Karmaloop, Inc. v. ODW Logistics

Filing 31

Judge Joseph L. Tauro: ORDER entered. MEMORANDUM and ORDER(Geraldino-Karasek, Clarilde) [Transferred from Massachusetts on 3/21/2013.]

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
KARMALOOP, INC.,
Plaintiff,
v.
ODW LOGISTICS, INC.,
Defendant.

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Civil Action No. 12-11857-JLT

MEMORANDUM
March 21, 2013
TAURO, J.
I.

Introduction
Plaintiff Karmaloop, Inc. (“Karmaloop”) brings this action against Defendant ODW

Logistics, Inc. (“ODW”) for breach of contract and related tort claims. ODW now moves to
transfer this action under 28 U.S.C. § 1404(a) to the U.S. District Court for the Southern District
of Ohio. For the following reasons, ODW’s Motion to Transfer [#7] is ALLOWED.
II.

Factual Background
Karmaloop is an online clothing retailer based in Massachusetts. ODW is a warehousing

and logistics company based in Ohio. In July 2006, Karmaloop and ODW signed an agreement
(“Original Contract”), in which ODW agreed to provide its storage and distributional services to
Karmaloop in Ohio.1 The Original Contract contained an Ohio choice-of-law provision,2 but no

1

Compl. Ex. 1, at 1-2 [#1-1].

2

Id. at 8 (“This Agreement shall be deemed to have been entered into and executed in the
State of Ohio and shall be construed, performed and enforced in all respects in accordance with
1

forum selection clause. The Original Contract also allowed either party to unilaterally terminate
the contract for convenience.3
Karmaloop alleges that ODW breached the Original Contract in 2010 and 2011.4 As a
result, Karmaloop exercised its right to terminate the Original Contract in February 2012.5 The
parties signed a second contract, the May 2012 Transition Services Agreement (“TSA”), to
“effectuate a smooth and orderly” termination to the parties’ contractual relationship.6 Under the
plain terms of the TSA, the Original Contract was “attached hereto and incorporated”7 into the
TSA. Finally, the TSA contained a forum selection clause, whereby both parties agreed that the
venue for any litigation would rest exclusively in Franklin County, Ohio.8
Karmaloop sued ODW in the District of Massachusetts on October 3, 2012 for breach of
contract and related tort claims. ODW filed a related action against Karmaloop in the Southern
District of Ohio on October 29, 2012, seeking a declaratory judgment of ODW’s obligations under
the TSA.9 ODW now moves to transfer the present action to the Southern District of Ohio.

the laws of the state.”).
3

Id. at 6.

4

Compl. ¶¶ 10-33 [#1].

5

Pl.’s Opp’n to Def.’s Mot. to Transfer, at 2 [#19].

6

Exs. in Supp. of Def.’s Mot. to Transfer Part 2, at 4 [#10].

7

Id.

8

Id. at 11 (“Should litigation be required to resolve any such disputes, the parties hereby
consent to personal jurisdiction of the state and federal courts residing in Franklin County, Ohio
as the sole and exclusive jurisdiction and venue . . . .”).
9

See ODW Logistics, Inc. v. Karmaloop, Inc., No. 12-996 (S.D. Ohio filed Oct. 29,

2012).
2

III.

Discussion
The transfer statute, 28 U.S.C. § 1404, provides in relevant part:
For the convenience of parties and witnesses, in the interest of justice, a district court
may transfer any civil action to any other district or division where it might have been
brought.10
This statute grants district courts broad discretion in making transfer decisions.11 Although

courts generally give presumptive weight to the plaintiff’s choice of forum, this presumption may
give way to other overriding considerations.12 Because the parties do not dispute that Karmaloop
could have filed this action in the Southern District of Ohio, the question presented is whether
convenience and the interests of justice warrant transfer. This court finds that they do.
First, Karmaloop’s cause of action arose in Ohio. The parties entered into the relevant

10

28 U.S.C. § 1404(a) (2006).

11

Codex Corp. v. Milgo Elec. Corp., 553 F.2d 735, 737 (1st Cir. 1977).

