Sawch v. Life Technologies Corporation

Filing 35

ORDER: Defendants Motion to Dismiss (Doc. No. 11) is hereby GRANTED. It is so ordered. Signed by Judge Alvin W. Thompson on 9/18/2012. (Sykes, J.)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
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WILLIAM B. SAWCH,
:
:
Plaintiff,
:
:
v.
:
:
LIFE TECHNOLOGIES CORPORATION,
:
:
Defendant.
:
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Civil Action No.
3:11CV1359 (AWT)

ORDER RE MOTION TO DISMISS
For the reasons set forth below, the defendant's motion to dismiss
is being granted.

This case is being dismissed pursuant to Federal Rule

of Civil Procedure 12(b)(3).
Legal Standard
In deciding a Rule 12(b)(3) motion to dismiss based on improper
venue, “[t]he court must take all allegations in the complaint as true,
unless contradicted by the defendants’ affidavits, and [w]hen an
allegation is so challenged [a] court may examine facts outside the
complaint to determine whether venue is proper.”

Indymac Mortgage

Holdings, Inc. v. Reyad, 167 F. Supp. 2d 222, 237 (D. Conn. 2001)
(internal quotation marks and citation omitted).

Furthermore, “[t]he

court must draw all reasonable inferences and resolve all factual
conflicts in favor of the plaintiff,” who has “the burden of showing
that venue in the forum is proper.”

Id.

If the venue is not proper,

the district court “shall dismiss, or if it be in the interest of
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justice, transfer such case to any district or division in which it could
have been brought.”

28 U.S.C. § 1406(a).

“Whether dismissal or

transfer is appropriate lies within the sound discretion of the district
court.”

Minnette v. Time Warner, 997 F.2d 1023, 1026 (2d Cir. 1993).
Discussion

In deciding whether an action should be dismissed based on a forum
selection clause, the Second Circuit has used a four-part analysis.
The first inquiry is whether the clause was reasonably
communicated to the party resisting enforcement. See, e.g.,
D.H. Blair & Co. v. Gottdiener, 462 F.3d 95, 103 (2d Cir. 2006).
The second step requires us to classify the clause as mandatory
or permissive, i.e., to decide whether the parties are required
to bring any dispute to the designated forum or simply permitted
to do so. See John Boutari & Son, Wines & Spirits, S.A. v. Attiki
Imps. & Distribs. Inc., 22 F.3d 51, 53 (2d Cir. 1994). Part three
asks whether the claims and parties involved in the suit are
subject to the forum selection clause. See, e.g., Roby v. Corp.
of Lloyd’s, 996 F.2d 1353, 1358–61 (2d Cir. 1993).
If the forum clause was communicated to the resisting party,
has mandatory force and covers the claims and parties involved in
the dispute, it is presumptively enforceable. See id. at 1362–63.
The fourth, and final, step is to ascertain whether the resisting
party has rebutted the presumption of enforceability by making a
sufficiently strong showing that ‘‘enforcement would be
unreasonable or unjust, or that the clause was invalid for such
reasons as fraud or overreaching.’’
M/S Bremen v. Zapata
Off–Shore Co., 407 U.S. 1, 15, 92 S.Ct.
1907, 32 L.Ed.2d 513 (1972) (establishing federal standard
relating to enforcement of forum clauses applicable in admiralty
and international transactions); see Bense v. Interstate Battery
Sys. of Am., Inc., 683 F.2d 718, 721 (2d Cir. 1982) (applying Bremen
standard to contractual dispute between domestic parties in
non-admiralty context).
Phillips v. Audio Active Ltd., 494 F.3d 378, 383–84 (2d Cir. 2007).
As to the first step in the analysis, the plaintiff argues that
he “had no direct knowledge of the forum selection provision.” (Pl.’s
Mem. Opp’n at 7.)

However, in making that argument the plaintiff relies
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on paragraph 8 of his affidavit, which reads as follows:
I generally was familiar with the terms of the Merger Agreement,
but I had little direct involvement in the drafting and negotiation
of most of its terms due to extensive responsibilities exceeding
that agreement. Members of my staff and outside counsel had
primary responsibility for the Merger Agreement, involving me only
with respect to specific issues in dispute or of particular
consequence.
(Pl.’s Mem. Opp’n Ex. 1, at 2.)

Thus, although the plaintiff had little

direct involvement in the drafting and negotiating of most of the terms
of the Merger Agreement, he had some direct involvement in the drafting
and negotiating of some of the terms, apparently the most significant
issues, and he was generally familiar with the terms of the Merger
Agreement.

