Big League Analysis, LLC v. Office of the Comm’r of Baseball, 2016 NCBC 66.
STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION COUNTY OF WAKE 15 CVS 16800
BIG LEAGUE ANALYSIS, LLC, a North ) Carolina Limited Liability Company, ) Plaintiff, ) ) v. ) OPINION AND ORDER ) THE OFFICE OF THE COMMISSIONER OF ) BASEBALL, an Unincorporated Association ) d/b/a Major League Baseball; UNITED ) STATES BASEBALL FEDERATION, INC., a ) Michigan Corporation; and NOAH GARDNER, ) an Individual, ) Defendants. )
THIS CAUSE, designated a mandatory complex business case by Order of the
Chief Justice of the North Carolina Supreme Court, pursuant to N.C. Gen. Stat. §7A-
45.4(b) (hereinafter, references to the North Carolina General Statutes will be to
“G.S.”), and assigned to the undersigned Special Superior Court Judge for Complex
Business Cases, comes before the Court upon Defendants' Consolidated Motion to
Dismiss pursuant to Rules 12(b)(2) and 12(b)(3) of the North Carolina Rules of Civil
Procedure (“Rule(s)”), or, Alternatively, to Stay the Action pursuant to G.S. § 1-
75.12(a) ("Motion to Dismiss"). On May 18, 2016, the Court held a hearing on the
Motion to Dismiss.
THE COURT, after considering the Motion to Dismiss, the briefs in support of
and in opposition to the Motion to Dismiss, the arguments of counsel, and other
appropriate matters of record, concludes that the Motion to Dismiss should be
GRANTED for the reasons set forth below. Manning, Fulton & Skinner, PA by Michael T. Medford, Judson A. Welborn, and Natalie M. Rice for Plaintiff.
Brooks, Pierce, McLendon, Humphrey & Leonard, LLP by James T. Williams, Jr. and Craig D. Schauer for Defendants.
McGuire, Judge.
FACTUAL AND PROCEDURAL BACKGROUND
1. Plaintiff Big League Analysis, LLC (Plaintiff or “BLA”) is a limited
liability company organized under the laws of North Carolina with its headquarters
in Wake County, North Carolina. Tyson Hanish (“Hanish”) is the manager and CEO
of BLA.
2. The Office of the Commissioner of Baseball (“Commissioner’s Office”) is
an unincorporated association whose members are the thirty Major League Baseball
Clubs. The Commissioner’s Office is responsible for the administrative and
operational matters relating to Major League Baseball, and is headquartered in New
York, New York.
3. The United States Baseball Federation, Inc. (“USA Baseball”) is a
corporation created under the laws of Michigan with its headquarters in Durham,
North Carolina. USA Baseball is the national governing body for amateur baseball.
Nearly every major national amateur baseball organization in America is a USA
Baseball national member organization.1
4. Major League Baseball Advanced Media, L.P. ("MLBAM") is the
internet and interactive media company of Major League Baseball, and is
1 USA BASEBALL, http://www.usabaseball.com/about/ (last visited Aug. 25, 2016). headquartered in New York, New York. Despite its central role in the transactions
and conduct alleged in this lawsuit, Plaintiff has not made MLBAM a defendant in
this action.
5. Noah Garden (“Garden”) was the Executive Vice President of Business
for MLBAM until approximately March 2015, at which time he became Vice
President of Business for the Commissioner’s Office. Garden is a resident of New
Jersey, and has never lived in North Carolina.
