CHARLES R. BREYER, District Judge.
This dispute is a result of the apparent fall-out between business partners in a venture capital firm. Plaintiff Peter Loukianoff ("Plaintiff") and Defendant Alexander "Sasha" Galitsky ("Defendant") created a venture capital firm together named Almaz sometime in 2007. They then created and funded a venture fund that invested in Russian Commonwealth of Independent States ("CIS") technology companies ("Fund I"). This fund was governed by a partnership and shareholder agreement. Defendant then allegedly began creating and funding a second fund ("Fund II"), with the Almaz name, but without the participation of Plaintiff. Plaintiff filed suit against Defendant for violation of the Lanham Act (15 U.S.C. § 1125(a)), the California Uniform Trade Secrets Act (Cal. Civ. Code §§ 3426 et seq.), the California Unfair Business Practices Act (Cal. Bus. & Prof. Code §§ 17200 et seq.), as well as tortious interference with prospective economic relations, defamation, common counts, and declaratory relief. Defendant now moves to dismiss, arguing that the contract governing the parties' relationship has a forum selection clause requiring litigation in the Cayman Islands, or in the alternative, requesting an order to compel arbitration under the same agreements. Since the partnership agreement governing Fund I is the only written partnership agreement between the parties, and the allegations relate to issues covered in the Agreement, the Court GRANTS the motion to dismiss. The Court DECLINES to rule on the motion for preliminary injunction.
Around early 2007, Plaintiff, Defendant and a third party, Joe Bowman, decided to partner together and create an independent business that would establish and manage venture capital funds, which would then be invested in technology companies in Russia and the CIS. Compl. (dkt. 1) ¶ 15. Plaintiff was based in Silicon Valley because his primary responsibility was soliciting U.S. capital investment and managing Almaz's domestic operations. Loukianoff Decl. (dkt. 17) ¶ 4. Defendant and Bowman were located in Europe where they had better access to the Russian start-up market.
The parties entered into the Partnership Agreement in June 2010.
The Partnership Agreement contains a choice-of-law provision, providing that: "[It] will be governed by and construed in accordance with the laws of the Cayman Islands. . . . In furtherance of the foregoing, the internal law of the Cayman Islands will control the interpretation and construction of this Agreement, even if under such jurisdiction's choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply." Galitsky Decl. Ex. A at 17. The Partnership Agreement also states that:
Galitsky Decl. Ex. A at 18.
Plaintiff alleges that in October 2011, Defendant "began using the Almaz Logo and the Almaz Mark and the goodwill associated with the mark and logo, to elicit venture capital investments to be placed by Defendant into a separate fund to be managed without Plaintiff's involvement." Compl. ¶ 38. Specifically, Plaintiff asserts that on October 20, 2011, Defendant notified Plaintiff by email that "he and some other partners and investors in Fund I were going to start a new fund for investing in Russia without Plaintiff's involvement (`Fund II')."
Federal Rule of Civil Procedure 12(b)(3) allows a defendant to move to dismiss an action for improper venue. Under Ninth Circuit law, a motion to dismiss based on a forum selection clause is treated as a challenge to venue under Rule 12(b)(3), and the district court therefore may consider facts and pleadings outside the scope of the complaint.
Generally, courts will enforce a forum selection clause, even one that requires submission of the dispute to a foreign court, unless the party challenging the clause can clearly show that its enforcement would be "unreasonable under the circumstances." M/S
Consistent with the "presumption in favor of enforcing [a] forum selection clause,"
Plaintiff does not argue that enforcement of the forum selection clause would be improper because it is the result of fraud, that it would be gravely difficult and inconvenient to litigate in the selected forum, or that enforcement of the clause would contravene a strong public policy. Rather, he argues that the contract which includes the forum selection clause does not govern the actions at issue in the case, and thus, does not apply at all to his claims. Thus, this dispute comes down to whether or not there are two "general partnerships" — the overall Almaz partnership that Plaintiff alleges exists, or only the Fund I General Partnership. As the documents and history demonstrate the formal existence of only one general partnership — the Fund I General Partnership — the Court finds Plaintiff's claims covered by that Agreement, and finds that Plaintiff is bound by that contract's mandatory forum selection clause.
Plaintiff alleges that there are two general partnerships between the parties. Opp'n at 9 ("Defendant is attempting to conflate, if not ignore, the Almaz general partnership between Plaintiff and Defendant that the parties and Bowman originally created in 2007 with a vehicle that Almaz created for the limited purposes of governing Almaz's role in Fund I."). Plaintiff alleges that there is a business called "Almaz," which is "simply a general partnership between Plaintiff and Defendant,"
Defendant argues in response that the suggestion that there are two general partnerships has no basis in fact. Defendant points out that Plaintiff does not offer any concrete evidence to support this contention. There are no allegations that the "Almaz" general partnership is incorporated in any jurisdiction. There are no allegations that it is reflected in any written agreement between the parties. There are no allegations that Almaz ever issued K-1s or like forms for tax purposes. Plaintiff allows that "Almaz" has no board of directors, no administrative committee, or investment committee. Opp'n at 6. It also appears the venture's website and logo refer to Almaz Capital, not "Almaz." Compl. ¶¶ 20, 28.
