SIM LAKE, District Judge.
Plaintiff Wellogix, Inc. ("Wellogix") brought this trade secrets action against SAP AG and SAP America, Inc. (collectively "SAP" or "Defendants"). Pending before the court is Defendants SAP America, Inc.'s and SAP AG's Motion for Summary Judgment ("Motion for Summary Judgment") (Docket Entry No. 8). For the reasons stated below, Defendants' Motion for Summary Judgment will be granted, and this case will be dismissed.
Wellogix develops software for the electronic procurement of goods and services by oil and gas operators.
SAP, a potential partner, had an existing software solution providing electronic P2P functionality for the oil and gas industry, but it lacked the complex services functionality offered by Wellogix.
In May of 2005, SAP and Wellogix pitched their integrated software to the consulting firm Accenture, which was working on behalf of BP to identify a global software provider for BP's operations.
In May of 2008, Wellogix sued Accenture, BP, and SAP in Texas state court, and the case was removed to the Southern District of Texas, Galveston Division.
Wellogix's claims against BP were arbitrated before Judge Ellison, who found that BP breached its confidentiality agreement with Wellogix by making Wellogix's confidential information accessible to Accenture and SAP.
Relevant to the present case, Wellogix's trade secrets claims against the SAP defendants were dismissed pursuant to a forum-selection clause in the NetWeaver Agreement.
On April 15, 2010, SAP America filed a Complaint for Declaratory Relief against Wellogix, Inc. and Wellogix Technology Licensing LLC (the "Declaratory Judgment Action"), which was assigned to the undersigned judge.
At a hearing on March 14, 2014, counsel for all parties agreed that the patent review process could take an additional six to
Wellogix's counterclaims against SAP America, Inc. and SAP AG allege misappropriation of trade secrets under Texas common law and theft of trade secrets in violation of the Texas Penal Code, which is made actionable under the Texas Theft Liability Act ("TTLA"). The common law claim is nearly identical to the claim that was dismissed by Judge Ellison in 2008.
A federal court applies the federal law of forum non conveniens in deciding a motion to dismiss pursuant to a forum-selection clause pointing to a state or foreign forum. Atlantic Marine Const. Co. v. U.S. Dist. Court for the W. Dist. of Tex., ___ U.S. ___, 134 S.Ct. 568, 580, 187 L.Ed.2d 487 (2013). The doctrine of forum non conveniens enables a district court, at its discretion, to decline to exercise jurisdiction "if the moving party establishes that the convenience of the parties and the court and the interests of justice indicate that the case should be tried in another forum." Karim v. Finch Shipping Co., 265 F.3d 258, 268 (5th Cir. 2001). Indeed, "the ultimate inquiry is where trial will best serve the convenience
As an initial matter, Wellogix argues that SAP has waived its rights under the forum-selection clause by filing the Declaratory Judgment Action in the Southern District of Texas.
Wellogix relies on Supreme Court precedent for the "well-established law that a party waives all of its potential objections to a venue with respect to any counterclaims filed by a defendant when it chooses to bring suit in a forum where it could not otherwise be sued."
While Wellogix contends that "[c]ourts have applied this rule to hold that parties have waived forum selection clauses by initiating litigation,"
The enforceability of a forum-selection clause in federal court is governed by federal law, regardless of the basis for federal jurisdiction. Haynsworth v. The Corporation, 121 F.3d 956, 962 (5th Cir. 1997); see also Jumara v. State Farm Ins. Co., 55 F.3d 873, 877 (3d Cir.1995) ("Because questions of venue and the enforcement of forum-selection clauses are essentially procedural, rather than substantive, in nature, federal law applies in diversity cases irrespective of Erie.") (internal quotation marks and citations omitted). While there is still considerable confusion as to what body of law applies to the interpretation of a forum-selection clause, there is some consensus that the court should apply the law that governs the rest of the contract. See Martinez v. Bloomberg LP, 740 F.3d 211, 222-23 (2d Cir. 2014) (reviewing cases from several circuits).
