3 UNITED STATES DISTRICT COURT
4 DISTRICT OF NEVADA
5 * * *
6 SWITCH, LTD, Case No. 2:19-cv-00371-MMD-DJA
7 Plaintiff, ORDER v. 8 GEI CONSULTANTS, INC., 9 Defendant. 10 11 I. SUMMARY 12 Plaintiff Switch, Ltd. sued Defendant GEI Consultants, Inc. in Nevada state court 13 for allegedly failing to perform under a contract involving a data center in Georgia, where 14 Defendant was to provide environmental consulting services. (ECF No. 1-1.) Defendant 15 removed the case to this Court. (ECF No. 1.) Before the Court is Plaintiff’s motion to 16 remand, which is primarily based on a forum selection clause in the contract governing 17 the relationship between the parties (the “Motion”).1 (ECF No. 16.) Also before the Court 18 is Defendant’s motion to dismiss. (ECF No. 10.) Because the Court agrees with Plaintiff 19 that the forum selection clause requires this case be litigated in state court, and as further 20 explained below, the Court will grant Plaintiff’s Motion and remand this case. 21 II. BACKGROUND 22 Plaintiff essentially alleges that Defendant did not perform its obligations under a 23 contract where Defendant agreed to perform “a subsurface exploration and geotechnical 24 evaluation of property [in Georgia that Plaintiff] was evaluating for purchase, to determine 25 the suitability of the land for building several mission critical data centers and creating a 26
27 1Defendant filed a response (ECF No. 20), and Plaintiff filed a reply (ECF No. 21). The Court also reviewed Plaintiff’s response (ECF No. 15), and Defendant’s reply (ECF 28 No. 17) to Defendant’s motion to dismiss. 1 new” campus for Plaintiff in Georgia (the “Contract”). (ECF No. 1-1 at 3; see also id. at 19- 2 24 (Contract).) Plaintiff brings claims for: (1) breach of contract; (2) intentional interference 3 with prospective economic advantage; (3) deceptive trade practices under NRS § 4 598.0915; (4) fraud; (5) negligence; (6) negligent misrepresentation; (7) gross negligence; 5 (8) breach of good faith and fair dealing; (9) unjust enrichment; and (10) declaratory relief. 6 (Id. at 8-16.) 7 Plaintiff’s Motion is primarily based on the forum selection clause in the Contract. 8 (ECF No. 16 at 6-12.) The forum selection clause of the Contract reads: Jurisdiction and Venue. The interpretation and enforcement of this 9 Agreement shall be governed by the laws of the State of Nevada, without regard to its conflict of laws provisions. Clark County, Nevada, shall be the 10 exclusive venue and jurisdiction for any dispute arising out of or related to this Agreement; except that either party may take interim action in any 11 jurisdiction to prevent disclosure of Confidential Information or to enforce a judgment or other decision. 12 13 (ECF No. 1-1 at 22.) Defendant invoked the Court’s diversity jurisdiction in removing this 14 case to this Court under 28 U.S.C. § 1332(a). (ECF No. 1 at 3.) 15 III. DISCUSSION 16 Federal courts are courts of limited jurisdiction, having subject-matter jurisdiction 17 only over matters authorized by the Constitution and Congress. See U.S. Const. art. III, § 18 2, cl. 1; see also, e.g., Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 19 (1994). A suit filed in state court may be removed to federal court if the federal court would 20 have had original jurisdiction over the suit at the commencement of the action. See 28 21 U.S.C. § 1441(a). However, courts strictly construe the removal statute against removal 22 jurisdiction, and “[f]ederal jurisdiction must be rejected if there is any doubt as to the right 23 of removal in the first instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) 24 (emphasis added). The party seeking removal such as Defendant here bears the burden 25 of establishing federal jurisdiction. See Kokkonen, 511 U.S. at 377. 26 “A forum selection clause operates outside of the various requirements for removal 27 specified in [28 U.S.C.] §§ 1441–1453.” Kamm v. ITEX Corp., 568 F.3d 752, 756 (9th Cir. 28 1 2009). “Instead, a forum selection clause is similar to other grounds for not exercising 2 jurisdiction over a case, such as abstention in favor of state court jurisdiction under 3 Younger v. Harris, 401 U.S. 37 (1971), and related abstention cases, or a refusal to 4 exercise supplemental jurisdiction and a resulting remand to state court under 28 U.S.C. 5 § 1367(c).” Id. “[A] forum selection clause does not [normally] deprive a federal court of 6 subject matter jurisdiction.” Id. at 754. 