GXP Capital, LLC v. Argonaut Manufacturing Services, Inc. ( 2020 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
GXP CAPITAL, LLC, )
Plaintiff, )
)
v. ) C.A. No. N18C-07-267
) PRW CCLD
ARGONAUT MANUFACTURING )
SERVICES, INC.; TELEGRAPH HILL )
PARTNERS III, L.P.; TELEGRAPH )
HILL PARTNERS III INVESTMENT )
MANAGEMENT, LLC, )
Defendants. )
Submitted: February 18, 2020
Decided: May 4, 2020
Withdrawn and Reissued With Clarifications: July 1, 2020
Upon Defendants’ Motion to Dismiss for Forum Non Conveniens,
GRANTED IN PART, STAY ENTERED.
MEMORANDUM OPINION AND ORDER
David L. Finger, Esquire (argued), FINGER & SLANINA, LLC, Wilmington,
Delaware, Benjamin M. Carson, Esquire (pro hac vice), LAW OFFICES OF
BENJAMIN M. CARSON, P.C., La Jolla, California, Attorneys for Plaintiff GXP
Capital, LLC.
John L. Reed, Esquire, Harrison S. Carpenter, Esquire, DLA PIPER LLP (US),
Wilmington, Delaware, Brian A. Foster, Esquire (pro hac vice) (argued), Noah A.
Katsell, Esquire (pro hac vice), Julie Gryce, Esquire (pro hac vice), DLA PIPER
LLP (US), San Diego, California, Attorneys for Defendants Argonaut
Manufacturing Services, Inc., Telegraph Hill Partners III, L.P., Telegraph Hill
Partners III Investment Management, LLC.
WALLACE, J.
On May 4, 2020, the Court issued an opinion on the Motion to Dismiss for
forum non conveniens filed by Argonaut Manufacturing Services, Inc. (“Argonaut”),
Telegraph Hill Partners, III, L.P. (“THP III”), and Telegraph Hill Partners III
Investment Management (“THP”). That Opinion ordered a stay in the litigation here
so as to permit GXP Capital, LLC (“GXP”) to pursue the substance of its claims
before a more appropriate tribunal. The Court granted a stay rather than the
requested dismissal to ensure that some forum remains open to hear GXP’s claims
should all others decline to reach the merits of the dispute.
GXP filed a timely Motion for Reargument under Superior Court Civil Rule
59(e). Clarification is a form of relief that may be granted under Rule 59(e) where
the meaning of what the Court has written is unclear.1 Having considered GXP’s
claims on reargument, the Court recognizes the value of greater clarity in the Court’s
findings and holdings, hereby withdraws its May 4, 2020 Opinion, and issues in
substitution this Opinion.
1
See R. Keating & Sons, Inc. v. Huber, 2020 WL 975435, at *2 (Del. Super. Ct. Feb. 27, 2020)
(citing State ex rel. French v. Card Compliant, LLC, 2018 WL 4183714, at *4 (Del. Super. Ct.
Apr. 30, 2018)); New Castle County. v. Pike Creek Recreational Services, LLC, 2013 WL
6904387, (Del. Ch. Dec. 30, 2013) (citing Naughty Monkey LLC v. MarineMax Northeast LLC,
2011 WL 684626, at *1 (Del Ch. Feb. 17, 2011)).
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I. THE PARTIES
GXP is a limited liability company organized and headquartered in Nevada. 2
GXP is the assignee of GXP CDMO, Inc., formerly known as Bioserv Corporation,
GXP’s parent company.3
Argonaut is a Delaware corporation with its headquarters in California, and is
the successor entity to Argonaut EMS (“Predecessor”), a California sole
proprietorship.4 THP III is a Delaware-organized limited partnership whose general
partner is THP, a Delaware-organized limited liability company.5 Both THP and
THP III are headquartered and operating in California.6
II. INTRODUCTION AND PROCEDURAL HISTORY
This litigation arises out of GXP’s accusation that Predecessor, THP, and THP
III received confidential business information about Bioserv during acquisition
negotiations, and agreed to keep that information confidential through express non-
disclosure agreements (“NDAs”), but did not do so.7 Instead, GXP alleges,
2
Compl. at ¶ 1 (D.I. 1).
3
Id. at ¶¶ 1, 7.
4
Id. at ¶ 2.
5
Id. at ¶ 3.
6
Id.
7
Id. at ¶¶ 6–9, 12, 14.
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Argonaut, THP, and THP III, working with others, initiated and successfully
executed a hostile acquisition of key Bioserv assets at below-market prices in a
bankruptcy proceeding through use and disclosure of the confidential information in
contravention of the NDAs.8 The residual Bioserv then assigned litigation rights to
its subsidiary, GXP.9
GXP first filed an action seeking relief for the alleged wrongs in federal
district court in the District of Nevada. Due to a lack of personal jurisdiction, GXP
voluntarily dismissed that action and filed a second case in the Southern District of
California. The second action was dismissed for lack of subject matter jurisdiction,
because the parties lacked complete diversity.10
Following that second dismissal, GXP initiated this action by filing its
Complaint here, alleging nine causes of action against Argonaut, THP, and THP III.
