RetailerX, Inc. v. Tavakkol ( 2023 )

1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 NORTHERN DISTRICT OF CALIFORNIA 8 9 RETAILERX, INC., et al., Case No. 23-cv-01705-JSW 10 Plaintiffs, ORDER GRANTING MOTION TO 11 v. DISMISS 12 AIDIN TAVAKKOL, et al., Re: Dkt. No. 36 Defendants. 13 14 15 Now before the Court is the motion to dismiss for forum non conveniens filed by 16 Defendants Aidin Tavakkol and Essan Parto (“Defendants”) on the basis that the parties, in their 17 Share Purchase Agreement (“SPA”), designated the courts of British Columbia as the exclusive 18 forum for any matter “arising thereunder or relating thereto.” Having considered the parties’ 19 papers and authority, the Court GRANTS Defendants’ motion to dismiss. 20 BACKGROUND 21 This case arises from Plaintiff Pantastic’s purchase of LimeSpot Solutions Inc. 22 (“LimeSpot”). LimeSpot provides online shopping technology for businesses in the e-commerce 23 space. According to the allegations in the complaint, Plaintiffs RetailerX, Inc. d/b/a Pantastic 24 Networks and individual Neil S. Rafer (“Plaintiffs”) entered into the SPA on June 25, 2022, to 25 purchase LimeSpot. The SPA contains a forum selection clause designating British Columbia in 26 the City of Vancouver as the exclusive jurisdiction “with respect to any matter arising hereunder 27 or thereunder, or relating hereto or thereto.” (Dkt. No. 14-5, Complaint at § 1.2.) Also in the 1 warranties set forth in the SPA, which included a detailed 11-page description of LimeSpot’s 2 technology, and that they were not relying on any pre-contract statements. (Id. at ¶ 3.6.) Pursuant 3 to the agreement and its exhibits, LimeSpot’s shareholders agreed to sell their shares to Pantastic, 4 subject to the terms and conditions set forth therein. (See id.) In the summer of 2022, Pantastic 5 became the owner of LimeSpot. Plaintiffs claim that, contrary to representations made by 6 Defendants, LimeSpot lacked the critical technological capabilities that were material to the 7 decision to purchase the company and Plaintiffs seek to invalidate the purchase agreement and 8 recoup their costs. 9 The Court shall address other relevant facts in the remainder of its order. 10 ANALYSIS 11 Choice of law provisions in international contracts are “’an almost indispensable 12 precondition to achievement of the orderliness and predictability essential to any international 13 business transaction,’ and should be enforced absent strong reasons to set them aside.” Northrup 14 Corp. v. Triad Int’l Marketing S.A., 811 F.2d 1265, 1270 (9th Cir. 1987) (quoting Scherk v. 15 Alberto-Culver Co., 417 U.S. 506, 516-20 (1974)). 16 “Forum selection clauses are prima facie valid and are enforceable absent a strong showing 17 by the party opposing the clause ‘that enforcement would be unreasonable or unjust, or that the 18 clause [is] invalid for such reasons as fraud or overreaching.’” Manetti-Farrow, Inc. v. Gucci 19 America, Inc., 858 F.2d 509, 514 (9th Cir. 1988) (emphasis and brackets in original) (citing M/S 20 Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972)). In general, “the appropriate way to 21 enforce a forum-selection clause pointing to a state or foreign forum is through the doctrine of 22 forum non conveniens.” Atl. Marine Const. Co. v. U.S. Dist. Ct. for the W. Dist. of Texas, 571 23 U.S. 49, 59-60 (2013); see also Livingston v. Pneu-Logic Corp., No. 20-cv-07155-JCS, 2021 WL 24 1375903, at *3 (N.D. Cal. Apr. 12, 2021). Under the doctrine of forum non conveniens, the 25 “plaintiff’s choice of forum merits no weight. Rather, as the party defying the forum-selection 26 clause, the plaintiff bears the burden of establishing that transfer to the forum for which the parties 27 bargained is unwarranted.” Id. at 63. In cases where a plaintiff “agrees by contract to bring suit 1 the plaintiff has effectively exercised its ‘venue privilege’ before a dispute arises. Only that initial 2 choice deserves deference.” Id. at 63-64. 3 First, the Court finds that the claims set out by the complaint in this matter fall within the 4 broad scope of the parties’ agreement.1 The disputes need not stem from the terms of the contract 5 itself, but do relate to and are inextricably intertwined with the parties’ contract. See, e.g., Sun v. 6 Advanced China Healthcare, Inc., 901 F.3d 1081, 1086 (9th Cir. 2018) (holding that forum 7 selection clauses that cover disputes “relating to” a particular agreement apply to any disputes that 8 reference the agreement or have some “logical or causal connection” to the agreement). Each 9 claim in the complaint is a consequence of Plaintiffs’ decision to enter the SPA and to make 10 payments to purchase LimeSpot. The specific relief Plaintiff seeks is the rescission of the funds 11 used to purchase the company. Here, the exclusive forum clause sets out that claims logically 12 connected to the agreement and require consideration of its terms. 