7 But “[a]n agreement limiting venue for litigation to a particular county 8 unambiguously prohibits litigation in federal court when there is no federal courthouse 9 located in the designated county.” City of Albany v. CH2M Hill, Inc., 924 F.3d 1306, 1308 10 (9th Cir. 2019). In contrast, “a forum selection clause that vests ‘exclusive jurisdiction and 11 venue’ in the courts ‘in’ a county provides venue in the state and federal courts located in 12 that county[,]” Simonoff v. Expedia, Inc., 643 F.3d 1202, 1207 (9th Cir. 2011), if there is a 13 federal courthouse in that county. See City of Albany, 924 F.3d at 1308 (discussing 14 Simonoff). Thus, if a forum selection clause specifies that disputes must be resolved in a 15 particular county, this Court may retain jurisdiction over the case if there is a federal 16 courthouse located in that county, but not if there is no federal courthouse there—in which 17 case the Court must remand. 18 But the Court may remand even where not required by City of Albany, and will do 19 so here—because the Court must remand if there is any doubt as to the right of removal 20 in the first instance, and the plain language of the Contract’s forum selection clause 21 compels the conclusion that the parties intended to limit potential litigation to the state 22 courts in Clark County, Nevada. 23 Plaintiff argues in pertinent part that the language of the forum selection clause 24 mandates the exclusive venue for any litigation between the parties is the state court 25 located in Clark County, Nevada. (ECF No. 16 at 6-12.) Defendant counters that this case 26 27 28 1 can proceed in this Court because it too is located in Clark County, Nevada. (ECF No. 20 2 at 4-6.) The Court agrees with Plaintiff. 3 The Court applies federal law in interpreting the forum selection clause of the 4 Contract, starting with the plain language of the Contract. See Simonoff, 643 F.3d at 1205. 5 The Court understands that the “common or normal meaning of language will be given to 6 the words of a contract unless circumstances show that in a particular case a special 7 meaning should be attached to it[.]” Id. (citation omitted). The key language in the Contract 8 uses neither ‘in,’ which has been interpreted to provide merely a geographic restriction on 9 venue unless there is no federal courthouse in the specified county, nor ‘of,’ which has 10 been interpreted to vest exclusive jurisdiction in a state court. See id. at 1205-7; see also 11 City of Albany, 924 F.3d at 1307-9.
Free access — add to your briefcase to read the full text and ask questions with AI
3 UNITED STATES DISTRICT COURT
4 DISTRICT OF NEVADA
5 * * *
6 SWITCH, LTD, Case No. 2:19-cv-00371-MMD-DJA
7 Plaintiff, ORDER v. 8 GEI CONSULTANTS, INC., 9 Defendant. 10 11 I. SUMMARY 12 Plaintiff Switch, Ltd. sued Defendant GEI Consultants, Inc. in Nevada state court 13 for allegedly failing to perform under a contract involving a data center in Georgia, where 14 Defendant was to provide environmental consulting services. (ECF No. 1-1.) Defendant 15 removed the case to this Court. (ECF No. 1.) Before the Court is Plaintiff’s motion to 16 remand, which is primarily based on a forum selection clause in the contract governing 17 the relationship between the parties (the “Motion”).1 (ECF No. 16.) Also before the Court 18 is Defendant’s motion to dismiss. (ECF No. 10.) Because the Court agrees with Plaintiff 19 that the forum selection clause requires this case be litigated in state court, and as further 20 explained below, the Court will grant Plaintiff’s Motion and remand this case. 21 II. BACKGROUND 22 Plaintiff essentially alleges that Defendant did not perform its obligations under a 23 contract where Defendant agreed to perform “a subsurface exploration and geotechnical 24 evaluation of property [in Georgia that Plaintiff] was evaluating for purchase, to determine 25 the suitability of the land for building several mission critical data centers and creating a 26
27 1Defendant filed a response (ECF No. 20), and Plaintiff filed a reply (ECF No. 21). The Court also reviewed Plaintiff’s response (ECF No. 15), and Defendant’s reply (ECF 28 No. 17) to Defendant’s motion to dismiss. 1 new” campus for Plaintiff in Georgia (the “Contract”). (ECF No. 1-1 at 3; see also id. at 19- 2 24 (Contract).) Plaintiff brings claims for: (1) breach of contract; (2) intentional interference 3 with prospective economic advantage; (3) deceptive trade practices under NRS § 4 598.0915; (4) fraud; (5) negligence; (6) negligent misrepresentation; (7) gross negligence; 5 (8) breach of good faith and fair dealing; (9) unjust enrichment; and (10) declaratory relief. 6 (Id. at 8-16.) 7 Plaintiff’s Motion is primarily based on the forum selection clause in the Contract. 8 (ECF No. 16 at 6-12.) The forum selection clause of the Contract reads: Jurisdiction and Venue. The interpretation and enforcement of this 9 Agreement shall be governed by the laws of the State of Nevada, without regard to its conflict of laws provisions. Clark County, Nevada, shall be the 10 exclusive venue and jurisdiction for any dispute arising out of or related to this Agreement; except that either party may take interim action in any 11 jurisdiction to prevent disclosure of Confidential Information or to enforce a judgment or other decision. 