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DSA Promotions LLC v. Vonage America, Inc.

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

February 27, 2018

DSA PROMOTIONS, LLC, Plaintiff,
v.
VONAGE AMERICA, INC., Defendants.

          MEMORANDUM OPINION AND ORDER

          SIDNEY A. FITZWATER UNITED STATES DISTRICT JUDGE.

         Defendant's motion to transfer under 28 U.S.C. § 1404(a) presents the question whether this suit should be transferred to the District of New Jersey under the terms of forum-selection clauses in two agreements. Concluding that it should be transferred under the forum-selection clause in at least one of the agreements, the court grants the motion.

         I

         This is an action by plaintiff DSA Promotions, LLC (“DSA”) against defendant Vonage America, Inc. (“Vonage”), in which DSA brings claims on a sworn account and for quantum meruit and unjust enrichment. Vonage removed the case to this court based on diversity of citizenship and now moves under 28 U.S.C. § 1404(a) to transfer the suit to the District of New Jersey under the terms of contractual forum-selection clauses in two agreements.

         Vonage is an Internet telephone service provider that offers business and residential telecommunication services based on Voice over Internet Protocol (commonly referred to as “VoIP”) technology. DSA is a limited liability company that markets, distributes, and sells telecommunication products and services.

         In 2012 Vonage and DSA entered into a contract (“Marketing Agreement”) for DSA to market, sell, and distribute Vonage's services and products. DSA agreed to sell these products “in designated locations in the U.S. in accordance [with] the terms of . . . executed Statement[s] of Work.” D. App. 18. The Marketing Agreement provided that its terms “shall be construed in accordance with the laws of the State of New Jersey, excluding such State's conflict of law provisions. Any claim arising out of or in any way related to this Agreement shall be brought in the state or federal courts sitting in New Jersey.” Id. at 14. It also stated that certain rights would survive when the Marketing Agreement terminated: “[t]he rights and obligations of either Party that by their natures would continue beyond the termination or expiration of this Agreement shall survive such termination or expiration. For example, the provisions of this Agreement regarding ownership of intellectual property, confidentiality, and limitation of liability shall survive.” Id.

         In accordance with the Marketing Agreement, Vonage and DSA then executed two statements of work: one dated January 31, 2012 (“SOW #1”), and the other dated July 15, 2015 (“SOW #2”). Under SOW #1, DSA agreed to market and sell Vonage's products in various movie theaters located in New Jersey, Virginia, Illinois, Georgia, Texas, and California. SOW #1 provided that DSA would hold and manage a select amount of inventory of Vonage's products, but that “[o]wnership in Vonage product remains with Vonage until purchased by the customer.” D. Supp. App. 7. Moreover, it stated that its terms “shall be governed by the Marketing Agreement.” Id. at 3.

         SOW #2 superseded SOW #1, and aimed to “expand the special events and locations in which [DSA] can sell Vonage Products and Services” to “grocery stores, restaurants, flea markets, fairs, and amusement parks.” Id. at 47. Regarding the products themselves, SOW #2 stated that they “shall be provided to [DSA] on a consignment model. [DSA] shall at no time be deemed a purchaser of the Products or to have any interest therein, legal or equitable, unless [DSA] purchases such Products for its own account.” Id. at 50. As with SOW #1, SOW #2 was “governed by the Marketing Agreement.” Id. at 47.

         Vonage terminated the Marketing Agreement on January 5, 2017. Later that month, on January 26, Vonage and DSA entered into a settlement agreement (“Settlement Agreement”). As part of the Settlement Agreement, Vonage supplemented a previous $463, 650 payment to DSA with an additional $400, 000. The Settlement Agreement stated that this “shall be deemed full and final compensation for any payments due and owing, or which may become due and owning, from Vonage to DSA under the [Marketing Agreement].” Id. at 72-73. This payment also

create[d] a “zero balance” due from Vonage to DSA for any and all disputes that have arisen, or that may hereafter arise, with respect to the parties' respective obligations under the [Marketing Agreement] and any and all Statements of Work entered into by the parties prior to the Effective Date hereof.

Id. at 73. The Settlement Agreement also contained the following choice of law and forum- selection clause: “[The Settlement Agreement] will be governed by and construed in accordance with the laws of the State of New Jersey, without reference to any conflicts of law principles. Any disputes regarding this Letter Agreement and Release shall be heard by the courts located in New Jersey.” Id. at 74.

         DSA alleges that, in February and March of 2017, it “tendered Inventory remaining in its possession, custody, and control to [Vonage], with the expectation that it would be compensated for the fair market value of these goods.” Pet. at 3. Vonage accepted the inventory, but refused to pay DSA's accompanying invoice. After sending Vonage a demand letter, DSA filed this suit in Texas state court.

         Vonage removed the case to this court, and now seeks to transfer the suit to the District of New Jersey in accordance with the forum-selection clauses contained in the Marketing and Settlement Agreements.[1] DSA opposes the motion.

         II

         28 U.S.C. § 1404(a) codifies “the doctrine of forum non conveniens for the subset of cases in which the transferee forum is within the federal court system.” Atl. Marine Constr. Co. v. U.S. Dist. Court for W. Dist. of Tex., U.S., 134 S.Ct. 568, 580 (2013). Section 1404(a) provides that, “[f]or 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 or to any district or division to which all parties have consented.” In cases where there is no forum-selection clause, district courts “must evaluate both the convenience of the parties and various public-interest considerations.” Atl. Marine, 134 S.Ct. at 581. District courts analyze § 1404(a) motions under the familiar private- and public-interest factors[2] and “decide whether, on balance, a transfer would serve ‘the convenience of parties and witnesses' and otherwise promote ‘the interest of justice.'” Id. at 581 (quoting § 1404(a)).

         But in cases where there is a valid forum-selection clause, “[t]he calculus changes, ” because the clause “‘represents the parties' agreement as to the most proper forum.'” Id. (quoting Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 31 (1988)). In that circumstance, district courts must “adjust their usual § 1404(a) analysis in three ways.” Id. “First, the plaintiff's choice of forum merits no weight. Rather, as the party defying the forum-selection clause, the plaintiff bears the burden of establishing that transfer to the forum for which the parties bargained is unwarranted.” Id. “Second, a court evaluating a defendant's § 1404(a) motion to transfer . . . should not consider arguments about the parties' private interests.” Id. at 582. “Third, when a party bound by a forum-selection clause flouts its contractual obligation and files suit in a different forum, a § 1404(a) transfer of venue will not carry with it the original venue's choice-of-law rules-a factor that in some circumstances may affect public-interest considerations.” Id. Accordingly, in a case involving a forum-selection clause, “a district court should transfer the case unless extraordinary circumstances unrelated to the convenience of the parties clearly disfavor a transfer.” Id. at 575.

         DSA relies on three grounds to oppose Vonage's motion to transfer: (1) the instant case falls outside the scope of the forum-selection clauses in the Marketing Agreement and the Settlement Agreement; (2) it would be unreasonable to enforce either forum-selection clause because of the unequal bargaining power between DSA and Vonage; and (3) the public-interest factors support retaining the case in this district rather than transferring it to the District of New Jersey.

         III

         The court first addresses whether the forum-selection clause in either the Marketing Agreement or the ...


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