GXP Capital, LLC v. Argonaut Manufacturing Services, Inc.

• Court: Superior Court of Delaware
• Decided: May 4, 2020
• Docket: N18C-07-267 PRW CCLD
• Status: Published

Opinion

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

GXP CAPITAL, LLC, ) ) Plaintiff, ) ) v. ) C.A. No. N18C-07-267 ) PRW CCLD ARGONAUT MANUFACTURING ) SERVICES, INC.; TELEGRAPH HILL ) PARTNERS III, L.P.; TELEGRAPH ) HILL PARTNERS III INVESTMENT ) MANAGEMENT, LLC; ) ) Defendants. )

Submitted: February 18, 2020 Decided: May 4, 2020

Upon Defendants’ Motion to Dismiss for Forum Non Conveniens, STAY GRANTED, in part.

OPINION AND ORDER

David L. Finger, Esquire (argued), Finger & Slanina, LLC, Wilmington, Delaware, Benjamin M. Carson, Esquire (pro hac vice), Law Offices of Benjamin M. Carson, P.C., La Jolla, California, Attorneys for Plaintiff.

John L. Reed, Esquire, Harrison S. Carpenter, Esquire, DLA Piper LLP (US), Wilmington, Delaware, Brian A. Foster, Esquire (pro hac vice) (argued), Noah A. Katsell, Esquire (pro hac vice), Julie Gryce, Esquire (pro hac vice), DLA Piper LLP (US), San Diego, California, Attorneys for Defendants.

WALLACE, J. I. THE PARTIES

GXP Capital, LLC, is a limited liability company organized and

headquartered in Nevada.1 GXP is the assignee of GXP CDMO, Inc., formerly

known as Bioserv Corporation, GXP’s parent company.2

Argonaut Manufacturing Services, Inc., is a Delaware corporation with its

headquarters in California, and is the successor entity to Argonaut EMS

(“Predecessor”), a California sole proprietorship.3 Telegraph Hill Partners, III, L.P.

(“THP III”), is a Delaware-organized limited partnership whose general partner is

Telegraph Hill Partners III Investment Management, LLC (“THP”), a Delaware-

organized limited liability company.4 Both THP and THP III are headquartered and

operating in California.5

II. INTRODUCTION AND PROCEDURAL HISTORY

This litigation arises out of GXP’s accusation that Predecessor, THP, and THP

III received confidential business information about Bioserv during acquisition

negotiations, and agreed to keep that information confidential through express non-

1 Compl. at ¶ 1 (D.I. 1). 2 Id. at ¶¶ 1, 7. 3 Id. at ¶ 2. 4 Id. at ¶ 3. 5 Id. -2- disclosure agreements (“NDAs”), but did not do so.6 Instead, GXP alleges,

Argonaut, THP, and THP III, working with others, initiated and successfully

executed a hostile acquisition of key Bioserv assets at below-market prices in a

bankruptcy proceeding through use and disclosure of the confidential information in

contravention of the NDAs.7 The residual Bioserv then assigned litigation rights to

its subsidiary, GXP.8

GXP first filed an action seeking relief for the alleged wrongs in federal

district court in the District of Nevada. Due to a lack of personal jurisdiction, GXP

voluntarily dismissed that action and filed a second case in the Southern District of

California. The second action was dismissed for lack of subject matter jurisdiction,

because the parties lacked complete diversity.9

Following that second dismissal, GXP initiated this action by filing its

Complaint here, alleging nine causes of action against Argonaut, THP, and THP III.

6 Id. at ¶¶ 6–9, 12, 14. 7 Id. at ¶¶ 47, 49, 52, 56. 8 Id. at ¶¶ 1, 61. 9 GPX Capital, LLC v. Argonaut EMS, No. 3:17-cv-02283-GPC-BLM (S.D. Cal. Jul. 23, 2018) (Dkt. No. 48) (“[T]the Court sua sponte DISMISSES without prejudice the complaint for lack of subject matter jurisdiction.”). The California district court case is captioned GPX rather than GXP in conformity with the corresponding Complaint. The same error occurred in early procedural stages in this case. See generally Compl. (D.I. 1). -3- Argonaut, THP, and THP III filed the instant Motion to Dismiss, seeking

dismissal of seven of the nine counts pursuant to Superior Court Civil Rule 12(b)(6)

for failure to state a claim upon which relief can be granted, and also seeking

dismissal of the entire Complaint based on forum non conveniens. At argument the

parties stipulated to GXP’s withdrawal of the counts challenged under Rule

12(b)(6).10 This leaves only Counts I and III—respectively, breach of contract11 and

misappropriation12—subject to the present forum non conveniens challenge.

