United States District Court, N.D. Texas, Dallas Division
MEMORANDUM OPINION AND ORDER
FISH Senior United States District Judge
the court is the defendant's motion to dismiss (docket
entry 8) for improper venue pursuant to Federal Rule of Civil
Procedure 12(b)(3), and in the alternative, lack of subject
matter jurisdiction pursuant to Rule 12(b)(1). For the
reasons stated below, the defendant's motion is granted.
plaintiff, Shoebacca, Ltd. (“Shoebacca”), brings
this suit against the defendant, K-2 Corporation
(“K2”), for claims of fraud, negligence, and
detrimental reliance related to a contractual agreement
between the parties for the purchase and sale of shoes.
Notice of Removal, Exhibit A2 (“Original
Petition”) ¶¶ 9, 14-17 (docket entry 1).
Shoebacca is a wholesaler and retailer of sports shoes and
apparel. Id. ¶ 7. K2 is primarily engaged in
the business of manufacturing sports shoes and apparel.
Id. ¶ 8. On December 18, 2013, Shoebacca and K2
entered into a contract titled “Retail Dealer
Agreement” (“the Agreement”) governing all
K2 product orders made by Shoebacca. Motion to Dismiss for
Lack of Jurisdiction (“Motion to Dismiss”) at 1
(docket entry 8). The Agreement contains both a forum
selection and an arbitration clause, stating that all
disputes arising under the Agreement are to be resolved by
arbitration in the state of Washington. Appendix In Support
of Shoebacca Ltd.'s Response and Objection
(“Appendix In Support”), Exhibit 2 ¶ 7.5
(docket entry 12).
claims that as direct inducement to enter into a contract
with K2, K2 promised several benefits to Shoebacca, such as
allowing Shoebacca to participate in sponsorship to promote
its brand. Original Petition ¶ 9. Based on these
promises, Shoebacca purchased K2 products at prices higher
than what it would have otherwise paid. Id.
¶¶ 10-11. However, Shoebacca alleges that K2 has
since failed to honor any of its promises, leaving Shoebacca
with a large inventory of shoes for which it has overpaid.
Id. ¶¶ 11-14.
January 11, 2017, Shoebacca filed suit in the 162nd Judicial
District of Dallas County, Texas, asserting claims for
fraudulent inducement, fraud, negligence, and detrimental
reliance against K2. Id. ¶¶ 14-17; Notice
of Removal ¶ 1. On February 20, 2017, K2 timely removed
the action to this court based on diversity of citizenship
jurisdiction. Notice of Removal at 2. K2 then filed a
motion to dismiss pursuant to Federal Rule of Civil Procedure
12(b)(3) for improper venue due to the forum selection and
arbitration clauses in the Agreement. Motion to Dismiss at 1.
Alternatively, K2 also seeks dismissal pursuant to Rule
12(b)(1) for lack of subject matter jurisdiction.
Id. at 1, 5. Shoebacca subsequently filed a response
to K2's motion to dismiss, to which K2 filed a timely
reply. Plaintiff's Objections to Defendant's Motion
to Dismiss Pursuant to F.R.C.P. 12(b)(3) and 12(b)(1) and
Brief in Support (“Response”) (docket entry 11);
Defendant K-2 Corporation's Reply to Plaintiff's
Response to Defendant's Motion to Dismiss
(“Reply”) (docket entry 18). The motion is now
ripe for decision.
faced with a motion to dismiss based on an arbitration
clause, the Fifth Circuit has yet to explicitly decide
whether Rule 12(b)(1) or Rule 12(b)(3) is the proper rule.
Noble Drilling Services, Inc. v. Certex USA, Inc.,
620 F.3d 469, 472 n.3 (5th Cir. 2010); see also Murchison
Capital Partners, L.P. v. Nuance Communications, Inc.,
625 F. App'x 617, 626-27 (5th Cir. 2015) (noting that the
defendant “would have been entitled to prevail on a
Rule 12(b)(1) or 12(b)(3) motion to dismiss the case because
the dispute is covered by the arbitration clause.”).
Without deciding whether Rule 12(b)(3) or 12(b)(1) is the
proper rule here, the court first analyzes the pending motion
under Rule 12(b)(3) as it is the basis of the defendant's
primary argument. McGee v. Western Express, Inc.,
No. 3:15-CV-3673K, 2016 WL 1622632, at *2 (N.D. Tex. Apr. 5,
2016) (Horan, M.J.) (“[W]ithout deciding whether Rule
12(b)(1) or Rule 12(b)(3) is the proper rule here, because
the Agreement's arbitration clause contains a forum
selection clause, the undersigned will analyze the pending
motion under Rule 12(b)(3).”), report and
recommendation adopted, No. 3:15-CV-3673-K, 2016 WL
1627662 (N.D. Tex. Apr. 22, 2016). Because the court
concludes that the instant case is properly dismissed for
improper venue under Rule 12(b)(3), it does not reach the
defendant's 12(b)(1) argument.
Rule 12(b)(3) motion, the plaintiff has the burden of proving
that the chosen venue is proper. Psarros v. Avior
Shipping, Inc., 192 F.Supp.2d 751, 753 (S.D. Tex. 2002).
When reviewing the facts, “the court must accept as
true all allegations in the complaint and resolve all
conflicts in favor of the plaintiff.” Braspetro Oil
Services Company v. Modec (USA), Inc., 240 Fed.
App'x 612, 615 (5th Cir. 2007) (per curiam). Moreover, on
a Rule 12(b)(3) motion, the court may look outside of the
complaint and its attachments and review extrinsic materials,
including affidavits.See Lane v. Halliburton, 529 F.3d
548, 557 (5th Cir. 2008); Burkitt v. Flawless Records,
Inc., No. CIV. A. 03-2483, 2005 WL 6225822, at *4 (E.D.
La. June 13, 2005) (“Unlike a Rule 12(b)(6) motion, . .
. a court may consider extrinsic materials, including
affidavits and other materials, in determining whether venue
is proper.”). Conflicts in the parties' affidavits
must also be resolved in favor of the plaintiff. CIT
Group/ Commercial Services, Inc. v. Romansa Apparel,
Inc., No. 3:02-CV-1954-P, 2003 WL 169208, at *2 (N.D.
Tex. Jan. 21, 2003) (Solis, J.).
whether parties should be compelled to arbitrate a dispute
involves two considerations: (1) whether there is a valid
agreement to arbitrate; and (2) whether the dispute in
question falls within the scope of the arbitration agreement.
Graves v. BP America, Inc., 568 F.3d 221, 222 (5th
Cir. 2009) (per curiam). Shoebacca argues that venue in this
court is proper because the dispute at issue falls outside
the scope of the arbitration clause and is therefore not
subject to its terms. Response at 2-5. Because Shoebacca does
not dispute the validity of the arbitration clause, see
id., but merely the ...