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Alaskan Brewing, LLC v. Peakaso Partners, LLC

United States District Court, D. Alaska

November 22, 2019

ALASKAN BREWING, LLC, an Alaska limited liability company, Plaintiff,
v.
PEAKASO PARTNERS, LLC, a Colorado limited liability company, Defendant.

          ORDER RE MOTION TO DISMISS THE COMPLAINT OR, ALTERNATIVELY, TRANSFER THE ACTION TO THE PROPER FORUM

          SHARON L. GLEASON UNITED STATES DISTRICT JUDGE

         Before the Court at Docket 27 is Defendant Peakaso Partners, LLC's (“Peakaso”) Motion to Dismiss the Complaint or, Alternatively, Transfer the Action to the Proper Forum. Plaintiff Alaskan Brewing, LLC (“Alaskan Brewing”) responded in opposition at Docket 29. Peakaso replied at Docket 32. Alaskan Brewing filed supplemental materials at Docket 33, which Peakaso did not respond. Oral argument was not requested and was not necessary to the Court's decision.

         BACKGROUND

         On November 20, 2018, Alaskan Brewing, a limited liability company headquartered in Juneau, Alaska, [1] initiated this action by filing a complaint for breach of contract against Peakaso Partners, a limited liability company headquartered in Denver, Colorado.[2] The complaint alleged the following facts:

         In 2016, Alaskan Brewing began looking for an enterprise resource planning (“ERP”) software system to help manage its business operations.[3] In early 2017, Peakaso contacted Alaskan Brewing to offer the brewery its “Crafted ERP” system.[4] After a Peakaso representative traveled to Juneau to demonstrate the software on March 14, 2017, [5] the parties reviewed “the functionality Alaskan Brewing required” and worked together for several months “to describe and prioritize the specific items Alaskan Brewing would need in its ERP system.”[6]

         On June 12, 2017, the parties signed several agreements that govern Peakaso's implementation of Crafted ERP for Alaskan Brewing:[7] An initial Statement of Work (“SOW”) that sets forth Peakaso's obligation “to provide advisory services for the implementation of Crafted ERP, ” identifies the specific functions and modules to be included in the software package, and lays out the costs associated with the software's implementation, support, and maintenance;[8] a General Business Terms (“GBT”) document that “govern[s] the services provided by Peakaso”;[9] and a Master Services Agreement (“MSA”) that incorporates the GBT and defines the parties' relationship at a broad level.[10] The Court will refer to these three agreements collectively as the “Implementation Agreement.”

         The MSA provides that “this [MSA], including the [GBT] and any Exhibit(s) attached hereto, and any [SOW(s)] issued hereunder . . . contain the sole and exclusive terms and conditions that will govern the rights, responsibilities and obligations of the parties with respect to the Services11 to be provided by Peakaso to [Alaskan Brewing].”12

         The GBT establishes an initial one-year term for the Implementation Agreement, but provides for automatic annual renewal unless either party gives 30-day written notice of its intent to terminate.[13] Neither party gave notice of termination prior to June 12, 2018, so the Implementation Agreement automatically renewed for a second one-year term.[14]

         The SOW established a “go-live date” of November 1, 2017 for the Crafted ERP system, but the system was not online by that date.[15] Alaskan Brewing gave written notice of non-conformance to Peakaso, and the parties agreed to move the go-live date to January 1, 2018.[16] A version of Crafted ERP went live on January 1, 2018, but Alaskan Brewing maintains that it “did not meet the requirements set forth in the . . . [Implementation] Agreement.”[17] Alaskan Brewing notified Peakaso that implementation of the software was deficient, but “the deficiencies identified by Alaskan Brewing ha[d] not been rectified” by the date the complaint was filed.[18]

         The complaint identifies a “non-exhaustive” of 12 functions or modules “set forth in the SOW that have not been implemented or have only been partially implemented.”[19] It seeks a “judicial declaration” that Peakaso has breached the Implementation Agreement by failing to deliver those modules and by assigning its responsibilities to a third party-Doozy Solutions, LLC-without Alaskan Brewing's consent.[20] The complaint also seeks “an order compelling Peakaso to remedy its breach and deliver the deliverables set forth in the Agreement at its sole expense, ” an “order compelling Peakaso to assign all right title and interest in the deliverables and the software, ” and an award of “damages caused by Peakaso's breaches.”[21]

