2023 UT App 25
THE UTAH COURT OF APPEALS
FERNANDO VOLONTE,
Appellant,
v.
DOMO, INC., ET AL.,
Appellees.
Opinion
No. 20210399-CA
Filed March 9, 2023
Fourth District Court, Provo Department
The Honorable Darold J. McDade
No. 190401778
Jon V. Harper, Francis A. Bottini Jr., and Yury A.
Kolesnikov, Attorneys for Appellant
Gregory M. Saylin, Cory A. Talbot, Michelle Quist,
Ignacio E. Salceda, Gregory L. Watts, Stephanie L.
Jensen, Tyre L. Tindall, and Steffen N. Johnson,
Attorneys for Domo Appellees1
Matthew L. Lalli, Annika L. Jones, and Adam S.
Hakki, Attorneys for Underwriter Appellees2
Juliana M. Yee, Attorney for Amicus Curiae
Chamber of Commerce of the United States
of America
1. Domo Appellees include Domo, Inc., Joshua G. James, Bruce
Felt, Fraser Bullock, Matthew R. Cohler, Dana Evan, Mark
Gorenberg, Nehal Raj, and Glenn Solomon.
2. Underwriter Appellees include Morgan Stanley & Co., Credit
Suisse Securities, Allen & Co., William Blair & Company, UBS
Securities, Cowen and Company, and JMP Securities.
Volonte v. Domo, Inc.
JUDGE RYAN D. TENNEY authored this Opinion, in which
JUSTICES DIANA HAGEN and JILL M. POHLMAN concurred.3
TENNEY, Judge:
¶1 Domo, Inc. (Domo) provides a cloud-based platform that
gives customers access to certain data-processing services. After
Domo went public in June 2018, Fernando Volonte purchased
some of its stock. In November 2019, Volonte sued both Domo
and various entities that had assisted it in going public, raising
claims against them under the Securities Act of 1933 (the
Securities Act). See 15 U.S.C. § 77. Volonte filed his suit in Utah
state court, even though Domo’s corporate bylaws stated that all
claims against it arising under the Securities Act could only be
litigated in “the federal district courts of the United States of
America.”
¶2 Domo and the other defendants moved to dismiss
Volonte’s complaint for improper venue, and the district court
granted that motion. Volonte now appeals that decision. For the
reasons set forth below, we affirm.
BACKGROUND
Domo’s Bylaws and Sciabacucchi
¶3 Domo is a Delaware corporation that was founded in 2010.
It’s headquartered in American Fork, Utah, and it provides a
cloud-based platform to its customers. Domo went public on June
29, 2018. In connection with its initial public offering (IPO), Domo
3. Justices Diana Hagen and Jill M. Pohlman began their work on
this case as members of the Utah Court of Appeals. They each
became members of the Utah Supreme Court thereafter and
completed their work on this case sitting by special assignment as
authorized by law. See generally Utah R. Jud. Admin. 3-108(4).
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Volonte v. Domo, Inc.
filed a registration statement and a prospectus (collectively, the
Offering Documents). These documents were prepared by
various investment banks that aided Domo with its IPO
(collectively, the Underwriter Defendants), and the documents
contained Domo’s corporate bylaws. One of these bylaws set forth
what the parties have called a “federal forum provision,” or, as an
alternative shorthand, an “FFP.” Domo’s FFP states:
Unless the corporation consents in writing to the
selection of an alternative forum, the federal district
courts of the United States of America shall be the
exclusive forum for the resolution of any complaint
asserting a cause of action arising under the
Securities Act of 1933, as amended.
¶4 About six months after Domo’s IPO, the Delaware Court of
Chancery issued a decision holding that FFPs like Domo’s were
facially invalid under Delaware law. See Sciabacucchi v. Salzberg,
No. 2017-0931-JTL, 2018 WL 6719718 (Del. Ch. Dec. 19, 2018). In
light of this decision, Domo filed a publicly accessible Form 8-K
(the Form 8-K) on January 7, 2019, which stated in relevant part:
On December 19, 2018, the Delaware
Chancery Court issued an opinion . . . invalidating
provisions in the certificates of incorporation of
Delaware corporations that purport to limit to
federal court the forum in which a stockholder
could bring a claim under the Securities Act of 1933,
as amended . . . . This case may be appealed to the
Delaware Supreme Court.
