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KGM Contractors, Inc. v. Heavy Haulers, Inc.

United States District Court, D. Minnesota

June 5, 2017

KGM CONTRACTORS, INC., a Minnesota corporation, Plaintiff,
HEAVY HAULERS, INC., a Georgia corporation, and CARDINAL TRANSPORT, INC., a Delaware corporation also known as Illinois Cardinal Transport, Inc., Defendants.


          JOAN N. ERICKSEN United States District Judge.

         Plaintiff KGM Contractors, Inc. (“KGM”) brought claims against Defendants Heavy Haulers, Inc. and Cardinal Transport, Inc. for damage sustained to an asphalt plant during disassembly in Florida and transport to Minnesota. Heavy Haulers moved to dismiss for lack of personal jurisdiction and moved, in the alternative, to transfer this action to the Northern District of Florida, where the asphalt plant was originally located and disassembled. Cardinal Transport separately moved to transfer to the same District. For the following reasons, the Court denies Heavy Haulers's motion to dismiss, but grants its alternative motion, and Cardinal Transport's motion, to transfer to the Northern District of Florida.

         I. BACKGROUND

         KGM purchased an asphalt plant located in Hawthorne, Florida from Anderson Columbia Company, Inc. (See Compl. ¶ 6, Dkt. No. 1.) KGM then contracted with Heavy Haulers to disassemble the plant into parts and transport the parts to KGM's location in Hibbing, Minnesota. (See Id. ¶ 9.) In turn, Heavy Haulers subcontracted some of the transportation to Cardinal Transport. (See Id. ¶ 13.) Cardinal Transport ended up delivering its parts late. (See id.)

         After delivery, “KGM discovered that the [asphalt plant] was significantly damaged and altered.” (Id. ¶ 14.) Electrical wires were cut and destroyed, parts were broken and missing, and structural aspects of the plant were damaged, among other things. (See id.) KGM spent over $250, 000 repairing these conditions. (See Id. ¶ 16.) It also sustained lost profits and liquidated damages due to inability to use the plant. (See Id. ¶ 17.)


         A. Motion to Dismiss for Lack of Personal Jurisdiction

         Heavy Haulers moves to dismiss this action for lack of personal jurisdiction. (See Dkt. No. 24.) The question of jurisdiction usually takes precedence over other considerations. See Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 577 (1999). However, a federal court has discretion “to choose among threshold grounds for denying audience to a case on the merits.” Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp., 549 U.S. 422, 431 (2007) (quoting Ruhrgas, 526 U.S. at 585). The decision to dismiss or transfer a case based on venue considerations is one such threshold ground, as it is merely “a determination that the merits should be adjudicated elsewhere” and does not entail ruling on the merits. Id. at 432. Thus, a federal court may address venue first, “bypassing questions of subject-matter and personal jurisdiction, when considerations of convenience, fairness, and judicial economy so warrant.” Id. at 432; see also In re LimitNone, LLC, 551 F.3d 572, 575-78 (7th Cir. 2008) (holding that a district court did not impermissibly act by transferring a case before addressing subject-matter jurisdiction).

         In this case, there are persuasive arguments for and against finding that Heavy Haulers has sufficient minimum contacts with Minnesota such that maintenance of the lawsuit would not offend “traditional notions of fair play and substantial justice.” Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Due to this, in view of the Court's ability to bypass the issue by evaluating venue, and because the relevant factors overwhelmingly favor transferring this action, the Court declines to rule on the issue of personal jurisdiction over Heavy Haulers in Minnesota.

         B. Transfer under 28 U.S.C. § 1404(a)

         “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.” 28 U.S.C. § 1404(a). Heavy Haulers and Cardinal Transport request that the Court transfer this action to the Northern District of Florida. (See Dkt. Nos. 24, 29.) This action could have been brought in that District because it is where “a substantial part of the events or omissions giving rise to [KGM's claims] occurred, ” namely because disassembly and part of the transportation occurred there. 28 U.S.C. § 1391(b)(2). Also, with respect to KGM's claim under 49 U.S.C. § 14706 against Cardinal Transport, the Northern District of Florida is proper because it is a state in which Cardinal Transport, the delivering carrier, operates.[1] See § 14706(d)(1); Winona Foods, Inc. v. Timothy J. Kennedy, Inc., No. 07-CV-1003 (WCG), 2008 WL 2570600, at *4 (E.D. Wis. June 26, 2008). Because the Northern District of Florida is a district in which this action could have been brought, the Court next considers factors relevant to transfer.[2]

         Courts must consider three categories of factors when ruling on a motion to transfer: “(1) the convenience of the parties, (2) the convenience of the witnesses, and (3) the interests of justice.” Terra Int'l, Inc. v. Miss. Chem. Corp., 119 F.3d 688, 691 (8th Cir. 1997). The Court may consider any case-specific factors in conducting its “flexible and individualized [transfer] analysis.” Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988). “In general, federal courts give considerable deference to a plaintiff's choice of forum and thus the party seeking a transfer under section 1404(a) typically bears the burden of proving that a transfer is warranted.” Terra Int'l, 119 F.3d at 695. “The party seeking transfer must show that the balance of factors ‘strongly' favors the movant.” Toomey v. Dahl, 63 F.Supp.3d 982, 993 (D. Minn. 2014) (quoting Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947)). Ultimately, the Court has discretion to decide whether the balance of relevant factors favors transfer. See Stewart, 487 U.S. at 29 (citing Van Dusen v. Barrack, 376 U.S. 612, 622 (1964)).

