LG2, LLC v. American Dairy Queen Corporation

U.S. District Court, District of Minnesota January 12, 2023

Trial Court Opinion

             UNITED STATES DISTRICT COURT                            
                DISTRICT OF MINNESOTA                                


LG2, LLC, a Texas limited liability    Case No. 22-cv-1044 (WMW/JFD)      
company,                                                                  

               Plaintiff,

ORDER

American Dairy Queen Corporation, a
Delaware corporation,

Defendant.

Before the Court is Defendant American Dairy Queen Corporation’s (ADQ)
motion to transfer venue or, in the alternative, to dismiss in part the complaint. (Dkt. 10).
For the reasons addressed below, the Court denies ADQ’s motion to transfer and grants
ADQ’s partial motion to dismiss.
BACKGROUND
Plaintiff LG2, LLC, (LG2) is a Texas limited liability company owned by Jordan
Giles and Terry Giles, who are residents of Texas. Defendant ADQ is a Delaware
corporation with its principal place of business in Bloomington, Minnesota.
In March 1961, ADQ entered into an agreement (the Legacy Agreement) with Bob
Denny, which granted Denny the exclusive right to use the trademark and name “Dairy
Queen” within Johnson County, Oklahoma (the Territory). The Legacy Agreement was
assigned several times. On December 1, 2019, the then-current assignee, C & K Cannon
Enterprises, LLC, (C & K Cannon), assigned the Legacy Agreement to LG2.
The Dairy Queen franchise (the Restaurant) governed by the Legacy Agreement is
located in Tishomingo, Oklahoma. In 1989, the Restaurant burned down and reopened a
year later at a different location in Tishomingo. In September 2021, LG2 purchased a

property 1.5 miles away from the second location and intended to relocate the Restaurant
to the new property beginning in January 2022. ADQ informed LG2 in November 2021
that ADQ would not permit LG2 to open the Restaurant at the new property unless LG2
entered into a new franchise agreement and/or reduced its menu.
LG2 commenced this action on April 25, 2022, advancing three claims to relief.

Count I alleges breach of contract and the implied covenant of good faith and fair dealing.
Count II alleges a violation of the Minnesota Franchise Act. Count III requests a
declaratory judgment. ADQ now moves to transfer this action to the United States
District Court for the Eastern District of Texas or, in the alternative, dismiss LG2’s
claims under the Minnesota Franchise Act (Count II).

ANALYSIS
I. Motion to Transfer Venue
ADQ seeks to transfer this case to the Eastern District of Texas, pursuant to

28 U.S.C. § 1404

(a).  LG2 opposes the motion to transfer, contending that the Eastern 
District of Texas is an improper venue for this action.                   

A district court may transfer a civil action to another district where the action may 
have  been  brought  for  “the  convenience  of  parties  and  witnesses,  in  the  interest  of 
justice.”

28 U.S.C. § 1404

(a).  The decision whether to transfer under Section 1404(a) 
involves a two-step inquiry.  Valspar Corp. v. Kronos Worldwide, Inc.,

50 F. Supp. 3d 1152, 1155

 (D. Minn. 2014).  First, the court must determine “whether the action might 
have been brought in the proposed transferee district.”

Id.

 (internal quotation marks 
omitted).  Second, the court must determine whether transfer would be convenient for the 

parties, convenient for the witnesses and in the interests of justice.

Id.

   
A defendant seeking transfer bears a “heavy burden” of proof to establish that 
transfer is warranted.  Bae Sys. Land & Armaments L.P. v. Ibis Tek, LLC,

124 F. Supp. 3d 878, 884

 (D. Minn. 2015) (internal quotation marks omitted).  This burden requires the 
defendant to show “that the balance of factors strongly favors” the defendant, not merely 

“that the factors are evenly balanced or weigh only slightly in favor of transfer.”

Id.

 
(internal quotation marks omitted).  A court may consider matters beyond the pleadings 
when determining whether venue is proper.  See e.g., Advanced Logistics Consulting, 
Inc. v. C. Enyeart LLC, No. 09-720(RHK/JJG),

2009 WL 1684428

, at *2 (D. Minn. June 
16, 2009).                                                                

LG2 first argues that ADQ’s proposed transferee district, the Eastern District of 
Texas, is an improper venue for this action.  ADQ maintains that venue is proper in the 
Eastern District of Texas.  In light of the Court’s conclusion that transfer to the Eastern 
District of Texas is not warranted, infra, the Court assumes without deciding that this 
action could have been properly venued in Texas and considers the remaining Section 

1404(a) factors.                                                          
  A.   Convenience of the Parties                                    
ADQ  argues  that  transfer  to  the  Eastern  District  of  Texas  would  be  more 
convenient for the parties.  There is a strong presumption in favor of a plaintiff’s choice 
of  forum,  particularly  when  the  plaintiff  resides  in  the  district  in  which  it  filed  the 
complaint.  Travel Tags, Inc. v. Performance Printing Corp.,

636 F. Supp. 2d 833, 836

 
(D. Minn. 2007).  A defendant can overcome this presumption by showing that the 

transferee district is more convenient than the current forum.  See

id.

