1

The relevant background facts are taken from Plaintiff’s May 21, 2009 complaint

and are accepted as true for purposes of this motion.

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

 

APPLIED ENERGY TECHNOLOGIES, INC.,

Plaintiff,

v. Case No. 09-CV-11959-DT

SOLAR LIBERTY ENERGY SYSTEMS, INC.,

Defendants.

_________________________________/

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT 

SOLAR LIBERTY ENERGY SYSTEMS, INC.’S MOTION TO DISMISS

Pending before the court is a motion to dismiss or, in the alternative, to transfer

to the Western District of New York, filed on July 13, 2009 by Defendant Solar Liberty

Energy Systems, Inc. The motion has been fully briefed and the court, pursuant to

Local Rule 7.1(e), determines that a hearing is not required. See E.D. Mich. LR

7.1(e)(2). For the reasons set forth below, the court will grant the motion to transfer

venue to New York and deny the motion to dismiss. 

I. BACKGROUND1

Plaintiff Applied Energy Technologies, Inc. (“AET”), a Michigan company, is a

start-up engineering company that is in the business of, among other things, designing

and manufacturing “racking systems” to support solar panels that are used to provide

electricity at homes, business, and other locations. (Compl. ¶ 2.) AET maintains most

of its operations in the metropolitan Detroit area. (Id. ¶ 3.) AET plans to expand its

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operations and employ currently unemployed automotive workers in the renewable

energy industry, including employing people in the areas of engineering, human

resources, sales, purchasing, and administrative functions. (Id. ¶ 4.) AET has

purchased manufacturing equipment and will be manufacturing its solar panel racking

system in Michigan. (Id.)

Defendant Solar Liberty Energy Systems, Inc. (“Solar Liberty”), a New York

company, is a distributor and installer of renewable energy technologies, including solar

panels for use on buildings. (Compl. ¶ 5.) 

This lawsuit arises out of a “Confidentiality and Non-Disclosure Agreement” (the

“NDA”) entered into by Solar Liberty and Latitude Energy Structures, LLC (“Latitude”) in

late November/early December of 2008. (See Compl. Ex. A.) Sometime after the NDA

was executed, Latitude bankruptcy, and all of its rights and benefits in the NDA that

were owned by Latitude were assigned to AET. (Id. at ¶ 24.)

The complaint sets forth the details of the creation of the NDA as follows. On

November 17, 2008, Aaron Faust and Adam Harris, then employees of Latitude made a

sales visit to Solar Liberty to see if there was an opportunity for Latitude to design and

sell products to Solar Liberty. (Id. ¶ 12.) At the November 17, 2008 meeting, Solar

Liberty expressed an interest for Latitude to design and supply a generic ballasted

racking system that would hold solar panels on the roof of a building. (Id.) Also at the

meeting, and in a November 19, 2008 telephone call, Solar Liberty set general

specifications and design goals that Latitude would need to achieve in designing a

ballasted solar panel racking system. (Id. ¶ 13.) It was up to Latitude to design a

product that met Solar Liberty’s specifications and was acceptable to Solar Liberty. (Id.)

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Mr. Harberts and Mr. Klinkman are accomplished engineers who have been

named inventors on at least fifteen issued patents, including U.S. Patent Nos.

7,441,679; 7,497,651; 7,431,485; 7,156,593; 7,040,849; D533,130; D538,136;

D552529; D508,889; D509,471; 6,135,472; 7,458,490; 7,377,674; 6,761,295; and

D574,096. (Compl. ¶ 15.)

3

After the November 17, 2008 meeting, Latitude assigned its engineers John

Harberts and John Klinkman to design a generic ballasted solar panel racking system

that met Solar Liberty’s specifications.2

 (Id. ¶ 14.) Mr. Harberts and Mr. Klinkman

conceived and created designs for solar panel racking systems. (Id. ¶ 16.) In order to

keep ownership of its proprietary designs for the ballasted solar panel racking systems,

Latitude requested that Solar Liberty sign its standard “Confidentiality and NonDisclosure Agreement.” (Id. ¶ 17.) Both Solar Liberty and Latitude signed the NDA. 

(Id. ¶ 18.) The Complaint attaches the NDA as Exhibit A and alleges that it contains a

complete and accurate copy of the NDA signed by Solar Liberty and Latitude. (Id.)

On December 13, 2008, Latitude presented four different design concepts for

ballasted solar panel racking systems that were conceived by John Harberts and John

Klinkman to Solar Liberty. (Id. ¶ 19.) Solar Liberty expressed interest in one of the

design concepts, and, based on the Solar Liberty’s interest, Latitude then created a

prototype of the design. (Id.) 

On February 10, 2009, Solar Liberty’s employee Nathan Rizzo visited Latitude in

Port Huron, Michigan to view Latitude’s prototypes, product packaging, and Latitude’s

manufacturing facility. (Id. ¶ 20.) Three days later, on or about February 13, 2009,

Latitude went out of business and/or filed for bankruptcy due to the general state of the

automotive industry in which it was involved. (Id. ¶ 21.)

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AET contends that it has invested approximately $400,000 in manufacturing

equipment and other expenses to produce its solar panel racking system. (Compl. ¶

4

On February 17, 2009, former Latitude employees John Harberts, Aaron Faust,

and John Klinkman visited Solar Liberty and informed it of their plan to form a new

company to continue to manufacture and sell the designs developed by John Harberts

and John Klinkman. (Id. ¶ 22.) Solar Liberty indicated that it might be interested in

becoming an investor in the new company being proposed and requested that Harberts,

Faust, and Klinkman submit a proposal. (Id.) However, on February 23, 2009, Solar

Liberty’s president, Adam Rizzo, telephoned Aaron Faust and stated Solar Liberty could

not become an investor in the proposed new company because it was having financial

issues. (Id. ¶ 23.) 

On March 17, 2009, AET was formed. (Id. ¶ 24.) All rights and ownership in the

former Latitude designs and inventions for the solar panel racking systems have been

assigned to AET, and all rights and benefits in the NDA that were owned by Latitude

have been assigned to AET. (Id.)

On or about March 17, 2009, a telephone conference occurred between AET

employee Aaron Faust and Solar Liberty’s employee Nathan Rizzo. (Id. ¶ 25.) On the

telephone call, Nathan Rizzo said that Solar Liberty would not use AET as a supplier of

solar panel racking systems. (Id.) Nathan Rizzo said that Solar Liberty had decided to

use a solar panel racking system designed and manufactured by a different supplier. In

response, Mr. Faust said that AET was moving forward with purchasing manufacturing

equipment to produce its racking system and that AET would be offering the racking

system for sale to third parties.3

 (Id.) Plagory 

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35.)

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On March 17, 2009, Solar Liberty’s President sent two emails to AET stating that

Solar Liberty provided proprietary information to Latitude and that if AET disclosed Solar

Liberty’s proprietary information, then Solar Liberty would file a lawsuit to enforce the

NDA and seek damages and injunctive relief. (Id. ¶ 26.) On April 24, 2009, AET’s

attorney faxed a response letter to Solar Liberty, stating that AET did not believe that it

had used any of Solar Liberty’s proprietary information in the design of the solar panel

racking system it would be offering for sale. (Id. ¶ 27.) AET’s attorney requested that

Solar Liberty identify what it considered to be its proprietary information so that AET did

not inadvertently use or disclose the information. AET’s attorneys requested that Solar

Liberty respond to its letter within two weeks time or it would consider the matter closed. 

(Id.)

Over two weeks later, between May 11, 2009 and May 16, 2009, AET and Solar

Liberty attended the American Solar Energy Society’s National Solar Conference

(“ASES Conference”). (Id. ¶ 28.) At the conference and tradeshow, AET displayed its

solar panel racking system in a display booth. (Id.) At the ASES Conference, on or

about May 15, 2009, while AET’s Vice President of Sales was talking to a prospective

customer, Solar Liberty’s President, Mr. Rizzo, approached the potential customer and

told the prospective customer not talk to AET because AET stole Solar Liberty’s

proprietary design. (Id. ¶ 29.) Mr. Rizzo intentionally made the accusations so that the

potential customer would not purchase AET’s solar panel racking system. (Id.) AET

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contends that Solar Liberty communicated to other third parties at the ASES

Conference that AET had stolen Solar Liberty’s proprietary designs. (Id. ¶ 30.) 

On May 15, 2009, Solar Liberty’s attorney sent a letter in response to the letter

sent by AET’s attorneys on April 24, 2009. (Id. ¶ 31.) Solar Liberty’s President also

hand-delivered a copy of the letter to AET at AET’s display booth at the ASES

Conference. (Id.) In this letter, Solar Liberty accused AET of violating the NDA by

misappropriating and/or disclosing the Solar Liberty’s proprietary designs in AET’s solar

panel racking system. (Id.) The letter demanded that “AET IMMEDIATELY CEASE

AND DESIST from any and all further dissemination and disclosure of Solar Liberty’s

proprietary solar panel roof ballast design rack, including, but not limited to, its

immediate removal of any such material from the American Solar Energy Society’s

National Solar Conference . . . .” (Id.) While delivering the letter, Mr. Rizzo said that

AET stole Solar Liberty’s proprietary designs and that he was going to sue AET, John

Harberts, and Aaron Faust if AET did not stop offering its solar panel racking system for

sale. (Id.) 

On May 16, 2009, Rizzo came to Solar Liberty’s display booth on at least two

separate occasions. (Id. ¶ 32.) According to AET, Rizzo yelled that AET had stolen

Solar Liberty’s proprietary designs. (Id.) Rizzo also yelled, again, that Solar Liberty was

going to sue AET, and Aaron Faust and John Harberts, personally. (Id.) AET contends

that Rizzo intentionally yelled his accusations and threats in such a manner so that all of

the potential customers viewing AET’s display would hear his accusations and would

not purchase AET’s solar panel racking system. (Id.) 

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AET employee John Harberts took a photograph of Rizzo at AET’s display booth

as evidence. (Compl. ¶ 33.)

7

AET asked Rizzo to leave the AET display booth and stop defaming AET in front

of its potential customers.4

 (Id. ¶ 33.) AET asserts that Solar Liberty’s defamatory

accusations at the ASES Conference were so belligerent and disruptive that AET

requested the organizers of the ASES Conference to monitor AET’s display booth. 

(Id. ¶ 34.) The ASES Conference organizers ordered Rizzo to stay away from AET’s

display booth and warned him that if he did not, he would be escorted out of ASES

Conference. (Id.)

Less than a week later, on May 21, 2009, AET initiated the instant litigation,

asserting two counts against Solar Liberty. In the first count, AET seeks a declaratory

judgment pursuant to 28 U.S.C. § 2201 that is has not violated the NDA and may

continue to sell the AET solar panel racking system. (Compl. ¶¶ 36-40.) In the second

count, AET asserts a defamation claim based on Solar Liberty’s alleged statements that

AET stole Solar Liberty’s proprietary designs. (Id. ¶¶ 41-45.)

II. STANDARD

Because federal subject matter jurisdiction in this case is based solely on

diversity of citizenship under 28 U.S.C. § 1332, venue is governed by 28 U.S.C. §

1391(a). “A civil action wherein jurisdiction is founded only on diversity of citizenship

may, except as otherwise provided by law, be brought only in (1) a judicial district where

any defendant resides, if all defendants reside in the same state, (2) a judicial district in

which a substantial part of the events or omissions giving rise to the claim occurred . . . ,

or (3) a judicial district in which any defendant is subject to personal jurisdiction at the

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time the action is commenced, if there is no district in which the action may otherwise

be brought.” 28 U.S.C. § 1391(a).

Transfer of venue is governed by 28 U.S.C. § 1404(a), which 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.” 28 U.S.C. § 1404(a). This provision is “intended to place discretion in the

district court to adjudicate motions for transfer according to an ‘individualized, case-bycase consideration of convenience and fairness.’” Stewart Org., Inc. v. Ricoh Corp.,

487 U.S. 22, 29 (1988) (citing Van Dusen v. Barrack, 376 U.S. 612, 622 (1964)). “A

district court ‘has broad discretion to grant or deny a motion to transfer [a] case.’” 

Phelps v. McClellan, 30 F.3d 658, 663 (6th Cir. 1994) (citing Cote v. Wadel, 796 F.2d

981, 985 (7th Cir. 1986)).

III. DISCUSSION

After being served with the complaint, Solar Liberty filed a motion to dismiss or to

transfer venue based on a forum selection clause in the NDA. Section 4 of the NDA

provides:

This Agreement shall be governed by and be construed and take effect in

all respects in accordance with the laws of the State of Michigan,

notwithstanding any choice of law provisions. The party wishing to bring

an action under this Agreement, shall bring it in the home jurisdiction of

the other party and shall agree to jurisdiction and venue as to all related

causes of action arising under the Agreement.

(Id. (emphasis added).) Solar Liberty contends that, under the NDA, since AET initiated

this action, it should have filed the action in the Western District of New York, Solar

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In its reply brief, Solar Liberty argues that the NDA may not be applicable to AET

at all, as there is some question as to whether Latitude could properly assign its

interests and obligations under that contract. Because this issue was raised for the first

time in the reply, the court will not consider it in making its analysis. Nonetheless, the

court notes that even if the NDA was not properly assigned to AET, the court’s

conclusion to transfer venue would remain unchanged. If the NDA was not properly

assigned to AET, then the only valid claim before the court would be the defamation

claim, which arose in New York and is asserted against a New York defendant. Under

this scenario, transfer of venue would be proper under § 1404. 

9

Liberty’s home jurisdiction.5

 Solar Liberty argues that this action should therefore either

be dismissed or transferred to the Western District of New York.

A. Dismissal

As an initial matter, the court finds that the facts of this case do not justify a

dismissal for improper venue. Although the Sixth Circuit, in some circumstances, will

allow a dismissal under Federal Rule of Civil Procedure 12(b)(6) based on a forum

selection clause, see Langley v. Prudential Mortgage Capital Comp., L.L.C., 546 F.3d

365, 369 (6th Cir. 2008), Solar Liberty has not shown that dismissal, rather than

transfer, is appropriate under the circumstances of this case. 

In its motion, Solar Liberty devotes three paragraphs to its dismissal argument,

and the bulk of those paragraphs simply cite to general case law stating that forum

selection clauses are enforceable. In its reply brief, Solar Liberty argues that dismissal

is proper because AET allegedly engaged in some “procedural fencing” activities in its

race with Solar Liberty to be the first to file this lawsuit. The court is not persuaded that

these activities, even if true, justify a dismissal. If this action were brought solely on the

basis of the NDA, then perhaps, with the NDA’s forum selection clause, and if supported

with additional case law and argument, the court would entertain the option of a

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dismissal under Rule 12(b)(6). However, inasmuch as Solar Liberty’s motion itself

focuses on the transfer option and because this lawsuit also contains a defamation

claim, the court will instead analyze this motion under 28 U.S.C. § 1404.

B. Transfer

To transfer an action under § 1404(a) the following three requirements must be

met: “(1) the action could have been brought in the transferee district court; (2) a

transfer serves the interest of justice; and (3) transfer is in the convenience of the

witnesses and parties.” Kepler v. ITT Sheraton Corp., 860 F. Supp. 393, 398 (E.D.

Mich. 1994). Factors to consider in determining whether to transfer venue include: 

(1) convenience of witnesses; 

(2) the location of relevant documents and relative ease of access to

sources of proof;

(3) the convenience of the parties;

(4) the locus of the operative facts;

(5) the availability of process to compel the attendance of unwilling witnesses;

(6) the relative means of the parties;

(7) the forum’s familiarity with the governing law;

(8) the weight accorded the plaintiff’s choice of forum; and

(9) trial efficiency and the interests of justice, based on the totality of

the circumstances.

Overland, Inc. v. Taylor, 79 F. Supp. 2d 809, 811 (E.D. Mich. 2000).

Finally, where a valid forum-selection clause was entered into by the parties, it

should ordinarily be given controlling weight. Detroit Coke Corp. v. NKK Chem. USA,

Inc., 794 F. Supp. 214, 218 (E.D. Mich. 1992) (citing Stewart Org., Inc. v. Ricoh Corp.,

487 U.S. 22, 33 (1988)). “[S]uch clauses are now deemed to be ‘prima facie valid’ and

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are to be enforced ‘unless enforcement is shown by the resisting party to be

“unreasonable” under the circumstances.’” Id. at 217 (citing Moses v. Bus. Card

Express, Inc. 929 F.2d 1131, 1136 (6th Cir. 1991)). The practical effect of a forumselection clause is that it shifts to the plaintiff the burden of showing that a transfer to

the proposed venue would be inconvenient. See U.S. v. P.J. Dick Inc., 79 F. Supp. 2d

803, 806-07 (E.D. Mich. 2000); see also Viron Int’l Corp. v. David Boland, Inc., 237 F.

Supp. 2d 812, 815 (W.D. Mich. 2002). Despite a strong preference to consider forumselection clauses valid, such clauses are only one factor in the court’s venue analysis

and are not dispositive. Steward, 487 U.S. at 23; MCNIC Oil & Gas v. Ibex Resources

Co., 23 F. Supp. 2d 729, 738 (E.D. Mich. 1998). 

The first step in the analysis in determining whether to grant a motion to transfer

venue is to determine whether venue would have been proper had the action been

originally filed in the transferee forum. 28 U.S.C. § 1404(a). Here, venue would have

been proper if filed in the Western District of New York. Solar Liberty, as a New York

corporation with its principal place of business in New York, “resides” in New York and,

additionally, the alleged facts giving rise to AET’s defamation claim occurred in New

York. Accordingly, under 28 U.S.C. § 1391(a)(1) and (2), venue would have been

proper if this case had been initially filed in New York. The court now turns to the

analysis of the relevant factors in determining whether to transfer venue.

1. Convenience of the Parties & Witnesses

The convenience of the witnesses is one of the most important factors in

considering a motion to transfer venue. 15 Wright, Miller & Cooper, Federal Practice

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and Procedure, § 3851 at 415 (2d Ed. 1986); see also Thomas v. Home Depot, U.S.A.,

Inc., 131 F. Supp. 2d 934, 937 (E.D. Mich. 2001). In this case, with respect to the first

claim, the witnesses appear to be evenly split between New York and Michigan. The

first claim will revolve around the interpretation and enforcement of the NDA and the

relevant witnesses will likely be former employees of Latitude as well as employees of

Solar Liberty. AET’s second claim, for defamation, arose out of events occurring in New

York. While AET claims that two relevant witnesses are two of its Michigan employees,

Solar Liberty accurately counters that non-party New York witnesses will also likely be

witnesses with respect to this claim. The court thus concludes that this factor is evenly

split, with the convenience of the witnesses and parties evenly balanced between

Michigan and New York. 

2. Availability of Process To Compel Attendance of Witnesses

Another factor in considering whether to transfer venue under § 1404 is the

availability of process to compel the attendance of unwilling witnesses. Overland, 79 F.

Supp. 2d at 811. As discussed above, the non-party witnesses from Latitude are

located in Michigan and non-party witnesses from the ASES Conference are located in

New York. Accordingly, this factor is also evenly split between Michigan and New York.

3. Location of Relevant Documents and Access to Proof 

This factor does not favor one venue over the other. The witnesses, as

discussed, are split between the venues and access to documents is a less significant 

factor in this “era of photocopying, fax machines, and Federal Express.” Coker v. Bank

of Am., 984 F. Supp. 757, 766 (S.D.N.Y. 1997). Further, depositions of the witnesses

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Solar Liberty contends that AET scheduled a conference call to be held on May

21, 2009 to discuss the parties’ differences and “sort this out.” (Def.’s Reply at 2.) Just

prior to the conference call, however, and without prior notice to Solar Liberty, AET

initiated this action. (Id.)

13

are likely to be conducted where the witnesses are located, regardless of venue. Thus,

this factor does not favor either party.

4. Locus of Operative Facts

The locus of operative facts slightly favors venue in New York. While the facts

surrounding the NDA creation and possible breach are split between New York and

Michigan, the facts giving rise to the defamation claim arose in New York. Thus, this

factor tips slightly in favor of a New York venue. 

5. Relative Means of the Parties

AET has submitted an affidavit stating that litigating this action in New York

would impose a substantial financial hardship on AET, which is a small start-up

company with only five employees. (Pl.’s Resp. Ex. D.) AET, however, provides no

explanation as to how litigating the action in New York would impose a substantially

greater hardship than litigating the action in Michigan. Further, Solar Liberty argues

that, had AET been more concerned with costs, it would not have undertaken an

alleged settlement “ruse”6

 in order to file this action first but would have instead

genuinely explored settlement as Solar Liberty attests it was willing to do. (Def.’s Reply

at 2, 5-6.) The court is inclined to find that if costs were such a high concern to AET it

would not have filed this lawsuit as quickly as it did, less than a week after the ASES

Conference, but would have instead explored further discussions or, perhaps, waited

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The court is not persuaded that the factor of trial efficiency favors one party over

the other. The court agrees with Solar Liberty that the Eastern District of Michigan and

the Western District of New York are equally equipped to efficiently preside over this

action.

14

until Solar Liberty filed an action, which would have been required to have been filed in

AET’s home venue. Nonetheless, AET has presented an affidavit stating that a New

York litigation would impose a hardship on it as a small company and the court

recognizes that, indeed, out-of-state litigations result in greater costs than in-state

litigations. Accordingly, the court finds that this factor weighs slightly in favor of AET’s

chosen forum. 

6. Forum’s Familiarity with the Law

The forum’s familiarity with the governing law is again split between the parties. 

Whichever federal court presides over this action will apply the same relevant state law. 

However, it is likely that this court is more familiar with Michigan law and the New York

federal court is more familiar with New York law. See Detroit Coke Corp. v. NKK Chem.

USA, Inc., 794 F. Supp. 214, 219 (E.D. Mich. 1992) (“It is axiomatic that the

construction of state law is best given to a court most familiar with it.”). The declaratory

action count will likely be governed, in accordance with the choice of law provision,

under Michigan law, but the defamation action will likely be governed by New York law,

inasmuch as New York is where the alleged defamation occurred. This factor does not

weigh in favor of either party.

7. Weight Accorded Plaintiff’s Choice of Forum and the Interests of Justice7

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 With all of the foregoing factors generally balanced between the parties, the court

considers the weight given to AET’s choice of forum and the overall interests of justice. 

In light of the forum selection clause, the court finds these factors weigh strongly in

favor of a transfer to New York. The NDA provides that “[t]he party wishing to bring an

action under this Agreement, shall bring it in the home jurisdiction of the other party and

shall agree to jurisdiction and venue as to all related causes of action arising under the

Agreement.” (NDA § 4.) From the plain language of this forum selection clause, any

party initiating an action arising under the NDA shall bring the action, and any related

causes of the action, in the opposing party’s home forum. Applied to the facts of this

case, AET filed a complaint seeking (1) a declaration that it is not in breach of the NDA

and (2) damages for a defamation claim relating to rights AET may or may not have had

under the NDA. When this complaint was filed, AET should have filed its complaint in

Solar Liberty’s home venue of the Western District of New York.

AET attempts to avoid the implications of the NDA in two creative, yet unavailing,

ways. AET first argues that this “defensive declaratory judgment suit should be

interpreted from the perspective of the natural plaintiff.” (Pl.’s Resp. at 7.) AET argues

that although it is technically the plaintiff in this action, in effect it is the natural

defendant as it seeks to simply defend itself from Solar Liberty’s assertions that AET is

in breach of the NDA. Thus, AET argues that the court should realign the parties, as it

sometimes does in patent cases, to reflect that Solar Liberty is the natural plaintiff and

AET is the natural defendant. AET contends that if the NDA’s forum selection clause is

viewed after realigning the parties, then the action is properly maintained in Michigan,

the home venue of that natural defendant. The court disagrees.

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First, the court typically realigns parties only in patent cases, and even then the

court usually requires the consent of both parties. The court would also make clear in

any realignment that the realignment does not affect any rights or obligations a party

would otherwise have had. Moreover, the court would not realign the parties where, as

here, there has been no answer filed and thus, at this point, all the causes of action are

asserted by AET and against Solar Liberty. If there is as yet no counterclaim, then

there is no reason to realign the parties. Further, the declaratory action count is not the

sole count of the complaint, and it would make little sense to realign the parties where

AET also asserts a defamation count against Solar Liberty. Finally, even if the court

were persuaded that realignment was proper, it would not affect the plain language of

the NDA’s forum selection clause, which requires the party filing suit to file it in the

opposing party’s venue. It is the alignment of the parties at the time of filing that is

relevant, not the alignment of the parties after a court may find it efficient to realign them

to their “natural” states. 

Relatedly, the court is also not persuaded by AET’s second argument, that AET’s

declaratory judgment action does not qualify as an “action” under the language of the

NDA. Specifically, AET contends that the term “action” does not apply to its count

under the Declaratory Judgment Act, but should apply only to substantive actions for

breach of contract. (Pl.’s Resp. at 10-11.) AET states that it is Solar Liberty, the

“natural plaintiff,” who is asserting a cause of action against AET, and AET is simply

defending itself by filing a declaratory judgment claim. Thus, AET contends that the

proper interpretation of the NDA requires that its declaratory judgment claim was

properly filed in Michigan.

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While AET's counsel presents an inventive argument, it is nonetheless

unavailing. The language of the forum selection clause does not, on its face, except

declaratory judgment claims from its scope. Rather, it applies to any “action” brought

“under this Agreement” and applies also to “all related causes of action arising under

the Agreement.” (NDA§ 4.) The court agrees with Solar Liberty that AET has failed to

cite any case for the remarkable proposition that a declaratory judgment action is not an

“action” as that term is generally known. If, as AET suggests, the parties wanted to limit

the forum selection clause to actions for breach of contract, the parties could easily

have drafted the NDA to provide that any claims for breach of contract will be brought in

the alleged breaching party’s home forum. The parties did not do so. Under the NDA

as drafted, any cause of action which generally arises under the NDA should have been

brought in the Defendant’s home forum. Here, AET asserts an action against Solar

Liberty which clearly arises under the NDA. Accordingly, the action should have been

filed in New York. 

Because this forum selection clause is presumed valid, the court finds that

granting deference to AET’s choice in this case would permit it to escape the terms of

an accepted forum selection clause and instead sanction a “race to the courthouse” in

contravention of an agreed-upon contractual forum. Although a plaintiff’s choice of

forum is typically entitled to deference, Thomas v. Home Depot, U.S.A., Inc., 131 F.

Supp. 2d 934, 937 (E.D. Mich. 2001), the fact that AET chose to file this lawsuit in

Michigan will not prevent a transfer under these circumstances. See Detroit Coke

Corp., 794 F. Supp. at 219 (finding that the plaintiff “made [his] ‘choice’ of forum when

[he] signed the Agreement which contained the forum selection clause”).

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Likewise, the interests of justice favor the enforcement of valid forum selection

clauses. It is settled law that forum selection clauses are to be read as “prima facie

valid,” and are enforceable in federal courts. Breman v. Zapata Off-Shore Co., 407 U.S.

1, 10, 15 (1972). In the instant case, no exceptional circumstances are present that

would lead the court to determine the provision is unenforceable. As such, for purposes

of this motion, the court finds that this contractual provision is a valid forum selection

clause requiring venue in New York.

While forum selection clauses are not dispositive for determining venue, the

Supreme Court has stated that “[t]he presence of a forum-selection clause such as the

parties entered into in this case will be a significant factor that figures centrally in the

district court’s calculus. The flexible and individualized analysis Congress prescribed in

§ 1404(a) thus encompasses consideration of the parties’ private expression of their

venue preferences.” Stewart, 487 U.S. at 29-30. Applying this standard to this case,

the forum selection clause in favor of New York should be given significant weight. 

Indeed, where all the other factors are evenly balanced, the strength of this final factor,

in effect, controls. For these reasons, the court finds that a balancing of the relevant

factors ultimately tips in favor of a transfer to New York and Solar Liberty’s motion

seeking the transfer will be granted. 

IV. CONCLUSION

IT IS ORDERED that Defendant’s July 13, 2009 motion to dismiss or to transfer

venue [Dkt. # 5] is GRANTED IN PART and DENIED IN PART. Defendant’s request for

a dismissal is DENIED, but its request for a transfer of venue is GRANTED. 

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IT IS FURTHER ORDERED that the clerk of the court is directed to TRANSFER

the above-captioned matter to the United States District Court for the Western District of

New York. 

 s/Robert H. Cleland 

ROBERT H. CLELAND

UNITED STATES DISTRICT JUDGE

Dated: August 27, 2009

I hereby certify that a copy of the foregoing document was mailed to counsel of record on

this date, August 27, 2009, by electronic and/or ordinary mail.

 s/Lisa Wagner 

Case Manager and Deputy Clerk

(313) 234-5522

S:\Cleland\JUDGE'S DESK\C3 ORDERS\09-11959.APPLIEDENERGY.MotionDismissVenue.ForumSelection.chd.wpd

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