6. On June 1, 2012, Plaintiff and MLBAM entered into a written contract
(“Development Agreement”).2 Neither the Commissioner’s Office nor USA Baseball
were parties to the Development Agreement. The Development Agreement provided
the terms under which Plaintiff would develop and operate the MLB.com Academy,
which would be featured and marketed on the MLB.com website.3 The Complaint
describes the MLB.com Academy as “a digital baseball video analysis product and a
membership portal in which users would be able to login and upload hitting and
pitching videos, and BLA would provide to the user images, videos, drills, and
instructional notes.”4
7. Under the Development Agreement, MLBAM granted Plaintiff a non-
exclusive license to “use, copy, reproduce and distribute” certain trademarks and
trade names associated with Major League Baseball in connection with the MLB.com
2 Defendants filed a redacted copy of the Development Agreement with the Court on April 6,
2016. 3 Verified Complaint (“Ver. Compl.”) ¶ 9. 4 Id. at ¶ 10. Academy.5 The Development Agreement prohibited MLBAM, with certain
exceptions, from creating other products or services competitive with or substantially
similar to the online instructional products and services provided by Plaintiff. The
Development Agreement also restricted MLBAM from disclosing Plaintiff’s
“Confidential Information,” but expressly authorized disclosure of such information
by MLBAM to “any MLB Entity” and their employees “who need to know for business
purposes related to this Agreement,” subject to such party’s agreement not to disclose
the Confidential Information.6 The Development Agreement defined Confidential
Information, in relevant part, as “trade secrets of each Party, any information
relating to each Party’s product plans, designs, ideas, concepts, costs, prices, finances,
marketing plans, business opportunities, personnel, research, development or know-
how and any other technical or business information of each Party.”7
8. Finally, the Development Agreement contained a forum selection clause
which provided as follows:
The validity, construction, and enforceability of this Agreement shall be governed by the laws of the State of New York applicable to contracts entered into and performed entirely within that State. The United States District Court for the Southern District of New York and the Supreme Court of the State of New York, sitting in New York County, shall be the exclusive jurisdictions and venues for any dispute arising directly or indirectly from the relationship created or the transactions contemplated by this Agreement. Each of the Parties consents to the jurisdiction and venue of any such court and waives any argument that any such court does not have jurisdiction over such Party or such dispute or that venue in any such forum is not appropriate or convenient.8
5 Development Agreement 3–4. 6 Development Agreement 12–13. 7 Id. at 11. 8 Id. at 23. 9. In reliance on the Development Agreement, Plaintiff located investors
and raised capital to finance development of the MLB.com Academy.
10. In early 2013, Garden notified Plaintiff that the Commissioner's Office9
had complained about BLA's use of the name “MLB.com Academy” in marketing its
services, but would be amenable to BLA's use of the name “MLB.com Digital
Academy.” Plaintiff alleges that the Commissioner’s Office was not a party to the
Development Agreement and did not have “authority to interfere” with the
Agreement.10 Despite its contention that the use of “MLB.com Academy” in
marketing its services was pre-approved, in March 2013 Plaintiff agreed to rebrand
to the MLB.com Digital Academy name.
11. In July 2013, MLBAM notified BLA that the Commissioner's Office had
complained about BLA’s plans to market the MLB.com Digital Academy at the 2013
College World Series (“CWS”). Plaintiff alleges that “BLA had the right to use the
approved MLB.com Academy word mark . . . and was not required to seek the [ ]
9 Plaintiff alleges that “MLBAM and the MLB Commissioner’s Office are separate and distinct entities and not otherwise related.” Ver. Compl. ¶ 82. Defendants have filed affidavits that state the Commissioner’s Office “is an unincorporated association of the 30 [Major League Baseball] Clubs,” Garden Aff.¶ 9, and “is an unincorporated association whose members are the 30 Major League Baseball Clubs.” Brumm Aff. ¶3. The Court notes that the question of whether the Court can consider information outside the pleadings in ruling on a motion under Rule 12(b)(3) is somewhat unclear. Compare Chow v. Crowell, 15 N.C. App. 733, 736, 190 S.E.2d 647, 649 (1972) (reversing transfer of venue where prevailing party filed only an unverified motion in the face of evidence filed by the opposing party) with McCrary Stone Serv., Inc. v. Lyalls, 77 N.C. App. 796, 799, 336 S.E.2d 103, 105 (1985) (limiting consideration of the propriety of the selected venue to the allegations contained in plaintiff's complaint). The Court's reference to affidavits presented by Defendants in this case is primarily to provide background, and the information provided in these affidavits is not necessary to the Court's ultimate conclusion that the Motion to Dismiss should be granted based on equitable estoppel. 10 Id. Commissioner’s Office’s approval. . .” and that the Commissioner’s Office
“intentionally interfered with BLA’s [ ] marketing during the CWS. . .”11
12. In September 2013, Plaintiff began developing the “MLB.com Digital
Academy Coaches Certification Course” as part of the services to be offered under the
Development Agreement.12 Plaintiff discussed with USA Baseball the possibility of a
partnership between Plaintiff and USA Baseball on this course. In March 2014,
MLBAM gave BLA approval to develop MLB.com Digital Academy Coaches
Certification Course. USA Baseball had not yet committed to a partnership, so
Plaintiff decided to proceed in developing the MLB.com Digital Academy Coaches
Certification Course without USA Baseball.
