EASYWEB INNOVATIONS, LLC v. FACEBOOK, INC. No. 11-CV-5121 (JFB)(ETB).
888 F.Supp.2d 342 (2012)
EASYWEB INNOVATIONS, LLC, Plaintiff, v. FACEBOOK, INC., Defendant.
United States District Court, E.D. New York.
August 30, 2012.
Alan S. Kellman, Esq., John Michael Desmarais, Esq., and Xiao Li, Esq., of Demarais LLP, New York, NY, for Plaintiff.
Heidi L. Keefe, Esq., Jonathan P. Bach, Esq., and Vidya Bhakar, Esq., of Cooley LLP, Palo Alto, CA, New York, NY, for Defendant.
REDACTED MEMORANDUM AND ORDER
JOSEPH F. BIANCO, District Judge:
Plaintiff, EasyWeb Innovations, LLC ("EasyWeb"), commenced this patent infringement action against Facebook, Inc. ("Facebook").
Facebook has now moved to transfer this case to the Northern District of California. For the reasons set forth below, Facebook's motion is denied. In particular, EasyWeb has chosen to file this suit in its home district. Not only is this District the home of EasyWeb and its sole owner and employee, but it is also one of the locations where the operative facts occurred — namely, the conception, reduction to practice, filing, and the assertion of the patents-in-suit. Although the allegedly infringing product was designed, developed, and produced by Facebook in California (and, thus, many of the operative facts took place in California), the plaintiff's choice of forum is still entitled to great deference under these circumstances, and a balancing of the factors does not provide a sufficient basis to disturb the plaintiff's choice of forum in this particular case. Transfer of the case from New York to California will effectively shift the inconvenience from Facebook's witnesses to the plaintiff. Moreover, the relative means of the parties strongly weighs against transfer. Facebook is a large corporation that has failed to demonstrate how flying its witnesses to New York will pose a significant burden on the corporation. In contrast, EasyWeb is a small company that has significant financial issues, and litigating this case in California will place a substantial financial burden on EasyWeb and its sole owner. Such a burden is unwarranted under the circumstances of this case, especially in light of the fact that this is plaintiff's home forum. In short, having fully considered the relevant factors, fairness and convenience do not support disturbing plaintiff's choice-of-forum in this particular case and, thus, the motion to transfer the case to the Northern District of California is denied.
The following facts are undisputed for the purposes of the motion unless otherwise noted.
John D. Codignotto ("Codignotto") is the sole owner and employee of EasyWeb and alleges that he is the sole inventor of the patents-in-suit. (Declaration of John D. Codignotto, dated June 7, 2012 (the "Codignotto Decl."), at ¶¶ 1, 3-4.) Codignotto resides in Wantagh, New York, and has lived within the Eastern District (the "District") for the majority of his life. (Id. at ¶ 2.) Plaintiff asserts that Codignotto operates other businesses, in addition to EasyWeb, and continues to consult within the District for various customers. (Id. at ¶ 3.) With respect to this case, Codignotto asserts the following:
(Id. at ¶ 4.) According to plaintiff, he reduced his ideas to practice in Wantagh, but financial resources were not available to enable its commercialization. (Plaintiff's Opposition to Facebook's Motion to Change Venue ("Pl.'s Opp.") at 2.) In 1999, Codignotto filed a provisional patent application, that led to the patents-in-suit, using the same address in Wantagh that EasyWeb now uses. (Id.)
Facebook notes that "EasyWeb registered to do business in New York State less than five months before filing this lawsuit, and its principal place of business is a rented mailbox inside a UPS Store." (Facebook's Memorandum in Support of Facebook's Motion to Change Venue ("Def.'s Br.") at 1.) Plaintiff does not dispute that EasyWeb's address is a "rented mailbox inside a UPS Store," but states that Codignotto "[r]uns a small business that cannot afford to have the kind of headquarters and facilities that Facebook [has]" and that the mailing address was chosen because it is conveniently located two miles from Codignotto's residence, which serves as his home office. (Pl.'s Opp. at 3.) Codignotto asserts that "[d]ue to the difficult economic environment in the last several years, [his] businesses ... have not fared as well as [he] had hoped," [redacted] (Id. at ¶ 13.) Thus, Codignotto states, "I cannot afford the additional time away from my businesses nor the additional expenses involved if this case were transferred to California." (Id. at ¶ 14.) Codignotto also notes, with respect to his several businesses, "[a]s the only employee, any of my time away from those businesses would shut down their operations." (Id. at ¶ 3.)
