Safe2Core, Inc. v. HCMM, Inc. et al

Filing 19

ORDER GRANTING MOTION TO DISMISS FOR FORUM NON CONVENIENS. Re: Dkt. No. 6 . Signed by Judge Nathanael Cousins. (lhS, COURT STAFF) (Filed on 9/20/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAFE2CORE, INC.,
Plaintiff,

United States District Court
Northern District of California

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v.
HCMM, INC., et al.,
Defendants.

Case No. 17-cv-02945 NC
ORDER GRANTING MOTION TO
DISMISS FOR FORUM NON
CONVENIENS
Re: Dkt. No. 6

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Plaintiff Safe2Core, Inc. brings this breach of contract action against defendant

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HCMM, Inc., a business consulting firm. HCMM initially moved to dismiss Safe2Core’s

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complaint because it was filed in an improper venue. However, the Court converted

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HCMM’s improperly filed motion to dismiss for improper venue into a forum non

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conveniens motion. Dkt. No. 16. The Court gave Safe2Core the opportunity to respond to

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the conversion of the motion, and Safe2Core filed a supplemental brief. Id.

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The Court reviewed all of the filings by HCMM and Safe2Core and GRANTS

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HCMM’s forum non conveniens motion. This case is DISMISSED WITHOUT

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PREJUDICE to it being refiled in the Hamilton County Court of Common Pleas,

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Cincinnati, Ohio.

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Case No. 17-cv-02945 NC

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I.

BACKGROUND
This case arose from a contract between Safe2Core and HCMM for HCMM to

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provide Safe2Core with its business consulting services. Dkt. No. 1 at 3. The contract

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contained the following forum selection clause: “it is specifically agreed that, in the event

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of litigation, exclusive jurisdiction shall vest in the Hamilton County Court of Common

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Pleas, Cincinnati, Ohio; Ohio law applying.” Id. at 6. Safe2Core alleges that HCMM did

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not complete the work and provide the services promised in the contract. Dkt. No. 1 at 4.

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Safe2Core then terminated the agreement with HCMM, and demanded HCMM return the

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$78,548.83 Safe2Core had paid it. Id. at 4-5. Safe2Core then filed this lawsuit for (1)

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intentional misrepresentation, (2) negligent misrepresentation, (3) concealment, and (4)

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United States District Court
Northern District of California

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breach of contract.
Both parties consented to the jurisdiction of a magistrate judge under 28 U.S.C. §

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636(c). Dkt. Nos. 11, 12.

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II.

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LEGAL STANDARD
“[T]he appropriate way to enforce a forum-selection clause pointing to a state or

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foreign forum is through the doctrine of forum non conveniens.” Atlantic Marine Const.

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Co. Inc. v. U.S. Dist. Court, 134 S. Ct. 568, 580 (2013).

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Forum non conveniens allows a court to decline to exercise its jurisdiction in cases

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where litigation in the forum would place an undue burden upon one of the parties. Forum

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non conveniens is an “exceptional tool to be used sparingly[.]” Ravelo Monegro v. Rosa,

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211 F.3d 509, 514 (9th Cir. 2000). Yet the forum non conveniens determination ultimately

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lies in the court’s discretion. Lueck v. Sundstrand Corp., 236 F.3d 1137, 1143 (9th Cir.

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2001). It is the moving party’s burden to make “a clear showing of facts which establish

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such oppression and vexation of a defendant as to be out of proportion to plaintiff's

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convenience, which may be shown to be slight or nonexistent.” Ravelo, 211 F.3d at 514.

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“A party moving to dismiss based on forum non conveniens bears the burden of showing

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(1) that there is an adequate alternative forum, and (2) that the balance of private and

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public interest factors favors dismissal.” Dole Food Co., Inc. v. Watts, 303 F.3d 1104 (9th
Case No. 17-cv-02945 NC

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Cir. 2002).
“In a typical case not involving a forum-selection clause, a district court

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considering a § 1404(a) motion (or a forum non conveniens motion) must evaluate both the

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convenience of the parties and various public-interest considerations.” Atlantic Marine,

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134 S. Ct. at 581. “The calculus changes, however, when the parties’ contract contains a

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valid forum-selection clause, which ‘represents the parties’ agreement as to the most

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proper forum.’” Id. (quoting Stewart Org. Inc. v. Ricoh Corp., 487 U.S. 22, 31 (1988)).