13. In July 2014, Plaintiff launched myPitch® on MLB.com. Unbeknownst
to Plaintiff at the time, MLBAM, the Commissioner’s Office, and USA Baseball were
simultaneously working together to develop Pitch Smart®, a competing pitching
safety website.13 Plaintiff alleges the development of Pitch Smart® was a violation
of the exclusive rights to develop instructional content that it had been granted by
the Development Agreement.14
14. Following the launch of the MLB.com Digital Academy Coaches
Certification Course, the dispute between Plaintiff and the Commissioner's Office
over Plaintiff's right to use various MLB related marks continued. In September
2014, the Commissioner’s Office notified Plaintiff of its demand that the certification
11 Id. at ¶ 21. 12 Id. at ¶¶ 23–24. 13 Id. at ¶ 34. 14 Id. program be marketed solely as the “Big League Analysis Coaches Certification
Course,” without reference to MLB.com. Plaintiff alleges that this notification
occurred six months after MLBAM granted Plaintiff permission to develop the
Coaches course as originally named.
15. In connection with the development of the MLB.com Digital Academy
Coaches Certification Course, Plaintiff sought the involvement of Dr. Glenn Fleisig,
a sports medicine expert with the American Sports Medicine Institute ("ASMI").
According to the Complaint, Dr. Fleisig affirmed his and ASMI's support for the
program, but noted that he wanted to receive clearance from MLBAM and the
Commissioner's Office for ASMI to participate before committing to participate in the
Coaches Certification Course. After further negotiation and discussion, MLBAM
decided to move forward with the MLB.com Digital Academy Coaches Certification
Course, and Garden instructed Plaintiff to submit a transcript and full scope of the
Coaches Certification Course to the Commissioner's Office for approval. Plaintiff
alleges that the Commissioner’s Office interfered with the Development Agreement
by requiring review of the course.
16. The day after MLBAM requested that Plaintiff submit the Coaches
Certification Course to the Commissioner's Office, the Commissioner's Office and
USA Baseball announced the launch of the Pitch Smart® website. Pitch Smart® was
“substantially similar to” and “in competition with” Plaintiff’s myPitch® product.15
15 Id. at ¶¶ 45, 46. 17. Plaintiff alleges that in December 2014, Garden moved from MLBAM to
a position with the Commissioner’s Office as Executive Vice President of Business,
but that this information was not provided to Plaintiff.16
18. In December 2014, Plaintiff provided to Garden and MLBAM “a binder
containing the details of BLA’s MLB.com Digital Academy Coaches Certification
Course for MLBAM’s approval.”17 The material provided by Plaintiff “included
creative renderings, home page examples, instructional courses, mobile navigation,
expert information and the course contents outline.”18 MLBAM represented that it
could not approve the course without approval by the Commissioner's Office, and
requested that Plaintiff upload and digitally deliver the entire program for review.
Plaintiff alleges, on information and belief, that MLBAM shared the uploaded digital
materials with the Commissioner's Office.
19. In late January 2015, MLBAM informed Plaintiff that the
Commissioner's Office approved the launch of the MLB.com Digital Academy Coaches
Certification Course without any changes. Hanish emailed Dr. Fleisig to notify him
that Plaintiff had approval to proceed with developing the MLB.com Digital Academy
Certification Course. In response, Dr. Fleisig indicated that he needed the approval
of the Commissioner’s Office to collaborate with Plaintiff based on a previous
relationship involving, among other projects, the Pitch Smart® website. In the
16 Garden has submitted an affidavit stating that he assumed his position with the Commissioner’s Office in or around March 2015. Garden Aff. ¶ 3. Garden contends that despite the change, he maintained all of the duties of his former role with MLBAM. Id. at ¶ 5. 17 Ver. Compl. ¶ 49. 18 Id. response email, Dr. Fleisig copied Chris Marinak, an official in the Commissioner’s
Office. Marinak then emailed Hanish, stating that the Commissioner's Office was
developing its own coach’s certification program with Dr. Fleisig and ASMI. Plaintiff
alleges that Marinak’s response was when Plaintiff “first discovered that the [ ]
Commissioner’s Office had been secretly working to develop its own coaches
certification course using BLA’s own advisors, concepts, course content and material
that it had obtained from MLBAM.”19
20. Notwithstanding the Commissioner's Office and USA Baseball's
development of a competing program, in March 2015, Plaintiff launched its MLB.com
Digital Academy Coaches Certification Course. Shortly thereafter, USA Baseball sent
an email to its national member organizations stating that Plaintiff was a licensee of
MLBAM and that any correspondence or content sharing with Plaintiff was not
connected to or endorsed by USA Baseball or the Commissioner's Office, and was not
related to the coaching certification program sponsored by USA Baseball.20 After
learning of this email, Hanish attempted to negotiate a resolution with the
Commissioner's Office and USA Baseball, but negotiations ultimately broke down.
