Callender et al v. Anthes et al
Filing
44
MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 4/18/14. (sat, Chambers)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
DONALD J. CALLENDAR, et al.
:
v.
:
Civil Action No. DKC 14-0121
:
DOUGLAS ANTHES, et al.
:
MEMORANDUM OPINION
Presently pending and ready for review in this defamation
case
are
four
Plaintiffs
motions:
Donald
J.
(A)
a
motion
Callender
and
to
remand
Convergence
Associations, LLC d/b/a Convergex Caribbean Ltd.
filed
by
Management
(ECF No. 28);
(B) a motion to dismiss filed by Defendants Douglas Anthes and
Dreamer’s Entertainment Club, LLC.
motions
to
Plaintiffs.
seal:
one
filed
by
(ECF No. 11); and (C) two
Defendants
(ECF Nos. 15 and 33).
and
one
filed
by
The issues have been briefed
and the court now rules, no hearing being deemed necessary.
Local Rule 105.6.
For the following reasons, the motions to
seal will be denied.
the
case
will
be
The motion to remand will be granted and
remanded
to
the
Circuit
Court
for
Calvert
County, Maryland.
I.
Background
Plaintiff Donald J. (“DJ”) Callender is head of Plaintiff
Convergence
Management
Associates,
LLC
d/b/a
Convergex
Caribbean, Ltd.
Both are citizens of Maryland.
Convergex acts
as an investor matchmaker: organizations and individuals come to
Convergex
seeking
evaluates
the
private
investment
capital
and
then
investment.
puts
them
the
agent
Convergex
in
touch
with
potential investors.
Defendant
Dreamer’s
Anthes
is
Club,
Entertainment
Arizona.
business
Douglas
LLC.
Both
of
are
Defendant
citizens
of
Mr. Anthes – through Dreamer’s – proposed a “start-up
offering
entertainment
combining
[a]
industry
the
completely
in
the
traditional
new
Phoenix
concept
to
area
.
entertainment
.
the
multi-
a
concept
.
center
(bowling,
billiards, and sports bar) and adding the thrill of racing and
nightclub
scene
with
Verified Complaint).
dancing
and
music.”
(ECF
No.
2
¶
6,
Defendants sought approximately $5,000,000
of funding.
In
June
investors.
2013,
Mr.
Anthes
contacted
Convergex
to
find
On June 11, 2013, the parties signed a “Mutual Non-
Circumvention,
Non-Disclosure
Agreement”
(“NDA”).
paragraphs of the NDA are relevant here:
(2) The parties will maintain complete
confidentiality
regarding
each
other’s
business
methods,
processes,
Source(s)
and/or affiliates and will disclose such
only to parties named in advance, pursuant
to express written permission of the Party
who had made available said source.
2
Three
(4) The parties will not disclose any
name(s),
address(es),
telephone/facsimile
number(s) of any contact(s) revealed by
either party to any third party.
(8) This Agreement is valid for any and all
transaction(s) between the parties hereto
and is enforceable only in the Courts of the
State of Maryland, Calvert County, United
States of America, and the signing Parties
hereby accept such selected jurisdiction as
the exclusive venue for the resolution of
any dispute(s).
(ECF
No.
2,
Ex.
A).
The
parties
“Financial Services Agreement” (“FSA”).
subsequently
signed
a
The FSA is dated June
24, 2013, although Defendants contend that it was in fact signed
in August 2013.
The FSA required Defendants to pay a $4,000 fee
to meet with Plaintiffs and a $21,000 “Good Faith Deposit.”
If
Plaintiffs failed to bring a willing and capable funding source
forward
to
immediately,
Defendants,
upon
demand.
the
$21,000
(ECF
2-1,
would
at
5).
be
Relevant
present purposes are two clauses of the FSA:
2.C: The Parties agree that the names,
locations and contact data of Source(s),
which [Plaintiffs] present to [Defendants]
represent valuable information, which may
not be disclosed at any time, except with
the prior written consent of [Plaintiffs].
To be most clear: [Defendants] shall keep
the identity, as well as the content of
discussions, negotiations and/or terms of
this Agreement or Agreements with any and
all Sources in the strictest of confidence,
revealing
such
to
no
person
–
to
specifically include Intermediaries – at any
time, for any reason or Client shall be in
material default of this Agreement.