Like interpreting a forum-selection clause, determining waiver of a forum-selection clause is arguably a matter of substantive contract law to be governed by the law applicable to the rest of the contract. Cf. CK DFW Partners Ltd. v. City Kitchens, Inc., No. 3-6-1598, 2007 WL 2381259, at *2 n. 8 (N.D.Tex. Aug. 17, 2007) ("Although federal law governs the enforceability of an otherwise valid forum selection clause, threshold questions concerning whether a forum selection clause is triggered or is somehow nullified under the other terms of the contract is a question governed by the applicable state law."); Martinez, 740 F.3d at 221 ("In construing a forum selection clause, a court may confront a wide range of contract law issues.... Erie warns against an approach that would force federal courts to generate a sprawling `federal general common law' of contracts to govern such questions whenever they arise in the context of forum selection clauses.").
In the arbitration context, the Fifth Circuit holds that waiver is to be addressed as a matter of federal law. See, e.g., Miller Brewing Co. v. Fort Worth Distrib. Co., 781 F.2d 494, 497 n. 4 (5th Cir.1986) ("The issue of arbitrability under the United States Arbitration Act is a matter of federal substantive law. We thus dismiss out of hand FWDC's citation of 60 Tex. Jur.2d 199 for the proposition[ ] that waiver is a question of fact based largely on intent.") (internal quotation marks and citations omitted).
When addressing waiver of a forum-selection clause, however, the Fifth Circuit applied Texas law and concluded that waiver requires an intent to relinquish a known right.
If federal law governs, the court has found no controlling cases on point and would therefore defer to the intent requirement articulated in GP Plastics and other cases in this district.
GP Plastics holds that waiver of a forum-selection clause requires an intent to relinquish rights under the contract. 108 Fed.Appx. at 836-37. There is no evidence that SAP intended to waive its rights under the forum-selection clause in this case. In fact, SAP's complaint in the Declaratory Judgment Action demonstrates an intent not to relinquish the relief granted by Judge Ellison in 2008:
The court therefore concludes that SAP did not intentionally relinquish its rights under the forum-selection clause.
In re ADM holds that a party waives a forum-selection clause by substantially invoking the judicial process to the other party's detriment or prejudice, but that there is a strong presumption against such waiver.
SAP argues that Judge Ellison's 2008 Order dismissing Wellogix's trade secrets claims precludes Wellogix from challenging the enforcement of the forum-selection clause in this action.
Before a court can consider enforcing a forum-selection clause, it must first determine whether the clause applies to
Once a court has decided an issue of fact or law necessary to its judgment in a case, the doctrine of collateral estoppel precludes parties from relitigating that issue in a subsequent case involving a party to the first. Allen v. McCurry, 449 U.S. 90, 101 S.Ct. 411, 414, 66 L.Ed.2d 308 (1980). "In this circuit, collateral estoppel applies when a previously litigated issue of law or fact was [1] identical to the present issue, [2] actually litigated, [3] necessary to a final judgment, and [4] reviewed under the same standard as the present issue." Duffy & McGovern Accommodation Servs. v. QCI Marine Offshore, Inc., 448 F.3d 825, 829 (5th Cir. 2006).
Here, the parties appear not to have "actually litigated" the scope of the forum-selection clause before Judge Ellison. Although Wellogix arguably conceded that its trade secrets claims arose out of the NetWeaver Agreement,
To determine whether a claim falls within the scope of a forum-selection clause, a court looks to the language of the contract. Braspetro, 240 Fed.Appx. at 616 (citing Marinechance Shipping, Ltd. v. Sebastian, 143 F.3d 216, 222 (5th Cir.1998)). As with the potential waiver of a forum-selection clause, a threshold issue here is what law to apply. The Fifth Circuit has applied federal law in this context, drawing on maritime and diversity cases in this and other circuits. See, e.g., id. Despite the choice-of-law clause in the NetWeaver Agreement, the parties also rely on federal law. This court will do the same. See Phillips v. Audio Active Ltd., 494 F.3d 378, 386 (2d Cir.2007) ("We will assume from the parties' briefing that they do not rely on any distinctive features of [the contractually selected] law and apply general contract law principles and federal precedent to discern the meaning and scope of the forum clause.").