In June 2015, the Commissioner’s Office informed Plaintiff that the Commissioner's
Office was no longer interested in pursuing an amicable resolution. One week later,
the Commissioner's Office and USA Baseball launched playball.org®, an educational
website in competition with Plaintiff’s products. Plaintiff alleges that this program
19 Id. at ¶ 61. Plaintiff alleges that USA Baseball was working with the Commissioner’s Office on its coaches certification course. Id. at ¶ 63. 20 Id. at ¶ 72. specifically contains many of the same features and content contained in Plaintiff's
program and for which it charges a subscription fee. Plaintiff alleges that “USA
Baseball and the [ ] Commissioner’s Office wrongfully misappropriated BLA’s
Confidential Information to USA Baseball’s and the [ ] Commissioner’s Office’s
advantage and in violation of BLA’s rights under the Agreement.”21
21. On December 21, 2015, Plaintiff filed its Verified Complaint alleging
that Defendants repeatedly interfered with Plaintiff's rights under the Development
Agreement, and misappropriated and misused Plaintiff's Confidential Information to
create competing baseball instructional products in violation of its rights under the
Development Agreement. The Verified Complaint asserts the following claims for
relief: tortious interference with contract against all Defendants; fraud and negligent
misrepresentation against the Commissioner’s Office and Garden; conversion against
all Defendants; civil conspiracy against all Defendants; misappropriation of trade
secrets against all Defendants; unfair and deceptive trade practices against all
Defendants; punitive damages against all Defendants; and permanent injunction
against all Defendants.
22. On February 17, 2016, MLBAM initiated a declaratory judgment action
against BLA in the Supreme Court of New York, County of New York, specifically
requesting a declaration that MLBAM has not breached the Development Agreement
and has not improperly disseminated or misappropriated Plaintiff’s Confidential
Information or trade secrets.22
21 Id. at ¶ 79. 22 Garden Aff. ¶ 29, Exh. C. 23. On February 19, 2016, Defendants filed the Motion to Dismiss, seeking
dismissal of this action based on improper venue pursuant to the forum selection
clause in the Development Agreement. Defendants also seek dismissal of the claims
against Garden on the grounds of lack of personal jurisdiction. Alternatively,
Defendants request that this action be stayed in favor of the action for declaratory
judgment currently pending in New York. The Motion to Dismiss has been fully
briefed and a hearing has been held. The Motion to Dismiss is therefore ripe for
determination.
DISCUSSION
A. Defendants’ Contentions.
24. In moving to dismiss the Verified Complaint, Defendants contend as
follows:
(a) Defendants should be permitted to enforce the forum selection clause in the
Development Agreement and the claims should be dismissed as to all
Defendants on the grounds of improper venue;
(b) The Court lacks personal jurisdiction over Garden because he has insufficient
minimum contacts with North Carolina to satisfy due process requirements;
and,
(c) Even if the Court does not dismiss the Complaint, the Court should stay this
action in favor of the lawsuit filed by MLBAM in New York.
B. Plaintiff’s Contentions.
25. In opposing the Motion to Dismiss, Plaintiff contends as follows: (a) Defendants cannot enforce the forum selection clause because they are neither
signatories/parties to the Development Agreement, nor corporate affiliates of
MLBAM.
(b) USA Baseball cannot enforce the forum selection clause on the basis of
equitable estoppel because its claims do not arise solely from the rights and
obligations created by the Development Agreement.
(c) Garden has sufficient contacts with North Carolina because he knowingly
dealt with Plaintiff and Hanish, and he sent several emails to Hanish in North
Carolina.
(d) This action should not be stayed.
C. Motion to Dismiss for Improper Venue.
26. A challenge to venue based on a forum selection agreement is properly
raised by motion under Rule 12(b)(3). Lendingtree v. Anderson, 228 N.C. App. 403,
408, 747 S.E.2d 292, 297 (2013). Rules 12(b)(3) and 12(h), read in conjunction, require
that a party raise an objection of improper venue in either its answer or in a pre-
answer motion pursuant to Rule 12, whichever the party files first. Id. at 409; Miller
v. Miller, 38 N.C. App. 95, 97, 247 S.E.2d 278, 279 (1978) (Rule 12(b)(3) "requires that
the motion be made at or before the time of filing of an answer."). Defendants have
properly challenged venue by raising the issue in a pre-answer motion pursuant to
Rule 12(b)(3).