Facebook's headquarters and principal place of business is in the Northern District of California. (Def.'s Br. at 1.) Facebook contends that its knowledgeable employees, relevant documents, other sources of proof concerning the design, development and implementation of its allegedly infringing technology, and non-party individuals and companies, are located within the Northern District of California. (Id.) Facebook also argues that it has no connection to the Eastern District of New York as it "[h]as no offices or employees in the District, maintains no records in this District, owns no property in this District, and operates no servers in this District." (Id. at 2.) As Facebook notes,
(Id. at 2-3 (citations and footnote omitted).)
EasyWeb acknowledges that Facebook does not have offices in this District; however, EasyWeb notes that Facebook has a large office in New York City with at least 100 employees. (Pl.'s Opp. Br. at 4.) EasyWeb also points to the fact that Facebook "[r]eceives a substantial amount of revenue from advertisements that are sold to New York area companies or that target New York residents, including an estimated reach of millions of people within the District by Facebook alone." (Id. at 5.) However, at oral argument on July 11, 2012, Facebook explained that, while the New York office has recently advertised for engineers, the engineers that would have knowledge regarding the product and its development are located in California.
B. Procedural History
Plaintiff commenced this action on October 20, 2011. On December 14, 2011, defendant requested that the Court schedule a pre-motion conference in anticipation of its motion to dismiss. On January 3, 2012, the Court held a pre-motion conference and set a briefing schedule. The motion to dismiss was fully briefed as of March 27, 2012.
The parties were scheduled for oral argument on the motion to dismiss for April 5, 2012. Prior to that date, defendant requested a pre-motion conference in anticipation of filing the pending motion to transfer this case to the Northern District of California. The Court adjourned the oral argument on the motion to dismiss, without date, pending the outcome of the motion to transfer.
Defendant filed its motion to transfer on May 17, 2012. Plaintiff filed its opposition on June 8, 2012. Defendant filed its reply on June 22, 2012. The parties participated in oral argument on the motion to transfer on July 11, 2012. The Court has fully considered all of the arguments presented by the parties.
A. Applicable Law
Under 28 U.S.C. § 1404(a), "[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." Section 1404(a) is intended "to prevent waste of `time, energy and money' and `to protect litigants, witnesses and [the] public against unnecessary inconvenience and expense.'" MasterCard Int'l Inc. v. Lexcel Solutions, Inc., No. 03 Civ. 7157(WHP), 2004 WL 1368299, at *5 (S.D.N.Y. June 16, 2004) (quoting Van Dusen v. Barrack,
The parties do not dispute that this action could have been brought in the
D.H. Blair & Co., Inc., 462 F.3d at 106-07 (quoting Albert Fadem Trust v. Duke Energy Corp.,
There is no strict formula for the application of these factors, and no single factor is determinative. See, e.g., Hilti Aktiengesellschaft v. Milwaukee Elec. Tool Corp., No. 04 Civ. 629(ARR)(ASC), 2004 WL 1812821, at *4 (E.D.N.Y. July 19, 2004); Indian Harbor Ins. Co. v. Factory Mut. Ins. Co.,
1. Plaintiff's Choice of Forum
It is well settled that the plaintiff's choice of forum is "given great weight." D.H. Blair & Co., Inc., 462 F.3d at 107 (citation omitted). Thus, "[a] plaintiff's choice of venue is entitled to significant consideration and will not be disturbed unless other factors weigh strongly in favor of transfer." Royal Ins. Co. of Am. v. United States,
In the instant case, EasyWeb is owned by one individual, Codignotto, who has resided within the District for the majority of his life and currently lives in Wantaugh, New York. Although EasyWeb's business address is a post office box inside of a UPS Store, defendant has pointed to no authority to support the position that simply because plaintiff's business address is a post office box that his choice of forum automatically should be granted less weight. In other words, in this case, it is clear from the record that the use of the post office box is not an indication of an attempt at forum shopping because it is clear that the home district for EasyWeb and its owner is this District. Instead, the post office box is simply an indication of the small size of EasyWeb and its limited financial resources. Thus, notwithstanding the use of the post office box, plaintiff's choice of forum here is entitled to deference as the plaintiff's home district.