III. BURDEN AND LEGAL STANDARD FOR FACT-FINDING

The forum non conveniens tests applied by Delaware courts vary based on the

specifics of both the litigation initiated here and the litigation history of the parties.13

But no matter which forum non conveniens analysis is applicable in a given situation,

to gain dismissal it is always the defendant-movant who must show a sufficient

burden visited by the plaintiff’s choice of Delaware as the forum in which to bring

suit. Ordinarily, at the motion to dismiss stage, the Court must accept as true all of

10 Arg. Tr., Jan. 28, 2019, at 2–3, 6. (D.I. 21). The stipulation was reduced to writing and approved as the Court’s Order. (D.I. 25). That written stipulation and Order also changed the caption, to correct the misspelling of GXP’s name made in the Complaint. 11 For violation of the NDAs. Compl. ¶ 60. 12 Apparently meaning misappropriation of a trade secret. Id. ¶¶ 69, 70; see also Cal. Civ. Code § 3426.2 (Containing California’s iteration of the Uniform Trade Secrets Act.). 13 Aranda v. Philip Morris USA Inc., 183 A.3d 1245, 1250-51 (Del. 2018) (Describing Delaware’s different forum non conveniens analyses.).

-4- a plaintiff’s well-pleaded facts and draw all reasonable inferences in her favor.14 But

on a motion to dismiss an action for forum non conveniens, this Court exercises its

sound discretion when making findings of fact and drawing conclusions therefrom

based on that supported by the record; the Court must, when doing so, use an orderly

and logical deductive process.15

IV. DISCUSSION – FORUM NON CONVENIENS—GENERAL PRINCIPLES

A motion for forum non conveniens is a request that a court possessing both

personal and subject matter jurisdiction over an action nevertheless decline to hear

it.16 Jurisdictional and venue statutes are broadly drawn, because principles of

justice require that every right have a court available to vindicate it.17 By necessary

consequence, many disputes are amenable to suit in several different jurisdictions.18

14 E.g. Olenik v. Lodzinski, 208 A.3d 704, 714 (Del. 2019) (Applying this standard where dismissal was sought and granted because the contested transaction was subject to business judgment review.); Cent. Mortg. Co. v. Morgan Stanley Mortg. Capital Hldgs. LLC, 27 A.3d 531, 535 (Del. 2011) (Applying this standard reversing dismissal where it was granted based on purportedly duplicative claims.); Clinton v. Enter. Rent-A-Car Co., 977 A.2d 892, 895 (Del. 2009) (Applying this standard where dismissal was granted under this Court’s Civil Rule 12(b)(6) because action was barred by statute of limitations.). 15 Williams Gas Supply Co. v. Apache Corp., 594 A.2d 34, 37 (Del. 1991). 16 Chrysler First Bus. Credit Corp. v. 1500 Locust Ltd. P’ship., 669 A.2d 104, 106 (Del. 1995). 17 See Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 507 (1947) (General venue statutes are drawn so that a plaintiff “may be quite sure of some place in which to pursue his remedy.”); see also Dorsey v. State, 761 A.2d 807, 816 (Del. 2000) (“[E]very right, when withheld, must have a remedy, and every injury its proper redress.”). 18 Gilbert, 330 U.S. at 507.

-5- The common law doctrine of forum non conveniens19 does not exist to deprive a

plaintiff of his choice of forum, but rather as a backstop to prevent resort to

intentionally inconvenient forums for illegitimate purposes.20 A plaintiff’s choice

of forum is ordinarily respected,21 and hardship, not mere inconvenience, must be

shown to obtain relief.22

A. FORUM NON CONVENIENS HARDSHIP FACTORS AND THEIR USE.

Delaware has long analyzed hardship using the “Cryo–Maid factors”: (1) the

relative ease of access to proof; (2) the availability of compulsory process for

witnesses; (3) the possibility of a view of the premises; (4) whether the controversy

is dependent upon the application of Delaware law which the courts of this State

more properly should decide than those of another jurisdiction; and (5) all other