Article XI of the Amended and Restated
Bylaws (the “Bylaws”) of Domo, Inc. . . . contains a
similar federal forum selection provision. As such,
and in light of the recent Sciabacucchi decision, the
Company does not currently intend to enforce the
foregoing federal forum selection provision unless
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Volonte v. Domo, Inc.
the Sciabacucchi decision is appealed and the
Delaware Supreme Court reverses the decision. If
there is no appeal of the Sciabacucchi decision or if
the Delaware Supreme Court affirms the Chancery
Court’s decision, then the Company intends to
amend the Bylaws to remove the invalid provision.
Sometime after Domo filed the Form 8-K, the Sciabacucchi decision
was appealed to the Delaware Supreme Court.
Volonte’s Complaint
¶5 Volonte purchased Domo stock pursuant and traceable to
Domo’s IPO. After Volonte purchased his stock, Domo
announced disappointing financial results and provided
guidance for the upcoming fiscal year that “fell short of market
expectations.” After these reports were issued, Volonte filed a
class action suit in Utah state court “on behalf of a class consisting
of all persons and entities . . . that purchased or otherwise
acquired Domo common stock pursuant and/or traceable to”
Domo’s IPO.
¶6 At the outset of his complaint, Volonte alleged that the
Offering Documents “contained materially incorrect or
misleading statements and/or omitted material information that
was required to be disclosed.” Volonte identified as defendants
Domo and a group of its current and former officers (collectively,
Domo), as well as the Underwriter Defendants. With respect to
the Underwriter Defendants, Volonte alleged that they had
“help[ed] to solicit investors to buy Domo stock in the IPO,” had
failed “to conduct adequate due diligence,” and had “acted as
financial advisors for and assisted in the preparation and
dissemination of [Domo’s] false and misleading” Offering
Documents.
¶7 Volonte pleaded three causes of action, each of which was
based on the Securities Act. See 15 U.S.C. § 77. The first two were
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Volonte v. Domo, Inc.
pleaded against “All Defendants”—meaning, both Domo and the
Underwriter Defendants. The third was pleaded against certain of
the “Individual Defendants” who were directors at Domo at the
time of the IPO.
¶8 Volonte filed this suit on November 8, 2019. At that time,
the Sciabacucchi decision had already been appealed to the
Delaware Supreme Court, but that court had not yet ruled on it.4
Domo’s Motion to Stay
¶9 In January 2020, Domo moved to stay Volonte’s suit in light
of another pending class action that had been filed against it.
Domo noted that the other suit had been filed against it in the
United States District Court for the District of Utah just three
weeks before Volonte filed this suit in Utah state court, that the
other suit alleged similar claims to Volonte’s, and that the other
suit sought to represent the same class of shareholders that
Volonte sought to represent. A few months later, the Utah state
court denied Domo’s motion to stay Volonte’s suit, reasoning that
the federal action was materially different from Volonte’s suit
because the federal action did not include one of Volonte’s claims
and did not name the Underwriter Defendants as defendants.
Domo’s Motion to Dismiss
¶10 While Domo’s motion to stay was pending before the
district court, the Delaware Supreme Court issued Salzberg v.
Sciabacucchi, 227 A.3d 102, 138 (Del. 2020), which reversed the
Delaware Court of Chancery’s Sciabacucchi decision and upheld
4. According to available public records from Delaware, it appears
that the opening brief in the case before the Delaware Supreme
Court was filed in September 2019, which was two months before
Volonte filed the suit at issue here.
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Volonte v. Domo, Inc.
the facial validity of FFPs under Delaware law.5 Relying on this
decision, Domo then filed a motion to dismiss Volonte’s suit for
improper venue. See Utah R. Civ. P. 12(b). The Underwriter
Defendants later moved to join that motion.
¶11 In its motion to dismiss, Domo argued that its bylaws
“designate federal courts as the exclusive forum for litigating
cases such as” Volonte’s and that “[t]his mandatory federal forum
provision” is both “valid and enforceable.” Domo noted that it’s
a Delaware corporation and that the Delaware Supreme Court’s
decision in Salzberg “unanimously and unambiguously upheld
the facial validity of federal forum provisions in the charters of
three Delaware corporations that are substantively identical to
Domo’s.” Domo then argued that Salzberg “applies equally” to a
corporation’s bylaws, and it asserted that its own FFP was
controlling in this case because it “squarely encompasse[d]
[Volonte’s] lawsuit since he only assert[ed] Securities Act claims.”