Argonaut, THP, and THP III filed the instant Motion to Dismiss, seeking
dismissal of seven of the nine counts pursuant to Superior Court Civil Rule 12(b)(6)
for failure to state a claim upon which relief can be granted, and also seeking
8
Id. at ¶¶ 47, 49, 52, 56.
9
Id. at ¶¶ 1, 61.
10
GPX Capital, LLC v. Argonaut EMS, No. 3:17-cv-02283-GPC-BLM (S.D. Cal. Jul. 23, 2018)
(Dkt. No. 48) (“[T]the Court sua sponte DISMISSES without prejudice the complaint for lack of
subject matter jurisdiction.”). The California district court case is captioned GPX rather than GXP
in conformity with the corresponding Complaint. The same error occurred in early procedural
stages in this case. See generally Compl. (D.I. 1).
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dismissal of the entire Complaint based on forum non conveniens. At argument the
parties stipulated to GXP’s withdrawal of the counts challenged under Rule
12(b)(6).11 This leaves only Counts I and III—respectively, breach of contract12 and
misappropriation13—subject to the present forum non conveniens challenge.
III. BURDEN AND LEGAL STANDARD FOR FACT-FINDING
The forum non conveniens tests applied by Delaware courts vary based on the
specifics of both the litigation initiated here and the litigation history of the parties.14
But no matter which forum non conveniens analysis is applicable in a given situation,
to gain dismissal it is always the defendant-movant who must show a sufficient
burden visited by the plaintiff’s choice of Delaware as the forum in which to bring
suit. Ordinarily, at the motion to dismiss stage, the Court must accept as true all of
a plaintiff’s well-pleaded facts and draw all reasonable inferences in her favor.15 But
11
Arg. Tr., Jan. 28, 2019, at 2–3, 6. (D.I. 21). The stipulation was reduced to writing and
approved as the Court’s Order. (D.I. 25). That written stipulation and Order also changed the
caption, to correct the misspelling of GXP’s name made in the Complaint.
12
For violation of the NDAs. Compl. ¶ 60.
13
Apparently meaning misappropriation of a trade secret. Id. ¶¶ 69, 70; see also Cal. Civ. Code
§ 3426.2 (Containing California’s iteration of the Uniform Trade Secrets Act.).
14
Aranda v. Philip Morris USA Inc., 183 A.3d 1245, 1250-51 (Del. 2018) (Describing
Delaware’s different forum non conveniens analyses.).
15
E.g. Olenik v. Lodzinski, 208 A.3d 704, 714 (Del. 2019) (Applying this standard where
dismissal was sought and granted because the contested transaction was subject to business
judgment review.); Cent. Mortg. Co. v. Morgan Stanley Mortg. Capital Hldgs. LLC, 27 A.3d 531,
535 (Del. 2011) (Applying this standard reversing dismissal where it was granted based on
purportedly duplicative claims.); Clinton v. Enter. Rent-A-Car Co., 977 A.2d 892, 895 (Del. 2009)
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on a motion to dismiss an action for forum non conveniens, this Court exercises its
sound discretion when making findings of fact and drawing conclusions therefrom
based on that supported by the record; the Court must, when doing so, use an orderly
and logical deductive process.16
IV. DISCUSSION – FORUM NON CONVENIENS—GENERAL PRINCIPLES
A motion raising forum non conveniens is a request that a court possessing
both personal and subject matter jurisdiction over an action nevertheless decline to
hear it.17 Jurisdictional and venue statutes are broadly drawn, because principles of
justice require that every right have a court available to vindicate it.18 By necessary
consequence, many disputes are amenable to suit in several different jurisdictions.19
The common law doctrine of forum non conveniens20 does not exist to deprive a
plaintiff of his choice of forum, but rather as a backstop to prevent resort to
(Applying this standard where dismissal was granted under this Court’s Civil Rule 12(b)(6)
because action was barred by statute of limitations.).
16
Williams Gas Supply Co. v. Apache Corp., 594 A.2d 34, 37 (Del. 1991).
17
Chrysler First Bus. Credit Corp. v. 1500 Locust Ltd. P’ship., 669 A.2d 104, 106 (Del. 1995).
18
See Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 507 (1947) (General venue statutes are drawn so
that a plaintiff “may be quite sure of some place in which to pursue his remedy.”); see also Dorsey
v. State, 761 A.2d 807, 816 (Del. 2000) (“[E]very right, when withheld, must have a remedy, and
every injury its proper redress.”).
19
Gilbert, 330 U.S. at 507.
20
See In re Asbestos Litigation, 929 A.2d 373, 381 (Del. Super. Ct. 2006) (“[F]orum non
conveniens is a creature of the common law.”).
