IAC/InterActiveCorp v. Adam Roston

44 F.4th 635
CourtCourt of Appeals for the Seventh Circuit
DecidedAugust 11, 2022
Docket21-2501
StatusPublished
Cited by31 cases

This text of 44 F.4th 635 (IAC/InterActiveCorp v. Adam Roston) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
IAC/InterActiveCorp v. Adam Roston, 44 F.4th 635 (7th Cir. 2022).

Opinion

In the

United States Court of Appeals For the Seventh Circuit ____________________ No. 21-2501 IAC/INTERACTIVECORP, et al., Plaintiffs-Appellants, v.

ADAM ROSTON, Defendant-Appellee. ____________________

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:20-cv-3440 — Sharon Johnson Coleman, Judge. ____________________

ARGUED JANUARY 11, 2022 — DECIDED AUGUST 11, 2022 ____________________

Before EASTERBROOK, SCUDDER, and KIRSCH, Circuit Judges. KIRSCH, Circuit Judge. After IAC Publishing signed an Em- ployment Agreement with Adam Roston making him its CEO, the relationship soured. Roston sparred with his em- ployer about the value of his stock appreciation rights. He soon moved to become CEO of Bluecrew, another affiliate of IAC Publishing’s parent company, IAC/InterActiveCorp, but the employment relationship continued to deteriorate until Roston was terminated. His former employers later 2 No. 21-2501

discovered that Roston had retained a company laptop, doc- uments, and confidential data. IAC/InterActiveCorp, IAC Publishing, and Bluecrew (collectively “the Companies”) brought a complaint in federal court in Illinois, seeking de- claratory, monetary, and injunctive relief. First, IAC/InterAc- tiveCorp and IAC Publishing sought relief declaring Roston was not entitled to more payments based on the stock appre- ciation rights Roston received from the plaintiffs. Second, IAC/InterActiveCorp and Bluecrew sought relief declaring that Roston was not wrongfully terminated. And third, all three plaintiffs brought claims under state and federal law that Roston had violated his contractual obligations by failing to return a laptop, company documents, and confidential data after his termination. But in the very same contract under which the Companies sought relief lurks a mandatory forum selection clause, desig- nating certain California courts as the exclusive venues for lit- igation. The district court was right to apply the forum non conveniens doctrine as it did and did not abuse its discretion in dismissing the complaint on that ground. We affirm. I A The fraught employment relationship at the heart of this case began in 2011, when Roston joined IAC/InterActiveCorp (“IAC”), a Delaware corporation headquartered in New York. Five years later Roston became the CEO of IAC Publishing, a subsidiary of IAC in Oakland, California. Pursuant to that new position and IAC’s 2016 Incentive Plan, Roston was awarded three and a half million stock appreciation rights (“SARs”), a form of equity-based compensation. Roston had No. 21-2501 3

a right to exercise his vested SARs at their specified price and benefit from any positive difference between the fair market value (“FMV”) of the common stock—determined by IAC Publishing’s Board of Managers—and the specified exercise price. He received four FMV determinations during his ten- ure at IAC Publishing and challenged all four. In that same period, Roston also became a board member of IAC’s subsid- iary Bluecrew, an online staffing company incorporated in Delaware and headquartered in Chicago, Illinois. One year after he became CEO of IAC Publishing, Roston signed an Employment Agreement (“Agreement”), effective July 1, 2016. Roston agreed to various obligations in handling confidential information, including trade secrets, data, infor- mation, and computer records. The Agreement also has mul- tiple paragraphs dealing with termination, such as what qual- ifies as “for cause” and what SARs Roston would have a right to exercise after he left the company. And although the Agree- ment was originally between Roston and IAC Publishing, the latter could “allow any of its obligations to be fulfilled by, or take actions through, any affiliate of the Company … and in the event of any such assignment … all references to the ‘Company’ shall refer to Company’s assignee or successor hereunder.” Each of those provisions matters, but at this case’s core is the precise interpretation and application of var- ious phrases within this paragraph: This Agreement and the legal relations thus cre- ated between the parties hereto (including, without limitation, any dispute arising out of or related to this Agreement) shall be governed by and construed under and in accordance with the internal laws of the State of California 4 No. 21-2501

without reference to its principles of conflicts of laws. Any such dispute will be heard and deter- mined before an appropriate federal court lo- cated in the State of California in Alameda County, or, if not maintainable therein, then in an appropriate California state court located in Alameda County, and each party hereto sub- mits itself and its property to the non-exclusive jurisdiction of the foregoing courts with respect to such disputes. IAC Publishing was later restructured, and Roston became CEO of Bluecrew in February 2019. Bluecrew equipped Ros- ton with a MacBook Pro, on which Roston kept Bluecrew doc- uments. Roston also had documents and data from his time at IAC and IAC Publishing, accumulated since 2011. These were stored in a personal Dropbox folder. The new position lasted barely over a year before Roston was informed of his termina- tion and presented with a draft separation letter from IAC’s general counsel. After his termination, Roston retained the MacBook and Dropbox documents and provided them to his attorneys. The plaintiffs learned of this in 2021 and made re- peated demands that Roston return the items. B After Roston’s termination but before discovery of his re- tention of the laptop and documents, IAC and IAC Publishing filed a one-count complaint in federal court in the Northern District of Illinois on June 12, 2020. The two plaintiff compa- nies sought declaratory relief relating to any dispute over the valuation of Roston’s SARs. Meanwhile, Roston sued in Ala- meda County Superior Court in California concerning the same and adding claims of wrongful termination. No. 21-2501 5

Learning of the laptop, documents, and data and made aware of a possible wrongful termination claim, the plaintiffs amended their complaint in the district court in Illinois. The operative complaint added eight new counts—for a total of nine—and added Bluecrew as a third plaintiff. Roston moved to dismiss the complaint based on the forum non conveniens doctrine, alleging the proper venue to be in California. The district court agreed, finding that the Agreement’s forum se- lection clause was mandatory and applied to Bluecrew and the complaint’s claims. The district court thus considered only the public interest factors in its forum non conveniens analysis. Having concluded that the balance of factors fa- vored California and that Illinois was not the proper forum, the district court dismissed the Companies’ complaint. II The Companies appeal the dismissal by challenging the district court’s premises about the application of the forum selection clause. The clause, the Companies first argue, does not apply at all because the Agreement itself is no longer in force, and, even if it were, the complaint’s claims are outside the forum selection clause’s scope. And the clause is a permis- sive, not mandatory, forum selection clause. Following from that, the Companies conclude that the district court misap- plied the forum non conveniens analysis by ignoring their preferred forum and the private interest factors and by mis- balancing the public interest factors. A Before we review the district court’s forum non conven- iens analysis, we address the threshold arguments about whether the forum selection clause applies to the claims in the 6 No. 21-2501

complaint and whether the clause is mandatory or permis- sive. We review questions of contract interpretation de novo, Soarus LLC v. Bolson Materials Int’l Corp.,

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