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Where there is a valid forum selection clause, the court’s usual forum non

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conveniens analysis changes in three ways. Id. First, the court may accord no weight to
the plaintiff’s chosen forum; “the plaintiff must bear the burden of showing why the court

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United States District Court
Northern District of California

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should not transfer the case to the forum to which the parties agreed.” Id. at 581-82.

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“Second, a court evaluating a defendant’s § 1404(a) motion to transfer based on a forum-

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selection clause should not consider arguments about the parties’ private interests.” Id. at

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582. The public interest factors that a court may consider are “the administrative

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difficulties flowing from court congestion; the local interest in having localized

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controversies decided at home; [and] the interest in having the trial of a diversity case in a

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forum that is at home with the law. The Court must also give some weight to the

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plaintiffs’ choice of forum.” Id. (quoting Piper Aircraft, 454 U.S. at 241 n.6) (alteration in

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original).

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The party challenging the forum selection clause must show that the “public-interest

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factors overwhelmingly disfavor a transfer.” Id. at 583. “In all but the most unusual cases,

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therefore, ‘the interest of justice’ is served by holding parties to their bargain.” Id.

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III. DISCUSSION

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A.

The Forum Selection Clause Is Enforceable.

The heart of Safe2Core’s opposition to HCMM’s forum non conveniens motion

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Case No. 17-cv-02945 NC

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concerns the enforceability of the forum selection clause. 1 This is because if the clause is

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invalid and therefore unenforceable, the burden shifting analysis in Atlantic Marine does

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not apply. 134 S. Ct. at 581. In its supplemental brief in response to the motion,

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Safe2Core apparently concedes that if the Atlantic Marine factors were applied, the motion

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to transfer would have to be granted. Dkt. No. 17.

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Forum selection clauses “are prima facie valid and should be enforced unless

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enforcement is shown by the resisting party to be ‘unreasonable’ under the circumstances.”

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The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972). Such unreasonable

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circumstances include the following:

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(1) [The forum selection clause’s] incorporation into the
contract was the result of fraud, undue influence, or
overweening bargaining power; (2) the selected forum is so
gravely difficult and inconvenient that the complaining party
will for all practical purposes be deprived of its day in court; or
(3) enforcement of the clause would contravene a strong public
policy of the forum in which the suit is brought.

United States District Court
Northern District of California

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Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 325 (9th Cir. 1996) (internal citations and

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quotation marks omitted).
Here, the Court is unpersuaded that the forum selection clause was incorporated

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into the contract as a result of fraud, undue influence, or overweening bargaining power.

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Id. Safe2Core argues that it was induced into entering into the underlying contract by

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fraud, but this argument does not go to whether the forum selection clause was agreed to as

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Safe2Core argues that the forum selection clause is actually a venue selection clause, and
so a forum non conveniens motion is inappropriate. Dkt. No. 17 at 5. The Court finds this
argument unpersuasive. Safe2Core quotes language in Alexander v. Superior Court, a case
in which the clause at issue was explicitly a state county venue selection clause. 114 Cal.
App. 4th 723, 726-27 (2003) (“4.12 Choice of Law: The construction, interpretation, and
performance of this Agreement shall be governed by the laws of the State of California and
each party specifically stipulates to venue in Santa Clara County, California.” (emphasis
added)). That is not the case here, and law regarding venue shopping in California in
contravention with California state law has nothing to do with a forum selection clause
specifying Ohio as the forum state, and also specifying the county in which the case must
be brought. Safe2Core cannot change the fact that Ohio, of which Hamilton County is a
part, is “a place of jurisdiction.” Forum, BLACK’S LAW DICTIONARY (9th ed. 2009).
Because the clause at issue here is a forum selection clause, “[a] contractual provision in
which the parties establish the place (such as the country, state, or type of court) for
specified litigation between them[,]” the reasoning in Alexander is irrelevant here. Forumselection clause, BLACK’S LAW DICTIONARY (9th ed. 2009).
Case No. 17-cv-02945 NC
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a result of fraud. Id. Safe2Core’s vaguely made allegations regarding duress regarding the

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underlying contract are likewise irrelevant here. Dkt. No. 14 at 6. Safe2Core further

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asserts that the forum selection clause is “crudely-drafted, arguably a grammatically

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unintelligible sentence.” Id. The Court had no such difficulty discerning the clause’s

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meaning on its first reading. Safe2Core’s fraud arguments go towards the other clauses in

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the contract, not to the forum selection clause. 2 This element weighs towards HCMM.

