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Case 3:16-cv-01966-JSC Document 16 Filed 06/17/16 Page 1 of 23

1 Ian R. Feldman (State Bar No. 200308)


ifeldman@clausen.com
2 R. Mick Rubio (State Bar No. 285588)
3 mrubio@clausen.com
CLAUSEN MILLER P.C.
4 17901 Von Karman, Suite 650
5 Irvine, CA 92614
Telephone (949) 260-3100
6 Facsimile (949) 260-3190
7 Attorneys for Defendants
8 BRIGHTSTAR FRANCHISING, LLC, an
Illinois Limited Liability Company; SHELLY
9 SUN, an individual; SEAN FITZGERALD, an
individual; THOMAS GILDAY, an individual;
10
SCOTT OAKS, an individual
11
12 IN THE UNITED STATES DISTRICT COURT
13 FOR THE NORTHERN DISTRICT OF CALIFORNIA
14
15 COSMO FRASER, an individual; ADAM Case No: 3:16-cv-01966-JSC
16 FRASER, an individual, (Honorable Magistrate Judge
Jacqueline Scott Corley)
17 Plaintiffs,
NOTICE OF MOTION AND MOTION
18 vs. TO DISMISS PURSUANT TO FRCP
12(b)(3); OR IN THE ALTERNATIVE,
19 BRIGHTSTAR FRANCHISING, LLC, an TRANSFER VENUE TO THE DISTRICT
20 Illinois Limited Liability Company; et al. COURT OF NORTHERN ILLINOIS
PURSUANT TO 28 U.S.C. § 1401(a);
21 Defendants. MEMORANDUM OF POINTS AND
AUTHORITIES
22
[Concurrently Filed With Declaration of Shelly Sun,
23 Declaration of Sean Fitzgerald, Declaration of Thomas
Gilday, Declaration of Scott Oaks, and Declaration of Ian
24 R. Feldman]

25 Date: August 04, 2016


26 Time: 9:00 a.m.
Court Room: F, 15th Floor
27
[Marin County Superior Court Case No.
28 CIV 1600876]
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NOTICE OF MOTION AND MOTION TO DISMISS PURSUANT TO FRCP 12(b)(3); OR IN ALTERNATIVE,
TRANSFER VENUE TO THE DISTRICT COURT OF NORTHERN ILLINOIS PURSUANT
TO 28 U.S.C SECTION 1401(a)
Case 3:16-cv-01966-JSC Document 16 Filed 06/17/16 Page 2 of 23

1 TO PLAINTIFFS AND TO THEIR ATTORNEY OF RECORD HEREIN:


2 PLEASE TAKE NOTICE that on August 04, 2016, in Courtroom F, 15th Floor, or as
3 soon thereafter as the matter may be heard in the above-entitled Court, located at 450
4 Golden Gate Avenue, San SHELLY SUN, an individual, SEAN FITZGERALD, an
5 individual, THOMAS GILDAY, an individual Francisco, CA 94102, Defendants
6 BRIGHTSTAR FRANCHISING, LLC, an Illinois Limited Liability Company, , and SCOTT
7 OAKS, an individual (collectively “Defendants”) will move the Court to dismiss the action,
8 with prejudice. Alternatively, Defendants move this Court to transfer Venue to the Northern
9 District Court of Illinois pursuant to 28 U.S.C. §1404(a).
10 Defendants request that this Court dismiss Plaintiffs’ First Amended Complaint, with
11 prejudice, and with costs to Defendants, pursuant to Fed. R. Civ. P. 12(b)(3) on the basis that
12 Plaintiffs initiated this matter in an Improper Venue. Alternatively, Defendants request that
13 this Court transfer Venue to the Northern District Court of Illinois, pursuant to 28 U.S.C. §
14 1404(a) on the basis of convenience and in the interests of justice.
15 The Motion will be based on this Notice of Motion, the Memorandum of Points and
16 Authorities filed herewith, the Declaration of Shelly Sun filed herewith, the Declaration of
17 Sean Fitzgerald filed herewith, the Declaration of Thomas Gilday filed herewith, the
18 Declaration of Scott Oaks filed herewith; the Declaration of Ian R. Feldman filed herewith,
19 and the pleadings and papers filed herein.
20
DATED: June 17, 2016 CLAUSEN MILLER P.C.
21
22
BY _____________________________________
23 Ian R. Feldman
R. Mick Rubio
24
25 Attorneys for Defendants
BRIGHTSTAR FRANCHISING, LLC, an
26 Illinois Limited Liability Company;
SHELLY SUN, and individual; SEAN
27 FITZGERALD, an individual; THOMAS
GILDAY, an individual; SCOTT OAKS, an
28 individual
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NOTICE OF MOTION AND MOTION TO DISMISS PURSUANT TO FRCP 12(b)(3); OR IN ALTERNATIVE,
TRANSFER VENUE TO THE DISTRICT COURT OF NORTHERN ILLINOIS PURSUANT
TO 28 U.S.C SECTION 1401(a)
Case 3:16-cv-01966-JSC Document 16 Filed 06/17/16 Page 3 of 23

1
2 TABLE OF CONTENTS

3 I. INTRODUCTION AND STATEMENT OF ISSUES ......................................1


4 II. STATEMENT OF FACTS ................................................................................1
5
A. BrightStar Franchise ...............................................................................1
6
B. The Individual Defendants ......................................................................2
7
C. Negotiation of Franchise Agreement ......................................................3
8
D. Plaintiffs’ Participation in “Join The Team” Day...................................3
9
10 E. BrightStar-Fraser Franchise Agreement .................................................3

11 III. PROCEDURAL HISTORY ...............................................................................4


12 A. Initial Complaint .....................................................................................4
13 B. First Amended Complaint .......................................................................5
14
IV. ARGUMENT .....................................................................................................5
15
A. Defendants May Challenge Venue By Way Of A Motion To
16 Dismiss Under Fed. R. Civ. Proc. 12(b)(3). ...........................................6
17 B. The Venue Clause In the Franchise Agreement Requires That
18 This Matter Be Adjudicated In The Northern District Of Illinois. .........8

19 A. Alternatively, as a Matter Of Convenience, This Matter Should


Be Transferred to the Northern District Of Illinois. ...............................9
20
1. Location of Where Relevant Agreements Were Negotiated ................11
21
22 2. The State That Is Most Familiar With the Governing Law ..................12

