CHEN v. WANG (2025)

Order

Pending before the Court is an action brought by five plaintiffs (Jie Chen, CGAH Grubmarket LLC (“CGAH”), Celtic House Asia Fund LLC (“CHAF”), Celtic House Asia Partners, Ltd. (“CHAP”), and Celtic 2023 One Ltd. (collectively “Plaintiffs”)) against three identified defendants (Chao “Charlie” Wang, Yelai “Larry” Liu, and Mingyang “Sky” Yu (collectively “Defendants”)) and 20 unidentified defendants (John and Jane Does 1-20) arising from a contentious business dispute over control of several investment firms. (ECF No. 1 (Complaint (“Comp.”)).) Plaintiffs assert nine claims against some or all defendants, including a federal claim for violation of the Computer Fraud and Abuse Act. See 18 U.S.C. § 1030.

For the reasons explained below, venue for this action is improper in the Eastern District of New York, and therefore the Court sua sponte transfers this action to the Northern District of California pursuant to its authority under 28 U.S.C. § 1406(a) and, in the alternative, 28 U.S.C. § 1404(a).

I. Legal Standard

A. Venue

The general venue statute, 28 U.S.C. § 1391(b), provides the applicable law for the determination of whether venue is proper:

A civil action may be brought in—

(1) a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located;

(2) 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; or

(3) if there is no district in which an action may otherwise be brought as provided in this section, any judicial district in which any defendant is subject to the court's personal jurisdiction with respect to such action.

As to § 1391(b)(2), the Second Circuit “caution[s] district courts to take seriously the adjective ‘substantial’ ” because courts “are required to construe the venue statute strictly.” Gulf Ins. Co. v. Glasbrenner, 417 F.3d 353, 357 (2d Cir. 2005). “[F]or venue to be proper, significant events or omissions material to the plaintiff's claim must have occurred in the district in question, even if other material events occurred elsewhere.” Id. (emphasis in original). “It would be error, for instance, to treat the venue statute's ‘substantial part’ test as mirroring the minimum contacts test employed in personal jurisdiction inquiries.” Id.

B. Transfer of Venue

As discussed below, two venue statutes – 28 U.S.C. §§ 1406(a) and 1404(a) – authorize transfer of civil actions. When a court finds that venue is improper or “wrong” in the district in which the court is located, the court must, pursuant to 28 U.S.C. § 1406(a), dismiss or transfer the action. If, however, venue is proper but may be more appropriate in a different district, the Court may, pursuant to the doctrine of forum non conveniens codified in 28 U.S.C. § 1404(a), transfer the action to a different judicial district. “Unlike § 1406(a), § 1404(a) does not condition transfer on the initial forum's being ‘wrong.’ ” Atlantic Marine Const. Co. v. U.S. Dist. Ct. for W. Dist. of Texas, 571 U.S. 49, 59, 134 S.Ct. 568, 187 L.Ed.2d 487 (2013).

It is well-established that courts have authority to transfer civil actions sua sponte under both § 1406(a) and § 1404(a). See Saunders v. NYC Health & Hosp., No. 24-cv-7411 (LDH) (LKE), 2025 WL 510055, at *1 (E.D.N.Y. Feb. 15, 2025) (“A transfer under § 1406(a) may be made upon motion or by a court sua sponte.”); Interested London Underwriters v. Kelly Glob. Logistics, Inc., No. 06-cv-5845 (PKL), 2008 WL 558038, at *5 (S.D.N.Y. Feb. 29, 2008) (same); Holey Soles Holdings, Ltd. v. Foam Creations, Inc., No. 05-cv-6893 (MBM), 2006 WL 1147963, at *9 (S.D.N.Y. May 1, 2006) (same); Johnson v. Sony Music Publ'g (US) LLC, No. 23-cv-10369 (LTS), 2024 WL 2924219, at *2 (S.D.N.Y. May 9, 2024) (“The power of district courts to transfer cases under Section 1404(a) sua sponte ․ is well established.”); Mulgrew v. United States Dep't of Transportation, 717 F. Supp. 3d 281, 287 (E.D.N.Y. 2024) (recognizing the discretion of courts “to transfer a case sua sponte under 28 U.S.C. § 1404”); Goodall v. New York State Dep't of Corr. & Cmty. Supervision, No. 19-cv-532 (KAM)(SJB), 2019 WL 4805029, at *1-2 (E.D.N.Y. Oct. 1, 2019) (same); Blum v. Salomon, No. 06-cv-3149 (WHP), 2006 WL 3851157, at *3 (S.D.N.Y. Dec. 28, 2006) (same).