         1. Convenience of the Parties

         When evaluating the convenience of the parties, courts may consider the parties' locations, the expenses and disruption that the parties will likely suffer if litigation is held in either forum, and the location where the complained-of conduct occurred. See In re Apple, Inc., 602 F.3d 909, 913-14 (8th Cir. 2010); Terra Int'l, 119 F.3d at 696; The Charter Oak Fire Ins. Co. v. The Burlington N. Santa Fe Ry. Co., No. 16-CV-140 (JNE/HB), 2016 WL 3004628, at *2-3 (D. Minn. May 24, 2016); Brockman v. Sun Valley Resorts, Inc., 923 F.Supp. 1176, 1180 (D. Minn. 1996). Transfer is not appropriate if it will merely shift inconvenience from one party to another. Terra Int'l, 119 F.3d at 696-97.

         a. The Parties' Locations

         In opposing transfer to the Northern District of Florida, KGM points out that none of the Parties are residents of Florida.[3] (See Plaintiff's Memorandum in Opposition to the Motion to Transfer (“Pl. Transfer Br.”) 7, Dkt. No. 40.) This appears to be the case: KGM is a Minnesota corporation, with a principal place of business in Minnesota; Heavy Haulers is a Georgia corporation, with a principal place of business in Georgia; and Cardinal Transport is a Delaware corporation, with a principal place of business in Illinois. (Compl. ¶¶ 3-5.) Despite this, Heavy Haulers argues that Florida is more convenient on balance because the company is located closer to the Northern District of Florida. (See Heavy Haulers's Memorandum in Support of Its Motion to Dismiss (“HH Dismiss Br.”) 16-17, Dkt. No. 25.) Cardinal Transport's drivers, who transported the plant parts and are independent contractors, are also closer to the Northern District of Florida; they are located in Florida and South Georgia. (Cardinal Transport's Memorandum in Support of Its Motion to Transfer (“CT Transfer Br.”) 4, Dkt. No. 30; see also Declaration of Jeffrey Clark (“Clark Decl.”) ¶ 5, Dkt. No. 31.) These drivers are the only identified persons affiliated with Cardinal Transport who participated in the events underlying the Parties' dispute. (See, e.g., Compl. ¶¶ 13, 16-17; Clark Decl. ¶ 5.) The practical location for Cardinal Transport, acting through independent contractors, is between Florida and South Georgia. Because, in the context of this case, more Parties are located closer to Florida, the Parties' locations favor transfer.

         b. Expenses and Disruption Resulting from Litigation in Either Forum

         The expenses and disruption that the parties “would likely incur . . . for airfare, meals, and lodging, and losses in productivity from time spent away from work” if litigating in one forum or another is relevant to the convenience of the parties. Oien v. Thompson, 824 F.Supp.2d 898, 903 (D. Minn. 2010) (quoting In re Apple, 602 F.3d at 913); see also Toomey, 63 F.Supp.3d at 993 (considering hardship to the parties). As explained above, the Parties are located closer to the Northern District of Florida. Due to the great distance between Minnesota and Florida, it is very likely that the Parties' collective expenses will be greater if they litigate this case in Minnesota, rather than in Florida. Thus, transfer would not merely shift inconvenience from one party to another, as KGM contends. (See Plaintiff's Memorandum in Opposition to the Motion to Dismiss (“Pl. Dismiss. Br.”) 18, Dkt. No. 41; Pl. Transfer Br. 7.) KGM will face some inconvenience if the case is transferred, but that inconvenience is outweighed by the inconvenience both Defendants would likely suffer if this action is litigated in Minnesota.

         More importantly, Heavy Haulers argues that, due to its small size and limited resources, litigation and a trial in Minnesota would seriously jeopardize its business operations. (See HH Dismiss Br. 16-17; see also Affidavit of Tony Clark (“Clark Aff.”) ¶ 7, Dkt. No. 26 (“Trying the case in [Minnesota] . . . would cripple Heavy Haulers'[s] ability to perform work during the trial.”) Where a defendant's “business would be substantially disrupted by having litigation proceed in an inconvenient forum, ” and the likely disruption would disproportionately burden the defendant, transfer is favored. Sec. & Exch. Comm'n v. Page Airways, Inc., 464 F.Supp. 461, 464 (D.D.C. 1978); see Feralloy Corp. v. Spig Indus., Inc., No. 09-CV-3028 (RMG), 2010 WL 3432283, at *2 (D.S.C. Aug. 30, 2010); In re Hanger Orthopedic Grp., Inc. Sec. Litig., 418 F.Supp.2d 164, 169 (E.D.N.Y. 2006).

         Heavy Haulers has only eight employees, and it argues that five of those employees are essential witnesses. (See HH Dismiss Br. 16-17; Clark Aff. ¶ 7.) Thus, trial in Minnesota could effectively shutter the company's operations and cause long-term business and financial consequences. On the other hand, trial in the Northern District of Florida-much closer to where Heavy Haulers operates-would likely have a less disruptive effect on Heavy Haulers's business. (See HH Dismiss Br. 16-17.) A similar argument can also be made for Cardinal Transport's independent contractors; trial in Minnesota would likely disrupt their ability to drive trucks and earn income more than trial in Florida would. The record does not reveal KGM's size, but its website indicates that it is larger than Heavy Haulers.[4] KGM also only identified three likely employee witnesses and did not argue that transfer would disrupt its business operations. (See Dkt. Nos. 27-1 at 7-8, 42-1 at 5.) By comparison, then, it appears less likely that KGM will suffer substantial business disruption if this action is litigated in Florida.

         Because Florida appears on balance less expensive for the Parties, and litigation in Minnesota will very likely force Heavy Haulers (and, potentially, Cardinal Transport's independent contractors) to shoulder a substantial and disproportionate disruption to ...

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