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intentionally inconvenient forums for illegitimate purposes.21 A plaintiff’s choice
of forum is ordinarily respected,22 and hardship, not mere inconvenience, must be
shown to obtain relief.23
A. FORUM NON CONVENIENS HARDSHIP FACTORS AND THEIR USE.
Delaware has long analyzed hardship using the “Cryo–Maid factors”: (1) the
relative ease of access to proof; (2) the availability of compulsory process for
witnesses; (3) the possibility of a view of the premises; (4) whether the controversy
is dependent upon the application of Delaware law which the courts of this State
more properly should decide than those of another jurisdiction; and (5) all other
practical problems that would make the trial of the case easy, expeditious and
inexpensive.24 And though it does not strictly bespeak of litigants’ hardship, the
21
Winsor v. United Air Lines, Inc., 154 A.2d 561, 563 (Del. Super. Ct. 1958) (“[T]he plaintiff
may not, by choice of an inconvenient forum, ‘vex,’ ‘harass,’ or ‘oppress’ the defendant by
inflicting upon him expense or trouble not necessary to his own right to pursue his remedy.”).
22
Taylor v. LSI Logic Corp., 689 A.2d 1196, 1198 (Del. 1997) (“Delaware courts consistently
uphold a plaintiff’s choice of forum except in rare cases.”).
23
Id. (It is not enough to show there is a “more appropriate forum.”); Warburg, Pincus Ventures,
L.P. v. Schrapper, 774 A.2d 264, 271–72 (Del. 2001) (Denying relief when movant “has not done
anything more than claim inconvenience . . . based on little more than generalized references to
the garden-variety concerns and expenses that characterize transnational litigation.”); Aveta, Inc.
v. Colon, 942 A.2d 603, 608 (Del. Ch. 2008) (“[D]espite linguistic appearance to the
contrary, forum non conveniens is not a doctrine of convenience; it is a doctrine of significant,
actual hardship.”).
24
General Foods Corp. v. Cryo–Maid, Inc., 198 A.2d 681, 684 (Del. 1964).
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pendency or non-pendency of other lawsuits between the parties over the same
subject25 has consistently been added to the enumeration of the Cryo–Maid factors.26
When the Delaware case is the first action filed, relief via forum non
conveniens is available only in the face of “overwhelming hardship” from Delaware
litigation.27 This application of the Cryo–Maid factors constitutes the “Cryo–Maid
test.”28 When an older case is pending in another jurisdiction, the hardship factors
are measured using the “McWane test” instead, in which a trial court is directed to
freely exercise its discretion in favor of the relief requested by the defendant in the
later-filed Delaware action.29
25
Parvin v. Kaufmann, 236 A.2d 425, 427 (Del. 1967).
26
E.g., Ison v. E.I. DuPont de Nemours and Co., Inc., 729 A.2d 832, 837–38 (Del. 1999). Cryo–
Maid itself credited four of the first-recognized hardship factors to this Court’s decision in Winsor
v. United Air Lines, while adding choice of law as a fifth. Cryo–Maid, 198 A.2d at 684. The last
of the Cryo–Maid factors was a residual catchall. Once Parvin v. Kaufman added consideration
of the pendency of other related actions, courts thereafter usually (but not always) numbered that
factor fifth and moved the residual factor to sixth. E.g., Candlewood Timber Grp., LLC v. Pan
Am. Energy, LLC, 859 A.2d 989, 994–95 (Del. 2004); but see AR Capital, LLC v. XL Specialty
Ins. Co., 2019 WL 1932061, at *7 (Del. Super. Ct. Apr. 25, 2019) (Numbering pendency of a
similar action as the last factor and the residual factor as fifth.).
27
Candlewood Timber Group, 859 A.2d at 998.
28
Martinez v. E.I. DuPont de Nemours and Co., Inc., 86 A.3d 1102, 1108 n.31 (Del. 2014)
(quoting IM2 Merchandising & Mfg., Inc. v. Tirex Corp., 2000 WL 1664168, at *10 (Del.Ch. Nov.
2, 2000)).
29
McWane Cast Iron Pipe Corp. v. McDowell-Wellman Engineering Co., 263 A.2d 281, 283
(Del. 1970). Notably, the McWane Court emphasized that this presumption in favor of relief
served the same purpose of protecting a plaintiff’s choice of forum, because under the
presumption, a civil defendant would “not be permitted to defeat the plaintiff’s choice of forum in
a pending suit by commencing litigation involving the same cause of action in another jurisdiction
of its own choosing.” Id.-8-
The Cryo–Maid and McWane tests cover the two poles of forum non
conveniens cases, but left between them is an intermediate situation—where an
earlier foreign lawsuit on the same matter was filed but already dismissed. Our
Supreme Court recently explained that when a prior-filed case is no longer pending,
relief will be granted or denied based on whichever party bears the greater weight of
Cryo–Maid factors.30
This intermediate case in turn resembles the framework the Court uses for
requests for a stay in simultaneously-filed cases. When two cases are filed at
approximately the same time, Delaware courts will weigh an application for a stay
“under the traditional forum non conveniens framework” without “preference for
one action over the other” to avoid rewarding the victor in a “race to the
courthouse.”31 In such cases, the reviewing court neutrally compares hardships
30
Gramercy Emerging Markets Fund v. Allied Irish Banks, P.L.C., 173 A.3d 1033, 1044 (Del.
