Samson Tug and Barge Company, Inc. v. Koziol et al
Filing
37
ORDER: denying defendant Clark's Motion to Dismiss 8 . Signed by Judge Sharon L. Gleason on 04/23/2012. (AEM, CHAMBERS STAFF)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
SAMSON TUG AND BARGE COMPANY,
INC., an Alaska Corporation,
Plaintiff,
v.
TIMOTHY J. KOZIOL and BRETT M.
CLARK,
Defendants.
Case No. 3:11-cv-00247-SLG
ORDER DENYING DEFENDANT CLARK’S MOTION TO DISMISS
Before the court at Docket 8 is defendant Brett Clark’s Motion to Dismiss. At
Docket 14, plaintiff Samson Tug and Barge (“Samson”) opposes. At Docket 18, Mr.
Clark replies. At Docket 28, Samson surreplies. Oral argument on the motion was held
on March 8, 2012.
FACTS AND PROCEDURAL BACKGROUND
The uncontroverted facts are as follows: Samson is an Alaska corporation
transporting freight and other materials within Alaska and to Seattle by tug and barge. 1
General Environmental Management, Inc. is a Nevada corporation (“GEM Nevada”). In
2008 and 2009, GEM Delaware was a Delaware corporation and the primary operating
subsidiary of GEM Nevada. 2 At all relevant times, defendant Timothy Koziol was the
Chief Executive Officer (CEO) and Mr. Clark the Chief Financial Officer (CFO) of GEM
1
Compl. at 2, Ex. A to Notice of Removal (Docket 1).
2
Id. at 2.
Nevada. Both were and are residents of California 3 who have been to Alaska “only
once or twice, and never in relation to the subject matter of this lawsuit.” 4
In the fall of 2008, GEM 5 hired Samson to transport contaminated material from
Kodiak, Alaska to Seattle, Washington. 6 After transporting the material in late 2008,
Samson requested payment from GEM.
In early 2009, Samson received some
payments on the invoices, but these payments stopped in April 2009. 7 By October
2009, Samson was owed $559,678.43, including interest on the unpaid balance due. 8
In 2009, Samson’s CFO Roslyn Dailey communicated with Mr. Clark about the
outstanding balance.
At least two of Ms. Dailey’s communications were sent on
Samson letterhead. That letterhead lists Samson’s corporate headquarters address in
Sitka, Alaska and includes the slogan “Alaskans Serving Alaskans.” 9
On June 30,
2009, Ms. Dailey and Mr. Clark communicated via e-mail to schedule a phone call. 10 In
this correspondence, which included a discussion of the time difference between Pacific
Standard Time and Alaska Standard Time, Mr. Clark explicitly acknowledged that Ms.
3
Id. at 1-2.
4
Mot. at 2 (Docket 8).
5
A number of times in the record it is not clear whether the reference is to GEM Nevada or
GEM Delaware. In those instances, the term “GEM” has been used.
6
Compl. at 2.
7
Id. at 3.
8
Id. at 3.
9
Letter of June 17, 2009, Ex. 8 to Aff. of Roslyn Dailey (Docket 14) [hereinafter Dailey Aff.];
Letter of Sept. 17, 2009, Ex. 15 to Dailey Aff.
10
E-mails of June 30, 2009, Ex. 11 to Dailey Aff.
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Dailey was in Sitka, Alaska. 11
In September 2009, Ms. Dailey indicated that Samson intended to pursue a court
action in Washington state court against GEM to recover the amount owed and sent
GEM a draft complaint. 12 The caption of the draft complaint identifies Samson as “an
Alaskan Corporation.” Additionally, the body of that draft complaint describes Samson
as “a duly licensed Alaska State Corporation” 13 and specifies that the action arises out
of the contract to transport materials from Kodiak to Seattle. 14
On or about November 6, 2009, GEM Nevada and Samson executed a
Settlement Agreement and Release (“Settlement Agreement”), in which GEM Nevada
agreed not to dispute that it owed Samson $559,678.43 through November 1, 2009 and
agreed to a payment plan to pay off the entire amount due by October 2010. 15 Also in
the Settlement Agreement, Samson expressly released GEM Delaware from all liability
for the amount due. 16 The Settlement Agreement contained language acknowledging
11
Id.
12
Compl. at 2. See also Draft Complaint, Ex. B to Aff. of Brett Clark (Docket 9) [hereinafter
Clark Aff.].
13
Draft Complaint at 1, Ex. B to Clark Aff.
14
Id. at 2.
15
Settlement Agreement at 4, Ex. 3 to Dailey Aff. (fax transmission date of signature page).
16
Id. at 2-3. See also Compl. at 4. Specifically, the Agreement contained the following release:
Except as otherwise set forth hereinafter, upon receipt by Samson from GEM of
all amounts due pursuant to this Agreement, Samson will waive, release and
forever discharge GEM and GEM’s officers, directors, shareholders, employees,
and agents from all claims, causes of action, losses, liabilities and/or damages,
known or arising prior to this Agreement, arising out of, or relating to, Samson’s
performance of its sub-subcontract with GEM. Upon execution hereof, Samson
releases and forever discharges GEM affiliated companies General
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Samson’s Alaskan connections. 17 The Settlement Agreement also provided that “any
action to interpret or enforce the terms of this Agreement shall be brought in the
Superior Court of King County, Washington.” 18
Just before Samson executed the Settlement Agreement, it was provided with
sworn declarations from Mr. Clark and Mr. Koziol as inducements to execute that
document. 19 Mr. Clark’s declaration was signed on November 4, 2009 in California
under penalty of perjury under California law and begins with the statement:
1. I am over the age of 18 years and am presently employed with
GENERAL ENVIRONMENTAL MANAGEMENT, INC. A Nevada
Corporation (“GEM”). I am the current Chief Financial Officer of
GEM, and am familiar with the assets and obligations of GEM and
its affiliates. 20
Mr. Koziol’s declaration was signed on November 5, 2009 in California, also under
penalty of perjury under California law, and begins with a similar statement:
1. I am over the age of 18 years and am presently employed with
GENERAL ENVIRONMENTAL MANAGEMENT, INC. A Nevada
Corporation (“GEM”). I am the current Chief Executive Officer of
GEM, and am familiar with the assets and obligations of GEM and
its affiliates. 21
Environmental Management, Inc., A Delaware Corporation, General
Environmental Management of Rancho Cordova, LLC, and Island Environmental
Services, Inc., A California Corporation, including their respective officers,
directors, shareholders, employees, and agents.