23 3. Plaintiff’s Choice of Forum ..................................................................13

24 4. The Respective Parties’ Contacts With the Forum ...............................13


25 5. The Contacts Relating to the Plaintiff’s Cause of Action in the
26 Chosen Forum .......................................................................................14

27 6. The Differences in the Costs of Litigation In the Two Forums ............14

28 7. The Availability of Compulsory Process to Compel Attendance


of Unwilling Non-Party Witnesses .......................................................15
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TABLE OF CONTENTS
Case 3:16-cv-01966-JSC Document 16 Filed 06/17/16 Page 4 of 23

1 8. Ease of Access To Sources of Proof .....................................................17

2 9. Public Policy of Forum State ................................................................17

3 V. CONCLUSION ..................................................................................................1
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TABLE OF CONTENTS
Case 3:16-cv-01966-JSC Document 16 Filed 06/17/16 Page 5 of 23

1 TABLE OF AUTHORITIES
2 Cases
3
4 Argueta v. Banco Mexicano, S.A. (9th Cir. 1996) 87 F.3d 320 ............................................... 8

5 Commodity Futures Trading Comm’n v. Savage (9th Cir. 1979) 611 F.2d 270 .............. 11, 13

6 Greenberg v. Giannini (2d Cir. 1944) 140 F.2d 550 ................................................................. 7

7 Jones v. GNC Franchising, Inc. (9th Cir. 2000) 211 F.3d 495 ............................................... 11

8 Lambert v. Kysar, 983 F.2d 1110 (1st Cir. 1993) ................................................................. 6, 7

9 Moss v. Atlantic Coast Line R.R. Co., 157 F.2d 1005 (2d Cir. 1946) ................................. 6, 7

10 PT United Can Co. Ltd. V. Crown Cork & Seal Co., Inc. 138 F.3d 65 (2d Cir. 1998)............ 6

11 Statutes

12
28 U.S.C. § 1332(a) ................................................................................................................ 10
13
28 U.S.C. § 1404(a) .............................................................................................................. 1, 6
14
28 U.S.C. § 1441 ....................................................................................................................... 7
15
28 U.S.C. § 1441 (a) ................................................................................................................. 7
16
28 U.S.C. § 1441(b) .................................................................................................................. 4
17
28 U.S.C. §1446 ........................................................................................................................ 7
18
California Corporations Code § 31201 ................................................................................... 12
19
Fed. R. Civ. P. 12(b) ............................................................................................................. 6, 8
20
Fed. R. Civ. P. 12(b)(3)................................................................................................. 1, 5, 6, 7
21
22
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TABLE OF AUTHORITIES
Case 3:16-cv-01966-JSC Document 16 Filed 06/17/16 Page 6 of 23

1 MEMORANDUM OF POINTS AND AUTHORITIES


2 I. INTRODUCTION AND STATEMENT OF ISSUES
3 Plaintiffs Cosmo Fraser and Adam Fraser (“Plaintiffs”) have no facts to establish that
4 this Court is the proper venue to adjudicate Plaintiffs’ Claims as against the Defendants.
5 Because of this, the Court should dismiss Plaintiffs’ Complaint in its entirety as against the
6 Defendants pursuant to Fed. R. Civ. P. 12(b)(3).Alternatively, this Court should transfer this
7 matter to the Northern District of Illinois pursuant to 28 U.S.C. § 1404(a).
8 The issues to be decided by this Court are: (1) whether or not Plaintiffs’ First
9 Amended Complaint should be dismissed, with prejudice, and with costs to Defendants, on
10 the basis that Plaintiffs commenced this litigation in an Improper Venue (Fed. R. Civ. P.
11 12(b)(3)); and (2) whether or not venue should be transferred to the Northern District of
12 Illinois on the basis of convenience and in the interests of justice (28 U.S.C. § 1404(a)).
13 II. STATEMENT OF FACTS
14 This matter stems from negotiations of a purported Franchise Agreement and the
15 subsequent establishment of a franchise as between franchisor Defendant BrightStar
16 Franchising, LLC (“BrightStar”)1, and the Plaintiffs as franchisees. Plaintiffs’ First
17 Amended Complaint sets forth allegations as described in detail below.
18 A. BrightStar Franchise
19 BrightStar is a franchisor in the home healthcare industry. See Plaintiffs’ First
20 Amended Complaint (“FAC”) attached as Exhibit “C” to the concurrently filed Declaration
21 of Ian R. Feldman (“Feldman Decl.”) at ¶ 21. Plaintiffs allege that on January 17, 2013,
22 Plaintiffs entered into a Franchise Agreement with Defendant BrightStar for the operation of
23 a BrightStar Franchise (“Franchise Agreement”). Exhibit “C” to Feldman Decl., FAC at ¶
24 22. Plaintiffs allege that they engaged in negotiations with the Individual Defendants and
25 BrightStar for the establishment of a franchise in Northeast Atlanta, Georgia. Exhibit “C” to
26 Feldman Decl., FAC at ¶ 23. Plaintiffs allege that the Individual Defendants and BrightStar
27 purportedly refused to allow a sale in that territory but rather were more interested in
28
1 Defendant BrightStar Franchising, LLC is not a movant in this herein Motion to Dismiss.
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MEMORANDUM OF POINTS AND AUTHORITIES
Case 3:16-cv-01966-JSC Document 16 Filed 06/17/16 Page 7 of 23

1 Plaintiffs opening a franchise in a territory known as the “Buckhead Territory”, also located
2 in Georgia. Exhibit “C” to Feldman Decl., FAC at ¶ 24.
3 Plaintiffs allege that the Buckhead Territory was not a “new” territory, but rather, the
4 Buckhead Territory already had two previously failed BrightStar franchises. Exhibit “C” to
5 Feldman Decl., FAC at ¶ 26. Plaintiffs allege that Defendant BrightStar and the Individual
6 Defendants Shelly Sun, Sean Fitzgerald, Thomas Gilday, and Scott Oaks (“Individual
7 Defendants,” collectively “Defendants”) failed to disclose these facts and that Defendants:
8 instead [went] to great lengths to conceal the existence of the
previous franchisees to Plaintiffs by, including but not limited to,
9 providing Plaintiffs contact information of franchisee owner
10 operators in Georgia, in order for Plaintiffs to conduct due
diligence prior to signing FA [Franchise Agreement], that
11 specifically excluded former Buckhead Territory owner who still
12 owns and operates a separate territory in Georgia.