19 See In re Asbestos Litigation, 929 A.2d 373, 381 (Del. Super. Ct. 2006) (“[F]orum non conveniens is a creature of the common law.”). 20 Winsor v. United Air Lines, Inc., 154 A.2d 561, 563 (Del. Super. Ct. 1958) (“[T]he plaintiff may not, by choice of an inconvenient forum, ‘vex,’ ‘harass,’ or ‘oppress’ the defendant by inflicting upon him expense or trouble not necessary to his own right to pursue his remedy.”). 21 Taylor v. LSI Logic Corp., 689 A.2d 1196, 1198 (Del. 1997) (“Delaware courts consistently uphold a plaintiff’s choice of forum except in rare cases.”). 22 Id. (It is not enough to show there is a “more appropriate forum.”); Warburg, Pincus Ventures, L.P. v. Schrapper, 774 A.2d 264, 271–72 (Del. 2001) (Denying relief when movant “has not done anything more than claim inconvenience . . . based on little more than generalized references to the garden-variety concerns and expenses that characterize transnational litigation.”); Aveta, Inc. v. Colon, 942 A.2d 603, 608 (Del. Ch. 2008) (“[D]espite linguistic appearance to the contrary, forum non conveniens is not a doctrine of convenience; it is a doctrine of significant, actual hardship.”).

-6- practical problems that would make the trial of the case easy, expeditious and

inexpensive.23 And though it does not strictly bespeak of litigants’ hardship, the

pendency or non-pendency of other lawsuits between the parties over the same

subject24 has consistently been added to the enumeration of the Cryo–Maid factors.25

When the Delaware case is the first action filed, relief via forum non

conveniens is available only in the face of “overwhelming hardship” from Delaware

litigation.26 This application of the Cryo–Maid factors constitutes the “Cryo–Maid

test.”27 When an older case is pending in another jurisdiction, the hardship factors

are measured using the “McWane test” instead, in which a trial court is directed to

23 General Foods Corp. v. Cryo–Maid, Inc., 198 A.2d 681, 684 (Del. 1964). 24 Parvin v. Kaufmann, 236 A.2d 425, 427 (Del. 1967). 25 E.g., Ison v. E.I. DuPont de Nemours and Co., Inc., 729 A.2d 832, 837–38 (Del. 1999). Cryo–Maid itself credited four of the first-recognized hardship factors to this Court’s decision in Winsor v. United Air Lines, while adding choice of law as a fifth. Cryo–Maid, 198 A.2d at 684. The last of the Cryo–Maid factors was a residual catchall. Once Parvin v. Kaufman added consideration of the pendency of other related actions, courts thereafter usually (but not always) numbered that factor fifth and moved the residual factor to sixth. E.g., Candlewood Timber Grp., LLC v. Pan Am. Energy, LLC, 859 A.2d 989, 994–95 (Del. 2004); but see AR Capital, LLC v. XL Specialty Ins. Co., 2019 WL 1932061, at *7 (Del. Super. Ct. Apr. 25, 2019) (Numbering pendency of a similar action as the last factor and the residual factor as fifth.). 26 Candlewood Timber Group, 859 A.2d at 998. 27 Martinez v. E.I. DuPont de Nemours and Co., Inc., 86 A.3d 1102, 1108 n.31 (Del. 2014) (quoting IM2 Merchandising & Mfg., Inc. v. Tirex Corp., 2000 WL 1664168, at *10 (Del.Ch. Nov. 2, 2000)).

-7- freely exercise its discretion in favor of the relief requested by the defendant in the

later-filed Delaware action.28

The Cryo–Maid and McWane tests cover the two poles of forum non

conveniens cases, but left between them is an intermediate situation—where an

earlier foreign lawsuit on the same matter was filed but already dismissed. Our

Supreme Court recently explained that when a prior-filed case is no longer pending,

relief will be granted or denied based on whichever party bears the greater weight of

Cryo–Maid factors.29

This intermediate case in turn resembles the framework the Court uses for

requests for a stay in simultaneously-filed cases. When two cases are filed at

approximately the same time, Delaware courts will weigh an application for a stay

“under the traditional forum non conveniens framework” without “preference for

one action over the other” to avoid rewarding the victor in a “race to the

28 McWane Cast Iron Pipe Corp. v. McDowell-Wellman Engineering Co., 263 A.2d 281, 283 (Del. 1970). Notably, the McWane Court emphasized that this presumption in favor of relief served the same purpose of protecting a plaintiff’s choice of forum, because under the presumption, a civil defendant would “not be permitted to defeat the plaintiff’s choice of forum in a pending suit by commencing litigation involving the same cause of action in another jurisdiction of its own choosing.” Id. 29 Gramercy Emerging Markets Fund v. Allied Irish Banks, P.L.C., 173 A.3d 1033, 1044 (Del. 2017). This assumes that the resolution of the prior-filed litigation did not reach the merits of the dispute. Because of concerns related to Full Faith and Credit, res judicata, and claim preclusion, if the older suit was resolved on the merits, McWane’s presumption in favor of dismissal still applies. Lisa, S.A. v. Mayorga, 993 A.2d 1042, 1047 (Del. 2010).