  A defendant’s 
motion to transfer should not be granted “if the effect is simply to shift the inconvenience 
to the party resisting the transfer.”

Id.

 (internal quotation marks omitted).   
Here, ADQ maintains that because LG2’s two owners live in Texas and have no 
connection to Minnesota, the Eastern District of Texas would be more convenient for 

LG2.  ADQ also argues that, although ADQ is headquartered in Minnesota, the ADQ 
employees with information relevant to the case live in Texas.  Because LG2 is not a 
resident of the District of Minnesota, the presumption in favor of its preferred venue is 
lessened.  See In re Apple, Inc.,

602 F.3d 909, 913

 (8th Cir. 2010) (observing that the 
“general practice of according deference [to the plaintiff’s choice of forum] . . . is based 

on an assumption that the plaintiff’s choice will be a convenient one” and that such an 
assumption is “much less reasonable” if the plaintiff is not a resident of the chosen 
district  and  there  is  a  risk  that  “the  plaintiff  chose  the  forum  to  take  advantage  of 
favorable law or to harass the defendant” (internal quotation marks omitted)).   LG2 
argues that the ADQ employees who were involved with the transfer of the Restaurant 

work  in  ADQ’s  Minnesota  headquarters  and,  therefore,  that  the  convenience  of  the 
parties weighs in favor of Minnesota.  Of the four relevant ADQ employees the parties 
have identified, two live in Minnesota and two live in Texas.  And LG2 is a Texas 
company whose owners reside in Texas.  For these reasons, the convenience-of-the-
parties factor weighs in favor of transfer to the Eastern District of Texas.  
  B.   Convenience of the Witnesses                                  

ADQ next contends that transferring this action to the Eastern District of Texas 
would increase the convenience of the witnesses.  A defendant seeking transfer “must 
clearly specify the essential witnesses to be called and must make a general statement of 
what their testimony will cover.”  Graff v. Qwest Commc’ns Corp.,

33 F. Supp. 2d 1117, 1122

  (D.  Minn.  1999).    After  such  a  showing,  the  district  court  can  evaluate  the 

materiality of the anticipated witnesses’ testimony and the accessibility of the forum.  
Bae Sys., 124 F. Supp. 3d at 885–86 (clarifying that this inquiry focuses primarily on 
non-party witnesses because “it is generally assumed that witnesses within the control of 
the party calling them, such as employees, will appear voluntarily in a foreign forum”).  
When a defendant makes only general allegations of witness inconvenience or establishes 

that a forum is only slightly inconvenient, a district court should not transfer the action.  
See

id.

at 887–88.
Here, each party identifies a non-party witness for whom their desired forum
would be more convenient. According to ADQ, Scott Lay is a non-party witness for
whom Texas would be more convenient. Lay previously held a one-third ownership

interest in LG2 and was involved in the construction of the new Restaurant. ADQ
anticipates that Lay will offer testimony regarding LG2’s Oklahoma ADQ franchise
operations, the differences between operating an ADQ franchise in Oklahoma and Texas
and LG2’s construction of the new Restaurant. Lay resides outside the subpoena power
of the District of Minnesota. See Fed. R. Civ. P. 45(c)(1) (“A subpoena may command a
person to attend a trial, hearing, or deposition only . . . within 100 miles of where the
person resides, is employed, or regularly transacts business in person”). LG2 provides a

declaration from Lay, in which Lay attests that although he resides in Texas, he is
“willing, able, and committed to voluntarily traveling to Minnesota” to testify in this
action. But LG2 does not dispute that Texas would be a more convenient forum for Lay
than Minnesota.
LG2 contends that former ADQ employee Nancy Kain is an essential non-party

witness who resides beyond the subpoena power of the Eastern District of Texas.
According to LG2, Kain was LG2’s assigned transfer coordinator at ADQ and would
testify as to the transfer process that led to LG2’s acquisition of the Restaurant and
ADQ’s procedures pertaining to store transfers. ADQ argues that Kain is not an essential
witness because current ADQ employees can provide the same information. But Kain, as

LG2’s assigned coordinator, may have information particular to the transfer of the
Restaurant to LG2 that a current employee might not be able to provide.1 For this reason,
Kain’s testimony may be material.
Because both parties to this dispute identify a nonparty witness they deem
essential who resides outside the subpoena power of the other party’s desired venue, the

convenience-of-the-witnesses factor is neutral.