17
Settlement Agreement at 1 (“Samson is an oversea freight and transportation company
operating between Seattle and various Alaskan ports . . .”).
18
Id. at 2.
19
Compl. at 4.
20
Decl. of Brett Clark Re Corporate Assets, Ex. 2 to Compl. [hereinafter Clark Decl.].
21
Decl. of Timothy Koziol Re Corporate Assets, Ex. 1 to Compl. [hereinafter Koziol Decl.].
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Both declarations express familiarity with “the assets and obligations of GEM and its
affiliates” and contain the following identical language:
2. GEM has executed an Agreement with Samson Tug and Barge
Company, Inc. (“Samson”), requiring the payment over time of the
sums reflected therein, (“Agreement”). The Agreement includes the
release of affiliated GEM companies upon execution thereof.
3. GEM has sufficient assets to assure repayment of the Samson
obligation. The released affiliates have less asset value and
income generation.
4. I understand that Samson is relying on the veracity of the
representations contained herein as an inducement to execute the
Agreement. 22
On November 23, 2009, GEM Nevada filed a Form 10-Q with the Securities and
Exchange Commission for the quarter ending September 30, 2009. 23 The Form 10-Q
reflects that as of that date GEM Nevada had a total stockholders’ deficiency of
$13,616,790 and a net loss for the first nine months of 2009 of $12,510,521. 24 On
November 25, 2009, GEM Nevada finalized an agreement to sell GEM Delaware and
two of its other affiliates to a third party. 25 That agreement included a provision that
GEM Nevada would fully assume GEM Delaware’s obligation to Samson and obtain
Samson’s release of GEM Delaware. 26 The sale of GEM Delaware and its affiliates was
22
Koziol Decl.; Clark Decl.
23
Compl. at 6.
24
Id.
25
Id.
26
Id. at 6-7.
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completed on February 26, 2010 at a price of $14,000,000. 27 GEM Nevada’s Form 10Q dated May 24, 2010 states that the net gain to GEM Nevada included a $765,000
bonus to be paid to senior management. 28 By September 20, 2010, GEM Nevada had
ceased doing business, according to an SEC filing dated September 20, 2010. 29
In the months after the execution of the Settlement Agreement and the sworn
declarations of Mr. Clark and Mr. Koziol, GEM Nevada made payments totaling $45,000
to Samson toward the amount due. No payment has been made since March 2010.
On October 25, 2011, Samson filed the Complaint that initiated this action in
Anchorage Superior Court, seeking the balance then due of over $600,000, including
interest. 30
The Complaint alleges that Mr. Clark and Mr. Koziol’s November 2009
declarations fraudulently and negligently misrepresented both GEM Nevada’s ability to
repay the debt owed Samson, and the asset value and income generation potential of
released affiliates, including GEM Delaware, so as to induce Samson to enter into the
Settlement Agreement with GEM Nevada and release GEM Delaware. 31
On December 28, 2011, Mr. Clark filed a Notice of Removal to this court under
28 U.S.C. § 1441, asserting diversity of citizenship and an amount in controversy in
27
Id. at 7. But see Supplemental Decl. of Brett Clark at 5-6 (Docket 20) (explaining that
although the bonuses were earned, management did not pay them, choosing instead to reinvest
the funds into the company).
28
Compl. at 7.
29
Id.
30
See Compl.
31
Id.
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excess of $75,000. 32 Mr. Clark filed this Motion to Dismiss on January 3, 2012. 33 Mr.
Koziol has not entered a formal appearance in this action, and default was entered
against him on April 18, 2012. 34
DISCUSSION
Mr. Clark seeks dismissal of this action based on his assertion that this court
lacks personal jurisdiction over both defendants. Alternatively, he asserts that Alaska is
the wrong or inconvenient venue for this action, and the case should be transferred to
the federal district court in California, or perhaps Washington.
I.
Personal Jurisdiction
A federal district court may exercise personal jurisdiction over a non-resident
defendant in a diversity action if jurisdiction is proper under the long-arm statute of the
forum state and consistent with federal constitutional due process principles. 35 Alaska’s
long-arm statute, AS § 09.05.015, permits the exercise of personal jurisdiction “to the
maximum extent permitted by due process under the federal constitution.” 36 Although
the state statute provides several specific grounds for jurisdiction, 37 it also contains a
32
Notice of Removal (Docket 1).
33
Docket 8.
34
Clerk’s Entry of Default (Docket 36).
35
Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1998).
36
Glover v. Western Air Lines, Inc., 745 P.2d 1365, 1367 (Alaska 1987) (citations omitted).
37
For example, in Cramer v. Wade, the Alaska Supreme Court discussed its earlier recognition
“that failing to pay monetary obligations to an Alaska creditor is an ‘omission in this state’
causing ‘injury to property’” that warranted the exercise of personal jurisdiction under AS
09.05.015(a)(3). 985 P.2d 467, 470 (Alaska 1999) (citing Kennecorp Mortgage & Equities, Inc.
v. First National Bank of Fairbanks, 685 P.2d 1232 (Alaska 1984)). In Cramer, the Alaska
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catch-all provision. 38
Therefore, a court “need not determine whether [a] case fits
perfectly” within the statute’s enumerated grounds for jurisdiction, if the court
“conclude[s] that due process permits the exercise of jurisdiction” over the defendant. 39
Thus, “the statutory and constitutional requirements merge into a single due process
test,” 40 such that an analysis of Mr. Clark’s jurisdictional argument under the federal
Due Process Clause is dispositive.
The United States Supreme Court has held that “[a] court may subject a
defendant to judgment only when the defendant has sufficient contacts with the
sovereign ‘such that the maintenance of the suit does not offend “traditional notions of
fair play and substantial justice.’” 41 Here, the parties agree that this court does not have
general personal jurisdiction over the defendants for any and all disputes. But they
disagree whether this court may exercise specific personal jurisdiction over the
defendants with respect to this particular case.
