Edwards Vacuum, LLC v. Hoffman Instrumentation Supply, Inc.

• Decision Date: 23 August 2021
• Docket Number: Case No. 3:20-cv-1681-SI
• Citation: 556 F.Supp.3d 1156
• Parties: EDWARDS VACUUM, LLC, Plaintiff, v. HOFFMAN INSTRUMENTATION SUPPLY, INC. d/b/a/ HIS Innovations Group, Mark Romeo, Jeffrey Schwab, Elisha Leveton, John Chadbourne, and Andrew Enseleit, Defendants.
• Court: U.S. District Court — District of Oregon

556 F.Supp.3d 1156

EDWARDS VACUUM, LLC, Plaintiff,

v.HOFFMAN INSTRUMENTATION SUPPLY, INC. d/b/a/ HIS Innovations Group, Mark Romeo, Jeffrey Schwab, Elisha Leveton, John Chadbourne, and Andrew Enseleit, Defendants.

Case No. 3:20-cv-1681-SI

United States District Court, D. Oregon.

Signed August 23, 2021

Nicholas F. Aldrich, Jr., Scott D. Eads, and Jason A. Wrubleski, Schwabe, Williamson & Wyatt pc, 1211 SW Fifth Avenue, Suite 1900, Portland, OR 97204; John D. Vandenberg, Klarquist Sparkman llp, One World Trade Center, 121 SW Salmon Street, Suite 1600, Portland, OR 97204; and Justin W. Bernick, Hogan Lovells US llp, 555 13th Street NW, Washington, DC 20004. Of Attorneys for Plaintiff.

David H. Angeli, Joanna T. Perini-Abbott, Edward A. Piper, and Michelle Holman Kerin, Angeli Law Group llc, 121 SW Morrison Street, Suite 400, Portland, OR 97204; and Michael E. Haglund and Eric J. Brickenstein, Haglund Kelley llp, 200 SW Market Street, Suite 1777, Portland, OR 97201. Of Attorneys for Defendant Hoffman Instrumentation Supply, Inc.

Jeff S. Pitzer and Peter M. Grabiel, Pitzer Law, 210 SW Morrison Street, Suite 600, Portland, OR 97204. Of Attorneys for Defendants Mark Romeo, Jeffrey Schwab, Elisha Leveton, John Chadbourne, and Andrew Enseleit.

OPINION AND ORDER ON PLAINTIFF'S MOTION TO DISMISS COUNTERCLAIMS

Michael H. Simon, District Judge.

Plaintiff Edwards Vacuum, LLC (Edwards) brings this lawsuit against one of its suppliers and competitors, Hoffman Instrumentation Supply, Inc., doing business as HIS Innovations Group (HIS), and five employees of HIS who previously worked for Edwards (the Individual Defendants). Edwards designs integrated vacuum pump systems, mostly for computer (or semiconductor) chip manufacturers. HIS supplies parts to Edwards but also recently began to compete with Edwards by designing, making, and selling its own integrated vacuum pump systems. In its Second Amended Complaint, Edwards alleges misappropriation of trade secrets, breach of contract, tortious interference with economic relations, conversion, breach of the duty of loyalty, and unjust enrichment. HIS denies liability. HIS also asserts three counterclaims, alleging breach of contract, monopolization, and attempted monopolization. Before the Court is Edwards's motion to dismiss HIS's counterclaims under Rule 12(b)(6) of the Federal Rules of Civil Procedure and alternative motion to dismiss under the doctrine of forum non conveniens. For the reasons stated below, the Court grants in part and denies in part Edwards's motions to dismiss. The Court also bifurcates HIS's antitrust counterclaims and stays any discovery that is related only to HIS's antitrust counterclaims. HIS's breach of contract counterclaim may proceed.

STANDARDS¹

A. Motion to Dismiss for Failure to State a Claim

A motion to dismiss under Rule 12(b)(6) may be granted only when there is no cognizable legal theory to support the claim or when the complaint lacks sufficient factual allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs., Inc. , 622 F.3d 1035, 1041 (9th Cir. 2010). In evaluating the sufficiency of a complaint's factual allegations, the court must accept as true all well-pleaded material facts alleged in the complaint and construe them in the light most favorable to the non-moving party. Wilson v. Hewlett-Packard Co. , 668 F.3d 1136, 1140 (9th Cir. 2012) ; Daniels-Hall v. Nat'l Educ. Ass'n , 629 F.3d 992, 998 (9th Cir. 2010). "[T]o be entitled to a presumption of truth, allegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively." Starr v. Baca , 652 F.3d 1202, 1216 (9th Cir. 2011). The court must draw all reasonable inferences from the factual allegations in favor of the plaintiff. Newcal Indus. v. Ikon Office Solution , 513 F.3d 1038, 1043 n.2 (9th Cir. 2008). The court need not, however, credit the plaintiff's legal conclusions that are couched as factual allegations. Ashcroft v. Iqbal , 556 U.S. 662, 678-79, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

A complaint must contain sufficient factual allegations to "plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation."

