Tradecomet.Com Llc v. Google Inc.

• Decision Date: 26 July 2011
• Docket Number: Docket No. 10–911–cv.
• Parties: TRADECOMET.COM LLC, Plaintiff–Appellant,v.GOOGLE, INC., Defendant–Appellee.
• Court: U.S. Court of Appeals — Second Circuit

647 F.3d 472

2011-2 Trade Cases P 77,537

TRADECOMET.COM LLC, Plaintiff–Appellant,

v.GOOGLE, INC., Defendant–Appellee.

Docket No. 10–911–cv.

United States Court of Appeals, Second Circuit.

Argued: Jan. 26, 2011.Decided: July 26, 2011.

Charles F. Rule (Jonathan Kanter, Joseph J. Bial, and Daniel J. Howley, on the brief), Cadwalader, Wickersham & Taft LLP, Washington, D.C., for Plaintiff–Appellant.Jonathan M. Jacobson (Sara Ciarelli Walsh, on the brief), Wilson Sonsini Goodrich & Rosati, P.C., New York, NY, for Defendant–Appellee.

Before: WINTER, SACK, and LIVINGSTON, Circuit Judges.DEBRA ANN LIVINGSTON, Circuit Judge:

Plaintiff–Appellant TradeComet.com LLC (“TradeComet”) appeals from a judgment entered pursuant to an opinion and order of the United States District Court for the Southern District of New York (Sidney H. Stein, District Judge) dismissing its complaint. TradeComet brought this action against Defendant–Appellee Google, Inc. (“Google”) for alleged violations of the Sherman Act, 15 U.S.C. §§ 1, 2, arising out of TradeComet's use of Google's “AdWords” search engine advertising platform (“AdWords”). Google filed a motion to dismiss pursuant to Rules 12(b)(1) and 12(b)(3) of the Federal Rules of Civil Procedure for lack of subject matter jurisdiction and improper venue. Google argued that TradeComet had accepted the terms and conditions associated with participation in its AdWords program, which included a forum selection clause requiring TradeComet to file its suit in state or federal court in Santa Clara County, California, not in New York. TradeComet contended, inter alia, that a district court may only enforce a forum selection clause permitting an alternative federal venue pursuant to 28 U.S.C. § 1404, which authorizes transfer of the case to the agreed-upon venue, rather than through Rule 12(b). In an opinion and order dated March 5, 2010, the district court rejected this argument and concluded that Google could seek enforcement of its forum selection clause by moving to dismiss pursuant to Rule 12(b). The court then applied our four-part test for determining whether to dismiss a claim based on a forum selection clause, see Phillips v. Audio Active Ltd., 494 F.3d 378, 383–84 (2d Cir.2007), and granted Google's motion to dismiss.

Here, TradeComet renews its argument that a § 1404(a) motion to transfer is the only appropriate vehicle for enforcing a forum selection clause when the clause at issue permits an alternative federal forum. We reject TradeComet's argument and hold, consistent with our precedents, that a defendant may seek enforcement of a forum selection clause through a Rule 12(b) motion to dismiss, even when the clause provides for suit in an alternative federal forum. In a contemporaneous summary order filed with this opinion, we conclude that the district court properly applied our test in Phillips to dismiss TradeComet's complaint.

BACKGROUND

Because we are reviewing the district court's dismissal of a complaint pursuant to Rule 12(b) of the Federal Rules of Civil Procedure, we view the facts in the light most favorable to TradeComet. See Phillips, 494 F.3d at 384. Google, a Delaware corporation, operates a well-known Internet search engine website bearing the same name. It has its principal place of business in Mountain View, California, and is authorized to do business in the State of New York. In 2001, Google launched AdWords, an advertising platform that enables advertisers to have their ads appear when Internet users perform searches containing specified search terms on Google's website.¹ TradeComet, a Delaware limited liability company with its principal place of business in New York, operates its own search engine website, “SourceTool.com.” In contrast to Google's search engine, TradeComet's search engine specifically targets businesses seeking to buy or sell products and services to other businesses.² Beginning in 2005, TradeComet used AdWords to generate online traffic for SourceTool.com. In response to what it perceived to be anticompetitive conduct on Google's part, however, TradeComet filed suit in the United States District Court for the Southern District of New York on February 17, 2009. TradeComet's complaint alleges violations of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, in connection with the prices Google charged TradeComet for its participation in the AdWords program.

Google requires AdWords users to accept certain terms and conditions to activate an AdWords account. Google also requires AdWords users to agree to any subsequent modifications or additions to these terms and conditions in order to continue advertising with AdWords. Over the course of TradeComet's participation in the AdWords program, Google issued three agreements delineating its terms and conditions. Two of them contained a forum selection clause providing that “[t]he Agreement must be ... adjudicated in Santa Clara County, California.” The third, effective August 2006, provided that all claims “arising out of or relating to this Agreement or the Google Program(s) shall be litigated exclusively in the federal or state courts of Santa Clara County, California.”