13 Exhibit “C” to Feldman Decl., FAC at ¶ 26.

14 Furthermore, Plaintiffs allege that Defendants concealed facts showing that the

15 Buckhead Territory was not a marketable area for the Plaintiffs’ new franchise. Exhibit “C”

16 to Feldman Decl., FAC at ¶ 27. Plaintiffs further allege that these issues were discovered

17 only after the signing of the Franchise Agreement. Exhibit “C” to Feldman Decl., FAC at

18 ¶28.

19 Plaintiffs allege that they discovered the franchise from a franchisee, Kevin Tolnai,
20 who purportedly signed a Franchise Agreement for the Buckhead Territory on or around
21 December 2007. Exhibit “C” to Feldman Decl., FAC at ¶ 29. That franchise purportedly
22 lacked profitability and was “turned back” to BrightStar. Exhibit “C” to Feldman Decl.,
23 FAC at ¶ 29.

24 B. The Individual Defendants


25 The Individual Defendants are not residents or citizens of the State of California.
26 Declaration of Shelly Sun (“Sun Decl.”) at ¶ 4; Declaration of Thomas Gilday (“Gilday
27 Decl.”) at ¶ 17; Declaration of Sean Fitzgerald (“Fitzgerald Decl.”) at ¶ 4; Declaration of
28 Scott Oaks (“Oaks Decl.”) at ¶ 4.

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MEMORANDUM OF POINTS AND AUTHORITIES
Case 3:16-cv-01966-JSC Document 16 Filed 06/17/16 Page 8 of 23

1 C. Negotiation of Franchise Agreement


2 The Franchise Agreement was negotiated, discussed, and explained principally over
3 the telephone, e-mail, and “WebEx” video conferences. Typically, discussions regarding
4 establishment of the franchise occur principally over the phone or via “WebEx” video
5 conferencing sessions. Gilday Decl. at ¶ 8. These conferences and discussions are typically
6 conducted by various franchise development directors who maintain home offices – none of
7 which is located in the State of California. Gilday Decl. at ¶ 8. As to the Plaintiffs’
8 franchise in this litigation, discussions regarding the franchise establishment with the
9 Plaintiffs occurred, consistent with our practice, via phone, e-mail, or “WebEx” video
10 conferencing. Gilday Decl. at ¶ 8. In regards to the Franchise Agreement involving
11 Plaintiffs, at no time did any of the Individual Defendants ever personally, physically appear
12 in the State of California for the execution, negotiation, marketing, or drafting of the
13 Franchise Agreement. Gilday Decl. at ¶ 8
14 D. Plaintiffs’ Participation in “Join The Team” Day
15 Plaintiffs attended “Join The Team Day” in or about February 2013. Gilday Decl. at ¶
16 9. This day is an “orientation” type session hosted and located in Gurnee, Illinois and is an
17 opportunity for potential franchisees to get information regarding the establishment of a
18 franchise. Gilday Decl. at ¶ 9.
19 E. BrightStar-Fraser Franchise Agreement
20 On or about February 29, 2013, Plaintiffs and BrightStar entered into the BrightStar
21 Agency Franchise Agreement. See Exhibit “A” to Gilday Decl., Franchise Agreement. The
22 BrightStar Franchise Agreement indicated the following venue provision:
23 Nothing contained in this Agreement will prevent Franchisor or
Franchisee from applying to and obtaining from any court having
24 jurisdiction a writ of attachment, a temporary injunction,
25 preliminary injunction and/or other emergency relief available to
safeguard such party’s interests. The parties expressly agree to
26 the jurisdiction and venue of any court of general jurisdiction in
27 the city and state where Franchisor’s headquarters are located at
the time the action is filed (“Home State”), and the jurisdiction
28 and venue of the United States District Court presiding over

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MEMORANDUM OF POINTS AND AUTHORITIES
Case 3:16-cv-01966-JSC Document 16 Filed 06/17/16 Page 9 of 23

1 Franchisor’s Home State. Franchisee acknowledges that this


agreement has been entered into in the State of Illinois.
2 Franchisee is to receive valuable and continuing services
emanating from the Home State where Franchisor’s headquarters
3 are located, including but not limited to assistance, support and
4 the development of the System. In recognition of such services
and their origin, Franchisee hereby irrevocably consents to the
5 personal jurisdiction of the state and federal courts of
6 Franchisor’s Home State as set forth above.

7 Exhibit “A” to Gilday Decl., Franchise Agreement at page 51–52.

8 Furthermore, the parties agreed to an arbitration provision that expressly referenced

9 adjudication of these actions by way of arbitrator and confirmation by “the United States

10 District Court presiding over Gurnee, Illinois (or Franchisor’s then-current headquarters)...”

11 Exhibit “A” to Gilday Decl., Franchise Agreement, at page 51.

12 III. PROCEDURAL HISTORY

13 A. Initial Complaint

14 On March 11, 2016, Plaintiffs filed a Complaint in the Superior Court of the State of

15 California, Marin County, as against Defendant BrightStar and the Individual Defendants.

16 The Complaint pleads the following five causes of action as against all of the Individual

17 Defendants and as against Defendant BrightStar Franchising, LLC: (1) Unlawful Offer and

18 Sale of Franchises by Means of Untrue Statements or Omissions of Material Fact (Cal. Corp.

19 Code § 31201); (2) Fraudulent Inducement; (3) Conspiracy to Commit Fraud; (4) Unfair

20 Business Practices; and (5) Negligent Misrepresentation. Exhibit “A” to Feldman Decl. ¶ 3.

21 On April 18, 2016, Defendant BrightStar and the Individual Defendants filed a Notice

22 of Removal of Civil Action pursuant to 28 U.S.C. § 1441(b) based on diversity of

23 citizenship. Feldman Decl. at ¶¶ 5–6; see also Exhibit “B” to Feldman Decl.