3
refunded
for
This provision of the Agreement between the
Parties requires Client initials here with
the specific understanding that it will
survive the termination or expiration of the
Agreement, as a whole.
7.B: This Agreement shall be governed by and
construed in accordance with the laws of the
State of Maryland and shall be deemed to
have been accepted and entered into at
[Convergex
Caribbean,
Ltd.]’s
place
of
business in Prince Frederick, Maryland.
(ECF No. 2-1, at 4-5, 7) (emphases in original).
On July 23, 2013, Mr. Anthes wired $4,000 to Plaintiffs to
secure a meeting.
August 3, 2013.
They met at a restaurant in Washington, DC on
Mr. Anthes wired the $21,000 balance of the
Good Faith Deposit to Plaintiffs on August 13, 2013.
The next
day, Defendants received an email from Signature Equity Services
Group in Nashville, Tennessee, to schedule a call.
16,
2013,
services
following
agreement
the
call,
setting
underwriting fee of $15,900.
Signature
forth
a
sent
On August
a
non-refundable
financial
initial
Defendants could not afford this
and subsequently learned that Signature’s corporate status had
been administratively dissolved on August 13, 2013, two days
before the call.
On August 19, 2013, Mr. Anthes called Mr.
Callender and let him know that he could not pay Signature’s
underwriting fee and demanded return of his $21,000 Good Faith
Deposit.
Mr. Callender refused.
The next day Mr. Anthes –
through email and telephone – told Plaintiffs that either they
4
fully refund the Good Faith Deposit or he will “publicize this
scandal” and “go to the FBI, IRS, Better Business Bureau, and
the States Attorney’s Offices of Maryland and Arizona.”
Mr.
Anthes made good on his promise and posted several allegedly
defamatory postings to multiple consumer protection websites.
(See ECF No. 2-1, at 9-15).1
On October 15, 2013, Plaintiffs’ counsel sent a cease and
desist letter to Defendants, demanding that they stop posting
defamatory statements and immediately remove the statements on
RipoffReport.com.
(ECF No. 2-1, at 16).
On November 12, 2013, Plaintiffs filed a verified complaint
in the Circuit Court for Calvert County, Maryland.
The
complaint
seeks
a
temporary
restraining
(ECF No. 2).
order
and
preliminary and permanent injunctive relief, and asserts claims
of defamation, invasion of privacy – false light, and breach of
contract, seeking $700,000 in compensatory damages and $600,000
in
punitive
damages.
The
Circuit
Court
granted
Plaintiffs’
request for a TRO on November 15, 2013, ordering Defendants not
to
post
any
further
false
and
defamatory
statements
to
the
Internet or any other public fora regarding Plaintiffs, and to
refrain from making any other statements or postings that are
specifically intended to cause Plaintiffs ridicule, contempt,
1
The websites were RipoffReport.com, ComplaintNow.com, and
ReviewsTalk.com.
5
hatred,
and
harm
by
discouraging
others
from
having
a
good
opinion of, or from associating or dealing with Plaintiffs; to
remove from the Internet all such postings, including those made
to RipoffReport.com, ComplaintNow.com, and ReviewsTalk.com; and
to restore and preserve the status quo as it existed on or
before August 19, 2013.
(ECF No. 4).
On December 18, 2013, Plaintiffs filed a motion to extend
the TRO, arguing that the allegedly defamatory postings remain
on the Internet and, in fact, Mr. Anthes made a posting to
RipoffReport.com after the TRO was entered.
(ECF No. 5).
The
motion was granted and the TRO was extended to January 22, 2014,
and a hearing date on the motion for a preliminary injunction
was set for January 21, 2014.
Defendants
were
(ECF No. 6).
officially
served
complaint on December 31, 2013.
with
the
state
court
Defendants removed to this
court on January 15, 2014, citing diversity jurisdiction, 28
U.S.C. § 1332.
(ECF No. 1).
counterclaims,
and
filed
They answered the complaint, filed
a
third
party
Convergex Carribean, Ltd. on January 21, 2014.
complaint
against
(ECF No. 13).
On January 22, 2014, Plaintiffs filed a motion to extend
the TRO pending their motion to remand that will be filed or, in
the
alternative,
extend
preliminary injunction.
the
TRO
pending
(ECF No. 19).
