Martensen v. Koch, Venue, and You

Yesterday we looked at a California federal court decision in Martensen v. Koch, in which ex-Oxbow executive Kirby Martensen has sued billionaire William Koch, alleging kidnapping, false imprisonment, conspiracy, and other claims related to his alleged treatment at the hands of Oxbow employees at the Bear Ranch in Colorado.  Specifically, we looked at what the decision means in terms of whether a court can maintain personal jurisdiction over an out-of-state defendant; in the Martensen case, the clear take-away is that committing any portion of an alleged wrong within a state counts as having committed the wrong within that jurisdiction.  So even though most of Kirby Martensen’s kidnapping and false imprisonment allegations relate to conduct that took place in Colorado, because he was allegedly placed on a private plane owned by Oxbow and flown to Oakland, California before being released, the court found that (for purposes of personal jurisdiction) Martensen’s alleged false imprisonment “that began on [Koch]’s private ranch by [Koch]’s agents [in Colorado] continued unbroken until [Martensen]’s release in Oakland, California,” and thus gave rise to personal jurisdiction over Koch in California.

Personal jurisdiction, however, is only the first step in the process of figuring out where you can and should be sued.  Personal jurisdiction determines whether a court has any power over you at all, and is based on the principle – expressed in depth in yesterday’s post – that if you have never set foot in the state of Wyoming, you cannot be compelled to appear in Court in Wyoming.(*)  But just because a state has personal jurisdiction over you doesn’t mean that state is the best place to handle a dispute.  This is the question of venue.  Read on.

Remember the argument on behalf of Koch that we left as a cliff-hanger at the end of yesterday’s post:  okay, California courts, you may have personal jurisdiction over me based on the fact that at least part of the “unbroken” chain of events that constitutes the alleged wrong took place in this state, but the overwhelming majority of Martensen’s claims center around what happened in Colorado.  He claims that he was lured out to Colorado, that he was intimidated by Colorado police officers, kept incommunicado from the outside world in Colorado, threatened in Colorado, and finally loaded onto the private plane in Colorado.  Doesn’t it make more sense for the Colorado courts to handle this case?

And indeed, this is precisely the fall-back argument that Koch made.  Generally, a litigant is permitted to argue “in the alternative” in motions made before a court.  So Koch first argued that he could not be subjected to jurisdiction in California at all; we addressed that argument yesterday.  He then argued, in the alternative, that even if he could be compelled to appear in court in California, it nevertheless made more sense and was more efficient for the case to be tried in Colorado where the majority of the alleged conduct occurred.

In support of this argument, Koch advanced three sub-arguments, all also in the alternative:  (1) that venue over all claims was not proper in the Northern District of California (which encompasses Oakland); (2) that even if venue in Oakland was proper with respect to Martensen’s false imprisonment claim, it is not proper over Martensen’s conspiracy claim; and (3) that even if venue in Oakland is proper, venue would be more appropriate in Colorado.

The Court rejected all three of those arguments.  Let’s look at why.

First, the Court determined that venue in Oakland was appropriate with respect to Martensen’s false imprisonment claim.  The relevant portion of the governing law – the federal venue statute, 28 U.S.C. § 1391 – provides that a lawsuit may be brought within “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.”   Here, the key word is “substantial,” which the Court noted is distinguishable from “majority.”  Thus, the fact that most of the alleged events giving rise to Martensen’s false imprisonment claim in Colorado does not automatically mean that venue is inappropriate in California; rather, the court must use its judgment to determine if the portion of the events occurring in California was “substantial.”  Here, the court opined that the fact that Martensen was allegedly prevented from catching his scheduled flight back to California and was instead flown via Koch’s private plane all the way back to Oakland constituted a “substantial” part of Koch’s claim.  The lesson here is that courts have considerable latitude to use their judgment as to whether events are “substantial” for purposes of venue, and there is no hard-and-fast rule that the majority of the conduct must occur within the place in which the lawsuit is brought.

Second, Koch argued that even if the California court had jurisdiction over Martensen’s false imprisonment claim, it certainly had no jurisdiction over his § 1983 conspiracy claim, because Martensen did not allege that any part of that alleged conspiracy took place in California.  Rather, Martensen alleged that all of the conspiracy took place in Colorado.

Here, the court agreed with Koch that Martensen’s civil conspiracy alleged conduct that took place exclusively in Colorado.  However, the court looked to the doctrine of pendent venue, which states that if venue is appropriate with respect to one of plaintiff’s claims, the court may retain other, closely-related claims brought in the same lawsuit as well, even if venue would be lacking for those claims if brought separately.  Here, the court found that although the specific elements of Martensen’s conspiracy claim are rooted in facts that allegedly took place in Colorado, the claim nevertheless “encompasses many of the same events” as the false imprisonment claim, and that therefore, the court could appropriately exercise pendent venue over the entire lawsuit.

Finally, Koch argued that, pursuant to 28 U.S.C. § 1404(a), the court could use its discretion to transfer the case to Colorado.  Here, the two pertinent statutory factors are (1) the “convenience of the parties and witnesses,” and (2) “the interest of justice.”  Id.  The “interest of justice” prong, in turn, hearkens back to a principle we discussed in yesterday’s post:  the idea that the Plaintiff is “master of her complaint” – that is, that you can generally choose where you want to sue someone, so long as the court in which you’ve brought the complaint has jurisdiction over the matter.  Doesn’t the idea of transferring venue for convenience undermine this principle?

It does.  As a result, courts require defendants moving to transfer venue to bear the burden of proof that the transfer is appropriate, and have further set forth a checklist of factors that gives weight to the plaintiff’s choice of where to bring suit in the first place.  In California, for example, there is an eight-part test that directs courts to consider:  “(1) the plaintiff's choice of forum; (2) the convenience of the parties; (3) the convenience of the witnesses; (4) ease of access to evidence; (5) familiarity of each forum with applicable law; (6) feasibility of consolidation of other claims; (7) any local interest in the controversy; and (8) the relative court congestion and time to trial in each forum.”  Pacific Coast Federation of Fisherman’s Ass’ns v. U.S. Dep’t of Interior (Case No. 12-2158 JSC) (N.D. Cal. Aug. 6, 2012).  (These factors are similar in other statets.)

Thus, in Martensen’s case, the court agreed that the question of convenience was a “close” call, but ultimately came down in Martensen’s favor based in part on the fact that Martensen was the plaintiff and chose to bring suit in California.

So there you have it:  a step-by-step approach as to how our courts balance the desire to allow plaintiffs to proceed in the forum of their choice against the need to protect defendants from being dragged off into inconvenient and foreign states with which they have little contact.

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