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Weight Loss Services, Lp, et al. v. Herbal Magic

September 22, 2011

WEIGHT LOSS SERVICES, LP, ET AL.
v.
HERBAL MAGIC, INC., ET AL.



The opinion of the court was delivered by: McLaughlin, J.

MEMORANDUM

The plaintiffs in this action are Weight Loss Services, LP ("Weight Loss Services"), NU Services, LP; LATYD, LP; LA My Way, LP; LATYDCA, LP; WLS IP, LLC; LAIP, LLC (collectively, the "entity plaintiffs"); William Warrin, Timothy Britt, and Kristi McKenna ("individual plaintiffs"). The plaintiffs filed their Complaint on May 24, 2011, in the Court of Common Pleas of Philadelphia County against Herbal Magic, Inc. ("Herbal"), and LA Weight Loss, LLC,*fn1 following the sale of their weight-loss business. The plaintiffs brought claims for breach of contract and breach of the individual plaintiffs' employment contracts, and sought a declaratory judgment interpreting the terms of the Asset Purchase Agreement ("APA") underlying the sale. The defendants removed the action to this Court on June 13, 2011 on the basis of diversity.

Before the Court are two motions: (1) the defendants'

Motion Under Fed. R. Civ. P. 12(b)(6) and/or 12(b)(3) to Dismiss, or in the Alternative, to Transfer Venue ("Defs.' Mot."), filed June 15, 2011; and (2) the plaintiffs' Motion to Amend the Complaint ("Pls.' Mot."), filed August 1, 2011. The Court will grant the motion to amend the complaint, deny the motion to dismiss, and grant the motion to transfer the case under 28 U.S.C. § 1404(a) to the United States District Court for the Southern District of New York.

I. Facts

The entity plaintiffs are Pennsylvania limited partnerships, a Pennsylvania limited liability company, and a Delaware limited liability company with their principal places of business located in a number of towns in eastern Pennsylvania.*fn2 Mr. Warrin and Mr. Britt reside in Pennsylvania and Ms. McKenna resides in New Jersey. The defendant Herbal Magic, Inc. is a Canadian corporation with its principal place of business located in Toronto, Ontario, and the defendant LA Weight Loss, LLC is a Delaware limited liability company with Herbal as its only member.*fn3 Compl. ¶¶ 3-16; Declaration of Craig Thompson, Ex. 2 to Defs.' Mot. ("Thompson Decl.") ¶¶ 2-3.

In early 2010, the defendants contacted the plaintiffs expressing their interest in purchasing their weight-loss business, LA Weight Loss. Throughout 2010, the plaintiffs and defendants negotiated a potential deal. Representatives from Herbal traveled to Philadelphia on numerous occasions to discuss the terms of the agreement, including provisions for the individual plaintiffs to continue operating the "Company Group" after the sale of the business.*fn4 The defendants conducted two rounds of due diligence on the deal and negotiations were completed on December 10, 2010. The parties executed the APA on that date. Compl. ¶¶ 29-45.

The APA contains two provisions that are relevant to the instant dispute:

13.6 Governing Law. This Agreement shall be governed by and construed in accordance with the Laws of the State of New York. 13.7 Consent to Jurisdiction and Venue . . . .

(a) Each party hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the courts of the United States of America located in the Southern District of New York and venue in Id.

Manhattan, New York County, New York, for any actions, suits or proceedings arising out of or relating to this Agreement.

APA, Compl. Ex. A at 55. The individual plaintiffs also executed Employment Agreements with the defendants that contained similar choice-of-law and forum-selection clauses. Employment Agreement §§ 13-14, Compl. Exs. B, C, D. The Employment Agreements provided that the individual plaintiffs would be employees of LA Weight Loss, LLC for a term of three years after the transaction closed and would be compensated at a rate of $250,000 annually, plus benefits. The individual plaintiffs were terminated on May 4, 2011, putatively for cause. Compl. ¶¶ 51-53, 63-64.

After the action was removed to this Court, the plaintiffs made demand on the defendants for severance payments and the value of their accrued but unused vacation days, which the defendants refused. The plaintiffs then filed their instant motion seeking leave to amend their complaint to add a claim for these amounts and liquidated damages under the Pennsylvania Wage Payment and Collection Law ("PWPCL"), 43 Pa. Cons. Stat. ยง 260.1 et seq. The ...


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