6
a
hearing
on
a
The matter was fully
briefed and a hearing was held on January 28, 2014, when the
motion was denied.
Plaintiffs
2014.
filed
(ECF No. 28).
their
motion
to
remand
on
February
3,
Defendants opposed on February 21, 2014
(ECF No. 36), and Plaintiff replied on March 10, 2014 (ECF No.
41).2
II.
Analysis
A.
Motion to Remand
Plaintiffs move to remand this case to the Circuit Court
for
Calvert
County,
selection clause.
Maryland,
pointing
to
the
NDA’s
forum
That clause states:
2
Defendants filed what they titled “Rebuttal in Opposition
to Plaintiffs’ Motion to Remand” on March 25, 2014.
(ECF No.
43).
This is a surreply, which may not be filed unless
otherwise ordered by the court. Local Rule 105.2(a). Although
a district court has discretion to allow a surreply, surreplies
are generally disfavored. Chubb & Son v. C.C. Complete Servs.,
LLC, 919 F.Supp.2d 666, 679 (D.Md. 2013).
A surreply may be
permitted “when the moving party would be unable to contest
matters presented to the court for the first time in the
opposing party’s reply.” Khoury v. Meserve, 268 F.Supp.2d 600,
605 (D.Md. 2003) (citation omitted).
By contrast, “[a] motion
for leave to file a surreply may be denied when the matter
addressed in the reply is not new.”
Marshall v. Capital View
Mut. Homes, No. RWT–12–3109, 2013 WL 3353752, at *3 (D.Md. July
2, 2013) (citation omitted).
Construing Defendants’ filing as a motion to file a
surreply, their motion will be denied and the filing will be
disregarded.
They seek to argue about the effect of the FSA’s
integration clause. Plaintiffs did not raise this issue for the
first time in their reply. In fact, as will be discussed below,
it was Defendants who argued in their opposition that the FSA
superseded the NDA.
7
This Agreement is valid for any and all
transaction(s) between the Parties hereto
and is enforceable only in the Courts of the
State of Maryland, Calvert County, United
States of America, and the signing Parties
hereby accept such selected jurisdiction as
the exclusive venue for the resolution of
any dispute(s).
(ECF No. 2-1, at 3).
Management
The parties are listed as “Convergence
Associates,
LLC
dba
Convergex
Caribbean,
Ltd.,”
legally represented by “D.J. Callender, Managing Partner,” and
“Dreamer’s
Entertainment
“Doug Anthes, Owner.”
Club,
LLC,”
legally
represented
by
(Id.).
Generally, a remand to state court is appropriate where the
court either lacks subject matter jurisdiction over the case or
there is some defect in the removal process.
1447(c)
(motion
to
remand
based
on
lack
of
See 28 U.S.C. §
subject
matter
jurisdiction may be brought “at any time before final judgment,”
while a motion “on the basis of any defect other than subject
matter jurisdiction must be made within 30 days after filing of
the notice of removal”).
Motions to remand on the basis of a
forum-selection clause, however, are based on neither lack of
jurisdiction nor any defect.
As the United States Court of
Appeals for the Ninth Circuit explained in Kamm v. ITEX Corp.,
568 F.3d 752, 756 (9th Cir. 2009):
A forum selection clause operates outside of
the
various
requirements
for
removal
specified in [28 U.S.C.] §§ 1441–1453.
The
existence of such a clause does not render
8
removal “defective” as we have understood
that term in our cases decided under §
1447(c).
Instead, a forum selection clause
is
similar
to
other
grounds
for
not
exercising jurisdiction over a case, such as
abstention
in
favor
of
state
court
jurisdiction under Younger v. Harris, 401
U.S. 37 (1971), and related abstention
cases, or a refusal to exercise supplemental
jurisdiction and a resulting remand to state
court under 28 U.S.C. § 1367(c).
The
Supreme Court has explicitly held that
remands based on abstention and a refusal to
exercise supplemental jurisdiction are not
covered by § 1447(c).
See Quackenbush v.
Allstate Ins. Co., 517 U.S. 706, 711–12
(1996) (abstention); Carnegie–Mellon Univ.
v. Cohill, 484 U.S. 343, 355 n.11 (1988)
(supplemental
jurisdiction);
see
also
Kircher v. Putnam Funds Trust, 547 U.S. 633,
640 (2006) (discussing Quackenbush without
stating that it is no longer good law
following the 1996 amendment of § 1447(c)).
