United States District Court, D. Alaska
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 ...