12

This court considers and weighs a number of private and public interest factors in
resolving ODW’s motion to transfer. The Supreme Court described these factors as follows:
The factors pertaining to the private interests of the litigants included the
“relative ease of access to sources of proof; availability of compulsory process
for attendance of unwilling, and the cost of obtaining attendance of willing,
witnesses; possibility of view of premises, if view would be appropriate to the
action; and all other practical problems that make trial of a case easy, expeditious
and inexpensive.” The public factors bearing on the question included the
administrative difficulties flowing from court congestion; the “local interest in
having localized controversies decided at home”; the interest in having the trial
of a diversity case in a forum that is at home with the law that must govern the
action; the avoidance of unnecessary problems in conflict of laws, or in the
application of foreign law; and the unfairness of burdening citizens in an
unrelated forum with jury duty.
Piper Aircraft Co. v. Reyno, 454 U.S. 235, 241 n.6 (1981) (citations omitted); see also Atari v.
United Parcel Serv., 211 F. Supp. 2d 360, 362 (D. Mass. 2002).
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contracts in Ohio, rendered all services under the Original Contract in Ohio, and committed all acts
and omissions that form the basis for Karmaloop’s complaint in Ohio. These facts “weigh heavily
in favor of transfer.”13
Second, Ohio law governs Karmaloop’s claims. Karmaloop does not dispute that the Ohio
choice-of-law provision in the Original Contract is valid. Ohio courts are better equipped to apply
Ohio law because they are more “at home with the law that must govern the action.”14
Third, the parties have a related action pending in the Southern District of Ohio. The
related action, like this action, requires an adjudication of the parties’ rights and liabilities under the
Original Contract and the TSA. Judicial economy favors transfer and consolidation.15
Fourth, given both parties’ submission of witness and document lists, a majority of relevant
evidence appears to be located in Ohio. Although any decision “necessarily will result in one side
being inconvenienced,” the net convenience of the parties tips in favor of an Ohio venue.16
Finally, Karmaloop’s lawsuit relates to the TSA, a contract that contains an Ohio forum
selection clause.17 The TSA expressly incorporates the Original Contract by reference.18 Under

13

See Wellons v. Numerica Sav. Bank, 749 F. Supp. 336, 337 (D. Mass. 1990).

14

Piper Aircraft Co., 454 U.S. at 241 n.6; see also Jackson Nat’l Life Ins. Co. v.
Economou, 557 F. Supp. 2d 216, 223-24 (D.N.H. 2008) (“[S]tanding alone, a requirement to
apply Florida law favors . . . a transfer to a Florida venue [because] Florida is better versed in, and
in a better position to apply, Florida law.”).
15

Wellons, 749 F. Supp. at 338.

16

Atari, 211 F. Supp. 2d at 364-65.

17

Under Ohio law, forum selection clauses between two commercial parties are
presumptively valid, “absent a strong showing” of fraud. Kennecorp Mortg. Brokers, Inc. v.
Country Club Convalescent Hosp., 610 N.E.2d 987, 989 (Ohio 1993) (citing M/S Bremen v.
Zapata Off-Shore Co., 407 U.S. 1, 15 (1972)). Karmaloop does not challenge the legality of the
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Ohio contract law, this incorporation by reference requires that both the Original Contract and the
TSA be read together as one document.19 Thus, the TSA’s forum selection clause also favors a
transfer of this case to the Southern District of Ohio.20
IV.

Conclusion
For the foregoing reasons, Defendant ODW’s Motion to Transfer [#7] is ALLOWED. This

case is transferred to the Southern District of Ohio.

AN ORDER HAS ISSUED.
/s/ Joseph L. Tauro
United States District Judge

forum selection clause.
18

Exs. in Supp. of Def.’s Mot. to Transfer Part 2, at 4 [#10] (“[The Original Contract]
between the parties dated July 1, 2006, as amended by instrument dated December 31, 2008, [is]
attached hereto and incorporated as Exhibit A.”).
19

Liberty USA Corp. v. Buyer’s Choice Ins. Agency, 386 F. Supp. 2d 421, 424 (S.D.N.Y.
2008) (“According to Ohio law, ‘[d]ocuments that are incorporated by reference into a contract
are to be read as though they are restated in the contract.’” (alteration in original) (quoting
Blanchard Valley Farmers Coop. v. Carl Niese & Sons Farms, 758 N.E.2d 1238, 1244 (Ohio Ct.
App. 2001))); Christe v. GMS Mgmt. Co., 705 N.E.2d 691, 693 (Ohio Ct. App. 1997) (“Where
one instrument incorporates another by reference, both must be read together.” (citing 18 Ohio
Jurisprudence, Contracts § 152 (3d ed. 1980))). Additionally, the parties executed a release
agreement pursuant to the TSA on July 15, 2012 (“Release”). Exs. in Supp. of Def.’s Mot. to
Transfer Part 4, at 1-2 [#12]. The Release holds the parties harmless for all contractual claims,
“whether pursuant to the Original Contract (referenced and defined in the [TSA]), any contract or
otherwise arising under law or equity.” Id. at 1. The Release’s express reference to both the
Original Contract and the TSA provides additional support for the conclusion that all of the
parties’ contracts must be read together.
20

See, e.g., Lambert v. Kysar, 983 F.2d 1110, 1121 (1st Cir. 1993) (“[T]he contracting
parties are bound to the forum selected in their contract.”).
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