See also Foster v. Chesapeake Ins. Co., Ltd., 933 F.2d 1207,
1212 n.7 (3d Cir. 1991) (“A forum selection clause does not oust
a court of subject matter jurisdiction, and abstention is, of
course, predicated on the notion that while the federal court
has subject [matter] jurisdiction, it should decline to exercise
it.”) (internal citation omitted; emphasis in original)).
Thus,
as a prudential matter, federal courts should give effect to a
valid and enforceable forum-selection clause, despite the fact
that the case was properly removed.
Cf. Atl. Marine Constr.
Co., Inc. v. U.S. Dist. Court for W. Dist. of Tex., 134 S.Ct.
568, 581 (2013) (“When the parties have agreed to a valid-forum
9
selection clause, a district court should ordinarily transfer
the case to the forum specified in that clause.”).
Courts
considering
remand
motions
in
this
context
have
uniformly conducted their analyses in terms of whether a given
forum-selection
remove.
clause
constitutes
a
waiver
of
the
right
to
See, e.g., Yakin v. Tyler Hill Corp., 566 F.3d 72, 76
(2d Cir. 2009) (“To the extent that a forum selection clause
binds
diverse
parties
by
its
express
terms
to
a
specific
jurisdiction that is not federal, it waives a statutory right to
remove.”); Global Satellite Commc’n Co. v. Starmill U.K. Ltd.,
378 F.3d 1269, 1272 (11th Cir. 2004) (“forum selection clause may
constitute a waiver of a defendant’s right to remove an action
to federal court.”); cf. Atl. Marine, 134 S.Ct. at 582 (“when a
plaintiff agrees by contract to bring suit only in a specified
forum – presumably in exchange for other binding promises by the
defendant – the plaintiff has effectively exercised its ‘venue
privilege’ before a dispute arises.”).
party
should
has
use
applicable,
preliminary
contractually
“the
same
waived
benchmarks
interpretation
contractual
its
as
it
In determining whether a
right
of
remove,
construction
employs
questions.”
to
in
Welborn
courts
and,
resolving
v.
if
all
Classic
Syndicate, Inc., 807 F.Supp. 388, 391 (W.D.N.C. 1992) (quoting
Foster, 933 F.2d at 1215 n.15).
Accordingly, resolution of the
instant motion turns on whether the NDA’s forum-selection clause
10
constitutes a waiver of Defendants’ right to remove the case to
this court.
In deciding that issue, the court must determine
the validity of the forum-selection clause.
“The initial step in analyzing the validity of a forumselection clause is to determine whether state or federal law
should be applied.”
Koch v. Am. Online, Inc., 139 F.Supp.2d
690, 692 (D.Md. 2000).
Because this is a diversity action, the
substantive law of Maryland is applied to analyze the forumselection clause.
Silo Point II LLC v. Suffolk Constr. Co.,
Inc., 578 F.Supp.2d 807, 809 (D.Md. 2008).
Maryland courts have
adopted the federal standard in analyzing the enforceability of
a forum-selection clause.
Gilman v. Wheat, First Sec., Inc.,
345 Md. 361, 371-78 (1997).
In
M/S
(1972),
the
mandatory
Bremen
Supreme
v.
Zapata
Court
forum-selection
Off–Shore
of
the
clauses
Co.,
United
“are
prima
407
U.S.
States
1,
held
facie
valid
10
that
and
should be enforced unless enforcement is shown by the resisting
party to be ‘unreasonable’ under the circumstances.”
See also
Pee Dee Health Care, P.A. v. Sanford, 509 F.3d 204, 213 (4th Cir.
2007).
The court’s task in “determining the enforceability and
applicability” of a forum-selection clause “is threefold”:
First, it must establish whether the clause
is
mandatory.
If
so,
the
clause
is
presumptively enforceable. Second, the court
must
establish
whether
the
clause
is
presumptively
enforceable
against
the
11
particular
claims
in
dispute,
i.e.[,]
whether the claims fall within the scope of
the clause. If it finds that they do fall
within the clause’s scope, then that clause
presumptively
applies
to
bar
their
adjudication outside its designated forum.