Defendant makes several other arguments supporting the notion that there is not a second general partnership of "Almaz" separate from Almaz capital, but the complete lack of any evidence of corporate structures, incorporation, written agreement, or any other evidence to support the existence of this second general partnership is conclusive. While there was the idea between Plaintiff and Defendant to create a venture capital fund in 2007, that idea came to fruition with the creation of Almaz Capital as the general partner investing in Fund 1. This general partnership was incorporated, has a governing written agreement, and corporate structures.
Accordingly, the operative general partnership is that of "Almaz Capital," and it is governed by that partnership's written partnership agreement.
The forum selection clause in the Partnership Agreement only applies if Plaintiff's claims are within its scope. Plaintiff argues the forum selection clause does not apply because his claims relate only to the "Almaz" general partnership, and not to his duties and obligations under the Fund I ("Almaz Capital") Partnership agreement or shareholder agreement. Defendants argue that since the only partnership agreement between the parties is the Almaz Capital partnership, governed by the agreements, the disputes between the parties must relate to this agreement.
"Whether a forum selection clause applies to tort claims depends on whether resolution of the claims relates to interpretation of the contract."
Here, with respect to Plaintiff's intellectual property claims, the Complaint alleges that in October 2011, Defendant "abused the Almaz Logo and the Almaz Mark by creating Fund II without Plaintiff's consent or authorization, and by soliciting capital investment into Fund II without Plaintiff's consent or authorization." Compl. ¶ 67. Plaintiff admits, however, that he and Defendant jointly own the brand by virtue of their partnership.
Alternatively, Plaintiff contends that the parties did not intend the forum selection clause to cover these causes of action because they allegedly excluded from the Partnership Agreement language regarding protection of the brand. Opp'n at 9. Specifically, the Opposition, citing the Loukianoff Declaration, states that the parties: "considered including a clause in the [Partnership Agreement] that would protect the ALMAZ mark. However, both parties as well as the Class B Shareholder agreed to exclude any mention of the ALMAZ brand from the [Partnership Agreement] because all the signatories recognized that the limited purpose of the [Partnership Agreement] was to define the relationships of the shareholders for [Almaz Capital]."
The Loukianoff Declaration does not contain such an explanation for the exclusion of a term regarding the Almaz Capital brand. Rather, the declaration states "Defendant and Charles Ryan, a Class B Shareholder under [the Partnership Agreement], insisted that this section should be removed to keep the focus of the [Partnership Agreement] limited and to avoid confusion." Loukianoff Decl. ¶ 25. This does not appear to constitute an agreement to exclude claims regarding the brand from the forum selection clause. The Loukianoff Declaration also refers to an email from Plaintiff to Defendant, dated March 23, 2010, which Plaintiff suggests contains evidence of the parties' negotiations regarding a brand provision.
Regarding his torts claims, Plaintiff contends that "[t]he fact that a subservient corporation has a clause that permits said corporation from removing [sic] persons from its investment, or any other, committee has no relevance to Defendant's defamatory statements that Plaintiff is no longer an Almaz partner." Opp'n at vi. However, as there is no evidence of a general partnership called "Almaz," any statements made by Defendant regarding Plaintiff's status with the partnership would necessarily relate to his role in Almaz Capital. Plaintiff's role in Almaz Capital, in turn, is expressly set forth in the terms of the Partnership Agreement. Accordingly, to assess the veracity of Defendant's alleged statements, a court would necessarily resort to the terms in the agreement that pertain to Plaintiff's status as a shareholder and member of Almaz Capital's advisory committees.
Plaintiff also claims that his tort claims arise out of Defendant's alleged statements that "Geoff Baehr has replaced him as a partner of Almaz." Opp'n at 11. Significantly, Plaintiff admits in the Complaint that these statements implicate the Partnership Agreement. Specifically, Plaintiff purportedly advised Defendant in an email that: "[Y]ou have engaged in actions that are in conflict with our agreements and arrangement. Most recently I heard . .. that you have publicly declared that Geoff Baehr joined Almaz as a partner, and that he is holding meetings on our behalf in that capacity. You have no right to appoint a partner or offer employment to anyone else, without my consent — as this is in direct violation of our agreement and the shareholders agreement for fund I [i.e., the Partnership Agreement]." Compl. ¶ 43. For all these reasons, the Court finds the claims are covered by the Partnership Agreement, and thus, subject to the forum selection clause.
Plaintiff argues that even if this court determines the forum selection clause applies, it can still retain jurisdiction for the purpose of ruling on Plaintiff's motion for preliminary injunction, scheduled to be heard on April 13, 2012. The cases where courts have retained some measure of jurisdiction after a determination to enforce a forum selection clause, stand for the more narrow proposition that a court may consider whether the parties intended to 4preclude the issuance of an injunction to secure assets pending a final judgment in the designated forum.
For the forgoing reasons, the Court GRANTS the motion to dismiss due to the forum selection clause, and DECLINES to rule on the motion for preliminary injunction.
Moreover, in
Finally, the Court agrees that the fact that all aspects of ownership of the business, and by extension ownership and use of its intellectual property, may not be set forth in the agreement does not preclude enforcement of the forum selection clause.
