Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-cv-01208/USCOURTS-cand-3_15-cv-01208-3/pdf.json

Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 18:1962 Racketeering (RICO) Act

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

JOSEPH CREAM, et al.,

Plaintiffs,

v.

NORTHERN LEASING SYSTEMS, INC., 

et al.,

Defendants.

Case No. 15-cv-01208-MEJ 

ORDER DENYING MOTION TO 

DISMISS COMPLAINT; ORDER 

TRANSFERRING CASE AND STAYING 

TRANSFER PENDING 

SUPPLEMENTAL BRIEFING

Re: Dkt. No. 16

INTRODUCTION

Plaintiffs Joseph Cream, Jr., Amanda Cream, Cathy Cream, and Fernando Carillo 

(“Plaintiffs”) bring this action alleging that Defendants1fraudulently induce small business owners 

like Plaintiffs to lease credit card machines under undisclosed and onerous terms. First Am.

Compl. (“FAC”) ¶ 1, Dkt. No. 13. Defendants Northern Leasing Systems, Inc., Lease Finance 

Group, LLC, CIT Financial USA, Inc., Lease Source, Inc. and Jay Cohen (collectively, 

“Defendants”) move to dismiss the FAC pursuant to Federal Rule of Procedure 12(b)(3) on the 

ground that this is not the proper venue to hear Plaintiffs‟ claims because they are subject to 

forum-selection clauses requiring that actions be filed in the jurisdiction of New York (and one in 

Illinois). Dkt. No. 16 (“Mot.”). Plaintiffs filed an Opposition (Dkt. No. 23), and Defendants filed 

a Reply in which they asked the Court to construe their Motion to Dismiss as a motion to transfer 

venue in the event the Court was not inclined to dismiss the matter (Dkt. No. 28 at 3). The Court 

 

1

Plaintiffs named as Defendants Northern Leasing Systems, Inc, Lease Finance Group LLC, EVO 

Merchant Services, LLC, EVO Payments International, LLC, Allen & Associates, Lease Source 

Inc., Lease Source-LSI, LLC, CIT Financial USA, Inc, Jay Cohen, Peter S Cohen, Ron G 

Arrington and Does 1-100.

Case 3:15-cv-01208-MEJ Document 40 Filed 07/31/15 Page 1 of 13
2

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

finds this matter suitable for disposition without oral argument. See Fed. R. Civ. P. 78(b); Civil

L.R. 7-1(b). Having considered the parties‟ positions, relevant legal authority, and the record in 

this case, the Court DENIES Defendants‟ Motion to Dismiss but GRANTS their request to 

transfer for the reasons set forth below. Additionally, the Court hereby STAYS the transfer 

pending further briefing by the parties as ordered below.

BACKGROUND

Neither Defendants nor Plaintiffs provided much of a factual background in their briefing, 

so the Court provides only a brief introduction about the facts giving rise to this case, based on 

Plaintiffs‟ 46-page FAC. 

According to Plaintiffs, Defendants claim to be in the business of financing equipment for 

small businesses through so-called “equipment finance lease” contracts. FAC at 6. Typically, the 

“equipment” is a point-of-sale credit card swiping machine. Id. Defendants, through their own 

representatives or third party salesmen, approached Plaintiffs about leasing these machines. Id. 

After making a successful sales pitch, these salesmen obtained Plaintiffs‟ signatures, with personal 

guarantees, on the Lease and Personal Guaranty which was drafted and prepared by Defendants. 

Id. Plaintiffs allege that they did not receive a copy of their agreements and that they were

unaware of the existence of the additional pages or the onerous terms contained in the agreements. 

Id. at 6-9. 

Plaintiffs allege that they signed fifteen lease agreements in total, referring to fourteen of 

them by their specific lease number. Id. at 9-24.