1 ADQ contends that Kain’s testimony is irrelevant because she was not involved in
coordinating the relocation policy at issue in this action. Although Kain’s testimony
would not be relevant to the relocation dispute, her testimony could be material to LG2’s
claims regarding ADQ’s alleged failure to provide a Franchise Disclosure Document
when ownership of the Restaurant transferred from C & K Cannon to LG2.
C. Interests of Justice
When determining whether the interests of justice favor transfer, district courts
consider “(1) judicial economy, (2) the plaintiff’s choice of forum, (3) the comparative

costs to the parties of litigating in each forum, (4) each party’s ability to enforce a
judgment, (5) obstacles to a fair trial, (6) conflict of law issues, and (7) the advantages of
having a local court determine local law.” Bae Sys.,

124 F. Supp. 3d at 888

 (internal 
quotation marks omitted).                                                 
     1.   Judicial Economy                                           

Judicial-economy considerations encompass the Court’s case load as well as other 
litigation activity between the parties.  Valspar,

50 F. Supp. 3d 1152, 1157

 (D. Minn. 
2014).    Here,  the  parties  do  not  identify  any  reason  why  judicial  economy  favors 
litigation in this District or in the Eastern District of Texas.  This factor is neutral.  
     2.   Plaintiff’s Choice of Forum                                

A plaintiff’s choice of forum is generally accorded deference.  In re Apple, Inc.,

602 F.3d at 913

.  But as addressed above, when a plaintiff commences an action in a 
district in which the plaintiff does not reside, the plaintiff’s choice of forum is entitled to 
less deference.  See

id.

  In particular, a plaintiff’s decision to commence litigation in a 
foreign forum increases “the risk that the plaintiff chose the forum to take advantage of 

favorable law or to harass the defendant.”

Id.

  Here, LG2 does not reside in Minnesota 
and, therefore, its decision to bring suit in the District of Minnesota is entitled to less 
weight.  But this case is not completely analogous to Apple, in which “no relevant 
connection”  existed  between  the  plaintiff,  defendant,  witnesses,  dispute,  and  the 
plaintiff’s  choice  of  forum.    See

id.

    ADQ  is  a  Minnesota  company  and  LG2  has 
identified several witnesses who reside in Minnesota.  Although LG2’s choice to bring 
this action in the District of Minnesota is not entitled to the same deference it would be 

were LG2 a Minnesota resident, its choice nonetheless merits some deference.  For this 
reason, the choice-of-forum factor weighs slightly against transfer.      
     3.   Comparative Costs to the Parties of Litigating in Each Forum 
When comparing the costs to each party, courts consider the relative costs of 
discovery, obtaining local counsel and other litigation-related expenses.  See Valspar 

Corp.,

50 F. Supp. 3d at 1157

.  But see My Pillow, Inc. v. LMP Worldwide, Inc.,

331 F. Supp. 3d 920, 928

  (D.  Minn.  2018)  (giving  little  weight  to  the  costs  of  document 
production due to advancements in technology).  When a transfer would merely shift the 
costs from one party to another, courts disfavor the transfer.  See Bae Sys.,

124 F. Supp. 3d at 888

.  Here, both parties have obtained Minnesota counsel.  And as LG2 observes, 

because  ADQ  has  employees  in  Texas  and  Minnesota,  ADQ  will  incur  travel  costs 
regardless of the forum.  Because transfer would merely shift the costs from one party to 
another, the comparative-costs factor weighs against transfer.            
     4.  LG2’s Ability to Enforce a Judgment                         
The parties do not dispute that LG2 will be able to enforce a judgment in either 

forum.  See Ahlstrom v. Clarent Corp., No. 02-780RHKSRN,

2002 WL 31856386

, at *7 
(D. Minn. Dec. 19, 2002) (“A plaintiff who obtains a money judgment from a federal 
district court may register that judgment in any other judicial district in which assets of 
the defendant are located.” (citing

28 U.S.C. § 1963

)).  This factor is neutral.   
     5.   Obstacles to a Fair Trial and  Advantages of Having a Local 
          Court Determine Questions of Local Law                     
LG2 argues that it is more likely to obtain a fair trial in this District than in the 
Eastern District of Texas because this case presents an unresolved question of Minnesota 
law, which the District of Minnesota is better equipped to resolve.  ADQ contends that 
LG2 could obtain a fair trial in the Eastern District of Texas and that the Eastern District 

of Texas is equally capable of applying Minnesota law.                    
Federal district courts routinely apply laws from other states.  Klatte v. Buckman, 
Buckman & Reid, Inc.,

995 F. Supp. 2d 951, 957

 (D. Minn. 2014).  But it is generally 
preferable for local courts to consider local issues of law.  Brockman v. Sun Valley 
Resorts, Inc.,

923 F. Supp. 1176, 1183

 (D. Minn. 1996).  The application of local law is 

particularly important when the legal questions at issue are novel.

