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Orthoflex, Inc. D/B/A Integrated v. Thermotek

December 3, 2010

ORTHOFLEX, INC. D/B/A INTEGRATED ORTHOPEDICS, MOTION MEDICAL TECHNOLOGIES, LLC AND WABASH MEDICAL COMPANY, LLC
PLAINTIFFS,
v.
THERMOTEK, INC., DEFENDANT.



The opinion of the court was delivered by: Judge Sharon Johnson Coleman

Magistrate Judge Geraldine Soat Brown

MEMORANDUM OPINION AND ORDER

This matter is before the Court on motion by Defendant Thermotek, Inc. ("Thermotek") to transfer venue to the Northern District of Texas pursuant to 28 U.S.C. § 1404(a). (Dkt. No. 28.) The motion has been fully briefed and the Court heard oral argument from the parties on November 29, 2010. For the reasons that follow the Court grants Thermotek's motion.

BACKGROUND

Plaintiffs Orthoflex, Inc. d/b/a Integrated Orthopedics ("Orthoflex"), Motion Medical Technologies, LLC ("Motion Medical"), and Wabash Medical Company, LLC ("Wabash Medical") distributed medical devices they purchased from Thermotek. (Dkt. No. 9 ¶¶ 1-3.) Plaintiffs are either Illinois corporations or Illinois limited liability corporations. (Id.) Integrated Orthopedics and Motion Medical have their principal place of business within the Northern District of Illinois, Eastern Division. Wabash Medical has its primary place of business outside of this district in Indianapolis, Indiana. (Id. at ¶ 3.) Thermotek is a Texas corporation with its principal place of business in Flower Mound, Texas. (Dkt. No. 12 ¶ 4.) Thermotek admits that it does business within, and is subject to personal jurisdiction in this district. (Id. at ¶ 6.)

Plaintiffs are related entities engaged in the business of providing medical apparatus to patients under the care of physicians and/or hospitals. (Dkt. No. 45-1 ¶ 1.) Michael Wilford ("Wilford"), the chief operating officer for each of the Plaintiffs, began looking for thermo compression devices to fit the needs of Wabash Medical and Motion Medical and learned that Thermotek offered such devices. (Id. at ¶ 4.) Wilford contacted Thermotek and inquired about its VascuTherm Therapy System ("VascuTherm System"). (Id. at ¶¶ 3-4.) The VascuTherm System is a thermo compression device that provides fluid heating, cooling, and compression therapy to patients in the treatment of various medical conditions. (Dkt. No. 9 ¶ 8.) Plaintiffs allege Wabash Medical began purchasing VascuTherm Systems from Thermotek in March 2008. (Dkt. 9 ¶ 8.) Shortly thereafter, Motion Medical also began purchasing VascuTherm Systems. (Dkt. No. 45-1 ¶ 5.) In May 2008, Melissa Wojcik ("Wojcik"), a sales manager from Thermotek's Downer's Grove, Illinois office contacted Wilford and proposed Plaintiffs distribute the VascuTherm System and other Thermotek products in Illinois and Indiana. (Id.) One year later, Wilford traveled to Texas and toured Thermotek's facilities. Following Wilford's visit, Wabash Medical, Motion Medical, and Thermotek reached agreement on a Distributor Agreement effective May 6, 2009. (Dkt. No. 45-3.)

Orthoflex began purchasing VascuTherm Systems after Wilford acquired the company in August 2009. (Dkt. No. 45-1 ¶ 7.) Plaintiffs collectively purchased over 800 VascuTherm Systems between March 2008 and January 2010. (Id. at 9.) Plaintiffs allege that many of the VascuTherm Systems failed due to Thermotek's use of a plastic resin known as acrylonitrilebutadiene-styrene ("ABS") to manufacture the working fluid reservoir in the VascuTherm System. (Dkt. No. 9 ¶ 9.) Plaintiffs claim that Thermotek represented and warranted that the ABS reservoir was compatible with an operating fluid mixture comprised of water and isopropyl alcohol, which was either heated or cooled to affect the therapy provided by the VascuTherm System. (Id. at ¶¶ 9-11.) Plaintiffs claim the ABS resin forming the reservoir was not compatible with a water and isopropyl alcohol mixture and that this incompatibility degraded the reservoir, caused leakage, and damaged the VascuTherm Systems including its electronic components. (Id. at ¶12.)

