Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_07-cv-01513/USCOURTS-cand-4_07-cv-01513-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:2201 Declaratory Judgement

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

CASCADE PROMOTION CORPORATION, a

California Corporation,

Plaintiff,

v.

AMA SYSTEMS, LLC, a Maryland Limited

Liability Company,

Defendant.

 /

No. C 07-1513 CW

ORDER

TRANSFERRING

ACTION

Defendant AMA Systems, LLC, moves for dismissal of this action

pursuant to Federal Rule of Civil Procedure 12(b)(3) and 28 U.S.C.

§ 1406(a), which provides that, in the interest of justice, a court

can transfer, rather than dismiss, an action filed in the wrong

district. Plaintiff Cascade Promotion Corp. opposes this motion. 

The hearing scheduled for June 7, 2007 is vacated and the matter is

submitted on the papers. Having considered all of the papers filed

by the parties and the evidence cited therein, and in the interest

of justice, the Court transfers this case to the United States

District Court for the District of Maryland, where venue is proper.

Case 4:07-cv-01513-CW Document 14 Filed 05/30/07 Page 1 of 7
United States District Court

For the Northern District of California

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BACKGROUND

Plaintiff purchases promotional items, including iPods. 

Defendant distributes iPods it purchases from Apple. Before

Defendant will sell iPods, or any other goods, on credit, it

requires potential customers to fill out, sign, and return a credit

application. 

In June, 2005, Defendant sent Plaintiff a two-page credit

application entitled "Information Sheet." The second page, right

above the signature line, provides that the person who signs the

application understands that he or she is "bound by AMA's attached

General Terms and Conditions, as amended from time to time."

Billingsley Dec., Ex. D. Defendant states that it sent the General

Terms and Conditions to Plaintiff. Plaintiff, however, claims that

it never received the General Terms and Conditions, until after

this suit was filed. 

Plaintiff filled out the application form and faxed it to

Defendant, along with materials regarding Plaintiff's credit

worthiness. It did not ask for a copy of the General Terms and

Conditions. Shortly thereafter, Defendant accepted Plaintiff as "a

credit customer in the amount of $20,000." Quant Dec., Ex. A. 

In 2006, Apple dropped its prices and discontinued sales of

certain iPod models. Plaintiff objected to the price that

Defendant was charging for certain discontinued iPods. In 2007,

Plaintiff filed this suit to resolve the dispute. According to

Plaintiff, shortly thereafter, it received for the first time a

three-page document from Defendant's counsel entitled "AMA

Computers General Terms and Conditions." The General Terms and

Case 4:07-cv-01513-CW Document 14 Filed 05/30/07 Page 2 of 7
United States District Court

For the Northern District of California

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Conditions that Defendant submits with its motion provide that AMA

Computers and the client "consent to the exclusive jurisdiction of

the courts of the State of Maryland, USA for any dispute arising

out of their relationship" and that Maryland law governs. 

Billingsley Dec., Ex. D. Plaintiff states that it entered into a

contract with Defendant AMA Systems, not AMA Computers. It further

states that it asked Defendant for proof that any "General Terms

and Conditions" were provided to it in 2005. 

Defendant's sales manager declares that he sent to Plaintiff

both the Information Sheet and the AMA Computers General Terms and

Conditions. In his reply declaration, Defendant's sale manager

also states that AMA Computers is a business division or part of

AMA Systems, LLC and is not a company separate from AMA Systems,

LLC. According to the sales manager, "There are no separate

contracts entered into by 'AMA Computers.'” Billingsley Reply Dec.

at ¶ 3.

After Plaintiff brought this action, Defendant filed an action

against Plaintiff in Maryland state court. Plaintiff removed the

case to the United States District Court for the District of

Maryland and has filed its answer. Although in its moving papers

Defendant requests that the Court dismiss this action, Defendant

states in its reply that this case should be transferred to the

Maryland District Court.

LEGAL STANDARD

 A motion to dismiss brought on the basis of a forum selection

clause is treated as a motion to dismiss for improper venue under

Federal Rule of Civil Procedure 12(b)(3). Argueta v. Banco

Case 4:07-cv-01513-CW Document 14 Filed 05/30/07 Page 3 of 7
United States District Court

For the Northern District of California

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Mexicano, S.A., 87 F.3d 320, 324 (9th Cir. 1996). The

enforceability of a forum selection clause is determined by federal

law. Id. 