In Mavrix Photo, Inc. v. Brand Technologies, Inc., the Ninth Circuit discussed the
applicable quantum of proof:
In opposing a defendant's motion to dismiss for lack of personal
jurisdiction, the plaintiff bears the burden of establishing that
jurisdiction is proper. Where, as here, the defendant's motion is
Supreme Court found that Cramer’s active encouragement and inducement of Wade, an
Alaskan, to participate in a loan constituted sufficient contacts for personal jurisdiction. Id. at
471.
38
AS § 09.05.015(c).
39
Polar Supply Co., Inc. v. Steelmaster Indust., Inc., 127 P.3d 52 (Alaska 2005).
40
Insurance Co. of North America v. Marina Salina Cruz, 649 F.2d 1266, 1269 (9th Cir. 1981).
41
J. McIntyre Machinery, Ltd. v. Nicastro, 131 S. Ct. 2780, 2785 (2011) (citing Int’l Shoe Co. v.
Washington, 326 U.S. 310, 316 (1945)).
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based on written materials rather than an evidentiary hearing, the
plaintiff need only make a prima facie showing of jurisdictional facts
to withstand the motion to dismiss. The plaintiff cannot “simply rest
on the bare allegations of its complaint,” but uncontroverted
allegations in the complaint must be taken as true. “[W]e may not
assume the truth of allegations in a pleading which are contradicted
by affidavit,” but we resolve factual disputes in the plaintiff's favor. 42
“As a general rule, the exercise of judicial power is not lawful unless the
defendant ‘purposefully avails itself of the privilege of conducting activities within the
forum State, thus invoking the benefits and protections of its laws.’” 43 Although courts
“often use the phrase ‘purposeful availment,’ in shorthand fashion, to include both
purposeful availment and purposeful direction … availment and direction are, in fact,
two distinct concepts.”44 Purposeful availment is “most often used in suits sounding in
contract,” while purposeful direction “is most often used in suits sounding in tort.” 45 As
this case involves allegations of tortious conduct, it is appropriate to use a purposeful
direction analysis to analyze whether Alaska has specific personal jurisdiction over the
defendants for this particular action.
The Ninth Circuit has developed a three-part test (the “Schwarzenegger test”) to
determine when a court may, consistent with due process, exercise personal jurisdiction
over a defendant with respect to specific alleged tortious conduct:
42
647 F.3d 1218, 1224 (9th Cir. 2011) (internal citations omitted), cert. denied, 132 S. Ct. 1101
(2012).
43
J. McIntyre Machinery, Ltd., 131 S. Ct. at 2785 (citing Hanson v. Denckla, 357 U.S. 235, 253
(1958)).
44
Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004) (citing Harris
Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1130 (9th Cir. 2003)).
45
Id. (citing Doe v. Unocal Corp., 248 F.3d 915, 924 (9th Cir. 2001); Dole Food Co., Inc. v.
Watts, 303 F.3d 1104, 1111 (9th Cir. 2002); Ziegler v. Indian River County, 64 F.3d 470, 473
(9th Cir. 1995)). See also Fiore v. Walden, 657 F.3d 838, 848 (9th Cir. 2011).
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(1) The non-resident defendant must purposefully direct his
activities or consummate some transaction with the forum or
resident thereof; or perform some act by which he purposefully
avails himself of the privilege of conducting activities in the forum,
thereby invoking the benefits and protections of its laws;
(2) the claim must be one which arises out of or relates to the
defendant's forum-related activities; and
(3) the exercise of jurisdiction must comport with fair play and
substantial justice, i.e. it must be reasonable. 46
The plaintiff bears the burden of establishing the first two prongs of this test. If it does,
then the burden shifts to the defendant to present a “compelling case that the exercise
of jurisdiction would not be reasonable.” 47 As discussed below, the Ninth Circuit has
developed sub-parts to these prongs that apply to this analysis.
This court has found the Ninth Circuit’s recent jurisdictional analysis in Fiore v.
Walden to be particularly instructive. 48 The facts in that case were as follows: the
plaintiffs, Fiore and Gipson, were professional gamblers traveling from Puerto Rico
through Atlanta back to their homes in Nevada, with $97,000 of legal cash in their
baggage. 49 This money was seized by DEA Agent Walden at the Atlanta airport when
the plaintiffs were there changing planes.
The plaintiffs alleged that they clearly
conveyed to Walden that they were flying to, and resided in Nevada. The plaintiffs
alleged that Walden provided a false probable cause affidavit to assist in bringing a
forfeiture action to obtain the funds. 50 Approximately seven months later, the DEA
46
Fiore, 657 F.3d at 845-46 (citing Schwarzenegger, 374 F.3d at 802) (emphasis in original).
47
Mavrix, 647 F. 3d at 1228 (internal citations and quotations marks omitted).
48
657 F.3d 838.
49
Id. at 842-43.
50
Id. at 843-44.
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returned the funds to the plaintiffs. 51 Fiore and Gipson brought a Bivens action in
Nevada federal court against Walden for claims arising out of those events. 52 Walden
moved to dismiss for lack of personal jurisdiction. 53
The district court granted the
motion to dismiss, concluding that Nevada did not have personal jurisdiction over
Walden because the search and seizure of the plaintiffs’ funds took place in, “and was
expressly aimed at, Georgia.” 54
On appeal, the Ninth Circuit reversed, and after
analyzing each of the prongs of the Schwarzenegger test as set forth herein, held that
Nevada could exercise personal jurisdiction over Walden for that specific case. 55 With
this background, this court turns to an analysis of whether Alaska has personal
jurisdiction over the defendants for this case.
A. Prong 1: Purposeful Direction
The first prong of the Schwarzenegger test requires a finding that the nonresident defendant “has purposefully direct[ed] his activities or consummate[d] some
transaction with the forum or resident thereof.”56 Purposeful direction is determined by
the Calder-effects test, a three-part inquiry formulated by the Supreme Court in Calder
v. Jones. 57 Under this test, a defendant is determined to have purposefully directed its
51
Id. at 844.
52
Id. at 844-45.
53
Id. at 845.
54
Id.
55
Id. at 860. The Ninth Circuit also held that Nevada was an appropriate venue. Id. at 858-59.
56
Id. at 845-46 (citing Schwarzenegger, 374 F.3d at 802) (emphasis in original).