Facebook also argues that plaintiff's choice of forum should not be given great weight because the operative facts have no connection to the District. (Def.'s Br. at 11-12.) Plaintiff counters that the allegedly infringed upon technology was created within this District. As EasyWeb states,
(Pl.'s Opp. Br. at 4 (emphasis in original).) However, Facebook contends that, in patent
2. Convenience of Witnesses
In deciding whether to disturb the plaintiff's choice of forum, the convenience of the witnesses is generally the most important factor in the transfer analysis. See, e.g., DLJ Mortgage Capital, Inc. v. Cameron Fin. Group, Inc., No. 07 Civ. 3746(LAP), 2007 WL 4325893, at *5 (S.D.N.Y. Dec. 4, 2007) ("[T]he convenience of witnesses is typically the most important factor in a motion pursuant to § 1404(a)."); accord Neil Bros. Ltd. v. World Wide Lines, Inc.,
Generally, the moving party submits an affidavit explaining why the transferee forum is more convenient, which includes "the potential principal witnesses expected to be called and the substance of their testimony." Pall Corp. v. PTI Techs., Inc.,
Facebook has submitted the declaration of Kelly Simpson ("Simpson"), an Intellectual Property Paralegal employed by Facebook. In Simpson's Declaration, Simpson states that, "[t]he vast majority of Facebook employees knowledgeable about the design, development and operation of the www.facebook.com website are located at Facebook's Menlo Park headquarters." (Declaration of Kelly Simpson, dated May 16, 2012 (the "Simpson Decl."), at ¶ 5.) Moreover, Simpson declares that,
(Id. at ¶ 7.) Thus, Simpson alleges that none of Facebook's potential witnesses are located in the Eastern District of New York. Moreover, Vidya Bhakar ("Bhakar"), an attorney with Cooley LLP, attorneys for defendant, submitted a declaration that alleges that over 40 individuals and entities
On the other hand, just as it is clear that the majority of Facebook witnesses would be located in the Northern District of California, the majority, if not all of plaintiff's witnesses will clearly be located within this District. As discussed supra, EasyWeb has one employee, Codignotto, who resides within this District and it would be inconvenient for him to travel to the Northern District of California. It is not clear at this juncture if plaintiff intends to call any additional witnesses from this District.
While Facebook may ultimately have more witnesses than plaintiff that need to travel to this District, at this stage of the
However, even assuming arguendo that Facebook will have to call a number of California residents as witnesses and that this factor favors transfer, the Court concludes that the other factors — especially, the fact that this is plaintiff's home district and the relative means of the parties (including plaintiff's precarious financial condition) — still outweigh this factor for the reasons discussed in this Memorandum and Order.
3. Location of Documents
With respect to the location of documents, Facebook argues that "[r]elevant documentation and evidence about Facebook's activities and operations concerning its website and services can also be found at its Menlo Park headquarters including evidence (such as financial marketing, and advertising documents and information) that may potentially relate to EasyWeb's damages and willfulness allegations." (Def.'s Br. at 10.) Moreover, Facebook argues that the location of EasyWeb's documents is irrelevant because "[i]t is the location of the development and production of the allegedly infringing product, as well as the documents related to such product, that is the relevant factor." (Id. (citing Ratner v. Martel Electronics Corporation, 07-CV-4742 (JS)(ARL), at *15, Sept. 30, 2008, ECF No. 52.)) However, the Court does not view this factor as particularly significant given the technological age in which we live, with the widespread use of, among other things, electronic document production. See, e.g., Am. S.S. Owners Mut. Prot. and Indem. Ass'n, Inc. v. Lafarge N. Am., Inc.,
4. Convenience of the Parties
In terms of the convenience of the parties, the Court recognizes that "`[w]here transfer would merely shift the inconvenience from one party to the other,' the Court should leave plaintiff's choice of venue undisturbed." See Wagner, 502 F.Supp.2d at 316 (quoting Wilshire Credit Corp. v. Barrett Capital Mgmt. Corp.,
Here, transferring venue to the Northern District of California will simply shift the inconvenience from plaintiff to defendant. As explained supra, EasyWeb's location, and its sole employee, Codignotto, is in the District. According to Facebook's representations that the majority of their employees with any material knowledge are located in the Northern District of California, it is entirely possible that transfer would completely eliminate any inconvenience to defendant. However, transferring to the Northern District of California will substantially add to plaintiff's inconvenience and place an enormous financial burden on plaintiff in litigating this case. Thus, this factor weighs against transfer of this action to the Northern District of California.
5. Locus of Operative Facts
The parties dispute whether the locus of operative facts is the location where the allegedly infringing technology was created (i.e., the Northern District of California), or where the initial technology was created and where the patents-in-suit were developed (i.e., the Eastern District of New York).
