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Atomi, Inc. v. RCA Trademark Management

United States District Court, S.D. New York

March 30, 2015

ATOMI, INC., Plaintiff,
v.
RCA TRADEMARK MANAGEMENT, S.A.S., and JOHN DOE # 1 through JOHN DOE # 10, Defendants.

OPINION & ORDER

VALERIE CAPRONI, District Judge.

Plaintiff Atomi, Inc. sued Defendant RCA Trademark Management, S.A.S. ("RCA") for breach of contract, fraudulent inducement, and unjust enrichment related to the parties' trademark licensing agreement (the "Agreement"). RCA moved to dismiss the Complaint on the basis of forum non conveniens because the Agreement's forum-selection clause designated the courts of Paris, France as the exclusive forum. RCA also moved for attorneys' fees under French law.[1] For the reasons that follow, RCA's motion to dismiss is GRANTED and RCA's motion for attorneys' fees is DENIED.

BACKGROUND[2]

Plaintiff markets consumer electronics, mobile accessories, and travel products. Compl. ¶ 9. RCA licensed the RCA trademark to Plaintiff in 2012. Compl. ¶ 10. According to Plaintiff, the Agreement granted Plaintiff an "exclusive, personal, non-sub-licensable and non-transferable limited license" to use RCA's trademarks on cellular phone accessories (the "Trademarks"). Compl. ¶¶ 11-12. In 2013, Voxx International Corporation ("Voxx") sued Plaintiff (the "Voxx Suit"), alleging, inter alia, that its exclusive license to the Trademarks was superior to Plaintiff's license. Compl. ¶¶ 20-22. Plaintiff alleges that RCA refused to defend the Voxx Suit despite an indemnification clause in the Agreement. Compl. ¶¶ 34-36, 41. As part of its settlement with Voxx, Plaintiff agreed to discontinue its use of the Trademarks. Compl. ¶ 41. Plaintiff now seeks damages from RCA for breach of contract, fraud in the inducement unjust enrichment, and restitution.

RCA moved to dismiss the Complaint for forum non conveniens based on the Agreement's exclusive forum-selection clause. Dkt. 20. Section 15.1 of the Agreement states: "THIS AGREEMENT SHALL BE GOVERNED BY FRENCH LAW." Cadieux Decl. Ex. A at 17. Section 15.2 provides:

In case of any dispute regarding the Agreement, which cannot be settled by amicable negotiations between the Parties, the Court of Paris, France, shall have exclusive jurisdiction. Licensee [Atomi] hereby consents to personal jurisdiction and venue therein and hereby waives any right to object to personal jurisdiction or venue therein.

Id. Plaintiff argues that the forum-selection clause is unenforceable. Pl. Mem. at 2, 11-13.

Because Plaintiff is bound by the forum-selection clause, RCA's motion is GRANTED, and the Complaint is DISMISSED.

LEGAL STANDARD

When a forum-selection clause points to a foreign forum, the appropriate way to enforce the clause is through the doctrine of forum non conveniens. Martinez v. Bloomberg LP, 740 F.3d 211, 216 (2d Cir. 2014) (citing Atl. Marine Constr. Co. v. U.S. District Court for the Western District of Texas, ___ U.S. ___, 134 S.Ct. 568, 580 (2013)). In deciding RCA's motion to dismiss based on the forum-selection clause, the Court may rely on the pleadings and affidavits submitted in support of the motion but must resolve all factual questions in favor of the Plaintiff. Id. at 216-17.

"Determining whether to dismiss a claim based on a forum selection clause involves a four-part analysis. The first inquiry is whether the clause was reasonably communicated to the party resisting enforcement." Phillips v. Audio Active Ltd., 494 F.3d 378, 383 (2d Cir. 2007). The second step involves determining whether the clause is "mandatory or permissive, " i.e., "whether the parties are required to bring any dispute in to the designated forum or simply permitted to do so." Id. "Part three asks whether the claims and parties involved in the suit are subject to the forum selection clause." Id. "If the forum clause was communicated to the resisting party, has mandatory force and covers the claims and parties involved in the dispute, it is presumptively enforceable." Id. The final step is "to ascertain whether the resisting party has rebutted the presumption of enforceability by making a sufficiently strong showing that enforcement would be unreasonable or unjust, or that the clause was invalid for such reasons as fraud or overreaching.'" Id. at 383-84 (quoting M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972)). The enforceability of the forum-selection clause at step four is determined by federal law, and the resisting party faces the "heavy burden' of showing that it would be unfair, unjust, or unreasonable to hold that party to his bargain.'" Martinez, 740 F.3d at 217-19 (quoting M/S Bremen, 407 U.S. at 18-19).

Plaintiff does not dispute that the Agreement's forum-selection clause was reasonably communicated, that it is mandatory, or that the claims and parties involved in the suit are subject to the clause. Plaintiff focuses solely on the fourth step but argues that RCA failed to carry the burden of demonstrating that the forum-selection clause would be enforceable under French law. Pl. Mem. at 13. Because Plaintiff has not contested the first three factors, the forum selection clause is presumptively enforceable, putting the "heavy burden" on the "resisting party" (here, the Plaintiff) to overcome the presumed enforceability of the clause by showing that enforcement would be "unfair, unjust, or unreasonable." M/S Bremen, 407 U.S. at 16-18.

The Circuit has established four factors for district courts to consider when determining whether a "resisting party" has met that heavy burden. Martinez, 740 F.3d at 227-28. A presumptively valid forum selection clause will not be enforced if:

(1) [i]ts incorporation was the result of fraud or overreaching; (2) the law to be applied in the selected forum is fundamentally unfair; (3) enforcement contravenes a strong public policy of the forum in which suit is brought; or (4) trial in the selected forum will be so difficult and ...

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