Id.

at 1182–83. Here,
LG2 argues that its arguments under the Minnesota Franchise Act (MFA) are novel and
have “recently been developed by courts in this district, applying Minnesota law.” LG2
argues that the Eastern District of Texas “would not have the benefit of this recent
development.” ADQ contends that the Eastern District of Texas also has an interest in
resolving the claim under the MFA because LG2’s claims implicate the extraterritorial

application of a state’s laws, which is an issue that is equally important to Texas.
Because federal district courts routinely apply laws from other states, the Eastern
District of Texas would be able to apply the MFA and provide LG2 a fair trial.
Accordingly, the fair-trial-obstacles factor is neutral. But because there is a preference
for allowing local courts to consider local issues of law, the local-application-of-local law
factor weighs against transfer.
6. Conflict of Law

Neither party identifies any choice-of-law issues relevant to this dispute. 2
Accordingly, this factor is neutral.
In summary, the convenience-of-the-parties factor weighs in favor of transfer to
the Eastern District of Texas. Several of the interests-of-justice factors, including the
plaintiff’s choice of forum, the comparative costs to the parties and the advantage of

having a local court apply local law, weigh against transfer. The remaining factors—
convenience of the parties, judicial economy, the ability to enforce a judgment and
obstacles to a fair trial—are neutral. Because most of the factors weigh against transfer
or are neutral, ADQ has not satisfied its burden to establish that transfer to the Eastern
District of Texas is warranted.

The Court, therefore, denies ADQ’s motion to transfer venue to the Eastern
District of Texas.
II. Motion to Dismiss
ADQ moves to dismiss LG2’s claims under the Minnesota Franchise Act (MFA)
for failure to state a claim on which relief can be granted. See Fed. R. Civ. P. 12(b)(6). A

complaint must contain “a short and plain statement of the claim showing that the pleader

2 LG2 argues that the conflicts-of-law factor weighs against transfer because this
District is better suited to apply Minnesota law. But this argument pertains to the
desirability of having a local court apply local law, see supra, Part I.D.5, not to whether
there are conflict-of-law issues.
is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A plaintiff need not prove his case at the
pleading stage, nor do the pleadings require detailed factual allegations to survive a
motion to dismiss. Bell Atl. Corp. v. Twombly,

550 U.S. 544, 555

 (2007); L.L. Nelson 

Enters., Inc. v. County of St. Louis,

673 F.3d 799, 805

 (8th Cir. 2012) (observing that 
“specific facts are not necessary” and pleadings “need only give the [opposing party] fair 
notice of what the claim is and the grounds upon which it rests” (internal quotation marks 
omitted)).  To survive a motion to dismiss, a complaint must allege sufficient facts to 
state a facially plausible claim to relief.  Ashcroft v. Iqbal,

556 U.S. 662, 678

 (2009) 

(citing Twombly,

550 U.S. at 570

).  Factual allegations that raise only a speculative right 
to relief are insufficient.  Twombly,

550 U.S. at 555

.  A district court accepts as true all of 
the  plaintiff’s  factual  allegations  and  views  them  in  the  light  most  favorable  to  the 
plaintiff.  Stodghill v. Wellston Sch. Dist.,

512 F.3d 472, 476

 (8th Cir. 2008).  But legal 
conclusions couched as factual allegations are not accepted as true.  Twombly,

550 U.S. at 555

.    And  mere  “labels  and  conclusions”  as  well  as  a  “formulaic  recitation  of  the 
elements of a cause of action” fail to state a claim for relief.

Id.

     
     A.   The Applicability of the MFA                               
As  an  initial  matter,  ADQ  argues  that  the  MFA  does  not  govern  ADQ’s 
relationship with LG2 because the MFA protects only franchisees located in Minnesota.  

Courts disagree as to the application of the MFA to franchisees outside of Minnesota.  
See Wave Form Sys., Inc. v. AMS Sales Corp.,

73 F. Supp. 3d 1052, 1061

 (D. Minn. 2014) 
(listing cases and concluding that the applicability of the MFA to franchisees located 
outside of Minnesota was “uncertain”); Johnson Bros. Liquor Co. v. Bacardi U.S.A., Inc.,

830 F. Supp. 2d 697, 703

(D. Minn. 2011) (observing that “even where a party to a
franchise agreement is a Minnesota corporation, the agreement is not within the purview
of the MFA if the franchisee is not located in and does not operate in Minnesota”

(internal quotation marks omitted)). Here, LG2 alleges that the MFA applies “because
the sale of and/or offer to sell or purchase the franchise was made in the state of
Minnesota.”
The MFA provides that its provisions “concerning sales and offers to sell shall
apply when a sale or offer to sell is made in this state; when an offer to purchase is made

and accepted in this state; or when the franchise is to be located in this state.” Minn. Stat.
§ 80C.19, subdiv. 1. “[A]n offer to sell or to purchase is made in this state, whether or
not either party is then present in this state, when the offer originates from this state or is
directed by the offeror to this state and received by the offeree in this state.” Id. § 80C.19,
subdiv. 2. The MFA defines the words “sale” and “sell” to include “every contract or

agreement for the sale of, and every contract to sell or dispose of, a franchise or interest
in a franchise for value.” Id. § 80C.01. subdiv. 15. The MFA defines “offer” and “offer
to sell” to include “every attempt to offer to dispose of, and every solicitation of an offer
to buy, a franchise or interest in a franchise for value.” Id. § 80C.01, subdiv. 16.
LG2 relies on the Assignment, Guaranty, and Consent Agreement (the Assignment

