A federal judge from the District of New Jersey has let stand a claim of trademark infringement, unfair competition, breach of contract, and unjust enrichment in a dispute between stores that market and sell soccer equipment.
The court did, however, grant the defendant’s request to transfer the action to the Southern District of California pursuant to 28 U.S.C. § (Section) 1404(a).
Plaintiff Elite Sports Enterprises, Inc. is a New Jersey corporation, while defendants LSI and SWI are California-base entities.
The plaintiff is in the business of franchising stores specializing in the retail of soccer equipment, athletic footwear and apparel, and related sportswear, accessories, products, and services. On May 18, 1998, the defendants entered into a franchise agreement with the plaintiff to operate stores in California, in the towns of Encinitas, Laguna Hills, and San Diego.
The Franchise Agreement provides, in part:
13.2 Choice of Law and Selection of Venue. Except as provided in Paragraph 13.9 hereof, this Agreement shall be governed by the laws of the State of New Jersey . . . The parties further agree that any action at law or equity instituted against either party to this Agreement shall be commenced only in the courts of New Jersey or a United States District Court for the District of New Jersey.
(Id. at P 13.2.) Paragraph 13.9 of the LSI Franchise Agreement provides:
13.9 State Law Applies. If any provision of this Agreement . . . is inconsistent with any valid law or regulation of the state in which Franchisee’s SOCCER POST store is located, then the valid law or regulation of that state applicable to the Franchise shall supersede any provision of this Agreement that is less favorable to Franchisee.
(Id. at P 13.9.)
Changes were made to this agreement in the intervening years, ultimately, after litigation was initiated, leading to a legal dispute.
In its discussion of the issues, the court noted that it had extensive authority to transfer cases from one district to another.
One standard that applied in the instant litigation, according to the court, was “private interests.”
The court wrote that the “private interests” standard “indicate that the Southern District of California is a more appropriate venue here, moreover. ‘[C]hoice of forum by a plaintiff is simply a preference; it is not a right.’ Hoffer v. InfoSpace.com, Inc., 102 F.Supp.2d 556, 573 (D.N.J. 2000). Although plaintiff chose to bring this action in New Jersey, its choice of forum is entitled to less deference because a substantial part of the events and operative facts here did not occur in New Jersey. Rather, the operative facts occurred in southern California, as this is where (1) LSI and SWI are incorporated and headquartered, (2) (individual defendants) John Lococo and Toni Lococo reside, (3) the stores that defendants operate under the franchise agreements are located, and (4) the stores that defendants allegedly operate using plaintiff’s trademarks without authorization are located. (See Compl., at PP 2-4, 15, 19.) Defendants also do not conduct business in New Jersey, and plaintiffs do not dispute this fact. (Defs. Br., at 6.) See Sun Chem. Corp. v. Markem Corp., No. 05-2565, 2006 U.S. Dist. LEXIS 4776, 2006 WL 288104, at (D.N.J. Feb. 6, 2006).
“… Plaintiff’s claims also arose in southern California. In particular, as to claims of trademark infringement and unfair competition, the cause of action occurs ‘where the passing off occurs, i.e., where the deceived customer buys defendant’s product in the belief that he or she is buying plaintiff’s product.’ Ceramica Falcinelli, S.P.A. v. Am. Marazzi Tile, Inc., No. 99-1223, 1999 U.S. Dist. LEXIS 15526, 1999 WL 795479, (D.N.J. Sept. 29, 1999). Here, it is undisputed that defendants operate their businesses only in southern California; thus, the ‘passing off’ occurred there, and not in New Jersey.
Additional private considerations also weigh in favor of transfer here. Plaintiff does not dispute that most, if not all, of the individuals with information or knowledge that would substantiate or refute plaintiff’s claims either live or are otherwise located in southern California. Moreover, plaintiff does not dispute that the books and records pertaining to LSI and SWI are located in California. (Defs. Br., at 6.) Thus, the parties could more easily access sources of proof if this action is transferred to the Southern District of California. Therefore, the ease of access to sources of proof, location of books and records, costs associated with witness attendance, and availability of compulsory process over unwilling witnesses all favor transferring this action to the Southern District of California. See Jumara, 55 F.3d at 879.”
The court also felt that that “public interests” standard weighed “strongly” in favor of transfer here. The local interest of California in deciding this action strongly favors transferring the action to the Southern District of California. Because all of LSI’s and SWI’s stores are located in California, the LSI Franchise Agreement and SWI Franchise Agreement provide for application of California law, to the extent any of their provisions conflict with California law and are unfavorable to LSI and SWI. Therefore, California’s interest in providing a forum for adjudicating claims arising from contracts subject to its laws and involving local residents is strong here. See First Franklin Fin. Corp. v. Mortgage Acad., No. 06-4343, 2006 U.S. Dist. LEXIS 94411, 2006 WL 3734624, (N.D. Cal. Dec. 18, 2006)
“Jury considerations also favor transfer, as jury duty should ‘not be imposed upon the people of a community, which have no relation to the litigation.’ Liggett Group Inc. v. R.J. Reynolds Tobacco Co., 102 F.Supp.2d 518, 536 (D.N.J. 2000).
Ultimately, the court found that the defendants “have shown that the Southern District of California is a more convenient forum, and plaintiff has not rebutted that showing.”
Elite Sports Enterprises, INC. v. John Lococo, et al.; D.N.J.; CIVIL ACTION NO. 07-4947 (MLC); 2008 U.S. Dist. LEXIS 67472; 9/5/08
Attorneys of Record: (for plaintiff) James M. McGovern, JR, Lomurro, Davison, Eastman & Munoz, Pa, Freehold, NJ. (for defendants) Diane Krebs, Gordon & Rees, LLP, New York, NY.