Edwards Vacuum LLC v. Hoffman Instrumentation Supply, Inc.

District Court, D. Oregon·Decided June 9, 2021·No. 3:20-cv-01681·Unknown

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON

EDWARDS VACUUM, LLC, Case No. 3:20-cv-1681-SI

Plaintiff, OPINION AND ORDER ON PLAINTIFF’S MOTION TO v. TRANSFER VENUE FOR COUNTERCLAIMS HOFFMAN INSTRUMENTATION SUPPLY, INC. d/b/a/ HIS INNOVATIONS GROUP, MARK ROMEO, JEFFREY SCHWAB, ELISHA LEVETON, JOHN CHADBOURNE, and ANDREW ENSELEIT,

Defendants.

Nicholas F. Aldrich, Jr., Scott D. Eads, and Jason A. Wrubleski, SCHWABE, WILLIAMSON & WYATT PC, 1211 SW Fifth Avenue, Suite 1900, Portland, OR 97204; John D. Vandenberg, KLARQUIST SPARKMAN LLP, One World Trade Center, 121 SW Salmon Street, Suite 1600, Portland, OR 97204; and Justin W. Bernick, HOGAN LOVELLS US LLP, 555 13th Street NW, Washington, DC 20004. Of Attorneys for Plaintiff.

David H. Angeli, Joanna T. Perini-Abbott, Edward A. Piper, and Michelle Holman Kerin, ANGELI LAW GROUP LLC, 121 SW Morrison Street, Suite 400, Portland, OR 97204; and Michael E. Haglund and Eric J. Brickenstein, HAGLUND KELLEY LLP, 200 SW Market Street, Suite 1777, Portland, OR 97201. Of Attorneys for Defendant Hoffman Instrumentation Supply, Inc.

Jeff S. Pitzer and Peter M. Grabiel, PITZER LAW, 210 SW Morrison Street, Suite 600, Portland, OR 97204. Of Attorneys for Defendants Mark Romeo, Jeffrey Schwab, Elisha Leveton, John Chadbourne, and Andrew Enseleit. Michael H. Simon, District Judge.

Plaintiff Edwards Vacuum, LLC (Edwards) brings this lawsuit against one of its suppliers and competitors, Hoffman Instrumentation Supply, Inc., doing business as HIS Innovations Group (HIS), and five individual employees of HIS who previously worked for Edwards (the Individual Defendants). Edwards designs integrated vacuum pump systems, mostly for computer (or semiconductor) chip manufacturers. HIS supplies parts to Edwards but recently began competing with Edwards by designing, making, and selling its own integrated vacuum pump systems. In this lawsuit, Edwards alleges misappropriation of trade secrets, breach of contract, tortious interference with economic relations, conversion, breach of the duty of loyalty, and unjust enrichment. HIS denies liability and asserts counterclaims, alleging monopolization, attempted monopolization, and breach of contract.1 Under 28 U.S.C. § 1404(a), Edwards asks the Court to transfer venue for HIS’s counterclaims to the District of Delaware, while keeping Edwards’s claims for trial in the District of Oregon.2 In support of its motion to transfer, Edwards invokes a mandatory forum selection clause contained in the contract alleged by HIS. For the reasons stated below, the Court DENIES Edwards’s motion to transfer.3

STANDARDS On a motion to transfer venue under 28 U.S.C. § 1404(a), a court generally may transfer any civil action “[f]or the convenience of the parties and witnesses, in the interests of justice.” 28