Plaintiffs allege that through each lease agreement, Defendants leased them this equipment 

at a cost of between $3.839.52 and $4,799.52. Id. Plaintiffs later discovered that the same 

equipment was available for purchase for less than $500. Id. at 6-7. The lease agreements also 

provided that tax and insurance could be charged to Plaintiffs in an amount not specified. Id. at 9-

24. Plaintiffs allege that Defendants took automatic debits out of Plaintiffs‟ bank accounts every 

month, at rates considerably higher than the amounts specified in the leases. Id.

The lease agreements contain forum-selection clauses, which Plaintiffs‟ FAC alleges

specify New York as the chosen forum. Id. at 9. 

Case 3:15-cv-01208-MEJ Document 40 Filed 07/31/15 Page 2 of 13
3

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

Plaintiffs filed this action on March 13, 2015 (Dkt. No. 1), amending their Complaint on 

March 30, 2015. In their FAC, they allege the following claims: (1) violation of the Racketeer 

Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962; (2) violation of the Electronic Funds 

Transfer Act, 15 U.S.C. § 1693; (3) violation of the Fair Debt Collection Practices Action, 15 

U.S.C. § 1692; (4) Fraud; (5) Negligent Misrepresentation; (6) Concealment; (7) Money Had and 

Received; (8) Unjust Enrichment; (9) violation of California‟s Unfair Competition Law, Cal. Bus. 

& Prof. Code section 17200 et seq.; and (10) violation of California‟s False Advertising Law, Cal. 

Bus. & Prof. Code section 17500 et seq. 

Defendants filed their Motion to Dismiss on May 1, 2015, providing copies of the lease 

agreements through a Request for Judicial Notice. See Dkt. No. 16-4 (Req. for Judicial Notice and 

attachments). On June 26, 2015, the Court vacated the hearing on Defendants‟ Motion and,

pursuant to Civil Local Rule 7-5, ordered Defendants to authenticate the lease agreements by 

affidavit or declaration to support their Motion. Dkt. No. 37 (“Order”). Defendants timely 

responded on July 10, 2015, providing the Declaration of Lina Kravic, Director of the Originations 

Department at Defendant Northern Leasing Systems, Inc. Dkt. No. 38, ¶ 1. Plaintiffs timely 

objected to the Declaration on July 17, 2015. Dkt. No. 39.

REQUEST FOR JUDICIAL NOTICE

As discussed in the Court‟s June 26 Order, the Court will not take Judicial Notice of the 

lease agreements submitted by Defendants with their Motion. See Order at 2. Nonetheless, courts 

regularly accept such evidence in determining motions to transfer based on forum-selection 

clauses. See Order at 3 (collecting cases). The problem, however, is that Defendants did not

initially file authenticated copies of those agreements. See id. (citing Civil L.R. 7-5, requiring that 

evidentiary matters be “appropriately authenticated by an affidavit or declaration.”); see also Orr 

v. Bank of Am., NT & SA, 285 F.3d 764, 776 (9th Cir. 2002) (“an inquiry into authenticity 

concerns the genuineness of an item of evidence, not its admissibility.” (citation omitted)).

Defendants have now filed the lease agreements with the Declaration of Lina Kravic. 

Kravic, in addition to being the Director of the Originations Department at Defendant Northern 

Leasing Systems, states that she is “one of the custodians” of their records. Kravic Decl. ¶¶ 1 & 6. 

Case 3:15-cv-01208-MEJ Document 40 Filed 07/31/15 Page 3 of 13
4

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

She explains that Northern Leasing Systems is “the authorized servicing agent for the leases it 

originates, as well as certain leases originated by [Lease Source, Inc.] and [CIT Financial USA, 

Inc], including the Leases” connected with Defendants‟ Motion. Id. ¶ 5. She states that she has 

“personal knowledge that these records and documents relied upon and referenced herein were 

made in the ordinary course of business, were made at or near the time or occurrence of the events 

of they are of record, and are made by persons who have a business duty to [Northern Leasing 

Systems] to made such records.” Id. ¶ 7.