         The complaint was brought pursuant to this Court's diversity jurisdiction.[22] It alleged that venue was proper in the District of Alaska pursuant to 28 U.S.C. § 1391(b)(2) “because a substantial part of the events and omissions giving rise to [Alaskan Brewing's] claims occurred in this district.”[23]

         As its first responsive filing, on July 12, 2019, Peakaso filed the instant Motion to Dismiss the Complaint or, Alternatively, Transfer the Action to the Proper Forum.[24] The parties had executed a separate series of agreements on June 12, 2017, which were not mentioned in the complaint, to “govern the subscription services and terms related to the [Crafted ERP] software”:[25] a Subscription Services Agreement (“SSA”) and the Crafted ERP's Terms of Service (“TOS”).[26] The Court will refer to these agreements collectively as the “Subscription Agreement.” The SSA contains a forum-selection clause, which provides that “each party agrees to submit to the exclusive jurisdiction of, and venue in, the courts in Denver county in Colorado in any dispute arising out of or relating to this Agreement.”[27]

         Peakaso contends that the SSA's forum-selection clause governs this dispute and seeks an order dismissing the complaint under either Federal Rule of Civil Procedure 12(b)(6) or the doctrine of forum non conveniens, or transferring the case to federal court in Denver, Colorado pursuant to 28 U.S.C. § 1404(a).[28]

         LEGAL FRAMEWORK

         A forum-selection clause that “point[s] to a particular federal district” is enforceable “through a motion to transfer under [28 U.S.C.] § 1404(a).”[29] In contrast, “the appropriate way to enforce a forum-selection clause pointing to a state or foreign forum is through the doctrine of forum non conveniens.”[30] “Section 1404(a) is merely a codification of the doctrine of forum non conveniens for the subset of the cases in which the transferee forum is within the federal court system” and the Supreme Court has explained that analysis under either enforcement mechanist “entail[s] the same balancing-of-interest standard.”[31]

         Under this approach, “[w]hen the parties have agreed to a valid forum-selection clause, a district court should ordinarily transfer the case to the forum specified in that clause.”[32] The “plaintiff ‘must bear the burden of showing why the court should not transfer the case to the forum to which the parties agreed, '” and his or her “subsequent choice of forum merits no weight.”[33] The reviewing court “must deem all factors relating to the private interests of the parties . . . as weighing ‘entirely in favor of the preselected forum, ” and “[w]hile a court may consider factors relating to the public interest . . ., those factors will rarely defeat a transfer motion.”[34] “The practical result is that a forum-selection clause ‘should control except in unusual cases' . . ., [and] ‘[o]nly under extraordinary circumstances unrelated to the convenience of the parties' should a motion to enforce a forum-selection clause be denied.”[35]

         In addition to § 1404(a) and the doctrine of forum non conveniens, Peakaso moves to enforce the SSA's forum-selection clause through Rule 12(b)(6).[36] The Ninth Circuit has held that Rule 12(b)(3), rather than rule 12(b)(6), “governs a motion to dismiss premised on the enforcement of a forum selection clause.”[37]However, the Supreme Court later held that Rule 12(b)(3) was “not [a] proper mechanism[] to enforce a forum-selection clause” where venue was otherwise proper under 28 U.S.C. § 1391(b).[38] Peakaso does not argue that the District of Alaska is an improper venue under § 1391(b), and the Court will restrict its analysis of the enforceability of the forum-selection clause to §1404(a) and the doctrine of forum non conveniens. That said, the Court applies the standard of review for Rule 12(b)(3) motions in conducting its analysis, “drawing reasonable inferences and resolving factual conflicts in favor of the non-movant, but not necessarily accepting the non-movant's pleadings as true, and also considering facts outside the pleadings.”[39]

         DISCUSSION

         I. Applicability of the Forum-Selection Clause

         Before determining whether the SSA's forum-selection clause is enforceable, the Court must first determine whether that clause applies to this dispute.[40] Courts “apply federal contract law to interpret the scope of a forum-selection clause even in diversity actions.”[41] In doing so, they “look for guidance ‘to general principles for interpreting contracts.'”[42] The Ninth Circuit has “held that forum-selection clauses covering disputes ‘arising out of' a particular agreement apply only to disputes ‘relating to the interpretation and performance of the contract itself.'”[43] In contrast, “forum-selection clauses covering disputes ‘relating to' a particular agreement apply to any disputes that reference the agreement or have some ‘logical or causal connection' to the agreement.”[44] The Circuit has clarified that “[t]he dispute need not grow out of the contract or require interpretation of the contract in order to relate to the contract.”[45]

