FEDERAL TRADE COMMISSION; STATE OF ILLINOIS; COMMONWEALTH OF KENTUCKY; and STATE OF NORTH CAROLINA, Plaintiffs,
FORTUNE HI-TECH MARKETING, INC.; FHTM, INC.; ALAN CLARK HOLDINGS, LLC; FHTM CANADA, INC.; FORTUNE NETWORK MARKETING (UK) LIMITED; PAUL C. ORBERSON; and THOMAS A. MILLS Defendants.
MEMORANDUM OPINION AND ORDER
JOHN W. DARRAH, District Judge.
On January 24, 2013, Plaintiffs, the Federal Trade Commission ("FTC"), the State of Illinois, the Commonwealth of Kentucky, and the State of North Carolina, filed a sealed Complaint seeking a permanent injunction and alleging that Defendants engaged in a wideranging scheme to violate various consumer protection statutes, including the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 45(a), and similar state consumer protection laws in Illinois, Kentucky and North Carolina. Concurrently with their Complaint, Plaintiffs filed an ex parte motion for a temporary restraining order (TRO) requesting an asset freeze, the appointment of a receiver, and other relief. On the same day, the Court granted Plaintiffs' motion, entered the TRO and appointed a temporary receiver to take control of the Corporate Defendants, Fortune Hi-Tech Marketing, Inc., FHTM, Inc., Alan Clark Holdings, LLC, FHTM Canada, Inc., Fortune Network Marketing (UK) Limited, and their assets.
Defendants have moved to transfer this case, pursuant to 28 U.S.C. § 1404(a), to the United States District Court for the Eastern District of Kentucky. Plaintiffs have filed a response opposing the transfer, and Defendants have filed a reply.
Defendants, Fortune Hi-Tech Marketing, Inc. and FHTM, Inc., are Kentucky corporations with their principal place of business in Lexington, Kentucky. Defendant Alan Clark Holdings, LLC is a Kentucky limited liability company with its principal place of business in Danville, Kentucky. Defendant FHTM Canada, Inc. is a Canadian corporation that has its registered office in Ottawa, Ontario and its principal place of business in Lexington, Kentucky. Defendant Fortune Network Marketing (UK) Limited is a United Kingdom private limited company that has its registered office in Berkshire, United Kingdom and its principal place of business in Lexington, Kentucky. Defendant Paul C. Orberson is a resident of Kentucky and the President and Director of Fortune Hi-Tech Marketing, Inc. and FHTM, Inc., a Member of Alan Clark Holdings, LLC, and a Director of FHTM Canada, Inc. Defendant Thomas A. Mills is a resident of Kentucky and the Chief Executive Officer of Fortune Hi-Tech Marketing, Inc., the Vice President and Director of FHTM, Inc., a Member of Alan Clark Holdings, LLC, a Director of FHTM Canada, Inc., and the Chief Executive Officer of Fortune Network Marketing (UK) Limited. (Compl. §§ 13-19.) Thus, all of the Defendants are either Kentucky residents or have their principal place of business in Kentucky.
Plaintiffs' Complaint alleges the following. Since approximately 2001, Defendants have collectively operated an illegal pyramid scheme through the recruitment of networked Independent Representatives ("IRs") to ostensibly sell products and services. ( Id. §§ 22, 27-37.) In order to become an IR, the consumer paid annual fees and paid additional fees to qualify for commissions and bonuses. According to the Complaint, Defendants falsely claimed IRs would earn high levels of income for selling product and services of companies, such as Dish Network, Frontpoint Home Security, and various cell phone providers, as well as for selling a line of health and beauty products. ( Id. §§ 23-25, 38-50.) However, Defendants' compensation program was based primarily on providing payments to IRs for the recruitment of new IRs. As a result, many IRs lost more money than they earned. ( Id. §§ 51-59, 65.) Defendants recruited IRs throughout the United States and Canada.
Pursuant to 28 U.S.C. § 1404(a), a district court may "for the convenience of parties and witnesses, in the interest of justice... transfer any civil action to any other district or division where it might have been brought." Thus, broken down into its statutory factors, transfer is appropriate where: (1) venue is proper in both the transferor and the transferee courts; (2) the transfer will serve the convenience of the parties and witnesses; and (3) the transfer is in the interest of justice. 28 U.S.C. § 1404(a); see Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219 (7th Cir. 1986) ( Coffey ). The district court considers these factors in light of all the circumstances, on a case by case basis, and has the sound discretion regarding the weight accorded to each factor. Coffey, 796 F.2d at 219. In so ruling, the court may consider facts presented by way of "affidavit, deposition, stipulation, or other relevant documents." Midwest Precision Servs., Inc. v. PTM Indus. Corp., 574 F.Supp. 657, 659 (N.D. Ill. 1983). Furthermore, the party seeking transfer bears the burden of establishing that the transferee court is clearly more convenient. Coffey, 796 F.2d at 219-220.
In this case, the first factor is not in dispute; the parties agree that venue is proper both in the Northern District of Illinois and in the Eastern District of Kentucky. The remaining factors are evaluated below.
Convenience of the Parties and Witnesses
In evaluating the convenience of the parties and witnesses, courts in this district consider five factors: (1) the plaintiff's initial choice of forum; (2) the situs of material events; (3) the relative ease of access to sources of proof; (4) the convenience of the parties litigating in the respective forums; and (5) the convenience of the witnesses. Amoco Oil Co. v. Mobil Oil Corp., 90 F.Supp.2d 958, 960 (N.D. Ill. 2000) ( Amoco Oil Co. ).
Plaintiff's Choice of Forum and the Situs of Material Events
A plaintiff's choice of forum is generally given substantial weight, particularly when the chosen forum is the plaintiff's home forum. Moore v. Motor Coach Indus., Inc., 487 F.Supp.2d 1003, 1007 (N.D. Ill. 2007) ( Moore ). However, while it is an important consideration, the ...