Third and finally, the court must decide
whether the party opposing the clause’s
enforcement has rebutted the presumption of
enforceability by proving that enforcement
would be unreasonable. If it has not, the
clause will be enforced.
Varsity Gold, Inc. v. Lunenfeld, Civ. No. CCB–08–550, 2008 WL
5243517, at *2 (D.Md. Dec. 12, 2008) (internal citations and
quotation omitted).
First, there is no question that the clause is mandatory
and Defendants do not argue otherwise.
A mandatory provision
is “one containing clear language showing that jurisdiction is
appropriate only in the designated forum.”
Davis Media Grp.,
Inc. v. Best Western Int’l, Inc., 302 F.Supp.2d 464, 467 (D.Md.
2004)
(quoting
Koch,
139
F.Supp.2d
at
693).
A
permissive
clause, by contrast is one that “permits jurisdiction in the
selected forum without precluding it elsewhere.”
467
(internal
quotation
marks
Davis, 302
F.Supp.2d
at
and
citation
omitted).
The NDA clause is clearly mandatory as it states that
it is “enforceable only in the Courts of the State of Maryland,
Calvert County, . . . and the signing parties hereby accept such
jurisdiction as the exclusive venue for the resolution of any
disputes.”
(ECF
No.
2-1,
12
at
3)
(emphases
added).
Defendants’ arguments are principally focused on whether
the NDA’s forum selection clause governs this case.
They make
three arguments: first, they argue that the Plaintiffs were not
parties to the NDA; second, they state that Defendant Anthes is
not a party to the NDA; and third, they posit that the FSA
supersedes the NDA.
Taking these arguments in order, Defendants
point to the NDA, which states that it is between “Convergence
Management Associates, LLC dba Convergex Caribbean, Ltd.” and
“Dreamer’s Entertainment Club, LLC.”
Convergex
Caribbean,
Ltd.
Management
Associations,
Defendants contend that
(“Convergex”)
Ltd.
and
(“Convergence”)
Convergence
are
in
fact
separate legal entities for which using the “d/b/a” designation
is improper.
See Bushey v. N. Assurance Co. of Am., 362 Md.
626, 637-38 (2001) (“doing business as” is merely descriptive of
the person or corporation who does business under some other
name and does not create a distinct legal entity).
Defendants
contend that only Convergex is the proper party to the NDA as
evidenced by the fact that the NDA was printed on Convergex’s
letterhead
and
Convergex.
The complaint, however, lists the Plaintiffs as Mr.
Callender
and
Mr.
Callender
“Convergence
signed
the
Management
NDA
on
Assoc.,
Convergex Caribbean, Ltd,” much like the NDA.
behalf
LLC
of
d/b/a
Defendants argue
that Convergence is the Plaintiff in this case but was not a
party to the NDA.
Conversely, Defendants argue that Convergex
13
is not a Plaintiff but was the only party to the NDA.
While
Convergex has now entered this case as a third party defendant,
it was not a party at the time of removal, therefore its current
presence is not sufficient.
See Francis v. Allstate Ins. Co.,
709 F.3d 362, 367 (4th Cir. 2013) (“The removability of a case
depends upon the state of the pleadings and the record at the
time of the application for removal.” (quotations and citations
omitted)).
Plaintiffs dispute Defendants’ contention that Convergence
does not do business as Convergex Caribbean, Ltd.
While it is
telling that Defendants filed a third-party complaint against
“Convergex
Caribbean,
Ltd.,”
which
Plaintiffs
admitted
is
a
“Bahamas International Corporation doing business in the Bahamas
and
in
Maryland”
(ECF
No.
34,
at
2,
Third
Party
Defendant
Answer), ultimately the status of Convergence and Convergex is a
red herring for the present dispute.
The terms of the contract
clearly identify Convergence as a party to the NDA.
Defendants
do not dispute that Convergence is a legal entity.
Convergence
is a Plaintiff in this action.
The contention that Convergex
might also be a party to the NDA is immaterial.
Consequently,
the NDA and its forum selection clause encompasses Plaintiffs
and Defendants.
Next, Defendants argue that only Defendant Dreamer’s – not
Defendant Anthes – was a party to the NDA and therefore the
14
NDA’s forum selection clause only applies to Dreamer’s.