27. The general rule is that mandatory forum selection clauses are enforced
in North Carolina. Lendingtree, 228 N.C. App. at 408, 747 S.E.2d at 297. “[M]andatory forum selection clauses recognized by our appellate courts have
contained words such as ‘exclusive’ or ‘sole’ or ‘only’ which indicate that the
contracting parties intended to make jurisdiction exclusive.” Printing Servs. of
Greensboro, Inc. v. Am. Capital Group, Inc., 180 N.C. App. 70, 74, 637 S.E.2d 230,
232 (2006) (citation omitted). Here, the forum selection clause clearly provides that
the specified New York courts shall be the “exclusive jurisdictions and venues” for
certain disputes. The Court therefore concludes that the forum selection clause in
the Development Agreement is mandatory.
28. Once it is established that a forum selection clause is mandatory, a party
“seeking to avoid enforcement of a forum selection clause carries a heavy burden and
must demonstrate that the clause was the product of fraud or unequal bargaining
power or that enforcement of the clause would be unfair or unreasonable.” Perkins v.
CCH Computax, Inc., 333 N.C. 140, 146, 423 S.E.2d 780, 784 (1992), superseded in
part by statute, N.C. Gen. Stat. § 22B-3 (2016).23 Plaintiff does not contend that it
was fraudulently induced to enter into the forum selection agreement nor
that MLBAM secured the agreement due to its greater bargaining power. Instead,
Plaintiff argues that Defendants should not be able to enforce the forum selection
clause because they did not sign and were not parties to the Development Agreement,
nor are they corporate affiliates of MLBAM. Defendants argue that because
23 Perkins has been superseded in part by statute. See N.C. Gen. Stat. § 22B- 3 (2007); Szymczyk v. Signs Now Corp., 168 N.C. App. 182, 186 n.2, 606 S.E.2d 728, 732 n.2 (2005). The statute provides that (with limited exceptions) forum selection clauses contained in contracts entered into in North Carolina are void and unenforceable. N.C. Gen. Stat. § 22B-3. In this case, however, Plaintiff does not contend that the Development Agreement was entered into in North Carolina, or that § 22B-3 is otherwise applicable to this action. Plaintiff’s claims against them arise from and rely on the terms of the Development
Agreement, and are intertwined with the conduct of MLBAM, equitable estoppel
principles warrant allowing Defendants to enforce the forum selection clause in this
action.
D. Enforcement of the Forum Selection Clause by Non-Parties.
29. Plaintiff’s argument that Defendants cannot enforce a forum selection
clause because they are not signatories or parties to the Development Agreement
must fail. It is well settled that, in appropriate circumstances, a nonsignatory can
enforce a forum selection clause contained in a contract against a signatory to that
contract. Speedway Motorsports v. Bronwen Energy Trading, 2009 NCBC LEXIS 17,
at *15 (N.C. Super. Ct. Feb. 18, 2009) (“the Court concludes that the common law
principles applied in North Carolina to extend the reach of arbitration agreements
may also be applied to forum selection clauses” to allow a nonsignatory to enforce the
forum selection clause); Adams v. Raintree Vacation Exch., LLC, 702 F.3d 436, 440
(7th Cir. 2012) (interpreting reach of forum selection clause by analogizing to “the
parallel situation of an arbitration clause” and holding nonsignatory could enforce
forum selection); Brantley v. Republic Mortgage Ins., Co., 424 F.3d 392, 395–96 (4th
Cir. 2005) (holding nonsignatory could enforce arbitration clause against party to
contract); Ellen v. A.C. Schultes of Md., Inc., 172 N.C. App. 317, 320, 615 S.E.2d 729,
732 (2005) (“well-established common law principles dictate that in an appropriate
case a nonsignatory can enforce, or be bound by, an arbitration provision within a
contract executed by other parties” (citing Washington Square Sec., Inc. v. Aune, 385 F.3d 432, 435 (4th Cir. 2004))). Courts have noted that foreclosing non-parties from
enforcing these provisions would render them essentially meaningless by allowing a
signatory to evade the contractual forum selection clause by artful pleading and the
omission of key parties. See Brantley, 424 F.3d at 396; Adams, 702 F.3d at 440.
