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Meyer v. Grady

United States District Court, N.D. Illinois, Eastern Division

June 6, 2017

MICHAEL MEYER, CHRISTOPHER MEYER, and MICHAEL MEYER CAPITAL GROUP, LLC, Plaintiffs,
v.
EVERETT GRADY, KATHRYN GRADY, KAEGEM, CORP., Defendants.

          MEMORANDUM OPINION AND ORDER

          ROBERT M. DOW, JR. UNITED STATES DISTRICT JUDGE

         Before the Court is Defendant Kaegem, Corp.'s motion to transfer venue to the Central District of Illinois under 28 U.S.C. § 1404 [17]. For the reasons set forth below, Defendant's motion [17] is denied. This case is set for further status on July 6, 2017, at 9:00 a.m.

         I. Background

         This case involves the operations and financial health of Defendant Kaegem, Corp., a nonpublic Illinois corporation that created compliance management software. Defendant Everett Grady is an Illinois citizen and Kaegem's President. [1, ¶ 11.] Defendant Kathryn Grady is an Illinois citizen and Kaegem's Secretary. Id. ¶ 12. Plaintiff Michael Meyer is a Missouri citizen and owns 15, 000 shares of Kaegem common stock. Id. ¶ 7. Plaintiff Christopher Meyer is an Oklahoma citizen and owns 5, 000 shares of Kaegem common stock. Id. ¶ 8. Plaintiff Meyer Capital Group, LLC (“Meyer Capital”) is a Missouri limited liability company and both of its members (Bryan and Jeff Meyer) are Missouri citizens. Id. ¶¶ 9-10. Meyer Capital owns 10, 000 shares of Kaegem common stock. Id. ¶ 9.

         Plaintiffs have sued Defendants under the Illinois Business Corporations Act and for breach of fiduciary duty, common law fraud, and unjust enrichment. Plaintiffs argue that Defendants misrepresented Kaegem's financial condition and capitalization in an effort to secure Plaintiffs' investments in 2013 and 2014. During most of the events underlying the complaint, Kaegem's principal place of business was in Mundelein and Libertyville, Illinois-both of which are in Lake County and fall within the Northern District of Illinois. [1, ¶ 13.] By the time Plaintiffs filed their complaint in January 2017, Kaegem had moved its operations to Jacksonville, which is in Morgan County, Illinois and the Central District of Illinois. Id. Defendant Kaegem-but not Defendants Everett or Kathryn Grady-filed the instant motion to transfer venue to the Central District of Illinois [17]. Defendant opted not to file a reply in support of its motion.

         II. Legal Standard

         28 U.S.C. § 1404(a) provides that, “[f]or 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 or to any district or division to which all parties have consented.” 28 U.S.C. § 1404(a). This provision authorizes courts to transfer matters based on a “case-by-case consideration of convenience and fairness.” Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988). The Seventh Circuit “grant[s] a substantial degree of deference to the district court in deciding whether transfer is appropriate.” Research Automation, Inc. v. Schrader-Bridgeport Int'l, Inc., 626 F.3d 973, 977-78 (7th Cir. 2010). The party moving to transfer venue (here, one Defendant) “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). Courts may transfer a case under Section 1404(a) when “(1) venue is proper in the transferor district; (2) venue is proper in the transferee district; (3) the transfer will serve the convenience of the parties and witnesses; and (4) the transfer will serve the interests of justice.” Hanover Ins. Co. v. N. Bldg.. Co., 891 F.Supp.2d 1019, 1025 (N.D. Ill. 2012). The Court considers these factors in turn.

         III. Analysis

         A. Is venue proper in the transferor and transferee districts?

         As to the first two factors, Plaintiffs and Defendant Kaegem agree that venue is proper both in this district and in the Central District of Illinois. [1, ¶ 5; 17, at 2.] Under 28 U.S.C. § 1391(b), “[a] civil action may be brought in-(1) a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located; (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 property that is the subject of the action is situated; or (3) if there is no district in which an action may otherwise be brought as provided in this section, any judicial district in which any defendant is subject to the court's personal jurisdiction with respect to such action.” Venue is proper in the Central District under subsection (1) because Kaegem's principal place of business is Jacksonville and all three Defendants are Illinois residents. See 28 U.S.C. § 1391(c)(2) (stating that entity-defendants “shall be deemed to reside * * * in any judicial district in which such defendant is subject to the court's personal jurisdiction”). Venue is proper in the Northern District under subsection (2) because, as alleged in the complaint, “a substantial part of the events or omissions” giving rise to Plaintiffs' fraud-related claims occurred in this district while Defendant's principal place of business was in Lake County. Therefore, the Court agrees that venue would be proper in both the Central and Northern Districts of Illinois.

         B. Will transfer serve the convenience of the parties and witnesses?

         “In evaluating the convenience of the parties and witnesses, courts weigh the following factors: (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 witnesses; and (5) the convenience to the parties of litigating in the respective forums.” Hanover Ins. Co., 891 F.Supp.2d at 1025. “When evaluating the convenience of a forum to the parties and witnesses, we may consider, for example, the length and cost of travel, the number of witnesses to be called, the nature of witnesses' testimony, and witness travel time.” Hutchinson v. Fitzgerald Equip. Co., 2016 WL 878265, at *4 (N.D. Ill. Mar. 8, 2016).

         First, the “plaintiff's choice of forum is generally given substantial weight, particularly when it is the plaintiff's home forum.” Aldridge v. Forest River, Inc., 436 F.Supp.2d 959, 960- 61 (N.D. Ill. 2006). That choice is entitled to less deference when “another forum bears a stronger relationship to the dispute or the plaintiff's choice of forum has no connection to the material events in question.” Id. Here, no Plaintiff resides in this district; they reside in either Missouri or Oklahoma. The Central District is geographically closer to Missouri than this District. That said, Plaintiffs filed their complaint in the district where they were allegedly induced to acquire Defendant's shares and remain as shareholders. Thus, Plaintiff's choice of forum is entitled to some, but not substantial, weight given this forum's connection to the material events of this suit.

         Second, both sides agree that the situs of material events is the Northern District. [17, at 3; 22, at 2-3.] Defendant's principal place of business when the alleged misrepresentations were made and Plaintiffs purchased Defendant's shares was the Northern District. That situs has not ...


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