1. Improper Venue (28 U.S.C. § 1406(a))

The statute governing improper venue, 28 U.S.C. § 1406(a), reads as follows:

The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.

This section “instructs a court to transfer a case from the ‘wrong’ district to a district ‘in which it could have been brought.’ ” Atlantic Marine, 571 U.S. at 58, 134 S.Ct. 568. “A ‘wrong’ district is therefore a district other than those districts in which Congress has provided by its venue statutes that the action may be brought.” Id. (citation modified). “This question — whether venue is ‘wrong’ or ‘improper’ — is generally governed by 28 U.S.C. § 1391.” Id. at 55, 134 S.Ct. 568. “The first two paragraphs of § 1391(b) define the preferred judicial districts for venue in a typical case, but the third paragraph provides a fallback option ․ [i]f no other venue is proper.” Id. at 56-57, 134 S.Ct. 568. If a court finds venue improper or “wrong” under § 1391(b), the court has no discretion under § 1406(a) to proceed with the case; the court “shall” dismiss or transfer the case. 28 U.S.C. § 1406(a).

2. Forum Non Conveniens (28 U.S.C. § 1404(a))

Under 28 U.S.C. § 1404(a), “[f]or 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.” “Section 1404(a) is merely a codification of the doctrine of forum non conveniens for the subset of cases in which the transferee forum is within the federal court system; in such cases, Congress has replaced the traditional remedy of outright dismissal with transfer.” Atlantic Marine, 571 U.S. at 60, 134 S.Ct. 568.

“District courts have broad discretion in making determinations of convenience under Section 1404(a) and notions of convenience and fairness are considered on a case-by-case basis.” D.H. Blair & Co. v. Gottdiener, 462 F.3d 95, 106–07 (2d Cir. 2006). “In the typical case not involving a forum-selection clause, a district court considering a § 1404(a) motion (or a forum non conveniens motion) must evaluate both the convenience of the parties and various public-interest considerations.” Atlantic Marine, 571 U.S. at 62, 134 S.Ct. 568.

“Factors relating to the parties’ private interests include relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; possibility of view of premises, if view would be appropriate to the action; and all other practical problems that make trial of a case easy, expeditious and inexpensive.” Id. at n.6 (internal quotations omitted).

“Public-interest factors may include the administrative difficulties flowing from court congestion; the local interest in having localized controversies decided at home; and the interest in having the trial of a diversity case in a forum that is at home with the law.” Id. (citation modified). “The Court must also give some weight to the plaintiffs’ choice of forum.” Id. (citation omitted). “Where, however, the plaintiff is an alien or a stranger to the forum with no connection to it, the degree of deference accorded its choice is diminished.” Cento Pearl v. Arts & Craft Supply Inc., No. 03-cv-2424 (LAK), 2003 WL 1960595, at *1 (S.D.N.Y. Apr. 24, 2003) (citing Guidi v. Inter–Continental Hotels Corp., 224 F.3d 142, 145 (2d Cir. 2000)).

II. Discussion

Although the parties are embroiled in highly contentious litigation in multiple forums, this Order considers a narrow issue: whether the Eastern District of New York is a proper venue under § 1406(a) and § 1404(a). First, the Court considers whether venue is improper or “wrong” in the Eastern District of New York under § 1391(b), and if so, whether to dismiss or transfer this action as mandated by § 1406(a). Second, the Court considers whether transfer is also warranted under the doctrine of forum non conveniens codified in § 1404(a).

