 U.S. 463, 466 (1962)). Hence, a finding of personal jurisdiction over the defendants "is not a prerequisite to transfer" under section 1404(a). Id.; see Cote v. Wadel, 796 F.2d 981, 985 (7th Cir. 1986) ("[U]nder 1404(a) as under 1406(a), the transferring court need not have personal jurisdiction over the defendants.").

The Court reserves its ruling on the motion to dismiss for lack of personal jurisdiction and addresses the motion to transfer venue. The issue before the Court is whether the Middle District of Florida, rather than the Northern District of Illinois, is significantly more convenient for the parties, the witnesses and the interests of justice.

II.Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404(a)

"For the convenience of 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."

28 U .S.C. § 1404(a). Thus, a transfer is appropriate when "(1) venue was proper in the transferor district, (2) venue and jurisdiction would be proper in the transferee district, and (3) the transfer will serve the convenience of the parties and the witnesses as well as the interests of justice." United Airlines, Inc. v. Mesa Airlines, Inc., 8 F. Supp. 2d 796, 798 (N.D. Ill. 1998); see Heller Fin., Inc. v. Midwhey Powder Co., Inc., 883 F.2d 1286, 1293 (7th Cir. 1989). The movant has the burden of showing, "by reference to particular circumstances, that the transferee forum is clearly more convenient." Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219-20 (7th Cir. 1986). Courts are given broad discretion to transfer under section 1404(a), Piper Aircraft Co. v. Reyno, 454 U.S. 235, 264-65 (1981), and are called upon to adjudicate motions for transfer according to an "individualized, case-by-case consideration of convenience and fairness," Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22, 29-31 (1988) (quotation omitted). Thus, district courts look at each statutory factor on a case-by-case basis and utilize a broader set of considerations that turn upon the particular facts of the case. Coffey, 796 F.2d at 219.

The first two factors -- convenience of parties and witnesses -- are divided into numerous "private interest" factors. Omnisource Corp. v. Sims Bros, Inc., No. 1:08-CV-89,2008 WL 2756345, at *3 (N.D. Ind. July 14, 2008). In addition, the interests of justice are broken into a variety of "public interest" considerations. Id. at *4. The public interests are a separate analysis and may be determinative in a particular case, even if the parties and witnesses factors might call for a different result. Coffey, 796 F.2d at 220. Moreover, when weighing the various factors, courts are to consider and take into account all "claims and controversies properly joined in a proceeding." In re Volkswagen AG, 371 F.3d 201, 204 (5th Cir. 1954); ...


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