On March 25, 2010, Plaintiffs filed a four count complaint alleging breach of an express warranty, breach of an implied warranty of merchantability, breach of an implied warranty of fitness for a particular purpose, and breach of the Distributor Agreement. (Id. at pp. 7-11.) Plaintiffs claim they suffered economic losses, lost profits, repair expenses, and property damage resulting from Thermotek's alleged breaches and defects in the VascuTherm Systems. (Id. at ¶¶ 16-17, 20, 23, 26.) Thermotek filed is answer and affirmative defenses on April 22, 2010 admitting that this Court has subject matter jurisdiction over the claims, that Thermotek is subject to personal jurisdiction in this district, and that venue is proper in this district. (Dkt. No. 12. ¶¶ 6-7.) In May 2010, the Court directed the parties to participate in a settlement conference. (Dkt. No. 17.) That conference was held in July 2010 but the parties were unable to reach agreement. (Dkt. No. 24.) Thereafter on August 26, 2010, Thermotek filed the instant motion seeking transfer to the Northern District of Texas, Dallas Division asserting this case's "overwhelming connection to Texas" clearly makes the Northern District of Texas a more convenient venue that will better serve the interests of the parties, the witnesses, and the judicial system as a whole. (Dkt. No. 28.)

LEGAL STANDARD

A district court is vested with broad discretion to transfer a civil action to another district where the action may have been filed "[f]or the convenience of the parties and witnesses, in the interest of justice." In Re Nat'l Presto Indus., Inc., 347 F.3d 662, 663 (7th Cir. 2003); 28 U.S.C. § 1404(a). Transfer is appropriate pursuant to 28 U.S.C. § 1404(a) where: (1) venue is proper in the transferor district; (2) venue and jurisdiction are proper in the transferee district; and (3) the transfer will serve the convenience of the parties and the witnesses and will promote the interest of justice. Amoco Oil Co. v. Mobil Oil Corp., 90 F. Supp. 2d 958, 959 (N.D. Ill. 2000) (Alesia, J.). The moving party has the burden of establishing 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). In determining whether to grant or deny a motion to transfer venue, a district court must conduct an "individualized, case-by-case consideration of convenience and fairness." Id. at 219 (citing Dusen v. Barrack, 376 U.S. 612, 622 (1964)).

In analyzing whether transfer is convenient under 28 U.S.C. § 1404(a), a district court must consider both private and public interests. Factors relevant to the private interests of the parties include: (1) the plaintiff's choice of forum; (2) the situs of the material events; (3) the relative ease of access to sources of proof; (4) the convenience of the parties; and (5) the convenience of the witnesses. Amoco Oil, 90 F. Supp. 2d at 960. The factors relevant to public interest focus on the efficient administration of the court system and include such considerations as: (1) the speed at which the case will proceed to trial; (2) the court's familiarity with the applicable law; (3) the relation of the community to the occurrence at issue; and (4) the desirability of resolving controversies in their locale. Id. at 961-962. The weighting of factors for and against transfer is within the sound discretion of the district court. See, e.g., Coffey, 796F.2d at 291.

DISCUSSION

Venue is proper in this district because Plaintiffs allege jurisdiction based solely on diversity of citizenship and both Plaintiffs and Thermotek assert that this Court has personal jurisdiction over Thermotek. Where jurisdiction is founded only on diversity of citizenship, an action may be brought in:

(1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of the property that is the subject of the action is situated, or (3) a judicial district in which any defendant is subject to personal jurisdiction at the time the action is commenced..For purposes of venue under this chapter, a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced. 28 U.S.C. § 1391(a) and (c) (emphasis added). Plaintiffs allege Thermotek "is a corporation organized and existing under the laws of the State of Texas." (Dkt. No. 9 ¶ 4.) Consequently, venue is also proper in the Northern District of Texas because Thermotek has sufficient minimum contacts to subject it to personal jurisdiction in that ...


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