57
Id. at 848 (citing Calder v. Jones, 465 U.S. 783 (1984)).
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activities toward the forum state if he has “[(a)] committed an intentional act, [(b)]
expressly aimed at the forum state, [(c)] causing harm that the defendant knows is likely
to be suffered in the forum state.”58 “Intentional torts, in particular, can support personal
jurisdiction over a nonresident defendant who has no other forum contacts.”59
i.
Intentional act.
In the context of this test, an intentional act “refer[s] to an intent to perform an
actual, physical act in the real world, rather than an intent to accomplish a result or
consequence of that act.” 60 In Fiore, the Ninth Circuit found that the alleged acts of
“[s]ubmitting a false and misleading probable cause affidavit and referring the case for
forfeiture proceedings in the absence of probable cause” were intentional. 61 Similarly,
in this case, the defendants acted intentionally when they allegedly authored false or
misleading declarations.
ii.
Expressly aimed at the forum state.
The Ninth Circuit has, as a general rule, “held the express aiming requirement
satisfied” when there is “‘individual targeting’ of the forum residents—actions taken
outside the forum state for the purpose of affecting a particular forum resident or a
58
Id. (citing Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1128 (9th Cir. 2010)).
59
Id. (citing Calder, 465 U.S. at 790). See also J. McIntyre Machinery, Ltd., 131 S. Ct. at 2787
(“in some cases, as with an intentional tort, the defendant might well fall within the State's
authority by reason of his attempt to obstruct its laws.”).
60
Id. at 849 (citing Schwarzenegger, 374 F.3d at 806).
61
Id.
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person with strong forum connections[.]” 62 The mere foreseeability of an impact in the
forum state is not enough; the defendant must target its “intended impact … at a known
individual who has a substantial, ongoing connection to the forum.”63 In Fiore, the court
determined that this requirement had been satisfied: “Walden expressly aimed his
actions [in Atlanta] at people and property he knew from the outset were not local.” 64
And the court there found the record to “indicate that at the time the assertedly false
affidavit was composed and filed, Walden recognized that the plaintiffs had significant
connections to Nevada, particularly with respect to the funds for which forfeiture was
being sought.” 65 The Ninth Circuit noted that activities can be expressly aimed at a
forum state without the defendant ever going to that state, citing to its precedents that
“firmly establishe[d] that if a defendant is alleged to have defrauded or similarly
schemed against someone with substantial ties to a forum, the ‘expressly aimed’ factor
is met, even if all the defrauding activities occur outside the forum.” 66
The court
described Walden as allegedly acting “falsely and with misleading omissions” based on
representations in a probable cause affidavit regarding funds belonging to “Fiore and
Gipson, whom he knew had a significant connection to Nevada.”67 The Ninth Circuit
62
Id. (citing Brayton Purcell, 606 F.3d at 1129–31; Pebble Beach Co. v. Caddy, 453 F.3d 1151,
1157 (9th Cir. 2006); Dole Food Co., 303 F.3d at 1111; Bancroft & Masters, Inc. v. Augusta Nat'l
Inc., 223 F.3d 1082, 1087 (9th Cir. 2000)).
63
Id. (emphasis omitted).
64
Id. at 850 (emphasis in original).
65
Id. at 851.
66
Id. at 852.
67
Id. at 853.
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found that Walden knew that his actions “would have their consequences felt in
Nevada.” 68
Consistent with the Ninth Circuit’s analysis in Fiore and its other case law, the
facts here readily demonstrate that the defendants’ conduct was expressly aimed at
Alaska. The defendants here knew that the target of their declarations was an Alaska
corporation, and knew and intended that Samson would feel the effects of their actions
in Alaska.
iii.
Foreseeable harm in the forum state.
This “element is satisfied when defendant's intentional act has ‘foreseeable
effects' in the forum … If a jurisdictionally sufficient amount of harm is suffered in the
forum state, it does not matter that even more harm might have been suffered in
another state.” 69 Here, the defendants knew that, and intended for, their declarations to
be relied upon by Samson in Alaska. Thus, the foreseeability of harm in Alaska has
been clearly demonstrated.
As each of the three prongs of the Calder-effects test is satisfied, this court finds
that the defendants purposefully directed their activities toward Alaska when they
signed their November 2009 declarations and transmitted them to Samson.
B. Prong 2: Forum-Related Conduct
The second prong of the Schwarzenegger test considers whether the claim
arises out of or relates to the defendant’s forum-related activities. The Ninth Circuit
68
Id.
69
Id. (citing Yahoo! Inc. v. La Ligue Contre Le Racisme Et L'Antisemitisme, 433 F.3d 1199,
1207 (9th Cir. 2006)).
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uses a “‘but-for test’ to determine forum-related conduct,” such that the plaintiff must
show that, but for the defendant’s actions, it would not have suffered the injury in the
forum state. 70
In Fiore, the Ninth Circuit found this prong “easily met” because the plaintiffs
demonstrated that “they would not have suffered the alleged injuries in Nevada ‘but for’
Walden’s false probable cause affidavit and attempt to facilitate a forfeiture
prosecution,”71 even though the affidavit was signed and the forfeiture was attempted in
Atlanta, Georgia.
Here, Samson alleges that it relied on the defendants’ declarations when
deciding to execute the Settlement Agreement with GEM Nevada and release GEM
Delaware. Drawing “reasonable inferences” in Samson’s favor, 72 this court finds that,
but for the defendants’ declarations, Samson would not have executed the Settlement
Agreement and would not have suffered injury in Alaska. Accordingly, the forum-related
conduct prong of the Schwarzenegger test is easily met.
C. Prong 3: Reasonableness Determination
The final prong of the Schwarzenegger test places the burden on the defendant
to “‘present[] a compelling case’ that the exercise of personal jurisdiction would not be
70
Id. at 854 (citing Menken v. Emm, 503 F.3d 1050, 1058 (9th Cir. 2007)).
71
Id.
72
Id. at 847.
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reasonable.”73 In making this determination, the court is to balance the following seven
factors, each of which is discussed in turn below:
[(i)] the extent of the defendants' purposeful interjection into the
forum state's affairs; [(ii)] the burden on the defendant of defending
in the forum; [(iii)] the extent of conflict with the sovereignty of the
defendants' state; [(iv)] the forum state's interest in adjudicating the
dispute; [(v)] the most efficient judicial resolution of the controversy;
[(vi)] the importance of the forum to the plaintiff's interest in
convenient and effective relief; and [(vii)] the existence of an
alternative forum. 74
i.
