Critters of the Cinema, Inc. v. Nestle Purina Petcare Co.

CRITTERS OF THE CINEMA, INC., a California Corporation, Plaintiff v. NESTLE PURINA PETCARE CO., a Missouri corporation,and DOES 1 through 20, inclusive, Defendants

CASE NO. 1:16-CV-0123 AWI JLT

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA

May 24, 2016

ORDER ON MOTION TO CHANGE VENUE AND ORDER TRANSFERRING MATTER TO THE WESTERN DIVISION OF THE CENTRAL DISTRICT OF CALIFORNIA

(Doc. Nos. 9, 12)

This case was removed from the Kern County Superior Court and arises from a contractual dispute between Plaintiff Critters of the Cinema ("Critters") and Defendant Nestle Purina Petcare Co. ("Nestle"). Critters alleges claims for breach of contract, breach of the implied covenant of good faith and fair dealing, tortious interference with prospective economic advantage, and declaratory relief. Nestle now moves to transfer this matter under 28 U.S.C. § 1404(a) to the Eastern District of Missouri, and also moves to dismiss the complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Per the Court's request under Costlow v. Weeks, 790 F.2d 1486 (9th Cir. 1986), the parties have submitted briefing regarding a § 1404(a) transfer to the Central District of California. For the reasons that follow, the Court will transfer this matter to the Central District of California.

FACTUAL BACKGROUND

From the Complaint, in 1995, Critters began working with Nestle under various written agreements. Critters was to inter alia train, maintain, make available, and provide cats to Nestle for use in advertising "Fancy Feast" brand cat food. In exchange for these services, Nestle agreed to pay Critters certain fees and expenses.

In March 2010, Critters and Nestle entered into a new service contract ("the Contract"), whereby Critters agreed to make available and provide a minimum of two particular breeds of cats for use by Nestle in its advertising (on camera or personal appearance use) through March 2020. The Contract contains allegedly "one-sided" clauses in favor of Nestle: a "dissatisfaction" and a "cure 'satisfaction'" clause. The two clauses provide that, in the event Nestle is dissatisfied with Critters's services, Nestle is to provide Critters with written notice detailing the areas of deficiency. Critters would then have 30 days to cure the deficiency. The clauses provide that, after 30 days, if Nestle determines "in its sole discretion" that Critters has failed to make satisfactory improvement, Nestle can terminate the Contract. The Contract also contains a clause that required Critters to be the owner of the cats. The clause provides that Critters warrants and represents that it is the owner of the cats and has full authority to enter into the Contract and perform all obligations under the Contract.

On December 30, 2013, Critters and Nestle were both named as defendants in a lawsuit filed in the San Francisco Superior Court. This lawsuit was allegedly a sham. The lawsuit falsely alleged that Critters was not the sole owner of the cat Aladdin (a cat Critters provided to Nestle under the Contract), and further falsely alleged that Critters mistreated Aladdin.

On July 31, 2014, Nestle sent Critters a letter in which Nestle provided notice of its intent to terminate the Contract based on Nestle's "dissatisfaction." The letter explained that Nestle was dissatisfied because of the sham lawsuit. Nestle did not want to be associated with Critters when Critters was accused of failing to support standards and values cultivated by Nestle, or utilizing methods which violate the humane ideals that are the criteria by which Nestle operates. Nestle also was dissatisfied with the allegation that Critters did not own Aladdin. Although Nestle gave Critters 30 days to cure the dissatisfaction, Nestle allegedly had no intent to act in good faithbecause it had already decided to terminate the Contract. The July 31 letter stated that Nestle believed that the deficiencies were incapable of correction. Given this position, Nestle made it contractually impossible to cure under the Contract.

On August 25, 2014, Critters responded in good faith to Nestle. Critters adamantly denied the allegations in the sham lawsuit. Critters denied that it or its employees mistreated any cats or behaved in a manner that compromised Nestle's standards or values. In support of this assertion, Critters provided notarized attestations from several individuals, including a veterinarian. Critters also provided Nestle with evidence that it owned Aladdin.

Despite the allegations of the sham lawsuit, Nestle still hired Critters to perform the exact services it was to perform under the Contract on April 29, 2014, on May 5, 2014, and June 5, 2014.¹ Critters performed without incident and to Nestle's satisfaction.

