Arcsona Inc. v. Appirio Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: February 7, 2023
• Docket: 22-15234
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS FEB 7 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

ARCSONA INC., No. 22-15234 Plaintiff - Appellant, D.C. No. 5:21-cv-05019-VKD v. MEMORANDUM* APPIRIO INC.; et al.,

Defendants-Appellees.

Appeal from the United States District Court for the Northern District of California, San Jose Virginia K. DeMarchi, Magistrate Judge, Presiding

Submitted December 8, 2022** San Francisco, California

Before: GRABER, WATFORD, Circuit Judges, and BATAILLON,*** District Judge.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). *** The Honorable Joseph F. Bataillon, United States District Judge for the District of Nebraska, sitting by designation. Plaintiff Arcsona Inc. appeals the dismissal of its complaint for failure to

state a claim. We affirm.

Arcsona and Defendant Appirio Inc. (through Co-defendant Daniel M.

Lascell) entered into an “Independent Contractor Agreement.” The agreement

committed Arcsona to provide contract workers to Appirio and to litigate disputes

in either state court in Santa Clara County or federal court in the Northern District

of California. Ultimately, Appirio engaged only two such contractors. Lascell

later admitted his distaste for Arcsona’s CEO and his use of Arcsona’s services

only as a last resort. Arcsona sued for promissory fraud in Santa Clara Superior

Court, and Appirio removed the case to federal court under diversity jurisdiction.

1. Forum-Selection Clause

Forum-selection clauses are presumed valid and enforceable, unless

unreasonable under the circumstances, and are governed by federal common law

and general contract principles, even in diversity. We interpret such a clause de

novo. Yei A. Sun v. Advanced China Healthcare, Inc., 901 F.3d 1081, 1086 (9th

Cir. 2018); Docksider, Ltd. v. Sea Tech., Ltd., 875 F.2d 762, 763 (9th Cir. 1989);

Hunt Wesson Foods, Inc. v. Supreme Oil Co., 817 F.2d 75, 77 (9th Cir. 1987).

The present clause provides:

Any suit . . . arising out of . . . this Agreement shall be commenced . . . in the Northern District of California or in state court in Santa Clara County, California, and each party irrevocably submits to the jurisdiction and venue of such courts. 2 Arcsona contends that Appirio waived its right of removal. We disagree.

An exclusive designation—“[v]enue . . . shall be deemed to be in Gloucester

County, Virginia”—implies waiver of removal. Docksider, Ltd., 875 F.2d at 763–

64. But a non-exclusive designation—“[t]he courts of California, County of

Orange, shall have jurisdiction”—does not. Hunt Wesson Foods, Inc., 817 F.2d at

76–77.

The apparent exclusivity here—“shall be commenced” and “irrevocably

submits”—comprises, in fact, a bargained-for choice of venue: either state or

federal. Nothing about removal offends this agreement. Consent, even

irrevocable, to one venue does not exclude another to which the parties have also

expressly consented. See id. at 77.

Neither of Arcsona’s counterarguments compels. First, forum-selection

clauses raise prudential, not jurisdictional concerns, and no one contests diversity

jurisdiction here. Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir.

2009); Kamm v. ITEX Corp., 568 F.3d 752, 754–56 (9th Cir. 2009); Manetti-

Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 513 (9th Cir. 1988). Second, no

ambiguity exists to construe against Appirio. Accordingly, the district court did

not err by denying remand.

3 2. Promissory Fraud

A complaint must allege sufficient facts, taken as true, to state a facially

plausible claim. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 570 (2007). Fraud pleadings require particularity, and we

review de novo dismissal for failure to state a claim. Khoja v. Orexigen

Therapeutics, Inc., 899 F.3d 988, 998, 1008 (9th Cir. 2018). We affirm the

dismissal of the complaint.

A promise to act implies an intent to perform, so a promise without such

intent implies misrepresentation. Lazar v. Superior Ct., 909 P.2d 981, 985 (Cal.

1996). Promissory fraud entails a lack of intent to perform a promise when made,

intent to deceive and induce reliance, deception and reliance, and resultant

damages. Fleet v. Bank of Am. N.A., 178 Cal. Rptr. 3d 18, 25 (Ct. App. 2014).

The operative complaint undermines any allegation that Appirio and Lascell

never intended to perform the underlying agreement, which merely committed

Arcsona to “provide professional services . . . [a]t the direction of Appirio” under

certain terms. Appirio could not, having agreed to consider Arcsona’s services,

categorically refuse them. See Locke v. Warner Bros., 66 Cal. Rptr. 2d 921, 925–

26 (Ct. App. 1997). Yet, as the complaint admits, Appirio: (1) engaged two

Arcsona contractors; and (2) avoided further engagement, “unless Appirio had no

choice.” In other words, the complaint contradicts the premise that Appirio

4 categorically refused Arcsona’s services: Appirio did use Arcsona’s services and

did contemplate further use, albeit as backup.

Arcsona fairly notes that Appirio could not have declined to request contract

workers in bad faith. While the implied covenant of good faith and fair dealing

limits discretion, it does not redraft a contract. The agreement did not specify the

circumstances in which Appirio would turn to Arcsona, the number of contractors

it might have needed, or the criteria for choosing. Instead of requiring minimum

engagement, it committed hiring decisions solely to Appirio. The agreement

demanded no more. See Carma Devs. (Cal.), Inc. v. Marathon Dev. Cal. Inc., 826

P.2d 710, 726–28 (Cal. 1992). Because we hold that the operative complaint failed

to state a claim, we need not decide whether Arcsona’s claim would be barred by

California’s economic loss rule.

AFFIRMED.