Free Proposed Order - District Court of California - California

Case 3:07-cv-05115-JSW

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1 GUTRIDE SAFIER REESE LLP Adam J. Gutride (Cal. State Bar No.181466) 2 Seth A. Safier (Cal. State Bar No. 197427) 835 Douglass Street 3 San Francisco, California 94114 Telephone: (415) 271-6469 4 Facsimile: (415) 449-6469 5 Counsel for Plaintiff 6 7 8 9 10 DOE, Individually And On Behalf Of All Others 11 Similarly Situated, 12 13 vs. Plaintiff, ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 07-5115 JSW [PROPOSED] ORDER DENYING DEFENDANT'S MOTION TO DISMISS PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(B)(3), OR IN THE ALTERNATIVE TO TRANSFER PURSUANT TO 28 U.S.C. § 1406(a), FOR IMPROPER VENUE JUDGE: Hon. Jeffery S. White DATE: Jan. 25, 2008 TIME: 9:00 am CTRM: 2 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION

14 NETWORK SOLUTIONS, LLC Defendant. 15 16 17 18 19 20 21 22 23 24 25 26 27 28

[PROPOSED] ORDER DENYING DEFENDANT'S MOTION TO DISMISS UNDER FRCP 12(b)(3) OR TO TRANSFER PURSUANT TO 28 U.S.C. § 1406(A)--CASE NO. C 07-5115 JSW

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Defendant has filed a Motion to Dismiss Pursuant to Federal Rule Of Civil Procedure

2 12(b)(3), Or In The Alternative To Transfer Pursuant to 28 U.S.C. § 1406(a), For Improper 3 Venue (Dkt.# 16). Defendant argues pursuant to a choice-of-forum provision that the only 4 appropriate venue is Virginia. Plaintiff opposes the motion. For GOOD CAUSE SHOWN, the 5 motion is DENIED. 6 7 Pertinent Facts Plaintiff, a California resident, claims he was injured when Defendant, an email service

8 provider, published his emails and his email in-box to Internet search engines such as Google. 9 Plaintiff makes claims for violations of the California Customer Records Act, California Civil 10 Code § 1798.80, et seq., the Electronics Communications Privacy Act, 18 U.S.C. § 2702, the 11 California Unfair Trade Practices Act, California Business & Professions Code § 17200 et seq., 12 the California Consumers Legal Remedies Act ("CLRA"), California Civil Code § 1750, et seq, 13 as well claims under California law for public disclosure of private facts and unjust enrichment. 14 No claims are asserted under Virginia law. 15 Defendant, which is domiciled in Virginia, but incorporated in Delaware, seeks to

16 enforce a Virginia governing law clause in its service agreement, to which it contends Plaintiff 17 agreed in registering for the email account by checking a box. The services agreement is more 18 than 50 pages long, when printed out single spaced in small type. The agreement is not 19 displayed to customers, but only available by traversing a hypertext link. Plaintiff never clicked 20 on the link nor read the agreement and did not read or agree to the governing law clause. No 21 special effort was made to alert him to the provision. 22 23 Motion to Dismiss A motion to dismiss brought on the basis of a forum selection clause is treated as a

24 motion to dismiss for improper venue under Federal Rule of Civil Procedure 12(b)(3). See 25 Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 324 (9th Cir. 1996). The enforceability of a 26 forum selection clause is determined by federal law. Id. In the context of a Rule 12(b)(3) motion 27 based upon a forum selection clause, the pleadings need not be accepted as true, and a court may 28 consider facts outside of the pleadings. Id. However, "the trial court must draw all reasonable

[PROPOSED] ORDER DENYING DEFENDANT'S MOTION TO DISMISS UNDER FRCP 12(b)(3) OR TO TRANSFER PURSUANT TO 28 U.S.C. § 1406(A)--CASE NO. C 07-5115 JSW

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1 inferences in favor of the non-moving party and resolve all factual conflicts in favor of the non2 moving party." Murphy v. Schneider Nat'l, Inc., 362 F.3d 1133, 1138 (9th Cir. 2004). When a 3 Rule 12(b)(3) motion is made prior to development of the factual record, if the facts asserted by 4 the non-moving party are sufficient to preclude enforcement of the forum selection clause, the 5 non-moving party is entitled to remain in the forum it chose unless and until the district court has 6 resolved any material factual issues that are in genuine dispute. Id. at 1139. 7 The Court rejects the application of the governing law clause of the service agreement for

8 several reasons. First, the clause applies only to disputes "under, arising out of, or related in any 9 way to this agreement." This litigation does not arise out of or relate to the agreement, but rather 10 involves tort claims for alleged publication of Plaintiff's private information. Plaintiff does not 11 invoke any rights under the service agreement in making those claims. See Coalition for ICANN 12 Transparency, Inc. v. VeriSign, Inc., 452 F. Supp. 2d 924, 931-932 (N.D. Cal. 2006) (rejecting 13 argument that nearly identical Virginia forum selection clause invoked by Defendant's parent, 14 Verisign, Inc. applied to non-contractual claims, including antitrust, intellectual property, unfair 15 competition, and tortious interference[.]") 16 Second, the clause is unreasonable and unjust. To establish the unreasonableness of a