24 After removal to this Court, Defendants filed a number of Motions to Dismiss.

25 Feldman Decl. at ¶ 7. Hearings on those Motions were set for June 23, 2016. Feldman Decl.

26 at ¶ 7. Shortly after the filing of said Motions to Dismiss, Plaintiffs filed a First Amended

27 Complaint. Feldman Decl. at ¶ 8; see also Exhibit “C” to Feldman Decl. The filing of that
28 First Amended Complaint obviated the need for hearing on the previously aforementioned

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MEMORANDUM OF POINTS AND AUTHORITIES
Case 3:16-cv-01966-JSC Document 16 Filed 06/17/16 Page 10 of 23

1 Motions to Dismiss. Feldman Decl. at ¶ 8.


2 B. First Amended Complaint
3 On May 13, 2016, Plaintiffs’ counsel filed and served their First Amended Complaint
4 (“FAC”) for damages. Plaintiffs’ FAC made the following substantial changes:
5  Inserted additional paragraphs regarding propriety of venue and diversity
6 jurisdiction (see Exhibit “C” to Feldman Decl., FAC at ¶¶ 1–2)
7  Inserted additional factual subparagraphs to support their Second Cause of Action
8 for Fraud in the Inducement. These additions identify new purported officers
9 and/or agents of BrightStar and additional incidents purportedly supporting
10 Plaintiffs’ Cause of Action for Fraud in the Inducement: (see Exhibit “C” to
11 Feldman Decl., FAC at ¶¶ 45(a)–(b))
12  Inserted additional factual allegations to support their Third Cause of Action for
13 Conspiracy to Commit Fraud. These additions identify new witnesses and allege a
14 meeting between Plaintiffs and certain agents of BrightStar. Furthermore, these
15 additions regarding BrightStar’s Franchise Document Disclosure Documents.
16 (See Exhibit “C” to Feldman Decl., FAC, ¶¶ 54–55.
17  Plaintiffs removed any claims for attorneys’ fees throughout the document. (see
18 Exhibit “C” to Feldman Decl., FAC, Pages 4:2; 14:23, 16:10).
19 On May 27, 2016, counsel for Plaintiffs granted an extension to June 14, 2016 for the
20 Defendants to respond to Plaintiffs’ First Amended Complaint. Feldman Decl. at ¶¶ 10–11;
21 see also Exhibit “D” to Feldman Decl.
22 Defendants now seek to dismiss the First Amended Complaint as against the
23 Defendants based upon Fed. R. Civ. P. 12(b)(3) on the basis that this Court is an Improper
24 Venue. Alternatively, Defendants request that this matter be transferred to the Northern
25 District of Illinois.
26 IV. ARGUMENT
27 Every defense to a claim for relief in any pleading must be asserted in the responsive
28 pleading if one is required. A party may assert an Improper Venue defense by way of a

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MEMORANDUM OF POINTS AND AUTHORITIES
Case 3:16-cv-01966-JSC Document 16 Filed 06/17/16 Page 11 of 23

1 motion to dismiss. Fed. R. Civ. P. 12(b)(3). A motion asserting this defense must be made
2 before pleading if a responsive pleading is allowed. Fed. R. Civ. P. 12(b). Here, the facts
3 reveal that this matter was improperly initially commenced in Marin County Superior Court,
4 and subsequently commenced in the Northern District of California. Based on these facts,
5 the Court should dismiss this matter pursuant to Fed. R. Civ. P. 12(b)(3).
6 Alternatively, pursuant to 28 U.S.C. § 1404(a), this matter should be transferred to the
7 Northern District of Illinois on the basis of convenience of the parties and witnesses, and in
8 the interests of justice.
9 A. Defendants May Challenge Venue By Way Of A Motion To Dismiss Under
10 Fed. R. Civ. Proc. 12(b)(3).
11 It is clear that Defendants are entitled to challenge venue in this District. Various
12 Circuit Courts have held that if a forum-selection clause renders venue improper in the state
13 court where the action was filed, it also renders venue improper in the federal court to which
14 the action has been removed. In this situation, a dismissal for improper venue will lie. PT
15 United Can Co. Ltd. V. Crown Cork & Seal Co., Inc. 138 F.3d 65, 72–73 (2d Cir. 1998). In
16 PT United Can Co. Ltd., the court observed that “[a] party who removes an action from state
17 to federal court does not, in so doing, waive the defense of improper venue as to the
18 underlying state court action.” Id. at 72, quoting Moss v. Atlantic Coast Line R.R. Co., 157
19 F.2d 1005, 1006 (2d Cir. 1946) (A “defendant is not precluded from having the suit
20 dismissed because its motion to remove was in any sense the waiver of a right, for it has
21 waived nothing by taking that action.”
22 While this issue has not been directly addressed in the 9th Circuit, other circuit courts
23 are clear that even following removal of an action to federal court, a Motion to Dismiss
24 based upon Fed. R. Civ. P. 12(b)(3) can still be asserted. In Lambert v. Kysar, 983 F.2d
25 1110, 1112 (1st Cir. 1993) Plaintiffs Kysars initially filed suit in Clark County, Washington
26 to recover monies from an undue balance pursuant to a written contract with Defendant
27 Lambert. Lambert filed a separate action against the Kysars in Massachusetts Superior Court
28 alleging various causes of action including breach of contract. Id. The Kysars removed

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MEMORANDUM OF POINTS AND AUTHORITIES
Case 3:16-cv-01966-JSC Document 16 Filed 06/17/16 Page 12 of 23

1 Lambert’s suit to federal district court and moved to dismiss under Fed. R. Civ. P. 12(b)(3)
2 alleging improper venue. Id. The federal court granted the Kysars’ motion and indicated
3 that [a]ccording to the terms of contract, suit must be filed in State Court in Washington.”
4 Id. On appeal, Lambert argued that the Massachusetts state venue was proper under the
5 general rules applicable to removed cases in federal court, i.e., 28 U.S.C. § 1441. Id. The
6 Court rejected this argument and observed:
7 It is well settled that the filing of a removal petition in a diversity
8 action, without more, does not waive the right to object in federal
court to the state court venue. In order to obtain the benefits of a
9 federal forum in diversity cases, “[the] removal must be ‘into the
10 district where such suit is pending’; no choice is possible and for
that reason nothing in respect to venue can be waived.” Moss v.
11 Atlantic Coast Line R. Co., 157 F.2d 1005 (2d Cir. 1946) [....]
12 Lambert, 983 F.2d at 1113, fn. 2.
13 Furthermore, it is clear that when a defendant removes an action from a state court in
14 which he has been sued, he consents to nothing and “waives” nothing. Instead, he is
15 exercising a privilege unconditionally conferred by statute, and, since the district court to
16 which he must remove is fixed by law, he has no choice. Under these circumstances, there
17 can be no “waiver.” Greenberg v. Giannini (2d Cir. 1944) 140 F.2d 550, 553.
18
In this matter, Defendants properly removed this matter to the Northern District of
19
California pursuant to Diversity Jurisdiction under 28 U.S.C. §1446. Feldman Decl. at ¶ 5.
20
The mandatory language of 28 U.S.C. § 1441 (a) indicating where removing parties are to
21
remove actions is unambiguous:
22 [a] civil action brought in a State court of which the district
23 courts of the United States have original jurisdiction, may be
removed by the defendant or the defendants, to the district court
24 of the United States for the district and division embracing the
place where such action is pending.
25
26 Here, because the Northern District of California embraces the Superior Court of the State of