-8- courthouse.”30 In such cases, the reviewing court neutrally compares hardships

imposed on each party by the adverse party’s chosen forum, and stays the Delaware

action if the foreign proceeding is less burdensome overall.31

So the five original Cryo–Maid factors are examined for all forum non

conviens claims. And the later-added sixth pendency-of-other-cases factor fixes the

background presumptions and thresholds against which those five factors are

analyzed. As explained by our high court:

When a case is first-filed, Delaware courts award dismissal only when the defendant has established overwhelming hardship, thus tilting the analysis in the plaintiff’s favor. When a case is later-filed, and its predecessors remain pending, McWane’s “strong preference for the litigation of a dispute in the forum in which the first action relating to such dispute is filed” applies and the analysis is tilted in favor of the defendant. But when a case is later-filed and its predecessors are no longer pending, the analysis is not tilted in favor of the plaintiff or the defendant.32

30 In re Citigroup Inc. Shareholder Derivative Litigation, 964 A.2d 106, 116 (Del. Ch. 2009). In deciding whether to grant dismissal under a forum non conveniens motion, the defendant- movant in a simultaneously-filed suit must show overwhelming hardship in accordance with the McWane test. BP Oil Supply Co. v. ConocoPhillips Co., 2010 WL 702382, *2 (Del. Super. Ct. Feb. 25, 2010). 31 Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. Axiall Corp., 2019 WL 4303388, at *4 (Del. Super. Ct. Sept. 11, 2019). The Delaware Supreme Court denied interlocutory review of the Axiall ruling, without reaching the merits. National Union Fire Ins. Co. of Pittsburgh, PA v. Axiall Corp., 2019 WL 4795508, at *1-2 (Del. Oct. 1, 2019). 32 Gramercy, 173 A.3d at 1044.

-9- Just as the first two situations are referred to as the Cryo–Maid and McWane tests,

Gramercy is now the defining precedent for the intermediate case.33 And the

analysis engaged in that intermediate case is “a straightforward assessment of

the Cryo–Maid factors, where dismissal is appropriate if those factors weigh in favor

of that outcome.”34

As noted earlier, GXP has previously filed actions seeking relief against these

same parties over these same grievances in federal district courts. It did so first in

Nevada, then in California. The first of those federal cases was dismissed before the

next was filed. Those dismissals were: voluntary due to lack of personal jurisdiction

(Nevada); and involuntary for lack of subject matter jurisdiction (California). Such

dismissals are without prejudice and not on the merits.35

So the present action is not a first-filed case imposing the Cryo–Maid

“overwhelming burden” requirement on the movant. And there are no prior-filed

actions pending that subject this one to the McWane presumption of dismissal. No,

this suit is that rare intermediate case subject to Gramercy, with the motion to be

33 Aranda, 183 A.3d at 1250–51. 34 Gramercy, 173 A.3d at 1036. 35 See Federal Rule of Civil Procedure 41(a)(1)(B)(“Unless the notice or stipulation states otherwise, [voluntary] dismissal is without prejudice . . . [unless] the plaintiff previously dismissed any federal- or state-court action based on or including the same claim.”); see also Fed. R. Civ. P. 41(b) (Noting that lack of jurisdiction is one of three forms of dismissal not operating as an adjudication on the merits without an express statement to the contrary by the court.).

- 10 - granted or denied depending on which side is favored by the greater weight of the

Cryo–Maid factors.36

Delaware Courts are seldom called upon to decide this intermediate case. The

parties and the Court have identified only one instance applying the intermediate

Gramercy standard—Schmidt v. Washington Newspaper Publishing Company.37

The Schmidt case involved a California plaintiff suing a Delaware-incorporated

publishing company operating a Washington, D.C. newspaper for defamation.38 The

Schmidt defendant removed the plaintiff’s original suit from Florida state courts to

the Southern District of Florida, where it was dismissed for lack of personal

jurisdiction.39 As the third forum considering the case, the Schmidt court granted

dismissal for forum non conveniens because: most witnesses and evidence were in

36 See Gramercy, 173 A.3d at 1040 (Describing as “rare” the situation where a later-filed Delaware case is the only active case with the other earlier case(s) having been disposed of without reaching the merits.). 37 2019 WL 4785560 (Del. Super. Sept. 30, 2019), amended on reconsideration by, 2019 WL 7000039 (Del. Super. Ct. Dec. 20, 2019). 38 Id at *3 (though the plaintiff moved to Texas after his family supposedly had to flee their California home due to death threats following the complained-of defamatory article). 39 Id. at *1.

