Kendle v. Whig Enters., LLC

JOHN F. KENDLE, Plaintiff, v. WHIG ENTERPRISES, LLC, et al., Defendants.

Civil Action 2:15-cv-1295

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO EASTERN DIVISION

January 29, 2016

Judge Frost

Magistrate Judge King

OPINION AND ORDER

This matter is before the Court on Defendant Jason Rutland's Motion to Transfer Venue, ECF No. 30 ("Rutland Motion"); Motion to Transfer Venue of Defendants Whig Enterprises, LLC, RXPRO of Mississippi, Inc. and Mitchell Chad Barrett, ECF No. 31 ("WHIG Motion"); plaintiff's opposition to both motions, ECF No. 32 ("Plaintiff's Opposition"); and the reply brief of defendant WHIG Enterprises, LLC ("WHIG's Reply"). For the reasons that follow, the Rutland Motion and WHIG Motion are DENIED.

I. Factual Allegations and Procedural History

Defendant WHIG Enterprises, LLC ("WHIG") is a Florida limited liability company with its principal place of business in Jackson, Mississippi. Amended Complaint, ECF No. 10, ¶ 1. WHIG's members include, inter alios, defendants Mitchell Chad Barrett and David Jason Rutland, who are residents and citizens of Jackson, Mississippi. Id. at ¶¶ 1, 3-4. Rx Pro Mississippi, Inc. ("Rx Pro"), an affiliate of WHIG, is incorporated under the laws of the State of Mississippi withits principal place of business in Jackson, Mississippi. Id. at ¶ 2. Defendants Barrett and Rutland, as Rx Pro's sole shareholders, control Rx Pro. Id. WHIG and Rx Pro are in the business of manufacturing and marketing medical and pharmaceutical products, including compounded medications, which are formulations of individual medications prescribed to provide relief from pain, scars, wounds, migraine headaches, and other physical ailments. Id. at ¶¶ 6, 10. WHIG and Rx Pro market their medical products through distributors and salespersons such as plaintiff, a resident of Marietta, Ohio. Id. at ¶¶ 5-6.

At all times relevant to the Amended Complaint, defendants Barrett and Rutland, individually and on behalf of WHIG and/or Rx Pro, had a continuing business relationship with Axion Therapeutics, LLC ("Axion"), which is located in Cleveland, Ohio, involving the sale of compounded medications. Id. at ¶ 11. In the summer of 2013, after learning of plaintiff's sales and marketing activities on Axion's behalf, defendants Barrett and Rutland began communicating with plaintiff, who was located in Ohio, in order to recruit plaintiff to work directly with them and on behalf of WHIG and/or Rx Pro. Id. at ¶ 11.

On August 27, 2013, plaintiff and WHIG entered into a consultant agreement and a memorandum of understanding. Id. at ¶¶ 12-25. More specifically, following negotiations, plaintiff entered into a Distributor Consultant Agreement with WHIG pursuant to which he would receive a commission on plaintiff's sale of medical productsmanufactured by WHIG and/or Rx Pro, including compounded medications, by distributing the products in Ohio and throughout the United States. Id. at ¶¶ 12-13; Exhibit A (copy of Distributor Consultant Agreement effective September 1, 2013), attached thereto. This agreement contains, inter alia, the following forum-selection clause:

11. GOVERNING LAW. This Agreement and the employment relationship created by it shall be governed by Florida law. The parties hereby consent to jurisdiction in Florida for the purposes of any litigation relating to this Agreement.

Exhibit A, p. 5, Article 11, attached to Amended Complaint. Plaintiff and defendant Barrett signed the Distributor Consultant Agreement. Id. at p. 5.

Plaintiff and WHIG also entered into a memorandum of understanding ("Memorandum of Understanding") regarding certain physician marketing groups known as "BAMBR Marketing Groups." Complaint, ¶¶ 20-27; Exhibit B (copy of Memorandum of Understanding), attached thereto. Under the BAMBR business model, defendants compensated physicians and other healthcare providers who prescribed WHIG products to their patients by offering the providers ownership interests in BAMBR Marketing Groups. Complaint, ¶ 22. According to plaintiff, defendants had already begun establishing such groups in Mississippi and Florida and solicited plaintiff to expand the BAMBR business model throughout the United States. Id. at ¶ 23. In exchange, defendants Barrett and Rutland, individually and on behalf of WHIG and/or Rx Pro, promised plaintiff that he would receive an ownership interest in and a share of the profits earned by the BAMBRprogram. Id. at ¶ 24. Defendant Barrett, acting on behalf of WHIG and/or Rx Pro, and plaintiff executed the Memorandum of Understanding, which entitled plaintiff to an ownership interest in BAMBR Marketing Groups and additional compensation for marketing BAMBR stock ownership to qualified physicians for membership in BAMBR. Id. at ¶ 25; Exhibit B, attached to Amended Complaint. Plaintiff successfully enlisted at least three physicians, including one from West Virginia and two from North Carolina, as members. Amended Complaint, ¶ 27.