For the reasons explained below, the Court finds transfer warranted under both § 1406(a) and § 1404(a) and transfers this action to a proper venue, the Northern District of California.

A. Improper Venue Under § 1406(a)

To ascertain whether venue is improper or “wrong” in this district under § 1406(a), the Court must undertake a step-by-step analysis of the general venue statute, 28 U.S.C. § 1391(b). As previously discussed, “[t]he first two paragraphs of § 1391(b) define the preferred judicial districts for venue in a typical case, but the third paragraph provides a fallback option ․ [i]f no other venue is proper.” Atlantic Marine, 571 U.S. at 56-57, 134 S.Ct. 568.

1. Section 1391(b)(1) is Inapplicable

The first paragraph, § 1391(b)(1), provides that venue is proper in “a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located.” As alleged in the complaint in the instant case, no defendant is a resident of the state of New York. (Comp. ¶¶ 16-18.) All defendants are foreign citizens and not alleged to be residents of the United States. (Comp. ¶¶ 16-18.) Accordingly, there is no judicial district where venue would be proper under § 1391(b)(1).

2. Section 1391(b)(2) is Applicable

The second paragraph, § 1391(b)(2), provides that venue is proper 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.” As previously discussed, the Second Circuit “caution[s] district courts to take seriously the adjective ‘substantial’ ” because courts “are required to construe the venue statute strictly.” Glasbrenner, 417 F.3d at 357. “[F]or venue to be proper, significant events or omissions material to the plaintiff's claim must have occurred in the district in question, even if other material events occurred elsewhere.” Id. (emphasis in original). “It would be error, for instance, to treat the venue statute's ‘substantial part’ test as mirroring the minimum contacts test employed in personal jurisdiction inquiries.” Id.

In this step of the analysis, the Court (i) analyzes whether venue is improper or “wrong” in the Eastern District of New York; and (ii) identifies which, if any, judicial district would be a proper venue for this action.

a. Venue is Improper in the Eastern District of New York

Plaintiffs’ complaint does not allege any facts to establish that “a substantial part of the events or omissions giving rise to the claim[s] occurred” in the Eastern District of New York. 28 U.S.C. § 1391(b)(2). In fact, Plaintiffs’ complaint appears to be devoid of any reference to events or omissions occurring in this district. Plaintiffs’ complaint alleges that each defendant “regularly conducts business in the United States, including in New York and California” – but it does not specify even one event or omission that occurred in this district. Nor do Plaintiffs allege that any “property that is the subject of the action” is located within this district. 28 U.S.C. § 1391(b)(2).

The only instance in the complaint in which Plaintiffs allege that any injury occurred within this district is their conclusory boilerplate venue paragraph:

Venue is proper in the United States District Court for the Eastern District of New York pursuant to 28 U.S.C. § 1391 because Defendants (i) have intentionally availed themselves of the laws of New York and the United States by conducting business in this district; (ii) do substantial business within this district; (iii) are subject to personal jurisdiction in this district; and (iv) a substantial part of the events or omissions giving rise to the claim occurred in this judicial district and Plaintiffs were harmed by Defendants’ conduct within this judicial district.

(Comp. ¶ 22.) A threadbare recitation of venue in a boilerplate paragraph, devoid of any supporting facts in the complaint, does not establish proper venue in this district.

In their pre-motion conference letter, Plaintiffs make cursory references to some relevant business activity Plaintiffs believe may have occurred in the state of New York – not specifically the Eastern District of New York – at some point in time. (ECF No. 11 at 1-2.) Plaintiffs write that (i) “at least one of the Defendants traveled to New York to conduct diligence on several CHAP portfolio companies;” (ii) “at least one Defendant sought to raise financing in New York in connection with CHAP and/or one of its portfolio companies;” (iii) “Defendants sent several of the defamatory statements at issue in this case to CHAP's LPs and others in New York;” and (iv) “many portfolio companies have significant operations in New York;” and (v) “CHAP has raised” funds from “New York investors, and routinely uses banks with New York branches.” (Id.)