- 11 - California and none were in Delaware;40 California law applied;41 and California

was an available forum.42

B. USE OF THE HARDSHIP FACTORS HERE.

Because the burden to overcome a plaintiff’s choice of forum still rests with

the movant-defendant under Gramercy, the guide for application of the salient

factors remains: this Court “must consider the weight of those factors in th[is]

particular case and determine whether any or all of them truly cause both

inconvenience and hardship.”43 So the Court now turns to the hardships facing

these litigants if the Court does or does not grant relief on the Motion.

Related to the first two hardship factors, GXP concedes that the parties all

have their headquarters and operations California or Nevada,44 and does not dispute

that the sole connection Argonaut, THP, and THP III have to Delaware is that this is

their place of formation.45 Argonaut, THP, and THP III identify a number of third-

40 Id. at *8. 41 Id. at *4, *8–9. 42 Id. at *9. Following a Motion for Reconsideration, the Schmidt Court additionally determined the action was time-barred under California law, and so amended its decision to a dismissal with prejudice. 2019 WL 7000039, *4. 43 Martinez, 86 A.3d at 1104 (quoting Chrysler First Bus. Credit Corp., 669 A.2d at 105). 44 Compl., at ¶¶ 1–3. 45 Pl. Br., at 19–20.

- 12 - party witnesses, a plurality of whom are from California, none of whom are from

Delaware, and only one of whom is even close-by.46

GXP does not deny that this deficiency means that the parties will be unable

to compel the attendance of apparently any of the third-party witnesses, but

instead—relying on Kolber v. Holyoke Shares, Inc.47—argues that depositions are

an adequate substitute. But a close reading of Kolber is not quite as helpful under

Gramercy as GXP would hope. In Kolber, the Court found that, while not

“overwhelmingly” heavy, forcing a defendant to rely on depositions in lieu of live

testimony and to travel from New York to Wilmington to face litigation were at least

factors weighing in favor of relief.48

The third hardship factor, pertaining to inspection of the premises, presents no

hardship to litigating in Delaware. Neither side suggests that any site inspections

46 Aff. of Brian Foster, at ¶ 11. 47 213 A.2d 444, 446 (Del. 1965); see also Delaware Rules of Evidence 804(a)(5) and (b)(1). 48 Id. GXP further argues that for this issue to weigh in a movant’s favor, that movant must identify the witnesses not subject to compulsion, the nature of their testimony, and the specific reason that a deposition would be insufficient, relying on Mar-Land Indus. Contractors, Inc. v. Caribbean Petroleum Refining, L.P., 777 A.2d 774, 781 (Del. 2001) and States Marine Lines v. Domingo, 269 A.2d 223, 226 (Del. 1970). In both those cases the Court refused to find overwhelming hardship on that factor when the movants failed to identify the names of the witnesses beyond the reach of compulsory process, demonstrate their number, show their relationship to the case, or explain why their testimony could not be presented by deposition. Id. Here, a multiplicity of witnesses are identified by name, and their relevance to the alleged wrongful conduct is clear and direct. Many of the witnesses are named by GXP as “co-conspirators” in the alleged wrongs, and hence their credibility will be a key issue. Reliance on depositions alone presents obvious and consequential hardship under the specifics of this case.

