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HILLARD v. GUIDANT CORP.

December 9, 1999

RONALD L. HILLARD, INDIVIDUALLY, THOMAS J. MCGRATH, JR., INDIVIDUALLY, AND DEVICES FOR LIFE, INC., PLAINTIFFS,
v.
GUIDANT CORPORATION, SULZER INTERMEDICS, INC. AND SULZER MEDICA USA, INC., DEFENDANTS.



The opinion of the court was delivered by: Munley, District Judge.

MEMORANDUM

Before the court for disposition is the plaintiffs' motion to transfer. The plaintiffs are Devices for Life, Inc. (hereinafter "DFL"), Ronald Hillard and Thomas McGrath, Jr., and the defendants are Guidant Corporation and Sulzer Intermedics, Inc.*fn1 The matter has been fully briefed and is thus ripe for disposition.

Background

Plaintiffs brought the instant action against the defendants, for conduct which occurred during Guidant Corporation's acquisition of Sulzer Intermedics, Inc., for whom the plaintiffs had been sales representatives under a Sales Representative Agreement (hereinafter "Agreement") which plaintiffs executed on April 1, 1996. Pursuant to the terms of the Agreement, the plaintiffs were the exclusive sales representatives for a defined territory with responsibility for selling products manufactured and/or distributed by Intermedics, Inc.*fn2 Further, Intermedics, Inc. was to use its "best efforts" to supply products to enable plaintiffs to meet their sales quotas.

The plaintiffs allege that the Agreement is binding on Intermedics' successors and assigns including Defendant Guidant who purchased Intermedics on February 1, 1999. Guidant sought to have direct employees sell their products rather than independent contractors such as the plaintiffs. Plaintiffs and Intermedics' other independent contractors were faced with a choice, either become direct employees of Guidant or remain independent contractors with Intermedics. Plaintiffs allege that Guidant implemented a plan whereby independent contractors would be kept a generation or two behind in technology as an incentive for the independent contractors to become direct employees in derogation of the Agreement. Plaintiffs' complaint seeks declaratory judgment regarding each party's rights and obligations under the Agreement as well as damages for breach of contract and commercial disparagement.

This court granted a preliminary injunction for the plaintiffs ordering, inter alia, Defendant Guidant to use its "best efforts" to supply Plaintiff DFL with sufficient quantities of state-of-the-art devices manufactured and/or distributed by Guidant in accordance with the obligation set forth in Sections 3.1.1 and 3.2.1 of the Sales Representative Agreement. Our decision was appealed, and the defendants received a stay of injunction from the appellate court. Plaintiffs decided to sever certain relationships with the defendants and made an alternative arrangement with St. Jude Medical S.C., Inc. (hereinafter "St. Jude"), an industry competitor. Plaintiffs Hillard and McGrath agreed to work as independent sales representatives selling products competitive to those manufactured and distributed by the defendants. As a result of Hillard and McGrath and the remainder of its sales representatives departing, Plaintiff DFL discontinued selling on behalf of Intermedics. The Third Circuit Court of Appeals dismissed the appeal as moot, and we subsequently vacated the preliminary injunction.

It would appear that much of plaintiffs' complaint is now moot. However, the breach of contract and commercial disparagement claims remain. Defendants Intermedics has filed a counterclaim seeking reimbursement of the temporary financial assistance and damages for plaintiffs having allegedly disparaged Intermedics and injuring its reputation by publicly stating that Intermedics products are inferior or substandard in violation of the agreement.

Plaintiffs now move this court to transfer the action to the United States District Court for the Central District of California. The defendants oppose the transfer. After a careful review, and for the reasons that follow, we shall deny the motion.

Discussion

The law provides that for 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. 28 U.S.C. § 1404. The Third Circuit has developed a paradigm for analyzing motions to transfer which includes an examination of public and private interests. Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995). The private interests to be examined include: "plaintiff's forum preference as manifested in the original choice; whether the claim arose elsewhere; the convenience of the parties as indicated by their relative physical and financial condition; the convenience of the witnesses — but only to the extent that the witnesses may actually be unavailable for trial in one of the fora; and the location of books and records (similarly limited to the extent that the files could not be produced in the alternative forum.)." Id. (citations omitted).

"The public interests have included: the enforceability of the judgment; practical considerations that could make the trial easy, expeditious, or inexpensive; the relative administrative difficulty in the two fora resulting from court congestion; the local interest in deciding local controversies at home; the public policies of the fora; and the familiarity of the trial judge with the applicable state law in diversity cases." Id. at 879-880. The burden of establishing a need for transfer to another district rests with the moving party. Id. at 879.

In the instant case, plaintiffs contend that in light of a change in circumstances between the parties, it is appropriate to transfer the case to the United States District Court for the Middle District of California to allow the issues to proceed collectively with seven other closely related actions presently pending there. Such a transfer will be convenient for the parties and witnesses, will promote judicial economy, will not prejudice the defendants and will serve the interests of justice, according to the plaintiffs.

Defendant's first argument is that it is improper for this court to rule on the motion to transfer while an appeal is pending on the preliminary injunction decision. As the appeal has been disposed of, this argument is now moot, and we shall proceed to the substantive contentions.

Defendants allege that motions to transfer should not be liberally granted and that it is the plaintiffs' burden as the moving party to establish the need for the transfer. Defendants proceed to analyze the following factors and find them all weighing in their favor: plaintiffs forum preference; where the operative events occurred; convenience of the witnesses and availability of compulsory process to secure attendance of non-party witnesses; where the action can be tried ...


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