UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
______________________________
CYNERGY SYSTEMS, INC., :
:
Plaintiff, :
v. : Civil Action No. 09-1079 (GK)
:
BRIGHT SCHOOL, INC., and :
JOSEPH PUTHUR, :
:
Defendants. :
______________________________:
MEMORANDUM OPINION
Plaintiff Cynergy Systems, Inc. brings this action pursuant to
28 U.S.C. § 1332 against Defendants Bright School, Inc. (BSI) and
Joseph Puthur. This matter is before the Court on Defendants’
Motion to Dismiss for Improper Venue or, In the Alternative, to
Transfer [Dkt. No. #5].
I. Background
Plaintiff is a Virginia corporation, with its principal place
of business in the District of Columbia, that develops and supplies
computer software. Compl. ¶ 1. Defendant BSI is a San Francisco-
based California corporation “formed for the purpose of providing
software products in the educational arena.” Def.’s Mot. 3-4.
Defendant Puthur is the founder, president, and principal of BSI
and currently resides in the State of Florida. Puthur Decl. ¶¶ 1,
3, 6. Plaintiff alleges that Puthur is the sole owner of BSI, and
that BSI is now insolvent and not actively engaged in business.
Pl.’s Opp’n 2.
The Complaint alleges that Cynergy entered into a contract in
January of 2008 with BSI to provide computer software design and
development services. Compl. ¶ 7. Cynergy claims BSI breached its
contract, alleging a failure to pay Cynergy an amount owed of
$524,000 for services rendered. Id. ¶¶ 1-20. Puthur, allegedly
acting on his own behalf and on behalf of BSI, is accused of
misrepresenting to Cynergy the level of funding secured by BSI,
thereby fraudulently inducing Cynergy to enter into their contract.
Id. ¶¶ 21-38. Without answering Cynergy’s Complaint, Defendants
moved to dismiss the action for improper venue or, in the
alternative, to transfer venue to the Northern District of
California.
II. Analysis
As an initial matter, dismissal for improper venue under Fed.
R. Civ. P. 12(b)(3) would be inappropriate in this case, given the
disadvantage that would be imposed on Plaintiff and the possibility
of transfer. In addition, it bears emphasis that Defendants’ Motion
does not argue that venue in this Court is improper or make a forum
non conveniens argument, pursuant to 28 U.S.C. § 1404(a). In fact,
as Defendants themselves observe in the Reply, the only argument
they make in support of the Motion is that Section 16 of the
contract between Cynergy and BSI, which contains a forum selection
clause, requires that suit be brought in California. Def.’s Reply
2.
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A plaintiff’s choice of forum is entitled to deference, and
the moving party carries the burden of demonstrating that a
transfer is warranted. Schmidt v. American Institute of Physics,
322 F.Supp.2d 28, 33 (D.D.C. 2004); Montgomery v. STG Int'l, Inc.,
532 F.Supp.2d 29, 32 (D.D.C. 2008). However, a case may be
transferred to another venue “[f]or the convenience of parties and
witnesses, in the interest of justice[.]” 28 U.S.C. § 1404(a). See
also Piper Aircraft Co. v. Reyno, 454 U.S. 235, 253 (1981). In a
diversity case such as this one, a forum selection clause does
carry a presumption of enforceability. Worldwide Network Services,
LLC v. DynCorp Intern., 496 F.Supp.2d 59, 62 (D.D.C. 2007).
Section 16 of the contract between Cynergy and BSI reads in
part:
The parties shall submit to the jurisdiction of, and
accept that venue is proper in, the State of [sic]
Federal Courts of the State of California in any legal
action or proceeding.
Ex. A to Compl.
In Byrd v. Admiral Moving and Storage, Inc., 355 F.Supp.2d 234
(D.D.C. 2005), Judge Huvelle distinguished between a “non-
mandatory” forum selection clause, which requires language clearly
establishing exclusive jurisdiction and venue, and a permissive
clause, which only provides that jurisdiction and venue will be
proper in a given forum. In Byrd, the forum selection clause
provided that “the parties specifically agree that venue shall lie
in Broward County, Florida.” As Judge Huvelle emphasized, “[j]ust
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because the contract establishes that venue lies in Florida does
not mean that it cannot also lie elsewhere, as is the case here. .
. . [The clause] does not state that venue “shall ONLY lie” in
Broward County, Florida.” Id. at 238-39 (emphasis in original).
The Ninth Circuit’s decision in Hunt Wesson Foods, Inc. v.
Supreme Oil Co., 817 F.2d 75 (9th Cir. 1987), makes the same point.
There, the court was presented with a forum selection clause that
stated that “the courts of California, County of Orange, shall have
jurisdiction over the parties in any action at law relating to the
subject matter or the interpretation of this contract.” Id. at 76.
The court held that:
Although the word ‘shall’ is a mandatory term, here it
mandates nothing more than that the Orange County courts
have jurisdiction. . . . Such consent to jurisdiction,
however, does not mean that the same subject matter
cannot be litigated in any other court.
Id. at 77. See also John Boutari and Son, Wines and Spirits, S.A.
v. Attiki Importers and Distributors, Inc., 22 F.3d 51 (2d Cir.
1994) (finding forum selection clause, in the absence of terms
conferring exclusive jurisdiction on specific courts, to be
permissive); Keaty v. Freeport Indonesia, Inc., 503 F.2d 955 (5th
Cir. 1974) (finding permissive a forum selection clause stating
that “the parties submit to the jurisdiction of the courts of New
York”).
Similar to those in Byrd and Hunt Wesson Foods, Inc., the
forum selection clause in this case mandates only that the parties
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“shall submit” to jurisdiction and agree that venue is proper in
California if suit should be brought there. Section 16 fails to
include any language conferring exclusive venue in the Federal or
State courts in California, and as such is more properly read as
a permissive clause that does not prevent venue from lying in this
Court. As such, and in the absence of any argument that venue in
this Court is improper, Cynergy’s choice of forum is entitled to
deference.
III. Conclusion
In light of the language used by the parties in Section 16,
this Court concludes that the forum selection clause is permissive
and not, as Defendants argue, mandatory. Therefore, the
Defendants’ Motion to Dismiss for Improper Venue or, In the
Alternative, to Transfer is denied.
/s/
September 22, 2009 Gladys Kessler
United States District Judge
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