Extent of purposeful interjection into the affairs of the forum state.
In Fiore, the Ninth Circuit focused its analysis of this factor on Walden’s
awareness of Fiore and Gipson’s connections to Nevada at the time he prepared the
allegedly false probable cause affidavit in Georgia. The court concluded that even
though Walden “never stepped foot in Nevada,” he knew of the plaintiffs’ connections to
that state at that time, and thus “was necessarily aware that his actions would … have
their principal impact outside of Georgia.” 75
Here, the defendants were well aware of Samson’s Alaska connection when
they signed the declarations, and in fact they expressly intended their declarations to
have an impact on Samson in Alaska. This court finds that the defendants’ actions
constituted a significant purposeful interjection into Alaskan affairs, and weighs strongly
in favor of the reasonableness of Alaska’s exercise of personal jurisdiction over them.
73
Id. at 854 (citing Menken, 503 F.3d at 1057).
74
Id. (citing Menken, 503 F.3d at 1058).
75
Id. at 855.
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ii.
Burden of defending in the forum.
Although “[m]odern means of communication and transportation have tended to
diminish the burden of defense of a lawsuit in a distant forum,” 76 the Ninth Circuit
remains sensitive to the expense and inconvenience that litigating in a distant forum can
place on a defendant. In Fiore, the Ninth Circuit noted that Walden, as a federal law
enforcement employee, was being defended and indemnified by the government, so the
burden on him to litigate in Nevada was minimized. 77 As such, the Ninth Circuit found
that this factor did not weigh in favor of Walden, although the court indicated that it
might have found differently “[w]ere Walden a local small business person[.]”78
Unlike the defendant in Fiore, the defendants here are private individuals. This
court recognizes that “many of the inconvenience burdens in this case are
symmetrical[,]”79 as it would be burdensome for Samson, a local business, to litigate
outside Alaska. However, “[t]he law of personal jurisdiction … is asymmetrical,” and is
primarily concerned with “the burden on a defendant.”80 This court finds that it would be
burdensome for the defendants to litigate in Alaska, such that this factor weighs against
Alaska’s exercise of personal jurisdiction over the defendants in this case.
76
Ins. Co. of N. Am. v. Marina Salina Cruz, 649 F.2d 1266, 1271 (9th Cir. 1981) (citing WorldWide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292-93 (1980); Hanson v. Denckla, 357
U.S. 235, 251 (1958); McGee v. Int’l Life Ins. Co., 355 U.S. 220, 222-23 (1957)).
77
Fiore, 657 F.3d at 855.
78
Id.
79
Marina Salina Cruz, 649 F.2d at 1272 (noting that burden of requiring Mexico-based shipyard
to defend in Alaska was symmetrical to burden of requiring boat owner and insurance company
to defend in Mexico).
80
Id. (citing World-Wide Volkswagen, 444 U.S. at 292).
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iii.
Extent of conflict with sovereignty of defendants’ state.
The defendants’ home state is California, and the declarations at issue were
signed under penalty of perjury under California law. Samson, an Alaska corporation,
suffered the alleged harm in Alaska. To the extent California has a sovereign interest in
punishing its citizens for perjury, that interest can be furthered in criminal prosecutions
in that state without conflicting with this civil proceeding and Alaska’s distinct interest in
protecting its citizens from tortious conduct. To analogize to the Ninth Circuit’s analysis
in Fiore: “[California] has no interest in protecting [Samson’s] interests,” because
Samson has “no connection to [California].” 81
As there is no serious conflict with
California’s sovereignty, this factor weighs in favor of Alaska’s exercise of personal
jurisdiction over the defendants in this case.
iv.
Interest of forum state in adjudicating the dispute.
States have “a strong interest in providing an effective means of redress for
[their] residents who are tortiously injured.” 82 Samson is an Alaska corporation which
was allegedly harmed by the defendants’ tortious conduct. Alaska has a clear interest
in this dispute. Accordingly, this factor weighs strongly in favor of finding personal
jurisdiction in Alaska.
81
Fiore, 657 F.3d at 856.
82
Ibrahim v. Dept. of Homeland Sec., 538 F.3d 1250, 1259 (9th Cir. 2008) (citing Ziegler v.
Indian River County, 64 F.3d 470, 475 (9th Cir. 1995)).
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v.
Most efficient resolution of the controversy.
The efficiency of a given forum depends “primarily on the location of witnesses
and evidence.” 83
In Fiore, the court found this factor evenly weighted, as the
documentation and witnesses were evenly split between the plaintiffs’ and the
defendants’ preferred court locations. Here, Mr. Clark’s sworn statement asserts that all
potential witnesses for the defense reside in California. 84 Samson asserts that “there
are multiple witnesses in Alaska necessary for trial.” 85 This court finds that, at this initial
stage of litigation and based on the current record, there is insufficient evidence to
accord any weight to this factor.
vi.
Importance of forum to plaintiff’s convenient and effective relief.
This factor, which “generally is not given much weight in this circuit[,]” 86 tips in
favor of Alaska, as if Samson is entitled to relief, it would be more conveniently and
effectively obtained in its home state, where its operations are based and its injuries
were allegedly incurred.
vii.
Existence of an alternative forum.
California is an alternative forum, in that this case could have been brought there.
This factor weighs against the exercise of personal jurisdiction over the defendants in
Alaska.
83
Fiore, 657 F.3d at 856 (citing Menken, 503 F.3d at 1060-61).
84
Clark Aff. at 5-8, supra n. 12.
85
Opp. to Mot. at 22 (Docket 14). Samson also notes that prior to discovery, there is no way to
know which of the witnesses listed by Mr. Clark l would actually be called to testify at trial—a
point which applies with equal force to both parties at this point in the litigation.
86
Fiore, 657 F.3d at 856-57 (citing Dole Food, 303 F.3d at 1116).
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Overall, the seven-factor balancing test weighs decidedly in favor of Alaska’s
exercise of personal jurisdiction over the defendants in this case. Mr. Clark has not
made a “compelling case” that this court’s exercise of personal jurisdiction would be
unreasonable.