Plaintiffs object on the ground that Kravic‟s Declaration does not state how long she has 

worked for Northern Leasing Systems, and there is no evidence that it employed her during the 

years from 2007-2012 when Plaintiffs allegedly signed the contracts. Pls.‟ Objections at 1-2. 

Additionally, Plaintiffs challenge the foundation for her knowledge of Defendant‟s “ordinary 

course of business,” including how she knew the individuals who signed the contracts on behalf of 

Defendants or how she knows how the contracts were collected and stored. Id. at 2. 

Kravic explains that her “responsibilities include supervision and control over the NLS 

employees and operations involved in the origination of lease accounts, as well as managing its 

risk department and monitoring NLS relationships with the independent equipment vendors, 

suppliers and distributors doing business with the companies under their vendor equipment 

finance programs.” Kravic Decl. ¶ 6. As such, she states she is “very familiar with LSI, CIT, and 

NLS‟ record keeping procedures in the originations and servicing of such accounts.” Id. She also 

declares that she has personal knowledge that the documents were made in the ordinary course of 

business. Id. ¶ 7. Thus, although the Court does not take judicial notice of the lease agreements, 

for purposes of this Motion, the Court finds Defendants properly authenticated them through

Kravic‟s Declaration. See Memry Corp. v. Kentucky Oil Tech., N.V., 2007 WL 2746736, at *6 

(N.D. Cal. Sept. 20, 2007) (“Kipperman‟s declaration states that he has personal knowledge that 

these agreements are maintained in the course of ordinary business activities and that he, as a 

director-level employee of Abbott, directed the documents to be retrieved from Abbott‟s files. 

This is sufficient to satisfy the court that the documents are what they are represented to be. Fed.

R. Evid. 901(a).”).

Case 3:15-cv-01208-MEJ Document 40 Filed 07/31/15 Page 4 of 13
5

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

LEGAL STANDARD

Under Federal Rule of Civil Procedure 12(b)(3), a defendant may move to dismiss a case 

for improper venue. Venue is generally proper in a district where, among other things, “a 

substantial part of the events . . . giving rise to the claim occurred” and where the defendant 

corporation does business. 28 U.S.C. § 1391(b)(2), (c). However, as the Supreme Court recently 

explained in Atlantic Marine Construction Company, Inc. v. United States District Court, __ U.S. 

__, 134 S.Ct. 568, 577 (2013),

[w]hen venue is challenged, the court must determine whether the 

case falls within one of the three categories set out in [28 U.S.C. §] 

1391(b). If it does, venue is proper; if it does not, venue is improper,

and the case must be dismissed or transferred under § 1406(a). 

Whether the parties entered into a contract containing a forumselection clause has no bearing on whether a case falls into one of 

the categories of cases listed in § 1391(b). As a result, a case filed in 

a district that falls within § 1391 may not be dismissed under § 

1406(a) or Rule 12(b)(3).

Accordingly, Rule 12(b)(3) is “not [the] proper mechanism[ ] to enforce a forum-selection 

clause[;]” rather, “[Section] 1404(a) and the forum non conveniens doctrine provide appropriate 

enforcement mechanisms.” Id. at 580 (footnote omitted); see also Niburutech Ltd. V. Jang, __ F.

Supp. 3d __, 2014 WL 6790031, at *1 (N.D. Cal. Dec. 2, 2014) (same); T & M Solar & Air 

Conditioning, Inc. v. Lennox Int’l Inc., __ F. Supp. 3d __, 2015 WL 1289497, at *6-7 (N.D. Cal. 

Mar. 20, 2015) (same).

