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Venue Class Action Defense Cases– Totilo v. Herbert: New York Federal Court Grants Defense Motion To Transfer Class Action Lawsuit To Georgia

Deference Afforded Plaintiff’s Choice of Forum “Diminished” in Class Action Cases, and Factors Affecting Convenience of Parties/Witnesses and Interests of Justice Supported Transfer of Class Action to Georgia under 28 U.S.C. § 1404(a) New York Federal Court Holds

Plaintiff filed a class action complaint against former officers of NetBank, FSB, a failed Internet bank that had been taken over by the Office of Thrift Supervision; the class action purported to be on behalf of bank depositors and alleged inter alia fraud, negligence and violations of new York’s consumer protection statute. Totilo v. Herbert, __ F.Supp.2d ___, 2008 WL 613148, *1 (S.D.N.Y. March 5, 2008). Defense attorneys moved to dismiss the class action complaint for failure to state a claim, for lack of jurisdiction and for improper venue, or alternatively moved the district court to transfer venue from New York to Georgia under 28 U.S.C. §§ 1404(a) and 1406(a). Id. The court explained at page 639 that “Section 1404(a) permits the transfer of any action to another district in which it might have been brought if such a transfer would serve the convenience of the parties and witnesses and be in the interest of justice.” The federal court granted the motion under Section 1404(a), and therefore did not analyze the Section 1406(a) claim.

Plaintiff’s lawyer filed the class action in the Southern District of New York on the grounds of diversity jurisdiction. Totilo, at *1. The district court readily resolved the threshold question of whether the class action complaint could have been brought in Georgia, as Netbank’s headquarters and principal place of business are in Georgia, and “a substantial part of the events or omissions giving rise to the claim occurred there,” see id. Accordingly, the federal court turned to whether transfer “would serve the convenience of the parties and witnesses and be in the interest of justice.” In this regard, the court noted that the deference generally afforded a plaintiff’s choice of forum is “diminished” in class action cases, but the relevant inquiry still involves an analysis of “(1) the convenience to the parties, (2) the convenience to the witnesses, (3) the relative ease of access to sources of proof, (4) the availability of process to compel the attendance of unwilling witnesses, (5) the cost of obtaining willing witnesses, (6) the practical problems indicating where the case can be tried more expeditiously and inexpensively, and (7) the interests of justice.” Id. The court easily concluded that transfer was warranted, explaining at page *2:

While plaintiff no doubt would find litigation in Atlanta less convenient than litigation here, it is perfectly plain on this record that the inconvenience to the defendants and non-party witnesses, all or most of whom are far closer to Atlanta than to New York, would dwarf any inconvenience suffered by plaintiff in consequence of litigation in Georgia. The Northern District would have readier access to sources of proof than would this Court. In short, all of the practical problems that attend the handling of litigation would be considerably reduced by litigation in Georgia, where the events occurred. Moreover, it bears mention that there are related cases already before the Northern District.

Accordingly, the district court transferred the class action to the Northern District of Georgia.

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