A New York federal court recently held that a coverage action between former television producers and their insurers should be transferred from New York to California because the events involved in the underlying action occurred and a majority of the witnesses and evidence is located in California. Employers Ins. Of Wausau v. News Corp., et al., 2008 WL 4443899 (Case No.06 Civ. 1602(SAS)) (S.D.N.Y. Sept. 29, 2008).

At issue is coverage under Media Special Perils insurance policies issued to various entertainment companies and affiliated companies. There is no forum selection clause or choice of law provision in the policies at issue.

The underlying class action lawsuit was filed in the United States District Court for the Central District of California against certain named insureds and affiliated companies. The class action was filed on behalf of all owners of copyrighted recordings used on the television show “Santa Barbara ," allegedly without permission.

Two insurers filed a declaratory judgment action in the Southern District of New York, seeking a declaration that they were not required to provide insurance coverage due, inter alia, to late notice of the underlying claims. Two days later, the insureds filed a complaint of their own in California state court seeking, among other things, damages for breach of contract and a declaration that the insurers were obligated to provide coverage for the California class action; that action was removed to federal court sitting in California. The procedural history includes a prior dismissal by the Southern District of New York of the action pending in the Southern District of New York to allow the California action to proceed, and a reversal and remand by the Second Circuit. The procedural history also includes a denial by the California court of the plaintiff insurers' motion to dismiss the second filed action or transfer venue to the Southern District of New York. 

After remand, on motion by the defendants in the New York action to transfer it to California pursuant to 28 U.S.C. Section 1404(a), the Southern District of New York noted that, while the plaintiff's choice of forum is ordinarily accorded "great weight," the plaintiffs had chosen a forum that was neither the district of its residence nor the locus of the operative facts in the case, and thus its choice is "given considerably less weight." The court also noted that there was a public interest factor of avoiding multiple cases on the same issue. The court rejected the argument of plaintiff-insurers that New York was the proper forum based on a forum selection clause in a Merger Agreement between entities seeking coverage, noting that the insurers who instituted the New York action were not parties to the Merger Agreement. 

Instead, the court looked at the factors that three of the defendants seeking coverage in the California-file action were headquartered in California; the action concerns the insurer's obligation with respect to a California class action which arose out of events that occurred in California; the central factual and legal dispute concerns notice and the events relating to notice had strong connections to California and almost no connection to New York; and defendants submitted a long list of California witnesses on the notice issues and contended that many cannot be compelled to testify in New York, contrasted with plaintiffs submitting a list of New York witnesses without explanation as to why their testimony would be material. 

Accordingly, the Southern District of New York granted the defendant's motion to transfer the New York action to the Central District of California.

For a copy of the decision, please click here.