Section 1404(a) states 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.” 28 

U.S.C. §1404(a). This provision provides a mechanism for enforcement of a forum-selection 

clause and “a proper application of § 1404(a) requires that a [valid] forum-selection clause be 

given controlling weight in all but the most exceptional cases.” Atl. Mar. Constr. Co., 134 S.Ct. at 

579 (internal quotation marks omitted). In other words, where there is a valid forum-selection 

clause in a contract between the parties, “the interest of justice” is best served by giving effect to 

the parties‟ bargain. Id. at 581-83 (“In all but the most unusual cases, therefore, „the interest of 

Case 3:15-cv-01208-MEJ Document 40 Filed 07/31/15 Page 5 of 13
6

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

justice‟ is served by holding parties to their bargain.”).

A valid forum-selection clause thus alters the § 1404 analysis in three ways. Id. at 581-82. 

“First, the plaintiff‟s choice of forum merits no weight.” Id. at 582. Second, a court evaluating a 

defendant‟s § 1404(a) motion to transfer based on a forum-selection clause should not consider 

arguments about the parties‟ private interests. Id. “Third, when a party bound by a forumselection 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.

The Supreme Court recognized its “analysis presupposes a contractually valid forum[ ]

selection clause.” Id. at 579 & n.5. Forum-selection clauses are “prima facie valid and should be 

enforced unless enforcement is shown by the resisting party to be „unreasonable‟ under the 

circumstances.” M/S Bremen v. Zapata Off-Shore Co. (Bremen), 407 U.S. 1, 10 (1972). Courts 

may find a forum-selection clause unreasonable and unenforceable if: (1) its inclusion was the 

result of fraud, undue influence, or overweening bargaining power; (2) the selected forum is so 

“gravely difficult and inconvenient” the complaining parties would “for all practical purposes be 

deprived of [their] day in court[;]” or (3) enforcement would contravene a strong public policy of 

the forum in which the suit is brought. Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 325 (9th 

Cir. 1996) (quoting Bremen, 407 U.S. at 12-13). “A forum selection clause is presumptively 

valid; the party seeking to avoid a forum selection clause bears a „heavy burden‟ to establish a 

ground upon which [the court] will conclude the clause is unenforceable.” Doe 1 v. AOL LLC, 

552 F.3d 1077, 1083 (9th Cir. 2009) (citing Bremen, 407 U.S. at 17).

In resolving motions to dismiss or transfer based on a forum-selection clause, the pleadings 

are not accepted as true, as would be required under a Rule 12(b)(6) analysis. Argueta, 87 F.3d at

324 (citations omitted); see also Doe 1, 552 F.3d at 1081 (in considering a motion to enforce a 

forum-selection clause “pleadings need not be accepted as true, and facts outside the pleadings 

may be considered.”); Pelleport Investors, Inc. v. Budco Quality Theatres, Inc., 741 F.2d 273, 280 

(9th Cir. 1984) (“Absent some evidence submitted by the party opposing enforcement of the 

clause to establish fraud, undue influence, overweening bargaining power, or such serious 

Case 3:15-cv-01208-MEJ Document 40 Filed 07/31/15 Page 6 of 13
7

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

inconvenience in litigating in the selected forum so as to deprive that party of a meaningful day in 

court, the provision should be respected as the expressed intent of the parties.” (citing Bremen, 407 

U.S. at 12-19 (emphasis added))). 

DISCUSSION

As an initial matter, as discussed above, the Supreme Court‟s 2013 decision in Atlantic 

Marine holds that the appropriate method for enforcing a valid forum-selection clause is the use of 

transfer to the contractually selected forum under 28 U.S.C. § 1404(a). 134 S.Ct. at 575; 5B

Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1352 (2015). 

Although there are fourteen different leases involved in this case, the forum-selection clauses are 

all mandatory, 2using non-permissive terms to require that prosecution and litigation arising out of 

leases and guarantees be brought in New York or, in the one instance, Illinois. See Kravic Decl., 

Exs. A-N (the lease at Ex. A provides for Illinois jurisdiction, whereas the other leases provide for 

New York jurisdiction). Consequently, the Court applies the rule in Atlantic Marine, and given 

that Defendants did not argue that California is an improper venue for any reason other than the 

forum-selection clauses, construes Defendants‟ motion as a motion to transfer pursuant to § 

1404(a). See also Reply at 2 (requesting the Court construe Defendants‟ Motion to Dismiss in the 

alternative as a motion to transfer).

