United States District Court, N.D. Alabama
STEPHEN MCKINNEY, INDIVIDUALLY AND DERIVATIVELY, ON BEHALF OF PRIMUS ENTERPRISE, LLC, Plaintiffs,
v.
THOMAS PINTER, et al., Defendants.
MEMORANDUM
SCHILLER, J.
Plaintiff
Stephen McKinney, Defendant Thomas Pinter, and Defendant
Stephen Worthington operated gravestone businesses together.
But now the arrangement is buried in argument. McKinney,
individually and derivatively on behalf of Primus Enterprise,
LLC, brings sixteen claims against Pinter, Worthington, and
their affiliated companies, Pinter Memorials, Inc., and
VetsUSA II, Inc.[1] McKinney's claims include
misappropriation of trade secrets under the Defend Trade
Secrets Act and the Pennsylvania Uniform Trade Secrets Act,
as well as numerous state law tort and contract claims.
Defendants
move to dismiss for lack of personal jurisdiction, improper
venue, and failure to state a claim. Alternatively,
Defendants seek to transfer pursuant to 28 U.S.C.
§§ 1404 or 1406. Because the parties established
business operations at an Alabama quarry, where most of the
alleged wrongful acts occurred, and for the reasons that
follow, the Court concludes that fairness and convenience
favor transfer. Therefore, the Court need not decide whether
it lacks personal jurisdiction over Worthington and VetsUSA,
or whether McKinney fails to state claims upon which relief
can be granted.
I.
BACKGROUND
McKinney,
Pinter, and Worthington are business partners from
Pennsylvania, Florida, and Virginia, respectively, who
allegedly agreed to manufacture, engrave, and distribute
gravestones. The gravestone businesses involved roughly three
arrangements: First, McKinney and Pinter manufactured
gravestones through a jointly owned limited liability
company, Primus. Second, Pinter Memorials, a company
associated with Pinter, inscribed the gravestones. Third,
VetsUSA, a company associated with Worthington, distributed
the gravestones to the United States Department of Veterans
Affairs, National Cemetery Association (“Veterans
Affairs”).
In
2013, McKinney purchased Wenzco Supplies, LLC. (McKinney
Decl. ¶¶ 5, 7.) Pinter was a customer of Wenzco
when McKinney purchased it. (Id. ¶ 7.) Business
relationships with McKinney and Worthington began as early as
2014 and “grew through [Pinter], who acted as a liaison
between” McKinney, Worthington, and Worthington's
companies. (Id. ¶¶ 11-13.)
The
present business arrangement began in June 2017, when Stanton
Grubb, an employee of VetsUSA, LLC, inquired about
McKinney's ability to supply materials for anticipated
contracts with the federal government. (Am. Compl. ¶
24.) Grubb's inquiry prompted follow-up meetings. Grubb
traveled to Pennsylvania in July 2017 to meet with McKinney
and Pinter, and to inspect facilities owned by Wenzco.
(Id. ¶¶ 25-26; McKinney Decl. ¶¶
5, 15.) Two months later, McKinney and Pinter visited a
facility in Bessemer, Alabama, that Worthington hoped to use
in connection with a federal gravestone contract. (Am. Compl.
¶ 27.)
After
the meetings, the parties decided to pursue a set-aside
contract with Veterans Affairs (the “VA
Contract”). (Id. ¶¶ 28-29.)
Worthington requested that Pinter solicit help from McKinney
to assemble a bid. (Id. ¶ 28.) Pinter did so in
November 2017, when he met with McKinney in Pennsylvania.
(Id. ¶ 32.) McKinney agreed to help Worthington
prepare a bid for the five-year VA Contract valued at $36,
391, 870. (Id. ¶ 28.) To submit the bid and
perform the contract, if awarded, Worthington established
VetsUSA in December 2017. (Id. ¶ 30.)
McKinney
helped prepare the bid by evaluating competition; evaluating
and soliciting equipment manufacturers and suppliers for raw
materials; creating a logistics strategy; and reviewing and
analyzing all costs, income, and other numbers for the
contract execution. (Id. ¶ 35.) He also
developed a specialized fabrication process, because the
parties agreed to subcontract gravestone production to
McKinney or an entity in which he had an ownership interest.