30. Similarly, Plaintiff’s contention that Defendants cannot enforce the
forum selection clause because they are not corporate affiliates of MLBAM24 also
fails. While corporate affiliation has been recognized as a basis for allowing a third-
party to a contract to enforce a forum selection (or arbitration) clause, the case law
does not support the position that corporate affiliation between the third-party
seeking to enforce a forum selection clause and a party to the contract is required in
order to enforce such a clause. Adams, 702 F.3d at 439–43 (finding that one third-
party could enforce forum selection agreement because it was corporate affiliate of
signatory to the contract and another third-party could enforce on the basis of an
alleged conspiracy between the third-party and a signatory to defraud the plaintiffs);
Brantley, 424 F.3d at 396–97 (recognizing that unaffiliated defendant third-party
could enforce arbitration agreement under theory of equitable estoppel but
concluding that defendant failed to satisfy elements for equitable estoppel); Ellen,
172 N.C. App. at 320–23, 615 S.E.2d at 732–33 (same); Speedway Motorsports, 2009
NCBC LEXIS 17 at *14–16 (Third-party to contract could enforce forum selection
clause against signatory on equitable estoppel grounds even though it was not a
corporate affiliate of signatory). Accordingly, the Court concludes that Defendants
24 Pl.’s Br. Opp. to Mot. to Dismiss 5–8. may be able to enforce the forum selection clause in the Development Agreement
against Plaintiff even if they are not corporate affiliates of MLBAM.
31. The Fourth Circuit Court of Appeals has held that under the equitable
estoppel analysis, allowing enforcement of a forum selection clause by a nonsignatory
is appropriate in two circumstances. “First, equitable estoppel applies when the
signatory to a written agreement . . . must ‘rely on the terms of the written agreement
in asserting [its] claims against the nonsignatory.’” Brantley, 424 F.3d at 395–96
(citation omitted). This arises where “each of a signatory's claims against a
nonsignatory ‘makes reference to’ or presumes the existence of the written
agreement, the signatory's claims ‘arise[] out of and relate[] directly to the [written]
agreement . . .’” Id. at 396. In the second circumstance, enforcement by a nonsignatory
is appropriate “when the signatory . . . raises allegations of . . . substantially
interdependent and concerted misconduct by both the nonsignatory and one or more
of the signatories to the contract.” Id. This Court has cited the Brantley standard
with approval while also recognizing a very similar, but slightly different, standard
originating in the Eleventh Circuit. Speedway Motorsports, 2009 NCBC LEXIS 17 at
*14–15 (“[A] nonsignatory to a contract may, on grounds of equitable estoppel, invoke
an arbitration provision contained therein where there is a ‘close relationship
between the entities involved’ and where the claims against the nonsignatory are
‘intimately founded in and intertwined with the underlying contract obligations’”
(citing Sunkist Soft Drinks v. Sunkist Growers, 10 F.3d 753, 757 (11th Cir. 1993))). i. Commissioner’s Office and Garden.
32. Applying these principals here, it is clear that the Commissioner’s
Office and Garden should be permitted to enforce the forum selection clause against
Plaintiff. Indeed, Plaintiff devotes little of its argument in its brief to contending
otherwise.25 First, all of the allegations regarding Garden involve his statements and
conduct in his capacity as an official of MLBAM or the Commissioner’s Office, and
the Court concludes that Garden may enforce the forum selection agreement to the
same extent as it can be enforced by MLBAM or the Commissioner’s Office. Ellison v.
Alexander, 207 N.C. App. 401, 412 -13, 700 S.E.2d 102, 111 (2010) (finding that an
individual nonsignatory may enforce arbitration agreement where “his alleged
liability arises from his actions as an agent of the corporate signatory to the
arbitration agreement”).
33. Plaintiff’s claims against the Commissioner’s Office and Garden could
not be more closely tied to and intertwined with the rights and obligations created by
the Development Agreement. The claim for tortious interference against the
Commissioner’s Office and Garden depends on a finding that they induced MLBAM
to breach the Development Agreement. Griffith v. Glen Wood Co., 184 N.C. App. 206,
212, 646 S.E.2d 550, 555 (2007) (“An essential element of a claim for tortious
interference with a contract is that ‘the defendant intentionally induces the third
person not to perform the contract.’”); Phillips v. Pitt Cty. Mem'l Hosp., Inc., 222 N.C.
25 Pl.'s Br. Opp. Mot. Dismiss 16–17. App. 511, 521, 731 S.E.2d 462, 469 (2012) (noting that tortious interference requires
the defendant to actually induce nonperformance of the contract).
