Rosie Sylvia Hernandez v. Commissioner of Social Security
Filing
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MEMORANDUM DECISION Regarding Motion to Dismiss 7 , signed by Judge Oliver W. Wanger on 4/20/11. Case Transferred to Central District of California, Los Angeles Division. (Verduzco, M)
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UNITED STATES DISTRICT COURT
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EASTERN DISTRICT OF CALIFORNIA
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1:10-cv-00198-OWW-GSA
BIG SANDY RANCHERIA OF WESTERN
MONO INDIANS, et al.,
Plaintiffs,
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MEMORANDUM DECISION REGARDING
MOTION TO DISMISS (Doc. 7)
v.
BROWNSTONE, LLC,
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Defendant.
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I. INTRODUCTION.
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Big Sandy Rancheria of Western Mono Indians and Big Sandy
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Rancheria Entertainment Authority (“Plaintiffs”) proceed with an
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action
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(“Defendant”).
for
declaratory
relief
against
Brownstone,
LLC
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Defendant filed a motion to dismiss Plaintiffs’ complaint on
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March 2, 2011 under Federal Rule of Civil Procedure 12(b)(3) for
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improper
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interpretation of a forum selection clause.
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first amended complaint (“FAC”) on March 23, 2011.
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Plaintiffs filed opposition to the motion to dismiss on April 4,
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2011.
venue.
7).
The
motion
centers
on
proper
Plaintiffs filed a
(Doc. 8).
(Doc. 9).
II. FACTUAL BACKGROUND.
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(Doc.
Plaintiff
Big
Sandy
Rancheria
1
of
Western
Mono
Indians
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(“Tribe”) is a federally recognized Indian Tribe.
Plaintiff Big
2
Sandy
wholly
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instrumentality of the Tribe organized under Tribal Law as an
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authorized government agency.
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Rancheria
Entertainment
Authority
is
a
owned
On September 10, 1999, the Tribe and the State of California
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executed
and
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(“Compact”) pursuant to the Indian Gaming Regulatory Act (25 U.S.C.
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§ 2701 et seq.) (“IGRA”).
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Interior approved the Compact on May 5, 2000.
sets
entered
forth
into
a
“Tribal-State
Gaming
Compact”
The United States Secretary of the
specific
and
Inter alia, the
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Compact
comprehensive
licensing
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requirements pursuant to which entities designated as “Gaming
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Resource Suppliers” or “Financial Sources” must become licensed by
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the Tribe’s Gaming Agency before providing any services to the
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Tribe. In order to become licensed, an entity must submit a formal
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application from the Tribal Gaming Agency and must also submit to
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a State Certification process with the California Gambling Control
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Commission.
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On May 21, 2002, the Tribe enacted the Big Sandy Rancheria
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Tribal Gaming Ordinance (“Gaming Ordinance”) and adopted the Big
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Sandy Rancheria Tribal Gaming Regulations (“Gaming Regulations”);
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both were approved by the National Indian Gaming Commission on
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November 7, 2002.
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Rancheria Gaming Commission (“Gaming Commission”).
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Commission is responsible for carrying out the Tribe’s regulatory
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responsibilities.
The Gaming Ordinance established the Big Sandy
The Gaming
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On January 16, 2007, the Tribe and Defendant executed a
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“Memorandum of Understanding” (“MOU”) which memorialized their
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attempt to enter into a formal development, financing agreement,
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and
consulting
agreement
for
a
new
casino,
hospitality,
and
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recreational project for the Tribe. Pursuant to the MOU, the Tribe
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was to forego discussion with any entity other than Defendant with
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respect to contracts or agreements related to the development,
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construction, opening, financing, or on-going operation of the
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Tribe’s proposed project.
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advance $40,000.00 to the Tribe pursuant to a Credit Agreement the
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parties intended to enter into at a later date.
The MOU provided that Defendant would
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On or about March 25, 2007, the Tribe and Defendant executed
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two agreements as contemplated by the MOU: (1) a Development
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Agreement; and (2) a Credit Agreement.
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stated that Defendant would provide an array of services to the
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Tribe in connection with its gaming activities.
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be paid a development fee equal to six percent of the total cost of
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the project.
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purports to relieve Defendant from any licensing requirements
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imposed under the IGRA, the Compact, the Gaming Regulations, or the
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Gaming
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exemption provision.
The Development Agreement
Defendant was to
The Development Agreement includes a provision that
Ordinance.
