GXP Capital, LLC v. Argonaut Manufacturing Services, Inc.

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
Upon Defendants’ Motion to Dismiss for Forum Non Conveniens,
STAY GRANTED, in part.
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.
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.
WALLACE, J.
I. THE PARTIES
GXP Capital, LLC, is a limited liability company organized and
headquartered in Nevada.1 GXP is the assignee of GXP CDMO, Inc., formerly
known as Bioserv Corporation, GXP’s parent company.2
Argonaut Manufacturing Services, Inc., is a Delaware corporation with its
headquarters in California, and is the successor entity to Argonaut EMS
(“Predecessor”), a California sole proprietorship.3 Telegraph Hill Partners, III, L.P.
(“THP III”), is a Delaware-organized limited partnership whose general partner is
Telegraph Hill Partners III Investment Management, LLC (“THP”), a Delaware-
organized limited liability company.4 Both THP and THP III are headquartered and
operating in California.5
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-
1
Compl. at ¶ 1 (D.I. 1).
2
Id. at ¶¶ 1, 7.
3
Id. at ¶ 2.
4
Id. at ¶ 3.
5
Id.
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disclosure agreements (“NDAs”), but did not do so.6 Instead, GXP alleges,
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.7 The residual Bioserv then assigned litigation rights to
its subsidiary, GXP.8
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.9
Following that second dismissal, GXP initiated this action by filing its
Complaint here, alleging nine causes of action against Argonaut, THP, and THP III.
6
Id. at ¶¶ 6–9, 12, 14.
7
Id. at ¶¶ 47, 49, 52, 56.
8
Id. at ¶¶ 1, 61.
9
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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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
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).10 This leaves only Counts I and III—respectively, breach of contract11 and
misappropriation12—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.13
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
10
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.
11
For violation of the NDAs. Compl. ¶ 60.
12
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.).
13
Aranda v. Philip Morris USA Inc., 183 A.3d 1245, 1250-51 (Del. 2018) (Describing
Delaware’s different forum non conveniens analyses.).
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a plaintiff’s well-pleaded facts and draw all reasonable inferences in her favor.14 But
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.15
IV. DISCUSSION – FORUM NON CONVENIENS—GENERAL PRINCIPLES
A motion for forum non conveniens is a request that a court possessing both
personal and subject matter jurisdiction over an action nevertheless decline to hear
it.16 Jurisdictional and venue statutes are broadly drawn, because principles of
justice require that every right have a court available to vindicate it.17 By necessary
consequence, many disputes are amenable to suit in several different jurisdictions.18
14
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)
(Applying this standard where dismissal was granted under this Court’s Civil Rule 12(b)(6)
because action was barred by statute of limitations.).
15
Williams Gas Supply Co. v. Apache Corp., 594 A.2d 34, 37 (Del. 1991).
16
Chrysler First Bus. Credit Corp. v. 1500 Locust Ltd. P’ship., 669 A.2d 104, 106 (Del.
1995).
17
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.”).
18
Gilbert, 330 U.S. at 507.
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The common law doctrine of forum non conveniens19 does not exist to deprive a
plaintiff of his choice of forum, but rather as a backstop to prevent resort to
intentionally inconvenient forums for illegitimate purposes.20 A plaintiff’s choice
of forum is ordinarily respected,21 and hardship, not mere inconvenience, must be
shown to obtain relief.22
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
19
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.”).
20
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.”).
21
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.”).
22
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.”).
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practical problems that would make the trial of the case easy, expeditious and
inexpensive.23 And though it does not strictly bespeak of litigants’ hardship, the
pendency or non-pendency of other lawsuits between the parties over the same
subject24 has consistently been added to the enumeration of the Cryo–Maid factors.25
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.26 This application of the Cryo–Maid factors constitutes the “Cryo–Maid
test.”27 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
23
General Foods Corp. v. Cryo–Maid, Inc., 198 A.2d 681, 684 (Del. 1964).
24
Parvin v. Kaufmann, 236 A.2d 425, 427 (Del. 1967).
25
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.).
26
Candlewood Timber Group, 859 A.2d at 998.
27
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)).
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freely exercise its discretion in favor of the relief requested by the defendant in the
later-filed Delaware action.28
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.29
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
28
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.
29
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).
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courthouse.”30 In such cases, the reviewing court neutrally compares hardships
imposed on each party by the adverse party’s chosen forum, and stays the Delaware
action if the foreign proceeding is less burdensome overall.31
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.32
30
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).
31
Nat’l 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).
32
Gramercy, 173 A.3d at 1044.
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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.33 And the
analysis engaged in that intermediate case is “a straightforward assessment of
the Cryo–Maid factors, where dismissal is appropriate if those factors weigh in favor
of that outcome.”34
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.35
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
33
Aranda, 183 A.3d at 1250–51.
34
Gramercy, 173 A.3d at 1036.
35
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.).
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granted or denied depending on which side is favored by the greater weight of the
Cryo–Maid factors.36
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.37
The Schmidt case involved a California plaintiff suing a Delaware-incorporated
publishing company operating a Washington, D.C. newspaper for defamation.38 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.39 As the third forum considering the case, the Schmidt court granted
dismissal for forum non conveniens because: most witnesses and evidence were in
36
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.).