The forum-selection clause in the NetWeaver Agreement states:
"The scope of a forum-select ion clause is not limited solely to claims for breach of the contract that contains it." MaxEn Capital, LLC v. Sutherland, No. H-08-3590, 2009 WL 936895, at *6 (S.D.Tex. Apr. 3, 2009). In a forum-selection clause, "[t]he term `arising' is generally interpreted as indicating a causal connection." Braspetro, 240 Fed.Appx. at 616. Clauses that extend only to disputes "arising out of" a contract are construed narrowly, while clauses extending to disputes that "relate to" or "are connected with" the contract are construed broadly. Blueskygreenland Envtl. Solutions, LLC v. Rentar Envtl. Solutions, Inc., No. H-11-1745, 2011 WL 6372842, at *4 (S.D.Tex. Dec. 20, 2011). Thus, the phrase "arising in connection with" has been found to reach "every dispute between the parties having a significant relationship to the contract and all disputes having their origin or genesis in the contract." Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 721 (9th Cir. 1999). Such a clause encompasses not only contract claims, but also statutory and common law trade secrets claims "in connection with" the agreement. Id. at 724-25.
Beginning with the first substantive paragraph of Wellogix's trade secrets counterclaim, it is clear that this is "a dispute[ ] arising between the parties out of or in connection with [the NetWeaver Agreement]":
"A party's consent to jurisdiction in one forum does not necessarily waive its right to have an action heard in another." City of New Orleans v. Mun. Admin. Servs., Inc., 376 F.3d 501, 504 (5th Cir.2004). "For a forum selection clause to be exclusive, it must go beyond establishing that a particular forum will have jurisdiction and must clearly demonstrate the parties' intent to make that jurisdiction exclusive." Id. Therefore, to be enforceable, a forum-selection clause must be mandatory, not just permissive. Caldas & Sons, Inc. v. Willingham, 17 F.3d 123, 127-28 (5th Cir.1994). Judge Ellison determined that the forum-selection clause in the NetWeaver Agreement is mandatory.
Prior to the Supreme Court's decision in Atlantic Marine, courts in this and other circuits enforced forum-selection clauses under the standard articulated in M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972). Under the Bremen standard, forum-selection clauses are prima facie valid and will be enforced unless the resisting party proves that enforcement is unreasonable. Id. at 1913.
After Atlantic Marine, forum-selection clauses must be "given controlling weight in all but the most exceptional cases," 134 S.Ct. at 579 (internal quotation marks and citation omitted), because in "all but the most unusual cases . . . the `interest of justice' is served by holding parties to their bargain," id. at 583.
As the Second Circuit has observed, Atlantic Marine "did not address the extent to which the `interest of justice' test . . . resembles the test developed under Bremen." Martinez, 740 F.3d at 219. Although there is still some uncertainty as to whether the Bremen factors remain relevant, courts continue to apply them. See, e.g., id. at 228; Emrit v. Watts, Guerra, L.L.P., No. SA-13-CV-00473-XR, 2014 WL 3970172, at *2 (W.D.Tex. Aug. 13, 2014) ("Assuming, for the sake of argument, that these factors all remain relevant post-Atlantic Marine ...."); 1-Stop Fin. Serv. Centers of Am., LLC v. Astonish Results, LLC, No. A-13-CA-961-SS, 2014 WL 279669, at *6-*7 (W.D.Tex. Jan. 23, 2014) (applying balancing-of-interest factors but also addressing unreasonableness argument under Bremen standard).
Judge Ellison applied the Bremen standard, and he held that the forum-selection clause was enforceable.
