Cadapult Graphic Systems, Inc. v. Tektronix, Inc.

• Decision Date: 18 May 2000
• Docket Number: No. Civ.A.99-3779(AMW).,Civ.A.99-3779(AMW).
• Citation: 98 F.Supp.2d 560
• Parties: CADAPULT GRAPHIC SYSTEMS, INC., Plaintiff, v. TEKTRONIX, INC., Defendant.
• Court: U.S. District Court — District of New Jersey

98 F.Supp.2d 560

CADAPULT GRAPHIC SYSTEMS, INC., Plaintiff, v. TEKTRONIX, INC., Defendant.

No. Civ.A.99-3779(AMW).

United States District Court, D. New Jersey.

May 18, 2000.

Joseph J. Fleishman, Norris, McLaughlin & Marcus, A Professional Corporation, Somerville, NJ, for plaintiff.

H. John Schank, II, Amy E. Robinson, Gibbons, Del Deo, Dolan, Griffinger & Vecchione, A Professional Corporation, Newark, NJ, for defendant.

OPINION

WOLIN, District Judge.

This matter comes before the Court on defendant's motion to (1) dismiss pursuant to Rule 12 of the Federal Rules of Civil Procedure, or in the alternative, (2) transfer venue pursuant to 28 U.S.C. § 1404(a). Defendant, Tektronix, Inc. ("Tektronix"), argues that the District of New Jersey is an improper forum to hear this case. In making this argument, defendant points to a forum-selection clause in an agreement signed by the parties which directs any litigation to be brought in Oregon. Plaintiff, Cadapult Graphic Systems, Inc. ("Cadapult"), opposes the motion. Cadapult maintains that the forum-selection clause is invalid because it is contained in a franchise agreement, thus, making it presumptively invalid pursuant to New Jersey law. See Kubis & Perszyk Assocs., Inc. v. Sun Microsystems, Inc., 146 N.J. 176, 680 A.2d 618 (1996). The matter has been decided on the papers, pursuant to Rule 78 of the Federal Rules of Civil Procedure. For the reasons stated below, the Court will grant defendant's motion to transfer venue to the District of Oregon.

BACKGROUND

Plaintiff, Cadapult, is a Delaware corporation with its principal place of business in New Jersey. Cadapult is in the business of reselling digital color printers and supplies and providing parts and service for such printers. Defendant, Tektronix, is an Oregon corporation with its principal place of business in Oregon. Tektronix is in the business of manufacturing and selling digital color printers and supplies, including a patented form of solid ink for color printers.

In October 1988, Cadapult entered into an agreement with Tektronix, entitled "Value Added Dealer Agreement," pursuant to which Cadapult could purchase Tektronix products at a discounted price for resale and could use Tektronix's trademark and advertising materials in connection with the resale of Tektronix products. Under the terms of this agreement, Tektronix appointed Cadapult to be an "authorized value added dealer." In August 1991, the parties entered into a subsequent "Value Added Dealer Agreement" (the "Agreement"). Cadapult remains a "value added dealer" pursuant to the August 1991 Agreement.

Both agreements contain a forum-selection clause. The clause states:

Governing Law. This Agreement and the rights of the parties hereunder shall be governed by the laws of the State of Oregon. Any litigation between the parties shall be commenced and prosecuted in the state and federal courts in Oregon.

Cadapult contends that this clause was non-negotiable. Specifically, Cadapult asserts that, at the time of contracting, it was a fledgling company and that it "feared" negotiations may jeopardize its status as a "value added dealer."

Tektronix, on the other hand, maintains that Cadapult "had every opportunity to negotiate" this clause. Indeed, Tektronix points to an established procedure which it follows in negotiating dealer's concerns. Moreover, defendant asserts that they never advised Cadapult that this clause was non-negotiable, nor did Cadapult object to the inclusion of this clause. Further, they point out that, in 1991, Cadapult was an established business with three years experience.

In August 1999, Cadapult filed a multicount complaint in this Court. Notably, the complaint alleged no violation of the "Value Added Dealer Agreement." Similarly, it did not allege that Tektronix's practices pursuant to this Agreement violated the New Jersey Franchise Practices Act ("Franchise Act"). Instead, Cadapult's complaint alleged, inter alia, (1) Franchise Act violations of a different agreement, entitled the "Premier Plus Reseller Program," (2) breach of contract, and (3) various federal and state statutory violations.