In the context of a Rule 12(b)(3) motion based upon a forum

selection clause, the pleadings need not be accepted as true, and a

court may consider facts outside of the pleadings. Id. However,

“the trial court must draw all reasonable inferences in favor of

the non-moving party and resolve all factual conflicts in favor of

the non-moving party.” Murphy v. Schneider Nat’l, Inc., 362 F.3d

1133, 1138 (9th Cir. 2004). When a Rule 12(b)(3) motion is made

prior to development of the factual record, 

if the facts asserted by the non-moving party are sufficient

to preclude enforcement of the forum selection clause, the

non-moving party is entitled to remain in the forum it chose

for suit unless and until the district court has resolved any

material factual issues that are in genuine dispute.

Id. at 1139. 

DISCUSSION

The Ninth Circuit instructs that "forum selection clauses are

presumptively valid" and, therefore, "should be honored 'absent

some compelling and countervailing reason.'” Id. at 1140 (quoting

Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 12 (1972)). Thus, even

though inferences are drawn in favor of the non-moving party and

conflicts are resolved in its favor, the party challenging a forum

selection clause "bears a 'heavy burden of proof' and must 'clearly

show that enforcement would be unreasonable and unjust, or that the

clause was invalid for such reasons as fraud or over-reaching.'" 

Id. (quoting Bremen, 407 U.S. at 15). See also Carnival Cruise

Lines, Inc. v. Shute, 499 U.S. 585, 590 (1991) (enforcing nonCase 4:07-cv-01513-CW Document 14 Filed 05/30/07 Page 4 of 7
United States District Court

For the Northern District of California

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negotiated forum selection clause in a passage contract, where the

"forum selection clause was reasonably communicated to the 

respondents, as much as three pages of fine print can be

communicated"). 

Defendant contends that the contract between the parties

contains a forum selection clause providing that any dispute

arising out of the contract will be resolved in Maryland, not here. 

It argues that Plaintiff cannot satisfy the “heavy burden of proof"

required to set aside the forum selection clause because the clause

is neither unreasonable nor unjust, nor would litigating this

dispute in Maryland be either unreasonable or unjust.

Plaintiff responds that the forum selection clause Defendant

relies on is in AMA Computers' General Terms and Conditions, not in

AMA Systems' General Terms and Conditions, and that it could not

have agreed to a forum selection clause contained in terms and

conditions that it never saw and thus should not be bound by the

clause. As noted above, however, AMA Computers is part of AMA

Systems. And Plaintiff's reliance on Sarmiento v. BMG

Entertainment, 326 F. Supp. 2d 1108 (C.D. Cal 2003), is misplaced. 

In Sarmiento, the court noted, "The opportunity to read a

clearly identified and intelligible forum selection clause before

accepting the contract provides sufficient notice to plaintiff." 

326 F. Supp. 2d at 1110. The court, however, rejected the

plaintiff's argument that the clause was not binding because it was

written in English and his primary language was Spanish; the

executives who negotiated the contract with the plaintiff spoke

both English and Spanish and, thus, the plaintiff had the

Case 4:07-cv-01513-CW Document 14 Filed 05/30/07 Page 5 of 7
United States District Court

For the Northern District of California

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opportunity to ask them to explain the forum selection clause. 

Because the plaintiff failed to set forth any evidence to

demonstrate that he was unable to understand the contract, the

court held that the forum selection clause was enforceable and

dismissed the case for improper venue. 

Here, too, Plaintiff fails to show that it did not have the

opportunity to read the forum selection clause before accepting the

contract. Plaintiff knew that, by signing the contract, it would

be bound by undisclosed terms and conditions, yet it provides no

evidence that it asked to see those conditions before signing the

contract and sending it back to Defendant. Nor does Plaintiff

provide evidence that its acceptance of the contract was

conditional on what terms were contained in the General Terms and

Conditions. 

The Court need not resolve who is more credible: Defendant's

sales manager, who states that he sent Plaintiff the General Terms

and Conditions, or Plaintiff's officer, who states that she never

received the "attached General Terms and Conditions." Plaintiff

has failed to show that enforcement of the forum selection clause

would be unreasonable or unjust, nor has Plaintiff shown that the

clause was invalid. There is a binding forum selection clause

providing that any dispute between the parties will be resolved in

Maryland; therefore, the Court transfers this case to the District

Court for the District of Maryland.

CONCLUSION

For the foregoing reasons, and in the interest of justice,

this action is TRANSFERRED to the United States District Court for

Case 4:07-cv-01513-CW Document 14 Filed 05/30/07 Page 6 of 7
United States District Court

For the Northern District of California

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the District of Maryland. Defendant's motion to dismiss (Docket

No. 4) is DENIED.

IT IS SO ORDERED.

Dated: 5/30/07 

CLAUDIA WILKEN

United States District Judge

Case 4:07-cv-01513-CW Document 14 Filed 05/30/07 Page 7 of 7