ValveTech, Inc. v. OHB Sys. AG
| Decision Date | 17 December 2020 |
| Docket Number | 19-CV-6829 (CJS) |
| Parties | VALVETECH, INC., Plaintiff, v. OHB SYSTEM AG, Defendant. |
| Court | U.S. District Court — Western District of New York |
Plaintiff ValveTech, Inc. ("ValveTech") filed this action against Defendant OHB System AG ("OHB") for breach of contract, a declaratory judgment that the purchase order contract is unenforceable, and replevin. Am. Compl., Dec. 3, 2019, ECF No. 9. The matter is presently before the Court on ValveTech's motion to remand, and OHB's motion for partial dismissal of the complaint. Mot. to Remand, Dec. 3, 2019, ECF No. 10; Mot. to Dismiss, Jan. 8, 2020, ECF No. 15. For the reasons stated below, Plaintiff ValveTech's motion to remand [ECF No. 10] is denied, and Defendant OHB's motion for partial dismissal of the complaint [ECF No. 15] is granted in part and denied in part. OHB is directed to answer the remaining claims in Plaintiffs' complaint within thirty days of the date of this order.
The following background has been drawn from Plaintiff's amended complaint, as well as "documents incorporated into the complaint by reference and matters of which a court may take judicial notice." Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). The factual allegations contained in the complaint have been accepted as true, and all reasonable inferences drawn in Plaintiff's favor. See Menaker v. Hofstra Univ., 935 F.3d 20, 26 (2d Cir. 2019).
Plaintiff ValveTech is a New York corporation "in the business of, among other things, engineering, designing, developing, and manufacturing commercial valves for use in a myriad of applications and industries," including aerospace manufacturing. Am. Compl. at ¶ 5. Defendant OHB is an affiliate of the OHB Corporation, a European multinational technology corporation in the business of space systems and aerospace and industrial products. Am. Compl. at ¶ 7. In September of 2014, OHB effected a merger with a company with which ValveTech had been in negotiations to supply valves for the ExoMars Programme. Am. Compl. at ¶ 9, 13.
In February 2014, ValveTech shipped a development valve to OHB so that OHB could assess the valve's functionality and develop a cleaning specification for the ExoMars Programme. Am. Compl. at ¶ 37. The development valve was ruined in the course of OHB's testing, and OHB returned the valve to ValveTech for repair and improvement. Am. Compl. at ¶ 38.
In November 2014, ValveTech and OHB entered into a "Non-Disclosure and Proprietary Rights Agreement" ("2014 NDA") to protect ValveTech's "Confidential Information" as the parties continued to work together to develop a suitable valve design and cleaning specification. Am. Compl. at ¶ 14-15. In September 2015, ValveTech - acting at OHB's request - sent a second iteration of the development valve to OHB so that OHB could work further on a cleaning specification for the valve. Am. Compl. at ¶ 51. At some point, the second iteration, too, was destroyed during testing and had to be shipped back to ValveTech. Am. Compl. at ¶ 52.
In November 2015, OHB sent a purchase order to ValveTech requesting a "flight valve, spare valve, and qualification valve for use in the ExoMars Rover." Am. Compl. at ¶ 39. ValveTech did not issue an acknowledgement to OHB, and did not specify a ship date for the order. Am. Compl. at ¶ 40.
During the summer of 2016, the parties attempted to negotiate a three-party "Non-Disclosure and Proprietary Rights Agreement" ("2016 NDA") to protect ValveTech's "Confidential Information." Am. Compl. at ¶ 18. The negotiations included ValveTech, OHB, and Thales Alenia Space Italia S.p.A. ("Thales"), a direct competitor of ValveTech's, in connection with the ExoMars Programme. Id. Although ValveTech and OHB both signed the 2016 NDA, Thales did not. Id.
After further negotiation, ValveTech agreed to send another valve, the "spare valve," for OHB's testing on the condition that OHB pay the material costs for the units. Am. Compl. at ¶ 53-54. Prior to shipping the spare valve, ValveTech required OHB to sign both the Strategic Trade Authorization License Prior Consignee Statement ("STA Statement") and an End-Use Statement. Am. Compl. at ¶ 56. The STA Statement provided that OHB understood and agreed that "further release, reexport, transfer, or further disclosure would require the prior approval of the U.S. Government." Am. Compl. at ¶ 57. The End-Use Statement required OHB to certify that it would not "directly or indirectly export, re-export, transmit, or cause to be exported, re-exported or transmitted any Restricted Item to any country, individual, individual corporation, organization, or entity to which such export, re-export, or transmission is restricted or prohibited." Am. Compl. at ¶ 58. The End-Use statement also provided that the spare valve was suppliedfor the limited purpose of "undergoing a bakeout at" OHB, and then would be returned to ValveTech for "a space qualification and test program at ValveTech Inc. (USA)." Am. Compl. at ¶ 59. OHB signed both statements on February 5, 2018. Am. Compl. at ¶ 56.
