Court Opinion

ID: 9402108
Source: CourtListenerOpinion
Date Created: 2023-06-15 14:01:06.752862+00
Date Added: 2024-06-11T17:19:57.465782
License: Public Domain

UNITED STATES DISTRICT COURT
                             FOR THE DISTRICT OF COLUMBIA

    LIQUIDITY SERVICES, INC.,
         Plaintiff
         v.                                                Civil Action No. 22-2158 (CKK)
    NICHOLAS ROZDILSKY
         Defendant.

                                  MEMORANDUM OPINION
                                      (June 15, 2023)

        Plaintiff Liquidity Services, Inc. (“LSI”) claims that its former employee, Defendant

Nicholas Rozdilsky (“Defendant” or “Rozdilsky”) breached a confidentiality agreement between

the parties, stealing Plaintiff’s trade secrets and converting them for his own purposes.

Defendant has moved to dismiss the complaint or, in the alternative, transfer this matter to the

District of Maryland. Because a later agreement provided that the parties must litigate

contractual disputes arising from the confidentiality agreement in Maryland, the Court will

transfer the case and leave the remainder of Defendant’s motion undisturbed. Accordingly, and

upon consideration of the briefing, 1 the relevant legal authorities, and the entire record,

Defendant’s [8] Motion To Dismiss or in the Alternative to Transfer the Complaint is

GRANTED IN PART.

1
 The Court’s consideration has focused on:
    • Defendant’s Memorandum of Points and Authorities in Support of Defendant’s Motion to
        Dismiss or in the Alternative to Transfer the Complaint, ECF No. 8 (“Motion” or
        “Mot.”);
    • Plaintiff’s Memorandum of Points and Authorities in Opposition to Defendant’s Motion
        to Dismiss the Complaint, ECF No. 10 (“Opp.”); and
    • Defendant’s Reply Memorandum in Support of Defendant’s Motion to Dismiss or in the
        Alternative to Transfer the Complaint, ECF No. 11 (“Repl.”).
In an exercise of its discretion, the Court declines to hold oral argument in this case.

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    I.      BACKGROUND

         On April 28, 2018, Rozdilsky began working as Vice President of Marketing for LSI, a

seller and marketer of surplus goods. Compl. ¶¶ 6-7. A number of agreements governed

Rozdilsky’s employment relationship with LSI. Key here was an “Employee Agreement

Regarding Confidentiality, Intellectual Property, and Competitive Activities” (“Confidentiality

Agreement”), executed April 23, 2018. This agreement controlled how Rozdilsky was to handle

confidential information during the course of his employment at LSI. Id. ¶ 8, Ex. A. The

Confidentiality Agreement provided that Delaware law would govern the agreement, and that

any claims arising from the agreement would be litigated in the District of Columbia. Compl.

Ex. A at ¶ 4.7.1 (choice of law), 4.7.2 (choice of forum).

         On November 5, 2019, Rozdilsky and LSI entered into another employment contract, an

“Executive Employment Agreement” (“Employment Agreement”). Compl. ¶ 9. This agreement

delineated additional terms governing Rozdilsky’s employment with LSI, and expressly

incorporated the terms and conditions of the 2018 Confidentiality Agreement. Id. Ex. B at ¶ 9. 2

Additionally, the Employment Agreement contained a choice of law clause, requiring that the

contract be governed by Maryland law. Id. Ex. B at ¶ 10.9. 3 Finally, the Employment Agreement

contained a forum selection clause, requiring that suits “arising out of or relating to” the

agreement be brought in Maryland state or federal court. See id.

2
  “Executive previously executed an Employee Agreement Regarding Confidentiality,
Intellectual Property, and Competitive Activities (the ‘Employee Agreement’) and the terms and
conditions of the Employee Agreement are specifically incorporated herein by reference.”
3
  “This Agreement, the rights and obligations hereto, and any claims or disputes relating thereto,
shall be governed by and construed in accordance with the laws of the State of Maryland[.]”
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   II.       LEGAL STANDARD

          Pursuant to 28 U.S.C. § 1404(a), a court may transfer a case to any other district where it

might have been brought “[f]or the convenience of parties and witnesses, in the interest of

justice.” The party moving to transfer venue bears the burden of establishing that convenience

and the interests of justice weigh in favor of transfer. See Int’l Bhd. of Painters & Allied Trades

Union v. Best Painting and Sandblasting Co., Inc., 621 F. Supp. 906, 907 (D.D.C. 1985).