Domo further asserted that Utah federal court is not an unjustly
inconvenient forum because it has jurisdiction over federal claims
like Volonte’s and is competent to hear cases arising under the
Securities Act.
¶12 Volonte opposed the motion to dismiss on a number of
grounds. First, Volonte argued that the FFP was not a binding
5. In line with the practices of some appellate systems (though not
ours), the caption for the Delaware Supreme Court case listed the
appellant (Salzberg) first, even though that party was the
defendant (and thus listed second) in the court of chancery’s
caption. Both decisions come up with some frequency in this
opinion, so to avoid any potential confusion for readers, we again
note that Salzberg v. Sciabacucchi, 227 A.3d 102 (Del. 2020), is the
appeal of Sciabacucchi v. Salzberg, No. 2017-0931-JTL, 2018 WL
6719718 (Del. Ch. Dec. 19, 2018), and any short-cite or shorthand
references to Salzberg or Sciabacucchi, respectively, will reflect the
particular decision at issue.
20210399-CA 6 2023 UT App 25
Volonte v. Domo, Inc.
contractual provision, at least as applied to shareholders, because
of a lack of mutual assent and notice. Second, Volonte argued that
even if there had been mutual assent and notice, there was “no
binding forum selection clause in effect at the time [Volonte]
commenced this action” because the Form 8-K had stated that
Domo did not “currently intend to enforce” the FFP. (Emphases
omitted.) In conjunction with this argument, Volonte contended
that Domo had affirmatively “consented in writing to not
enforc[e]” the FFP when it issued the Form 8-K. (Emphases
omitted.) Third, Volonte argued that even if the FFP was valid, it
was unenforceable under the doctrines of promissory and
equitable estoppel because Volonte had relied to his detriment on
the Form 8-K’s assertion that Domo did not “currently intend to
enforce” the FFP when he filed his suit in state court. Fourth,
Volonte argued that under Cyan, Inc. v. Beaver County Employees
Retirement Fund, 138 S. Ct. 1061, 1078 (2018), state courts can hear
Securities Act suits, and he then argued that the FFP was either
invalid or unenforceable because it conflicts with certain
anti-removal and anti-waiver principles from federal law.
¶13 At a subsequent hearing on Domo’s motion to dismiss,
Volonte introduced an additional argument, asking the court to
retain the case under the forum non conveniens doctrine.
Expounding on that argument, Volonte argued that “[Domo’s]
delay”—i.e., its previous motion to stay—had caused “the federal
forum” to not “exist anymore” because of statute of limitations
problems. As a result, Volonte asserted that there would not be
“an alternative forum to bring this case” should the court dismiss
it, so he asked the court not to do so.
¶14 In a separate filing, Volonte also opposed the Underwriter
Defendants’ motion to join Domo’s motion to dismiss. Volonte
argued that the Underwriter Defendants “cannot enforce the
[FFP] as third-party beneficiaries or under estoppel principles,”
and he further asserted that the Underwriter Defendants’ reliance
on the FFP was improper because they “are not signatories or
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Volonte v. Domo, Inc.
parties to the bylaws and are not agents of Domo.” (Emphases
omitted.)
¶15 In April 2021, the district court issued a written decision
that sided with Domo and the Underwriter Defendants and
dismissed Volonte’s suit. In its decision, the court “reject[ed] all
contentions” raised by Volonte.
¶16 First, the court noted that under the Delaware Supreme
Court’s decision in Salzberg, FFPs “are facially valid under
Delaware law.” The court further noted that, “[a]ccording to
Delaware law, bylaws are broad, binding agreements among
implicated parties” and that they “generally are binding on a
corporation’s shareholders.” The court noted that the Utah
Supreme Court has “generally recognized the ‘binding nature’ of
bylaws” too. Given that “the bylaw[s] constitute[d] a binding
agreement” under either Delaware or Utah law, the court rejected
Volonte’s arguments that “no mutual assent surrounded the
[FFP].”
¶17 Second, the court rejected Volonte’s arguments that the
Form 8-K created an agreement between Domo and the
shareholders under which Domo could not enforce the FFP. In the
court’s view, the Form 8-K “merely state[d] that Domo did not
intend to enforce the provision unless the Salzberg lower court
decision was appealed and reversed, which it was.”
