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Des-Case Corp. v. Madison Industries Holdings LLC

United States District Court, M.D. Tennessee, Nashville Division

April 18, 2018




         I. Introduction

         Pending before the Court are Defendants Madison Industries And Todd Technologies' Motion To Transfer (Doc. No. 42), Plaintiff's Response (Doc. No. 64), and Defendants' Reply (Doc. No. 68).[1] Through a Notice Of Joinder (Doc. No. 67), Defendant Filtration Group Corporation has joined in the Motion To Transfer.

         For the reasons set forth below, Defendants' Motion To Transfer (Doc. No. 42) is GRANTED. Accordingly, this action is TRANSFERRED to the District Court for the District of Delaware.

         II. Factual and Procedural Background

         Through its Second Amended Complaint, Plaintiff Des-Case Corporation, a Tennessee corporation with its principal place of business in Goodlettsville, Tennessee, names as Defendants Madison Industries Holdings LLC, Filtration Group Corporation, and Todd Technologies Inc. LLC. (Doc. No. 66, at ¶¶ 1-4). Plaintiff alleges that, in 2014, Defendant Madison Industries explored the prospect of buying an interest in Plaintiff, but Plaintiff's majority owner at the time, Pfingsten Partners, was not interested in the offer and negotiations ended. (Id., at ¶ 10). According to Plaintiff, in late 2015 or early 2016, Pfingsten Partners explored an interest in selling Plaintiff and hired Craig-Hallum Capital Group LLC (“Craig-Hallum”) to explore the sale of the company and recruit bidders. (Id., at ¶ 11). The proposed sale was known by the code name “Project Purify.” (Id.) On February 22, 2016, Plaintiff alleges, Craig-Hallum entered into a Confidentiality and Non-Disclosure Agreement (“NDA”) with Defendant Madison Industries. (Id., at ¶ 13). Plaintiff further alleges that the NDA:

. . . provided that Craig-Hallum and Des-Case would share extensive confidential information about ‘Purify' or Des-Case for the sole purpose of allowing Madison Industries to determine if they wanted to purchase Des-Case. Des-Case was a third-party beneficiary of the NDA, which is attached to this Complaint as Exhibit A, but was not a signatory to it.

(Id., at ¶ 13).

         According to Plaintiff, Craig-Hallum shared Des-Case confidential information and trade secrets with Defendant Madison Industries, as well as Madison's representative, Defendant Filtration Group. (Id., at ¶¶ 16-20). Plaintiff alleges that Defendant Madison Industries subsequently made a purchase bid for the company that was unsuccessful. (Id., at ¶ 22). Plaintiff contends that Defendants Madison Industries and Filtration Group then used Plaintiff's confidential information to design and market a competing line of products, and formed Defendant Todd Technologies for that purpose. (Id., at ¶ 23). Plaintiff alleges that Defendants are also contacting Plaintiff's customers in an effort to sell these products. (Id., at ¶¶ 35-38).

         Plaintiff raises the following claims: (1) breach of contract against Defendant Madison Industries; (2) civil conspiracy against all Defendants; (3) intentional interference with business relationships and/or prospective business advantage against all Defendants; (4) unfair competition under the Lanham Act against all Defendants; (5) common law unfair competition against all Defendants; (6) violation of the Tennessee Uniform Trade Secrets Act against all Defendants; (7) breach of the Defend Trade Secrets Act against all Defendants; and (8) violation of the Tennessee Consumer Protection Act against all Defendants. (Doc. No. 66).

         III. Analysis

         Defendants argue that this case should be transferred to Delaware, pursuant to 28 U.S.C. § 1404(a), based on a provision of the NDA. Plaintiff argues, on the other hand, that neither the provision nor Section 1404 supports Defendants' transfer request.

         Section 1404(a) provides: “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 or to any district or division to which all parties have consented.” In ruling on a motion to transfer venue, a court typically considers factors relating to the convenience of the parties and the public interest. Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Texas, 571 U.S. 49, 134 S.Ct. 568, 581, 187 L.Ed.2d 487 (2013). Factors relating to the convenience of the parties include the relative ease of access to sources of proof; availability of compulsory process for attendance of witnesses and the cost of obtaining attendance of willing witnesses; and the possibility of a view of the premises, if relevant. 134 S.Ct. at 581 n.6. Factors relating to the public interest include the local interest in having localized disputes decided at home; the administrative difficulties resulting from court congestion; and the interest in having a trial of a diversity case in a forum at home with the law that will be applied. Id. See also Means v. United States Conference of Catholic Bishops, 836 F.3d 643, 651 (6th Cir. 2016) .

         When the parties have entered into an agreement that contains a valid forum-selection clause, “[t]he calculus changes.” Atl. Marine Const., 134 S.Ct. at 581. The district courts are to adjust the usual Section 1404(a) analysis by considering arguments about public-interest factors only, and by giving no weight to the plaintiff's choice of forum. Id., at 582. In addition, although the moving party generally bears the burden of demonstrating that transfer is warranted, a party acting in violation of a valid forum-selection clause bears ...

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