G. MURRAY SNOW, District Judge.
Pending before the Court is Defendants' Motion to Dismiss for Lack of Personal Jurisdiction and Improper Venue. (Doc. 11.) For the following reasons the motion is granted in part and the action is transferred to the Eastern District of Michigan.
This action arises out of an Agreement by Plaintiff Medbox, Inc. to purchase a 50% interest in Medvend Holdings, LLC ("Medvend") from the Defendants Darryl B. Kaplan, Claudio Tartaglia, and Eric Kovan. (Doc. 1, Ex. 1.) After making payments of $600, 000, Medbox learned of an action brought by a third party against the Defendants. (Doc. 10 at 4-5.) As a result, Medbox filed this action seeking a return of its payment and rescission of the Agreement. ( Id. at 23.)
Medbox is incorporated in Nevada but has offices in Arizona and California. ( Id. at 2.) Medbox's CEO, Dr. Bruce Bedrick, lives and maintains his office in Arizona. (Doc. 12, Ex. 1.) Medbox's founder, Vincent Mehdizadeh, lives and maintains his office in California. (Doc. 11 at 3.)
The Defendants are all residents of Michigan who have never lived in Arizona or owned property here. ( Id. at Ex. A-C.) None of them has been to Arizona in over a decade, and they made no visit to Arizona in connection with this or any other business transaction. ( Id. ) Defendant Kaplan primarily negotiated the Agreement from Michigan over the phone and email with Mehdizadeh in California. ( Id. ) Defendant Tartaglia was also involved with the negotiation, and Tartaglia and Kaplan met with Mehdizadeh in California and Nevada. ( Id. ) Defendant Kovan was not directly involved in the negotiations. ( Id. )
Defendants did have some contacts with Arizona in connection with this Agreement. In December 2012, Defendant Kaplan communicated with Bedrick in Arizona through several phone calls and emails. (Doc. 12 at 13-52.) They entered into a Non-Disclosure Agreement which listed Medbox's principal place of business as being in Arizona. ( Id. at 15-17.) These early negotiations included discussions about the price of the deal and an exchange of information about Medvend's business. ( Id. at 13-52.) Kaplan made these communications at least partly in his capacity as CEO of Medvend, and Tartaglia also received many of these emails as the COO. ( Id. )
After these initial negotiations, Kaplan and Tartaglia met with Mehdizadeh, who became the primary point of contact for the negotiations. ( Id. at 33; Doc 11, Ex. A.) Those meetings and communications did not involve Arizona. (Doc 11, Ex. A.) In March 2012, after the Agreement had been signed but apparently before it had formally closed, Kaplan again began to have phone calls and emails with Bedrick in Arizona. (Doc. 12 at 53-103.) Kaplan asked Bedrick, in Arizona, to wire $300, 000 and provided him with the bank routing number. ( Id. at 53-57.) Bedrick told Kaplan that he was "not directly overseeing this transaction" and that he would forward the request to Mehdizadeh. ( Id. at 58.) The $600, 000 payments were eventually sent from the California office under Mehdizadeh's direction. (Doc 11, Ex. A.)
Kaplan's later communications with Bedrick in Arizona also involved changes to Medvend's website and a discussion about handling referrals. (Doc. 12 at 53-103.) Bedrick introduced Kaplan to another person in Arizona who was part of a team that was going to be helping to improve the website. ( Id. ) That team was also located in Arizona and Kaplan had communications with a member of that team. ( Id. ) There were also communications about a press release and about meetings with reporters to publicize their new deal. ( Id. ) Finally, there were communications involving Bedrick, Mehdizadeh, Kaplan, and Tartaglia about winding down Medvend, LLC as part of the transition to Medvend, Inc. ( Id. ) Again, in all of these communications Kaplan was at least partly acting in his capacity as CEO of Medvend and Tartaglia received many of these emails as the COO. ( Id. )
In May, after hearing about the deal from the press release and news coverage, the third parties filed their lawsuit against the Defendants. (Doc. 1, Ex. 2.) As a result of the lawsuit, Medbox sent a letter to the Defendants seeking to end the Agreement. (Doc. 1, Ex. 3.) This letter noted that the closing of the Agreement had never occurred. ( Id. ) Defendants had hired Arizona legal counsel to draft the Agreement, and the Agreement specified that the closing would occur at the counsel's office in Arizona or at another place mutually agreed upon. ( Id., Exs. 1, 3.) The letter also laid out the issues now presented in this action, which is a dispute over whether the Agreement was ever binding and whether it, and the payments made under it, should be unwound.
Defendants filed their Motion to Dismiss arguing first that venue is improper and additionally that this Court has no personal jurisdiction over them. Defendants ask that the action be dismissed or transferred to the District Court for the Eastern District of Michigan. Defendants also seek attorney's fees and other costs for their motion.
I. Legal Standard
Medbox argues that venue is proper under 28 U.S.C. § 1391(b)(2), (Doc. 10 ¶ 6), which provides venue in a diversity action 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." In applying this statute, the adjective "substantial" must be taken seriously. "[S]ignificant events or omissions material to ...