BlueEarth Biofuels LLC v. Hawaiian Electric Company Inc et al
Memorandum Opinion and Order granting 4 , 7 , 11 , 32 , 35 Defendants' Motion to Transfer. This case is transferred to the District of Hawaii pursuant to 28 USC Section 1404(a). (see order) (Ordered by Magistrate Judge Jeff Kaplan on 4/3/2009) (axm) . [Transferred from Texas Northern on 4/22/2009.]
IN THE LINITEDSTATESDISTRICTCOURT N O R T H E R NDISTRICTOF TEXAS D A L L A S DIVISION LLC B L U E E A R T HBIOFUELS"
Plaintiff, VS. H A W A I I A N ELECTRIC COMPANY. I N C . . ET AL. Defendants.
$ $ $ $ $ $ $ $ $ $
OPINION AND ORDER
Defendants Hawaiian Electric Company, Inc. ("HECO"), Maui Electric Company, Ltd. ( " M E C O " ) , andKarl E. Stahlkopf("Stahlkopf'), collectivelyrefenedto asthe "HECO Defendants," motions to transferthis diversity and DefendantAloha Petroleum,Ltd. ("Aloha") havefiled separate action to a federal district court in Hawaii. For the reasonsstatedherein, the motions are granted. I. I n March 2006,Plaintiff BlueEarthBiofuels,LLC ("BlueEarth"),aNevada limited liability company headquarteredin Texas, entered into negotiations with HECO and its wholly-owned s u b s i d i a r y ,MECO, for the joint developmentof a biodieselproduction facility on the Hawaiian i s l a n d of Maui ("the Maui Project"). (HECO App. at 2, n q. During the course of those
n e g o t i a t i o n s , plaintiff entered into separateMutual Non-Circumvention and Non-Disclosure ofconfidential information ("NDAs") with HECO andMECO to facilitatetheexchange Agreements asthe partiesworked toward their mutual goal of developing "renewableenergyopportunities." (Id. a t 2 , \ 5; see alsoPlf. First Am. Compl.,Exhs.A & B). The NDAs prohibitedthe partiesfrom, inter alia,disclosing confidential information to third parties,using confidential information forpurposes
umelatedto the Maui Project,and soliciting or accepting business from sources madeavailableby (Plf.First.Am.Compl.,Exh.Aatl,3&Exh. theotherpartywithoutexpresswrittenauthorization. B at l, 3). After months of additional negotiations,plaintifl HECO, and MECO executeda Memorandum of Understanding ("the Project Agreement") outlining the responsibilities of each party in developing the Maui Project, including the mutual obligation to work exclusively with one another in good faith to finalize an investment agreement,to develop the site of the biodiesel 6 production facility, and to negotiatean acceptable tolling agreement. (HECO App. at 2,11 & 9,'lT'17 1 - 3 ) . Karl E. Stahlkopf signedboth the NDA and the ProjectAgreementin his capacityas Senior of V i c e - P r e s i d e n t HECO. (ld. at 12; Plf. First Am. Compl., Exh. A at 4). Aloha aboutoperatinga fuel storagefacility that would In August 2007, plaintiff approached 5, supportfor the Maui Project. (Aloha App. at 3-4, fltT 7). To p r o v i d e logisticaland transportation plaintiff and Aloha enteredinto a Mutual Non-DisclosureAgreement f a c i l i t a t e their discussions, which, like the NDAs with HECO and MECO, prohibited the parties from disclosing confidential information to third parties and using confidential information for purposesunrelatedto the project. (See id. at 18-21). After the agreementwas signed, plaintiff introduced Aloha to MECO as a p o t e n t i a l operatorof the fuel storagefacility. (SeePlf. First Am. Compl. at 12,n29). An Aloha by then traveledto Iowa to visit a biodieselproductionfacility operated NewMech representative Inc. ("NewMech") that was similar to the facility plannedfor Maui. (Aloha App. at 9, Companies, into yet anotherconfidentiality t T l T 3 5 - 3 6 )Prior to that visit, plaintiff, Aloha, andNewMech entered . agreement to protect the disclosure of confidential information and to prevent one party from from clients of anotherparty("the Aloha NDA"). (Plf. First Am. Compl., Exh. s o l i c i t i n g business
