LG ELECTRONICS U.S.A., INC. v. ACTIONLINK, LLC
OPINION. Signed by Judge Madeline C. Arleo on 10/30/15. (cm )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
LG ELECTRONICS U.S.A., INC.,
Civ. No. 15-5472 (MCA)
ARLEO, UNITED STATES DISTRICT JUDGE
This matter comes before the Court on Plaintiff’s Motion to Remand the Complaint to the
Superior Court of New Jersey, Bergen County pursuant to 28 U.S.C. § 1447(c). Dkt. No. 6. The
Court decides this motion on the papers pursuant to Fed. R. Civ. P. 78 and Local Civ. R. 78.1(b).
For the reasons set forth below, the Court will remand Plaintiff’s Complaint to the Superior Court
of New Jersey, Bergen County.
On August 26, 2010, Plaintiff LG Electronics U.S.A., Inc. (“Plaintiff”) entered into a
Master Services Agreement (“Agreement”) with Defendant Actionlink, LLC (“Defendant”) in
which Plaintiff authorized Defendant “to design and operate an In-Store Execution Program” in
an effort to boost the sale of Plaintiff’s products. Complaint ¶ 5. In this action, Plaintiff alleges
that Defendant sent false invoices totaling more than $1.8 million to Plaintiff under the
Agreement. 1 Id. ¶¶ 9-16. Pursuant to § 13.E of the Agreement, Plaintiff and Defendant agreed
There is a related case which was filed in this District on May 5, 2015 in which Actionlink sues
LG Electronics U.S.A., asserting six causes of action due to LG Electronics U.S.A.’s alleged
“to submit any dispute relating to this Agreement to the exclusive jurisdiction of the courts of the
State of New Jersey, United States of America.” Dkt. No. 6-2, Christopher Welgos Cert. Ex. A,
Master Services Agreement § 13.E. Pursuant to the Agreement, Plaintiff filed suit against
Defendant in the Superior Court of New Jersey, Bergen County on June 3, 2015, alleging claims
of breach of contract, common law fraud and breach of the implied covenant of good faith and fair
dealing, and seeking to recover more than $1.8 million in damages. Id. ¶¶ 23-49.
On July 10, 2015, Defendant removed the action to this Court. Dkt. No. 1. Defendant
asserted that this Court has jurisdiction pursuant to 28 U.S.C. § 1332. 2 On August 7, 2015, Plaintiff
filed a Motion to Remand its Complaint to state court, arguing that removal was improper because
the parties had selected the state courts of New Jersey as the exclusive forum in which to address
28 U.S.C. § 1441(a) permits a defendant to remove a civil action in state court to a federal
court where the action could have been filed originally, that is, where the federal court has subject
matter jurisdiction over the action. Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). For
removal based on diversity of citizenship, “a proper exercise of federal jurisdiction requires
satisfaction of the amount in controversy requirement as well as complete diversity between the
failure to perform under the Master Services Agreement. See Actionlink LLC v. LG Electronics
U.S.A., Inc., No. 15-3168 (MCA).
There does not appear to be any dispute that the requirements of 28 U.S.C. § 1332 are satisfied.
According to the Notice of Removal, Plaintiff is a Delaware corporation with its principal place of
business in New Jersey. Dkt. No. 1, Notice of Removal ¶ 12. Defendant is a limited liability
company, the members of which reside in Ohio, Nevada and California. Id. ¶¶ 7-11. Finally,
Plaintiff seeks damages well in excess of $75,000. Id. ¶ 14.
parties, that is, every plaintiff must be of diverse state citizenship from every defendant.” In re
Briscoe, 448 F.3d 201, 215 (3d Cir. 2006).
A federal court lacking subject matter jurisdiction over a case must remand the matter back
to state court. 28 U.S.C. § 1447(c); see Farina v. Nokia, Inc., 625 F.3d 97, 114 (3d Cir. 2010)
(noting that federal courts can neither proceed without subject matter jurisdiction, nor can a party
waive a lack of jurisdiction).
The party asserting federal jurisdiction bears the burden of
demonstrating that removal was proper. Frederico v. Home Depot, 507 F.3d 188, 193 (3d Cir.
2007); see also Brown v. Jevic, 575 F.3d 322, 326 (3d Cir. 2009) (describing this burden as
“heavy”). The removal statutes “are to be strictly construed against removal and all doubts should
be resolved in favor of remand.” Boyer v. Snap–On Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990)
(citing Steel Valley Auth. v. Union Switch & Signal Div., 809 F.2d 1006, 1010 (3d Cir. 1987)).