27 California for Marin County, Defendants were compelled to remove to the Northern District

28 of California. As observed by the above case authority, notwithstanding Defendants’

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MEMORANDUM OF POINTS AND AUTHORITIES
Case 3:16-cv-01966-JSC Document 16 Filed 06/17/16 Page 13 of 23

1 removal to this Court, Defendants are still entitled to challenge the Improper Venue of the
2 Northern District as this matter was improperly commenced in California in the first
3 instance.
4 B. The Venue Clause In the Franchise Agreement Requires That This Matter
5 Be Adjudicated In The Northern District Of Illinois.
6 A valid forum selection clause will be enforced and a Motion to Dismiss will be
7 properly granted if that forum selection clause has not been properly complied with.
8 Generally, analysis under Fed. R. Civ. P. 12(b)(3) permits the district court to consider facts
9 outside of the pleadings, and is consistent with the Supreme Court standard for resolving
10 forum selection clause cases. Argueta v. Banco Mexicano, S.A. (9th Cir. 1996) 87 F.3d 320,
11 324. Forum selection clauses are typically prima facie valid and should not be set aside
12 unless the party challenging enforcement of such a provision can show it is unreasonable
13 under the circumstances. Id. at 325.
14 The Supreme Court has construed this exception narrowly. A forum selection clause
15 is unreasonable if (1) its incorporation into the contract was the result of fraud, undue
16 influence, or overweening bargaining power; (2) the selected forum is so "gravely difficult
17 and inconvenient" that the complaining party will "for all practical purposes be deprived of
18 its day in court,"; or (3) enforcement of the clause would contravene a strong public policy of
19 the forum in which the suit is brought. Id. To establish the unreasonableness of a forum
20 selection clause, a challenging party has the heavy burden of showing that trial in the chosen
21 forum would be so difficult and inconvenient that the party would effectively be denied a
22 meaningful day in court. Id.
23 Plaintiffs can establish none of the above elements to challenge the valid forum
24 selection clause. Here, the Franchise Agreement’s venue provision states:
25 15.8 Venue. Nothing contained in this Agreement will prevent
Franchisor or Franchisee from applying to and obtaining from
26 any court having jurisdiction a writ of attachment, a temporary
27 injunction, preliminary injunction and/or other emergency relief
available to safeguard such party’s interests. The parties
28 expressly agree to the jurisdiction and venue of any court of

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MEMORANDUM OF POINTS AND AUTHORITIES
Case 3:16-cv-01966-JSC Document 16 Filed 06/17/16 Page 14 of 23

1 general jurisdiction in the city and state where Franchisor’s


headquarters are located in the time the action is filed
2 (“Home State”), and the jurisdiction and venue of the United
States District Court presiding over Franchisor’s Home
3 State. Franchisee acknowledges that this Agreement has
4 been entered into in the State of Illinois. Franchisee is to
receive valuable and continuing services emanating from the
5 Home State where Franchisor’s headquarters are located,
6 including but not limited to assistance, support and the
development of the System. In recognition of such services and
7 their origin, Franchisee hereby irrevocably consents to the
personal jurisdiction of the state and federal courts of
8 Franchisor’s Home State as set forth above.
9
10 Exhibit A to Gilday Decl., Franchise Agreement at ¶ 15.8.

11 Here, it is undoubted that the parties agreed that this litigation was intended by the

12 parties to be venued in the “United States District Court presiding over Franchisor’s Home

13 State.” Here, the franchisor, defendant BrightStar, is headquartered in Gurnee, Illinois.

14 Gilday Decl. at ¶ 4. Based on the venue provision, this matter should have been commenced

15 in the Northern District of Illinois.

16 The Franchise Agreement further indicates that “valuable and continuing services”

17 emanated from the home state where Franchisor’s headquarters were located and “assistance,

18 support and the development of the System” effectively stemmed from Gurnee, Illinois.

19 Exhibit A to Gilday Decl., Franchise Agreement at ¶ 15.8. Thus, the very language and

20 contractual provisions from the Franchise Agreement contemplated resolution of disputes in

21 the Franchisor’s home state of Illinois.

22 Based on this language, and because Plaintiffs failed to properly commence their

23 litigation in the Federal District Court embracing Gurnee, Illinois, the Court should dismiss

24 the action against Defendants with prejudice.

25 A. Alternatively, as a Matter Of Convenience, This Matter Should Be

26 Transferred to the Northern District Of Illinois.

27 If the Court is not inclined to dismiss Plaintiffs’ FAC against Defendants on the basis

28 of improper venue, the Court should transfer this matter to the Northern District of Illinois.

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MEMORANDUM OF POINTS AND AUTHORITIES
Case 3:16-cv-01966-JSC Document 16 Filed 06/17/16 Page 15 of 23

1 A change of venue on the basis of convenience and in the interest of justice is delineated in
2 28 U.S.C. §§ 1404(a)–(b):
3 (a) For the convenience of parties and witnesses, in the interest of
justice, a district court may transfer any civil action to any other
4 district or division where it might have been brought or to any
5 district or division to which all parties have consented.