12 13 (ECF No. 1-1 at 22.) Defendant invoked the Court’s diversity jurisdiction in removing this 14 case to this Court under 28 U.S.C. § 1332(a). (ECF No. 1 at 3.) 15 III. DISCUSSION 16 Federal courts are courts of limited jurisdiction, having subject-matter jurisdiction 17 only over matters authorized by the Constitution and Congress. See U.S. Const. art. III, § 18 2, cl. 1; see also, e.g., Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 19 (1994). A suit filed in state court may be removed to federal court if the federal court would 20 have had original jurisdiction over the suit at the commencement of the action. See 28 21 U.S.C. § 1441(a). However, courts strictly construe the removal statute against removal 22 jurisdiction, and “[f]ederal jurisdiction must be rejected if there is any doubt as to the right 23 of removal in the first instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) 24 (emphasis added). The party seeking removal such as Defendant here bears the burden 25 of establishing federal jurisdiction. See Kokkonen, 511 U.S. at 377. 26 “A forum selection clause operates outside of the various requirements for removal 27 specified in [28 U.S.C.] §§ 1441–1453.” Kamm v. ITEX Corp., 568 F.3d 752, 756 (9th Cir. 28 1 2009). “Instead, a forum selection clause is similar to other grounds for not exercising 2 jurisdiction over a case, such as abstention in favor of state court jurisdiction under 3 Younger v. Harris, 401 U.S. 37 (1971), and related abstention cases, or a refusal to 4 exercise supplemental jurisdiction and a resulting remand to state court under 28 U.S.C. 5 § 1367(c).” Id. “[A] forum selection clause does not [normally] deprive a federal court of 6 subject matter jurisdiction.” Id. at 754. 7 But “[a]n agreement limiting venue for litigation to a particular county 8 unambiguously prohibits litigation in federal court when there is no federal courthouse 9 located in the designated county.” City of Albany v. CH2M Hill, Inc., 924 F.3d 1306, 1308 10 (9th Cir. 2019). In contrast, “a forum selection clause that vests ‘exclusive jurisdiction and 11 venue’ in the courts ‘in’ a county provides venue in the state and federal courts located in 12 that county[,]” Simonoff v. Expedia, Inc., 643 F.3d 1202, 1207 (9th Cir. 2011), if there is a 13 federal courthouse in that county. See City of Albany, 924 F.3d at 1308 (discussing 14 Simonoff). Thus, if a forum selection clause specifies that disputes must be resolved in a 15 particular county, this Court may retain jurisdiction over the case if there is a federal 16 courthouse located in that county, but not if there is no federal courthouse there—in which 17 case the Court must remand. 18 But the Court may remand even where not required by City of Albany, and will do 19 so here—because the Court must remand if there is any doubt as to the right of removal 20 in the first instance, and the plain language of the Contract’s forum selection clause 21 compels the conclusion that the parties intended to limit potential litigation to the state 22 courts in Clark County, Nevada. 23 Plaintiff argues in pertinent part that the language of the forum selection clause 24 mandates the exclusive venue for any litigation between the parties is the state court 25 located in Clark County, Nevada. (ECF No. 16 at 6-12.) Defendant counters that this case 26 27 28 1 can proceed in this Court because it too is located in Clark County, Nevada. (ECF No. 20 2 at 4-6.) The Court agrees with Plaintiff. 3 The Court applies federal law in interpreting the forum selection clause of the 4 Contract, starting with the plain language of the Contract. See Simonoff, 643 F.3d at 1205. 5 The Court understands that the “common or normal meaning of language will be given to 6 the words of a contract unless circumstances show that in a particular case a special 7 meaning should be attached to it[.]” Id. (citation omitted). The key language in the Contract 8 uses neither ‘in,’ which has been interpreted to provide merely a geographic restriction on 9 venue unless there is no federal courthouse in the specified county, nor ‘of,’ which has 10 been interpreted to vest exclusive jurisdiction in a state court. See id. at 1205-7; see also 11 City of Albany, 924 F.3d at 1307-9. Instead, the forum selection clause is written, “Clark 12 County, Nevada, shall be the exclusive venue and jurisdiction for any dispute arising out 13 of or related to this Agreement[.]” (ECF No. 1-1 at 22.) 