A. Motion to Remand Based on Forum Selection Clause
Plaintiff does not dispute that diversity jurisdiction exists; however, it argues that the
forum selection clause contained in the Agreement requires that this case be remanded to state
court because § 13.E of the Agreement provides that:
The parties agree to submit any dispute relating to this Agreement
to the exclusive jurisdiction of the courts of the State of New Jersey,
United States of America.
Dkt. No. 6-2, Christopher Welgos Cert. Ex. A § 13E. Defendant opposes the motion to remand,
arguing that the forum selection clause cannot be enforced because it is ambiguous, and can be
interpreted to mean that the instant action could have been brought either in federal court or state
court in New Jersey.
“A defendant can contractually waive his right to remove an action brought in a state
court.” New Jersey v. Merrill Lynch & Co., 640 F.3d 545, 547 (3d Cir. 2011) (internal quotation
and punctuation omitted). A contractual waiver of the right to remove exists where a valid and
enforceable forum selection clause excludes federal jurisdiction. Id. at 550 (“In sum, we find that
the forum selection clause memorializes the parties’ intention to litigate all contractual disputes in
the state courts of New Jersey and thus was a waiver of the right to removal.”). “If a defendant
has removed a case in violation of a forum selection clause, remand is a particularly appropriate
and effective remedy for the wrong.” Foster v. Chesapeake Inc. Co., Ltd., 933 F.3d 1207, 1216
(3d Cir.), cert. denied, 502 U.S. 908 (1991). “In federal court, the effect to be given a contractual
forum selection clause in diversity cases is determined by federal not state law.” See Jumara v.
State Farm Ins. Co., 55 F.3d 873, 877 (3d Cir. 1995); see also Wall Street Aubrey Golf, LLC v.
Aubrey, 189 Fed. App'x 82, 84 (3d Cir. 2006). In the Third Circuit, forum selection clauses are
presumptively valid. See Wall Street, 189 Fed. App'x at 85 (citing Costal Steel Corp. v. Tilghman
Wheelabrator Ltd., 709 F.2d 190, 202 (3d Cir. 1983)); Int'l Business Software Solutions, Inc. v.
Sail Labs Tech., AG, 440 F. Supp. 2d 357, 362 (D.N.J. 2006); Cadapult Graphic Sys., Inc. v.
Tektronix, Inc., 98 F. Supp. 2d 560, 564 (D.N.J. 2000). Hence, the party opposing the forum
selection clause bears the burden of making a “strong showing” that the clause is unreasonable,
and therefore unenforceable. See Cadapult, 98 F. Supp. 2d at 565 (citing M/S Bremen v. Zapata
Off–Shore Co., 407 U.S. 1, 10 (1972)).
Generally, a forum selection clause is unreasonable if: (1) it is the result of fraud or
overreaching; (2) its enforcement would violate the forum's strong public policy; or (3) its
enforcement would, in the particular circumstances of the case, result in litigation in a jurisdiction
so seriously inconvenient as to be unreasonable. See Cadapult, 98 F. Supp. 2d at 565; see also
Jumara, 55 F.3d at 880 (stating that “[w]here the forum selection clause is valid, which requires
that there have been no fraud, influence, or overwhelming bargaining power ... the plaintiffs bear
the burden of demonstrating why they should not be bound by their contractual choice of forum”)
(internal quotation marks omitted).
In determining whether the parties have waived their right to remove via a forum selection
clause, the Court must determine the meaning of the clause in the same manner it would any other
contractual provision, i.e., by ascertaining the “plain and ordinary meaning” of the clause. Merrill
Lynch & Co., 640 F.3d at 547-48. If the language of the forum selection clause is unambiguous,
“the inquiry ends and the court must enforce the contract as written.” Integrated Health Res., LLC
v. Rossi Psychological Grp., P.A., 537 F. Supp. 2d 672, 674-75 (D.N.J. 2008).
In the instant case, Defendant does not argue that the Master Services Agreement is
invalid, 3 or that the forum selection clause was obtained through “fraud or overreaching,” or that
its enforcement would either violate public policy or result in litigation in a jurisdiction so
inconvenient as to be unreasonable. But Defendant challenges the forum selection clause as
ambiguous, and as such, Defendant bears the burden of demonstrating that the clause should not
be enforced. Defendant argues that the forum selection clause is ambiguous for three reasons: 1)
the first use of “of” in the forum selection clause is ambiguous because it can be interpreted to
mean federal or state court; 2) “the Superior Court of New Jersey is a single unified Superior Court
exercising original jurisdiction over all cases” so the use of the term “courts” means both state and
federal court in New Jersey; and 3) the addition of “United States of America” to the forum
To the contrary, ActionLink itself has sued to enforce the Agreement. See ActionLink, LLC v.