Facebook argues that "[i]n patent infringement cases, the locus of operative facts usually lies where the allegedly infringing product was designed, developed, and produced" (Def.'s Br. at 9 (citing Neil Bros. Ltd. v. World Wide Lines, Inc.,
However, several districts courts within this Circuit have had a more expansive view of the locus of operative facts in patent cases. As plaintiff notes in its opposition, in Children's Network, LLC v. PixFusion LLC, the court held that "[i]n patent cases, the locus of operative facts
This Court agrees with Children's Network framework and concludes that, in patent cases, the locus of operative facts can include the district where either the patent-in-suit
6. Availability of Process to Compel the Attendance of Unwilling Witnesses
Rules 45(b)(2) and 45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure prohibit a subpoena from directing a witness to travel more than 100 miles. Fed. R.Civ.P. 45. There is no indication that any non-party witnesses would refuse to appear and, thus, this factor is neutral. Although Facebook notes that potential witnesses would be outside of the District's ability to be subpoenaed, they have not indicated that such witnesses would be unwilling to appear.
7. Relative Means of the Parties
"Where a disparity exists between the means of the parties, such as in the case of
Although EasyWeb is a corporation, there is no dispute that it is a small corporation that is solely owned by Codignotto. Moreover, as discussed supra, Codignotto, as well as his businesses, have suffered financially, and as a result, are in substantial debt. Thus, EasyWeb argues that it cannot afford the expense of litigating in California. This Court agrees that the relative means of the parties, including the precarious financial situation of plaintiff, strongly favors denial of defendant's motion to transfer.
Facebook attempts to argue that the means of the parties is a neutral factor. However, that is clearly not the case. In contrast to EasyWeb, Facebook is a large corporation. Facebook attempts to point to the fact that EasyWeb has only provided the financial status of Codignotto, rather than EasyWeb, and thus has not met its burden. As Facebook argues "Mr. Codignotto's declaration is exceedingly ambiguous as to whether EasyWeb has or is receiving outside financing for this litigation. He merely claims that EasyWeb Technologies, Inc., a holding company for EasyWeb, has limited money in its bank account and that his other unrelated business expenses have not been successful." (Def.'s Reply at 7.)
However, Codignotto has explained in his declaration that EasyWeb has never received any revenue, and thus does not have a bank account. (Codignotto Decl. at ¶ 9.) Moreover, plaintiff has attached EasyWeb Technologies' most recent bank statement, showing a balance of $1,127.75. (Id. at ¶ 10.) Although Facebook is correct that the plaintiff in this case is EasyWeb, and not EasyWeb Technologies, as discussed supra, EasyWeb was only formed in 2011 with EasyWeb Technologies as its sole member. (Id. at ¶ 7.) Thus, EasyWeb Technologies' financial status is relevant to this analysis. In addition, although Facebook argues that Codignotto's personal financial situation is not relevant, the Court disagrees. Facebook does not dispute that EasyWeb's sole owner and employee is Codignotto. Accordingly, the Court finds that the financial information provided by plaintiff is sufficient to demonstrate that litigating this case in the Northern District of California would be financially burdensome to plaintiff, and that the relative means of the parties heavily favors a denial of transfer.
Additionally, Facebook does not dispute that it is a large corporation and that EasyWeb is a small corporation that is solely owned by Codignotto. While Facebook has argued that it would be inconvenient for it to litigate this case in New York, it has not suggested, unlike EasyWeb, that it would be a financial hardship to litigate this case in New York. Thus, this factor strongly favors denial of the transfer motion.
8. Familiarity with the Governing Law
With respect to the forum's familiarity with the governing law, the Court finds that this factor is neutral. This District and the Northern District of California are equally familiar with, and capable of applying, the legal principles necessary to adjudicate plaintiffs federal patent claims. See Farrior v. George Weston Bakeries Distrib., Inc., No. 08-CV-2705 (JFB)(WDW), 2009 WL 113774, at *8 n. 6 (E.D.N.Y. Jan. 15, 2009). (noting that either federal district court in question had necessary expertise to evaluate federal
9. Remaining Factors
With respect to the relative docket conditions of the two districts in question, the Court does not view this factor as significant in this case. The Court is fully capable of adjudicating plaintiff's claims in a timely manner, and there is no indication that the situation in the Northern District of California would be any different.
Similarly, the Court does not find any basis to conclude that "the interests of justice" factor — a separate component of the § 1404(a) analysis — weighs in favor of transfer. Instead, the Court finds that such interests support transfer under the totality of circumstances outlined herein.
In sum, after carefully considering the parties' submissions and the applicable law, the Court concludes in its discretion that the defendant has not met its burden by demonstrating that the above-referenced factors, as well as the totality of the circumstances and the interests of justice, warrant transfer of this action to the Northern District of California.
For the reasons set forth herein, defendant's motion to change venue, pursuant to Section 1404(a), is denied.
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