The
Credit
Agreement
includes
a
similar
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The Compact, Gaming Ordinance, and Gaming Regulations require
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Defendant’s licensure in light of the terms and provisions of the
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Development Agreement and the Credit Agreement.
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never applied for or been granted any Tribal Gaming License, nor
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has Defendant ever submitted to a Suitability Determination by the
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California Gambling Control Commission.
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Defendant has
On or about December 10, 2009, the Gaming Commission notified
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Defendant
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Commission
that
it
was
requested
required
that
to
be
Defendant
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licensed.
submit
all
The
Gaming
necessary
1
applications within ten days.
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Defendant responded to the Gaming Commission and asserted that it
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was not subject to licensing requirements pursuant to the exemption
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provisions
entailed
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Agreement.
Defendant also asserted that it did not need to obtain
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any licensing because Defendant did not deem any of its services to
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the tribe to be “Gaming Resources.”
in
the
Approximately thirty days later,
Development
Agreement
and
Credit
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The Gaming Commission reiterated its position in a letter to
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Defendant on February 9, 2010, noting that the contract language
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Defendant sought to rely on conflicted with the express terms of
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the Compact, the Gaming Ordinance, and the Gaming Regulations. The
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Gaming Commission notified Defendant that until it received the
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necessary licenses, Defendant was to refrain from further contact
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with the Tribal Council or the Entertainment Authority.
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On or about July 13, 2010, the Gaming Commission notified the
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Tribe of its “Findings of Regulatory Review of Brownstone, LLC and
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Associated Documents with resulting Business Relationships with the
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Big Sandy Entertainment Authority and the Big Sandy Rancheria Band
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of
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Findings provided that the Gaming Commission determined that the
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Development Agreement and Credit Agreement were “null and void” for
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failure to comply with the Compact, Gaming Ordinance, and Gaming
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Regulations.
Western
Mono
Indians”
(“the
Findings”).
Inter
alia,
the
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On or about July 16, 2010, the Tribe notified Defendant that
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the Development Agreement, Credit Agreement, and the MOU were each
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null and void.
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that the agreements remained in effect and binding.
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responded on September 7, 2010 and reiterated its position, but
Defendant responded on July 22, 2010 and asserted
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The Tribe
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also indicated a willingness to entertain further proposals once
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Defendant complied with applicable licensing provisions. Defendant
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refuses to submit to any licensing requirements and continues to
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demand that the Tribe withdraw its licensing requirements.
III. LEGAL STANDARD.
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Defendant moves to dismiss the complaint on the basis of forum
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selection
clauses
contained
in
the
parties’
agreements.
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Enforcement of a forum selection clause is an appropriate basis for
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a motion to dismiss pursuant to Rule 12(b)(3).
Fed. R. Civ. P.
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12(b)(3); Doe 1 v. AOL LLC, 552 F.3d 1077, 1081 (9th Cir. 2009). In
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adjudicating a motion to dismiss for improper venue under Rule
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12(b)(3), pleadings need not be accepted as true, and facts outside
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the pleadings may be considered.
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interpretation of a forum selection clause under Rule 12(b)(3). Id.
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Forum selection clauses are prima facie valid and should not
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be set aside unless the party challenging enforcement of such a
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provision can show it is "'unreasonable' under the circumstances."
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E.g., Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 325 (9th Cir.
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1996).
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incorporation into the contract was the result of fraud, undue
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influence, or overweening bargaining power; (2) the selected forum
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is so "gravely difficult and inconvenient" that the complaining
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party will "for all practical purposes be deprived of its day in
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court;" or (3) enforcement of the clause would contravene a strong
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public policy of the forum in which the suit is brought. Id.
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(citations omitted).
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///
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///
A
forum
selection
clause
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Id.
is
Federal law applies to
unreasonable
if
(1)
its
IV. DISCUSSION.
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The parties’ agreements each contain sections entitled “Forum
Selection” which provide as follows:
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Each party hereto irrevocably and unconditionally
submits, for itself and its property subject to the
provision in this SECTION 8, to the exclusive
jurisdiction for any claim arising hereunder of (i) the
United States District Court for the Central District of
California (of [sic] if such court determines it is
unwilling or unable to hear any dispute, any other
federal court of competent jurisdiction in the State of
California) (and any court having appellate jurisdiction
thereof) and (ii) if, and only if the federal courts
identified in Section 6.02(I) [sic] determine that they
lack jurisdiction over any claim arising hereunder, the
Superior Court in and for Los Angeles County, California
(of [sic] if such court determines it is unwilling or
unable to hear the dispute, any other state court of
[sic] in the State of California (and any court having
appellate jurisdiction thereof) (collectively, the
“Applicable Courts”)
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(FAC, Ex. K, Development Agreement at 13; Ex. L, Credit Agreement
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at 14).1
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for dismissal under Rule 12(b)(3).