On September 12, 2014, Nestle sent Critters a letter terminating the Contract. Nestle acknowledged that Critters had cured the alleged deficiencies, but still terminated the Contract based on a "perception," and not based on deficiencies in Critters's services. The decision to terminate was allegedly arbitrary, capricious and unreasonable, in light of the information provided by Critters and Critters' history and years of unblemished service to Nestle. Nestle completely failed to substantiate, investigate, or use the discovery process with respect to the allegations of the sham lawsuit.

On September 18, 2014, the state court dismissed the sham lawsuit. As of January 1, 2016, no appeal of the dismissal had been taken, and the plaintiff in the sham lawsuit has not attempted to re-file her case.

Critters alleges that the termination by Nestle breached the Contract, and that Nestle's conduct breached the implied covenant of good faith and fair dealing. Critters also alleges thatNestle knew of Critters's business relationship and prospects in the animal training industry. However, Nestle's termination of the Contract, along with Nestle's subsequent conduct and contact with third parties, has effectively blackballed and destroyed Critters's business and reputation. Nestle's conduct has interfered with Critters's business relationships and prospective business relationships.

I. MOTION TO CHANGE VENUE Defendant's Argument

Nestle argues that the relevant considerations show that this case should be transferred to the Eastern District of Missouri ("EDMO"). First, the contract at issue has a broad choice of law clause that sets Missouri law as the governing law. The EDMO will be more familiar with the governing law than the Eastern District of California ("EDCA").

Second, the EDMO has a strong relationship to the dispute. Nestle, 11 current and retired employees, and at least 3 third party witnesses are all located in the St. Louis area.

Third, the EDMO is less congested than the EDCA. The EDMO has about half the case load as the EDCA, and also has three more judges than the EDCA.

Fourth, there are numerous witnesses for whom the EDMO is a more convenient forum. There are a number of Nestle employees who worked on the television and advertising team involving Critters, and those employees all reside in the Saint Louis, Missouri area. There are third party entities who worked with Critters directly as part of advertising and public relations activities. Avrett, Free, & Ginsberg, LLC is based in New York, and was involved in television advertising and briefing Critters on what the cats would do for photoshoots. MRA Advertising/Production Support Services, Inc. ("MRA") was involved in television advertising costs and budgeting, including the expenses for Critters. MRA is based in Ohio, but the employee who worked with Nestle and Critters resides in Michigan. Thompson Design Group ("TDG") is based in California, and worked with Critters concerning what the cats should do for photoshoots. MSL Group Americas is a New York based public relations firm that communicated with Critters regarding public relations events. Check Mark PR ("CMPR") is a subsidiary of Nestle thatcommunicated with Critters regarding public relations events. CMPR and its 3 employees who worked with Critters are located in the St. Louis area. The nature and quality of these witnesses' testimony is central to the million dollar tortious interference claim. The current and former Nestle employees can all address whether they engaged in the alleged tortious conduct or knew of Nestle employees who did. The third party witnesses can attest to whether they heard anything from their Nestle counterparts that would support Critters's claims. All of the witnesses could be expected to affirm the value of the Fancy Feast brand and the reasons supporting Nestle's cure notice and termination. Given the location of these witnesses, the EDMO is more convenient.

In supplemental briefing, Nestle argues that the Central District of California ("CDCA") is a more appropriate forum than the EDCA. Nevertheless, for the same reasons that the EDMO is a more convenient and appropriate forum than the EDCA, it is also more convenient than the CDCA. There are numerous witnesses in the EDMO, and the EDMO is more familiar with the governing law.

Plaintiff's Opposition

Critters argues that a transfer of venue is unwarranted. California is an obvious forum choice. Critters resides in California, and Nestle maintains a facility in Maricopa, California. The contract at issue was entered into in California, all of the Fancy Feast cats reside in California, all of the cat training occurred in California, and all of the Fancy Feast advertising/filming occurred in California. That is, everything relevant to the complaint occurred in California. California has a strong connection to this case, and the choice to bring this suit in California is entitled to deference.

With respect to Court congestion, this is a relatively disfavored consideration. The EDCA is not so congested that it cannot hear this case.

With respect to witnesses, primary consideration is given to third parties, as opposed to the employees of a party. Those...