Based on this court’s analysis of the three prongs of the
Schwarzenegger test, this court finds that Alaska’s exercise of personal jurisdiction over
the defendants comports with constitutional due process.
D. Corporate Shield Doctrine
Mr. Clark cites the Ninth Circuit’s decision in Forsythe v. Overmyer to support his
argument that because he and Mr. Koziol had contact with Alaska only in their
capacities as corporate officers of GEM, they are protected from the exercise of
personal jurisdiction by the corporate, or fiduciary, shield doctrine. 87 As a preliminary
matter, the declaration of each defendant contains no indication that it was signed solely
in the capacity of a corporate officer. With all reasonable inferences drawn for the
plaintiff on this motion, Mr. Clark’s argument fails on that basis alone.
Moreover, the corporate shield doctrine is inapplicable. Mr. Clark argues that
Ninth Circuit precedent is the relevant law and that Samson’s state-law based argument
is erroneous. 88 However, within the Ninth Circuit, the corporate shield doctrine does not
require a constitutional inquiry, and is therefore controlled by state law. 89 Under Alaska
87
576 F.2d 779, 783-84 (9th Cir. 1978) (“[A] corporate officer who has contact with a forum only
with regard to the performance of his official duties is not subject to personal jurisdiction in that
forum.”) (citing Chem Lab Prods., Inc. v. Stepanek, 554 F.2d 371 (9th Cir. 1977)).
88
Opp. to Mot. to Strike at 2, n.1 (Docket 23).
89
Kubley v. Whetstone, 2004 WL 2827716, *6 (D. Alaska Dec. 3, 2004) (citing Davis v. Metro
Productions, Inc., 885 F.2d 515, 521 (9th Cir. 1989)).
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law, “the ‘fiduciary shield’ doctrine does not insulate an officer from the exercise of
personal jurisdiction over him.” 90
Mr. Clark and Mr. Koziol therefore cannot obtain
protection from the doctrine.
For the foregoing reasons, Mr. Clark’s motion to dismiss this action for lack of
personal jurisdiction is denied.
II.
Venue
Mr. Clark’s motion challenges venue in Alaska on two alternative grounds: (1)
that Alaska is a statutorily improper venue under 28 U.S.C. § 1391(a) and (2) even if
venue in Alaska is statutorily permitted, Alaska is an inconvenient forum such that the
court should transfer the case to the Central District of California, or perhaps
Washington.
When considering a defendant’s assertion of improper venue, the court may
consider facts outside of the pleadings, with the burden on the plaintiff to demonstrate
that venue properly lies in its chosen state. 91 With respect to a motion seeking to
transfer venue pursuant to 28 U.S.C. § 1404(a), the court may also consider facts
outside the pleadings, but the burden is on the party seeking to transfer the case to
90
Id. (citing Cramer v. Wade, 985 P.2d 467, 472 (Alaska 1999)). Mr. Clark argues that the
relevant language in Cramer is merely dicta, or at best an alternative opinion, as the Alaska
Supreme Court specified that Cramer was acting to further his own interests, not those of his
employer. Opp. to Mot. to Strike at 2, n.1. However, the court expressly held that “it is entirely
beside the point whether Cramer acted for himself or solely in his corporate capacity,” Cramer,
985 P.2d at 472, adding, “that even if [Cramer] could be deemed to have acted exclusively in his
corporate capacity, due process would not shield him from suit in his individual capacity.” Id.
See also Casciola v. F.S. Air Serv., Inc., 120 P.3d 1059, 1063 n. 11 (Alaska 2005) (“The
corporate form does not shield corporate officers or employees who commit torts on behalf of
their employer from personal liability.”).
91
Argueta v. Banco Mexicano, 87 F.3d 320, 324 (9th Cir. 1996).
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“make a strong showing of inconvenience to warrant upsetting the plaintiff’s choice of
forum.” 92
A. Is Alaska an improper venue for this action?
28 U.S.C. § 1391(a) is the venue statute applicable to diversity cases. 93 That
statute provides:
A civil action wherein jurisdiction is founded only on diversity of
citizenship may, except as otherwise provided by law, be brought
only in (1) a judicial district where any defendant resides, if all
defendants reside in the same State, (2) a judicial district in which
a substantial part of the events or omissions giving rise to the claim
occurred, or a substantial part of property that is the subject of the
action is situated, or (3) a judicial district in which any defendant is
subject to personal jurisdiction at the time the action is commenced,
if there is no district in which the action may otherwise be brought.
When a court determines that it lacks venue, 28 U.S.C. § 1406(a) provides:
The district court of a district in which is filed a case laying venue in
the wrong division or district shall dismiss, or if it be in the interest
of justice, transfer such case to any district or division in which it
could have been brought.
Clearly, Alaska does not have venue for this action under either subsection (1) or
subsection (3) of the venue statute. At issue is whether venue in Alaska lies under
subsection (2), and specifically, whether “a substantial part of the events or omissions
giving rise to [Samson’s] claim occurred” in Alaska. Under a “substantial part” venue
analysis, “even if other material events occurred elsewhere,” venue in a certain forum
92
Gherebi v. Bush, 352 F. 3d 1278, 1302 (9th Cir. 2003). See also Northern Acceptance Trust
1065 v. Gray, 423 F. 2d 653, 655 (9th Cir. 1970) (according “substantial weight to [plaintiff’s]
choice of forum.”).
93
In December 2011, the Federal Courts Jurisdiction and Venue Clarification Act of 2011 was
enacted, modifying the language of the venue statute. The Act, however, applies only to suits
filed after its effective date. As this action was filed prior to the Act’s effective date of January 6,
2011, the previous version of the statute applies.