Agreement) between LG2 and C & K Cannon in support of its allegation that an offer to
sell or purchase a franchise was made in Minnesota. LG2 alleges that the Assignment
Agreement was drafted by ADQ in Minnesota, only became effective once ADQ signed
it in Minnesota and “contemplated a relationship involving continuous communication
and payments between LG2 and ADQ in Minnesota.” According to LG2, ADQ also
accepted the assignment from ADQ’s offices in Minnesota and communicated its
acceptance of the assignment from LG2 from its offices in Minnesota. But LG2 offers no

support for its contention that, as a matter of law, any of these actions constituted “a sale
or offer to sell”3 under the MFA. Instead, these actions pertained to ADQ’s right to
approve the assignment from C & K Cannon to LG2. The cases on which LG2 relies
concern a franchisor dealing directly with a franchisee and, therefore, do not support
LG2’s argument that a franchisor’s consent to a franchise assignment constitutes a sale or

an offer to sell a franchise.
Reading the MFA in context bolsters the Court’s conclusion that a franchisor’s
consent to an assignment of a franchise does not constitute a sale or an offer to sell. The
MFA exempts from its registration requirements an “offer or sale of a franchise owned by
that franchisee . . . if the sale is not effected by and through a franchisor.” Minn. Stat.

§ 80C.03(a). And the MFA clarifies that a “sale is not effected by or through a franchisor
merely because a franchisor has a right to approve or disapprove a different franchisee.”
Id. Because this provision relates to exemptions from the MFA’s registration agreements,

3 LG2 provides as an exhibit to its opposition to ADQ’s motion a copy of ADQ’s
System Standards and Operations Manual (the Manual). Although the Court generally
cannot consider matters outside the pleadings on a motion to dismiss, documents
necessarily embraced by the complaint are not matters outside the pleading. Ashanti v.
City of Golden Valley,

666 F.3d 1148, 1151

 (8th Cir. 2012) “Documents necessarily 
embraced by the pleadings include documents whose contents are alleged in a complaint 
and whose authenticity no party questions, but which are not physically attached to the 
pleading.”

Id.

(internal quotation marks omitted). Because LG2 does not allege the
contents of the Manual in its complaint, the Manual is not necessarily embraced by the
complaint and cannot be considered by the Court.
the Court need not address whether this exemption, on its own, is sufficient to preclude
the applicability of the MFA to the claims in this action. But when read in context,
Section 80C.03(a) supports the Court’s conclusion that consent to assign a franchise is

insufficient to constitute a sale or offer to sell for the purposes of Section 80C.19.
Because the MFA does not apply to LG2s claims in this action, the Court grants
ADQ’s motion to dismiss LG2’s claims under the MFA (Count II).
III. Motion to Stay Deadline to Answer
ADQ requests that the Court stay ADQ’s deadline to answer the remaining

allegations in the complaint pending the disposition of this motion. LG2 argues that
granting ADQ’s request will delay the progress of the case. Federal Rule of Civil
Procedure 12(a)(1)(A)(i) requires that a defendant serve an answer within 21 days after
being served with the summons and complaint. If a defendant files a motion to dismiss
pursuant to Rule 12, Fed. R. Civ. P., the defendant must serve an answer within 14 days

after the Court denies the motion to dismiss. Fed. R. Civ. P. 12(a)(4)(A). ADQ moves to
dismiss only one count of LG2’s complaint. Although the Federal Rules of Civil
Procedure do not expressly contemplate partial motions to dismiss or partial answers,
courts have granted requests to stay the deadline to answer the remaining allegations in
the complaint to avoid “piecemeal partial answers.” Corning Inc. v. Wilson Wolf Mfg.

Corp.,

492 F. Supp. 3d 840

, 864 (D. Minn. 2020); accord Speed RMG Partners, LLC v. 
Arctic Cat Sales Inc, No. 20-CV-609 (NEB/LIB),

2021 WL 5087273

, at *9 (D. Minn. 
Mar. 5, 2021) (granting the defendant 14 days after the issuance of the order to answer 
and observing that the United States Court of Appeals for the Eighth Circuit has not 
addressed  whether  Rule  12(a)(4)(A),  Fed.  R.  Civ.  P.,  applies  to  partial  motions  to 
dismiss).  Here, requiring ADQ to answer before the resolution of its motion to dismiss 
would result in piecemeal litigation and disserve judicial efficiency.  For these reasons, 

the Court grants ADQ’s request for a stay of its deadline to answer the remaining claims 
in LG2’s complaint.

