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Ww Healthcare Consultants, LLC v. Lintech, LLC

United States District Court, W.D. North Carolina, Statesville Division

July 17, 2014

WW HEALTHCARE CONSULTANTS, LLC, Plaintiffs,
v.
LINTECH, LLC, Defendants.

ORDER GRANTING MOTION TO DISMISS ON 12(b)(3).

RICHARD L. VOORHEES, District Judge.

THIS MATTER is before the Court on Defendant Lintech, LLC's Motion to Dismiss under Rule 12(b)(3) of the Federal Rules of Civil Procedure and Local Rules 5.2.1(c) and 7.1 filed December 9, 2013. For the reasons set forth therein, the Motion will be GRANTED.

I. PROCEDURAL AND FACTUAL BACKGROUND

In November of 2011, WW Healthcare Consultants ("Plaintiff") entered into a Software Licensing Agreement and a Training and Software Maintenance Agreement (collectively, the "Agreement") with Lintech, LLC ("Defendant"). The Agreement provided that Defendant would install and maintain a software system in Plaintiff's six business facilities to streamline Plaintiff's business operations. The Agreement contained a forum selection clause that stated: "Jurisdiction for any dispute hereunder shall lie only in the federal or state courts located in the State of New Jersey." (Doc. 12-1 at 3, ¶ 5.2; Doc. At 6, ¶ 16.2).

On October 16, 2013, Plaintiff filed this suit in the United States District Court for the Western District of North Carolina alleging six causes of action for fraud in the inducement, fraud and intentional misrepresentation, negligent misrepresentation, breach of contract, conversion, and unjust enrichment.

On December 9, 2013, Defendant filed a motion to dismiss for improper venue under Rule 12(b)(3) of the Federal Rules of Civil Procedure. Defendant claims that the forum selection clause is mandatory, providing that any dispute shall be litigated in the federal or state courts located in the State of New Jersey. Plaintiff maintains that the forum selection clause is permissive and that the Western District of North Carolina is the proper venue under 28 U.S.C. §1391(b).

Plaintiff is a North Carolina company with its principal place of business in Hickory, Catawba County, North Carolina with additional locations in Florida, Kentucky and Illinois. (Doc. 1 at 1). Defendant is a Delaware company with its principal place of business in New Jersey. Id. Under 28 U.S.C. §1332(c)(1) a corporation is a citizen of every state in which it is incorporated and where it has its principal place of business. This Court has diversity jurisdiction over this matter under 28 U.S.C. § 1332, because the action involves citizens of different states and the amount in controversy exceeds $75, 000.

II. LEGAL STANDARD

The Fourth Circuit has held that, "a motion to dismiss based on a forum-selection clause should be properly treated under Rule 12(b)(3) as a motion to dismiss on the basis of improper venue." Gita Sports Ltd. v. SG Sensortechnik GmbH & Co. KG , 560 F.Supp.2d 432, 435 (W.D. N.C. 2008) (citing Sucampo Pharm., Inc. v. Astellas Pharm., Inc., 471 F.3d 544, 550 (4th Cir. 2006). Thus, under Rule 12(b)(3), a case may be dismissed for improper venue based on a forum selection clause. Id. at 435.

III. DISCUSSION

The Court must determine (1) whether the forum-selection clause is reasonable and therefore valid and enforceable; and (2) if the clause is reasonable, whether it is mandatory or permissive. A forum selection clause is presumed valid and should be enforced unless it is found to be unreasonable. Allen v. Lloyd's of London , 94 F.3d 923, 928 (4th Cir. 1996); Bremen v. Zapata Off-Shore Co. , 407 U.S. 1, 10 (1972). A forum selection clause is unreasonable if (1) its formation was induced by fraud or overreaching; (2) the complaining party would for all practical purposes be deprived of his day in court because of grave inconvenience or unfairness of selected forum; (3) the fundamental fairness of the chosen law may deprive the plaintiff of a remedy; or (4) the enforcement would contravene strong public policy of the forum state. Baker v. Adidas Am., Inc. 334 Fed. App. 356, 360 (4th Cir. 2009); Allen , 94 F.3d at 928; Carnival Cruise Lines, Inc. v. Shute , 499 U.S. 585, 595 (1991).

a. Validity of Forum Selection Clause

Here, Plaintiff has not shown that the forum selection clause is unreasonable; therefore, it is valid and must be enforced. First, the formation of the agreement was not induced by fraud or overreaching. Both parties are professional companies that engaged in approximately nine months of negotiations prior to entering the Agreement. (Doc. 15 at 2). Further, Plaintiff has presented no evidence to indicate that the parties possessed unequal bargaining power. See AC Controls Co., Inc. v. Pomeroy Computer Res., Inc. 284 F.Supp.2d 357, 360 (W.D. N.C. 2003) (holding that neither party possessed superior bargaining power and that the forum selection clause was enforceable.) Finally, the forum selection clause was bargained for and explicitly stated in a stand-alone paragraph in the Agreement. This placement lacks any signs of fraud and is a clear expression of the parties' intentions as to the desired forum. Bremen , 407 U.S. at 12 (stating that "it is important to give effect to the parties' expectations so that confidence in contract formation is maintained.")

Second, Plaintiff would not be deprived of Plaintiff's day in court because of grave inconvenience or unfairness of selected forum. In order to establish unreasonableness, the party opposing the enforcement of the forum selection clause has a heavy burden of showing that trial in the chosen forum would be so difficult and inconvenient that the party would be denied a meaningful day in court. Bremen , 407 U.S. 1, 18 (1972). Plaintiff claims that bringing a large number of witnesses to testify at trial in New Jersey would place an extraordinary burden on Plaintiff by removing necessary personnel from Plaintiff's business. However, this Court has concluded that, "[I]n a diversity case, whichever forum is ultimately selected will inevitably burden one side or the other by requiring them to bring themselves and their witnesses from another state." AC Controls Co., 284 F.Supp.2d at 361-62; Brock v. Entre Computer Centers, Inc. , 933 F.2d 1253, 1258 (4th Cir. 1991). Further, the burden of litigating in a distant forum was inevitably ...


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