On February 25, 2014, plaintiff, acting as a marketer for defendants, communicated with defendants Barrett and Rutland about organizing a meeting of distributors in Atlanta, Georgia. Id. at ¶ 35. Plaintiff alleges that defendants Barrett and Rutland later wrongfully blamed him for promoting the discussion of negative topics during the distributor meeting in Atlanta and "immediately terminated their business relationships with Plaintiff and ceased all communication with him" and terminated his access to defendants Id. at ¶¶ 36-38. According to plaintiff, defendants Barrett and Rutland contacted plaintiff's sales representatives and encouraged them to terminate existing relationships with plaintiff and work directly with defendants. Id. at ¶ 39. Despite plaintiff's requests, defendants allegedly failed and refused to pay plaintiff commissions from

(1) sales procured by plaintiff and his sales team for January, 2014, February 2014 and all months to follow until all refills on all scripts were exhausted from those made in Ohio and throughout the United States (2) commissions owed to Plaintiff for refill sales procured by Plaintiff and his sales team, and (3) commissions that he would have earned in the future but for Defendants' wrongful termination of the Distributor Consulting Agreement.

Id. at ¶ 40. Plaintiff also alleges that defendants have failed to pay him for services in connection with the expansion and development of the BAMBR program nationwide and have failed to pay him profits and/or other compensation for plaintiff's actions that were necessary to the establishment of the Rx Pro Compounding pharmacy in Indiana, Pennsylvania. Id. at ¶¶ 41-42.

On April 15, 2015, plaintiff instituted this action, naming as defendants WHIG, Rx Pro, and Messrs. Barrett and Rutland. Complaint, ECF No. 1. Thereafter, plaintiff filed the Amended Complaint, asserting claims of breach of contract (breach of the Distributor Consultant Agreement, the Memorandum of Understanding, and the agreement in connection with the Rx Pro compounding pharmacy in Pennsylvania), unjust enrichment, and tortious interference with contractual and business relationships arising out of defendants' alleged wrongful termination of the parties' medical and pharmaceutical products and services marketing agreement. All of the defendants have moved to transfer this action to the Northern District of Florida, Pensacola Division. See Rutland Motion, WHIG Motion. The motions to transfer are ripe for resolution.

II. Standard

The Rutland Motion and WHIG Motion seek to transfer this action pursuant to 28 U.S.C. § 1404(a), which provides, in pertinent part, that, "[f]or the convenience of the 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[.]"This Court employs a two-step analysis in resolving motions filed pursuant to § 1404(a). See, e.g., Pac. Life Ins. Co. v. U.S. Bank Nat'l Ass'n, No. 1:15-CV-416, 2016 WL 223683, at *2 (S.D. Ohio Jan. 19, 2016); DRFP, LLC v. Republica Bolivariana De Venezuela, 945 F. Supp. 2d 890, 902 (S.D. Ohio 2013); Kay v. Nat'l City Mortg. Co., 494 F. Supp.2d 845, 849-50 (S.D. Ohio 2007). First, the threshold determination is whether the action might have been brought in the proposed transferee court. Id. "An action 'might have been brought' in a transferee court if: (1) the court has jurisdiction over the subject matter of the action; (2) venue is proper there; and (3) the defendant is amenable to process issuing out of the transferee court." SKY Techs. Partners, LLC v. Midwest Research Inst., 125 F. Supp.2d 286, 291 (S.D. Ohio 2000) (citations and punctuation omitted). Under 28 U.S.C. § 1391(b)(2), venue is proper in "a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated[.]"

Next, the Court must "evaluate both the convenience of the parties and various public-interest considerations[,]" which means that the Court ordinarily "weigh[s] the relevant factors and decide[s] whether, on balance, a transfer would serve 'the convenience of parties and witnesses' and otherwise promote 'the interest of justice.'" Atlantic Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Texas, ___ U.S. ___, 134 S. Ct. 568, 581 (2013) (quoting 28 U.S.C. § 1404(a)). "The balance of convenience, considering all therelevant factors, 'should be strongly in favor of a transfer before such will be granted.'" Kay, 494 F. Supp. 2d at 850 (quoting First Bank of Marietta v. Bright Banc Savings Assoc., 711 F. Supp. 893, 896-97 (S.D. Ohio 1988)). See also DRFP, LLC, 945 F. Supp. 2d at 902 (explaining that the second step of a § 1404(a) analysis requires a court to determine whether, "considering all relevant factors, the balance of convenience and the interest of justice 'strongly' favor transfer") (quoting Proctor & Gamble Co. v. Team Tech., Inc., No....