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A. Scope of the Forum Selection Clauses
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Defendant invokes the forum selection clauses as a basis
Plaintiffs contend that their claims for declaratory relief
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are outside the scope of the forum selection clauses.
Plaintiffs
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cite Mediterranean Enters., Inc. v. Ssangyong Corp., 708 F.2d 1458,
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1464 (9th Cir. 1983) and Cedars-Sinai Med. Ctr. v. Global Excel
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Defendant’s motion misquotes the forum selection provisions by substituting the
word “or” in place of the word “of” in two separate clauses. (Doc. 7, Motion to
Dismiss at 3). Although the syntax and apparent purpose of the forum selection
provisions indicate that use of the word “of” instead of “or” was likely a
typographical error (Plaintiffs do not contend otherwise), attorneys do not have
license to substitute words they believe should have been included in a contract
for the words that are actually set forth in the agreement when quoting contract
provisions to a court. At a minimum, typographical errors should be flagged by
including the correct words in brackets, or by use of the term “[sic].”
Presenting an edited contract provision as a direct quote in a pleading is
inappropriate, particularly when an attorney’s edits have a material impact on
the force and effect of the provision.
See Fed. R. Civ. P. 11.
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Mgmt., Inc., 2010 U.S. Dist. LEXIS 139848 *14, 2010 WL 5572079 *5
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(C.D. Cal. 2010) for the proposition that the phrase “any claims
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arising hereunder” only encompasses claims “requiring the court to
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interpret the agreements in the context of...performance under
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them.
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agreements, nor [does it] cover claims having their origin in the
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agreements.”
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Plaintiffs supports this reading of the forum selection clauses
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contained in the Development Agreement and the Credit Agreement.
[It]
does
not
cover
claims
that
merely
(Doc. 9, Opposition at 3).
Neither case cited by
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context
12
hereunder.”
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synonymous with the phrase “arising under the Agreement.” 708 F.2d
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at 1464.
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an
arbitration
Ninth
the
In
of
the
to
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Mediterranean,
relate
Circuit
agreement,
interpreted,
the
phrase
in
the
“arising
The Ninth Circuit interpreted “arising hereunder” as
The Court then examined the scope of that phrase:
The phrase "arising under" has been called "relatively
narrow as arbitration clauses go." Sinva, Inc. v.
Merrill, Lynch, Pierce, Fenner & Smith, Inc., 253 F.
Supp. 359, 364 (S.D.N.Y. 1966). In In re Kinoshita & Co.,
287 F.2d 951, 953 (2d Cir. 1961), Judge Medina concluded
that when an arbitration clause "refers to disputes or
controversies 'under' or 'arising out of' the contract,"
arbitration is restricted to "disputes and controversies
relating to the interpretation of the contract and
matters of performance." Judge Medina reasoned that the
phrase "arising under" is narrower in scope than the
phrase "arising out of or relating to," the standard
language recommended by the American Arbitration
Association. Id.
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Id. (emphasis added).
As Defendant points out, Mediterranean
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establishes that the phrase “arising hereunder” encompasses claims
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“relating to the interpretation...of the contract.”
Id.
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Cedars-Sinai is of no help to Plaintiffs, as it says nothing
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about the meaning of the phrase “arising hereunder.” Cedars-Sinai
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discusses
generally
the
three
categories
7
of
forum
selection
1
clauses:
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First, the most limited forum selection clauses cover
claims "arising under" the relevant agreement.
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Second, an intermediate category is occupied by forum
selection clauses that govern disputes "arising out of or
relating to" the contract. These clauses cover claims
that have a significant relationship to the contract or
have "their origin or genesis" in the contract.
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Third, at the most extreme end of the spectrum, some
forum selection clauses purport to govern "all claims"
without qualification.
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Cedars-Sinai, 2010 U.S. Dist. LEXIS 139848 *14 (citations omitted).