34. Plaintiff’s fraud and negligent misrepresentation claims against the
Commissioner’s Office and Garden contain express allegations regarding Plaintiff’s
rights under the Development Agreement, which involve the terms “Licensed
Properties” and “Confidential Information” as defined by the Development
Agreement.26 Similarly, the claims against the Commissioner’s Office and Garden
for conversion and misappropriation of trade secrets arise from the confidentiality
obligations created by the Development Agreement and will require determination of
MLBAM’s rights to share and the Commissioner’s Office’s right to use Confidential
Information. Finally, Plaintiff’s claims for unfair and deceptive trade practices and
conspiracy are based upon the same alleged unlawful conduct. Accordingly, the Court
concludes that Plaintiff’s allegations against the Commissioner’s Office and Garden
arise out of and directly relate to the Development Agreement.
35. The Court also concludes that there is a “close relationship” between
MLBAM, on the one hand, and the Commissioner’s Office and Garden, on the other,
that supports permitting the Commissioner’s Office and Garden to enforce the forum
selection clause against Plaintiff. Although Plaintiff alleges that “MLBAM and the [
] Commissioner’s Office are separate and distinct entities and are not otherwise
related,”27 this allegation is belied by the Development Agreement, which is replete
with references to Major League Baseball and the Commissioner’s Office as entities
26 Ver. Compl. ¶¶ 92, 100, 101. 27 Id. at ¶ 82. related to and affiliated with MLBAM. The Development Agreement makes it clear
the MLBAM is closely affiliated with the Commissioner’s office, a fact that is verified
by Defendants’ evidence regarding the relationship between Major League Baseball,
the Commissioner’s Office, and MLBAM.28
36. Ultimately, the Court concludes that it is “hard-pressed to imagine a
closer relationship between parties and alleged wrongs that would justify extending
the reach of a mandatory forum selection clause so as to require litigation of all claims
related to the dispute in one venue.” Speedway Motorsports, 2009 NCBC LEXIS 17
at *18. Defendants’ Motion to Dismiss the Office of the Commissioner of Baseball
and Noah Garden pursuant to Rule 12(b)(3) for improper venue is GRANTED without
prejudice.
ii. USA Baseball.
37. Plaintiff devotes most of its efforts to arguing that USA Baseball cannot
enforce the forum selection clause. Like the Commissioner’s Office, USA Baseball is
neither a party nor a signatory to the Development Agreement. USA Baseball,
however, is differently situated from the Commissioner’s Office. First, USA Baseball
is not a corporate affiliate of MLBAM, the Commissioner’s Office, or Major League
Baseball. Second, unlike the Commissioner’s Office, the Development Agreement
does not grant any specific rights to, or impose any obligations upon, USA Baseball.29
28 Garden Aff. ¶¶ 8–9; Brumm Aff. ¶¶ 3–5. 29 From the Court’s review, USA Baseball is referred to only once in the Development Agreement. The Development Agreement provides that MLBAM may maintain certain relationships with USA Baseball despite the rights granted to Plaintiff under the Development Agreement. Development Agreement 4–5. The allegations do not support the conclusion that there is a “close relationship”
between USA Baseball and MLBAM. Speedway Motorsports, 2009 NCBC LEXIS 17
at *14–15. The Court, however, does not believe that enforcement of a forum selection
clause on the basis of equitable estoppel is limited solely to third-parties who are in
a close relationship with a signatory. In Speedway Motorsports, this Court cited with
approval the equitable estoppel principals recognized by the Fourth Circuit in
Brantley, neither of which required a close relationship between the third-party
seeking to enforce the clause and a signatory.
38. Plaintiff argues that USA Baseball should not be able to enforce the
forum selection clause because Plaintiff’s claims against USA Baseball “are not
dependent on a finding that MLBAM, as a signatory, breached the Development
Agreement.”30 With regard to its claim for tortious interference with contract,
Plaintiff contends that it is not required to prove that USA Baseball induced MLBAM
to breach the Development Agreement, but only that USA Baseball made Plaintiff’s
“performance under the Development Agreement more expensive and burdensome.”31
Conduct that made Plaintiff’s performance more burdensome, however, would still
have to interfere with MLBAM’s performance of the Development Agreement. In
North Carolina, to establish a claim for interference with contract, a plaintiff must
show that the defendant induced a third-party “not to perform the contract.” Phillips,
222 N.C. App. at 521, 731 S.E.2d at 469; Griffith, 184 N.C. App. at 212, 646 S.E.2d at
555; cf. Lexington Homes, Inc. v. W.E. Tyson Builders, Inc., 75 N.C. App. 404, 410–
30 Pl.'s Br. Opp. Mot. Dismiss 13 (emphasis in original). 31 Id. 14-15. 11, 331 S.E.2d 318, 321–22 (1985) (holding that inducement not to perform contract
was a required element of claim, but concluding that party alleging interference did
not have to prove “breach,” but only that third-party “wrongfully interfered with [the
party]'s rights under the contract” (emphasis in original)). Accordingly, whether or
not Plaintiff must show an actual “breach,” the tortious interference with contract
claims will require Plaintiff to establish that USA Baseball induced the non-
performance of, or interfered with rights created by, the Development Agreement. In
either case, the claim derives from and is dependent on Plaintiff’s rights under the
Development Agreement.