ORDER

Based on the foregoing analysis and all the files, records and proceedings herein, 
IT IS HEREBY ORDERED:                                                     

1.   Defendant American Dairy Queen Corporation’s motion to transfer, (Dkt. 
10), is DENIED.                                                           
2.   Defendant American Dairy Queen Corporation’s motion to dismiss Count 
II of the complaint, (Dkt. 10), is GRANTED.                               
3.   Defendant American Dairy Queen Corporation must answer Plaintiff LG2, 

LLC’s complaint within 14 days of the date of this Order.                 

Dated:  January 12, 2023                s/Wilhelmina M. Wright            
                                   Wilhelmina M. Wright              
                                   United States District Judge

Trial Court Opinion

             UNITED STATES DISTRICT COURT                            
                DISTRICT OF MINNESOTA                                


LG2, LLC, a Texas limited liability    Case No. 22-cv-1044 (WMW/JFD)      
company,                                                                  

               Plaintiff,

ORDER

American Dairy Queen Corporation, a
Delaware corporation,

Defendant.

ANALYSIS
I. Motion to Transfer Venue
ADQ seeks to transfer this case to the Eastern District of Texas, pursuant to

28 U.S.C. § 1404

(a).  LG2 opposes the motion to transfer, contending that the Eastern 
District of Texas is an improper venue for this action.                   

A district court may transfer a civil action to another district where the action may 
have  been  brought  for  “the  convenience  of  parties  and  witnesses,  in  the  interest  of 
justice.”

28 U.S.C. § 1404

(a).  The decision whether to transfer under Section 1404(a) 
involves a two-step inquiry.  Valspar Corp. v. Kronos Worldwide, Inc.,

50 F. Supp. 3d 1152, 1155

 (D. Minn. 2014).  First, the court must determine “whether the action might 
have been brought in the proposed transferee district.”

Id.

 (internal quotation marks 
omitted).  Second, the court must determine whether transfer would be convenient for the 

parties, convenient for the witnesses and in the interests of justice.

Id.

   
A defendant seeking transfer bears a “heavy burden” of proof to establish that 
transfer is warranted.  Bae Sys. Land & Armaments L.P. v. Ibis Tek, LLC,

124 F. Supp. 3d 878, 884

 (D. Minn. 2015) (internal quotation marks omitted).  This burden requires the 
defendant to show “that the balance of factors strongly favors” the defendant, not merely 

“that the factors are evenly balanced or weigh only slightly in favor of transfer.”

Id.

 
(internal quotation marks omitted).  A court may consider matters beyond the pleadings 
when determining whether venue is proper.  See e.g., Advanced Logistics Consulting, 
Inc. v. C. Enyeart LLC, No. 09-720(RHK/JJG),

2009 WL 1684428

, at *2 (D. Minn. June 
16, 2009).                                                                

LG2 first argues that ADQ’s proposed transferee district, the Eastern District of 
Texas, is an improper venue for this action.  ADQ maintains that venue is proper in the 
Eastern District of Texas.  In light of the Court’s conclusion that transfer to the Eastern 
District of Texas is not warranted, infra, the Court assumes without deciding that this 
action could have been properly venued in Texas and considers the remaining Section 

1404(a) factors.                                                          
  A.   Convenience of the Parties                                    
ADQ  argues  that  transfer  to  the  Eastern  District  of  Texas  would  be  more 
convenient for the parties.  There is a strong presumption in favor of a plaintiff’s choice 
of  forum,  particularly  when  the  plaintiff  resides  in  the  district  in  which  it  filed  the 
complaint.  Travel Tags, Inc. v. Performance Printing Corp.,

636 F. Supp. 2d 833, 836

 
(D. Minn. 2007).  A defendant can overcome this presumption by showing that the 

transferee district is more convenient than the current forum.  See

id.

  A defendant’s 
motion to transfer should not be granted “if the effect is simply to shift the inconvenience 
to the party resisting the transfer.”

Id.