Even if the Court were to credit these factual allegations (that are absent from Plaintiffs’ complaint), they fall well short of alleging that “significant events or omissions material to the plaintiff's claim ․ occurred in the district.” Glasbrenner, 417 F.3d at 357 (emphasis in original). In sum, Plaintiffs allege merely that two unspecified defendants each had business trips in the state of New York at some point in time, that some of the allegedly defamatory statements reached individuals located in New York, and that CHAP had a financial relationship with other people and entities (i.e., investors and portfolio companies) located in New York. Plaintiffs’ allegations, if taken at face value, would establish that events in the state of New York may have had some minor role in the disputes giving rise to this action. Given that courts “are required to construe the venue statute strictly,” Glasbrenner, 417 F.3d at 357, such attenuated references to some possible relevant activity within the state of New York cannot establish proper venue in the Eastern District of New York.

Given that the Court has found that venue is improper in the Eastern District of New York, § 1406(a) mandates dismissal or transfer of this action. “Whether dismissal or transfer is appropriate lies within the sound discretion of the district court.” Minnette v. Time Warner, 997 F.2d 1023, 1026 (2d Cir. 1993). Because “the functional purpose of 28 U.S.C. § 1406(a) is to eliminate impediments to the timely disposition of cases and controversies on their merits,” id. at 1027, the Court finds that, if venue is proper in a different judicial district, transfer in this case would “be in the interest of justice” under § 1406(a).

b. Venue is Proper in the Northern District of California

Having found venue improper in the Eastern District of New York, the Court considers whether a different, proper venue for this action can be identified. The Court's review of the complaint reveals that, pursuant to § 1391(b)(2), the Northern District of California is a proper venue for this action because (i) “a substantial part of the events or omissions giving rise to the claim[s]” and (ii) “a substantial part of property that is the subject of the action” are in that district.

The Court first addresses the “events or omissions giving rise to the claim” that occurred in California – and presumably within the Northern District of California where the two American corporate plaintiffs ¹ are headquartered. Plaintiff Jie Chen, a California resident in the Northern District of California, (Comp. ¶ 11), alleges that he and the four corporate plaintiffs suffered various damages as a result of Defendants’ actions, none of which are alleged to have occurred in the Eastern District of New York, (Comp. ¶¶ 94-144). Given that Mr. Chen is a California resident and the American corporate plaintiffs’ headquarters are in the Northern District of California, (Comp. ¶¶ 12-13), highly relevant “events” (i.e., the alleged harms suffered by Mr. Chen) presumably occurred in California and very likely within the Northern District of California. For example, defendant Yu was allegedly employed by Plaintiffs to “help on back-office matters, including HR and compliance,” (Comp. ¶¶ 30-31), and defendant Wang was responsible for Plaintiffs’ “reception, social activities, and investor relations,” (Comp. ¶ 33).

Second, analysis of the “property that is the subject of the action” even more conclusively resolves the question of proper venue. For example, Plaintiffs allege that “Defendants also misappropriated Celtic House Websites, property owned by Mr. Chen.” (Comp. ¶ 97) (emphasis added). The dispute over control of the websites occurred, in significant part, in the Northern District of California. As the screenshots in Plaintiffs’ complaint show, the online activity related to this alleged illegal transfer of property occurred near Ontario, Canada and Hayward, California – the latter being within the Northern District of California. (Comp. ¶ 42.) The alleged loss of Mr. Chen's property, specifically the websites at issue and access to records, therefore occurred, in substantial part, within the Northern District of California.

Upon careful review of the complaint in this case, the Court finds, pursuant to § 1391(b)(2), that the Northern District of California is a proper venue for this action because (i) “a substantial part of the events or omissions giving rise to the claim[s]” and (ii) “a substantial part of property that is the subject of the action” are in that district.