6 (b) Upon motion, consent or stipulation of all parties, any action,


suit or proceeding of a civil nature or any motion or hearing
7 thereof, may be transferred, in the discretion of the court, from
the division in which pending to any other division in the same
8 district. Transfer of proceedings in rem brought by or on behalf
9 of the United States may be transferred under this section without
the consent of the United States where all other parties request
10 transfer.
11 As such, this Court is empowered, for the convenience of parties and witnesses, to
12 transfer any civil action to any other district or division where it might have been brought or
13 to any district or division to which all parties have consented. Here, it is undoubted that
14 convenience of the parties and witnesses, and the interests of justice require transfer to the
15 Northern District of Illinois.
16 This litigation “might have been brought” in the Northern District of Illinois given
17 Plaintiffs’ allegations in its FAC. Indeed, this matter could have been commenced in the
18 Northern District of Illinois based upon Diversity Jurisdiction under 28 U.S.C. § 1332(a) as
19 this matter exceeds the amount in controversy requirements of $75,000 and involves citizens
20 of different states. See Exhibit “C” to Feldman Decl., FAC, at ¶¶ 1–4; see also Sun Decl. at
21 ¶ 4; see also Fitzgerald Decl. at ¶ 4; see also Gilday Decl. at ¶ 17; see also Oaks Decl. at ¶ 4.
22 Plaintiffs’ FAC all but stipulates to Defendants’ previously filed Notice of Removal. See
23 Exhibit B to Feldman Decl. Plaintiffs’ FAC stipulates that this matter meets the amount in
24 controversy requirements, and the citizenship requirements as required by 28 U.S.C. §
25 1332(a). See Exhibit “C” to Feldman Decl., FAC at ¶¶ 1–2. Furthermore, 28 U.S.C. §
26 1391(b) allows a matter to be commenced in a district in which “a substantial part of the
27 events or omissions” giving rise to the claim occurred. Here, there is an abundance of
28 evidence showing that many of the negotiations surrounding establishment of Plaintiffs’

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MEMORANDUM OF POINTS AND AUTHORITIES
Case 3:16-cv-01966-JSC Document 16 Filed 06/17/16 Page 16 of 23

1 franchise occurred in Gurnee, Illinois. See Gilday Decl. at ¶ 9; see also Exhibit “C” to
2 Feldman Decl., FAC at ¶45a–c. For these reasons, it is clear that this matter might have been
3 brought in the Northern District of Illinois.
4 For a § 1404(a) transfer, a moving party bears the burden to establish that the
5 convenience of parties and witnesses and interest of justice require transfer to another
6 district. Commodity Futures Trading Comm’n v. Savage (9th Cir. 1979) 611 F.2d 270, 279.
7 A motion to transfer venue under § 1404(a) requires the court to weigh multiple
8 factors in its determination whether transfer is appropriate in a particular case. For example,
9 the court may consider: (1) the location where the relevant agreements were negotiated and
10 executed, (2) the state that is most familiar with the governing law, (3) the plaintiff's choice
11 of forum, (4) the respective parties' contacts with the forum, (5) the contacts relating to the
12 plaintiff's cause of action in the chosen forum, (6) the differences in the costs of litigation in
13 the two forums, (7) the availability of compulsory process to compel attendance of unwilling
14 non-party witnesses, and (8) the ease of access to sources of proof. Additionally, the
15 presence of a forum selection clause is a "significant factor" in the court's § 1404(a) analysis.
16 Jones v. GNC Franchising, Inc. (9th Cir. 2000) 211 F.3d 495, 498-499. Also, the relevant
17 public policy of the forum state, if any, is at least as significant a factor in the § 1404(a)
18 balancing. Id.
19 1. Location of Where Relevant Agreements Were Negotiated
20 Here, the Frasers and BrightStar negotiated the Franchise Agreement in the State of
21 Illinois. Plaintiffs’ own allegations indicate that Plaintiffs, on at least one occasion, travelled
22 to Gurnee, Illinois to discuss the “Buckhead” Territory. See FAC at 45.a. Given that the
23 Buckhead Territory was purportedly key to Plaintiffs’ opening of a BrightStar Franchise,
24 Plaintiffs’ travel to Illinois certainly suggests negotiation of Plaintiffs’ and Defendants’
25 business arrangements occurring in the State of Illinois. In addition, the Franchise
26 Agreement was negotiated, discussed, and explained principally over the telephone, e-mail,
27 and “WebEx” video conferences. Gilday Decl. at ¶ 8. Despite this, at no time did
28 negotiations or discussions regarding the franchise ever physically occur in the State of

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MEMORANDUM OF POINTS AND AUTHORITIES
Case 3:16-cv-01966-JSC Document 16 Filed 06/17/16 Page 17 of 23

1 California. Gilday Decl. at ¶ 8; Oaks Decl. at ¶ 6; Fitzgerald Decl. at ¶ 6.


2 Plaintiffs, based on the FAC, on at least one occasion actually travelled to Illinois.
3 Conversely, none of the Defendants have ever travelled to California for the purpose of
4 establishing the franchise at issue. See Gilday Decl. at ¶ 8; see also Fitzgerald Decl. at ¶ 8.
5 Furthermore, the Franchise Agreement states, quite clearly, that aspects of the
6 franchise agreement were negotiated in the State of Illinois: “Franchisee acknowledges that
7 this Agreement has been entered into in the State of Illinois.” Exhibit “A” to Gilday Decl.,
8 Franchise Agreement, at ¶ 15.8. This factor weighs in favor of proceeding with this
9 litigation in the Northern District of Illinois.
10 2. The State That Is Most Familiar With the Governing Law
11 It is undisputed that Plaintiffs’ litigation stems from the relevant Franchise
12 Agreement, the negotiations surrounding the Franchise Agreement, and the subsequent
13 compliance or non-compliance with the Franchise Agreement. The Franchise Agreement is
14 unambiguous regarding the Governing Law:
15 22. Governing Law
16 This Agreement will be governed by and construed in accordance
17 with the laws of the state of Illinois, except the Illinois Franchise
Disclosure Act of 1987 will apply to this Agreement only if its
18 jurisdictional requirements are met independent of this Article 22.
19 Exhibit “A” to Gilday Decl., Franchise Agreement, at ¶ 22.
20 Here, while Plaintiffs will argue that their First Cause of Action is brought pursuant to
21 California State Law and pursuant to California Corporations Code § 31201, it is clear from
22 the plain text of the Franchise Agreement that Illinois law was to apply to the subsequent
23 enforcement of the Franchise Agreement, and any causes of action surrounding the
24 establishment of the BrightStar Franchise. Here, it is clear that Illinois is the forum most
25 familiar with the applicable governing laws, as Illinois law was intended to be the governing
26 law for Plaintiffs’ and BrightStar’s agreement and any subsequent disputes surrounding
27 Plaintiffs’ and BrightStar’s agreement. Indeed, Defendants continue to question the validity
28 of Plaintiffs’ First Cause of Action, given the governing law provisions of the Franchise