         The forum-selection clause in the SSA applies to “any dispute arising out of or relating to this Agreement.”[46] Peakaso argues that Alaskan Brewing's breach of contract claim relates to the SSA and is thus subject to the forum-selection clause.[47] Peakaso maintains that the claims in the complaint are logically connected to the SSA:

Alaskan Brewing's claims that Peakaso failed to deliver professional services related to the software provided under the SSA constitutes such a dispute [arising under or relating to the SSA]. Additionally, any disputes related to the decision not to renew the SSA and discontinue Alaskan Brewing's access to the software would be directly related to the SSA.[48]

         In response, Alaskan Brewing argues that its claim relates only to the Implementation Agreement and that “the parties never agreed to litigate disputes regarding the implementation of [Crafted ERP] under the MSA, GBT, and SOW in Colorado.”[49] Alaskan Brewing's complaint does not reference the Subscription Agreement, and its breach of contract claim arises entirely out of the Implementation Agreement.[50] Moreover, as the brewery maintains, the Implementation Agreement and the Subscription Agreement both contain an integration clause providing that each is the complete and exclusive agreement of the parties relative to its subject matter.[51]

         Despite this, the Implementation Agreement and the Subscription Agreement are intimately related. They were executed on the same day as part of a single negotiation process.[52] And together, the Implementation and Subscription Agreements control the entirety of the parties' relationship to Crafted ERP; the former governing Peakaso's implementation of the software, the latter governing Alaskan Brewing's access to it.

         This relationship is reflected in Alaskan Brewing's claim. Although it stems from Peakaso's alleged breach of the SOW and the GBT, [53] Alaskan Brewing's claim contemplates access to Crafted ERP even if it does not reference the Subscription Agreement by name. Alaskan Brewing's ability to utilize the deliverables identified in the SOW depends on the brewery's continued access to the Crafted ERP software.[54] The dispute raised in Alaskan Brewing's complaint is therefore logically connected to the Subscription Agreement and the forum-selection clause contained therein.

         Alaskan Brewing maintains that a “forum[-]selection clause applies to a dispute where the resolution of the claims requires or relates to an interpretation of the contract containing the forum[-]selection clause.”[55] However, this characterization of the governing law is too narrow; as explained above, the Ninth Circuit recently clarified that a “dispute need not grow out of the contract or require interpretation of the contract in order to relate to the contract.”[56] Moreover, a June 10, 2019 letter that Peakaso received from Alaskan Brewing's attorney shows that interpretation of the Subscription Agreement may, in fact, become necessary in this case. The letter was sent in the context of settlement negotiations, [57] and responds to Peakaso's May 2, 2019 notice of non-renewal of both the SSA and MSA, which alleged that Alaskan Brewing had breached the Subscription Agreement.[58] The letter states:

Section 4.1 of the SSA (on which Peakaso's notice of non-renewal relies) requires Peakaso to provide “a general renewal reminder and a renewal Estimate/Order Form.” By changing all the documents into the name of Doozy, Peakaso repudiated the prior Peakaso Order and improperly substituted Doozy as the new service provider. As such, Peakaso's notice of termination is ineffective, and the SSA with Peakaso is automatically renewed for another year under its terms.[59]

         In the letter, Alaskan Brewing's attorney threatened to “file a motion on shortened time for an order to maintain the foregoing status quo” and bring “the issue [of the SSA's automatic renewal] . . . before the Court.”[60]

         The dispute raised in the complaint bears a logical connection to Alaskan Brewing's access to the Crafted ERP software, and correspondence between the parties shows that this litigation may require a court to interpret the Subscription Agreement. Accordingly, the Court finds that the dispute relates to the Subscription Agreement and that the forum-selection clause in the SSA applies.

         II. Enforceability of the Forum-Selection Clause

         “‘[O]nly under extraordinary circumstances unrelated to convenience of the parties' should a motion to enforce a forum-selection clause be denied.”[61] The Ninth Circuit has provided three examples of such extraordinary circumstances:

(1) the clause is invalid due to “fraud or overreaching, ” (2) “enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or judicial decision, ” or (3) “trial in the contractual forum will be so gravely difficult and inconvenient that [the litigant] will for all practical purposes be deprived of his day in court.”[62]

         Alaskan Brewing does not argue that any of these circumstances apply to this case.[63] Accordingly, the Court finds that the SSA's ...


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