Following Atlantic Marine, a forum-selection clause that points to a nonfederal forum must be evaluated under the doctrine of forum non conveniens, including a balancing-of-interests analysis. Atlantic Marine, 134 S.Ct. at 581-83. Because Judge Ellison's 2008 Order ruled on a 12(b)(3) motion and did not apply a forum non conveniens analysis,
Under a traditional forum non conveniens analysis, the court conducts a two-step inquiry. First, the court must establish the existence of an alternative forum in which the case may be brought. Piper Aircraft Co. v. Reyno, 454 U.S. 235, 102 S.Ct. 252, 265 n. 22, 70 L.Ed.2d 419 (1981). Such a forum must be both available and adequate. In re Air Crash Disaster Near New Orleans, La., 821 F.2d 1147,
"An alternative forum is available when the entire case and all parties can come within the jurisdiction of that forum." Id. (internal quotation marks and citation omitted). "A defendant's submission to the jurisdiction of a foreign forum sufficiently satisfies the availability requirement." City of New Orleans Employees' Ret. Sys. ex rel. BP P.L.C. v. Hayward, 508 Fed.Appx. 293, 296 (5th Cir. 2013); see also Saqui, 595 F.3d at 210 ("Fifth Circuit law has consistently held that when a defendant submits to the jurisdiction of an alternate forum, that renders the forum available for purposes of FNC analysis.").
To dismiss a case for forum non conveniens a court must establish that the defendants are amenable to process in the alternative forum. In re BP Shareholder Derivative Litig., No. 10-MD-2185, 2011 WL 4345209, at *6 (S.D.Tex. Sept. 15, 2011) aff'd sub nom. City of New Orleans Employees' Ret. Sys. ex rel. BP P.L.C. v. Hayward, 508 Fed.Appx. 293 (5th Cir. 2013). Neither party has addressed the availability of Germany as a forum or the Defendants' amenability to process there. Courts in this circuit sometimes condition dismissal for forum non conveniens on defendants stipulating that they will submit to the jurisdiction of the foreign court. See, e.g., id. However, this practice predates Atlantic Marine, and it is not clear that such conditions are required in a case involving a forum-selection clause.
In light of the mandatory forum-selection clause providing for jurisdiction in Frankfurt, Germany, and Defendants' argument that the clause applies to claims against both SAP AG and SAP America, the court is satisfied that Defendants have consented to the jurisdiction of the German courts. The court is not inclined to delay the resolution of this matter by imposing conditions on dismissal. However, should Wellogix have a good-faith argument that SAP AG or SAP America is not amenable to process in Germany, the court may reconsider and condition dismissal on an appropriate stipulation. Barring a good-faith showing to the contrary, the Court finds that German courts provide an available alternative forum in which to proceed with this case.
An alternative forum is adequate "when the parties will not be deprived of all remedies or treated unfairly, even though they might not enjoy the same benefits as they might receive in an American court." In re Air Crash Disaster, 821 F.2d at 1165 (citing Piper, 102 S.Ct. at 265; Syndicate 420 at Lloyd's London v. Early Am. Ins. Co., 796 F.2d 821, 829 (5th Cir.1986)). Although neither party has addressed the adequacy of Germany as a forum, a party moving to dismiss for forum non conveniens "may rely on a presumption that the foreign forum is adequate." Indusoft, Inc. v. Taccolini, 560 Fed.Appx. 245, 249 (5th Cir.2014). "The substantiative law of the foreign forum is presumed to be adequate unless the plaintiff makes some showing to the contrary, or unless conditions in the foreign forum
Atlantic Marine modified the typical forum non conveniens analysis for cases involving a forum-selection clause. Because such a clause "represents the parties' agreement as to the most proper forum," the plaintiff's choice of forum "merits no weight," and a court "must deem the private-interest factors to weigh entirely in favor of the preselected forum." Atlantic Marine, 134 S.Ct. at 581-82. Thus a court may only consider arguments about public-interest factors.
SAP points to a number of public-interest factors favoring dismissal.
For the reasons stated above, Defendants SAP America, Inc.'s and SAP AG's Motion for Summary Judgment is