Section 1404(a) vests discretion in the district court to conduct an “individualized, case-by-case”

analysis of whether transfer is appropriate. Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29

(1988).

   III.      DISCUSSION

          Among other things, Defendant has moved to transfer venue, arguing that the later

Employment Agreement’s choice-of-forum clause controls, rather than the earlier Confidentiality

Agreement’s choice-of-forum clause. The Court agrees.

          A. Choice of Law

          The Court must begin by determining the choice of law governing this contractual

dispute. As a threshold matter, the Court applies District of Columbia law to determine which

law applies to a contract dispute. Ideal Elec. Sec. Co. v. Int’l Fidelity Ins., 129 F.3d 143, 148

(D.C. Cir. 1997) (federal court applies home forum’s choice-of-law rules). Under District of

Columbia law, a contract “containing a term inconsistent with a term of an earlier contract

between the same parties regarding the same subject matter should be interpreted to rescind the

inconsistent term in the earlier contract.” Nat’l R.R. Passenger Corp. v. ExpressTrak, L.L.C., 330

                                                   3
F.3d 523, 530 (D.C. Cir. 2003) (citing Chang v. Louis & Alexander, Inc., 645 A.2d 1110, 1114

(D.C. 1994) (internal citation omitted)). 4

       Here, the choice-of-law clause in the Employment Agreement supersedes the choice-of-

law clause in the Confidentiality Agreement because the two contracts are between the same

parties and involve the same subject matter. The Confidentiality and Employment Agreements

both involve the same parties, LSI and Rozdilsky. Compl. Ex. A at 9, Ex. B at 7. And the

Confidentiality Agreement and the Employment Agreement both cover the terms of Rozdilsky’s

employment with LSI. Not only do both agreements govern the same employment relationship,

but the latter explicitly incorporates the former by reference. Compl. Ex. B ¶ 9, 10.10. Because

the Employment and Confidentiality Agreements involve the same subject matter and both

agreements are between LSI and Rozdilsky, Maryland law applies.

       B. Forum Selection Clause

       Like District of Columbia law, Maryland law holds that “a subsequent contract

completely covering the same subject-matter, and made by the same parties, as an earlier

agreement, but containing terms inconsistent with the former contract . . . rescinds, supersedes,

and is substituted for the earlier contract.” Hercules Powder Co. v. Harry T. Campbell Sons Co.,

133 A. 510, 516 (Md. 1929) (internal citation and quotation marks omitted). Again, the two

contracts here cover the same subject-matter and were made by the same parties. The

Employment Agreement even explicitly incorporates by reference the Confidentiality

Agreement. Therefore, the Employment Agreement’s clause providing for exclusive venue in

Maryland state or federal court controls.

4
  See also Wardman v. Washington Loan & Trust Co., 90 F.2d 429, 431 (D.C. Cir. 1937); Egan v.
McNamara, 467 A.2d 733, 740 (D.C. 1983); Hershon v. Hellman Co., 565 A.2d 282, 284 (D.C.
1989); La France v Georgetown Univ. Hosp., 1988 WL 135066 (D.D.C. Dec. 9, 1989) (RCL).
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         C. Section 1404(a) Analysis

         The Maryland forum-selection-clause is the end of the matter. When, as here, there is a

valid forum-selection-clause, the Court must usually enforce it. In such a circumstance, “‘the

plaintiff's choice of forum merits no weight[,]’” and the Court may not “consider arguments

about the parties’ private interests.” Glycobiosciences, Inc. v. Innocutis Holdings, LLC, 189 F.

Supp. 3d 61, 66-67 (D.D.C. 2016) (RDM) (quoting Atl. Marine Const. Co. v. U.S. Dist. Court for

W. Dist. of Tex., 571 U.S. 49 (2013)). Furthermore, when a valid forum-selection clause is

present, “[o]nly under extraordinary circumstances unrelated to the convenience of the parties

should a § 1404(a) motion be denied.” Id. at 581. Plaintiff has identified no “extraordinary

circumstances” here, and the Court is unaware of any. Having determined that the parties

contractually agreed that the appropriate forum is Maryland, the Court must transfer this case to

the District of Maryland.

   IV.      CONCLUSION

         Faced with a valid forum-selection-clause, the Court must transfer this matter to the

District of Maryland. As such, as to transfer, the Court GRANTS IN PART Defendant’s [8]

Motion To Dismiss or in the Alternative to Transfer the Complaint. An appropriate order

accompanies this memorandum opinion.

Dated: June 15, 2023                                     /s/
                                                      COLLEEN KOLLAR-KOTELLY
                                                      United States District Judge

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