This
argument will be rejected as it is well-established that nonsignatories to an agreement are nevertheless “covered by choice
of forum clauses so long as their alleged conduct is ‘closely
related’ to the contract in question.”
Belfiore v. Summit Fed.
Credit Union, 452 F.Supp.2d 629, 633 (D.Md. 2006) (citing Hugel
v. Corp. of Lloyd’s, 999 F.2d 206, 209 (7th Cir. 1993)).
The
allegations make clear that Mr. Anthes is the sole officer of
Dreamer’s.
the
NDA
conclude
He engaged in discussions with Plaintiffs and signed
and
FSA
that
as
such
Dreamer’s
an
officer
agent.
is
It
“closely
is
reasonable
related
to
to
the
contract in question,” and Defendants have presented no evidence
suggesting otherwise, as was their burden.
See Ruifrok v. White
Glove Rest. Servs., No. DKC 10-2111, 2010 WL 4103685, at *6
(D.Md. Oct. 18, 2010) (high-ranking officers of company were
closely
related
employee).
to
employment
contract
between
company
and
Furthermore, inasmuch as all defendants must join in
removal, if Dreamer’s waived its right to do so, the case cannot
be removed, even if Mr. Anthes is not bound by the clause.
Defendants’ final argument is that the NDA – and its forum
selection clause – was superseded by the FSA, which contains no
forum selection clause, but only a choice of law provision.
relevant clause states:
15
The
This Agreement shall be governed by and
construed in accordance with the laws of the
State of Maryland and shall be deemed to
have been accepted and entered into at CCL’s
place of business in Prince Frederick,
Maryland.
(ECF No. 2-1, at 7).
Unlike the NDA, the FSA does not include a
forum selection clause naming Calvert County Circuit Court, or
any other court, as the exclusive forum.
dispute
that
the
FSA
was
signed
after
the
Plaintiffs do not
NDA.
Therefore,
Defendants argue, the NDA was modified and updated by the more
comprehensive FSA, including the clause that provides only a
choice of law and is silent on forum selection.
Defendants
believe
that
“[t]he
Arizona-based
Accordingly,
Defendants
are
entitled to the benefits of the less restrictive choice of law
provision in the [FSA].”
(ECF No. 36, at 5).
This argument will be rejected.
The NDA’s forum selection
clause states that it is “valid for any and all transactions
between the Parties hereto, . . . and the signing Parties hereby
accept [Calvert County Circuit Court] as the exclusive venue for
the
resolution
of
(emphases added).
any
dispute(s).”
(ECF
No.
2-1,
at
3)
Defendants do not point to any controlling
portion of the FSA, or any legal authority for that matter, to
16
support their contention that the more recent FSA obviates the
NDA’s forum selection clause.3
Defendants’ remaining argument contends that enforcement of
the forum selection clause would be unreasonable.
407
U.S.
at
10,
the
Supreme
Court
In Bremen,
established
that
the
presumption of enforceability of a forum-selection provision may
be
overcome
by
a
clear
showing
that
“‘unreasonable’ under the circumstances.”
enforcement
would
be
Such provisions may
be found unreasonable if:
(1) their formation was induced by fraud or
overreaching; (2) the complaining party
“will for all practical purposes be deprived
of his day in court” because of the grave
inconvenience or unfairness of the selected
forum; (3) the fundamental unfairness of the
chosen law may deprive the plaintiff of a
remedy; or (4) their enforcement would
contravene a strong public policy of the
forum state.
3
While the FSA does contain an integration clause, that
does not change the analysis.
Integration clauses are more
likely to be enforced literally when the same parties have
entered into more than one agreement addressing the same
subject. See Hercules Powder Co. v. Harry T. Campbell Sons Co.,
156 Md. 346 (1929). In such a circumstance, the later-executed
agreement annuls any prior agreements addressing the same
subject because the agreements conflict and cannot be construed
together.
See id.
When separately-executed contracts between
the same parties do not have conflicting provisions and are
entered into as part of a single transaction, however, those
agreements will be construed together even when they are
executed at different times and do not refer to each other. See
Rocks v. Brosius, 241 Md. 612, 637 (1966). The NDA and FSA were
part of the same Dreamer’s transaction but the terms do not
conflict and can be construed together.