14 Despite using neither ‘of’ nor ‘in,’ the phrasing of the forum selection clause 15 unambiguously reflects the parties’ intent to provide for any disputes to be litigated in the 16 state court in Clark County—the Eighth Judicial District Court in and for the County of 17 Clark. First, ‘shall’ is traditionally understood to be mandatory, not permissive. See SHALL, 18 Black’s Law Dictionary (11th ed. 2019) (“Has a duty to; more broadly, is required to . . . 19 This is the mandatory sense that drafters typically intend and that courts typically uphold.”); 20 see also Simonoff, 643 F.3d at 1205 (stating that interpretation begins with plain 21 2Defendant also argues Plaintiff’s Motion was untimely because Plaintiff is trying to 22 manipulate the Court, pointing to the fact that Plaintiff previously filed a different state court case involving similar facts and allegations as this case that Defendant removed to another 23 Court in this District, which Judge Gordon then dismissed for failure to prosecute. (ECF No. 20 at 6-7.) But “the thirty-day time limit of § 1447(c) does not apply to a motion to 24 remand based on a forum selection clause specifying state rather than federal court as the appropriate forum.” Kamm, 568 F.3d at 757 (affirming the district court’s decision to 25 remand the case over a timeliness objection). The Court is thus unpersuaded by Defendant’s timeliness argument. In addition, Defendant argues Plaintiff’s Motion should 26 be denied because the requirements for diversity jurisdiction are satisfied here. (ECF No. 20 at 7-8.) But like in Kamm, 568 F.3d at 754, where it was “undisputed that there is 27 diversity jurisdiction[,]” the Court may still remand this case even if the requirements for diversity jurisdiction are otherwise satisfied when the forum selection clause of the 28 Contract compels such a result. 1 language); Kamm, 568 F.3d at 755 (turning to Black’s Law Dictionary to interpret terms). 2 Thus, the Contract specifies that any litigation must be initiated in Clark County. Second, 3 this clause provides that Clark County shall be the exclusive jurisdiction (in addition to 4 venue) for any litigation. (ECF No. 1-1 at 22.) The concept of jurisdiction goes to power, 5 not location. See Simonoff, 643 F.3d at 1205-6 (discussing the relevant distinctions 6 between power and geography in this context). And this Court does not derive its power 7 from Clark County—it derives its power from the U.S. Constitution and federal laws. Thus, 8 the parties must have been referring to state court when they negotiated this provision. 9 Third, the parties could have expressly mentioned the federal court located in Clark County 10 like the parties in Nevada Corp. Headquarters, Inc. v. Sellers Playbook, Inc., Case No. 11 2:18-cv-01842-JCM-GWF, 2019 WL 3210068, at *4-*5 (D. Nev. July 16, 2019) (holding 12 that a forum selection clause specifying that any litigation “shall be commenced exclusively 13 in the Eighth Judicial District Court of Nevada or the federal courts located in the same 14 location thereof, as Clark County is considered the place of execution of this Agreement[,]” 15 clearly and unambiguously provided that litigation could be initiated in either court) 16 (emphasis in original), but they did not. Especially considering that the Court presumes 17 both parties are reasonably sophisticated commercial entities with competent counsel, the 18 absence of a reference to federal court in the forum selection clause suggests the absence 19 was intentional. For all of these reasons, the Court finds that the forum selection clause of 20 the Contract unambiguously provides for resolution of any dispute in the state court of 21 Clark County, Nevada—not this Court. 22 Moreover, the Court is mindful that it must reject federal jurisdiction “if there is any 23 doubt as to the right of removal in the first instance.” Gaus, 980 F.2d at 566. This general 24 rule further tips the Court’s analysis towards remand. In sum, the Court will grant the 25 Motion. 26 /// 27 28 1 IV. CONCLUSION 2 The Court notes that the parties made several arguments and cited to several cases 3 not discussed above. The Court has reviewed these arguments and cases and determines 4 that they do not warrant discussion as they do not affect the outcome of the motions before 5 the Court. 6 It is therefore ordered that Plaintiff’s motion to remand (ECF No. 16) is granted. 7 It is further ordered that this action is remanded to the Eighth Judicial District Court 8 in and for the County of Clark (Case No. A-19-789196-C, Dept. No. 14). 9 The Clerk of Court is directed to close this case. 10 DATED THIS 1st day of October 2019.
12 MIRANDA M. DU 13 CHIEF UNITED STATES DISTRICT JUDGE 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28