Delaware Business Litigation Report

Federal Court Declines To Transfer Case To Arizona After Applying The Jumara Test

J-Squared Technologies, Inc. v. Motorola, Inc., No. Civ.04-960-SLR, 2005 WL 388599 (D.Del. Feb. 4, 2005). Plaintiff brought suit alleging: (1) breach of contract; (2) promissory estoppel; (3) negligent misrepresentation; (4) breach of the duty of good faith and fair dealing; and (5) violation of Arizona's Consumer Fraud Act. Plaintiff sought compensatory and punitive damages. The defendant moved to transfer the action to the District of Arizona or alternatively dismiss the case under Fed.R.Civ.P. 9(b) and 12(b)(6). The Court denied the Motion to Transfer. Plaintiffs include J-Squared Technologies, Inc. ("JST"), a Canadian corporation with its principal place of business in Ontario, Canada and J-Squared Technologies (Oregon), Inc. ("JSO"), with its principal place of business in Oregon. The plaintiffs are commissioned sales agents selling various products to computer manufacturers. The defendant is a Delaware corporation, with its headquarters in Illinois. Motorola Computer Group ("MCG") is a business unit of the defendant, which manufactures computer products. MCG negotiated a Manufacturer's Representative Agreement ("MRA") with JST in 2002 and another with JSO. Both contracts were regulated from Arizona and the commissions were calculated there as well. Two former employees of MCG who were involved in the negotiations of the contracts lived in Arizona. The plaintiffs alleged that they never traveled to Arizona to conduct negotiations with MCG and that all such negotiations were conducted by telephone and emails. In short, the defendants claim that the suit has no nexus to Delaware and should therefore be transferred to Arizona. The Court extensively examined the Third Circuit law pertaining to transfer of actions between federal courts under 28 U.S.C. Section 404(a), and in particular the public and private factors for considering a motion to transfer laid down in Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995). Applying the Jumara factors and Third Circuit case law, the Court found that the defendants contention that Delaware had no connection with the litigation was unfounded because the defendant's complaints "about litigating [in Delaware] are outweighed by the fact that Motorola has enjoyed the benefits and protections of incorporation in Delaware and that the state has an interest in litigation regarding companies incorporated within its jurisdiction." Further, the Court noted that the two witnesses from Arizona had not declined to travel to Delaware for trial. The Court therefore held that conducting the trial in Delaware was not overly burdensome and therefore, declined to transfer the case to Arizona. Authored by: Raj Srivatsan 302.888. 6831 rsrivatsan@morrisjames.com Share