(Id. ¶ 37.) McKinney worked for four hours
every day, primarily from Pennsylvania, until March 2018,
when Veterans Affairs awarded the VA Contract to VetsUSA.
(Id. ¶ 39; McKinney Decl. ¶ 29.) After
VetsUSA secured the VA contract in late March or early April
2018, Worthington recognized that “but for
McKinney's involvement . . . VetsUSA would not have
obtained it.” (Am. Compl. ¶ 40.)
Once
VetsUSA secured the VA Contract, McKinney and Pinter started
developing plans as the prospective suppliers. (Id.
¶ 36.) McKinney and Pinter consulted a professional in
Blue Bell, Pennsylvania, about forming Primus to fabricate
blank gravestones. (Id. ¶¶ 42-43.) At the
consultant's direction, McKinney and Pinter formed
Primus, a Delaware limited liability company. (McKinney Decl.
¶ 38.) All formation paperwork was prepared in
Pennsylvania; some of the papers were executed in
Pennsylvania. (Id. ¶¶ 39-40.)
McKinney
and Pinter formed an oral operating agreement to govern
Primus. (Am. Compl. ¶ 46.) Among other things, it
provided that Primus begin work at the plant in Bessemer,
Alabama, operated by JB Processing, LLC. (Id. ¶
47(b); McKinney Decl. ¶ 50.) However, McKinney and
Pinter expected to move operations to Pennsylvania around
October 2018 because the Alabama marble quarry was not
suitable for the VA Contract's needs. (Am. Compl. ¶
47(b); McKinney Decl. ¶¶ 52-53.)
When
operations commenced in April 2018, McKinney lived in a hotel
room near the Alabama plant. (McKinney Decl. ¶¶
57-58.) By June 2018, McKinney and Pinter signed year-long
leases for apartments in Alabama. (Id. ¶ 58;
Pinter Decl. ¶ 4, Jan. 10, 2019.) Although Worthington
did not move to Alabama, he visited the plant on two
occasions. (Pinter Decl. ¶ 8, Jan. 10, 2019.)
McKinney
maintained his permanent address in Pennsylvania, returned to
Pennsylvania weekly or biweekly, and, at least once,
delivered supplies to Pinter from Pennsylvania. (McKinney
Decl. ¶¶ 59-60, 62.) Moreover, Wenzco shipped
materials from Pennsylvania to Alabama for the VA Contract,
and two Wenzco employees traveled from Pennsylvania to
Alabama to provide Primus with temporary labor for the VA
Contract. (Id. ¶¶ 63, 83.)
By the
end of summer, relationships soured. When McKinney returned
from traveling internationally on Primus business, he
received emails that effectively removed him from business
operations. Specifically, Pinter emailed McKinney on August
12, 2018, stating an intent to dissolve their business
relationships; the August 12 email copied an employee from JB
Processing. (Am. Compl. ¶¶ 70-71.) Ten minutes
later, the JB Processing employee emailed McKinney, banning
him from the Alabama plant. (McKinney Decl. ¶ 88.)
Almost two weeks later, Pinter copied McKinney on an email to
Worthington, stating that Pinter had formed a new business to
manufacture gravestones and offering to provide gravestones
to VetsUSA. (Id. ¶ 89.)
McKinney
alleges that, after Pinter froze him out, Pinter mismanaged
Primus by operating at less than capacity, diverting
resources, and depleting assets. (Am. Compl. ¶ 77.) As a
result, McKinney claims that Defendants stole, among other
things, “trade secrets . . ., know-how, consumer lists,
and contracts.” (Id. ¶ 78.)
II.
STANDARD OF REVIEW
Improper
venue may be asserted pursuant to Federal Rule of Civil
Procedure 12(b)(3). “[W]hen deciding a Rule 12(b)(3)
motion to dismiss for improper venue, a court must accept as
true the allegations in the complaint, although the parties
may submit affidavits to support their positions.”
Leone v. Cataldo, 574 F.Supp.2d 471, 483 (E.D. Pa.
2008). It is the defendant's burden, when moving to
dismiss based on improper venue, to establish that venue is
improper. Myers v. Am. Dental Ass'n, 695 F.2d
716, 724 (3d Cir. 1982); see also Shutte v. ...