2017). This assumes that the resolution of the prior-filed litigation did not reach the merits of the
dispute. Because of concerns related to Full Faith and Credit, res judicata, and claim preclusion,
if the older suit was resolved on the merits, McWane’s presumption in favor of dismissal still
applies. Lisa, S.A. v. Mayorga, 993 A.2d 1042, 1047 (Del. 2010).
31
In re Citigroup Inc. Shareholder Derivative Litigation, 964 A.2d 106, 116 (Del. Ch. 2009). In
deciding whether to grant dismissal under a forum non conveniens motion, the defendant-movant
in a simultaneously-filed suit must show overwhelming hardship in accordance with the McWane
test. BP Oil Supply Co. v. ConocoPhillips Co., 2010 WL 702382, *2 (Del. Super. Ct. Feb. 25,
2010).
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imposed on each party by the adverse party’s chosen forum, and stays the Delaware
action if the foreign proceeding is less burdensome overall.32
So the five original Cryo–Maid factors are examined for all forum non
conviens claims. And the later-added sixth pendency-of-other-cases factor fixes the
background presumptions and thresholds against which those five factors are
analyzed. As explained by our high court:
When a case is first-filed, Delaware courts award
dismissal only when the defendant has established
overwhelming hardship, thus tilting the analysis in the
plaintiff’s favor. When a case is later-filed, and its
predecessors remain pending, McWane’s “strong
preference for the litigation of a dispute in the forum in
which the first action relating to such dispute is filed”
applies and the analysis is tilted in favor of the defendant.
But when a case is later-filed and its predecessors are no
longer pending, the analysis is not tilted in favor of the
plaintiff or the defendant.33
Just as the first two situations are referred to as the Cryo–Maid and McWane tests,
Gramercy is now the defining precedent for the intermediate case.34 And the
analysis engaged in for that intermediate case is “a straightforward assessment of
32
National Union Fire Ins. Co. of Pittsburgh, PA v. Axiall Corp., 2019 WL 4303388, at *4 (Del.
Super. Ct. Sept. 11, 2019). The Delaware Supreme Court denied interlocutory review of the Axiall
ruling, without reaching the merits. National Union Fire Ins. Co. of Pittsburgh, PA v. Axiall Corp.,
2019 WL 4795508, at *1-2 (Del. Oct. 1, 2019).
33
Gramercy, 173 A.3d at 1044.
34
Aranda, 183 A.3d at 1250–51.
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the Cryo–Maid factors, where dismissal is appropriate if those factors weigh in favor
of that outcome.”35
As noted earlier, GXP has previously filed actions seeking relief against these
same parties over these same grievances in federal district courts. It did so first in
Nevada, then in California. The first of those federal cases was dismissed before the
next was filed. Those dismissals were: voluntary due to lack of personal jurisdiction
(Nevada); and involuntary for lack of subject matter jurisdiction (California). Such
dismissals are without prejudice and not on the merits.36
So the present action is not a first-filed case imposing the Cryo–Maid
“overwhelming burden” requirement on the movant. And there are no prior-filed
actions pending that subject this one to the McWane presumption of dismissal. No,
this suit is that rare intermediate case subject to Gramercy, with the motion to be
granted or denied depending on which side is favored by the greater weight of the
Cryo–Maid factors.37
35
Gramercy, 173 A.3d at 1036.
36
See Federal Rule of Civil Procedure 41(a)(1)(B)(“Unless the notice or stipulation states
otherwise, [voluntary] dismissal is without prejudice . . . [unless] the plaintiff previously dismissed
any federal- or state-court action based on or including the same claim.”); see also Fed. R. Civ. P.
41(b) (Noting that lack of jurisdiction is one of three forms of dismissal not operating as an
adjudication on the merits without an express statement to the contrary by the court.).
37
See Gramercy, 173 A.3d at 1040 (Describing as “rare” the situation where a later-filed
Delaware case is the only active case with the other earlier case(s) having been disposed of without
reaching the merits.).
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Delaware Courts are seldom called upon to decide this intermediate case. The
parties and the Court have identified only one instance applying the intermediate
Gramercy standard—Schmidt v. Washington Newspaper Publishing Company.38
The Schmidt case involved a California plaintiff suing a Delaware-incorporated
publishing company operating a Washington, D.C. newspaper for defamation.39 The
Schmidt defendant removed the plaintiff’s original suit from Florida state courts to
the Southern District of Florida, where it was dismissed for lack of personal
jurisdiction.40 As the third forum considering the case, the Schmidt court granted
dismissal for forum non conveniens because: most witnesses and evidence were in
California and none were in Delaware;41 California law applied;42 and California
was an available forum.43
38
2019 WL 4785560 (Del. Super. Sept. 30, 2019), amended on reconsideration by, 2019 WL
7000039 (Del. Super. Ct. Dec. 20, 2019).
39
Id at *3 (though the plaintiff moved to Texas after his family supposedly had to flee their
California home due to death threats following the complained-of defamatory article).
