CSX Transp. v. Zayo Grp.

• Docket Number: 1:21-cv-02859-JMS-MJD
• Decision Date: 24 August 2023
• Parties: CSX TRANSPORTATION, INC., Plaintiff, v. ZAYO GROUP, LLC, Defendant. ZAYO GROUP, LLC, Third-Party Plaintiff, v. MILENIUM, INC.; CROSSROADS COMMUNICATIONS SOLUTIONS, LLC; BASELINE COMMUNICATIONS, NXC, LLC; BSM GROUPS, LLC; JDH CONTRACTING, INC.; OCM ENGINEERING, LLC; ON POINT CONSTRUCTIONS MANAGEMENT, INC.; PLB ENGINEERING, LLC; SPECTRUM ENGINEERING, LLC; and TESCO COMPANY, INC. Third-Party Defendants.
• Court: U.S. District Court — Southern District of Indiana

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CSX TRANSPORTATION, INC., Plaintiff,
v.
ZAYO GROUP, LLC, Defendant.

ZAYO GROUP, LLC, Third-Party Plaintiff,
v.
MILENIUM, INC.; CROSSROADS COMMUNICATIONS SOLUTIONS, LLC; BASELINE COMMUNICATIONS, NXC, LLC; BSM GROUPS, LLC; JDH CONTRACTING, INC.; OCM ENGINEERING, LLC; ON POINT CONSTRUCTIONS MANAGEMENT, INC.; PLB ENGINEERING, LLC; SPECTRUM ENGINEERING, LLC; and TESCO COMPANY, INC. Third-Party Defendants.

No. 1:21-cv-02859-JMS-MJD

United States District Court, S.D. Indiana, Indianapolis Division

August 24, 2023

ORDER

HON. JANE MAGNUS-STINSON, JUDGE UNITED STATES DISTRICT COURT

This case began with allegations by Plaintiff CSX Transportation, Inc. ("CSX Transportation") that Defendant Zayo Group, LLC, ("Zayo Group") installed fiber optic cables upon its active railroad property in Indiana and Illinois, which resulted in damage to railroad equipment and interfered with railroad operations. [See Filing No. 210.] Zayo Group subsequently filed third-party claims for breach of contract and indemnification against the Third-Party Defendants, including Baseline Communications, NXC, LLC ("Baseline"), who were involved in

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installing the fiber optic cables at issue. [Filing No. 222]. Baseline has filed a Motion to Dismiss, [Filing No. 286], arguing that Zayo Group's claims against it should be dismissed under Federal Rule of Civil Procedure 12(b)(3) for improper venue and pursuant to the doctrine of forum non conveniens. Baseline's Motion has been fully briefed and is ripe for the Court's review.

I.

Standards of Review

A. Improper Venue under Rule 12(b)(3)

Rule 12(b)(3) allows a party to move to dismiss an action for improper venue. Fed.R.Civ.P. 12(b)(3). When deciding a motion to dismiss under Rule 12(b)(3), the Court must accept the allegations in the plaintiff's complaint as true unless those allegations are contradicted by evidence submitted by the defendant. Deb v. SIRVA, Inc., 832 F.3d 800, 809 (7th Cir. 2016). "Rule 12(b)(3) is a somewhat unique context of dismissal in that a court may look beyond the mere allegations of a complaint, and need not view the allegations of the complaint as the exclusive basis for its decision." Id. "Where one party makes a bald claim of venue and the other party contradicts it, a district court may look beyond the pleadings to determine whether the chosen venue is appropriate." Id. at 809-10.

B. The Doctrine of Forum Non Conveniens

The doctrine of forum non conveniens "empowers a court to dismiss a suit when litigating in that court as opposed to an alternative forum unreasonably burdens the defendant." Instituto Mexicano del Seguro Soc. v. Zimmer Biomet Holdings, Inc., 29 F.4th 351, 357 (7th Cir. 2022) (citing Sinochem Int'l Co. Ltd. v. Malaysia Int'l Shipping Corp., 549 U.S. 422, 429-30 (2007), and U.S.O. Corp. v. Mizuho Holding Co., 547 F.3d 749, 750 (7th Cir. 2008)). A district court may exercise its discretion and dismiss a case on forum non conveniens grounds when (1) "'an alternative forum has jurisdiction to hear [the] case'" and (2) a trial in the chosen forum would

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prove disproportionately oppressive and vexatious to the defendant, or "'the chosen forum [is] inappropriate because of considerations affecting the court's own administrative and legal problems.'" Sinochem, 549 U.S. at 432 (quoting Am. Dredging Co. v. Miller, 510 U.S. 443, 44748 (1994)) (alterations original). The doctrine of forum non conveniens is "an exceptional one that a court must use sparingly." Deb, 832 F.3d at 805. While the defendant bears the burden of persuading the district court that dismissal for forum non conveniens is appropriate, courts ordinarily afford a plaintiff's choice of forum strong deference. Clerides v. Boeing Co., 534 F.3d 623, 628 (7th Cir. 2008); In re Ford Motor Co., 344 F.3d 648, 652 (7th Cir. 2003).

II.

Background

To set context, the procedural background of the Third-Party claim at issue is set forth below. The following factual allegations are set forth in Zayo Group's Second Amended Third-Party Complaint, [Filing No. 222], and in support of Baseline's instant motion.