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can be proper if “significant events or omissions material to the plaintiff's claim …
occurred in the district in question.”94
In Rodriguez v. California Highway Patrol, the Northern District of California
found that because at least some of the incidents of alleged racial profiling that formed
the basis of the plaintiffs’ claims had occurred in its district, venue was proper. 95 The
court explained that a “majority of events” need not “have occurred in the district where
suit is filed[,]” nor must “events in that district predominate.”96 Similarly, in Xcentric
Ventures LLC v. Borodkin, the Arizona District Court held that the defendants’ travel to
Arizona for settlement discussions and placing of phone calls to the plaintiff’s place of
business in Arizona constituted a “substantial part of the events giving rise” to the
plaintiff’s tort claims, so as to permit venue in that state, even though the “principal
event giving rise” to the claims had occurred in California. 97
The Ninth Circuit has recognized that the location of the injury in tort cases is a
relevant factor in determining whether there is proper venue under a “substantial part”
analysis. 98 “The fact that at least one of the harms suffered” was felt in a particular
94
Xcentric Ventures LLC v. Borodkin, 2012 WL 692976, *7 (D. Ariz. Mar. 1, 2012) (citing Gulf
Ins. Co. v. Glasbrenner, 417 F.3d 353, 357 (2d Cir. 2005)) (emphasis removed).
95
Rodriguez v. California Hwy. Patrol, 89 F. Supp. 2d 1131, 1136 (N.D. Cal. 2000).
96
Id. (citing Sidco Indus. Inc. v. Wimar Tahoe Corp., 768 F.Supp. 1343, 1346 (D.Or. 1991)).
97
Xcentric Ventures, 2012 WL 692976 at *8. The court had already determined that venue was
proper in Arizona under a substantial part analysis because Arizona was the “locus of the
injury,” but additionally found that these actions constituted a substantial part of the events. Id.
98
Fiore, 657 F.3d at 859 (citing Myers v. Bennett Law Offices, 238 F.3d 1068, 1076 (9th Cir.
2001)). See also Xcentric Ventures, 2012 WL 692976 at *7.
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forum may make venue proper, even when the injury was solely economic. 99 In Myers
v. Bennett Law Offices, the plaintiffs were Nevada residents who brought suit in Nevada
against the defendants, alleging that the defendants had violated the Fair Credit
Reporting Act by ordering credit reports on them for improper purposes. 100
The
defendants, Utah residents, asserted improper venue. 101 The Ninth Circuit found that
venue in Nevada was proper because the plaintiffs had felt “at least one of the ‘harms’”
(which it analogized to the tort of invasion of privacy) in Nevada, such that “a substantial
part of the events or omissions giving rise to the claim” had occurred in that state. 102
Similarly, in Fiore v. Walden, the Ninth Circuit found venue in Nevada was proper.
Citing the language from Myers that “at least one of the harms” 103 was suffered in the
forum state, the court found “[a]ll the economic injuries suffered by Fiore and Gipson
were realized in Nevada, including their loss of use and interest on the funds[.]” 104
Here, Samson alleges that because it was fraudulently induced to enter into a
settlement agreement with an entity that was unable to meet its obligations, it suffered
significant economic injury. Like Fiore and Gipson, Samson alleges that it has suffered
the “loss of use and interest on [its] funds.” 105 As Samson is a Sitka-based Alaskan
99
Id. (internal quotation marks omitted) (citing Myers, 238 F.3d at 1076).
100
238 F.3d 1068.
101
Id. at 1071.
102
Id. at 1075-76.
103
Fiore, 657 F.3d at 859 (citing Myers, 238 F.3d at 1076).
104
Id. at 859.
105
Id. at 859.
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corporation, the economic consequences of this injury were felt in Alaska. Moreover,
there were additional events connected with Alaska that gave rise to this claim –
perhaps most notably the fact that the underlying debt arose from the shipment of
materials out of Alaska. 106 This court finds that a substantial part of the events giving
rise to Samson’s claim occurred in Alaska. Accordingly, the motion to dismiss on the
basis of improper venue is denied.
B. Is Alaska an inconvenient venue?
A defendant may seek to demonstrate that the case ought to be transferred to a
more convenient forum, if that forum is one where the action may also originally have
been brought.
28 U.S.C. § 1404(a) governs change of venue for the purpose of
convenience:
For the convenience of parties and witnesses, in the interest of
justice, a district court may transfer any civil action to any other
district or division where it might have been brought.
“[W]hether transfer or dismissal is appropriate ‘rests within the sound discretion of the
district court.’”107 To succeed on such a motion, “the defendant must make a strong
showing of inconvenience to warrant upsetting the plaintiff’s choice of forum.”108
Mr. Clark asserts that Alaska is an inconvenient venue and that the court should
transfer this action to the Central District of California, where venue is also proper under
106
In addition, the defendants had ongoing communications with Samson in Alaska.
107
Sixty-Two First Street, LLC v. Capital Source Finance LLC, 2011 WL 2182915 *3 (June 6,
2011) (citing Naartex Consulting Corp. v. Watt, 722 F.2d 779, 789 (D.C. Cir. 1983); Cook v. Fox,
537 F.2d 370, 371 (9th Cir. 1976)). Cf. Norwood v. Kirkpatrick, 349 U.S. 29, 31-32
(1955) (district court has broad discretion to transfer under 28 U.S.C. § 1404(a)).
108
Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986).
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28 U.S.C. § 1391(a), as it is the district in which both defendants reside. 109
The Ninth Circuit uses a nonexclusive ten-factor analysis to determine whether
transfer of an action is warranted on the grounds of inconvenience:
(1) the location where the relevant agreements were negotiated
and executed; (2) the state that is most familiar with the governing
law; (3) the plaintiff's choice of forum; (4) the respective parties'
contacts with the fora; (5) the contacts relating to the plaintiff's
cause of action in the chosen forum; (6) the differences in the costs
of litigation in the two fora; (7) the availability of compulsory process
to compel attendance of unwilling non-party witnesses; (8) the ease
of access to sources of proof; (9) whether a forum selection clause
is present; and (10) the relevant public policy of the forum state, if
any. 110
Additionally, a district court may also consider any other factors that affect the ease,
expense, or expeditiousness of trial. 111
i.
Location of negotiation and execution of relevant agreements.
The defendants’ declarations, while not agreements per se, are at the core of this
action and were executed in California. The record contains no information on where
the original shipping contract between Samson and GEM was negotiated or executed.
The Settlement Agreement was signed by GEM Nevada in California. 112 Samson has
not indicated where it signed the Agreement, but this court finds it reasonable to infer
109
Mr. Clark requests, in the alternative, that the court transfer this action to Washington, Mot. at
3, but has not made an argument for Washington as a more convenient venue.