- 13 - will be necessary for this litigation. The absence of hardship based on the situs of

the acts spawning the litigation renders the premises-location factor

“inconsequential.”49

On the fourth factor, pertaining to choice of law, the parties do not dispute

that the substantive law involved in this case is that of California. While not

preferable, Delaware courts are accustomed to applying the laws of sister states.50

This factor adds little—but some—weight toward forum non conveniens relief.51

As to the pendency or nonpendency of other cases, no such other cases are

pending. The dismissal of this case from the federal district courts of Nevada and

California accounts for the application of the intermediate Gramercy threshold, and

no party points to any other case looming. Under such circumstances, the

49 See GTE Mobilnet Inc. v. Nehalem Cellular, Inc., 1994 WL 116194, at *5 (Del. Ch. Mar. 17, 1994). 50 Taylor, 689 A.2d at 1200. By contrast, when the foreign law Delaware must apply is that of a foreign country, especially a non-Anglophone one, the burden is greater. Martinez, 86 A.3d at 1106–07. And when necessary use of a foreign language poses greater practical difficulties, such as the use of an entirely different alphabet, these concerns become even more pronounced. Gramercy, 173 A.3d at 1042. 51 See Martinez, 86 A.3d at 1106–07 (“[T]his Court has recognized that novel or important issues of Delaware law are best determined by Delaware courts.”); Sequa Corp. v. Aetna Cas. and Sur. Co., 1990 WL 123006, at *4 (Del. Super. Ct. July 13, 1990) (“The need to apply another state’s law will not be a substantial deterrent to conducting litigation in this state.”); Monsanto Co. v. Aetna Cas. and Sur. Co., 559 A.2d 1301, 1305–06 (Del. Super. Ct. 1987) (The fact that Court would need to adjudicate some or all issues using another state’s laws “alone would not weigh overwhelmingly in favor of” defendant’s dismissal request.).

- 14 - background presumptions fully capture any hardship that the prior cases impose, and

this factor can rightly be considered neutral within a Gramercy analysis.52

When the Court considers the residual factor here, the availability of an

alternative forum in the California state courts highlights the needless practical

difficulties that a Delaware forum presents.53 And though not controlling, prior

Delaware cases have observed the availability of an alternate forum to be an apposite

factor.54 Argonaut, THP III, and THP are all headquartered in California and have

conceded jurisdiction there.55 GXP previously sought to litigate this case in

California when it filed the second case in a federal district court there, indicating

the strong amenability of all parties to suit in California. But for lack of complete

diversity of citizenship,56 this case would currently be well underway in federal

52 See Schmidt, 2019 WL 4785560, at *9. 53 See Hupan v. Alliance One Int’l. Inc., 2016 WL 4502304, at *8 (Del. Super. Ct. Aug. 25, 2016) (The availability of an alternative forum is a practical consideration under the residual factor.), aff’d, Aranda, 183 A.3d 1245. 54 Aranda, 183 A.3d at 1254. See also Ison, 729 A.2d at 845 (Discussing availability of alternative fora under the residual factor.). 55 Defs. Br., at 2–3. 56 See Carden v. Arkoma Associates, 494 U.S. 185, 187 (1990) (“Since its enactment, we have interpreted the diversity statute to require complete diversity of citizenship.”) (quoting Strawbridge v. Curtiss, 3 Cranch 267 (1806)).

- 15 - court in California by GXP’s own earlier election.57 When that court closed its

doors, GXP could have filed down the street in a California state court. Instead, it

dragged the Defendants across the country and into this Court.

Delaware has an interest in regulating the conduct of entities formed under its

laws, and this public interest can weigh against granting forum non conveniens

relief.58 But Delaware’s public interest in providing a forum on the basis of

incorporation is strongest in cases where issues of substantive corporate governance

and structure are implicated.59 And this general—but important—interest in

providing a forum for disputes involving its corporate citizens to resolve disputes

can be outweighed by the hardship occasioned from the other factors visited on those

who appear to have been brought here for vexatious, harassing, or oppressive

purposes.

Lastly, GXP argues that one of the non-disclosure agreements at issue

contains a clause waiving any potential forum non conveniens motion in this case.

57 Diversity of citizenship is not a requirement for California state courts, of course, which are courts of general jurisdiction. Quigley v. Garden Valley Fire Protection Dist., 444 P.3d 688 (Cal. 2019) (citing Cal. Const., art. VI §§ 1, 10). 58 See Sands v. Union Pacific Railroad Co., 2017 WL 5664748, at *3 (Del. Super. Ct. Nov. 20, 2017). 59 Armstrong v. Pomerance, 423 A.2d 174, 179 n.8 (Del. 1980); see also Hall v. Maritek Corp., 170 A.3d 149, 160 (Del Super. Ct. 2017) (“Delaware incorporation does not preclude dismissal on forum non conveniens grounds, particularly in circumstances where a corporation’s only Delaware presence is its registered agent or when a state of incorporation has no rational connection to the cause of action.”) (internal quotations omitted).

