Gaby's Bags, LLC v. Mercari, Inc.

CourtDistrict Court, N.D. California
DecidedJanuary 30, 2020
Docket3:20-cv-00734
StatusUnknown

This text of Gaby's Bags, LLC v. Mercari, Inc. (Gaby's Bags, LLC v. Mercari, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gaby's Bags, LLC v. Mercari, Inc., (N.D. Cal. 2020).

Opinion

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA FORT MYERS DIVISION

GABY’S BAGS, LLC,

Plaintiff,

v. Case No.: 2:19-cv-785-FtM-38MRM

MERCARI, INC.,

Defendant. / OPINION AND ORDER1 Before the Court are the responses to an Order to Show Cause (Doc. 49) from Plaintiff Gaby’s Bags, LLC and Defendant Mercari, Inc. (Docs. 55; 61). Also here are several pending motions. For these reasons, the Court transfers the case to California. BACKGROUND2 This is a case about selling purses online. Mercari runs an app and website where “anyone” can sell “anything.” (Doc. 4 at 1). Essentially, it’s like the Japanese eBay. To gain American market share, Mercari targets “resellers” (which are typically businesses) through internet marketing, reiterating “anyone” can sell on its platforms. (Doc. 4 at 15). But this is all a big scheme. Mercari lures resellers to stock its pages with popular products and establish a customer base. Then, Mercari boots the reseller from its platforms because it “does not offer or allow ‘business accounts.’” (Doc. 4 at 22). With

1 Disclaimer: Documents hyperlinked to CM/ECF are subject to PACER fees. By using hyperlinks, the Court does not endorse, recommend, approve, or guarantee any third parties or the services or products they provide, nor does it have any agreements with them. The Court is also not responsible for a hyperlink’s availability and functionality, and a failed hyperlink does not affect this Order. 2 These facts are allegations from the Complaint (Doc. 4). the reseller gone, Mercari “keeps the customers” on its service, all the while increasing its userbase and market share. (Doc. 4 at 22). This happened to Gaby’s Bags. For two years, Gaby’s Bags was a handbag reseller on Mercari, generating about $400,000 in sales. That ended abruptly when Mercari terminated Gaby’s Bags’ account because “Mercari does not offer ‘business

accounts.’” (Doc. 4 at 25). As a result, Gaby’s Bags sued for deceptive or unfair trade practices, false advertising, and RICO under state law. Each claim revolves around Mercari’s scheme to falsely advertise “anyone” could use its platforms. Mercari brings a counterclaim for breach of contract. (Doc. 7). The contract is called “Terms of Service” (“TOS”). (Doc. 7 at 44). During the parties’ business relationship, there were four versions of the TOS.3 (Docs. 6-1; 6-2; 6-3; 6-4). Where relevant, every TOS was similar. One provision is a forum-selection clause—stipulating to litigate non-arbitrable disputes in San Francisco. (Doc. 6-4 at 17). APPLICABLE LAW

When a forum-selection clause points to another federal court, the proper enforcement mechanism it is a motion to transfer under 28 U.S.C. § 1404(a). Atl. Marine Constr. Co. v. U.S. Dist. Court for the W. Dist. of Tex., 571 U.S. 49, 52, 59-60 (2013). That provision follows: “For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented.” 28 U.S.C. § 1404(a). Under this provision, district courts have somewhat

3 Without deciding which version applies, the Court refers to the version Gaby’s Bags relies on (Doc. 6-4). broad discretion. Hight v. U.S. Dep’t of Homeland Sec., 391 F. Supp. 3d 1178, 1182-83 (S.D. Fla. 2019). And “the construction of forum selection clauses by federal courts is a matter of federal common law, not state law of the state in which the federal court sits.” Cornett v. Carrithers, 465 F. App’x 841, 842 (11th Cir. 2012) (citing P&S Bus. Machs., Inc. v. Canon USA, Inc., 331 F.3d 804, 807 (11th Cir. 2003)).