110
Kubley, 2004 WL 2827716 at *10 (citing Jones v. GNC Franchising, Inc., 211 F.3d 495, 498–
99 (9th Cir. 2000)).
111
Cf., e.g., Grubs v. Consolidated Freightways, Inc., 189 F. Supp 404, 410 (D. Montana 1960)
(inconvenience of counsel not a relevant consideration); Oriska Insurance Co. v. Power P.E.O.,
Inc., 317 F. Supp 2d 161, 166 (N.D.N.Y. 2004) (disparity between means of the parties relevant
to venue determinations).
112
Clark Aff. at 3, supra n. 12.
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that Samson signed it in Alaska, as the final paragraph of the Agreement provides that it
can be executed by counterparts, including facsimile transmission, and the copy
attached to Ms. Dailey’s affidavit bears a fax header with an Alaskan area code. 113
Given that the declarations were signed in California, this factor supports the transfer of
venue to California.
ii.
State most familiar with governing law.
“A change of venue under § 1404(a) generally should be, with respect to state
law, but a change of courtrooms.” 114 If this diversity case were transferred on grounds
of inconvenience, the transferee court would apply the same law as the court in
Alaska. 115 With respect to the plaintiffs’ claims of fraud and misrepresentation, Alaska
law would presumably apply, and a court in Alaska would be most familiar with that
governing law.
Arguably, however, the choice of law clause in the Settlement
Agreement might warrant application of Washington law on some issues. And issues
regarding the meaning of the sworn declarations might apply California law.
On
balance, this court finds this factor is neutral.
iii.
The plaintiff’s choice of forum.
A plaintiff’s choice of forum is accorded “a strong presumption” in its favor. 116 As
113
Settlement Agreement at 4, supra n. 15.
114
W RIGHT & MILLER, FED. PRAC. & P. § 3846 (3d ed.) (citing Van Dusen v. Barrack, 84 S.Ct.
805, 821 (1964)).
115
See id. (“it is now well settled . . . that after a Section 1404(a) transfer on a defendant's
motion of a case that had been brought properly in the transferor court, the transferee court will
apply the law that would have been applied in the transferor court under the conflicts-of-laws
rules of the state from which the action was transferred.”).
116
Piper Aircraft Co. v. Reyno, 454 U.S. 235, 265-66 (1982).
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Samson filed suit in Alaska, this factor tips strongly toward venue remaining in Alaska.
iv.
The parties’ contacts with the fora.
Samson is an Alaskan corporation with extensive contacts with Alaska. It has
had very limited contact with California. There is no indication in the record that its
shipping operations outside of Alaska have extended beyond Seattle, Washington. The
defendants’ contacts with California are extensive, as it is their state of residence.
Conversely, their contacts with Alaska appear to have been quite limited except with
respect to their communications with Samson relative to this cause of action.
On
balance, this factor weighs slightly toward venue remaining in Alaska.
v.
Contacts relating to the cause of action in the chosen forum.
Samson’s contacts in Alaska relating to its cause of action are extensive. And
the crucial event of Samson’s cause of action is the defendants’ transmittal of their
allegedly fraudulent declarations to Samson, an Alaska corporation.
This factor
therefore weighs toward venue remaining in Alaska.
vi.
The differences in the cost of litigation.
Either Samson would have to bear the cost of litigating outside of Alaska, or the
defendants would have to bear the cost of litigation in Alaska. As each forum would
inconvenience one of the parties, this factor does not tip in either direction.
vii.
Availability of compulsory process to compel attendance of witnesses.
As in the previous factor, this factor could present issues in either forum, but at
this stage of the proceeding it has not been demonstrated to weigh in either direction.
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viii.
Ease of access to sources of proof.
Again, each forum would present difficulties for one of the parties, as Samson’s
sources of proof would be primarily in Alaska, while the defendants’ would be primarily
in California, and thus this factor does not tip in either direction.
ix.
Existence of a forum selection clause.
The Settlement Agreement contains a forum selection clause designating the
Western District of Washington as the chosen forum for disputes between GEM Nevada
and Samson related to that agreement. The clause provides:
8. This Agreement shall be construed and interpreted according to
the laws of the State of Washington. The Parties agree that any
action to interpret or enforce the terms of this Agreement shall be
brought in the Superior Court of King County, Washington. The
prevailing party in any such action shall be entitled to the payment
of the reasonable costs and attorney’s fees incurred therein,
inclusive of any appeal. 117
Mr. Clark has suggested, as an alternative to California, that this action be
transferred to Washington, 118 but did not develop an argument in support of this
proposal.
Samson is the only party in this action which was also a party to the
Settlement Agreement and is not seeking in this action to interpret or enforce the terms
of the Settlement Agreement against GEM Nevada. As Mr. Clark was not a party to the
Settlement Agreement, he cannot rely on it to change venue to Washington. Rather,
this court finds that the clause has little, if any, bearing on the venue inquiry.
117
Settlement Agreement at 2.
118
Mot. at 3.
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x.
Relevant public policy of the forum.
This court finds that Alaska’s interest in protecting its citizens from fraud and
misrepresentation is more compelling than any public policy that could be attributed to
Washington or California with respect to this case. This factor therefore tips decidedly
in Alaska’s favor.
As the majority of the relevant factors tip toward venue remaining in Alaska,
including the plaintiff’s choice of forum, this court finds that transfer of this action from
Alaska is not warranted on grounds of inconvenience. Mr. Clark’s alternative motion to
transfer venue is therefore denied. 119
CONCLUSION
For the foregoing reasons, Mr. Clark’s Motion to Dismiss is DENIED in its
entirety.
Dated at Anchorage, Alaska this 23rd day of April, 2012.
/s/ Sharon L. Gleason
United States District Judge
119
However, the present denial of the motion to transfer venue is not necessarily dispositive of a
subsequent motion to transfer, if the defendants present different facts demonstrating greater
inconvenience at a later date. See W RIGHT & MILLER, 15 FED. PRAC. & P. § 3844 (3d ed.)
(“Section 1404(a) sets no limit on the time by which a motion to transfer may be made. … In
addition, even though a motion for [Section 1404(a)] transfer has been denied once, the district
judge is not precluded from hearing and considering a subsequent motion, if made, for transfer
on the basis of the facts then presented.”).
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