- 16 - In that contract, Predecessor—but not THP or THP III—stipulated that the

agreement “shall be governed by the laws of [California60]” and that the parties

“agree to submit disputes arising out of or in connection with this Agreement to the

non-exclusive [jurisdiction] of the courts in [California].”61 By stipulating to non-

exclusive jurisdiction, GXP argues that the clause placed Argonaut, and by extension

the other parties, on notice that suit may occur anywhere.62 But the Court doesn’t

read that provision quite so broadly.

Delaware enforces forum selection clauses absent a showing that they are

unreasonable or unjust, even if only some operable instruments contain such a

60 The writing specifies the jurisdiction as being that of GXP’s headquarters location, and GXP’s signatory identifies himself as the CEO and gives an address in California. Compl. ex. C at 3 (D.I. 1). By contrast, when the Complaint was filed GXP identified itself as being Nevada- headquartered. Compl. ¶ 1. GXP agrees that the unstated jurisdiction is California. O.A. Tr. 1/31/2020 at 18 (D.I. 32). 61 Compl., Ex. C at 3. The sentence literally reads “to the non-exclusive of the courts,” but the parties agreed that the word “jurisdiction” was erroneously omitted between exclusive and of. Arg. Tr., Jan. 31, 2020, at 18. The decision to fix a typographical error in a contract “is tantamount to reforming a contract when it has material consequences.” Nationwide Emerging Managers, LLC. v. Northpointe Holdings, LLC, 112 A.3d 878, 890 (Del. 2015). Reformation of a contract is an equitable power. See Glidepath Ltd. v. Beumer Corp., 2018 WL 2670724, at *9 (Del. Ch. Jun. 4, 2018) (“Reformation is an equitable remedy which emanates from the maxim that equity treats that as done which ought to have been done.”) (citing In re TIBCO Software Inc. S'holders Litig., 2015 WL 6155894, *13 (Del. Ch. Oct. 20, 2015)). However, a reformed contract can be enforced at law. Commissioners of Lewes v. Breakwater Fisheries Co., 110 A. 669, 670 (Del. Ch. 1920). Because the parties continue to agree that the word “jurisdiction” was erroneously omitted and neither objects to its inclusion, that agreement effectively amends the contract and permits this Court to enforce the real agreement at law without the need for a court in equity to first reform it. 62 Arg. Tr., Jan. 31, 2020, at 14–15.

- 17 - clause.63 Because it specifies non-exclusive jurisdiction, the clause in this case does

stipulate as to personal jurisdiction and substantive law, without commanding one

forum or another. Nothing about that silence constitutes a waiver of forum non

conveniens objections in the appropriate case even for the signatories, let alone as

applied to non-signatories THP and THP III. Far from stipulating amenability to

suit in Delaware, the instrument further emphasizes the appropriateness and

availability (and likely expectation) of California state courts to do prompt,

complete, and impartial justice on GXP’s claims.

C. THE PROPER REMEDY UNDER GRAMERCY.

Of note, the Court’s Gramercy analysis here does rely heavily on the

representation that California state courts are open to GXP.64 If some procedural

obstacle prevents California courts from ruling on the merits of this dispute,

Delaware would be the only forum with both subject matter65 and personal66

jurisdiction to do so. While not itself dispositive, the complete lack of possible fora

63 Ingres Corp. v. CA, Inc., 8 A.3d 1143, 1146–47 (Del. 2010) 64 See Defs. Op. Br., at 17 (“California Is An Adequate And Available Forum.”) (D.I. 8). 65 Since federal courts have already disclaimed subject matter jurisdiction. GPX Capital, LLC v. Argonaut EMS, No. 3:17-cv-02283-GPC-BLM (S.D. Cal. Jul. 23, 2018) (Dkt. No. 48). 66 See Daimler AG v. Bauman, 571 U.S. 117, 137 (2014) (“With respect to a corporation, the place of incorporation and principal place of business are paradigm bases for general jurisdiction.”) (citing Brilmayer et al., A General Look at General Jurisdiction, 66 Tex. L. Rev. 721, 735 (1988)).

