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Vinci v. VF Outdoor, LLC

United States District Court, D. Vermont

July 10, 2018

VF OUTDOOR, LLC, Defendant.


          Christina Reiss, District Judge

         Plaintiffs William and Linda Vinci (the "Vincis") bring state law claims against Defendant VF Outdoor, LLC ("VF Outdoor"), arising out of the Vincis' purchases of The North Face branded products subject to a Multiparty Guaranty Agreement ("the Agreement"). Pending before the court is VF Outdoor's motion to transfer the Vincis' remaining claims to the United States District Court for the Northern District of California pursuant to 28 U.S.C. § 1404(a). The Vincis oppose the motion, which the court took under advisement on May 31, 2018.

         Plaintiffs are represented by David E. Bond, Esq. Defendants are represented by R. Jeffrey Behm, Esq.

         I. Factual and Procedural Background.

         The court adopts as its factual and procedural background the factual allegations set forth in its February 21, 2018 Opinion and Order. See Opinion & Order (Doc. 24), Feb. 21, 2018, at 2-4. The Vincis are husband and wife and the sole shareholders of TNF Gear, Inc. ("TNF"), a Vermont corporation with its principal place of business in Burlington, Vermont. In 2001, TNF opened The North Face Store @ KL Sport in Shelburne, Vermont, which was later moved to College Street in Burlington and then to 90 Church Street in Burlington. TNF's store sold only The North Face branded apparel purchased at wholesale from V.F. Corp. and VF Outdoor. Plaintiffs allege that until 2015, "The North Face was positioned as a premium brand[, ]" and V.F. Corp. and VF Outdoor required them to adhere to manufacturer approved pricing plans that dictated correspondingly high retail prices. (Doc. 5 at 3, ¶ 11.) The Vincis allege that the two companies "represented to Plaintiffs that these policies applied to all retailers selling The North Face products." Id. at ¶ 9.

         In early 2015, TNF placed its yearly order for winter apparel, totaling approximately $1.2 million in merchandise. In the fall of 2015, after TNF accepted delivery of those products, V.F. Corp. and VF Outdoor allegedly dramatically reduced their wholesale prices for sales made to third-party vendors. These third-party vendors, in turn, sold the discounted merchandise at significantly reduced retail prices to the general public, in violation of the marketing policies with which V.F. Corp. and VF Outdoor required TNF and the Vincis to comply. The Vincis claim that they were unable to compete with the significantly reduced prices, and that even if they could match them, they were barred from doing so pursuant to their promise to adhere to Defendants' manufacturer approved pricing plans. The Vincis allege that they fell "deeply into debt[, ]" id., ¶ 13, and reported this to their contacts at the two companies who promised to "reign[] in" the third-party discounters. Id. at 4, ¶ 14.

         In 2016, the Vincis purchased $650, 000 in winter apparel inventory through TNF, and in the fall of that year V.F. Corp. and VF Outdoor again allegedly offered the same apparel to third-party vendors at steep discounts. The Vincis allege that they were again substantially underpriced by other retailers and were unable to maintain profitability. "As a result of Defendants' actions, the Vincis exhausted their savings and their credit, and in under 20 months saw their business go from a successful enterprise to the verge of failure." Id., ¶ 17. The Vincis claim they offered to sell their business to V.F. Corp. and VF Outdoor, but that they refused to entertain a fair market value purchase.

         On May 23, 2017, the Vincis and TNF filed a Complaint naming only V.F. Corp. as a Defendant and alleging breach of contract, promissory estoppel, breach of the implied covenant of good faith and fair dealing, and fraudulent nondisclosure under Vermont common law. On June 19, 2017, the Vincis and TNF amended their Complaint to include VF Outdoor as a Defendant, stating that VF Outdoor "is a wholly-owned subsidiary of [V. F. Corp.]. On information and belief, [VF Outdoor] is the owner of The North Face brand, and operates a division under the tradename, 'The North Face.'" Id. at 1, ¶ 4. The Amended Complaint includes a jury demand and seeks five million dollars in damages.