“Only under extraordinary circumstances unrelated to the convenience of the parties 

should a § 1404(a) motion be denied.” Atl. Marine Const., 134 S. Ct. at 581. The Supreme Court 

did not specify what sort of “extraordinary circumstances” might qualify to deny such a motion. 

In any case, Plaintiffs have raised a number of arguments as to why Defendants‟ motion should be 

 

2

“Although Atlantic Marine never addressed the „permissive‟ versus „mandatory‟ distinction, 

district courts across the country have generally limited the Atlantic Marine framework to 

situations where the forum selection clause is mandatory.” Waste Mgmt. of Louisiana, L.L.C. v. 

Jefferson Parish, 2014 WL 4403447, at *12 (E.D. La. Sept. 5, 2014), motion to certify appeal on 

this issue granted sub nom. Waste Mgmt. of Louisiana, L.L.C. v. Parish, 2014 WL 5393362 (E.D.

La. Oct. 22, 2014); see also Karl W. Schmidt & Assocs., Inc. v. Action Envtl. Solutions, LLC, 2014 

WL 6617095, at *5 (D. Colo. Nov. 21, 2014); Fin. Cas. & Sur., Inc. v. Parker, 2014 WL 2515136, 

at *3 (S.D. Tex. June 4, 2014) (“District courts across the country have . . . recognized that the 

analysis on a motion to transfer based on a forum-selection clause begins with whether the clause 

is mandatory or permissive. If the forum-selection clause is permissive, the courts have 

consistently declined to apply Atlantic Marine.”).

Case 3:15-cv-01208-MEJ Document 40 Filed 07/31/15 Page 7 of 13
8

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

denied, discussed below.

A. Concealment and Fraudulent Inducement

First, Plaintiffs contend that “they were never informed they had to litigate any disputes in 

New York[,]” and “this fact was concealed from Plaintiffs because Defendants‟ did not give

Plaintiffs a copy of the document they allegedly signed.” Opp‟n at 8 (citing J. Cream, Jr. Decl. ¶¶ 

4, 7, Dkt. No. 23-2). Consequently, they argue that “[b]ecause Plaintiffs did not know about the 

alleged forum selection clause until after Defendants were making unauthorized withdrawals from 

their bank accounts, the Forum Selection Clause is not presumptively valid.” Id. at 7. In support 

of their argument, Plaintiffs submitted the Declaration of Joseph Cream, who appears to have 

signed eleven out of the fourteen agreements. See Kravic Decl, Exs. A, D-M. But they did not 

provide declarations from the other Plaintiffs, including Cathy Cream and Fernando Carrillo, who 

also appear to have signed agreements (see id., Exs. B-C, N). In his Declaration, Joseph Cream

states that Defendants sent him copies of the contracts he purportedly signed, but he is “not sure 

the alleged contracts which Defendants provided me after the fact were actually what I signed.” J.

Cream, Jr. Decl. ¶ 4. He notes that “[a]t least one of the alleged signatures does not appear to be 

mine.” Id.

Second, Plaintiffs suggest that the agreements are invalid because Defendants fraudulently 

induced Plaintiffs to sign them. They assert that “Plaintiff[s] w[ere] induced into entering an 

alleged agreement to Defendants‟ salesmen‟s representations that the lease was a good deal and 

the salesmen‟s concealment of the fact that the credit card swiping machines were worth less than 

$500.” Opp‟n at 8 (citing J. Cream, Jr. Decl. ¶ 3). From this statement and Joseph Cream‟s 

supporting Declaration, there is no indication that all Plaintiffs were fraudulently induced to accept 

the contract, only some indication that one of Defendants‟ salespeople convinced Joseph Cream 

that “the lease” (he does not state which) was “a good deal” despite the fact that the equipment 

was available for purchase at a lesser price. See J. Cream, Jr. Decl. ¶ 3. While the FAC contains 

some discussion about the nature of the alleged fraud, Plaintiffs provided no other support for this 

theory. 