40
Id. at *1.
41
Id. at *8.
42
Id. at *4, *8–9.
43
Id. at *9. Following a Motion for Reconsideration, the Schmidt Court additionally determined
the action was time-barred under California law, and so amended its decision to a dismissal with
prejudice. 2019 WL 7000039, *4.
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B. USE OF THE HARDSHIP FACTORS HERE.
Because the burden to overcome a plaintiff’s choice of forum still rests with
the movant-defendant under Gramercy, the guide for application of the salient
factors remains: this Court “must consider the weight of those factors in th[is]
particular case and determine whether any or all of them truly cause both
inconvenience and hardship.”44 So the Court now turns to the hardships facing
these litigants if the Court does or does not grant relief on the Motion.
Related to the first two hardship factors, GXP concedes that the parties all
have their headquarters and operations in California or Nevada,45 and does not
dispute that the sole connection Argonaut, THP, and THP III have to Delaware is
that this is their place of formation.46 Argonaut, THP, and THP III identify a number
of third-party witnesses, a plurality of whom are from California, none of whom are
from Delaware, and only one of whom is even close-by.47
GXP does not deny that this deficiency means that the parties will be unable
to compel the attendance of apparently any of the third-party witnesses, but
44
Martinez, 86 A.3d at 1104 (quoting Chrysler First Bus. Credit Corp., 669 A.2d at 105).
45
Compl., at ¶¶ 1–3.
46
Pltf. Br., at 19–20.
47
Aff. of Brian Foster, at ¶ 11.
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instead—relying on Kolber v. Holyoke Shares, Inc.48—argues that depositions are
an adequate substitute. But a close reading of Kolber is not quite as helpful under
Gramercy as GXP would hope. In Kolber, the Court found that, while not
“overwhelmingly” heavy, forcing a defendant to rely on depositions in lieu of live
testimony and to travel from New York to Wilmington to face litigation were at least
factors weighing in favor of relief.49
The third hardship factor, pertaining to inspection of the premises, presents no
hardship to litigating in Delaware. Neither side suggests that any site inspections
will be necessary for this litigation. The absence of hardship based on the situs of
the acts spawning the litigation renders the premises-location factor
“inconsequential.”50
48
213 A.2d 444, 446 (Del. 1965); see also Delaware Rules of Evidence 804(a)(5) and (b)(1).
49
Id. GXP further argues that for this issue to weigh in a movant’s favor, that movant must
identify the witnesses not subject to compulsion, the nature of their testimony, and the specific
reason that a deposition would be insufficient, relying on Mar-Land Indus. Contractors, Inc. v.
Caribbean Petroleum Refining, L.P., 777 A.2d 774, 781 (Del. 2001) and States Marine Lines v.
Domingo, 269 A.2d 223, 226 (Del. 1970). In both those cases the Court refused to find
overwhelming hardship on that factor when the movants failed to identify the names of the
witnesses beyond the reach of compulsory process, demonstrate their number, show their
relationship to the case, or explain why their testimony could not be presented by deposition. Id.Here, a multiplicity of witnesses are identified by name, and their relevance to the alleged wrongful
conduct is clear and direct. Many of the witnesses are named by GXP as “co-conspirators” in the
alleged wrongs, and hence their credibility will be a key issue. Reliance on depositions alone
presents obvious and consequential hardship under the specifics of this case.
50
See GTE Mobilnet Inc. v. Nehalem Cellular, Inc., 1994 WL 116194, at *5 (Del. Ch. Mar. 17,
1994).
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On the fourth factor, pertaining to choice of law, the parties do not dispute
that the substantive law involved in this case is that of California. While not
preferable, Delaware courts are accustomed to applying the laws of sister states.51
This factor adds little—but some—weight toward forum non conveniens relief.52
As to the pendency or nonpendency of other cases, no such other cases are
pending. The dismissal of this case from the federal district courts of Nevada and
California accounts for the application of the intermediate Gramercy threshold, and
no party points to any other case looming. Under such circumstances, the
background presumptions fully capture any hardship that the prior cases impose, and
this factor can rightly be considered neutral within a Gramercy analysis.53
When the Court considers the residual factor here, the availability of an
alternative forum in the California state courts highlights the needless practical
51
Taylor, 689 A.2d at 1200. By contrast, when the foreign law Delaware must apply is that of a
foreign country, especially a non-Anglophone one, the burden is greater. Martinez, 86 A.3d at
1106–07. And when necessary use of a foreign language poses greater practical difficulties, such
as the use of an entirely different alphabet, these concerns become even more pronounced.
Gramercy, 173 A.3d at 1042.
52
See Martinez, 86 A.3d at 1106–07 (“[T]his Court has recognized that novel or important issues
of Delaware law are best determined by Delaware courts.”); Sequa Corp. v. Aetna Cas. and Sur.
Co., 1990 WL 123006, at *4 (Del. Super. Ct. July 13, 1990) (“The need to apply another state’s
law will not be a substantial deterrent to conducting litigation in this state.”); Monsanto Co. v.
