MARCIA S. KRIEGER, Chief District Judge.
According to the Complaint
In 2016, the parties began discussing the Plaintiffs purchasing the rights to market research software owned by Sample, known as "ISIS" and "Crop Duster" ("the Software"). The Plaintiffs intended to modify the Software somewhat before reselling it, and emphasized to Sample that, as part of the sale, they would require access to Raymond Nicoletti, a Sample employee and the Software's author, for assistance in making the modifications. Sample, through Defendant Gittelman, its officer, promised to make Mr. Nicoletti available to the Plaintiffs: he would remain a nominal employee of Sample, but would spend 3/4 of his work time on the Plaintiffs' projects, with the Plaintiffs paying 3/4 of his salary. The parties also agreed that this arrangement would not violate an agreement between them not to solicit each others' employees. However, the Plaintiffs contend that, despite these promises, Mr. Gittelman never had any intention of making Mr. Nicoletti available to the Plaintiffs.
The parties formalized and executed a written agreement for the sale of the Software (the "software sales agreement") in April 2017, although it is important to note that the agreement does not contain any provisions regarding Mr. Nicoletti and that it contains an integration clause excluding any parol agreements. Almost immediately thereafter, the Defendants "delayed in fulfilling their obligations under that agreement," such as delaying the handoff of the Software itself for a period of several months and failing to provide additional data that was included in the Plaintiffs' purchase of the Software. The parties apparently resolved these disputes eventually, but the Plaintiffs contend that the Defendants continued to withhold the services of Mr. Nicoletti.
In October 2017, Mr. Nicoletti resigned from employment with Sample, stating that he wanted to "follow the code" and joined the Plaintiffs to continue working on the Software. However, in November 2017, Sample's counsel wrote to Mr. Nicoletti, threatening to sue him if he continued to work for the Plaintiffs. Fearing the cost and risk of litigation, Mr. Nicoletti tendered his resignation to the Plaintiffs. Mr. Nicoletti's resignation caused delay in the Plaintiffs' intended sale of the modified Software, causing the Plaintiffs to suffer business losses.
Based on these allegations, the Complaint alleges five claims against the Defendants, all sounding in tort: (i) "fraudulent inducement" against all Defendants, in that the Defendants induced the Plaintiffs to purchase the Software by falsely representing their intention to make Mr. Nicoletti available to the Plaintiffs; (ii) tortious interference with contract against all Defendants, in that the Defendants wrongfully interfered with the Plaintiffs' employment contract with Mr. Nicoletti; (iii) tortious interference with prospective relations against all Defendants, in that the Defendants' actions prevented the Plaintiffs from completing their modifications to the Software so that it could be marketed to the Plaintiffs' customers as anticipated; (iv) unjust enrichment against all Defendants in that the "Defendants received numerous benefits ranging from consideration under the software sales agreement, to decreased compensation from the Plaintiffs, to resultant increases profits for Defendants," all at the Plaintiffs' expense; and (v) promissory estoppel against all Defendants, in that the Plaintiffs detrimentally relied upon the Defendants' representations about making Mr. Nicoletti available when deciding to purchase the Software.
In the instant motion, the Defendants move
A forum selection clause that states that a case "shall be" brought in a certain location is a mandatory one. American Soda, LLP v. U.S. Filter Wastewater Group, Inc., 428 F.3d 921, 927 n. 4 (10th Cir. 2005). Court will enforce a mandatory forum selection clause unless the party challenging it "clearly shows that enforcement would be unreasonable or unjust, or that the clause was invalid for such reasons as fraud or overreaching." Niemi v. Lasshoffer, 770 F.3d 1331, 1351 (10
Here, the parties' dispute concerns whether the Plaintiffs' claims in this case "arise under" or "relate to" the software sales agreement. The Plaintiffs argue that none of their claims "arise under" the software sales agreement because none of those claims allege a breach of any contractual provision within the agreement. The Plaintiffs further contend that, to "relate to" the sales agreement, their claims must "involve the same operative facts as a parallel breach of contract claim" in order to fall within the scope of the forum selection clause. Citing Xantrex Tech, Inc. v. Advanced Energy Indus., Inc., 2008 WL 2185882 (D. Colo. May 23, 2008). In essence, the Plaintiffs contend that tort claims are governed by the forum selection clause only if a breach of contract claim could be (and perhaps is) brought on the same set of facts implicated by the tort claims.