17 forum selection clause, the party opposing enforcement of the clause "has the heavy burden of 18 showing that trial in the chosen forum would be so difficult and inconvenient that the party 19 effectively would be denied a meaningful day in court." Argueta v. Banco Mexicano, S.A., 87 20 F.3d 320, 325 (9th Cir. 1996), citing M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 12-15 21 (1972). Enforcement of a forum selection clause is unreasonable if: 22 23 24 25 enforcement is unreasonable if the clause was not "reasonably communicated" to the plaintiff at 26 the time of contracting. See Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595 (1991). And 27 such provisions are unenforceable when they contravene a strong public policy of the forum in 28 (1) if the inclusion of the clause in the agreement was the product of fraud or overreaching; (2) if the party wishing to repudiate the clause would effectively be deprived of his day in court were the clause enforced; or (3) if enforcement would contravene a strong public policy of the forum in which the suit is brought. Murphy v. Schneider National, Inc., 362 F.3d 1133, 1140 (9th Cir. 2003). Furthermore,

[PROPOSED] ORDER DENYING DEFENDANT'S MOTION TO DISMISS UNDER FRCP 12(b)(3) OR TO TRANSFER PURSUANT TO 28 U.S.C. § 1406(A)--CASE NO. C 07-5115 JSW

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1 which suit is brought. See Vimar Seguros y Reaseguros, S. A. v. M/V Sky Reefer, 515 U.S. 528 2 (1995); Bremen, 407 U.S. at 15. 3 Here, the non-negotiable governing law clause was not reasonably communicated to

4 Plaintiff. The agreement was not put directly before the Plaintiff but rather was available only 5 by way of a hypertext link, and no effort was made to alert him to the governing law provision, 6 which is buried in a long, dense document. Furthermore, it is seriously inconvenient for Plaintiff 7 (a California resident with California counsel) to litigate in Virginia, and arguably less 8 convenient for Defendant as well as the chief third party witness, Google, Inc. to litigate in this 9 district, as is the home office of Defendant's outside litigation firm. And as explained in more 10 detail in this Court's Order Denying Defendant's Motion To Strike, enforcement of the provision 11 would contravene several important policies of the forum state, California, such as the non12 waiver of claims under the CLRA and Customer Records Act, and the ability to pursue claims in 13 a class action. See America Online, Inc. v. Superior Court, 90 Cal. App. 4th 1, 16 (2001). 14 15 Motion to Transfer The heavy burden of showing that a case should be transferred is on the moving party.

16 See Carolina Casualty Co. v. Data Broad. Corp., 158 F. Supp. 2d 1044, 1048 (N.D. Cal. 2001). 17 The Ninth Circuit has set forth the following factors that a district court should consider in 18 deciding whether a transfer is appropriate: (1) Plaintiff's choice of forum; (2) convenience of the 19 parties; (3) familiarity of each forum with the governing law; (4) the respective parties' contacts 20 with the forum; (5) feasibility of consolidation of other claims; (6) differences in the costs of 21 litigation in the two forums; (7) availability of compulsory process to compel attendance of 22 unwilling nonparty witnesses; (8) ease of access to sources of proof; and (9) relevant public 23 policy of the forum state. See Royal Queentex Royal Inc. v. Sara Lee Corp., 2000 U.S. Dist. 24 LEXIS 10139 at *2 (N.D. Cal. 2000), citing Decker Coal Co. v. Commonwealth Edison Co., 805 25 F. 2d 834, 843 (9th Cir. 1986). Where "a plaintiff has selected a forum that clearly meets the 26 general venue requirements...a transfer should be ordered only when, after considering all the 27 pertinent factors, the balance clearly tips in favor of the transfer." Linear Tech. Corp. v. Analog 28 Devices, Inc., No. 94-3988, 1995 WL 225672, at *1 (N.D. Cal. Mar. 10, 1995).

[PROPOSED] ORDER DENYING DEFENDANT'S MOTION TO DISMISS UNDER FRCP 12(b)(3) OR TO TRANSFER PURSUANT TO 28 U.S.C. § 1406(A)--CASE NO. C 07-5115 JSW

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In support of transfer, Defendant again cites the service agreement, which the Court

2 rejects for the reasons above. Defendant also argues that there exists a related case in Virginia, 3 but that case is merely a declaratory action that seeks to establish that Plaintiff must sue in 4 Virginia under Virginia law, a decision in the purview of this Court, and in any event a motion to 5 dismiss that suit is currently pending. 6 Applying the multi-factored test, the balance of factors does not clearly weigh in favor of

7 transfer. Plaintiff resides here, as does the chief anticipated third-party witness, Google, Inc. 8 Defendant has not identified the names or location of other witnesses, or the relevance of their 9 testimony, as is required by Carolina Cas. Co. v. Data Broad. Corp., 158 F. Supp. 2d 1044, 1049 10 (N.D. Cal. 2001) and Williams v. Bowman, 157 F. Supp. 2d 1103, 1108 (N.D. Cal. 2001). This 11 Court is more familiar with California law than the Virginia Courts. See First Franklin Fin. 12 Corp. v. Mortgage Acad., Inc., 2006 U.S. Dist. LEXIS 94411 (N.D. Cal. 2006) (court in 13 Northern District of California is more familiar with the California state law than Eastern District 14 of Michigan.) This Court must also assume that California law will apply, because in this 15 diversity case, it must apply California choice of law rules, and under those rules, California law 16 would apply, as further explained in the Order Denying Defendant's Motion To Strike. Finally, 17 California has a strong interest in protecting its consumers. 18 19 20 21 22 23 24 25 26 27 28 IT IS SO ORDERED Dated: ____________________ Jeffrey S. White United States District Judge

[PROPOSED] ORDER DENYING DEFENDANT'S MOTION TO DISMISS UNDER FRCP 12(b)(3) OR TO TRANSFER PURSUANT TO 28 U.S.C. § 1406(A)--CASE NO. C 07-5115 JSW

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