Starr , 652 F.3d at 1216. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (citing Bell Atl. Corp. v. Twombly , 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully." Mashiri v. Epsten Grinnell & Howell , 845 F.3d 984, 988 (9th Cir. 2017) (quotation marks omitted).

B. Motion to Dismiss for Forum Non Conveniens

1. Forum Non Conveniens Based on a Contractual Forum-Selection Clause

"[T]he appropriate way to enforce a forum-selection clause pointing to a state or foreign forum is through the doctrine of forum non conveniens. " Atl. Marine Constr. Co. v. U.S. Dist. Court for the W. Dist. of Tex. , 571 U.S. 49, 60, 134 S.Ct. 568, 187 L.Ed.2d 487 (2013). The doctrine of forum non conveniens "rests on the principle that a court may resist imposition upon its jurisdiction when the matter may be more conveniently tried in another forum, even when jurisdiction is authorized by the letter of a general venue statute." Hamilton v. Firestone Tire & Rubber Co. , 679 F.2d 143, 146 (9th Cir. 1982) (citing Gulf Oil Corp. v. Gilbert , 330 U.S. 501, 67 S.Ct. 839, 91 L.Ed. 1055 (1947) ). The Ninth Circuit has cautioned, however, that "[t]he doctrine of forum non conveniens is a drastic exercise of the court's ‘inherent power’ because, unlike a mere transfer of venue, it results in the dismissal of the plaintiff's case.... Therefore, we have treated forum non conveniens as ‘an exceptional tool to be employed sparingly,’ and not a ‘doctrine that compels plaintiffs to choose the optimal forum for their claim.’ " Carijano v. Occidental Petroleum Corp. , 643 F.3d 1216, 1224 (9th Cir. 2011) (quoting Dole Food Co. v. Watts , 303 F.3d 1104, 1118 (9th Cir. 2002) ).

When parties to a lawsuit have formed a contract that includes a valid forum-selection clause, federal law controls whether that clause is enforceable. See Manetti-Farrow, Inc. v. Gucci Am., Inc. , 858 F.2d 509, 513 (9th Cir. 1988). In Atlantic Marine , the Supreme Court clarified the factors that a district court should consider when evaluating the enforceability of a valid forum-selection clause. 571 U.S. at 63-65, 134 S.Ct. 568. When a valid forum-selection clause is present, "the plaintiff's choice of forum merits no weight." Id. at 63, 134 S.Ct. 568. Additionally, the district court "should not consider arguments about the parties’ private interests.... A court accordingly must deem the private-interest factors [including inconvenience to the parties] to weigh entirely in favor of the preselected forum." Id. at 64, 134 S.Ct. at 582. A district court may only consider arguments concerning public-interest factors, which "will rarely defeat" a motion to dismiss. Id.

The Supreme Court also explained that a valid forum-selection clause alters the ordinary forum non conveniens analysis. See Atl. Marine , 571 U.S. at 63, 134 S.Ct. 568. A court must give a valid forum-selection clause "controlling weight in all but the most exceptional cases." Id. at 60, 134 S.Ct. 568 (citation and quotation marks omitted). Courts should not "unnecessarily disrupt the parties’ settled expectations" when the parties have "contracted in advance to litigate disputes in a particular forum." Id. at 66, 134 S.Ct. 568. "In all but the most unusual cases, therefore, ‘the interest of justice’ is served by holding parties to their bargain." Id. ; see also Swenson v. T-Mobile USA, Inc. , 415 F. Supp. 2d 1101, 1104 (S.D. Cal. 2006) ("[Forum selection clauses] are prima facie valid and are enforceable unless the party challenging enforcement shows the clause is unreasonable under the circumstances." (citing R.A. Argueta v. Banco Mexicano, S.A. , 87 F.3d 320, 325 (9th Cir. 1996) )). A party asserting a claim subject to a valid forum-selection clause pointing to another forum bears the burden of showing exceptional circumstances that make dismissal inappropriate despite that clause. See Atl. Marine , 571 U.S. at 63, 134 S.Ct. 568.

2. Common Law Forum Non Conveniens

In the absence of a valid forum-selection clause, the common law doctrine of forum non conveniens provides that a court may dismiss an action even when venue is proper if the defendant makes "a clear showing of facts which establish such oppression and vexation of a defendant so as to be out of proportion to plaintiff's convenience, which may be shown to be slight or nonexistent." Dole Food Co. , 303 F.3d at 1118 (citation and quotation marks omitted). The moving party must prove "(1) that there is an adequate alternative forum, and (2) that the balance of private and public interest factors favor dismissal." Id.

After the codification of 28 U.S.C. § 1404(a), the doctrine of forum non conveniens has limited application, as explained by the Supreme Court:

The common-law doctrine of forum non conveniens has continuing application in federal courts only in cases where the alternative forum is abroad, and perhaps in rare instances where a state or territorial court serves litigational convenience best. For the federal court system, Congress has codified the doctrine and has provided for transfer, rather than dismissal, when a sister federal court is the more convenient place for trial of the action.

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