The eventsgiving rise to this suit startedto unfold aroundthe time Aloha visited NewMech. According to plaintiff, the HECO Defendantsceasedall efforts to negotiate an acceptabletolling agreementwith investorsand refusedto work in good faith with plaintiff to jointly develop the Maui P r o j e c t . (Plf. First Am. Compl. at 13,nn 32-34 & l4-l5,ll 38). Instead,the HECO Defendants allegedly promised Aloha a key investment role in the project and the opportunity to purchase p l a i n t i f f s majority interest. (Id. at13-14,fl 35). Plaintiff further alleges that the HECO Defendants and Aloha violated their respective confidentiality agreementsby disparaging plaintiff, by using and by soliciting plaintiff s clients. (Id. at l4-l5 , confidential information for unauthorizedpurposes,
and Aloha. In O n October6, 2008,plaintiff filed this lawsuit againstthe HECO Defendants part "all or a substantial i t s complaint,plaintiff allegesthat venueis proper in this district because o f the eventsor omissionsgiving rise to the claimsoccurredwithin the Northern District of Texas," executedby the partiesprovide for jurisdiction and venue and the various confidentiality agreements now all i n this forum. (Id. at6, fl I l). Defendants, of whom residein Hawaii for venuepurposes, m o v e to transferthis caseto the District of Hawaii.' The transfermotions have beenfully briefed by the parties and are ripe for determination. il. T h e court begins its analysisby examiningthe relevantvenue statute. Under 28 U.S.C. $ l 3 9 l ( a ) , a civil action wherein jurisdiction is founded only on diversity of citizenship must be
I The venue issuehas been raised in at leastfour motions filed by defendants, including: (l) Aloha's Rule and Rule l2(bX3) motion to dismissfor impropervenueor, l 2 ( b ) ( 2 ) motion to dismissfor lack of personaljurisdiction Rule a l t e r n a t i v e l y ,motion to transfervenue pursuantto 28 U,S.C. $ la0a(a) (Doc. #4); (2) the HECO Defendants' jurisdiction and Rule 12(bX3)motion to dismissfor impropervenueor, l 2 ( b ) ( 2 ) motion to dismissfor lack of personal a l t e r n a t i v e l y ,motion to transfer venue pursuantto 28 U.S.C. $ la0a(a) (Docs. #7 & ll); (3) Aloha's motion for i m m e d i a t etransfer of venue pursuantto 28 U.S.C. $ la0a(a) (Doc. #32); and (4) the HECO Defendants'motionto t r a n s f e rvenuepursuantto 28 U.S.C. $ 1a0a(a)(Doc. #35). Only the section 1404(a)motionshavebeenreferredto the judge for determination.(SeeDoc. #46). magistrate
resides, all defendants if residein the same brought in: (l) a judicial district where any defendant part of the eventsor omissionsgiving rise to the S t a t e ;(2) a judicial district in which a substantial claim occuned, or a substantialpart of the property that is the subjectof the action is situated;or (3) a judicial district in which any defendantis subjectto personaljurisdiction at the time the action is commenced,if there is no district in which the action may otherwise be brought. Plaintiff doesnot allege that any of the defendantsresidein the Northern District of Texas. Nor is there any evidence that all or a substantialpart of the eventsor omissionsgiving rise to plaintiff s claims occurredwithin this district. Instead, plaintiff argues that all parties contractually agreedto litigate any dispute involving the Maui Project in a Texas federal court. In particular, plaintiff relies on a forum s e l e c t i o nclausein the Aloha NDA, which provides: Jurisdiction in any action brought in any court, federal or state,shall residewithin the Stateof domicile of the party aggrieved,in any such c o u r thavingsubjectmatterjurisdictionarisingunderthis Agreement. states: ( / d , Exh. D at2,lT 8). A similar provision in the HECO and MECO agreements This Agreement is hereto enforceablein any United Statescourt as t h e exclusivevenue. that this actionshouldbe transferred counter ( I d . , E x h A at3,n7 &Exh. B at 3, !f 7). Defendants provide for mandatoryvenue in Texas, and Hawaii is a to Hawaii becausenone of the agreements more convenient forum for the parties and witnesses. A. F o r u m selectionclausesmay be classifiedeither as mandatory or pennissive. See Von contains G r a f f e n r e i d v. Craig,246 F.Supp.2d553,560 (N.D. Tex. 2003). Where the agreement forum, the clauseis mandatory. clear languageshowing that venueis appropriateonly in a designated jurisdiction or S e e id. (citing cases). By contrast,a permissiveforum selectionclauseauthorizes