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Safe2Core does not address the second and third elements set forth in Argueta, either in its

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opposition, or in its supplemental brief, except to point out that Cincinnati is 2,500 miles

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away. The Court considers waived any other argument regarding the inconvenience of the
Ohio court or arguments regarding the public policy of California. Argueta, 87 F.3d at

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United States District Court
Northern District of California

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325.
Given that the Argueta factors weigh in favor of finding the forum selection clause

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enforceable, the Court next considers Atlantic Marine.

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B.

The Public Interest Factors Weigh In Favor of HCMM.

The pleadings by both parties are barren of substantive analysis of the Atlantic

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Marine factors. This failure to set forth arguments prejudices Safe2Core, as it is

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Safe2Core’s burden to show why the forum selection clause should not be enforced.
The public interest factors the Court may consider are “‘the administrative

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difficulties flowing from court congestion; the local interest in having localized

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controversies decided at home; [and] the interest in having the trial of a diversity case in a

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forum that is at home with the law.’ The Court must also give some weight to the

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plaintiffs’ choice of forum.” Atlantic Marine, 134 S. Ct. at 581 n.6 (quoting Piper

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In its supplemental brief, Safe2Core argues the Court should reject the forum selection
clause because it was part of an adhesion contract under California law. Dkt. No. 17 at 45. Safe2Core also argues the Court should apply California law to the interpretation of the
contract. Based on the language of the forum selection clause, however, the Court
disagrees. Yet even applying California law, the forum selection clause would be
enforceable, as HCMM points out. Tompkins v. 23andMe, Inc., 840 F.3d 1016, 1028 (9th
Cir. 2016) (collecting California state court cases). Safe2Core’s authorities do not stand
for the proposition that forum selection clauses in adhesion contracts are never
enforceable, and its argument lacks factual allegations regarding this issue.
Case No. 17-cv-02945 NC
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Aircraft, 454 U.S. 235, 241 n.6). The party challenging the forum selection clause must

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show that the “public-interest factors overwhelmingly disfavor a transfer.” Id. at 583.

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Safe2Core did not brief these factors, but the Court will consider them. First, the

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Court is unfamiliar with Ohio law, which it would have to apply to interpret the contract.

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Id. at 581 n.6. Further, the Court, like all courts in this district, is busy with many matters.

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Second, the events in this case occurred in this district, so this factor weighs in favor of

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retaining the case. Id. The third factor, the interest in having the case decided in a forum

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that is at home with the law suggests that this case should be heard in Ohio, because the

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contract will be construed in accordance with Ohio state law. Id. All of Safe2Core’s
claims are state law claims. Fourth, Safe2Core’s choice in filing this case here is a reason

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United States District Court
Northern District of California

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to keep this case in the Northern District of California. Id. In weighing these factors, the

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Court finds they are insufficient to overwhelmingly disfavor granting HCMM’s motion.

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Id. at 583. Thus, HCMM’s forum non conveniens motion is GRANTED.

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Lastly, the Court notes an issue that neither party briefed: the clause’s limitation of

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lawsuits filed under the contract to Ohio state court. Under Ninth Circuit law, such a

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limitation is permissible. See Doe 1 v. AOL LLC, 552 F.3d 1077, 1081-82 (9th Cir. 2009)

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(“We hold that the forum selection clause at issue here—designating the courts of

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Virginia—means the state courts of Virginia only; it does not also refer to federal courts in

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Virginia”). As a result, rather than transfer this case to an Ohio federal court, the Court

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dismisses this case without prejudice to refiling in Ohio state court.

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IV. CONCLUSION

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The Court GRANTS HCMM’s motion and DISMISSES this case WITHOUT

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PREJUDICE to it being refiled in the Hamilton County Court of Common Pleas,

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Cincinnati, Ohio.

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IT IS SO ORDERED.

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Dated: September 20, 2017

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Case No. 17-cv-02945 NC

_____________________________________
NATHANAEL M. COUSINS
United States Magistrate Judge
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