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TSI USA LLC v. Uber Technologies Inc.

United States District Court, N.D. Texas, Dallas Division

January 11, 2017

TSI USA, LLC, Plaintiff,
v.
UBER TECHNOLOGIES, INC., Defendant.

          MEMORANDUM OPINION AND ORDER OF TRANSFER

          DAVID L. HORAN UNITED STATES MAGISTRATE JUDGE.

         Defendant Uber Technologies, Inc. (“Defendant” or “Uber”) has filed a Motion to Transfer Case out of District/Division pursuant to 28 U.S.C. § 1404. See Dkt. No. 10 (the “Motion to Transfer Venue”). United States District Judge Sam A. Lindsay has referred the motion to the undersigned United States Magistrate Judge for hearing, if necessary, and determination pursuant to 28 U.S.C. § 636(b). See Dkt. No. 13.

         Plaintiff TSI USA, LLC (“Plaintiff” or “TSI”) filed a response, see Dkt. No. 16, and Uber has filed a reply, see Dkt. No. 18.

         The Court GRANTS Uber's Motion to Transfer Venue [Dkt. No. 10] for the reasons explained below.

         Background

         TSI is a Delaware limited liability company whose principal place of business is Dallas, Texas. It “contracts with businesses and individuals to manage, schedule, book and optimize their airline, hotel, and related travel needs.” Dkt. No. 7 at 3.

         Uber is a software technology company organized under Delaware law. Its principal place of business is San Francisco, California, where about 3, 300 of its 5, 800 U.S. employees work. It “connects riders to automobile drivers in approximately 150 cities in 50 countries.” Id.

         In 2014, Uber circulated a Request for Proposals (the “RFP”) seeking proposals from travel agencies for corporate travel services to be provided to its employees. Uber alleges that TSI responded to the RFP with certain misrepresentations about the size and scale of TSI's operation.

         Uber ultimately agreed to pay TSI to create an international travel services program that Uber's employees could utilize to make travel arrangements. The parties executed two contracts on November 24, 2014 to commemorate this arrangement - (i) a Services Agreement (the “Services Agreement”) and (ii) a Statement of Work for Uber Global Travel Management Services (the “Statement of Work” or “SOW”; collectively with the Services Agreement, the “Contract”).

         TSI then filed this lawsuit. TSI alleges that, after Uber “induced TSI to spend capital and deploy personnel to create and implement an international travel services program, ” it “constantly added and changed specifications, ” prematurely terminated the parties' agreements, and “refuse[d] to pay TSI” the money that Uber owes. Id. at 1. TSI also alleges that “Uber directed its new travel services vendor to hire away at least one of TSI's employees ... in breach of that employee's contract with TSI” and that Uber's management “began to make false, defamatory and damaging comments to at least one TSI client.” Id. at 2.

         “Uber anticipates filing a counterclaim.” Dkt. No. 11 at 3. Uber alleges that TSI is a small limited liability company and argues that TSI therefore “committed fraud in the inducement by representing itself [to Uber] as a Delaware corporation with global operations and 3, 000 employees in 33 countries and $3 billion in revenue, and by representing it could provide services it lacked the personnel or capacity to provide.” Id. at 4. Uber also argues that “TSI committed numerous material breaches of the [parties' agreements], including failing to provide required services and failing to launch the travel program in the required timeframe.” Id.

         Uber has since filed the pending Motion to Transfer Venue. Uber contends that this case should be transferred to the Northern District of California's San Francisco Division pursuant to Section 12.1 of the Services Agreement (the “Forum-Selection Clause”). The Forum-Selection Clause provides that:

This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to its choice or conflict of laws provisions. Consultant hereby consents to exclusive jurisdiction and venue in the state and federal courts sitting in San Francisco County, California.

         Uber argues that there are “no extraordinary circumstances” to permit this Court to disregard the clause. Id. at 2.

         TSI disagrees. It argues that the Forum-Selection Clause is no longer in effect in light of Section 11.2 of the Agreement (the “Survival Clause”). The Survival Clause provides, in pertinent part, that “[o]utstanding payment obligations and Sections 1, 3-9, 10.3, and 11 of this Agreement shall survive any termination of this Agreement.” See Dkt. No. 16 at 2. TSI asserts that the Forum-Selection Clause - that is, Section 12.11 of the Services Agreement - does not apply to this dispute because it was not among the provisions enumerated in the Survival Clause. It also argues that the Forum-Selection Clause is too ambiguous to be unenforceable and would not apply to its Tortious Interference and Defamation claims even if enforceable.

         Legal Standards and Analysis

         I. The Forum-Selection Clause does not survive termination of the Contract.

         The Court finds that the Forum-Selection Clause only applies to dispute litigated during the life of the Contract for the reasons explained below. Because the Forum-Selection Clause consequently does not apply to this dispute, the Court's analysis does not address TSI's arguments concerning either the ambiguity of the Forum-Selection Clause or its applicability to TSI's specific claims.

         A. Texas' choice-of-law rules determine the body of law that governs the interpretation of the Survival Clause and the Forum-Selection Clause.

         Courts in the Fifth Circuit apply the forum state's choice-of-law rules to interpret the scope of a forum-selection clause and federal law to determine the enforceability of a forum-selection clause. See Barnett v. DynCorp International, L.L.C., 831 F.3d 296, 301-02 (5th Cir. 2016). But, as the Fifth Circuit has recently remarked, it is less clear what body of law governs when determining the validity of a forum-selection clause. See id.

         In Barnett v. DynCorp International, L.L.C., the Fifth Circuit observed that “the ‘validity' of a forum-selection clause is [arguably] a matter of substantive contract law, ” in which case, courts apply the body of law dictated by a state law's choice-of-law rules. Id. But the Court of Appeals also noted that “validity is [arguably] just part of the federal law of enforceability, which heavily favors forum-selection clauses.” Id. at 302.

         The Court will apply the body of law dictated by Texas' choice-of-law rules to this dispute. TSI does not appear to challenge the validity of the Forum-Selection Clause. It, instead, argues that the parties agreed that the Forum-Selection Clause only applied during the life of the Contract, not after termination. And that is a question of scope, not validity.

         The Court acknowledges that TSI's argument could be framed as a challenge to the Forum-Selection Clause's continued validity but is still inclined to apply Texas' choice-of-law rules even if the issue is so framed - without weighing in on the dispute discussed in Barnett as to what body of law typically applies when a forum-selection clause's validity is wholly in question. In Barnett, the plaintiff argued that the forum-selection clause was “void under Texas law” since “it directs litigation to a forum in which the limitations period of breach of an employment contract is less than two years” in violation of Texas Civil Practice & Remedies Code § 16.070. Id. at 300. In other words, the plaintiff challenged the forum-selection clause's validity by arguing that it was void by its terms under Texas law.

         This case is different. TSI's argument turns on the interpretation of the Survival Clause. If the Survival Clause lists every provision of the Contract that shall survive termination, as TSI contends, then the Forum-Selection Clause is only applicable during the life of the Contract. If the Survival Clause is only meant to apply to those provisions that would otherwise not survive the Contract and therefore does not apply to the Forum-Selection Clause, as Uber contends, then the Forum-Selection Clause does survive termination of the Contract.

         The Survival Clause's interpretation is a matter of substantive contract law that is governed by a state's choice-of-law rules. See Weber v. PACT XPP Techs., AG, 811 F.3d 758, 770 (5th Cir. 2016) (citing Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496-97 (1941)). The fact that the interpretation ...


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