Aetna Cas. and Sur. Co., 559 A.2d 1301, 1305–06 (Del. Super. Ct. 1987) (The fact that Court
would need to adjudicate some or all issues using another state’s laws “alone would not weigh
overwhelmingly in favor of” defendant’s dismissal request.).
53
See Schmidt, 2019 WL 4785560, at *9.
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difficulties that a Delaware forum presents.54 And though not controlling, prior
Delaware cases have observed the availability of an alternate forum to be an apposite
factor.55 Argonaut, THP III, and THP are all headquartered in California and have
conceded jurisdiction there.56 GXP previously sought to litigate this case in
California when it filed the second case in a federal district court there, indicating
the strong amenability of all parties to suit in California. But for lack of complete
diversity of citizenship,57 this case would currently be well underway in federal
court in California by GXP’s own earlier election.58 When that court closed its
doors, GXP could have filed down the street in a California state court. Instead, it
dragged the Defendants across the country and into this Court.
Delaware has an interest in regulating the conduct of entities formed under its
laws, and this public interest can weigh against granting forum non conveniens
54
See Hupan v. Alliance One Int’l. Inc., 2016 WL 4502304, at *8 (Del. Super. Ct. Aug. 25, 2016)
(The availability of an alternative forum is a practical consideration under the residual factor.),
aff’d, Aranda, 183 A.3d 1245.
55
Aranda, 183 A.3d at 1254. See also Ison, 729 A.2d at 845 (Discussing availability of
alternative fora under the residual factor.).
56
Defs. Br., at 2–3.
57
See Carden v. Arkoma Associates, 494 U.S. 185, 187 (1990) (“Since its enactment, we have
interpreted the diversity statute to require complete diversity of citizenship.”) (quoting
Strawbridge v. Curtiss, 3 Cranch 267 (1806)).
58
Diversity of citizenship is not a requirement for California state courts, of course, which are
courts of general jurisdiction. Quigley v. Garden Valley Fire Protection Dist., 444 P.3d 688 (Cal.
2019) (citing Cal. Const., art. VI §§ 1, 10).
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relief.59 But Delaware’s public interest in providing a forum on the basis of
incorporation is strongest in cases where issues of substantive corporate governance
and structure are implicated.60 And this general—but important—interest in
providing a forum for resolving disputes involving its corporate citizens can be
outweighed by the hardship occasioned from the other factors visited on those who
appear to have been brought here for vexatious, harassing, or oppressive purposes.
Lastly, GXP argues that one of the non-disclosure agreements at issue
contains a clause waiving any potential forum non conveniens motion in this case.
In that contract, Predecessor—but not THP or THP III—stipulated that the
agreement “shall be governed by the laws of [California61]” and that the parties
“agree to submit disputes arising out of or in connection with this Agreement to the
non-exclusive [jurisdiction] of the courts in [California].”62 By stipulating to non-
59
See Sands v. Union Pacific Railroad Co., 2017 WL 5664748, at *3 (Del. Super. Ct. Nov. 20,
2017).
60
Armstrong v. Pomerance, 423 A.2d 174, 179 n.8 (Del. 1980); see also Hall v. Maritek Corp.,
170 A.3d 149, 160 (Del Super. Ct. 2017) (“Delaware incorporation does not preclude dismissal on
forum non conveniens grounds, particularly in circumstances where a corporation’s only Delaware
presence is its registered agent or when a state of incorporation has no rational connection to the
cause of action.”) (internal quotations omitted).
61
The writing specifies the jurisdiction as being that of GXP’s headquarters location, and GXP’s
signatory identifies himself as the CEO and gives an address in California. Compl. ex. C at 3 (D.I.
1). By contrast, when the Complaint was filed GXP identified itself as being Nevada-
headquartered. Compl. ¶ 1. GXP agrees that the unstated jurisdiction is California. Arg. Tr., Jan.
31, 2020, at 18 (D.I. 32).
62
Compl., Ex. C at 3. The sentence literally reads “to the non-exclusive of the courts,” but the
parties agreed that the word “jurisdiction” was erroneously omitted between exclusive and of. Arg.
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exclusive jurisdiction, GXP argues that the clause placed Argonaut, and by extension
the other parties, on notice that suit may occur anywhere.63 But the Court doesn’t
read that provision quite so broadly.
Delaware enforces forum selection clauses absent a showing that they are
unreasonable or unjust, even if only some of the operable instruments contain such
a clause.64 Because it specifies non-exclusive jurisdiction, the clause in this case
does stipulate as to personal jurisdiction and substantive law, without commanding
one forum or another. Nothing about that silence constitutes a waiver of forum non
conveniens objections in the appropriate case even for the signatories, let alone as
applied to non-signatories THP and THP III. Far from stipulating amenability to
suit in Delaware, the instrument further emphasizes the appropriateness and
availability (and likely expectation) of California state courts to do prompt,
complete, and impartial justice on GXP’s claims.
