Vault, LLC v. Dell Inc.
| Decision Date | 04 January 2019 |
| Docket Number | 1:18-CV-00633 |
| Court | U.S. District Court — Middle District of North Carolina |
| Parties | VAULT, LLC, Plaintiff, v. DELL INC., Defendant. |
Plaintiff Vault, LLC ("Vault") brings this action against Dell Inc. ("Dell") for breach of contract, fraud, and unfair and deceptive trade practices arising out of a business relationship. (Doc. 2.) Before the court is Dell's motion to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) or, in the alternative, to transfer venue pursuant to 28 U.S.C. § 1404(a) based on a forum-selection provision of an agreement between the parties. (Doc. 7.) Vault opposes the motion and moves to seal its response brief and an attachment. (Doc. 13.) For the reasons set forth below, the court declines to address the motion to dismiss, grants the motion to transfer, and denies the motion to seal as moot.
The allegations of the complaint, taken in the light most favorable to Vault, as well as evidence submitted by the parties appropriate for consideration at this stage as to the motion to transfer shows the following:
Dell is a corporation organized under the laws of the state of Delaware, doing business in North Carolina. (Doc. 2 ¶ 2.) Vault is a limited liability company organized under the laws of North Carolina, with a principal place of business in Guilford County, North Carolina. (Id. ¶ 1.) Vault is an "industry-leading producer of tablet enclosures and has worked with a variety of electronics companies." (Id. ¶ 5.)
In October 2015, Vault was invited by Sherie Meek (now "Stephenson"1), Dell's Program Manager of Original Equipment Manufacturers ("OEMs"), to design a Venue 8 Pro 5855 Product Sleeve enclosure (the "product") for a Dell Venue 8 Pro 5855 electronic tablet. (Id. ¶ 6.) Meek told Vault that the tablet would be distributed through Dell sales representatives and through Dell's OEM customers. (Id.) Meek and her team represented to Vault President James Cagle that a Dell OEM, Oracle/Micros ("Oracle"), needed "'tens of thousands' of product units" and that the project would have an estimated value of over $20 million. (Id. ¶¶ 7-8.) When Cagle expressed concerns about designing the product because of the frequency with which tablets are updated in the electronicsindustry, Meek and Dell representatives Mike Griffith and John McDonald guaranteed that the "end-of-life date" for the tablet would occur no earlier than February 2018. (Id. ¶ 10.)
Dell and Vault entered into a Master Relationship Agreement ("MRA"),2 effective December 10, 2015, which states that it sets forth "the only terms under which Dell will purchase and license Solutions [defined as hardware, software, and other related services] from Provider [Vault]." (Doc. 8-1 at 2; Doc. 14-1 §§ 1.9, 2.1.) The MRA provides further that it "shall apply to all Solutions purchased from Provider [Vault]." (Doc. 8-1 at 2.) Among the other provisions is a forum-selection clause that states:
Provider [Vault] and Dell irrevocably submit and consent to the exclusive jurisdiction and venue of the U.S. District Court for the Western District of Texas (Austin Division) or if there is no basis for federal jurisdiction, then any claims must be brought in the Texas State District Court in Williamson County, Texas. The Parties agree that such courts shall be the exclusive proper forum for the determination of any claim or dispute arising out of, or in connection with, this agreement and waive any objection to venue or convenience of forum.
Vault contends that, relying on the representations of the Dell personnel noted above, it entered into an agreement with Dell (the date not alleged in the complaint) to develop, design, and manufacture the Venue 8 Pro 5855 Sleeve tablet enclosures. (Doc.2 ¶ 12.) Dell allegedly arranged for its "purchasing agents," World Wide Technology ("WWT") and Synnex Corporation ("Synnex"), to purchase product units from Vault pursuant to purchase orders. (Id. ¶ 13.) At Dell's direction, Vault completed case modifications to the product that were not in the original scope of the product and manufactured custom-made product units for Oracle that included trademarked logos, custom programming, and custom physical modification. (Id. ¶¶ 15-20.)
In December 2016, Oracle canceled its order with Dell. (Id. ¶ 22.) Vault worked with Dell to find a substitute purchaser for the product units, and while Dell committed to issue new purchase orders to Vault in place of the WWT and Synnex purchase orders, it failed to do so. (Id. ¶ 23.) Vault has been left with thousands of custom product units with modifications that "have essentially rendered the Product units unsalable after Oracle canceled its order with Dell," because no other purchasers are interested in them. (Id. ¶ 25.)