LG Electronics, U.S.A., Inc., No. 15-3168, Dkt. No. 1, Complaint ¶¶ 12-33, 38-41 (alleging LG
Electronics breached the Master Services Agreement by, inter alia, providing confidential
personnel information to an ActionLink competitor, thereby allowing the competitor to hire away
ActionLink employees to work on a similar marketing campaign for LG).
selection clause indicates that the case could be brought in either state or federal court in New
Defendant relies on cases from the First and Eleventh Circuits, as well as a case from the
Northern District of Georgia for the proposition that a forum selection clause that limits
jurisdiction to “the courts of the State of …” is ambiguous. See Opp. Br. at 4, incorporated here
by reference, Dkt. No. 16 (citing Stateline Power Corp. v. Kremer, 148 Fed. Appx. 770, 771 (11th
Cir. 2005); First State Bank of Northwest Arkansas v. Georgia 4-S Investment LLLP, 715 F. Supp.
2d 1301, 1302 (N.D. Ga. 2010); Global Satellite Communication Co. v. Starmill U.K. Ltd., 378
F.3d 1269, 1274 (11th Cir. 2004); LFC Lessors, Inc. v. Pac. Sewer Maint. Corp., 739 F.2d 4, 7
(1st Cir. 1984)). The Court finds that Defendant’s reliance on these cases is misplaced. Cases
from the First Circuit, Eleventh Circuit and Northern District of Georgia are not controlling in this
district. While other courts have decided that the phrase “courts of the State of…” is ambiguous,
those cases are not controlling here.
The United States Court of Appeals for the Third Circuit addressed the jurisdictional
implications of a similar forum selection clause in New Jersey v. Merrill Lynch & Co., 640 F.3d
545 (3d Cir. 2011). The forum selection clause there provided that “exclusive jurisdiction . . . shall
lie in the appropriate courts of the State [of] New Jersey.” Merrill Lynch & Co., 640 F.3d at 546.
The Third Circuit held by using the phrase “of a state” rather than “in a state,” the forum selection
clause limited jurisdiction exclusively to the specified state court. Id. at 548-49. In so holding,
the Third Circuit agreed with the Fourth Circuit’s conclusion in FindWhere Holdings, Inc. v. Sys.
Env’t Optimization, LLC, 626 F.3d 752, 755 (4th Cir. 2010), that “of [a state]” “‘limits jurisdiction
. . . to the state courts of the named state.’” Id. Accordingly, the Third Circuit rejected the
ambiguity that Defendant urges the Court to find here.
The Third Circuit in Merrill Lynch & Co. also addressed the use of the plural “courts” in a
forum selection clause. The Third Circuit stated:
[T]he New Jersey Superior Court may be a unified “court,” but it
boasts fifteen vicinages throughout the twenty-one counties at the
trial level. The use of the plural “courts” is best read as a vestigial
reference to the many tribunals comprising the Superior Court of
New Jersey, not the federal district courts in the state.
Id. at 548. Accordingly, Merrill Lynch & Co. instructs that a forum selection clause’s use of
“courts” does not necessarily contemplate both federal and state courts, and when used in
conjunction with “of a state,” still limits jurisdiction to state court.
The Third Circuit has even interpreted a forum selection clause that, as here, included
“USA” after the selection of the courts of a state. Motiva Enterprises LLC v. Swiss Re Int’l S.E.,
577 F. App’x 136 (3d Cir. 2014). In Motiva Enterprises, the parties had agreed that any dispute
“would be subject to ‘the Law of Delaware’ and ‘Jurisdiction of the State of Delaware, U.S.A.’”
Id. at 137. The Third Circuit affirmed the remand of the action to state court by the district court,
holding “we also reject the [defendants’] argument that the term ‘Jurisdiction of the State of
Delaware, USA,’ can be construed to encompass the jurisdiction of federal courts located in
Delaware.” Id. at 139.
Another court in this district also has determined that “the jurisdiction of the judges and
courts of the State of New Jersey, United States of America” means that jurisdiction lies
exclusively in the state courts of New Jersey. Volvo Fin. Servs., LLC v. Financiera TFC S.A., No.