Tr., Jan. 31, 2020, at 18. The decision to fix a typographical error in a contract “is tantamount to
reforming a contract when it has material consequences.” Nationwide Emerging Managers, LLC.
v. Northpointe Holdings, LLC, 112 A.3d 878, 890 (Del. 2015). Reformation of a contract is an
equitable power. See Glidepath Ltd. v. Beumer Corp., 2018 WL 2670724, at *9 (Del. Ch. Jun. 4,
2018) (“Reformation is an equitable remedy which emanates from the maxim that equity treats
that as done which ought to have been done.”) (citing In re TIBCO Software Inc. S’holders Litig.,
2015 WL 6155894, *13 (Del. Ch. Oct. 20, 2015)). Because the parties continue to agree that the
word “jurisdiction” was erroneously omitted and neither objects to its inclusion, that agreement
effectively amends the contract and permits this Court to enforce the real agreement at law without
the need for a court in equity to first reform it.
63
Arg. Tr., Jan. 31, 2020, at 14–15.
64
Ingres Corp. v. CA, Inc., 8 A.3d 1143, 1146–47 (Del. 2010)
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C. THE PROPER REMEDY UNDER GRAMERCY.
Of note, the Court’s Gramercy analysis here does rely heavily on the
representation that California state courts are open to GXP.65 If some procedural
obstacle prevents California courts from ruling on the merits of this dispute,
Delaware would be the only forum with both subject matter66 and personal67
jurisdiction to do so. While not itself dispositive, the complete lack of possible fora
would present an exceptional hardship on GXP68 that would accordingly add weight
to the residual factor and against forum non conveniens relief for Argonaut, THP,
and THP III.69
65
See Defs. Op. Br., at 17 (“California Is An Adequate And Available Forum.”) (D.I. 8).
66
Since federal courts have already disclaimed subject matter jurisdiction. GPX Capital, LLC v.
Argonaut EMS, No. 3:17-cv-02283-GPC-BLM (S.D. Cal. Jul. 23, 2018) (Dkt. No. 48).
67
See Daimler AG v. Bauman, 571 U.S. 117, 137 (2014) (“With respect to a corporation, the
place of incorporation and principal place of business are paradigm bases for general jurisdiction.”)
(citing Brilmayer et al., A General Look at General Jurisdiction, 66 Tex. L. Rev. 721, 735 (1988)).
68
See Ison, 729 A.2d at 846 (Del. 1999) (Availability of an alternative forum “relates to the
convenience of the plaintiffs, not to the inconvenience of the defendant” but is still a serious
consideration.); Maritek, 170 A.3d at 167 (While an adequate alternative forum is not a
“prerequisite,” relief is appropriate only to avoid “undue hardship and inconvenience,” for which
the availability of a more appropriate tribunal is an important consideration.) (emphasis added).
69
As the Court made clear to the parties here, it will not deafen itself to a Mayoian cry by a
plaintiff that it no longer has a forum open to hear its complaint. An Officer and a Gentleman
(1982) (Upon being told by his drill instructor, Gunnery Sergeant Emil Foley, that he is being
kicked out of Officer Candidate School, Officer Candidate Zack Mayo sputters: “Don’t you do it!
Don’t! You . . . I GOT NOWHERE ELSE TO GO! I got nowhere else to g . . . I got nothin’ else.”)
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At argument, Argonaut, THP, and THP III disavowed any statute of
limitations or other non-merit based defense as to the remaining counts.70 Cognizant
of the Court’s concerns, they expressed a willingness to submit to any stipulation or
conditions sufficient to satisfy GXP and the Court that the case would reach a ruling
on the merits in California state court.71 Conversely, GXP gave no explanation for
why, having been ousted from the Southern District of California, they traveled to
Delaware’s state courts in lieu of California’s.72 GXP invoked only the Delaware
state courts’ reputation for prompt justice73—which, of course, begs the question:
Why didn’t they file here in the first place? And the fact that they previously chose
California, of course, undermines any argument by GXP that litigating there presents
a hardship to them.
Because the balance of hardships weighs in favor of Argonaut, THP, and THP
III, the Court will grant relief. Because that balance is contingent on the availability
of California state courts to hear the matter on its merits,74 the appropriate form of
70
Arg. Tr., Jan. 31, 2020, at 8.
71
Id. at 8, 19.
72
Id. at 13–14.
73
Id.
74
See Ingres Corp., 8 A.3d at 1145 (Litigation in a foreign court weighs in favor of relief when
that “court is capable of doing prompt and complete justice.”) (citing McWane, 263 A.2d at 283).
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relief is a stay in contemplation of litigation elsewhere.75 A stay in lieu of dismissal
preserves the possibility of adjudication in Delaware should all other fora decline to
reach the merits of this dispute.
V. GXP’s RULE 59(e) MOTION
GXP objects to the Court’s May 4, 2020 Opinion, arguing that by requiring it
to bring suit in California state courts the Court allows a permissive choice of forum
clause to operate as a mandatory one. Moreover, by crafting relief in the form of a
stay, GXP argues that the Court has effectively denied GXP access to appellate
review.