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MEMORANDUM OF POINTS AND AUTHORITIES
Case 3:16-cv-01966-JSC Document 16 Filed 06/17/16 Page 18 of 23

1 Agreement. Nevertheless, this factor, again, weighs in favor of transfer to the Northern
2 District of Illinois.
3 3. Plaintiff’s Choice of Forum
4 Because plaintiff’s choice of forum is entitled to deference, the moving party has the
5 burden of showing that the convenience of parties and witnesses and interest of justice
6 require transfer to another district. Commodity Futures Trading Comm’n v. Savage (9th Cir.
7 1979) 611 F.2d 270, 279. As established here, Plaintiffs’ choice in commencing this action
8 in Marin County Superior Court, and subsequently, in the Northern District of California is
9 outweighed by the convenience of the parties and the witnesses and the interests of justice.
10 4. The Respective Parties’ Contacts With the Forum
11 Here, the facts are clear that the parties’ respective contacts with the forum fall
12 squarely outside of California, and towards Illinois. Here, based on the FAC, only one party
13 appears to reside in California: Plaintiff Cosmo Fraser resides in Tiburon, Marin County,
14 California. FAC at ¶ 3. Not even Plaintiff Adam Fraser resides in California, but rather, is a
15 resident of Georgia. FAC at ¶ 4.
16 On the other hand, each of the Defendants are all residents and/or citizens of other
17 states:
18  Defendant Thomas Gilday is a resident of Illinois and a citizen of Connecticut.
19 Gilday Decl at ¶ 17.
20  Defendant Shelly Sun is a resident and citizen of Illinois. Sun Decl. at ¶ 4.
21  Defendant Scott Oaks is a resident and citizen of Ohio. Oaks Decl. at ¶ 4.
22  Defendant Sean Fitzgerald is a resident and citizen of Ohio. Fitzgerald Decl. at ¶
23 4.
24  Defendant BrightStar Franchising, LLC is a single-member Illinois Limited
25 Liability Company whose sole member is BrightStar Group Holdings, Inc.
26 BrightStar Group Holdings, Inc. is a citizen of Delaware, with its principal place
27 of business in Illinois. Gilday Decl. at ¶¶ 4–5.
28 ///

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MEMORANDUM OF POINTS AND AUTHORITIES
Case 3:16-cv-01966-JSC Document 16 Filed 06/17/16 Page 19 of 23

1 All of the Individual Defendants maintain consistent contacts with the State of Illinois
2 and some conduct a substantial amount of their work related to BrightStar out of Illinois.
3 Sun Decl. at ¶ 6; Oaks Decl. at ¶ 6. At least one Individual Defendant who is no longer
4 employed by BrightStar conducts his professional business in Ohio, but travel to Illinois is
5 not burdensome. All of the Individual Defendants are burdened by travel to California. Sun
6 Decl. at ¶ 5; Fitzgerald Decl. at ¶ 5; Gilday Decl. at ¶ 18; Oaks Decl. at ¶ 5.
7 Based on the foregoing, this factor weighs in favor of transfer to the Northern District
8 of Illinois.
9 5. The Contacts Relating to the Plaintiff’s Cause of Action in the
10 Chosen Forum
11 As indicated above, the sole connection to California appears to be one of the
12 Plaintiffs – Cosmo Fraser. Cosmo Fraser is purportedly a resident of California. Exhibit
13 “C” to Feldman Decl., FAC at ¶ 3. Despite this, it appears that none of the other parties has
14 any relevant contacts in California related to this litigation. None of the evidence will be
15 located in California, while on the other hand, the information relating to this litigation will
16 likely be found outside of California, and in Illinois. Gilday Decl. at ¶ 18.
17 6. The Differences in the Costs of Litigation In the Two Forums
18 The costs for Defendants to litigate this matter in California will pose a significant
19 burden. Gilday Decl. at ¶ 17. As established above, the vast majority of the witnesses
20 whom Plaintiffs identified are located in Illinois. Assuming compliance by those witnesses
21 with compulsory process (see infra), the Identified Witnesses, the Individual Defendants, and
22 presumably Plaintiff Adam Fraser, will incur costs associated with travel to California. The
23 only party who is “convenienced” by litigation in California is Plaintiff Cosmo Fraser. The
24 costs of litigation will unnecessarily be inflated if this matter is allowed to be litigated in this
25 venue.
26 ///
27 ///
28 ///

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MEMORANDUM OF POINTS AND AUTHORITIES
Case 3:16-cv-01966-JSC Document 16 Filed 06/17/16 Page 20 of 23

1 7. The Availability of Compulsory Process to Compel Attendance of


2 Unwilling Non-Party Witnesses
3 Compulsory process will be difficult to effectuate upon non-party witnesses. Given
4 that the newly identified witnesses in Plaintiffs’ FAC are outside the State of California, (see
5 Feldman Decl. at ¶¶ 13–24), service of subpoenas on the non-party Identified Witnesses
6 might pose a problem, and will also increase the costs of litigation. Indeed, counsel for
7 Defendants will need to effectuate service of subpoenas on witnesses who are outside of the
8 state, thus driving up costs. See Feldman Decl. at ¶ 24. If litigation remains in the State of
9 California, defense counsel would have to conduct discovery on out-of-state witnesses.
10 Thus, my clients would incur greater fees and costs to adequately defend this case. Feldman
11 Decl. at ¶ 24. As indicated in the Gilday Declaration, these witnesses are located in the State
12 of Illinois and elsewhere. Gilday Decl. at ¶ 14; see also Feldman Decl. at ¶¶ 13–24.
13 Because the vast majority of these witnesses are located in Illinois, transfer of venue to
14 Illinois would allow for compulsory process to be served upon those witnesses residing in
15 Illinois, and would also greatly increase the chances that those witnesses would be
16 responsive to compliance with valuable discovery necessary for proper litigation of this
17 matter. Feldman Decl. at ¶ 23.
18 Furthermore, it would be far more convenient for the witnesses and parties to engage
19 in this litigation in Illinois as opposed to California as all of the witnesses and parties are
20 either: (1) far closer in proximity to Illinois than California; or (2) located in the state of
21 Illinois. Quite simply, convenience demands this matter be venued in the Northern District of
22 Illinois.
23 Plaintiffs newly amended FAC identify at least nine key witnesses. These witnesses
24 purportedly misrepresented facts surrounding the Buckhead Territory and are alleged to have
25 conspired with Defendants. These witnesses are: Becky Seiller, JD Sun, Dean Ulizio, Amie
26 Schneider, Jayson Pearl, Andrew Lynch, Sharon Maguire, Scott Oaks, and Deborah Hustace
27 (“Identified Witnesses”). See Exhibit “C” to Feldman Decl., FAC at ¶ 45.a. and ¶ 54.
28 According to Plaintiffs’ FAC, these witnesses apparently “verbally misrepresented to

