WILLIAM B. SHUBB, District Judge.
Plaintiff Clippercreek, Inc. ("Clippercreek") brings this action against defendants Intelligrated Systems, LLC ("Intelligrated"), Honeywell International, Inc. ("Honeywell"), Deposco, Inc. ("Deposco"), and Does 1 through 50, alleging that defendants fraudulently induced plaintiff into a contract for specialized custom technology and subsequently failed to perform their obligations under the agreement. Before the court are defendants' motions to dismiss, or, in the alternative, to transfer venue. (Docket Nos. 29, 30).
Clippercreek manufactures and sells electric vehicle charging stations. (Compl. ¶ 19.) Honeywell purchased Intelligrated in 2016. (Compl. ¶ 20.) In late 2017 to early 2018, Honeywell partnered with Deposco to sell integrated warehouse management solutions, order management solutions, and material handing solutions to Clippercreek. (Compl. ¶ 23.) Defendants toured Clippercreek's headquarters to study plaintiff's manufacturing process. (Compl. ¶ 24.) Defendants then held a series of marketing and sales meetings where they represented that defendants could design an automated system that could be integrated into Clippercreek's manufacturing, material management, and internet sales systems. (Compl. ¶ 25.)
The parties subsequently entered into a contract consisting of three documents: (1) the Master Technology Agreement ("MTA"), (2) the Sales Agreement, and (3) the Intelligrated Proposal FQ-18-51002. (Compl. ¶¶ 28-30.) The MTA included a forum-selection clause. (Compl. Ex. 1, at 13, ¶ 18.2.) The clause requires the parties to bring any action under the agreement in the Southern District of Ohio. (Id.) Pursuant to the contract, plaintiff paid defendants a deposit. (Compl. ¶ 40.)
Prior to and after signing the contract, defendants assured plaintiff that defendants' product would integrate Clippercreek's manufacturing requirements. (Compl. ¶¶ 33, 35, 38.) For example, after the contract was signed, defendants assured plaintiff that the system would have the ability to auto-generate serial labels. (Compl. ¶ 37.) When Deposco sent its engineers to Clippercreek's headquarters to integrate the technology, however, the engineers told plaintiff that the system would not be able to perform some of the "essential requirements for manufacturing." (Compl. ¶ 45.) Two days after Deposco sent its engineers to plaintiff's headquarters, Clippercreek notified defendants of its immediate rescission of the contract. (Compl. ¶ 52). Plaintiffs demanded a return of the deposit, but defendants refused to comply with the demand. (Compl. ¶¶ 52, 56.)
Plaintiff then filed this action alleging the following six claims under California state law: (1) rescission by mutual and/or unilateral mistake, (2) rescission by lack of consideration, (3) rescission by fraud, (4) negligent misrepresentation, (5) breach of contract, and (6) unfair competition, pursuant to California Business & Professions Code § 17200 et seq. Defendants now move to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6), or, in the alternative, transfer the case to the Southern District of Ohio, pursuant to 28 U.S.C. § 1404(a), in accordance with the agreement's forum-selection clause.
Forum selection clauses "are presumptively valid" and "should be honored `absent some compelling and countervailing reason.'"
Plaintiff does not contend that enforcement of the clause would contravene California public policy. The court therefore evaluates only the first two exceptions to the enforcement of forum-selection clauses.
Plaintiff argues that "[t]he [complaint] makes a strong showing that . . . the MTA containing the forum-selection clause. . . was affected by fraud, undue influence and a huge differential in bargaining power." (Pl.'s Opp. to Mot. to Dismiss at 14 (Docket No. 33).)
Plaintiff's allegations are insufficient to decline enforcement of the forum-selection clause on the grounds of fraud. "For a party to escape a forum selection clause on the grounds of fraud, it must show that `the inclusion of that clause in the contract was the product of fraud or coercion.'"
Here, the complaint alleges that defendant fraudulently induced plaintiff into signing the MTA. The complaint does not, however, allege that defendant fraudulently introduced the forum-selection clause into the agreement. Indeed, the complaint does not even mention the forum-selection clause. Plaintiff therefore cannot avoid enforcement of the clause on the grounds of fraud.
Moreover, "[t]he Ninth Circuit has made it clear that neither power differential between the parties or the non-negotiability of a contract are sufficient to invalidate a forum selection clause."
To avoid enforcement of a forum selection clause for deprivation of day in court, "trial in the contractual forum [must] be so gravely difficult and inconvenient that [the plaintiff] will for all practical purposes be deprived of his day in court."
Plaintiff argues that litigation in the Southern District of Ohio is unreasonable because (1) the single owner of Clippercreek would have to travel "thousands of miles" for trial, (2) the cost for witnesses to travel would be "prohibitive," (3) subpoena power under Federal Rule of Civil Procedure 45(c)(1)(A) would not reach "essential" witnesses, (4) plaintiff "would not be able to show the trier of fact Plaintiff's manufacturing and production site in Auburn, CA," and (5) some of plaintiffs' claims (e.g., violation of California's unfair competition law) are not available in Ohio. (Pl.'s Opp. to Honeywell/Intelligrated Mot. to Dismiss at 14.). The court considers each in turn.
Plaintiff's first two allegations related to the ability to travel are not sufficiently specific for the court to find that enforcement of the clause would deprive plaintiff of its day in court. In
Plaintiff's allegations about the inability to subpoena essential witnesses are similarly conclusory. Plaintiff does not identify who these witnesses are or where they are located.
Plaintiff's assertion that transferring the action to Ohio would prevent plaintiff from showing the jury plaintiff's manufacturing site is likewise insufficient. The evidence that would be presented in California and Ohio would be the same: plaintiff can rely on experts and pictures to fully describe the site. Further, the court is not aware of any authority requiring a jury field trip for a plaintiff to pursue litigation, and, at any rate, this court is unlikely to consider such an option if requested.
Finally, plaintiff's allegation that plaintiff would not be able to pursue numerous causes of action in Ohio also does not establish that plaintiff would be deprived of their day in court. The prescribed forum need not be identical to plaintiff's preferred forum — it need only provide plaintiff with "a meaningful day in court."
In deciding a § 1404(a) motion to transfer pursuant to a forum-selection clause, "a district court may consider arguments about public-interest factors only."
Plaintiff does not offer reasons additional to those above for the court to deny the transfer of this action to the Southern District of Ohio. The Supreme Court's decision in
The court declines defendants' invitation to dismiss the action pursuant to Federal Rule of Civil Procedure 12(b)(3). (Mot. to Dismiss at 6-7 (Docket No. 30).) Rule 12(b)(3) permits the court to dismiss a case based on improper venue. "[A] forum-selection clause does not render venue in a court `wrong' or `improper' within the meaning of . . . Rule 12(b)(3)."
The appropriate vehicle to enforce the clause at issue is § 1404(a). The Supreme Court held that the only "appropriate enforcement mechanisms" are § 1404(a) and the
When considering a § 1404(a) motion involving a valid forum-selection clause, the "district court should ordinarily transfer the case to the forum specified in that clause."
IT IS THEREFORE ORDERED that defendants' motions to transfer venue (Docket Nos. 29, 30) be, and the same hereby are, GRANTED.
This action is hereby TRANSFERRED to the United States District Court for the Southern District of Ohio.