¶18 Third, the court “disagree[d] with [Volonte’s] argument
that estoppel require[d] [the court] to deem the [FFP]
unenforceable.” Without further elaboration, the court concluded
that the “elements of estoppel” were “not met.”
¶19 Fourth, the court concluded that “Cyan does not preclude
enforcement of federal forum provisions in relation to Securities
Act claims.”
20210399-CA 8 2023 UT App 25
Volonte v. Domo, Inc.
¶20 Fifth, as to Volonte’s forum non conveniens argument, the
court held that because Volonte was “the party defying the
forum-selection clause,” he had “the burden of establishing that
the transfer to the forum for which the parties bargained is
unwarranted.” (Quoting Atlantic Marine Constr. Co. v. United
States Dist. Ct., 571 U.S. 49, 51 (2013).) The court also noted that
“application” of the forum non conveniens doctrine “is
discretionary” with a district court. The court then expressed its
view that the existence of a valid forum selection clause should be
“weighed heavily” in its forum non conveniens analysis. On this
front, the court noted that it saw no reason to “ignore the forum
provision.”
¶21 To the extent that Volonte’s forum non conveniens
argument also asserted that there was no longer “an adequate,
available alternative forum,” the court noted that this was an
argument that Volonte had only “raised during oral argument.”
In the court’s view, it had “very little to consider regarding” this
“dispositive issue.” The court noted that Volonte “did not present
a convincing argument or present any facts” showing that he had
been “precluded from filing” his suit “in federal court.” It noted
that “no party asked [it] to consider supplemental briefing” on
this “specific, dispositive matter” and that it was “not the duty of
[the court] to seek out and provide such information to itself.” The
court observed that “no party” (including Domo and the
Underwriter Defendants) had “provided adequate argument or
briefing regarding whether” Volonte “could or could not
currently bring his claims in federal court” and that the “parties
merely glossed over the issue.” The court opined that it could not
“overstate the importan[ce] of such omission.” Addressing this
argument on what had been given, the court observed that it
appeared that Volonte “could have and should have brought suit
in federal court”—or, instead, “in both state and federal court.”
While the court expressed some “sympath[y]” for Volonte’s
position, it noted that “despite the clear language of the” FFP,
Volonte had “declined to file a federal complaint.” From all this,
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Volonte v. Domo, Inc.
the court concluded that the forum non conveniens doctrine did
not prevent it from enforcing the otherwise valid FFP.
¶22 Finally, the court granted the Underwriter Defendants’
motion to join Domo’s motion to dismiss. The court held that
“[r]equiring a bifurcated trial on the same issues” would
“contravene[] the objective of modern procedure, which is to
litigate all claims in one action if that is possible.” (Quoting Prows
v. Pinpoint Retail Sys., Inc., 868 P.2d 809, 813 (Utah 1993).) The
court further opined that “a range of transaction participants,
parties and non-parties, should benefit from and be subject to
forum selection clauses,” particularly where “the alleged conduct
of the non-parties is so closely related to the contractual
relationship.” (Quoting Manetti-Farrow, Inc. v. Gucci Am., Inc., 858
F.2d 509, 514 n.5 (9th Cir. 1988).) Expressing the view that it would
create “unnecessary burdens” to prevent the Underwriter
Defendants from joining that motion, the court granted the
Underwriter Defendants’ request, thereby dismissing the suit as
to them as well.
Volonte’s Motion to Alter, Amend, or Reconsider
¶23 Volonte subsequently filed a “motion to amend or alter
judgment under rule 59 or, in the alternative, request for
reconsideration.” With respect to his forum non conveniens
argument, Volonte asked the court to hold that it was Domo’s
burden—not his—to demonstrate “that there currently exists an
alternative available forum.” Volonte further asserted that “the
federal forum is no longer available because the one-year statute
of limitations expired on September 5, 2020,” and that since Domo
“failed to show that an adequate alternative forum exists,” the
court should have denied Domo’s motion to dismiss on this basis.
(Emphases omitted.)
¶24 The district court rejected Volonte’s motion. The court
noted that Volonte had not asked it “to amend or make additional
findings of fact,” but that he had only asked the court to “amend
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Volonte v. Domo, Inc.
conclusions of law.” In the court’s view, this limited its review to
the facts that had been before it at the time of its earlier decision.
