United States District Court, E.D. North Carolina, Western Division
C. DEVER III Chief United States District Judge.
January 4, 2016, Valencell, Inc. ("Valencell")
filed a complaint in this court against Apple Inc.
("Apple" or "defendant") alleging patent
infringement, breach of contract, and unfair and deceptive
trade practices [D.E. 1]. On March 2, 2016, Valencell amended
its complaint, removing its claim for breach of contract
[D.E. 15]. On March 21, 2016, Apple answered, asserting seven
affirmative defenses and eight counterclaims [D.E. 17]. On
April 11, 2016, Valencell moved to dismiss Apple's
counterclaims [D.E. 19] and filed a memorandum in support
[D.E. 20]. On May 5, 2016, Apple amended its answer [D.E.
27]. On May 6, 2016, Apple responded to Valencell's
motion to dismiss [D.E. 29]. On May 17, 2016, Apple moved to
transfer the case to the Northern District of California
[D.E. 30] and filed a memorandum in support [D.E. 31]. On
June 24, 2016, Valencell responded to Apple's motion to
transfer [D.E. 39]. As explained below, the court denies
Apple's motion to transfer and denies Valencell's
motion to dismiss as moot.
is a Delaware corporation with its principal place of
business in Raleigh, North Carolina. Am. Compl. [D.E. 15]
¶ 1. Valencell holds patents relating to
"wrist-based heart sensor technology." Id.
¶¶ 12, 16, 23, 30, 37. Apple is a California
corporation with its principal place of business in
California. Id. ¶ 2; Am. Ans. [D.E. 27] ¶
2; In 2013, Apple began developing the Apple Watch. Am.
Compl. ¶ 5; Am. Ans. ¶ 5. In March 2013, Apple
employees accessed Valencell's website and downloaded
information. Am, Compl. ¶¶ 6-8; Am. Ans.
¶¶ 6-8. Valencell's website required
prospective downloaders to provide identifying information
before accessing certain documents, and the Apple employees
provided fictitious identifying information. Am. Compl.
March 29 and 30, 2013, Valencell and Apple signed a
confidentiality agreement that contained a forum-selection
clause. [D.E. 31-1] 2-3, 6-8. In June 2013, employees of
Apple and Valencell met to discuss using Valencell's
technology in Apple products. Am. Compl. ¶ 9; Am. Ans.
¶ 9. Pursuant to the confidentiality agreement, the two
companies cooperated through 2013 and into 2014 to
investigate implementing Valencell's technology into
Apple's products. Am. Compl. ¶¶ 10-12; Am. Ans.
¶¶ 10-12. On November 7, 2013, Valencell and Apple
entered into a second confidentiality agreement that
superseded the first. [D.E. 31-1] 10-13. That agreement
contained a forum-selection clause, restated here in its
ENTIRE AGREEMENT AND GOVERNING LAW. This
Agreement constitutes the entire agreement with respect to
the Confidential Information disclosed pursuant to this
Agreement and supersedes all prior or contemporaneous oral or
written agreements concerning such Confidential Information,
including the Apple Discloses NDA dated May 29, 2013. The
parties also agree that no information provided by Valencell
to Apple prior to the execution of this Agreement is to be
considered Valencell Confidential Information, regardless of
how such information may have been marked. The parties
further agree that notwithstanding any click-through,
embedded, web-based, or other licenses displayed or
associated with the distribution and use of the
"PerformTek" app made available to Apple by
[Valencell] through the TestFlight beta test platform, the
use of the "PerformTek" app by Apple shall be
solely governed by the terms of this Agreement. This
Agreement may not be amended except by written agreement
signed by authorized representatives of both parties. This
Agreement will be governed by and construed in accordance
with the laws of the State of California, excluding that body
of California law concerning conflicts of law. The parties
further submit to and waive any objections to the exclusive
jurisdiction of and venue in any of the following forums:
U.S. District Court for the Northern District of California,
California Superior Court for Santa Clara County, or any
other forum in Santa Clara County, for any litigation arising
out of this Agreement.
24, 2015, Apple began selling the Apple Watch, which
incorporated a heart-rate sensor. Am. Compl. ¶ 13; Am.
Ans. ¶ 13.
asks this court to transfer the action to the United States
District Court for the Northern District of California.
Courts will generally honor the parties' "contract
[to] confer jurisdiction and venue on a particular court...
so long as it is not unreasonable." Albemarle Corp.
v. AstraZeneca UK Ltd.. 628 F.3d 643, 649-50 (4th Cir.
2010). Federal courts follow the federal law of contract
interpretation to determine the scope of a forum-selection
clause. Id. at 650 (collecting cases). In doing so,
a federal court must first determine if a particular
forum-selection clause applies to a plaintiffs claims. See
Robinson v. Ladd Furniture. Inc.. 995 F.2d 1064, at
*4 (4th Cir. 1993) (per curiam) (unpublished table decision).
forum-selection clause in this case covers "any
litigation arising out of the nondisclosure agreement. [D.E.
31-1] 12-13. For guidance, the court looks to cases
interpreting arbitration clauses which are "in effect, a
specialized kind of forum-selection clause." Scherk
v. Alberto-Culver Co.. 417 U.S. 506, 519 (1974).