Plaintiffs‟ concealment and fraudulent inducement arguments are unpersuasive, as their 

Case 3:15-cv-01208-MEJ Document 40 Filed 07/31/15 Page 8 of 13
9

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

evidence is insufficient to establish that Defendants deliberately concealed the terms of the 

contract from Plaintiffs or fraudulently induced Plaintiffs to accept the forum selection clause. To 

prove a claim of a claim of fraudulent inducement, a plaintiff must show (a) a misrepresentation, 

false representation, concealment or nondisclosure; (b) knowledge of falsity; (c) intent to defraud 

or to induce plaintiff to enter into a contract; (d) justifiable reliance; and (e) resulting damage. See

Lazar v. Superior Court, 12 Cal. 4th 631, 638 (1996). Plaintiffs do not provide any indication that 

Defendants concealed from them that the equipment was available for less money than the lease, 

or that Defendants knew this fact. Nor do they show that Plaintiffs‟ reliance was justified. While 

it is possible that Plaintiffs could ultimately provide such evidence in support of their fraudulent 

inducement theory, they have not done so at this time. Accordingly, for purposes of this motion, 

Plaintiffs‟ fraudulent inducement claim does not prevent the enforcement of the forum-selection 

clauses.

Nor have Plaintiffs shown that the leases they signed somehow concealed the forumselection clauses. Even if, as alleged in the Complaint, Plaintiffs only saw and signed the first 

page of these lease agreements (see FAC at 6-7

3

), the first pages of the lease agreements include 

mandatory forum-selection clauses. See, e.g., Kravic Decl., Ex. A (“The undersigned agrees and 

consents the Court of the State of Illinois having jurisdiction in Cook County or any Federal 

District Court having jurisdiction in said county shall have jurisdiction and shall be the proper 

venue for the determination of all controversies and disputes arising hereunder.”); Exs. A-E

(“THE UNDERSIGNED WAIVES . . . ANY OBJECTION ARISING OUT OF THIS LEASE OR 

GUARANTY BEING VENUED IN THE STATE OF NEW YORK, NEW YORK COUNTY.”); 

Ex. F-N

4

(“ALL DISPUTES RELATING TO THIS GUARANTY SHALL BE LITIGATED 

EXCLUSIVELY IN THE FEDERAL OR STATE COURTS LOCATED IN THE STATE AND 

 

3

Plaintiffs‟ FAC alleges: “To facilitate this fraudulent scheme, Defendants drafted the Lease and 

Personal Guaranty such that Plaintiffs have to sign on the very first page of the Lease and Personal 

Guaranty. Since the signature of parties to a document are usually at the end of the document, 

Plaintiffs was [sic] led to believe that the Lease and Personal Guaranty is a one page document 

containing all the terms of the lease.” FAC at 6-7.

4

Ex. N‟s forum-selection clause is not written in capitalized lettering.

Case 3:15-cv-01208-MEJ Document 40 Filed 07/31/15 Page 9 of 13
10

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

COUNTY OF NEW YORK . . . .”). Defendants further point out that several of the leases show 

that Plaintiffs initialed each page of the lease, including the pages which contain the full forumselection clauses. See Reply at 3. Although Joseph Cream stated in his declaration that “at least

one of the alleged signatures does not appear” to be his, he provides no explanation as to why he 

believes this to be true or which of the contracts he believes to be forged.5 Nor does he provide 

any suggestion that he never saw the forum-selection clauses on the numerous agreements he 

signed. 