 (internal quotation marks omitted).   
Here, ADQ maintains that because LG2’s two owners live in Texas and have no 
connection to Minnesota, the Eastern District of Texas would be more convenient for 

LG2.  ADQ also argues that, although ADQ is headquartered in Minnesota, the ADQ 
employees with information relevant to the case live in Texas.  Because LG2 is not a 
resident of the District of Minnesota, the presumption in favor of its preferred venue is 
lessened.  See In re Apple, Inc.,

602 F.3d 909, 913

 (8th Cir. 2010) (observing that the 
“general practice of according deference [to the plaintiff’s choice of forum] . . . is based 

on an assumption that the plaintiff’s choice will be a convenient one” and that such an 
assumption is “much less reasonable” if the plaintiff is not a resident of the chosen 
district  and  there  is  a  risk  that  “the  plaintiff  chose  the  forum  to  take  advantage  of 
favorable law or to harass the defendant” (internal quotation marks omitted)).   LG2 
argues that the ADQ employees who were involved with the transfer of the Restaurant 

work  in  ADQ’s  Minnesota  headquarters  and,  therefore,  that  the  convenience  of  the 
parties weighs in favor of Minnesota.  Of the four relevant ADQ employees the parties 
have identified, two live in Minnesota and two live in Texas.  And LG2 is a Texas 
company whose owners reside in Texas.  For these reasons, the convenience-of-the-
parties factor weighs in favor of transfer to the Eastern District of Texas.  
  B.   Convenience of the Witnesses                                  

ADQ next contends that transferring this action to the Eastern District of Texas 
would increase the convenience of the witnesses.  A defendant seeking transfer “must 
clearly specify the essential witnesses to be called and must make a general statement of 
what their testimony will cover.”  Graff v. Qwest Commc’ns Corp.,

33 F. Supp. 2d 1117, 1122

  (D.  Minn.  1999).    After  such  a  showing,  the  district  court  can  evaluate  the 

materiality of the anticipated witnesses’ testimony and the accessibility of the forum.  
Bae Sys., 124 F. Supp. 3d at 885–86 (clarifying that this inquiry focuses primarily on 
non-party witnesses because “it is generally assumed that witnesses within the control of 
the party calling them, such as employees, will appear voluntarily in a foreign forum”).  
When a defendant makes only general allegations of witness inconvenience or establishes 

that a forum is only slightly inconvenient, a district court should not transfer the action.  
See

id.

convenience-of-the-witnesses factor is neutral.

124 F. Supp. 3d at 888

 (internal 
quotation marks omitted).                                                 
     1.   Judicial Economy                                           

Judicial-economy considerations encompass the Court’s case load as well as other 
litigation activity between the parties.  Valspar,

50 F. Supp. 3d 1152, 1157

 (D. Minn. 
2014).    Here,  the  parties  do  not  identify  any  reason  why  judicial  economy  favors 
litigation in this District or in the Eastern District of Texas.  This factor is neutral.  
     2.   Plaintiff’s Choice of Forum                                

A plaintiff’s choice of forum is generally accorded deference.  In re Apple, Inc.,

602 F.3d at 913

.  But as addressed above, when a plaintiff commences an action in a 
district in which the plaintiff does not reside, the plaintiff’s choice of forum is entitled to 
less deference.  See

id.

  In particular, a plaintiff’s decision to commence litigation in a 
foreign forum increases “the risk that the plaintiff chose the forum to take advantage of 

favorable law or to harass the defendant.”

Id.

  Here, LG2 does not reside in Minnesota 
and, therefore, its decision to bring suit in the District of Minnesota is entitled to less 
weight.  But this case is not completely analogous to Apple, in which “no relevant 
connection”  existed  between  the  plaintiff,  defendant,  witnesses,  dispute,  and  the 
plaintiff’s  choice  of  forum.    See

id.

    ADQ  is  a  Minnesota  company  and  LG2  has 
identified several witnesses who reside in Minnesota.  Although LG2’s choice to bring 
this action in the District of Minnesota is not entitled to the same deference it would be 

were LG2 a Minnesota resident, its choice nonetheless merits some deference.  For this 
reason, the choice-of-forum factor weighs slightly against transfer.      
     3.   Comparative Costs to the Parties of Litigating in Each Forum 
When comparing the costs to each party, courts consider the relative costs of 
discovery, obtaining local counsel and other litigation-related expenses.  See Valspar 

Corp.,

50 F. Supp. 3d at 1157

.  But see My Pillow, Inc. v. LMP Worldwide, Inc.,

331 F. Supp. 3d 920, 928

  (D.  Minn.  2018)  (giving  little  weight  to  the  costs  of  document 
production due to advancements in technology).  When a transfer would merely shift the 
costs from one party to another, courts disfavor the transfer.  See Bae Sys.,

124 F. Supp. 3d at 888

.  Here, both parties have obtained Minnesota counsel.  And as LG2 observes, 

because  ADQ  has  employees  in  Texas  and  Minnesota,  ADQ  will  incur  travel  costs 
regardless of the forum.  Because transfer would merely shift the costs from one party to 
another, the comparative-costs factor weighs against transfer.            
     4.  LG2’s Ability to Enforce a Judgment                         
The parties do not dispute that LG2 will be able to enforce a judgment in either 

forum.  See Ahlstrom v. Clarent Corp., No. 02-780RHKSRN,

2002 WL 31856386

, at *7 
(D. Minn. Dec. 19, 2002) (“A plaintiff who obtains a money judgment from a federal 
district court may register that judgment in any other judicial district in which assets of 
the defendant are located.” (citing