A. Procedural History

This case initially began as a dispute between CSX Transportation and Zayo Group when CSX Transportation filed suit, alleging that Zayo Group made unauthorized fiber optic cable installations on its property in violation of its policies and federal safety requirements. [ See Filing No. 1; Filing No. 210 at 16.] CSX Transportation alleges that Zayo Group's actions resulted in damage to railroad infrastructure and equipment that has and continues to interfere with railroad operations. [Filing No. 210 at 11-35.] After CSX Transportation filed its claims, Zayo Group filed third-party claims for breach of contract and indemnification against the Third-Party Defendants, including Baseline, who each participated in the fiber optic cable installations at the center of CSX Transportation's claims. [Filing No. 222.]

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B. The Master Construction Services Agreement

Zayo Group and Baseline are parties to a Master Construction Services Agreement (the "MSA") which provides that Baseline will perform certain engineering services on behalf of Zayo Group, including the design of fiber optic cable installations. [Filing No. 222 at 8.] The MSA includes a provision (the "Indemnity Provision") that requires Baseline to:

defend, indemnify, and hold [Zayo Group] harmless from and against any and all claims, proceedings, losses, demands actions (and all expenses associated therewith asserted against, suffered, or incurred by indemnities) with respect to Death or injury to any persons or damage to property arising out of the acts or omissions of [Baseline,] its subcontractors and its or their employees or agents during the performance of the Services, any violation of law, or any failure to comply with any obligations imposed on it under this agreement.

[Filing No. 222 at 9.]

With respect to the relationship between the parties, the Terms and Conditions section of the original MSA^[1] includes a provision (the "Arbitration Provision") that provides:

44.0 DISPUTE RESOLUTION

All claims and disputes relating to [the MSA] shall be subject to arbitration in Denver, Colorado. Any controversy or claim arising out of or relating to [the MSA] or the breach thereof shall be settled by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association, and judgment of the award rendered by the Arbitrator(s) may be entered in any court having jurisdiction thereof.

[Filing No. 288-1 at 36.]

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Additionally, the original MSA contained a provision (the "Forum Selection Clause") that provided:

42.0 GOVERNING LAWS

The rights and obligations of the parties hereto shall be construed and interpreted in accordance with the substantive law of the State of Colorado without giving effect to its principles for the choice of law.

[Filing No. 288-1 at 36.]

Importantly, however, the parties subsequently entered into six addendums that amended and extended the terms of the MSA.^[2] [Filing No. 288-2; Filing No. 288-3; Filing No. 288-4; Filing No. 288-5; Filing No. 288-6.] Each of the addendums referenced the original MSA and stated that any amendments were "annexed to and made a part of"' the MSA but "all other terms and conditions of [the MSA] shall remain in full force and effect." [Filing No. 288-2 at 1-4; Filing No. 288-3 at 1-2; Filing No. 288-4 at 1; Filing No. 288-5 at 1; Filing No. 288-6 at 1-2.] However, each of the addendums also provided that: "[i]n each instance in which the provisions of this Addendum contradict or are inconsistent with the provisions of the [MSA,] the provisions of this Addendum shall prevail and govern, and the contradicted, superseded, or inconsistent provisions shall be deemed amended accordingly." [Filing No. 288-2 at 1; Filing No. 288-3 at 1; Filing No. 288-4 at 1; Filing No. 288-5 at 1; Filing No. 288-6 at 1.]

The Second Addendum to the MSA amended the Forum Selection Clause as follows:

3. Section 42.0 Governing Laws, of Exhibit C, shall be removed and replaced in its entirety with the following:

"42.0 GOVERNING LAWS & ATTORNEYS FEES

The validity, performance and all matters relating to the interpretation and effect of [the MSA] and any amendment thereto shall be governed by the

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laws of the State of Colorado, excluding its rules with respect to conflict of laws and all litigation arising under [the MSA] shall be in the state courts located in Boulder County, Colorado. [Baseline] hereby irrevocably consents to the exclusive personal jurisdiction of the state courts located in Boulder County, Colorado and Contractor shall not instituted any legal proceeding in any other court. Registered or certified mail of any legal process shall constitute lawful and valid service of process in any such proceeding, suit or controversy. . . . "

[Filing No. 288-2 at 2-3.]

C. Zayo Group's Claims Against Baseline

Zayo Group alleges that Baseline is obligated under the Indemnity Provision of the MSA to defend it from CSX Transportation's claims arising out of the MSA and to indemnify it for any damages recovered in this action, but Zayo Group alleges that Baseline has breached the terms of the MSA by failing to abide by these obligations. [Filing No. 222 at 9; Filing No. 222 at 16-17.] Accordingly, Zayo Group seeks a judgment requiring Baseline to indemnify and defend it, and payment for "all losses, including court costs and attorney's fees, expert witness fees, and expenses, sustained by Zayo Group." [Filing No. 222 at 16-17.]

Baseline has filed a Motion to Dismiss, which seeks dismissal of each of Zayo Group's claims against it pursuant to Fed.R.Civ.P. 12(b)(3) and the doctrine of forum non conveniens. [Filing No. 286.]

III.

Discussion

Baseline argues that the MSA requires dismissal under...