While a § 1404(a) motion typically precedes transfer, it is not required. Rather, courts may sua sponte transfer a case under § 1404(a) after giving each party notice and opportunity to be heard. E.g., Hisey v. Qualtek USA, LLC, 753 F. App’x 698, 704 & n.5 (11th Cir. 2018); Tazoe v. Airbus S.A.S., 631 F.3d 1321, 1336 (11th Cir. 2011); Nalls v. Coleman Low Fed. Inst., 440 F. App’x 704, 706 (11th Cir. 2011).4 Here, the Court raised the issue while reviewing briefing on other motions. (Doc. 49). Each party had a chance to respond, and they have done so. (Docs. 55; 61). With the issue of transfer properly before the Court, the analysis turns to § 1404(a). In applying the statute, courts use a two-step approach. Fike v. JetBlue Airways

Corp., No. 2:13-cv-706-FtM-38UAM, 2014 WL 582877, at *2 (M.D. Fla. Feb. 13, 2014). The first question is whether the case might have been brought in the transferee district or the parties consented to suit there. Carrigg v. Gen. R.V. Ctr., Inc., No. 3:18-cv-654-J- 34PDB, 2018 WL 5904447, at *4 (M.D. Fla. Nov. 9, 2018). At the second step, courts consider several factors related to convenience and the interest of justice. Id. When

4 See also Nissei ASB Co. v. R&D Tool & Eng’g Co., No. 1:18-cv-553-TCB, 2018 WL 9961069, at *5 (N.D. Ga. Nov. 9, 2018); Powell v. United Rentals (N. Am.), Inc., No. C17- 1573JLR, 2019 WL 1489149, at *6-7 (W.D. Wash. Apr. 3, 2019); U.S. ex rel. QSR Steel Corp. v. Safeco Ins. Co. of Am., No. 3:14-cv-1017 (VAB), 2015 WL 4393576, at *4-5 (D. Conn. July 16, 2015) (collecting cases); 15 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 3844 (4th ed. 2019). transfer is based on a forum-selection clause, however, the analysis changes in several ways. Atl. Marine, 571 U.S. at 62. For instance, the burden is on the party opposing enforcement of the clause. Id. at 63. DISCUSSION A. Transfer

Mercari argues the Court should transfer; Gaby’s Bags disagrees. In deciding whether to transfer, the Court begins with the first step. This case could have been brought in the Northern District of California, where Mercari has its principal place of business. (Doc. 4 at 2); see 28 U.S.C. § 1391(b)-(c). Because a forum-selection clause is at issue though, the Court will analyze three other matters: (1) whether the clause is valid; (2) whether the claims fall within the scope of the clause; and (3) whether the clause is mandatory or permissive. See, e.g., Carrigg, 2018 WL 5904447, at *5-6; Hindi v. Birdeye, Inc., No. 19-cv-61201-BLOOM/Valle, 2019 WL 4091425, at *3 (S.D. Fla. Aug. 29, 2019). The Court takes each in turn.

1. Validity “Forum-selection clauses are presumptively valid and enforceable unless the plaintiff makes a ‘strong showing’ that enforcement would be unfair or unreasonable under the circumstances.” Krenkel v. Kerzner Int’l Hotels Ltd., 579 F.3d 1279, 1281 (11th Cir. 2009) (quoting Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 593-95 (1991)). But these clauses are not impregnable. A “clause will be invalidated when: (1) its formation was induced by fraud or overreaching; (2) the plaintiff would be deprived of its day in court because of inconvenience or unfairness; (3) the chosen law would deprive the plaintiff of a remedy; or (4) enforcement of the clause would contravene public policy.” Id. (quoting Lipcon v. Underwriters at Lloyd’s, London, 148 F.3d 1285, 1296 (11th Cir. 1998)). Mercari argues Gaby’s Bags failed to make a strong showing that the forum- selection clause is not valid. The Court agrees.

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