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Viper Publishing, LLC v. Bailey

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

December 14, 2017

VIPER PUBLISHING, LLC, Plaintiff,
v.
HOWARD BAILEY, Jr. p/k/a Chingy, Defendant.

          ORDER

          Graham C. Mullen United States District Judge

         THIS MATTER is before the Court on Defendant's Motion to Dismiss (Doc. No. 13). For the following reasons, this Motion is denied.

         I. BACKGROUND

         Plaintiff Viper Publishing, LLC (“Viper”), is a Nevada limited liability company with its principal place of business in North Carolina. Viper is a digital entertainment company. Defendant Howard Bailey, Jr. (“Bailey”), is a musical recording artist and performer who is professionally known as “Chingy.” The owner of Viper is Leslie Charles King II (“King”). King is a licensed attorney in North Carolina, and King previously provided “management services” to Bailey pursuant to an oral agreement (the “Management Agreement”).

         According to the Complaint, Viper and Bailey entered into a Purchase Agreement on April 25, 2014. Under the Purchase Agreement, Viper acquired (among other things) all of Bailey's right, title, and interest to any digital performance royalties for the transmission and reproduction of sound recordings by Bailey. SoundExchange, a nonprofit collective management organization that collects and distributes digital performance royalties, managed royalties on behalf of Bailey. Up until April 2017, Viper received all of Bailey's SoundExchange royalties pursuant to the Purchase Agreement. In April 2017, Bailey changed the bank account information applicable to the SoundExchange recordings in order to route royalty payments to himself, instead of to Viper.

         Viper sent a Demand Letter to counsel for Bailey on April 12, 2017, and when Bailey refused to comply, Viper filed a Complaint on June 9, 2017, alleging five counts of breach of contract and seeking relief in the form of liquidated damages, attorney's fees and costs, and a declaratory judgment. Viper properly served its Complaint on Bailey on or before August 21, 2017. When Bailey did not timely answer, Viper moved for and received an entry of default, and then subsequently moved for a default judgment. Bailey then made an appearance through counsel and moved to set aside the entry of default, which this Court granted.

         When he moved to set aside the entry of default, Bailey simultaneously filed this Motion to Dismiss for lack of personal jurisdiction.

         II. STANDARD OF REVIEW

         “When personal jurisdiction is properly challenged under Rule 12(b)(2), the jurisdictional question is to be resolved by the judge, with the burden on the plaintiff ultimately to prove grounds for jurisdiction by a preponderance of the evidence.” Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 396 (4th Cir. 2003). “If jurisdiction turns on disputed facts, the court may resolve the challenge after a separate evidentiary hearing, or may defer ruling pending receipt at trial of evidence relevant to the jurisdictional question.” Co Star Realty Information, Inc. v. Meissner, 604 F.Supp.2d 757, 763 (D. Md. 2009) (citing Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989)). If “a district court decides a pretrial personal jurisdiction motion without conducting an evidentiary hearing, the plaintiff need only make a prima facie showing of personal jurisdiction.” Carefirst, 334 F.3d at 396. In determining if there is jurisdiction, “the court must take all disputed facts and reasonable inferences in favor of the plaintiff.” Id.

         III. DISCUSSION

         The only basis for personal jurisdiction that Viper asserts in this case is the forum selection clause of the Purchase Agreement. In ¶ 6.2(a) of the Agreement, the parties agreed to “irrevocably submit to the jurisdiction of the North Carolina courts (state and federal) in any action or proceeding involving a controversy arising out of this Agreement and irrevocably waive any right to contest the jurisdiction or power or decision of that court other than appropriate appellate courts.”

         Forum selection clauses act as a waiver to personal jurisdiction objections, Consulting Engineers Corp. v. Geometric Ltd., 561 F.3d 273, 281 n.11 (4th Cir. 2009), and forum selection clauses are prima facie valid, M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972). The presumptive validity of forum selection clauses can only be overcome “by a clear showing that they are ‘unreasonable' under the circumstances.” Allen v. Lloyd's of London, 94 F.3d 923, 928 (4th Cir. 1996). There are four ways for forum selection clauses to be unreasonable:

(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 ...

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