To clarify, GXP is in no way limited to filing suit exclusively in the state
courts of California during the stay. Should GXP identify another more appropriate
tribunal, it is free to pursue adjudication there during the stay. So long as GXP
demonstrates that it is actively attempting to obtain a judgment on the merits, this
Court will refuse to dismiss the Complaint in order to retain the possibility of a
litigation here should GXP exhaust all other potential fora.
The Court certainly is not misreading the permissive forum selection clause
as a mandatory one. To the contrary, had this Court been GXP’s first choice,
75
Though the Motion contained only a request for dismissal and not any lesser relief, granting a
stay is always within the inherent power of the Court. Insurance Co. of North America v. Steigler,
300 A.2d 16, 18 (Del. Super. Ct. 1972) (citing Landis v. North American Co., 299 U.S. 248, 254-
55 (1936)).
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Argonaut, THP, and THP III would not have obtained forum non conveniens relief
absent a showing of overwhelming hardship. Because Delaware is not GXP’s first
choice but instead its third, the required forum non conveniens analysis follows the
less restrictive Gramercy standard. Because both personal and subject matter
jurisdiction are indisputably found in the state courts of California, the availability
of those courts is a weighty consideration under the Cryo–Maid factors, but even so
not a controlling one.
With respect to GXP’s concerns about its appeal rights, it is no worse situated
than any other litigant facing a stay under McWane.76 While the harsher relief of
dismissal might confer a right of direct appeal, appellate review may still be sought
via Supreme Court Rule 42. Obtaining such requires a litigant to first request this
Court’s certification of the matter for review,77 which GXP has not done. And no
matter this Court’s ruling on such a request, GXP may still seek review in the
Supreme Court—it just has a steeper climb to get there.78
76
E.g. Brookstone Partners Acquisition XVI, LLC v. Tanus, 2012 WL 5868902, *7 (Del. Ch.
Nov. 20, 2012) (staying rather than dismissing a Delaware action in favor of a prior-filed action in
another state, to retain the ability to rule on the merits should the out-of-state litigation not reach a
final judgment on the merits); Dura Pharmaceuticals, Inc. v. Scandipharm, Inc., 713 A.2d 925(Del. Ch. 1998) (same).
77
See Supreme Court Rule 42(c) (“An application for certification of an interlocutory appeal
shall be made in the first instance to the trial court in accordance with the following procedures: .
. .”).
78
See Supreme Court Rule 42(d)(v) (describing a trial court’s response to an application for
certification for interlocutory review as only a ‘relevant factor’ in the Supreme Court’s decision
whether to take an interlocutory appeal). As the Delaware Supreme Court has made clear in the
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VI. CONCLUSION
No doubt, in Delaware there is clear preference in favor of a plaintiff’s
choice of forum.79 And, no doubt, Delaware’s courts are reluctant “to lightly disturb
a plaintiff’s first choice of fora.”80 Courts in Delaware consider forum non
conveniens motions under six factors of which one, the pendency or nonpendency
of other suits on the same matter, is primarily used to determine the burden or
presumption against which the others are measured. Where, as here, a plaintiff like
GXP has not chosen Delaware first (or even second) and its first two actions
elsewhere were dismissed on jurisdictional grounds without reaching their merits,
this Court determines whether Delaware is an appropriate forum via “a reasoned
assessment” of those substantive (i.e. the Cryo–Maid) factors.
Here the Court’s reasoned assessment of those hardship factors weighs in
favor of relief. However, that weighing is contingent on at least one more
appropriate forum, California state courts, available to hear and decide this case on
the merits. California litigation would avoid the principal hardships presented in
specific context of an interlocutory appeal from a stay granted in response to a forum non
conveniens motion, the trial court’s certification decision is a factor given “great weight.” Axiall,
2019 WL 4795508, at *2.
79
Mar–Land, 777 A.2d at 778 (“A plaintiff seeking to litigate in Delaware is afforded the
presumption that its choice of forum is proper and a defendant who attempts to obtain dismissal
based on grounds of forum non conveniens bears a heavy burden.”).
80
Gramercy, 173 A.3d at 1037 (emphasis added).
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Delaware, that of long travel for fact witnesses and parties, the lack of compulsory
process for witnesses, and the needless application of California law by a Delaware
instead of a California state court. The availability of California prevents the
hardship on GXP of being barred entirely of a forum for prompt and complete
justice.
To ensure that this availability is not illusory, the Court will stay this litigation
to permit GXP to file suit in California state court or some other more appropriate
tribunal. Should GXP initiate such a suit, the Court will renew the stay for the
duration of the litigation to ensure it reaches a final ruling on the merits before
dismissing the instant case. Should GXP fail to initiate such a suit, the Court will
consider the underlying claim abandoned and dismiss the suit entirely.
For those reasons, the Motion shall be GRANTED IN PART, and this action
is STAYED for ninety (90) days from the date of this Order.
IT IS SO ORDERED.
/s/ Paul R. Wallace
_______________________
Paul R. Wallace, Judge
Original to Prothonotary
cc: All Counsel via File and Serve
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