13 The party objecting to the contractual choice of forum bears a heavy burden of proof that 14 some exception to the agreement applies. A forum-selection clause will control unless the 15 plaintiff makes a strong showing that: (1) the clause is invalid due to “fraud or overreaching,” (2) 16 “enforcement would contravene a strong public policy of the forum in which the suit is brought, 17 whether declared by statute or by judicial decision,” or (3) “trial in the contractual forum will be 18 so gravely difficult and inconvenient that [the plaintiff] will for all practical purposes be deprived 19 of his day in court.” Sun, 901 F.3d at 1088 (quoting M/S Bremen, 407 U.S. at 15, 18). 20 With regard to the factor that the clause may be considered invalid due to fraud, the 21 Supreme Court has noted that “simply alleging that one was duped into signing the contract is not 22 enough.” Richards v. Lloyd’s of London, 135 F.3d 1289, 1297 (9th Cir. 1998) (citing Scherk, 417 23 U.S. 519 n.14). The fraud exception “does not mean that any time a dispute arising out of a 24 25 1 Although Neil Rafer sues as an individual plaintiff and was not named as a party to the SPA, to 26 the extent he can maintain any individual claims, those are related to the parties’ agreement and fall under the purview of the forum selection clause. See, e.g., Holland America Line v. Warsila 27 North Amer., 485 F.3d 450, 456 (9th Cir. 2007) (holding that foreign forum selection clauses applied even when litigant was not a party to the contract: “any transactions between those 1 transaction is based upon an allegation of fraud … the clause is unenforceable.” Id. Rather, for a 2 “party to escape a forum selection clause on the grounds of fraud, it must show that ‘the inclusion 3 of that clause in the contract was the product of fraud or coercion.” Id. (citing Prima Paint Corp. 4 v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404 (1967)) (emphasis in original). While Plaintiffs 5 appear to argue that the agreement in its entirety should not be enforced because it was induced by 6 fraud, the complaint makes no allegation that the forum selection clause itself was procured by 7 fraud. Without allegations of this element, Plaintiffs cannot maintain that the forum selection 8 clause is unenforceable due to fraud. 9 Similarly, Plaintiffs cannot demonstrate that there is a strong public interest in this 10 jurisdiction to resolve the parties’ claims. All but the third count for violation of unfair business 11 practices under the California Code Business and Professions Code assert common contract, 12 quasi-contract, and tort causes of action that are recognized and routinely litigated in courts in 13 British Columbia. Even if the third claim for relief is viable, the Court enforces the forum clause 14 as it finds that the courts in British Columbia could enforce this state law claim. And if litigating 15 in British Columbia would result in losing the California UCL claim, the Court would still enforce 16 the forum selection clause. See, e.g., Lee v. Fisher, 70 F.4th 1129, 1151 (9th Cir. 2023) (enforcing 17 forum selection clause even though doing so would result in the deprivation of the right to pursue 18 certain claims). The Court finds that Plaintiff has failed to meet their burden to demonstrate that 19 there exist exceptional circumstances meriting the disregard of the parties’ chosen forum selection 20 clause. 21 Lastly, as to the third and last element to consider, the Court finds that Plaintiffs will not be 22 deprived of their day in court if the case is litigated in British Columbia. In cases in which the 23 parties have agreed to a forum-selection clause, they “waive their right to challenge the 24 preselected forum as inconvenient or less convenient for themselves or their witnesses, or for their 25 pursuit of litigation.” Alt. Marine, 571 U.S. at 64. The Court is not persuaded by Plaintiffs’ 26 contention that their chosen forum is inconvenient. Although perhaps more costly, litigation is 27 possible in British Columbia and Plaintiffs will not be deprived of the right to their day in court. 1 CONCLUSION 2 Based on the foregoing, the Court GRANTS Defendants’ motion to dismiss for forum non 3 conveniens. Plaintiffs do not set forth additional claims that fall outside the scope of the forum 4 selection clause or offer persuasive contentions regarding efforts to amend the complaint. 5 Accordingly, the matter is dismissed without leave to amend. The Court shall issue a separate 6 judgment and the Clerk is instructed to close the file. 7 8 IT IS SO ORDERED. a | 9 || Dated: December 13, 2023 i / Ie é I } 10 i 5 JEFFRE} S. WHI 11 A ates Disffict Judge a 12 Lf 13 Se 15 16 = 17 Zz (18 19 20 21 22 23 24 25 26 27 28