The issue then is whether the Court must take further action at this stage to resolve this 

dispute. The Court concludes it does not. As this Court recognized in SeeComm Network 

Services Corp. v. Colt Telecommunications, “[t]o hold that the Forum-Selection Clause is invalid 

because the contract as a whole is invalid—as a result of a unilateral mistake or because of 

fraudulent inducement in entering the contract—requires the Court to assess the merits of the 

case.” 2004 WL 1960174, at *4 (N.D. Cal. Sept. 3, 2004). The Court noted that such an analysis 

was “clearly backwards” as the question before the Court was “the validity of the Forum-Selection 

Clause, not the validity of the contract as a whole.” Id. at *4-5. As the plaintiff in that case made 

no arguments and produced no evidence to support a finding that the forum-selection clause was 

incorporated into the contract as a result of fraud, the Court found that the plaintiff‟s broader 

arguments regarding fraudulent enticement as to signing the entire agreement had no place in the 

enforceability analysis for a forum-selection clause. Id. at *6.

Other courts have similarly rejected forum selection arguments that embrace “the ultimate 

issue” and refused to “determine the validity of the entire contract merely to resolve a defendant‟s 

venue claim under § 1404(a).” CoActiv Capital Partners, Inc. v. Feathers, 2009 WL 1911673, at 

*4 (E.D. Pa. July 1, 2009); Melissa’s Trust v. Seton, 2014 WL 3811241, at *8 (N.D. Ill. July 31, 

 

5

The FAC alleges that the signatures on Leases 1602302, 1687926, 1695605A, and 1725264A 

“do[] not appear to be that of Plaintiffs[.]” FAC at 11-13. However, Plaintiffs, either in their 

Opposition, FAC, or Joseph Cream‟s Declaration fail to provide an explanation as to why they 

believe those signatures do not belong to Joseph Cream or Cathy Cream. Nor is there any 

confirmation in Plaintiffs‟ Opposition or supporting documents that the suspicious lease 

agreements referenced in the FAC are same documents as provided by Defendants in their 

exhibits. 

Case 3:15-cv-01208-MEJ Document 40 Filed 07/31/15 Page 10 of 13
11

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

2014) (finding that determining the validity of the entire contract merely to resolve the venue 

claim “would be both circular and improvident.” (citing CoActive, 2009 WL 1911673, at *4)). 

Similarly, in a footnote, the Supreme Court indicated that in determining a § 1404(a) motion, 

courts should not engage in a full merits-based analysis. See Atl. Marine Const., 134 S. Ct. at 580

n.4 (observing that “a motion under Rule 12(b)(6), unlike a motion under § 1404(a) . . . , may lead 

to a jury trial on venue if issues of material fact relating to the validity of the forum-selection 

clause arise.” (emphasis added)). The Court thus notes that even if they could use Rule 12(b)(6) to 

enforce a forum-selection clause, “defendants would have sensible reasons to invoke § 1404(a) . . .

in addition to Rule 12(b)(6).” Id. at 580 & n.4. 

Because the Court finds it imprudent to engage in a merits-based analysis of Plaintiffs‟ 

fraudulent inducement claim, and Plaintiffs have not otherwise shown that Defendants 

incorporated these forum-selection clauses as a result of fraud, the Court finds that Plaintiffs‟ 

concealment and fraudulent inducement arguments fail to make the forum-selection clauses 

unenforceable. 

B. Contravention of Public Policy

Plaintiffs then turn to the second Bremen factor, noting that “[w]here enforcement of a 

forum-selection clause would contravene a strong public policy of the forum, enforcement is 

unreasonable.” Opp‟n at 9 (citing Bremen, 407 U.S. at 15). Plaintiffs contend they are small 

business owners doing business only in Northern California, and that “[b]ecause of the limited 

financial means of Plaintiffs” and “the distance from California to New York, the New York 

forum-selection clause essentially deprives Plaintiff of a meaningful day in court.” Id. (emphasis 

omitted). Plaintiffs provide no evidence of their financial means or how the distance to New York 

burdens them.

