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Lopatin v. LTF Club Operations Co. Inc.

United States District Court, D. Arizona

February 3, 2016

Ian Lopatin, et al., Plaintiffs,
v.
LTF Club Operations Company Incorporated, et al., Defendants.

ORDER

David G. Campbell United States District Judge

Defendants have filed a motion to transfer this case to the United States District Court for the District of Minnesota. Doc. 6. Plaintiff filed an opposition, and Defendants replied. Docs. 22, 21. For the reasons that follow, the Court will deny the motion.[1]

I. Background.

Plaintiffs in this action are Ian Lopatin, an individual residing in Arizona, and At One Yoga, LLC (“AOY”), an Arizona limited liability company that operates in Arizona. Doc. 1-2 (hereinafter Complaint), ¶¶ 12-13. The named Defendants are (1) LTF Club Operations Company, Inc. (“LTF Operations”), a Minnesota corporation with its principal place of business in Minnesota, (2) Lifetime Fitness, Inc. (“Lifetime”), a Minnesota corporation with its principal place of business in Minnesota and the parent company of LTF Operations, (3) Bahram Akradi, an individual residing in Minnesota and Lifetime’s Chief Executive Officer, and (4) Joe Hall, an individual residing in Minnesota and Life Time’s Vice President of National Club Operations. Id., ¶¶ 5, 14-17, 30. Ten unknown persons are also listed as defendants. Id., ¶ 18.

Plaintiff Lopatin is the founder of AOY, a Scottsdale area yoga studio. Id., ¶ 2. Six years ago, AOY was generating substantial revenue and achieving a significant profit margin due in large part to its proprietary system for training and certifying yoga instructors (the “Certification Program”). Id., ¶¶ 2-3. AOY’s success came at the expense of its competitors, including “Life Power Yoga, ” a Scottsdale area studio owned by LTF Operations. Id., ¶ 4. In February 2010, Defendant Akradi approached Lopatin, in Scottsdale, about purchasing AOY. Doc. 20-1 at 2, ¶ 3. The two met several times in Arizona to negotiate the purchase, reaching an agreement on July 6, 2010. Id. Under the Agreement, Life Time purchased AOY and the right to use the Certification Program. Id., ¶ 5. Life Time made a small upfront payment to Lopatin, and agreed to make deferred payments for the next five years based on the profitability of the Certification Program. Id., ¶ 5. It promised to use “commercially reasonable efforts” to “develop, grow, and implement” the Program. Id., ¶ 7.

Plaintiffs allege that Life Time has not delivered on its promise to invest in the Program. In fact, the Program’s success since the sale has been so meager that Plaintiffs now suspect that Life Time’s actual purpose was not to obtain the Certification Program, but to eliminate AOY so that Life Power Yoga could monopolize the Scottsdale yoga market. Id., ¶ 9. Plaintiffs seek to recover the deferred payments that never materialized, asserting claims for breach of contract, breach of the implied covenant of good faith and fair dealing, fraudulent inducement, civil conspiracy, and unfair competition in violation of A.R.S. § 44-1402.

II. Legal Standard.

28 U.S.C. § 1404(a) provides: “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.” The Court adjudicates motions to transfer under this provision “according to an individualized, case-by-case consideration of convenience and fairness.” Jones v. GNC Franchising, Inc., 211 F.3d 495, 498 (9th Cir. 2000) (quotation marks omitted). The Jones Court enumerated eight non-exclusive factors that are relevant to this determination:

(1) the location where the relevant agreements were negotiated and executed;
(2) the state that is most familiar with the governing law; (3) the plaintiff’s choice of forum; (4) the respective parties’ contacts with the forum; (5) the contacts relating to the plaintiff’s cause of action in the chosen forum; (6) the differences in the costs of litigation in the two forums; (7) the availability of compulsory process to compel attendance of unwilling non-party witnesses; and (8) the ease of access to sources of proof.

Id. at 498-99. The movant has the burden of showing that transfer is appropriate, see Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255-256 (1981), and “must make a strong showing of inconvenience to warrant upsetting the plaintiff’s choice of forum, ” Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986).

III. Analysis.

Because all Defendants are residents of Minnesota, this action could have been brought in Minnesota, 28 U.S.C. § 1391(b)(1), and could be transferred there if such transfer would serve “the interest of justice, ” 28 U.S.C. § 1404(a).[2] But a review of the relevant factors shows that transfer would not serve the interest of justice.

The first factor favors Arizona. Plaintiff Lopatin avers that Defendant Akradi approached him in Arizona about purchasing AOY and that the two met in Arizona several times to negotiate the Agreement. Doc. 20-1 at 2, ¶ 3. Akradi admits that he attended these meetings. Doc. 7 at 19, ¶ 14. Although Defendants aver that Akradi and his staff worked on the negotiation from Lifetime’s headquarters in Minnesota (Doc. 7 at 19, ¶ 16, id. at 24, ΒΆ 9), that is of limited relevance because this work was undertaken ...


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