17
Allen v. Lloyd’s of London, 94 F.3d 923, 928 (4th Cir. 1996)
(citing Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595
(1991); Bremen, 407 U.S. at 12–13, 15, 18); Gilman, 345 Md. at
378.
Defendants
argue
induced by fraud.
that
the
forum
selection
clause
was
As outlined in their pleadings, Defendants
allege that the NDA was “fraudulent[ly] based on the Plaintiffs’
successful scheme to collect $25,000 from the Defendants and
refer them to a so-called ‘funding source’ which the Plaintiff
knew would never fund the Dreamer’s project.”
(ECF No. 36, at
6).
To
challenge
the
clause
on
the
basis
of
fraud
or
overreaching, a plaintiff must establish that “the inclusion of
that clause [itself] in the contract was the product of fraud or
coercion,” not the agreement as a whole.
Culver
Co.,
allegations
417
U.S.
concerning
506,
the
519
NDA,
n.14
Scherk v. Alberto-
(1974).
however,
focus
Defendants’
on
the
NDA
overall, and make no allegation concerning the forum selection
clause.
(See, e.g., ECF No. 14 ¶ 17, Counterclaim (“By the time
the [NDA] wa[s] sent to Mr. Anthes; [Plaintiffs] knew that a
suitable funding source for Dreamer’s could not be located.”).
Additionally,
Defendants
make
no
argument
that
the
forum
selection clause is fundamentally unfair, would deprive them of
their day in court, or contravenes a strong public policy of
18
Maryland.
Consequently, the forum selection clause is valid,
applicable to the claims in this case, and enforcement against
Defendants is not unreasonable.
B.
Motions to Seal
Defendants filed a motion to seal their counterclaims and
third-party
complaint
it
contains
information that Plaintiffs may claim violate the NDA.
(ECF No.
15).
Plaintiffs
answer
because
due
filed
a
Defendants
Plaintiffs
do
not
Defendants
later
want
to
reversed
to
their
similar
made
belief
motion
their
violate
in
regard
filings
the
themselves
that
under
NDA.
after
(ECF
Mr.
to
their
seal
and
No.
33).
Callender
-
during direct examination by his attorney at the preliminary
injunction hearing – identified by name the funding source that
Defendants sought to keep out of the public domain.
(ECF No.
38).
“The right of public access to documents or materials filed
in a district court derives from two independent sources: the
common law and the First Amendment.”
Va. Dep’t of State Police
v. Wash. Post, 386 F.3d 567, 575 (4th Cir. 2004).
“The common
law presumes a right of the public to inspect and copy ‘all
judicial records and documents,’” id. at 575 (quoting Stone v.
Univ. of Md. Med. Sys. Corp., 855 F.2d 178, 180 (4th Cir. 1988)),
although
this
presumption
“can
be
rebutted
if
countervailing
interests heavily outweigh the public interests in access.”
19
Id.
(quoting Rushford v. New Yorker Magazine, Inc., 846 F.2d 249,
253 (4th Cir. 1988)); see also Nixon v. Warner Commc’ns, Inc.,
435 U.S. 589, 597–99 (1978).
Under this common law balancing
analysis, “[t]he party seeking to overcome the presumption bears
the burden of showing some significant interest that outweighs
the presumption.”
under
the
common
Rushford, 846 F.2d at 253.
law[,]
the
decision
“Ultimately,
whether
to
grant
or
restrict access to judicial records or documents is a matter of
a district court’s ‘supervisory power,’ and it is one ‘best left
to the sound discretion of the [district] court.’”
Va. Dep’t of
State Police, 386 F.3d at 575 (quoting Nixon, 435 U.S. at 598–
99) (second alteration in original).
In addition to the public’s common law right of access, the
First Amendment provides a “more rigorous” right of access for
certain “judicial records and documents.”
Va. Dep’t of State
Police, 386 F.3d at 575-76; see also In re Application of the
United
States
2703(D),
707
“significant”
for
F.3d
an
Order
283,
distinction
290
Pursuant
(4th
between
Cir.
the
to
18
2013)
two
U.S.C.
Section
(explaining
rights
of
the
access).
Where the First Amendment does apply, access may be denied “only
on the basis of a compelling governmental interest, and only if
the
denial
is
narrowly
tailored
to
serve
that
interest.”