28 U.S.C. § 1963

)).  This factor is neutral.   
     5.   Obstacles to a Fair Trial and  Advantages of Having a Local 
          Court Determine Questions of Local Law                     
LG2 argues that it is more likely to obtain a fair trial in this District than in the 
Eastern District of Texas because this case presents an unresolved question of Minnesota 
law, which the District of Minnesota is better equipped to resolve.  ADQ contends that 
LG2 could obtain a fair trial in the Eastern District of Texas and that the Eastern District 

of Texas is equally capable of applying Minnesota law.                    
Federal district courts routinely apply laws from other states.  Klatte v. Buckman, 
Buckman & Reid, Inc.,

995 F. Supp. 2d 951, 957

 (D. Minn. 2014).  But it is generally 
preferable for local courts to consider local issues of law.  Brockman v. Sun Valley 
Resorts, Inc.,

923 F. Supp. 1176, 1183

 (D. Minn. 1996).  The application of local law is 

particularly important when the legal questions at issue are novel.

Id.

complaint must contain “a short and plain statement of the claim showing that the pleader

550 U.S. 544, 555

 (2007); L.L. Nelson 

Enters., Inc. v. County of St. Louis,

673 F.3d 799, 805

 (8th Cir. 2012) (observing that 
“specific facts are not necessary” and pleadings “need only give the [opposing party] fair 
notice of what the claim is and the grounds upon which it rests” (internal quotation marks 
omitted)).  To survive a motion to dismiss, a complaint must allege sufficient facts to 
state a facially plausible claim to relief.  Ashcroft v. Iqbal,

556 U.S. 662, 678

 (2009) 

(citing Twombly,

550 U.S. at 570

).  Factual allegations that raise only a speculative right 
to relief are insufficient.  Twombly,

550 U.S. at 555

.  A district court accepts as true all of 
the  plaintiff’s  factual  allegations  and  views  them  in  the  light  most  favorable  to  the 
plaintiff.  Stodghill v. Wellston Sch. Dist.,

512 F.3d 472, 476

 (8th Cir. 2008).  But legal 
conclusions couched as factual allegations are not accepted as true.  Twombly,

550 U.S. at 555

.    And  mere  “labels  and  conclusions”  as  well  as  a  “formulaic  recitation  of  the 
elements of a cause of action” fail to state a claim for relief.

Id.

     
     A.   The Applicability of the MFA                               
As  an  initial  matter,  ADQ  argues  that  the  MFA  does  not  govern  ADQ’s 
relationship with LG2 because the MFA protects only franchisees located in Minnesota.  

Courts disagree as to the application of the MFA to franchisees outside of Minnesota.  
See Wave Form Sys., Inc. v. AMS Sales Corp.,

73 F. Supp. 3d 1052, 1061

 (D. Minn. 2014) 
(listing cases and concluding that the applicability of the MFA to franchisees located 
outside of Minnesota was “uncertain”); Johnson Bros. Liquor Co. v. Bacardi U.S.A., Inc.,

830 F. Supp. 2d 697, 703

666 F.3d 1148, 1151

 (8th Cir. 2012) “Documents necessarily 
embraced by the pleadings include documents whose contents are alleged in a complaint 
and whose authenticity no party questions, but which are not physically attached to the 
pleading.”

Id.

Corp.,

492 F. Supp. 3d 840

, 864 (D. Minn. 2020); accord Speed RMG Partners, LLC v. 
Arctic Cat Sales Inc, No. 20-CV-609 (NEB/LIB),

2021 WL 5087273

, at *9 (D. Minn. 
Mar. 5, 2021) (granting the defendant 14 days after the issuance of the order to answer 
and observing that the United States Court of Appeals for the Eighth Circuit has not 
addressed  whether  Rule  12(a)(4)(A),  Fed.  R.  Civ.  P.,  applies  to  partial  motions  to 
dismiss).  Here, requiring ADQ to answer before the resolution of its motion to dismiss 
would result in piecemeal litigation and disserve judicial efficiency.  For these reasons, 

the Court grants ADQ’s request for a stay of its deadline to answer the remaining claims 
in LG2’s complaint.

ORDER

Based on the foregoing analysis and all the files, records and proceedings herein, 
IT IS HEREBY ORDERED:                                                     

1.   Defendant American Dairy Queen Corporation’s motion to transfer, (Dkt. 
10), is DENIED.                                                           
2.   Defendant American Dairy Queen Corporation’s motion to dismiss Count 
II of the complaint, (Dkt. 10), is GRANTED.                               
3.   Defendant American Dairy Queen Corporation must answer Plaintiff LG2, 

LLC’s complaint within 14 days of the date of this Order.                 

Dated:  January 12, 2023                s/Wilhelmina M. Wright            
                                   Wilhelmina M. Wright              
                                   United States District Judge

Reference

Status: Unknown