Vault filed suit against Dell in the General Court of Justice, Superior Court Division, Guilford County, North Carolina. (Doc. 2.) Dell timely removed the action to this court (Doc. 1) and brought the instant motion to dismiss or, in the alternative, to transfer (Doc. 7). Having been fully briefed, the motions are ready for consideration.
As a preliminary matter, the court addresses Vault's motion to seal its unredacted response brief and a portion of the MRA attached as Exhibit 1 (Docs. 14, 14-1). (Doc. 13.) Vault has filed a redacted version of the MRA in the public record (Doc. 12-1) and moves to seal the original only because Dell filed a redacted version of the MRA in support of its motion (Doc. 8-1) and Vault's response seeks to rely on page 2 of the document. (Doc. 13.) Dell has since stated, however, that it does not contend that the provisions at issue meet the standards for sealing (Doc. 18 at 1) and indeed quotes portions of the same material in its reply brief. (Doc. 17 at 2, 7.) Consequently, Dell has waived any claim of confidentiality as to page 2 of the MRA, and Vault's motion to seal will be denied as moot. The documents filed under seal (Docs. 14, 14-1, 14-2) shall be be unsealed.
Vault argues that Dell's motion to dismiss or transfer should be denied because it relies on the forum-selection and choice-of-law provisions of Dell's MRA, which the complaint does not allege is involved. (Doc. 14 at 4.) Vault argues that the MRA was not attached to, referred to, or "integral to" the complaint, "is not an agreement to develop, design, or manufacture anything," is not relied upon by it, and therefore should not be considered by thecourt on the Rule 12(b)(6) motion to dismiss. (Doc. 14 at 4-5.) Dell contends that the MRA is incorporated by reference in the complaint and has attached a copy to its brief. (Doc. 8 at 3 n.2; Doc. 8-1.) Neither party addresses whether the MRA can be considered for purposes of deciding the motion to transfer.
In reviewing a motion to transfer, the court may consider evidence outside the pleadings. Brooks-Williams v. Keybank, N.A., No. WDQ-15-559, 2015 U.S. Dist. LEXIS 169188, at *2 n.4 (D. Md. Dec. 17, 2015). Courts regularly do so. See, e.g., id.; Weishaupt v. Boston College, No. 1:11-cv-1122, 2012 WL 1439030, at *3-6 (M.D.N.C. April 24, 2012). In fact, such evidence is usually necessary to meet the moving party's burden of proving that the balance of the § 1404(a) factors weighs in favor of transfer. See, e.g., Weishaupt, 2012 WL 1439030, at *2. Because the court will decline to consider the motion to dismiss, it need not determine whether the MRA and other exhibits attached to the motion are incorporated into the complaint by reference. For purposes of deciding the motion to transfer, the court may consider all properly authenticated exhibits that are relevant. These include the MRA (Doc. 8-1), two declarations of Sherie Stephenson (Docs. 8-2, 17-1), page 2 of the MRA (Docs. 12-1, 14-1), and the declaration of James Cagle (Docs. 12-2, 14-2).
Dell urges the court to transfer this action to the Western District of Texas based on the forum-selection clause of the MRA,which Dell asserts is the only contract entered into between Vault and Dell referenced in the complaint and governs their relationship. (Doc. 8 at 1-2.) Vault opposes application of the forum-selection clause and argues that the MRA is not relevant to its claims. (Doc. 14 at 5.) For the reasons laid out below, the court finds that the forum-selection clause of the MRA governs the claims in this action.
Under 28 U.S.C. § 1404(a), "[f]or 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 or to any district or division to which all parties have consented." Section 1404(a) "provides a mechanism for enforcement of forum-selection clauses that point to a particular federal district." Atl. Marine Constr. Co., Inc. v. U.S. Dist. Court for W. Dist. of Tex., 571 U.S. 49, 59 (2013). "[A] proper application of § 1404(a) requires that a forum-selection clause be 'given controlling weight in all but the most exceptional cases.'" Id. at 59-60 (quoting Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 33 (1988) (Kennedy, J., concurring)). Where there is a valid forum-selection clause, a modified version of the common-law doctrine of forum non conveniens applies. Atl. Marine, 571 U.S. at 60-66; BAE Sys. Tech. Sol. & Servs. v. Republic of Korea's Def. Acquisition Program Admin., 884 F.3d 463, 470-71 (4th Cir. 2018) ().
If a forum-selection clause is mandatory rather than permissive, courts in the Fourth Circuit enforce the forum-selection clause unless it would be unreasonable to do so. BAE, 884 F.3d at 470. A mandatory forum-selection clause "requires litigation to occur in a specified forum," while "a permissive clause permits litigation to occur in...
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