The Plaintiffs' reading of Xantrex and other cases is too narrow; none stand for the proposition that
Accepting as true that the false promises by Mr. Gittelman about making Mr. Nicoletti available to the Plaintiffs were not incorporated into the actual software sales agreement — much like the misrepresentations about the risk profile of the securities in Huffington were not incorporated into the securities sales agreement — the injury that underlies the Plaintiffs' tort claims nevertheless arises, inexorably and proximately, from the Plaintiffs' decision to purchase the Software, and the Plaintiffs' decision to purchase the software was predicated upon Mr. Gittelman's promise of access to Mr. Nicoletti. The Complaint repeatedly makes clear that the Plaintiffs insisted on access to Mr. Nicoletti as a condition of purchasing the Software, and would not have entered into the agreement if they had believed that the Defendants would
Here, there can be no dispute that the Plaintiffs' fraudulent inducement, unjust enrichment, and promissory estoppel claims all expressly refer to the Plaintiffs' entry into the software sales agreement as the mechanism by which the Plaintiffs were injured. See Complaint, ¶ 119, 135, 143. Thus, there can be no dispute that these claims "relate to" the agreement under Huffington, and thus, that they are within the scope of the forum selection clause. Accordingly, they must be litigated in New York.
Admittedly, there is a colorable argument to be made that the Plaintiffs' remaining claims — tortious interference with contract and tortious interference with prospective business relations — are not governed by the forum selection clause. The mechanism of injury for these claims is not the software sale itself, but, rather, actions that the Defendants took after the sale was fully completed. Thus, these claims would not be governed by the forum selection clause. But neither party has addressed how they believe the Court should proceed if
First, the Court could bifurcate the tortious interference claims, retaining jurisdiction over those two claims here in Colorado and transferring the remaining claims to the Eastern District of New York. But such an approach yields two lawsuits proceeding simultaneously, in two separate jurisdictions (nearly two thousand miles and two time zones apart), with identical parties and somewhat overlapping facts. As the Court explained in Hill's Pet Products v. A.S. U., Inc., 808 F.Supp. 774, 776-77 (D.Kan. 1992), such bifurcation "would not advance the goal of judicial economy" and that "simultaneous prosecution in two different courts relating to the same parties and issues leads to the wastefulness of time, energy, and money."
The other alternative is for the Court to, sua sponte, exercise its discretion to transfer the tortious interference claims to New York as well, pursuant to 28 U.S.C. § 1404(a). See Nalls v. Coleman Low Federal Inst., 440 Fed.Appx. 704, 706 (11th Cir. 2011) ("A district court may sua sponte transfer a civil action to any other district where it might have been brought if doing so will be convenient for the parties and witnesses and serve the interest of justice").
However, perhaps the most important figure in the Plaintiffs' tortious interference claims is Mr. Nicoletti himself, and the parties note (indirectly) that he does not reside in either Colorado or New York. Rather, he is a citizen of North Carolina. This fact alters the landscape somewhat. Again, recall that the Plaintiffs' tortious interference with contract claim alleges that the Defendants wrote threatening letters to Mr. Nicoletti in order to induce him to resign his employment with the Plaintiffs. The locus of those actions, then, is the Defendants' location in New York (where the letters were sent) and Mr. Nicoletti's residence in North Carolina (where the letters were received); Colorado is significant only insofar as the injury to the Plaintiffs from Mr. Nicoletti's resignation was felt there. Moreover, as the parties note, Mr. Nicoletti has filed his own lawsuit against Mr. Gittelman and Mktg in that state. The presence of yet another lawsuit in yet another jurisdiction only serves to exacerbate the inefficiencies of multiplying fora, and, in turn, underscores the desirability of corralling all of the various cases among these parties to as few jurisdictions as possible. Because, as noted above, some of the Plaintiffs' claims here
The factor tipping most strongly in favor of lodging some claims here in Colorado is the fact that it is the Plaintiffs' chosen forum for this suit. Without diminishing the obvious reasons why a party would desire to litigate in its own home state, this Court agrees with the reasoning of Hill's Pet Products: the undesirable inefficiencies of multi-jurisdiction litigation themselves may
Accordingly, the Court finds that, to the extent that the tortious interference claims are not governed by the forum selection clause, the analysis under 28 U.S.C. § 1404(a) nevertheless warrants the conclusion that those claims should be transferred to the Eastern District of New York along with the other claims in this case.
For the foregoing reasons, the Court