1 The specific contract alleged by HIS in its counterclaims is a different contract than any of the several contracts alleged by Edwards in its claims. 2 Four days before Edwards filed its motion to transfer venue for HIS’s counterclaims, the Court denied Edwards’s earlier motion to bifurcate and stay HIS’s counterclaims. ECF 215. 3 Edwards initially requested oral argument, ECF 216, but later withdrew that request. ECF 226 at 1 n.2. Defendants have not requested oral argument, and the Court does not believe that oral argument will be helpful in resolving this matter. See LR 7-1(d)(1). U.S.C. § 1404(a). The ordinary analysis of a motion to transfer under § 1404(a), however, changes when the parties have a contract that includes a valid forum selection clause. See Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Tex., 571 U.S. 49, 62 (2013). A court must give a valid forum selection clause “controlling weight in all but the most exceptional cases.” Id. at 63 (internal citation and quotation marks omitted). In addition, in the presence of a valid forum

selection clause, the choice of forum made by the party asserting the claim but seeking to avoid the agreed-upon forum “merits no weight.” Id. at 63. Also, the district court “should not consider arguments about the parties’ private interests.” Id. at 64. Further, the party resisting a forum selection clause bears the burden of showing the exceptional circumstances that make transfer inappropriate. Id. at 63. In short, “[w]hen parties have contracted in advance to litigate disputes in a particular forum, courts should not unnecessarily disrupt the parties’ settled expectations.” Id. at 66. When a court considers a motion to transfer venue involving a valid forum selection clause, it may only consider “public interest” factors, which will rarely defeat a transfer motion.

Id. at 64. “In all but the most unusual cases, therefore, ‘the interest of justice’ is served by holding parties to their bargain.” Id. at 66; see also In re TFT-LCD (Flat Panel) Antitrust Litig., 2014 WL 1477748, at *1 (N.D. Cal. Apr. 14, 2014). As noted by U.S. District Judge James Donato, however: This is not to say that a forum selection clause will always be enforced, no matter what. It means that the Court, in weighing a transfer, may consider “public interest factors only” such as the interest of justice, and not arguments about witness convenience or other “private” concerns of the litigants. CZ Servs., Inc. v. Express Scripts Holding Co., 2018 WL 3972030, at *2 (N.D. Cal. Aug. 20, 2018) (quoting Atl. Marine, 571 U.S. at 64). Finally, “a forum clause applies only to claims within its scope.” Id. at *2. DISCUSSION A. Scope and Application of Forum Selection Clause 1. HIS’s Contract Claim HIS alleges that in the spring of 2019, HIS and Edwards were in active discussions about HIS possibly becoming Edwards’s exclusive supplier of certain key components used in Edwards’s integrated vacuum pump frame systems. The parties also discussed the potential for HIS to build subsystems or to assemble subsystems into complete systems for Edwards and, in

exchange, HIS would agree not to perform similar work for any other seller or brand. By mid- May 2019, HIS had circulated a draft proposal for Edwards’s consideration that generally reflected HIS’s understanding of these terms. ECF 191, ¶ 37. Shortly thereafter, Edwards’s key customer reached out to HIS to request that HIS develop an “agnostic” integrated vacuum pump frame system, capable of being used with vacuum pumps and other equipment made by any approved supplier and not just by Edwards. Soon after receiving that invitation, HIS informed Edwards of HIS’s new opportunity. Id., ¶ 38. Within a few weeks, Edwards and HIS began to discuss the possibility of Edwards acquiring HIS. Id., ¶ 45. HIS and Edwards formally began due diligence on June 21, 2019 and

agreed to a confidentiality and nondisclosure agreement (NDA) on that date. Id., ¶ 46; ECF 77-12 at 9-12. With HIS listed as the “Disclosing Party” and Edwards as the “Recipient,” the parties agreed that if HIS disclosed certain confidential information to Edwards about HIS’s business, then the “Recipient [Edwards] shall use the Confidential Information solely for the Purpose” of evaluating a possible business transaction between Edwards and HIS. Id. This confidential information included Edwards receiving “detailed information regarding HIS’s strategic plans to develop an integrated vacuum pump frame system, including HIS’s anticipated cost, margin, head count requirements, labor rates, and capital equipment spending for its new system.” Id.

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Edwards Vacuum LLC v. Hoffman Instrumentation Supply, Inc., (D. Or. 2021).

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