BD Performing Arts v. B.A.C. Musical Instruments, LLC

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 BD PERFORMING ARTS, Case No. 22-cv-02050-JSW

8 Plaintiff, ORDER DENYING MOTION TO 9 v. DISMISS FOR FORUM NON CONVENIENS 10 B.A.C. MUSICAL INSTRUMENTS, LLC, et al., Re: Dkt. No. 44 11 Defendants.

13 This matter comes before the Court upon consideration of the motion to dismiss filed by 14 Defendants B.A.C. Musical Instruments, LLC (“B.A.C.”) and RMI, LLC (“RMI”) (collectively 15 “Defendants”).1 The Court has considered the parties’ papers, relevant legal authority, and the 16 record in this case, and it HEREBY DENIES Defendants’ motion. 17 BACKGROUND AND ANALYSIS 18 Plaintiff, BD Performing Arts (“Plaintiff”), filed its initial complaint on March 30, 2022. 19 It alleges that by making and selling instruments bearing Plaintiff’s “System Blue” trademark, 20 Defendants violated, inter alia, the Lanham Act, the Tariff Act, and California’s Unfair 21 Competition Law. On April 4, 2022, Plaintiff filed a motion for a temporary restraining order. 22 The Court denied that motion, without prejudice, on April 25, 2022. The relevant facts underlying 23 this dispute are set forth in that Order, and the Court will not repeat them in detail here. (See Dkt. 24 No. 43, “Order” at 1:20-4:18.) 25 The facts relevant to the current motion pertain to a Distribution and Marketing Services 26

27 1 Defendant Tianjin Jinbao Musical Instruments Co., Ltd. (“Jinbao”), a Chinese corporation, 1 Agreement (“DMSA”) that Plaintiff’s former subsidiary, Azulo, Inc. (“Azulo”), entered into with 2 the Defendants. The DMSA contains a forum selection that provides that “[a]ny dispute regarding 3 this Agreement shall be brought in the District Court of Johnson County, Kansas, or the Federal 4 Court located in Kansas City, Kansas.” (Dkt. No. 44-1, Declaration of Greg Wohler (“Wohler 5 Decl., ¶ 3, Ex. A (DMSA, § 9.2.) 6 On that same date, Plaintiff entered into a separate agreement with Defendants entitled 7 “Commitment of Intellectual Property Rights Agreement” (“IP Agreement”). (Wohler Decl., ¶ 4, 8 Ex. B (IP Agreement).) The IP Agreement provides that Plaintiff “will benefit as a result of the” 9 DMSA. (Id. at 1.) It also contains forum selection clause that provides that “[a]ny dispute 10 regarding this Agreement shall be brought in the District Court of Johnson County, Kansas[.]” 11 (Id. § 2.) 12 Based on those clauses, Defendants moved to dismiss on the grounds of forum non 13 conveniens. On May 13, 2022, Plaintiff filed a motion for leave to file an amended complaint 14 (“FAC”). The Court granted that motion on June 17, 2022 and took Defendants’ motion to 15 dismiss under submission stating it would rely on the allegations in the FAC to resolve motion. 16 The Court will address additional facts as necessary in its analysis. 17 ANALYSIS 18 The forum selection clauses at issue provide for both federal and state fora. “Forum 19 selection clauses are prima facie valid, and are enforceable absent a strong showing by the party 20 opposing the clause ‘that enforcement would be unreasonable or unjust, or that the clause [is] 21 invalid for such reasons as fraud or overreaching.’” Manetti-Farrow, Inc. v. Gucci America, Inc., 22 858 F.2d 509, 514 (9th Cir. 1988) (emphasis and brackets in original) (citing M/S Bremen v. 23 Zapata Off-Shore Co., 407 U.S. 1, 15 (1972)). 24 In general, a motion to transfer venue is the appropriate vehicle to enforce “forum- 25 selection clauses that point to a particular federal district,” and “the appropriate way to enforce a 26 forum-selection clause pointing to a state or foreign forum is through the doctrine of forum non 27 conveniens.” Atl. Marine Const. Co. v. U.S. Dist. Ct. for the W. Dist. of Texas, 571 U.S. 49, 59-60 1 (N.D. Cal. Apr. 12, 2021). Under either approach, “courts should evaluate a forum-selection 2 clause pointing to a nonfederal forum in the same way that they evaluate a forum-selection clause 3 pointing to a federal forum.” Atl. Marine, 571 U.S. at 61.2 4 In contrast to the balancing test used under Section 1404(a), which considers public and 5 private factors, when a forum selection clause is involved, a “plaintiff’s choice of forum merits no 6 weight” and a district court may consider arguments about public-interest factors only.” Id. at 63- 7 64. Thus, if the forum selection clauses are enforceable, the Court considers “the administrative 8 difficulties flowing from court congestion; the local interest in having localized controversies 9 decided at home; [and] the interest in having the trial of a diversity case in a forum that is at home 10 with the law.” Id. at 62 n.6. 11 Plaintiff argues the forum selection clause in the DMSA cannot be enforced because it is 12 not a party to that agreement and argues that neither clause applies to the amended claims in this 13 dispute, which only relate to the manufacture and sale of instruments made after Plaintiff’s 14 agreement with Jinbao expired on December 31, 2020. Because the Court concludes the latter 15 argument is dispositive, it does not address whether Plaintiff should be bound by the clause in the 16 DMSA. 17 The Court is not persuaded by Plaintiff’s argument that the term “regarding” should be 18 construed narrowly. See, e.g., Litton Fin. Printing Div., a Div. of Litton Bus. Sys. v. N.L.R.B., 501 19 U.S. 190, 193-94 (1991) (describing an arbitration agreement using the phrase “[d]ifferences that 20 may arise between the parties hereto regarding this Agreement and any alleged violations of the 21 Agreement” as “broad”); see also Radcliff v. San Diego Gas & Elec. Co., No. 20-cv-01555-H- 22 MSB, 2020 WL 6395677, at *3 (S.D. Cal. Nov. 2, 2020) (citing cases). When a forum selection 23 clause is drafted broadly, it “reaches every dispute between the parties having a significant 24 relationship to the contract and all disputes having their origin or genesis in the contract” and the 25

26 2 Federal law generally governs the interpretation of forum selection clauses. Manetti- Farrow, 858 F.2d at 513. Although the forum selection clauses also contain choice of law 27 provisions, the parties agree that there are no material differences between Kansas law and federal 1 allegations “need only touch on matters covered by the contract.” Simula, Inc. v. Autoliv, Inc., 175 2 || F.3d 716, 721 (9th Cir. 1999). 3 Although the Court is not persuaded by Plaintiff's argument that the clauses should be 4 || construed narrowly, the Court concludes the amendments demonstrate that the conduct in question 5 is not sufficiently connected with the DMSA and the IP Agreement to conclude that the defenses 6 || will “touch upon” those agreements. See, e.g., Zaitzeff v. Peregrine Fin. Grp., No. CV 08-2874- 7 || MMM (JWJx), 2008 WL 11408422, at *8 (C.D. Cal. June 23, 2008) (“[A] claim may fall within 8 || the scope of a forum selection clause even if it is related only to a defense[.]”) (citing John Wyeth 9 || & Bro. Ltd. v. Cigna Int’l Corp., 119 F.3d 1070, 1076 (3rd Cir. 1997)). 10 Accordingly, the Court DENIES Defendants’ motion to dismiss. 1] IT ISSO ORDERED. □□ = 12 || Dated: September 7, 2022 / | / Nts ¥ 13 \ j Ht / 14 JEFFREY) S/ WHIT Unjted Stes Distt Judge /

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