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MEMORANDUM OF POINTS AND AUTHORITIES
Case 3:16-cv-01966-JSC Document 16 Filed 06/17/16 Page 21 of 23

1 Plaintiffs during their meetings that the Buckhead territory was a ‘new’ territory....” Exhibit
2 “C” to Feldman Decl., FAC at ¶ 45.a. These purported misrepresentations by the Identified
3 Witnesses are key to forming not only Plaintiffs’ Causes of Action for Fraud in the
4 Inducement and Conspiracy to Commit Fraud, but are also key to the entirety of Plaintiffs’
5 lawsuit against Defendants. Indeed, Plaintiffs’ causes of action stem from alleged
6 negotiations and agreements surrounding the Buckhead Territory. These newly Identified
7 Witnesses will be key in determining the veracity of the allegations made in Plaintiffs’ FAC.
8 Compulsory process and compliance with process will be vital to defensing this case. As
9 indicated, a closer proximity in distance to the Identified Witnesses greatly increases the
10 chances that these witnesses will comply and provide information necessary in litigating this
11 matter.
12 The Identified Witnesses will be expected to testify both at deposition and at trial.
13 Feldman Decl. at ¶ 22; see also Gilday Decl. at ¶ 15. The Identified Witnesses’ testimony
14 will include, but not be limited to the following: alleged misrepresentations made by the
15 Identified Witnesses and/or BrightStar representatives to Plaintiffs; alleged omissions of
16 material fact made by the Identified Witnesses and/or BrightStar representatives made to
17 Plaintiffs; alleged “fraudulent inducements” made by the Identified Witnesses and/or
18 BrightStar representatives to Plaintiffs regarding the purchase of the Buckhead Territory as it
19 relates to the Franchise Agreement; alleged false representations made by the Identified
20 Witnesses and/or BrightStar representatives to Plaintiffs; alleged misrepresentations and
21 omissions regarding the Buckhead Territory made by the Identified Witnesses and/or
22 BrightStar representatives to Plaintiffs; alleged concealment regarding the performance or
23 underperformance of the Buckhead Territory; any negotiations or any further interactions
24 with the Plaintiffs. Feldman Decl. at ¶ 22; see also Gilday Decl. at ¶ 15.
25 Plaintiffs also identify “Kevin Tolnai” as a non-party witness. See Exhibit “C” to
26 Feldman Decl., FAC at ¶ 29. Based upon due diligence conducted by counsel for
27 Defendants, it appears Mr. Tolnai is likely located in the Georgia area, which is significantly
28 closer to Illinois than California. Feldman Decl. at ¶ 15; see also Exhibit “K” to Feldman

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MEMORANDUM OF POINTS AND AUTHORITIES
Case 3:16-cv-01966-JSC Document 16 Filed 06/17/16 Page 22 of 23

1 Decl.
2 It is undoubted, that based upon the location and convenience of the known witnesses,
3 this matter should be transferred to the Northern District of Illinois.
4 8. Ease of Access To Sources of Proof
5 Furthermore, all of the books, records, and pertinent documents as they relate to the
6 Plaintiffs’ business interactions with Defendants are located in Gurnee, Illinois. Sun Decl. at
7 ¶ 7.C.; Fitzgerald Decl. at ¶ 7.C.; Gilday Decl. at ¶ 19; Oaks Decl. at ¶ 7.C. In addition,
8 BrightStar operates its business out of Gurnee, Illinois (see Gilday Decl. at ¶ 4) and it is
9 likely that the bulk of documents, data, and/or discoverable information will be located in
10 Gurnee, Illinois. Therefore, this factor weighs in favor of transfer to the Northern District of
11 Illinois.
12 9. Public Policy of Forum State
13 Plaintiffs might argue that public policy requires that this matter be adjudicated in
14 California. Here, public policy outweighs Plaintiffs’ assertion in favor of adjudicating this
15 matter in the Northern District of Illinois. Indeed, the facts and issues surrounding this case
16 can be more conveniently located, adjudicated, and litigated in Illinois as the evidence,
17 parties, and witnesses are all located in or close to the State of Illinois.
18 On balance of the factors as indicated above, it is clear that should this matter not be
19 dismissed, with prejudice because of the improper forum, this matter should be transferred
20 for convenience and the interests of justice to the Northern District of Illinois.
21 ///
22 ///
23 ///
24
25
26
27
28

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MEMORANDUM OF POINTS AND AUTHORITIES
Case 3:16-cv-01966-JSC Document 16 Filed 06/17/16 Page 23 of 23

1 V. CONCLUSION
2 For the foregoing reasons, the Court should grant the Defendants’ Motion to Dismiss
3 based on Improper Venue, with prejudice, and with costs to Defendants.
4 In the alternative, the Court should transfer this matter to the Northern District of
5 Illinois for convenience of the parties and witnesses, and in the interests of justice.
6
7 DATED: June 17, 2016 CLAUSEN MILLER P.C.
8
9 BY ___________________________
Ian R. Feldman
10 R. Mick Rubio
11 Attorneys for Defendants
12 BRIGHTSTAR FRANCHISING, LLC, an
Illinois Limited Liability Company;
13 SHELLY SUN, and individual; SEAN
FITZGERALD, an individual; THOMAS
14
GILDAY, an individual; SCOTT OAKS,
15 an individual
16
17
18
19
20
21
22
23
24
25
26
27
28

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MEMORANDUM OF POINTS AND AUTHORITIES