- 18 - would present an exceptional hardship on GXP67 that would accordingly add weight

to the residual factor and against relief.68

At argument, Argonaut, THP, and THP III disavowed any statute of

limitations or other non-merit based defense as to the remaining counts.69 Cognizant

of the Court’s concerns, they expressed a willingness to submit to any stipulation or

conditions sufficient to satisfy GXP and the Court that the case would reach a ruling

on the merits in California state court.70 Conversely, GXP gave no explanation for

why, having been ousted from the Southern District of California, they traveled to

Delaware’s state courts in lieu of California’s.71 GXP invoked only the Delaware

state courts’ reputation for prompt justice72—which, of course, begs the question:

Why didn’t they file here in the first place? And the fact that they previously chose

67 See Ison, 729 A.2d at 846 (Del. 1999) (Availability of an alternative forum “relates to the convenience of the plaintiffs, not to the inconvenience of the defendant” but is still a serious consideration.); Maritek, 170 A.3d at 167 (While an adequate alternative forum is not a “prerequisite,” relief is appropriate only to avoid “undue hardship and inconvenience,” for which the availability of a more appropriate tribunal is an important consideration.) (emphasis added). 68 As the Court made clear to the parties here, it will not deafen itself to a Mayoian cry by a plaintiff that it no longer has a forum open to hear its complaint. An Officer and a Gentleman (1982) (Upon being told by his drill instructor, Gunnery Sergeant Emil Foley, that he is being kicked out of Officer Candidate School, Officer Candidate Zack Mayo sputters: “Don’t you do it! Don’t! You . . . I GOT NOWHERE ELSE TO GO! I got nowhere else to g . . . I got nothin’ else.”) 69 Arg. Tr., Jan. 31, 2020, at 8. 70 Id. at 8, 19. 71 Id. at 13–14. 72 Id.

- 19 - California, of course, undermines any argument by GPX that litigating there presents

a hardship to them.

Because the balance of hardships weighs in favor of Argonaut, THP, and THP

III, the Court will grant relief. Because that balance is contingent on the availability

of California state courts to hear the matter on its merits,73 the appropriate form of

relief is a stay in contemplation of litigation there.74 A stay in lieu of dismissal

preserves the possibility of adjudication in Delaware should California courts fail to

reach the merits of this dispute.

V. CONCLUSION

No doubt, in Delaware there is clear preference in favor of a plaintiff's

choice of forum.75 And, no doubt, Delaware’s courts are reluctant “to lightly disturb

a plaintiff’s first choice of fora.”76 Courts in Delaware consider motions for forum

non conveniens under six factors of which one, the pendency or nonpendency of

73 See Ingres Corp., 8 A.3d at 1145 (Litigation in a foreign court weighs in favor of relief when that “court is capable of doing prompt and complete justice.”) (citing McWane, 263 A.2d at 283). 74 Though the Motion contained only a request for dismissal and not any lesser relief, granting a stay is always within the inherent power of the Court. Insurance Co. of North America v. Steigler, 300 A.2d 16, 18 (Del. Super. Ct. 1972) (citing Landis v. North American Co., 299 U.S. 248, 254- 55 (1936)). 75 Mar–Land, 777 A.2d at 778 (“A plaintiff seeking to litigate in Delaware is afforded the presumption that its choice of forum is proper and a defendant who attempts to obtain dismissal based on grounds of forum non conveniens bears a heavy burden.”). 76 Gramercy, 173 A.3d at 1037 (emphasis added).

- 20 - other suits on the same matter, is primarily used to determine the burden or

presumption against which the others are measured. Where, as here, a plaintiff like

GXP has not chosen Delaware first (or even second) and its first two actions

elsewhere were dismissed on jurisdictional grounds without reaching their merits,

this Court determines whether Delaware is an appropriate forum via “a reasoned

assessment” of those substantive (i.e. the Cryo–Maid) factors.

Here the Court’s reasoned assessment of those hardship factors weighs in

favor of relief. However, that weighting is contingent on the availability of

California state courts to hear and decide this case on the merits. California litigation

would avoid the principal hardships presented in Delaware, that of long travel for

fact witnesses and parties, the lack of compulsory process for witnesses, and the

needless application of California law by a Delaware instead of a California state

court. The availability of California prevents the hardship on GXP of barring

entirely a forum for prompt and complete justice.

To ensure that this availability is not illusory, the Court will stay this litigation

to permit GXP to file suit in California state court. Should GXP initiate such a suit,

the Court will renew the stay for the duration of the litigation to ensure it reaches a

final ruling on the merits before dismissing the instant case. Should GXP fail to

initiate such a suit, the Court will consider the underlying claim abandoned and

dismiss the suit entirely.

- 21 - For those reasons, the Motion shall be GRANTED IN PART, and this action

is STAYED for ninety (90) days from the date of this Order.

IT IS SO ORDERED.

- 22 -