As to the alleged Franchise Act violations relating to the "Premier Plus Reseller Program," the Court, in a prior opinion, has already found those allegations substantially devoid of merit. See Cadapult Graphic Systems, Inc. v. Tektronix, Inc., Civ. No. 99-3779, Memorandum Op., Aug. 25, 1999. At the outset of this action Cadapult moved, based on the alleged Franchise Act claims, for a temporary restraining order and a preliminary injunction. Cadapult maintained that defendant violated the Franchise Act because defendant discontinued Cadapult's participation in the "Premier Plus Reseller Program." The Court denied Cadapult's motion, holding that Cadapult would not likely succeed on the merits. See id. at 7-9. The court did so because the "Premier Plus Reseller Program" did not constitute a franchise agreement within the meaning of the Franchise Act. Specifically, the Court found that Cadapult failed to demonstrate a "written agreement," a "license to Use Tektronix's tradename or trademark," and a "community of interest" between Cadapult and Tektronix. See id.; see also N.J.S.A. § 56:10-3(a) (defining a "franchise" as a "written agreement in which a person grants to another person a license to use a trade name, trade mark, service mark, or related characteristics, and in which there is a community of interest in the marketing of goods or services....").

After the Court denied the preliminary injunction, Tektronix brought the instant motion. In this motion, Tektronix seeks either dismissal or transfer of this case pursuant to the above-quoted forum-selection clause. Cadapult, however, maintains that the forum-selection clause is invalid under the New Jersey Supreme Court's decision, Kubis & Perszyk Assocs., Inc. v. Sun Microsystems, Inc., 146 N.J. 176, 680 A.2d 618 (1996).¹ For the reasons discussed immediately below, the Court will grant the motion to transfer, finding that the facts of this case do not implicate Kubis.

DISCUSSION

I. Transfer

The present motion hinges around the Agreement's forum-selection clause. "In federal court, the effect to be given a contractual forum selection clause in diversity cases is determined by federal not state law." Jumara v. State Farm Ins. Co., 55 F.3d 873, 877 (3d Cir.1995); see also Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 27-32, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988).

Here, in a motion to transfer venue, the applicable federal law is 28 U.S.C. § 1404(a).² See Stewart Org., 487 U.S. at 28-29, 108 S.Ct. 2239; Jumara, 55 F.3d at 877-78. Thus, federal courts must view a forum-selection clause within the parameters of section 1404 and other related federal laws. See Stewart Org., 487 U.S. at 28-29, 108 S.Ct. 2239; Jumara, 55 F.3d at 877-78.

Section 1404(a) provides:

For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.

The decision whether to transfer falls in the sound discretion of the trial court. See Lony v. E.I. DuPont de Nemours & Co., 886 F.2d 628, 632 (3d Cir. 1989); Danka Funding, L.L.C. v. Page, Scrantom, Sprouse, Tucker & Ford, P.C., 21 F.Supp.2d 465, 474 (D.N.J.1998); NCR Credit Corp. v. Ye Seekers Horizon, Inc., 17 F.Supp.2d 317, 320 (D.N.J.1998). In exercising this discretion, the Court must consider certain factors enunciated by the Supreme Court and further developed by the Third Circuit. See Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508-09, 67 S.Ct. 839, 91 L.Ed. 1055 (1947); Jumara, 55 F.3d at 879-80. These factors fall into two groups: those relating to the private convenience of the litigants and those affecting the public interest in the fair and efficient administration of justice. See Jumara, 55 F.3d at 879-80.

In Jumara, the Third Circuit enumerated both private and public interests protected by section 1404(a). Private interests include: (1) the "plaintiff's forum preference," (2) "the defendant's preference," (3) "whether the claim arose elsewhere," (4) "the convenience of the parties as indicated by their relative physical and financial condition," (5) "the convenience of the witnesses-but only to the extent that the witnesses may actually be unavailable for trial in one of the fora," and (6) "the location of books and records (similarly limited to the extent that the files could not be produced in the alternative forum)." Jumara, 55 F.3d at 879 (citations omitted).

Public interests include: (1) "the enforceability of the judgment," (2) "practical considerations that could make the trial easy, expeditious, or inexpensive," (3) the relative administrative difficulty in the two fora resulting from court congestion, (4) "the local interest in deciding local controversies at home," (5) "the public policies of the fora," and (6) "the familiarity of the trial judge with the applicable state law in diversity cases." Id. at 879-80.

Within this framework, courts should place great weight on valid forum-selection clauses. While a valid forum-selection clause is not dispositive, "it is entitled to substantial consideration." Id. at 880.

Cadapult argues that the instant forum-selection clause is invalid and, thus, deserves no consideration. In this Circuit, however, "in accord with the dictates of the Supreme Court, forum selection clauses are presumptively valid." Reynolds Publishers, Inc. v. Graphics Fin. Group, Ltd., 938 F.Supp. 256, 263 (D.N.J.1996) (citing Coastal Steel Corp. v. Tilghman Wheelabrator Ltd., 709 F.2d 190, 202 (3d Cir.1983), overruled on other ground, Lauro Lines v. Chasser, 490 U.S. 495, 109 S.Ct. 1976, 104 L.Ed.2d 548 (1989)); see also Union Steel America Co. v. M/V Sanko Spruce, 14 F.Supp.2d 682, 686 (D.N.J. 1998). Accordingly, courts will respect such clauses unless the resisting party makes a "strong...