In March and April of 2018, ValveTech and OHB executed a third "Non-Disclosure and Proprietary Rights Agreement" ("2018 NDA"). The 2018 NDA prohibited the release, disclosure, use or duplication of ValveTech's "Proprietary Information" without the knowledge and consent of ValveTech. Am. Compl. at ¶ 31. In addition, OHB agreed that it would ensure any disclosure of proprietary information permitted under the agreement would not be contrary to any applicable laws and regulation, and that OHB would obtain ValveTech's written consent prior to requesting the authority to export confidential information subject to International Traffic in Arms Regulations ("ITAR") or Export Administration Regulations ("EAR") requirements. Am. Compl. at ¶ 32, 35. ValveTech shipped the spare valve to OHB on August 1, 2018. Am. Compl. at ¶ 61.
On September 20, 2018, ValveTech learned that OHB had exported the spare valve to Thales in Italy without the knowledge and consent of ValveTech, and without notifying the authorities controlling and overseeing such an export. Am. Compl. at ¶ 72. ValveTech terminated its relationship with OHB immediately, and further demanded that all ValveTech property be returned. Am. Compl. at ¶ 73. On September 26, 2018, at ValveTech's insistence, OHB notified the appropriate office at the U.S. Department of Commerce that it had exported ValveTech's "spare valve" to Italy without getting the appropriate approvals. Am. Compl. at ¶ 82. To date, OHB has not returned any of ValveTech's property or information, and ValveTech believes that the spare valveprovided to OHB in 2018 is installed in the ExoMars Rover. Am. Compl. at ¶ 75-77.
On February 21, 2019, ValveTech filed a complaint in New York State Supreme Court in Monroe County. Not. of Removal (Ex. 2), Nov. 8, 2019, ECF No. 1-2. ValveTech properly served OHB pursuant to the Hague Service Convention on October 11, 2019. Not. of Removal, ¶ 2, Nov. 8, 2019, ECF No. 1. On November 8, 2019, OHB filed a notice of removal to this Court on the basis of diversity jurisdiction pursuant to 28 U.S.C. § 1332(a). Id. at ¶ 27-29. Soon thereafter, OHB also filed a motion to dismiss ValveTech's complaint for failure to state a claim. Mot. to Dismiss, Nov. 15, 2019, ECF No. 5.
On December 3, 2019, ValveTech filed an amended complaint, and a cross-motion to remand this matter back to the Supreme Court in Monroe County. Mot. to Remand, Dec. 3, 2019, ECF No. 10. OHB renewed its motion to dismiss on January 8, 2020, and opposed ValveTech's motion to remand. Mot. to Dismiss, Jan. 8, 2020, ECF No. 15. OHB's motion to dismiss, and ValveTech's motion to remand, have both been fully briefed and are presently before the Court.
ValveTech has moved the Court to remand this action back to the state court. ValveTech maintains that it elected to file suit in the New York Supreme Court in Monroe County in accordance with the forum selection clause in the parties' agreements, and that the matter should be remanded because OHB has failed to show why removal to this Court was necessary. Mot. to Remand at 5-6 (). OHB observes that the agreement between the parties provides that the parties submitted tothe exclusive jurisdiction of New York Supreme Court or the United States District Court, Western District of New York. Def.'s Mem. of Law, 18-19, Jan. 8, 2020, ECF No. 15-1. Given this choice, OHB argues that because it had proper grounds for removal, it also had the right to select which of the two listed forums it would litigate in. Def.'s Mem. of Law at 19.
"In recognition of the fact that, in the initial choice of forum, only plaintiffs have the opportunity to select the federal court, the statute conferring the right to remove on defendants is designed to allow defendants the same opportunity." Oppenheimer & Co. v. Neidhardt, 56 F.3d 352, 356 (2d Cir. 1995).1 Thus, 28 U.S.C. § 1441(a) provides that "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." However, if a contract contains a forum selection clause, that clause controls unless the party seeking to escape its enforcement "clearly show[s] that [its] enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching." M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972).
Forum selection clauses are interpreted according to standard principles ofcontract law. John Boutari & Son v. Attiki Importers, 22 F.3d 51, 53 (2d Cir. 1994). The waiver of a party's statutory right to remove a case to federal court must be clear...
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