Therefore, the court concludes that the forum selection

clause was reasonably communicated to the plaintiff.
As to the second step in the analysis, the language in section
8.5(c) of the Merger Agreement is mandatory, not permissive, in nature.
As to the third step in the analysis, both the claims and the
parties involved in this action are subject to the forum selection
clause.

With respect to the claims, the first two sentences in the

forum selection clause make it clear that it is intended to cover
provisions of the Merger Agreement, and the claim in this action is
directly related to section 5.7(g) of the Merger Agreement.
As to whether the parties are subject to the forum selection
clause, “where the alleged conduct of the nonparties is closely related
to the contractual relationship, ‘a range of transaction participants,
parties and non-parties, should benefit from and be subject to forum
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selection clauses.’”

BNY AIS Nominees Ltd. v. Quan, 609 F. Supp. 2d

269, 275 (D. Conn. 2009).

“The determination as to whether the

closely-related test has been satisfied is one that requires an inquiry
that is highly fact-specific.”

Id.

Here the court concludes that the

closely-related test is satisfied with respect to the plaintiff, who
was not a party to the Merger Agreement, based on three factors, each
of which is discussed in BNY AIS Nominees.

First, as alleged in

paragraph 10 of the complaint, the plaintiff is a third-party
beneficiary of the Merger Agreement.

See Compl. ¶ 10.

Second,

“[o]fficers of a corporate signatory can also satisfy the
closely-related test.”

BNY AIS Nominees, 609 F. Supp. 2d at 275.

A

chief financial officer has been found to satisfy the closely-related
test.

See id. at 275-76.

Here the defendant was the general counsel

and that position is comparable to the position of chief financial
officer for the purposes of the closely-related test.

Third, the

principle of mutuality, i.e., whether the plaintiff would be entitled
to enforce the forum selection clause against the defendant, is a useful
factor is assessing whether the closely-related test is satisfied.
Here if the plaintiff were seeking a determination by some group other
than the Continuing Company Directors and the defendant brought suit,
in a court other than a federal or state court sitting in the state of
Delaware, against the plaintiff seeking to enforce the provisions of
section 5.7(g) of the Merger Agreement, the plaintiff would be able to
enforce the forum selection clause against the defendant.
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The plaintiff argues that the Merger Agreement makes “Plaintiff
a beneficiary of two specific contract sections, but explicitly does
not bind Plaintiff to any right, benefit or remedy in any other section
-- including Section 8.5.”

(Pl.’s Mem. Opp’n at 8.)

However, it is

not necessary that section 8.5 of the Merger Agreement explicitly bind
the plaintiff because the plaintiff is subject to the forum selection
clause in section 8.5 under controlling case law pursuant to the
closely-related test.
For the reasons discussed above, the forum selection clause is
presumptively enforceable.

The plaintiff has failed to rebut the

presumption of enforceability by showing that enforcement would be
unreasonable or unjust or that the clause is invalid for reasons such
as fraud or overreaching.

The plaintiff argues that the forum

selection clause should not be enforced because the defendant
repudiated and materially breached the Merger Agreement.

However, the

court finds this argument unpersuasive because it would allow any party
resisting enforcement of a forum selection clause to simply “plead
around” the forum selection clause.

KTV Media Intern, Inc. v. Galaxy

Grp., 812 F. Supp. 2d 377, 387 (S.D.N.Y. 2011).
The court has the discretion under 28 U.S.C. § 1406(a) to transfer
this case to the District of Delaware.
a transfer is not appropriate.

The court concludes that such

The relief sought by the plaintiff is

all related to the failure of the Continuing Company Directors to
resolve the dispute with respect to post-termination benefits, and the
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defendant’s failure to timely submit the dispute to the Continuing
Company Directors.

However, after this action was filed, the defendant

took the initiative to have the Continuing Company Directors perform
their obligations under section 5.7(g) of the Merger Agreement,
although it suspended that activity pending the resolution of the
instant motion.

In addition, the plaintiff filed a statement of claim

with the American Arbitration Association based on the arbitration
clause in the Employment Agreement.

Thus, a transfer would not be in

the interest of judicial economy.
The court notes that it has considered the defendant’s arguments
in support of its position that this case should be dismissed pursuant
to Federal Rule of Civil Procedure 12(b)(6) and finds them unpersuasive.
Thus, those arguments have not been a factor in the court’s conclusion
that the case should be dismissed as opposed to transferred.
Conclusion
For the reasons set forth above, Defendant’s Motion to Dismiss
(Doc. No. 11) is hereby GRANTED.

The Clerk shall close this case.

It is so ordered.
Dated this 18th day of September 2012, at Hartford, Connecticut.
/s/
Alvin W. Thompson
United States District Judge

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