Stone, 855 F.2d at 180; see also, Doe v. Public Citizen, --F.3d ----, 2014 WL 1465728, at *14 (4th Cir. Apr. 16, 2014).
20
“For a right of access to a document to exist under either
the First Amendment or the common law, the document must be a
‘judicial record’” in the first instance.
707
F.3d
at
290.
The
Fourth
In re Application,
Circuit
recently
held
that
judicially authored or created documents are “judicial records,”
as are documents filed with the court that “play a role in the
adjudicative process, or adjudicate substantive rights.”
Id.
(citing Rushford, 846 F.2d at 252; In re Policy Mgt. Sys. Corp.,
67
F.3d
(4th
296
Cir.
1995)
(unpublished
table
decision)).
“[T]he more rigorous standard should . . . apply to documents
filed in connection with a summary judgment motion in a civil
case.”
Va. Dep’t of State Police, 386 F.3d at 578 (quoting
Rushford, 846 F.3d at 253) (alteration in original).
Thus, as a substantive matter, when a district court is
presented with a request to seal certain documents, it must
determine two things: (1) whether the documents in question are
judicial records to which the common law presumption of access
applies; and (2) whether the documents are also protected by the
more
rigorous
Application,
First
707
Amendment
F.3d
at
290;
right
see
of
also
access.
Va.
Dep't
In
of
re
State
Police, 386 F.3d at 576.
The sealing of any judicial records must also comport with
certain procedural requirements.
First, the non-moving party
must be provided with notice of the request to seal and an
21
opportunity to object.
235 (4th Cir. 1984).
In re Knight Publ’g Co., 743 F.2d 231,
This requirement may be satisfied by either
notifying the persons present in the courtroom or by docketing
the motion “reasonably in advance of deciding the issue.”
at 234.
Id.
In addition, “less drastic alternatives to sealing”
must be considered.
Va. Dep’t of State Police, 386 F.3d at 576;
see also Local Rule 105.11 (requiring any motion to seal to
include
both
“proposed
reasons
supported
by
specific
factual
representations to justify the sealing” and “an explanation why
alternatives
protection”).
to
sealing
would
not
provide
sufficient
Finally, if sealing is ordered, such an order
must “state the reasons (and specific supporting findings)” for
sealing and must explain why sealing is preferable over its
alternatives.
Va. Dep’t of State Police, 386 F.3d at 576.
The parties fail to meet their burden.
The motions to seal
are based on the cursory reasoning that the document may contain
information
that
could
violate
established
that
“parties
cannot
the
by
NDA,
but
agreement
public’s right of access to judicial records.”
it
is
well-
overcome
the
Cochran v. Volvo
Grp. N. Am., LLC, 931 F.Supp.2d 725, 729 (M.D.N.C. 2013); see
also Bureau of Nat’l Affairs v. Chase, No. ELH-11-1641, 2012 WL
3065352, at *3 (D.Md. July 25, 2012) (“[p]rivate parties are
entitled to enter into confidential agreements, but the courts
ordinarily are not party to such promises of confidentiality.”).
22
The
parties
have
made
no
attempt
to
redact
portions
of
the
filings as opposed to sealing the documents in their entirety.
See Butler v. DirectSAT USA, LLC, 876 F.Supp.2d 560, 576 n.18
(D.Md. 2012) (“In their motion to seal, Plaintiffs state only
that they seek to seal exhibits pursuant to the confidentiality
order,
an
explanation
insufficient
to
satisfy
the
‘specific
factual representations’ that Local Rule 105.11 requires.”).
At
the preliminary injunction hearing, the undersigned informed the
parties as to the presumption of public access and encouraged
them
to
file
redacted
copies.
They
have
not
done
so.
Furthermore, any concerns about confidentiality are diminished
after Mr. Callender testified to the name of the funding source
potentially covered by the NDA.
Consequently, the motions to
seal will be denied and the relevant documents will be ordered
unsealed.
III. Conclusion
For the foregoing reasons, the motion to remand this case
to
the
Circuit
Court
for
Plaintiffs will be granted.
parties will be denied.
Calvert
County,
Maryland
filed
by
The motions to seal filed by the
A separate order will follow.
/s/
DEBORAH K. CHASANOW
United States District Judge
23
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