12-5609, 2013 WL 3761035 (D.N.J. July 16, 2013). Additionally, four other Courts of Appeals
have interpreted similar forum selection clauses in the same manner. As noted above, the Third
Circuit in Merrill Lynch & Co. relied on the Fourth Circuit in FindWhere Holdings, Inc., 626 F.3d
at 754-55. In interpreting “the courts of the state of Virginia, USA,” the Fourth Circuit held that
“[a]s federal courts are not courts ‘of’ the state of Virginia, the contract language at issue refer[red]
to sovereignty rather than geography and limit[ed] jurisdiction over the parties’ dispute to state
court.” FindWhere Holdings, Inc., 626 F.3d at 754-55. See also Doe 1 v. AOL LLC, 552 F.3d
1077, 1081-82 (9th Cir. 2009) (“We hold that the forum selection clause at issue here—designating
the courts of Virginia—means the state courts of Virginia only; it does not also refer to federal
courts in Virginia.”); Am. Soda, LLP v. U.S. Filter Wastewater Grp., Inc., 428 F.3d 921, 926 (10th
Cir. 2005) (“We therefore conclude that the forum selection clause in the parties’ agreement
[‘Courts of the State of Colorado’] designates the Colorado state court system as the forum for
resolution of disputes arising out of the contract, and does not include the federal district court.”);
Dixon v. TSE Int’l Inc., 330 F.3d 396, 397-98 (5th Cir. 2003) (plain meaning of forum selection
clause selecting “[t]he Courts of Texas, U.S.A.” rests jurisdiction only with Texas state courts).
This Court finds that the Third Circuit has conclusively determined that the use of the terms
“of a state,” “courts” and “United States of America” does not render the forum selection clause
in the instant case ambiguous. Because Defendant has not met its burden of demonstrating that
the forum selection clause should not be enforced, the Court finds that the parties agreed to the
“exclusive jurisdiction” of the state courts of New Jersey and Defendant waived its right to remove
this action. Accordingly, the Court will remand this action to the Superior Court of New Jersey,
B. Attorney's Fees
Plaintiff also seeks an award of fees under 28 U.S.C. § 1447(c). “An order remanding the
case may require payment of just costs and any actual expenses, including attorney fees, incurred
as a result of the removal.” 28 U.S.C. § 1447(c). An award of costs and fees is proper “where the
removing party lacked an objectively reasonable basis for seeking removal.” Id. A Court “has
broad discretion and may be flexible in determining whether to require the payment of fees under
[28 U.S.C. § ] 1447(c).” Mints v. Educ. Testing Serv., 99 F.3d 1253, 1260 (3d Cir.1996).
Although the United States Court of Appeals for the Third Circuit has found “no need to establish
definitive criteria” for awarding fees and costs under this statute, a court can consider whether the
notice of removal raised difficult issues or whether it was “frivolous” or “insubstantial.” Id. at
1260–61. Bad faith need not be present to award fees. Id. at 1260. Ultimately, in deciding whether
to award fees, the Court “must weigh the circumstances of the case before it.” Siebert v. Norwest
Bank Mn., 166 F. App'x 603, 607 (3d Cir. 2006) (citing Mints, 99 F.3d at 1260).
Here, Plaintiff seeks fees because “minimal research would have revealed the impropriety
of removal” 4 because the Third Circuit has on two prior occasions held that removal was improper
where there were operative forum selection clauses binding the parties similar to the forum
selection clause in this case. In opposition to the motion to remand, Defendant argues that the
forum selection clause must include the federal courts of the State of New Jersey because the
language in the forum selection clause refers to “the courts of the state of New Jersey, United
States of America” and there is only “one, singular Superior Court of New Jersey.” Actionlink,
LLC v. LG Electronics U.S.A., Inc., 15- 3168, Dkt. No. 16, Pls.’ Opp. at 5. Simply because this
Court finds Defendant’s argument unavailing, does not mean that it was objectively unreasonable
for Defendant to have removed the case. The Court cannot say that Defendant’s removal of the
instant action was completely without an objectively reasonable basis here, so it would be
inappropriate to award fees to Plaintiff. The Court therefore denies Plaintiffs’ request for fees.
Pl. Reply Br. at 8; see Gloucester Cnty. Imp. Auth. v. Gallenthin Realty Dev., Inc., No. 07-cv5328, 2008 WL 336784, at *8 (D.N.J. Feb. 5, 2008) (quoting Newton v. Tavani, 962 F. Supp. 45,
48 (D.N.J. 1997)).
For the reasons above, the Court will grant Plaintiff's motion to remand this matter to the
Superior Court of New Jersey, Bergen County, and will deny Plaintiff's request for fees. An
appropriate Order accompanies this Opinion.
Date: October 30, 2015
/s Madeline Cox Arleo
MADELINE COX ARLEO
UNITED STATES DISTRICT JUDGE
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?