37
2019 WL 4785560 (Del. Super. Sept. 30, 2019), amended on reconsideration by, 2019 WL
7000039 (Del. Super. Ct. Dec. 20, 2019).
38
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).
39
Id. at *1.
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California and none were in Delaware;40 California law applied;41 and California
was an available forum.42
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.”43 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 California or Nevada,44 and does not dispute
that the sole connection Argonaut, THP, and THP III have to Delaware is that this is
their place of formation.45 Argonaut, THP, and THP III identify a number of third-
40
Id. at *8.
41
Id. at *4, *8–9.
42
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.
43
Martinez, 86 A.3d at 1104 (quoting Chrysler First Bus. Credit Corp., 669 A.2d at 105).
44
Compl., at ¶¶ 1–3.
45
Pl. Br., at 19–20.
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party witnesses, a plurality of whom are from California, none of whom are from
Delaware, and only one of whom is even close-by.46
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
instead—relying on Kolber v. Holyoke Shares, Inc.47—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.48
The third hardship factor, pertaining to inspection of the premises, presents no
hardship to litigating in Delaware. Neither side suggests that any site inspections
46
Aff. of Brian Foster, at ¶ 11.
47
213 A.2d 444, 446 (Del. 1965); see also Delaware Rules of Evidence 804(a)(5) and (b)(1).
48
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.
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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.”49
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.50
This factor adds little—but some—weight toward forum non conveniens relief.51
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
49
See GTE Mobilnet Inc. v. Nehalem Cellular, Inc., 1994 WL 116194, at *5 (Del. Ch. Mar.
17, 1994).
50
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.
51
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.).
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background presumptions fully capture any hardship that the prior cases impose, and
this factor can rightly be considered neutral within a Gramercy analysis.52
When the Court considers the residual factor here, the availability of an
alternative forum in the California state courts highlights the needless practical
difficulties that a Delaware forum presents.53 And though not controlling, prior
Delaware cases have observed the availability of an alternate forum to be an apposite
factor.54 Argonaut, THP III, and THP are all headquartered in California and have
conceded jurisdiction there.55 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,56 this case would currently be well underway in federal
52
See Schmidt, 2019 WL 4785560, at *9.
53
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.
54
Aranda, 183 A.3d at 1254. See also Ison, 729 A.2d at 845 (Discussing availability of
alternative fora under the residual factor.).
55
Defs. Br., at 2–3.
56
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)).
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court in California by GXP’s own earlier election.57 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
relief.58 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.59 And this general—but important—interest in
providing a forum for disputes involving its corporate citizens to resolve disputes
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.
57
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).
58
See Sands v. Union Pacific Railroad Co., 2017 WL 5664748, at *3 (Del. Super. Ct. Nov.
20, 2017).
59
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).
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In that contract, Predecessor—but not THP or THP III—stipulated that the
agreement “shall be governed by the laws of [California60]” 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].”61 By stipulating to non-
exclusive jurisdiction, GXP argues that the clause placed Argonaut, and by extension
the other parties, on notice that suit may occur anywhere.62 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 operable instruments contain such a
60
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. O.A. Tr.
1/31/2020 at 18 (D.I. 32).
61
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. 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)). However, a reformed contract can be enforced
at law. Commissioners of Lewes v. Breakwater Fisheries Co., 110 A. 669, 670 (Del. Ch. 1920).
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.
62
Arg. Tr., Jan. 31, 2020, at 14–15.
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clause.63 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.
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.64 If some procedural
obstacle prevents California courts from ruling on the merits of this dispute,
Delaware would be the only forum with both subject matter65 and personal66
jurisdiction to do so. While not itself dispositive, the complete lack of possible fora
63
Ingres Corp. v. CA, Inc., 8 A.3d 1143, 1146–47 (Del. 2010)
64
See Defs. Op. Br., at 17 (“California Is An Adequate And Available Forum.”) (D.I. 8).
65
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).
66
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)).
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would present an exceptional hardship on GXP67 that would accordingly add weight
to the residual factor and against relief.68
At argument, Argonaut, THP, and THP III disavowed any statute of
limitations or other non-merit based defense as to the remaining counts.69 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.70 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.71 GXP invoked only the Delaware
state courts’ reputation for prompt justice72—which, of course, begs the question:
Why didn’t they file here in the first place? And the fact that they previously chose
67
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).
68
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.”)
69
Arg. Tr., Jan. 31, 2020, at 8.
70
Id. at 8, 19.
71
Id. at 13–14.
72
Id.
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California, of course, undermines any argument by GPX 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,73 the appropriate form of
relief is a stay in contemplation of litigation there.74 A stay in lieu of dismissal
preserves the possibility of adjudication in Delaware should California courts fail to
reach the merits of this dispute.
V. CONCLUSION
No doubt, in Delaware there is clear preference in favor of a plaintiff's
choice of forum.75 And, no doubt, Delaware’s courts are reluctant “to lightly disturb
a plaintiff’s first choice of fora.”76 Courts in Delaware consider motions for forum
non conveniens under six factors of which one, the pendency or nonpendency of
73
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).
74
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)).
75
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.”).
76
Gramercy, 173 A.3d at 1037 (emphasis added).
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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 weighting is contingent on the availability of
California state courts to hear and decide this case on the merits. California litigation
would avoid the principal hardships presented in 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 barring
entirely 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. 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.
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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.
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