However, courts freely construe arbitration agreements in
favor of arbitration, see Moses H. Cone Mem'l Hosp.
v. Mercury Constr. Corp.. 460 U.S. 1, 24-25 (1983), but
have no corresponding preference in favor of transfer
pursuant to forum-selection clauses. Courts distinguish
between arbitration clauses which use the phrase
"arising out of or the similar phrase "arising
under" and those that include broader language like
"related to" or "in connection with." See
Great Am. Tns. Co. v. Hinkle Contracting
Corp.. 497 F.App'x 348, 3 54 (4th Cir. 2012)
(unpublished); Burlington Ins. Co. v. Trvgg-Hansa Ins.
Co. AB. 9 F.App'x 196, 201 n.6 (4th Cir. 2001) (per
curiam) (unpublished); Am. Recovery Corp. v. Computerized
Thermal Imaging. Inc.. 96 F.3d 88, 92-93 (4th
Cir. 1996). Other courts have held that a cause of action
falls within the scope of an "arising under" or
"arising out of clause only if the cause of action
relates to the interpretation, performance, or
non-performance of the underlying contract. See Cape
Flattery Ltd. v.Titan Mar.. LLC. 647 F.3d 914, 921-22
(9th Cir. 2011); Phillips v. Audio Active. Ltd.. 494
F.3d 378, 389-90 (2d. Cir. 2007); Qmron Healthcare. Inc.
v. Maclaren Exps. Ltd., 28 F.3d 600, 602 (7th Cir.
1994); Mediterranean Enters, v. Ssangvong Corp.. 708
F.2d 1458, 1463-64 (9th Cir. 1983); see also Harlev v.
Bank of N.Y. Mellon. No. 1:15-CV-1384, 2015 WL 6956564,
at *3 (M.D. Pa. Nov. 10, 2015) (unpublished). By contrast, if
an arbitration clause uses broader language, such as
"arising out of or related to" or "arising out
of or connected with, " then that clause covers any
claim that has a "significant relationship" with
the contract. See Am. Recovery Corp.. 96 F.3d at 93;
see also Prima Paint Corp. v. Flood & Conklin Mfg.
Co.. 388 U.S. 395, 398 (1967).
forum-selection clause at issue applies to "litigation
arising out of this Agreement." [D.E. 31-1] 13.
Valencell's claims of patent infringement and unfair and
deceptive trade practices do not arise out of the contract.
Therefore, the claims are not subject to the forum-selection
court now addresses whether it should nonetheless transfer
the action to the Northern District of California. "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" 28 U.S.C. § 1404(a). In analyzing a motion
to transfer, the court initially determines whether the
action could have been brought in the proposed transferee
district. See, e.g.. Szulikv. TAGV.I..Inc. 858
F.Supp.2d 532, 547 (E.D. N.C. 2012) (collecting cases). If
so, the court must then decide whether to transfer venue.
Id. To determine whether an action could have been
brought in the transferee forum, a court must find that
personal jurisdiction and venue would have been proper in the
proposed transferee district had the plaintiffs filed
suitthere. See, e.g., Hoffman v. Blaski. 363 U.S.
335, 340-44 (1960). Personal jurisdiction over Apple would
have been proper in the Northern District of California based
on the presence of Apple's corporate headquarters in that
district. See Goodyear Dunlop Tires Operations. S.A. v.
Brown. 564 U.S. 915, 923-24 (2011). Venue also would
have been proper in the Northern District of California
because a substantial part of the events and omissions giving
rise to Valencell's claims occurred in that district.
SeeAm.Compl.¶¶2, 5-14;28U.S.C. §§
1391(b)(2), 1400(b). Therefore, personal jurisdiction and
venue would have been proper in the Northern District of
California had Valencell originally filed there.
the court must decide whether to transfer the case. See
Szulik. 858 F.Supp.2d at 548; Dacar v. Savbolt
LP. No. 7:10-CV-12-F, 2011 WL 223877, at *2 (E.D. N.C.
Jan. 24, 2011) (unpublished); Blue Mako. Inc. v.
Minidis. 472 F.Supp.2d 690, 703 (M.D. N.C. 2007). A
district court must "consider four factors when deciding
whether to transfer venue: (1) the weight accorded to
plaintiffs choice of venue; (2) witness convenience and
access; (3) convenience of the parties; and (4) the interest
of justice." Trustees of the Plumbers and
Pipefitters Nat'l Pension Fund v. Plumbing Servs..
Inc.. 791 F.3d436, 444(4thCir.2015). In balancing
these factors, a district court has substantial discretion to
decide whether to transfer venue. See Stewart Org.. Inc.
v. Ricoh Corp.. 487 U.S. 22, 29 (1988); Brock v.
Entre Comput. Ctrs.. Inc., 933 F.2d 1253, 1257 (4th Cir.
1991); Jenkins v. Albuquerque Lonestar Freightliner.
LLC. 464 F.Supp.2d 491, 493 (E.D. N.C. 2006). The court
now considers each factor in turn.
the first factor, the weight accorded to plaintiffs initial
choice of forum, Valencell initially filed this action in the
Eastern District of North Carolina. Thus, the first factor
weighs against transfer.
second factor concerns accessibility of evidence and
witnesses. Although many important potential
witnesses-particularly Apple employees-may reside in the
Northern District of California, others reside in the Eastern
District of North Carolina. Therefore, even if ...