In any case, Plaintiffs cite the Ninth Circuit‟s decision in Murphy v. Schneider National, 

Inc., for the proposition that the Court may consider the challenging party‟s “financial ability to 

bear [the] costs and inconvenience of litigating in the forum selected by the contract.” 362 F.3d 

1133, 1140-41 (9th Cir. 2004) (quotation marks omitted; alteration in original). However, as 

noted above, a valid forum-selection clause alters the § 1404 analysis in that a court evaluating a 

Case 3:15-cv-01208-MEJ Document 40 Filed 07/31/15 Page 11 of 13
12

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

defendant‟s § 1404(a) motion based on a forum-selection clause should not consider arguments 

about the parties‟ private interests. Atl. Mar. Constr., 134 S.Ct. at 582 (“When parties agree to a 

forum-selection clause, they waive the right to challenge the preselected forum as inconvenient or 

less convenient for themselves or their witnesses, or for their pursuit of the litigation.”). “A court 

accordingly must deem the private-interest factors to weigh entirely in favor of the preselected 

forum.” Id. Consequently, courts in this District have found that considerations of the financial 

costs and inconvenience of litigating in a distant forum are the sorts of “private-interest factors” 

that may not be considered in analyzing whether a forum selection clause is reasonable. See 

Monastiero v. appMobi, Inc., 2014 WL 1991564, at *5 (N.D. Cal. May 15, 2014); Adema Techs.

Inc. v. Wacker Chemie AG, 2014 WL 3615799, at *5 (N.D. Cal. July 22, 2014). “As a 

consequence, a district court may consider arguments about public-interest factors only[,]” and 

“[b]ecause those factors will rarely defeat a transfer motion, the practical result is that forumselection clauses should control except in unusual cases.” Atl. Marine Const., 134 S. Ct. at 582. 

Accordingly, the Court finds Plaintiffs‟ private interest factors also fail to make the forum 

selection clauses unenforceable.

Plaintiffs provide no argument as to whether the forum-selection clauses contravene public 

policy. Nor do they provide any other arguments under the Bremen factors or otherwise as to why 

the forum-selection clauses should not be enforced.6 

CONCLUSION

In light of the foregoing analysis, the Court DENIES Defendants‟ Motion to Dismiss but 

GRANTS Defendants‟ request to transfer. However, the Court STAYS transfer of this motion 

pending resolution of the following issue. Specifically, one of Joseph Cream‟s agreements states 

that he consents to “the Court of the State of Illinois having jurisdiction in Cook County or any 

Federal District Court having jurisdiction in said county,” (Kravic Decl., Ex. A), whereas all other 

agreements—including the other agreements signed by Mr. Cream—select New York as the 

 

6

For example, there are no claims that that the forum-selection clauses are part of adhesion 

contracts. See Brooks v. Sotheby’s, 2013 WL 3339356, at *5 (N.D. Cal. July 1, 2013)

(considering whether the forum-selection clause in an adhesion contract was reasonably

communicated to the plaintiff).

Case 3:15-cv-01208-MEJ Document 40 Filed 07/31/15 Page 12 of 13
13

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

intended forum. Given this situation, the Court requires supplemental briefing from the parties 

addressing whether to sever this one claim under the agreement at Exhibit A or whether the parties 

can agree to allow Mr. Cream‟s claims related to Exhibit A to proceed along with his other claims 

in New York, if desired. The parties shall meet and confer to determine whether they are able to 

reach an agreement on this issue. If so, the parties shall file a stipulation and proposed order by 

August 10, 2015. If the parties are unable to reach an agreement, Plaintiffs shall file a response 

by August 14, 2015, with Defendants‟ reply due by August 21, 2015. 

IT IS SO ORDERED.

Dated: July 31, 2015

______________________________________

MARIA-ELENA JAMES

United States Magistrate Judge

Case 3:15-cv-01208-MEJ Document 40 Filed 07/31/15 Page 13 of 13