Subsequent to the filing of TradeComet's complaint, Google filed a motion to dismiss for lack of subject matter jurisdiction and improper venue, pursuant to Rules 12(b)(1) and 12(b)(3) of the Federal Rules of Civil Procedure. Google argued that the forum selection clause contained in its August 2006 terms and conditions applied to TradeComet's antitrust claims, and that the clause required TradeComet to file its suit in a state or federal court located in Santa Clara County, California. In opposing the motion, TradeComet contended, inter alia, that the district court was required to convert Google's motion to dismiss into a motion to transfer pursuant to 28 U.S.C. § 1404(a), since the forum selection clause permitted venue in a different federal forum. The district court concluded that a motion to dismiss pursuant to Rules 12(b)(1) and 12(b)(3) was a proper vehicle for enforcing a forum selection clause, and found that the August 2006 forum selection clause applied to TradeComet's antitrust claims. The district court granted Google's motion to dismiss the complaint. This appeal followed.

DISCUSSION

TradeComet primarily argues on appeal that the district court erred in dismissing its case pursuant to Rule 12(b), rather than considering whether to transfer it to an appropriate federal court pursuant to § 1404(a).³ TradeComet contends that a district court must enforce a forum selection clause pursuant to § 1404(a), and convert a Rule 12(b) motion into a motion to transfer, when the clause at issue provides for suit in an alternative federal forum. TradeComet thus argues that a Rule 12(b) motion to dismiss is available solely when a forum selection clause specifies only foreign and/or state fora as acceptable venues for adjudicating the parties' disputes. We review de novo a district court's dismissal of a complaint pursuant to Rules 12(b)(1) and 12(b)(3), viewing all facts in the light most favorable to the non-moving party. See Phillips, 494 F.3d at 384; Makarova v. United States, 201 F.3d 110, 113 (2d Cir.2000).

I.

The enforcement of a forum selection clause through a Rule 12(b) motion to dismiss is a well-established practice, both in this Circuit and others. See, e.g., Phillips, 494 F.3d at 383–84; New Moon Shipping Co., Ltd. v. MAN B & W Diesel AG, 121 F.3d 24, 28 (2d Cir.1997) (citing cases). We have noted, however, that neither the Supreme Court, nor this Court, has “specifically designated a single clause of Rule 12(b)”—or an alternative vehicle—“as the proper procedural mechanism to request dismissal of a suit based upon a valid forum selection clause.” Asoma Corp. v. SK Shipping Co., Ltd., 467 F.3d 817, 822 (2d Cir.2006) (internal quotation marks omitted); see also Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 588–89, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991) (enforcing a forum selection clause through a motion for summary judgment); New Moon Shipping Co., 121 F.3d at 28 (noting that the Supreme Court in M/S Bremen v. Zapata Off–Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972), failed to specify whether its analysis applied to the defendant's motion to dismiss for lack of jurisdiction or for forum non conveniens). Consequently, we have “refused to pigeon-hole [forum selection clause enforcement] claims into a particular clause of Rule 12(b).” Asoma, 467 F.3d at 822. We have affirmed judgments that enforced forum selection clauses by dismissing cases for lack of subject matter jurisdiction under Rule 12(b)(1), see AVC Nederland B.V. v. Atrium Inv. P'ship, 740 F.2d 148, 152 (2d Cir.1984), for improper venue under Rule 12(b)(3), see Phillips, 494 F.3d at 382, and for failure to state a claim under Rule 12(b)(6), see Evolution Online Sys., Inc. v. Koninklijke PTT Nederland N.V., 145 F.3d 505, 508 n. 6 (2d Cir.1998).

In determining whether a Rule 12(b) motion to dismiss pursuant to a forum selection clause was properly granted, we have analyzed the enforceability of such clauses by applying the standards set forth by the Supreme Court in Bremen.⁴ See, e.g., Phillips, 494 F.3d at 383–84; Jones v. Weibrecht, 901 F.2d 17, 18–19 (2d Cir.1990) (per curiam); Bense v. Interstate Battery Sys. of Am., Inc., 683 F.2d 718, 720–21 (2d Cir.1982). The Court in Bremen held that forum selection clauses “are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be ‘unreasonable’ under the circumstances.” 407 U.S. at 10, 92 S.Ct. 1907.

To the extent TradeComet attempts to distinguish Bremen as announcing a narrow rule to be applied solely in international cases, or those arising under admiralty law, we are not persuaded. Although Bremen was an admiralty case and involved international trade, we have recognized that its reasoning extends beyond the admiralty and...