Europa Eye Wear Corp. v. Kaizen Advisors, LLC
Europa Eye Wear Corp. v. Kaizen Advisors, LLC
Opinion of the Court
Europa Eye Wear Corporation ("Europa") and Alan McKinley ("McKinley"), president of AO Eyewear, Inc. ("AO"), brought these actions seeking declaratory judgment that Kaizen Advisors, LLC ("KZA") could not enjoin its impending acquisition AO, (Docket No. 1, No. 4:19-cv-40022-TSH), and that McKinley is not liable to KZA for fraud (Docket No. 1, No. 4:19-cv-40024-TSH). In both actions, KZA subsequently moved to dismiss or alternatively, transfer on the grounds Europa's and McKinley's claims falls within the scope of two forum-selection clauses governing *230the relationship between KZA and AO, which require all claims to be brought in California. (Docket No. 28, No. 4:19-cv-40022-TSH; Docket No. 11, No. 4:19-cv-40024-TSH). For the reasons stated below, KZA's motions are granted.
Background
KZA negotiated and conducted due diligence to acquire AO. In furtherance of their negotiations, KZA and AO entered two contracts, a Non-Disclosure and Non-Circumvention Agreement ("NDNCA") and a Letter of Intent ("LOI"), both of which include forum-selection clauses providing that disputes be resolved in California. The NDNCA, in relevant part, reads: "The parties agree and accept that any legal action or proceeding brought with respect to this Agreement shall be brought in the State of California or the United States District Court for the Central District of California, Los Angeles, California." (Docket No. 29-1, at 22, No. 4:19-cv-40022-TSH). Similarly, the LOI provides: "Any dispute shall be resolved exclusively in the State or Federal courts located in Los Angeles, California." Id. at 26.
Before the deal closed, however, AO terminated the planned acquisition and entered a binding letter of intent with Europa. Europa then filed this action for declaratory relief, outpacing KZA to the courthouse doors who subsequently filed its own action in California state court.
Legal Standard
After Atlantic Marine , "in the vast majority of cases when a forum-selectin clause is included, a § 1404(a) motion to transfer will be allowed."
*231Kebb Mgmt. v. Home Depot U.S.A., Inc. ,
Discussion
The parties agree that the written agreements between KZA and AO contain a forum-selection clause designating California as the exclusive venue for any legal proceeding relating to the agreement. I find that these clauses are mandatory. See Provanzano v. Parker View Farm, Inc. ,
In general, "the fact a party is a non-signatory to an agreement is insufficient, standing alone, to preclude enforcement of a forum selection clause." Aguas Lenders Recovery Grp., LLC v. Suez, S.A. ,
In Rivera , for example, a medical patient signed pre-procedure consent documents containing a forum-selection clause. After complications following surgery, the patient and his wife sued the hospital. The patient's wife, a non-signatory to the forum-selection clause, brought a claim for emotional distress. The First Circuit concluded that both the patient and his wife were bound by the forum-selection clause because " 'claims involving the same operative facts' as a claim for breach of contract that is subject to a forum selection clause should also be litigated in the forum chosen by the parties." Rivera ,
Here, in the California Action, KZA seeks damages and injunctive relief based on AO's alleged breaches of the LOI and NDNCA, AO and McKinley's alleged fraud, and Europa's alleged interference with KZA's existing contractual and prospective economic relationships. See generally Docket 29-1, No. 4:19-cv-40022-TSH. In its Amended Complaint in this Court, Europa seeks a declaration that "KZA is not entitled to delay or prevent the sale of AO[ ], or any of its assets, to Europa, whether by temporary restraining order, preliminary injunction or other judicial decree." (Docket No. 27 ¶ 16, No. 4:19-cv-40022-TSH). Whether KZA is entitled to delay or prevent the sale of AO, however, necessarily requires an interpretation of the contracts between KZA and AO. See Manetti-Farrow, Inc. ,
Europa contends that enforcing the forum-selection clause is improper because it is not subject to personal jurisdiction in California. It is true that several of the cases enforcing forum-selection clauses against non-signatories noted above involve motions to dismiss for improper venue, not for want of personal jurisdiction. This distinction is not without a difference. "While objections to both personal jurisdiction and venue may be waived, venue is primarily a matter of choosing a convenient forum and implicates no constitutional principle, while due process considerations are present in all personal jurisdiction inquiries." Guaranteed Rate, Inc. v. Conn ,
The Court recognizes the significant due process considerations implicated where forum-selection clauses are applied to a non-signatory. In this case, however, unlike in Guaranteed Rate and *233Howmedica Osteonics , Europa is the plaintiff seeking declaratory judgment not a defendant being haled into a forum with which it has no contacts. Accordingly, like all other plaintiffs, if it wishes to proceed with its claims, it must do so in the proper forum. Here, that is the Central District of California. If it objects to forum-selection clause on jurisdictional grounds, the California Action (where Europa is a defendant) is the appropriate court to adjudicate those claims upon a more fully developed record than presented to this Court.
Conclusion
For the reasons stated above, KZA's motions are granted. Accordingly, it is ordered that this case be transferred to the Central District of California.
SO ORDERED.
McKinley does not proffer any unique arguments why enforcing the forum-selection clauses is improper and instead relies on the arguments offered by Europa. See generally Docket No. 35, 4:19-cv-40022-TSH. Therefore, because the Court finds Europa's arguments unconvincing, both cases will be transferred to the Central District of California. Further, because the Court will transfer the cases, it will not address KZA's motions insofar as it seeks dismissal of Europa's or McKinley's claims.
Europa has since removed that action to federal court in the Central District of California.
Reference
- Full Case Name
- EUROPA EYE WEAR CORP. v. KAIZEN ADVISORS, LLC and AO Eyewear, Inc., Alan McKinley v. Kaizen Advisors, LLC
- Cited By
- 2 cases
- Status
- Published