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In discussing the scope of the first and most limited type of forum
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selection clause, Cedars-Sinai cites In re Kinoshita. Id. As noted
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in Mediterranean, Kinoshita holds that the phrase “arising under”
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encompasses
“disputes
and
controversies
relating
to
the
13
interpretation of the contract.”
Mediterranean, 708 F.2d at 1464
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(citing Kinoshita, 287 F.2d at 953).
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The FAC asserts two causes of action, each of which arise under
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the contract as alleged by the FAC’s express terms. The FAC’s first
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cause
of
action
alleges
“there
is
an
actual
and
justiciable
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controversy relating to the legal rights and duties of Plaintiffs
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and Defendant under the Development Agreement.”
(FAC at 22).
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Similarly, the second cause of action alleges “there is an actual
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and justiciable controversy relating to the legal rights and duties
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of Plaintiffs and Defendant under the Credit Agreement.”
(FAC at
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22).
Inter alia, the FAC seeks a declaration from the court that
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“the two agreements...impermissibly encumber Indian lands.”
(FAC
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at 2).
It cannot be denied that the FAC calls on the court to
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interpret the parties’ agreements respecting the need for a license.
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Absent interpretation of the parties’ respective rights and duties
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1 under the contract, Plaintiffs’ claims cannot be adjudicated.
2 Plaintiffs’ claims for relief fall within the ambit of the forum
3 selection clauses. See, e.g., Mediterranean, 708 F.2d at 1464
4 (holding
that
phrase
“arising
hereunder”
covers
disputes
and
5 controversies “relating to the interpretation of the contract”)
6 (citing Kinoshita, 287 F.2d at 953).
7 B. Exclusivity Entailed by the Forum Selection Clauses
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Plaintiffs
contend
that
the
9 permissive, rather than mandatory.
forum
selection
(Opposition at 6).
clauses
are
Plaintiffs
10 argue that the language of the forum selection clauses does not
11 establish exclusive jurisdiction in the United States District Court
12 for the Central District of California, because the forum selection
13 clauses contemplate jurisdiction in other California courts.
14 Plaintiffs’ argument misses the mark.
That the forum selection
15 clause does not establish the Central District as the only possible
16 venue for litigation does not provide for alternative fora. A forum
17 selection clause, like any other contractual agreement, must be
18 construed and enforced according to the plain meaning of its terms.
19 E.g., Hunt Wesson Foods, Inc. v. Supreme Oil Co., 817 F.2d 75, 77
20 (9 th Cir. 1987) (noting that plain meaning must be afforded to
21 words contained in a forum selection provision).
Here, the forum
22 selection clauses specifically state that the forum of first resort
23 for claims arising under the parties agreements is the United State
24 District Court for the Central District of California.
Plaintiffs
25 do not contend otherwise.
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Plaintiffs’
citations
to
Northern
Cal.
Dist.
Council
of
27 Laborers v. Pittsburg-Des Moines Steel Co., 69 F.3d 1034, 1037 (9th
28 Cir. 1995) and Krish v. Balasubramaniam, 2006 U.S. Dist. LEXIS 76194
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1 * 14-16 (E.D. Cal. 2007) are of no avail, as neither case involved
2 forum selection clauses similar to the parties’ agreements.
The
3 forum selection clause in Pittsburg-Des Moines Steel Co. “mandate[d]
4 nothing more than that the Orange County courts have jurisdiction.”
5 69 F.3d at 1037.
In Krish, the court acknowledged that, in order
6 to justify dismissal under Rule 12(b)(3), “[a] forum selection
7 clause needs to contain additional language mandating that venue be
8 in a particular place.”
2006 U.S. Dist. LEXIS 76194 * 14.
The
9 subject forum selection agreements contain language mandating that
10 suit must first be brought in the Central District; only if that
11 court “determines it is unwilling or unable to hear any dispute” is
12 suit in another district appropriate.
(FAC, Ex. K, Development
13 Agreement at 13; Ex. L, Credit Agreement at 14).
14 C. Remedy
Plaintiffs request that this case be transferred rather than
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16 dismissed, and Defendant does not oppose transfer of this case to
17 the Central District.
(Reply at 4).
The court finds that a
18 transfer, as opposed to a dismissal, is in the interest of justice.
ORDER
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For the reasons stated, this case is TRANSFERRED to the United
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21 States District Court for the Central District of California, Los
22 Angeles Division.
23 IT IS SO ORDERED.
24 Dated:
hkh80h
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April 20, 2011
/s/ Oliver W. Wanger
UNITED STATES DISTRICT JUDGE
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