B. Forum Non Conveniens Under § 1404(a)

Although transfer (or dismissal) is mandated by § 1406(a) where, as here, venue is improper, the Court finds that, in the alternative, discretionary transfer to the Northern District of California is also warranted under the doctrine of forum non conveniens as codified in § 1404(a). The Second Circuit has held that “[d]istrict courts have broad discretion in making determinations of convenience under Section 1404(a) and notions of convenience and fairness are considered on a case-by-case basis.” Gottdiener, 462 F.3d at 106–07.

As a threshold matter, Plaintiffs’ decision to file a complaint with no factual allegations related to any person, entity, or conduct in this district is questionable. As the Supreme Court has explained, “[i]n most instances, the purpose of statutorily specified venue” like § 1404(a) “is to protect the defendant against the risk that a plaintiff will select an unfair or inconvenient place of trial.” Atlantic Marine, 571 U.S. 49 at 63 n.7, 134 S.Ct. 568 (emphasis in original). Where, as here, Defendants have stated their willingness to litigate the action in the American plaintiffs’ home district (the Northern District of California), (ECF No. 10 at 3), the American plaintiffs cannot credibly claim to be prejudiced by a transfer of this action to their home district. Given Plaintiffs’ lack of any meaningful connection to the Eastern District of New York, this Court joins other courts in finding that, “[w]here ․ the plaintiff is ․ a stranger to the forum with no connection to it, the degree of deference accorded its choice [of forum] is diminished.” Cento Pearl, 2003 WL 1960595, at *1 (citing Guidi, 224 F.3d at 145).

Other considerations of fairness and convenience further reinforce that the Northern District of California is a more appropriate venue. As Plaintiffs’ complaint identifies, there is ongoing litigation commenced by Defendants (the “California Action”) in Alameda County Superior Court (located in the Northern District of California) between the parties regarding control of the investment firms at issue in this action. (Comp. ¶ 89.) Given that witnesses and evidence may significantly overlap in the two cases, litigation of this action would be more convenient in the Northern District of California. Defendants’ grievances regarding the “cost and inconvenience on foreign Defendants” by “Plaintiffs’ decision to litigate 3,000 miles away from their own headquarters” are legitimate. (ECF No. 10 at 3.) Moreover, Defendants have represented that “discovery is well underway in the California Action and there is no stay.” (ECF No. 12 at 1.)

Plaintiffs’ arguments contesting transfer are unavailing and are premised on the notion that venue is proper in this district because “Defendants have conducted business in New York.” (ECF No. 11 at 3.) As the Court has emphasized repeatedly in this Order, such threadbare generalizations that Defendants conducted unspecified business at an unspecified date at an unspecified location within the state of New York is insufficient to support venue in the Eastern District of New York. To the contrary, Defendants represent that they “have not conducted any business in New York,” and “do not own, use or possess real property in New York.” (ECF No. 12 at 2.) Defendants also contend that “the operative facts arose, key witnesses and documents are located, and compulsory process over unwilling, non-party witnesses” exists in the Northern District of California. (Id. at 3.)

Upon consideration of the relevant forum non conveniens considerations of fairness and convenience, the Court finds that, “in the interest of justice,” discretionary transfer to the Northern District of California is warranted under § 1404(a).

III. Conclusion

For the reasons explained in this Order, the Court exercises its authority under 28 U.S.C. §§ 1406(a) and 1404(a) to order, sua sponte, the transfer of venue in this action. The Court respectfully directs the Clerk of Court to transfer this action to the Northern District of California and close this case.

So ordered.

FOOTNOTES

1.   Plaintiffs are comprised of Jie Chen, an individual plaintiff who is an American citizen residing in California, and four corporate plaintiffs. (Comp. ¶¶ 11-15.) Of the four corporate plaintiffs, two corporate plaintiffs (CHAP and Celtic 2023 One Ltd.) are incorporated in the British Virgin Islands. (Comp. ¶¶ 14-15.) Of the remaining two corporate plaintiffs, CGAH is a California limited liability company with a principal place of business in Fremont, California. (Comp. ¶ 12.) CHAF is a Delaware limited liability company with a principal place of business in Fremont, California at the same address as CGAH. (Comp. ¶ 13.)

Kiyo A. Matsumoto, United States District Judge: