Court Opinion

ID: 9554130
Source: CourtListenerOpinion
Date Created: 2023-08-07 20:00:56.38315+00
Date Added: 2024-06-11T15:33:13.166394
License: Public Domain

In the

    United States Court of Appeals
                For the Seventh Circuit
                    ____________________
No. 22-1583
NULOGY CORPORATION,
                                                 Plaintiff-Appellant,
                                v.

MENASHA PACKAGING COMPANY, LLC, et al.,
                                  Defendants-Appellees.
                    ____________________

        Appeal from the United States District Court for the
          Northern District of Illinois, Eastern Division.
          No. 1:21-cv-01164 — Mary M. Rowland, Judge.
                    ____________________

    ARGUED JANUARY 18, 2023 — DECIDED AUGUST 7, 2023
                ____________________

   Before HAMILTON, JACKSON-AKIWUMI, and LEE, Circuit
Judges.
   JACKSON-AKIWUMI, Circuit Judge. This legal entanglement
began in Ontario, Canada, where Nulogy Corporation sued
Menasha Packaging Company, LLC, and Deloitte Consulting
LLP, alleging the two collaborated to misuse Nulogy’s propri-
etary information and Menasha breached its contract with
2                                                       No. 22-1583

Nulogy. 1 After Deloitte challenged the Canadian court’s juris-
diction, but before the Canadian court was able to rule, Nu-
logy voluntarily dismissed its Canadian trade secrets claims
against both defendants and refiled in the United States under
federal and state law. Menasha moved to dismiss those new
claims against it, arguing Canada was the proper forum. We
agree: Because Nulogy agreed by contract to litigate claims
against Menasha in Canada—claims, like those here, arising
from the companies’ contractual relationship—we affirm the
district court’s dismissal of Nulogy’s claims against Menasha.
But because Deloitte has no similar contractual agreement
with Nulogy pointing to Canada as the proper forum, and it
continues to insist that Canadian courts do not have jurisdic-
tion over Nulogy’s claims against it, we reverse the district
court’s ancillary decision to dismiss Deloitte from the case.
                                  I
    Menasha licensed one of Nulogy’s software products, Nu-
logy Solution, to assist with its supply chain management.
Years later, Deloitte reviewed Menasha’s systems in hopes of
better integrating Nulogy Solution into Menasha’s ecosystem
of other business management software. To further that re-
view, Deloitte and Menasha asked Nulogy to share proprie-
tary information to which Menasha did not have access. Nu-
logy alleges that the two used this information to reverse en-
gineer an alternative to Nulogy Solution.
   In July 2020, Nulogy filed suit in Ontario’s Superior Court
of Justice, alleging breach of contract by Menasha and

    1 Nulogy also sued the parent companies, Menasha Corporation and

Deloitte LLP. For simplicity, we refer to the parents and subsidiaries
jointly as Menasha and Deloitte.
No. 22-1583                                                     3

violations of trade secrets by Menasha and Deloitte. Deloitte
insisted that it was not subject to jurisdiction in Canada; ra-
ther the United States offered the proper forum. Nulogy re-
sponded by voluntarily dismissing its trade secrets claims
against Deloitte and Menasha and refiling those claims in the
United States District Court for the Northern District of Illi-
nois under the federal Defend Trade Secrets Act, 18 U.S.C.
§ 1836(b), and the Illinois Trade Secrets Act, 765 ILCS
§ 1065/1, et seq. The breach of contract claims against Menasha
remained pending in Canadian court.
     Menasha moved to dismiss the United States trade secrets
litigation, in part, on the grounds of forum non conveniens.
Menasha pointed out that its contract with Nulogy contained
a forum selection clause. That clause provides, “The Parties
will initiate any lawsuits in connection with the Agreement in
Toronto, Ontario, Canada, and irrevocably attorn to the exclu-
sive personal jurisdiction and venue of the courts sitting
therein.” Deloitte did not join this motion. Instead, it filed its
own motion to dismiss arguing that Nulogy had failed to state
a claim upon which relief could be granted and seeking dis-
missal with prejudice.
    The district court sided with Menasha, holding that Nu-
logy agreed to litigate claims against Menasha in Canada and
it should be held to that agreement. In dismissing the claims
against Menasha based on the doctrine of forum non conven-
iens, the district court reasoned that the doctrine required dis-
missal without prejudice of the entire complaint, including
the claims against Deloitte. Consequently, the court denied
Deloitte’s motion as moot.
   Nulogy appeals, arguing forum non conveniens requires
that the claims against Menasha and Deloitte remain here in
4                                                     No. 22-1583

the United States. In any event, Nulogy continues, the claims
against Deloitte must remain considering its insistence that
Canadian courts lack jurisdiction.
                                 II
    At the outset we recognize that this case offered the dis-
trict court three unsatisfactory options: First, it could reject
Menasha’s arguments, overriding a freely agreed upon con-
tractual preference for litigating in Canada. Second, it could
honor that preference and dismiss the claims against Deloitte
along the way, allowing a third party to benefit from a con-
tractual agreement it never bargained for. Third, it could dis-
miss the claims against Menasha while retaining those against
Deloitte, potentially allowing for piecemeal litigation. The
district court, for understandable reasons, opted for the sec-
ond choice. We, however, find the last option more palatable.
While the idea of closely related claims being litigated simul-
taneously in the United States and Canada is not ideal, this
option preserves Menasha and Nulogy’s bargain in line with
Supreme Court precedent while ensuring Deloitte does not
benefit from a contract for which it never provided consider-
ation.
    The Supreme Court has instructed that “the appropriate
way to enforce a forum-selection clause pointing to a state or
foreign forum is through the doctrine of forum non conven-
iens.” Atl. Marine Constr. Co. v. U.S. Dist. Ct. for the W. Dist. of
Tex., 571 U.S. 49, 60 (2013). But before turning to the district
court’s forum non conveniens analysis, we must determine
whether the forum selection clause applies to the claims
within Nulogy’s complaint and whether the clause is manda-
tory or permissive. IAC/InterActiveCorp v. Roston, 44 F.4th 635,
No. 22-1583                                                    5

640 (7th Cir. 2022). These are threshold questions that we re-
view de novo. Id.
    Nulogy argues the contract’s choice of law provision, con-
taining the forum selection clause, does not apply to its Amer-
ican-based trade secrets claims. It reminds us that the provi-
sion applies to claims bearing a “connection with the Agree-
ment” and, from Nulogy’s vantage point, this means the
claim must be contract related. Fitting the bill, in Nulogy’s es-
timation, would be claims “for breach of contract, enforce-
ment of contract or other claims under the contract itself.” Nu-
logy would have us believe its trade secrets claims are unre-
lated to its contract, which required Nulogy to deliver Nulogy
Solution, not share protected information.
    We do not read the contract’s choice of law provision or
Nulogy’s complaint so narrowly. The complaint relies heavily
on the existence of Nulogy’s contractual relationship with
Menasha. Nulogy alleged that “Menasha continued to engage
in licensing with Nulogy, not only to obtain the use of the Nu-
logy Solution but also to continue access to and obtain
through their misrepresentations the delivery of confidential
trade secret information that would otherwise never have
been provided.” Nulogy suggests it never would have pro-
vided the confidential information central to its claims absent
the contract, and any claims regarding the information’s mis-
use therefore bear a strong connection to the agreement.
    Satisfied that the forum selection clause applies, we turn
next to whether it is mandatory or permissive. Our work here
is straightforward. The clause provides that the parties “will”
initiate lawsuits in Toronto and that they “irrevocably attorn
to the exclusive personal jurisdiction and venue of courts sit-
ting therein.” This language could not be more mandatory.
6                                                    No. 22-1583

“[W]here venue is specified with mandatory or obligatory
language, the clause will be enforced; where only jurisdiction
is specified, the clause will generally not be enforced unless
there is some further language indicating the parties’ intent to
make venue exclusive.” Paper Exp., Ltd. v. Pfankuch Maschinen
GmbH, 972 F.2d 753, 757 (7th Cir. 1992) (citation omitted); see
IAC/InteractiveCorp, 44 F.4th at 643 (citing cases and providing
examples).
    Because the clause is mandatory, the forum non conveniens
analysis is modified in three ways. First, Nulogy’s choice of
forum merits no weight. Atl. Marine, 571 U.S. at 63. Typically,
a defendant that invokes forum non conveniens “bears a heavy
burden in opposing the plaintiff’s choice of forum” because
the doctrine results in dismissal with the plaintiff unable to
refile elsewhere if the statute of limitations has run. Deb v.
SIRVA, Inc., 832 F.3d 800, 806 (7th Cir. 2016). But the analysis
is inverted when plaintiffs file in a location that would violate
a mandatory contractual obligation. Atl. Marine, 571 U.S. at
63. In this scenario, “as the party defying the [mandatory] fo-
rum selection clause, the plaintiff bears the burden of estab-
lishing that transfer to the forum for which the parties bar-
gained is unwarranted.” Id. (emphasis added). Second, we do
not consider the parties’ arguments regarding their private in-
terests. Id. at 64. And third (less relevant here), we do not con-
sider the original venue’s choice-of-law rules, “a factor that in
some circumstances may affect public-interest considera-
tions.” Id.
   Using this modified approach, we now turn to whether
the district court abused its discretion in considering
Menasha’s invocation of forum non conveniens. See
IAC/InterActiveCorp, 44 F.4th at 640. The first step in the
No. 22-1583                                                      7

analysis is to determine the availability and adequacy of the
alternate forum. Deb, 832 F.3d at 807. Nulogy argues that the
district court erred by skipping this step. But because forum
selection clauses represent an agreement as to the proper fo-
rum, district courts are permitted to assume that the chosen
forum is available to the contracting parties, see Azima v. RAK
Inv. Auth., 926 F.3d 870, 875 (D.C. Cir. 2019) (citing Atl. Marine,
571 U.S. at 63–64), and to assign no weight to the plaintiff’s
conflicting forum choice, see Atl. Marine, 571 U.S. at 63.
    Nulogy would have us jettison this assumption because its
complaint included claims against Deloitte, a party to the liti-
gation that was not party to the Nulogy-Menasha contract
and therefore had not agreed that Canada is the proper fo-
rum. In support, Nulogy cites to cases where we have said
that “an alternative forum is available if all parties are amena-
ble to process and are within the forum’s jurisdiction.” Kamel
v. Hill-Rom Co., 108 F.3d 799, 803 (7th Cir. 1997) (emphasis
added); see also Deb, 832 F.3d at 807; Fischer v. Magyar Államva-
sutak Zrt., 777 F.3d 847, 867 (7th Cir. 2015); In re Factor VIII or
IX Concentrate Blood Prods. Litig., 484 F.3d 951, 957 (7th Cir.
2007). But in none of those cases did we have occasion to con-
sider the question we now face: does the naming of a defend-
ant not party to a contractual forum selection clause upset At-
lantic Marine’s forum non conveniens analysis as to claims
against a party that is subject to the clause? We hold that it
should not. A contrary ruling would be in tension with our
precedent that plaintiffs cannot defeat a forum selection
clause by picking and choosing which “provisions to sue on,
[] the legal theories to press, [or] defendants to name in the
suit.” Am. Patriot Ins. Agency v. Mut. Risk Mgmt., Ltd., 364 F.3d
884, 888 (7th Cir. 2004). Nulogy cannot subvert its agreement
8                                                   No. 22-1583

with Menasha to litigate claims between the two in Canada
by naming Deloitte as a defendant.
    Nulogy has a backup argument if we decide the forum se-
lection clause applies: Menasha’s claims are best litigated in
the United States despite the forum selection clause. But the
district court did not abuse its discretion in finding otherwise.
Once an adequate forum is established, the typical forum non
conveniens analysis then requires the moving party (here,
Menasha) to show that the public and private interests weigh
in favor of dismissal. Clerides v. Boeing Co., 534 F.3d 623, 628
(7th Cir. 2008). Again, this changes when attempting to defy
a mandatory forum selection clause, with the burden shifting
to the plaintiff (here, Nulogy). Further, with a contractually
agreed upon forum, “[a] court must deem the private-interest
factors to weigh entirely in favor of the preselected forum.”
Atl. Marine, 571 U.S. at 64. Therefore, the party attempting to
defy a forum selection clause (here, Nulogy) must prove the
public interest factors alone counsel against dismissal. Id. “Be-
cause those factors will rarely defeat a transfer motion, the
practical result is that forum-selection clauses should control
except in unusual cases.” Id.
     Faced with this burden of defeating the preselected forum,
Nulogy has one persuasive argument, which is that requiring
its trade secrets claims against Menasha to be brought in Can-
ada will result in piecemeal litigation. Indeed, Deloitte claims
it is not amenable to suit in Canada; Nulogy has not repudi-
ated Deloitte’s position on this, and we see no reason not to
accept it. So at this juncture we will assume that the claims
against Deloitte should stay in the United States even if the
claims against Menasha proceed in Canada. And we recog-
nize that “concern[s] about the danger of piecemeal litigation
No. 22-1583                                                  9

[are] well founded.” LaDuke v. Burlington N. R.R. Co., 879 F.2d
1556, 1560 (7th Cir. 1989). But Nulogy’s argument is a red her-
ring because even if Menasha were forced to defend the trade
secrets claims in the United States with Deloitte, litigation
would still proceed on two tracks with Menasha having to lit-
igate the pending contractual claims against it in Canada. We
recognize that by dismissing the claims against Menasha in
favor of litigating those claims in Canada we would require
closely related trade secrets claims to proceed simultaneously
in Canada (against Menasha) and the United States (against
Deloitte). But “courts regularly permit parallel proceedings in
an American court and a foreign court.” See Turner Ent. Co. v.
Degeto Film GmbH, 25 F.3d 1512, 1521 (11th Cir. 1994). In this
case, any worry about piecemeal litigation should not over-
ride Menasha’s and Nulogy’s valid forum selection clause.
Atl. Marine, 571 U.S. at 64 (“[F]orum-selection clauses should
control except in unusual cases.”).
    Nulogy’s other argument against dismissing its American
trade secret claims against Menasha is that American courts
have a strong interest in interpreting and enforcing American
laws. According to Nulogy, Canadian courts, on the other
hand, should not be left to adjudicate claims under United
States federal and Illinois state trade secret laws, laws they
have no familiarity with. But we see no reason why this
would come to pass. Nulogy previously brought trade secret
claims against Menasha in Canada under Canadian law that
it voluntarily dismissed, and it does not attempt to explain
why it cannot do so again.
   Although we hold that the claims against Menasha should
have been dismissed, that does not extend automatically to
Deloitte. Just as Nulogy should not be allowed to circumvent
10                                                              No. 22-1583

its freely agreed upon forum selection clause by naming
Deloitte, Deloitte should not be allowed the unquestioned
benefit of a forum selection clause for which it did not bar-
gain. Nevertheless, the district court provided Deloitte that
benefit based on Adams v. Raintree Vacation Exchange, LLC,
702 F.3d 436 (7th Cir. 2012). There we concluded that one de-
fendant could enforce a forum selection clause pointing to
Mexico and hypothesized that forum non conveniens might ne-
cessitate the dismissal of claims against the second defendant
even if it could not independently enforce the clause. Id. at
443. But this was dicta because the second defendant could en-
force the forum selection clause, something Deloitte cannot
do (and no one argues as much). Applying this dicta would
ignore the nuance in the case before us. The threat of piece-
meal litigation weighs in favor of dismissing the claims
against Deloitte, but Deloitte’s insistence that Canadian
courts lack jurisdiction counsels against dismissing it from the
case in the United States. The district court never engaged
with these questions. Indeed, Deloitte did not cite forum non
conveniens as a reason to dismiss the claims against it, and it
should not prevail on an argument it has not raised. 2 The

     2 Deloitte does raise an argument that we should affirm dismissal be-

cause Nulogy failed to state a claim. See FED. R. CIV. P. 12(b)(6). If this was
merely an alternate ground for affirmance, then we could hear its argu-
ment as part of Nulogy’s appeal. See Weitzenkamp v. Unum Life Ins. Co. of
Am., 661 F.3d 323, 332 (7th Cir. 2011). Deloitte confirmed at oral argument,
however, that it seeks dismissal with prejudice on the Rule 12(b)(6)
ground. In seeking to alter the judgment to make it more favorable to it,
Deloitte’s argument is outside the scope of this appeal, and it needed to
file a cross-appeal. See generally, Mass. Mut. Life Ins. Co. v. Ludwig, 426 U.S.
479, 480 (1976), quoting United States v. Am. Ry. Express Co., 265 U.S. 425,
435 (1924) (“the appellee may not attack the decree with a view either to
No. 22-1583                                                           11

claims against Deloitte should remain in the United States un-
til and unless it can show a more convenient forum exists.
                                  III
    The claims against Menasha that arise out of its contrac-
tual relationship with Nulogy should be litigated in Canada
as the two companies agreed. The dispute between Nulogy
and Deloitte, however, should remain in the United States,
the only forum Deloitte insists it is amenable to suit in. We
therefore AFFIRM the dismissal of Nulogy’s claims against
Menasha and REVERSE the dismissal of its claims against
Deloitte.

enlarging his own rights thereunder or of lessening the rights of his ad-
versary” without taking a cross-appeal).