         On July 18, 2017, VF Outdoor and V.F. Corp. filed three motions pursuant to Fed.R.Civ.P. 12. First, VF Outdoor moved to enforce a binding forum selection clause in the Agreement with TNF, arguing in the alternative either for dismissal of the Vermont action or transfer of the case to the United States District Court for the Northern District of California. On January 12, 2018, the court granted VF Outdoor's motion and transferred TNF's claims against it to the Northern District of California. Those claims are presently pending in that court's San Francisco Division in Civil Docket No. 18-cv-00253-JSC.[1]

         Second, V.F. Corp. sought dismissal of all Plaintiffs' claims against it for lack of personal jurisdiction. On February 21, 2018, the court granted V.F. Corp.'s motion, dismissed all claims against it, and dismissed it as a party to this action. TNF was subsequently dismissed as a party because, following transfer of its claims against VF Outdoor and dismissal of its claims against V.F. Corp., none of TNF's claims remained pending in this court.

         Third, both V.F. Corp. and VF Outdoor sought dismissal of the Vincis' individual causes of action for failure to state a claim upon which relief could be granted. Having determined that it lacked personal jurisdiction over V.F. Corp., the court denied V.F. Corp.'s motion as moot. VF Outdoor's motion was thus granted in part and denied in part. The court dismissed Counts I and III without prejudice, which alleged breach of contract and breach of the implied covenant of good faith and fair dealing, but denied VF Outdoor's motion with respect to Counts II and IV, which pleaded claims of promissory estoppel and fraudulent nondisclosure. As a result, the Vincis' state law claims against VF Outdoor for promissory estoppel and fraudulent nondisclosure are the only claims that remain pending in this court. VF Outdoor seeks transfer of those claims to the Northern District of California so that all of the claims arising out of the sale of The North Face Branded products to TNF and the Vincis may be tried in a single action. The Vincis oppose that outcome.

         II. Conclusions of Law and Analysis.

         28 U.S.C. § 1404 governs VF Outdoor's motion to transfer and states that: "[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 or to any district or division to which all parties have consented." 28 U.S.C. § 1404(a). "Section 1404(a) is merely a codification of the doctrine of forum non conveniens for the subset of cases in which the transferee forum is within the federal court system; in such cases, Congress has replaced the traditional remedy of outright dismissal with transfer." Atl. Marine Constr. Co., Inc. v. U.S. Dist. Ct.for the W. Dist. of Texas, 571 U.S. 49, 60 (2013). It "reflects an increased desire to have federal civil suits tried in the federal system at the place called for in the particular case by considerations of convenience and justice." Van Dusen v. Barrack, 376 U.S. 612, 616 (1964) (footnote omitted).

         As the Supreme Court has observed, § 1404 "was designed as a federal housekeeping measure, allowing easy change of venue within a unified federal system." Piper Aircraft Co. v. Reyno, 454 U.S. 235, 254 (1981) (internal quotation marks omitted). Therefore, "[district courts [are] given more discretion to transfer under § 1404(a) than they [have] to dismiss on grounds of forum non conveniens[, ] id., and "motions for transfer ... are determined upon notions of convenience and fairness on a case-by-case basis." Cuyahoga Equip. Corp. v. United States (In re: Cuyahoga Equip. Corp.), 980 F.2d 110, 117 (2d Cir. 1992) (citing Stewart Org, Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988)).

         Where no forum selection clause governs the parties' dispute, "a district court considering a § 1404(a) motion . . . must evaluate both the convenience of the parties and various public-interest considerations." Atl. Marine, 571 U.S. at 62.

Factors relating to the parties' private interests include relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; possibility of view of premises, if view would be appropriate to the action; and all other practical problems that make trial of a case easy, expeditious and inexpensive. Public-interest factors may include the administrative difficulties flowing from court congestion; the local interest in having localized controversies decided at home; and the interest in having ...

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