39. Plaintiff’s contention that its claims for conversion, misappropriation of
trade secrets, and unfair trade practices “do not depend on whether MLBAM
breached the Development Agreement” 32 also are unpersuasive. Each of the claims
arise directly out of the exclusive rights Plaintiff claims to have under the
Development Agreement to develop instructional digital and video content aimed at
amateur baseball players, the confidentiality obligations imposed by the Agreement,
and Defendants’ alleged interference with and violations of those rights. The forum
selection clause here covers “any dispute arising directly or indirectly from the
relationship created or the transactions contemplated by” the Development
Agreement.33 As this Court concluded in enforcing a similar, but more narrow, forum
selection clause against a signatory “[t]his broad language easily encompasses [the]
tort claims because they have their genesis in the … Agreements and related [ ]
32 Pl.'s Br. Opp. Mot. Dismiss 14. 33 Development Agreement 23 (emphasis added). contracts.” Speedway Motorsports, 2009 NCBC LEXIS 17 at *18. Given the repeated
incorporation of and reference to the terms of the Development Agreement, and the
requirement that to prevail on several of its claims the Court would be forced to
interpret the Development Agreement or conclude that MLBAM breached that
agreement, the Court concludes that Defendants have sufficiently shown Plaintiff's
reliance on the contract to allow USA Baseball to enforce the forum selection clause
in that agreement. See Brantley, 424 F.3d at 395–96.
40. Additionally, Plaintiff also has “raise[d] allegations of . . . substantially
interdependent and concerted misconduct by both the nonsignatory [USA Baseball]
and one or more of the signatories to the contract,” Brantley, 424 F.3d at 396;
Speedway Motorsports, 2009 NCBC LEXIS 17, at *15. Plaintiff alleges that
Defendants, including USA Baseball, “wrongfully interfered with BLA’s right to,
possession and use of its Confidential Information” and “wrongfully and intentionally
converted and misappropriated BLA’s Confidential Information.”34 The Complaint
expressly alleges that MLBAM “work[ed] with the MLB Commissioner’s Office and
USA Baseball in violation of BLA’s rights under the [Development] Agreement,” 35
and that the Commissioner’s Office and USA Baseball together used the Confidential
Information provided by MLBAM to create instructional websites substantially
similar to and/or in competition with BLA’s services under the Development
Agreement.36
34 Id. at ¶¶ 107 - 108. 35 Id. at ¶ 34. 36 Id. at ¶¶ 45, 78, 108, 124. 41. The disputes underlying Plaintiff’s claims in this lawsuit arise, directly
and indirectly, from rights and obligations created by the Development Agreement.
At the heart of Plaintiff's Complaint is the contention that it was deprived of rights
under the Development Agreement by the concerted and interrelated actions of
MLBAM, the Commissioner's Office, Garden, and USA Baseball. Accordingly,
Plaintiff’s failure to include MLBAM as a defendant in this action has the distinct
appearance of being an attempt evade the forum selection clause to which BLA
agreed. Speedway Motorsports, 2009 NCBC LEXIS 17, at *17–18 (recognizing the
principle that a party cannot avoid broad forum selection agreement by “cast[ing] its
complaint in tort rather than in contract” (citation omitted)). The Court concludes,
for the reasons discussed above, that Plaintiff is equitably estoppel from preventing
Defendants’ enforcement of the forum selection clause in the Development
Agreement, and that all claims asserted in this action fall within the scope of that
clause. Therefore, the Court concludes that venue for this action properly lies in New
York, and the Motion to Dismiss should be GRANTED based on improper venue.
Based on this conclusion, the Court need not address Defendants' personal
jurisdiction argument or request to stay this action.
THEREFORE, IT IS ORDERED that the Motion to Dismiss is GRANTED, and
the Verified Complaint is DISMISSED WITHOUT PREJUDICE to Plaintiff's rights
to bring its claims in either forum provided in the Development Agreement. This the 29th day of August, 2016.
/s/ Gregory P. McGuire Gregory P. McGuire Special Superior Court Judge for Complex Business Cases