venue in a designatedforum, but doesnot prohibit litigation elsewhere. Seeid. (citing cases). It is important to distinguish betweenjurisdiction and venuewhen interpreting a forum selectionclause. for " A l t h o u g h it is not necessary sucha clauseto use the word'venue'or'forum,' it must do more than establish that one forum will have jurisdiction." City of New Orleans v. Municipal
1396(2005). AdministrativeServices,Inc.,376F.3d50l,504(5thCir.2004),cert.denied,l25S.Ct. No. 6-07-CV-282, 2008 WL S e ealso Interactive Music Technologt,LLC v. Roland Corp. U.,S., wi#z 2 4 5 1 4 2at * 3 (8.D. Tex. Jan.29,2008) (" [W]here venueis specifiedin a forum selectionclause mandatory or obligatory language. the clause will be enforced, while where only jurisdiction is specified, the clause will generally not be enforced without some further language indicating the parties' intent to make venue exclusive.") (emphasisin original). at N o n e of the agreements issueprovide for exclusive venue in the Northern District of Texas. In fact, the Aloha NDA does not mention venue at all. Rather, the agreementstatesthat " [jJurisdiction in any action brought in any court, federal or state,shall reside within the State of d o m i c i l e of the pafi aggrieved[.]" (Plf. First Am. Compl., Exh. D at2, fl 8) (emphasisadded). court, provide for "exclusivevenue"in any United States W h i l e the HECO and MECO agreements identifiesthe Northern District of ( s e eid.,Exh. A at 3, $ 7 & Exh. B at 3, fl 7), neitheragreement Texas as the preferred forum for litigating disputesinvolving the Maui Project. The plain language o f this forum selectionclausepermits litigation in any federal district court, including Hawaii. contain clear languageshowing that venue is appropriateonly in Becausenone of the agreements Texas, the forum selectionclausesare permissive,not mandatory. SeeBBC Chartering & Logistic .2d WindPowerA/5,546 F.Supp 437 G m b H & Co. K.G. v. Siemens ,442-43 (S.D. Tex. 2008)(forum s e l e c t i o nclauseproviding that parfy may bring suit in "anyjurisdiction" was permissive).
B. Having determinedthat the parties are not contractually obligated to litigate this dispute in T e x a s ,the court must decidewhetherto transferthe actionto Hawaii. Under 28 U.S.C. $ 1404(a): in F o r the convenience partiesandwitnesses, the interestofjustice, of may transfer any civil action to any other district or a district court d i v i s i o n where it might have beenbrought. The purpose of this statute is "to prevent the waste of time, energy, and money and to protect and inconvenience expense."DataTreasury unnecessary l i t i g a n t s ,witnesses, the public against and .2d C o r p . v. First Data Corp.,243 F.Supp 591,593(N.D. Tex. 2003), quotingAndradev. Choinacki, .817 , S32(S.D. Tex. 1996). In ruling on a motion to transfervenue,the court first must 9 3 4 F.Supp determinewhether the plaintiff s claim could have beenfiled in the judicial district to which transfer of i s sought. In re Volkswagen America,lnc.,545 F.3d 304, 312 (5th Cir. 2008) (enbanc),cert. must show district,the defendant d e n i e d , l 2 9 S.Ct. 1336(2009). If venueis properin the transferee "good cause" for the transfer. Id. at 315. To show "good cause,"the defendantmust satis$ the that a transferis " [f]or the convenienceofparties and statutoryrequirementsand clearly demonstrate w i t n e s s e s ,in the interestofjustice." ./d If the defendantcannotmeet this burden,the plaintiffs c h o i c e of forum should be respected. Id.; see also DoubletreePqrtners, L.P. v. Land America at WL 5119599 *4 QII.D.Tex. Dec. 3, 2008). A m e r i c a n Title Co.,No. 3-08-CV-1547-O,2008 I n deciding a transfermotion, the court must considervarious private and public interest F.3d at 315. The private interestfactors are: (1) the relative ease f a c t o r s . In re Voll
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