The court further noted that Volonte had “not brief[ed] the
[statute of limitations] issue” previously and that his prior factual
assertions had “only supported a claim that he might be barred
from filing the claims in federal court.” (Emphasis in original.)
Moreover, the court pointed out that it had already conducted “a
robust forum non conveniens analysis based on the facts and
arguments before it” and that it had rejected Volonte’s argument
on those facts earlier. Because the court previously had “no
relevant information to rely on regarding [the] availability of an
alternative forum, and because the [c]ourt found the forum
provision clause to be valid and enforceable,” the court
“decline[d] to further revisit or disturb [the] legal conclusions
within the subject ruling.”
¶25 Volonte timely appealed the district court’s decision to
dismiss his case.
ISSUES AND STANDARDS OF REVIEW
¶26 Volonte raises six issues on appeal.
¶27 First, Volonte argues that the district court erred in
construing Domo’s FFP as being part of a binding contract
between Domo and its stockholders because, in Volonte’s view,
there was no “meeting of the minds . . . with regard to the” FFP.
Second, Volonte separately argues that the Form 8-K created a
binding contract that barred Domo from enforcing the FFP and
that the district court erred in concluding otherwise. “Whether a
contract exists is a legal determination,” so we review the rulings
on these two issues for correctness. Thomas v. Mattena, 2017 UT
App 81, ¶ 6, 397 P.3d 856.
¶28 Third, Volonte argues that the FFP is unenforceable under
the doctrines of equitable or promissory estoppel. “Claims based
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Volonte v. Domo, Inc.
on equitable doctrines are mixed questions of fact and law.”
Cottonwood Improvement Dist. v. Qwest Corp., 2013 UT App 24, ¶ 2,
296 P.3d 754 (quotation simplified). “Accordingly, we defer to a
trial court’s factual findings unless there is clear error,” but we
“review its legal conclusions for correctness.” Id. (quotation
simplified). “However, because of the fact-intensive nature of
equitable doctrines, we grant the trial court broader discretion in
applying the law to the facts.” Id. (quotation simplified).
¶29 Fourth, Volonte argues that Domo’s FFP “violate[s] the
Securities Act’s anti-removal and anti-waiver provisions.” This
presents us with a question of statutory interpretation, which is a
question of law that we review for correctness. See Tolle v. Fenley,
2006 UT App 78, ¶ 11, 132 P.3d 63.
¶30 Fifth, Volonte argues that under the forum non conveniens
doctrine, “enforcement of the [FFP] would be unreasonable
because there is no longer any available alternative forum” for
him to prosecute his class claims. “It is a general rule that the trial
court’s discretion to invoke the doctrine of forum non-conveniens
will not be interfered with by an appellate court, absent an abuse
of discretion.” Kish v. Wright, 562 P.2d 625, 628 (Utah 1977).
¶31 Finally, Volonte argues that the district court erred when it
allowed the Underwriter Defendants to join in Domo’s motion to
dismiss because, as non-signatories to the bylaws, “the
Underwriter Defendants were not entitled to invoke the” FFP.
Volonte argues that we should review this question for
correctness because, in his view, the district court’s interpretation
of the FFP is a question of law. The Underwriter Defendants,
however, argue that this should be reviewed for an abuse of
discretion. See Jacobsen Constr. Co. v. Teton Builders, 2005 UT 4, ¶ 9,
106 P.3d 719 (“A district court’s decision to enforce a forum
selection clause is reviewed for abuse of discretion.”). We need
not resolve this dispute, however, because Volonte’s contention
fails under both standards.
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Volonte v. Domo, Inc.
ANALYSIS
¶32 Volonte challenges the district court’s ruling on six
grounds.
• First, he argues that the FFP was invalid because of a
lack of assent and notice.
• Second, he argues that the FFP was invalid because of
Domo’s Form 8-K.
• Third, he argues that the FFP was unenforceable under
the promissory and equitable estoppel doctrines.
• Fourth, he argues that the FFP conflicts with certain
provisions of the Securities Act.
• Fifth, he argues that the FFP should not have been
enforced under the forum non conveniens doctrine.
• Finally, he argues that even if the FFP was valid and
enforceable as to Domo, it was not enforceable by the
Underwriter Defendants.
Our substantive analysis of these issues is set forth in Parts I
through VI below. As explained there, we disagree with each of
Volonte’s arguments.
¶33 Before doing so, however, we first note that there’s
something of an overarching question about which state’s laws
govern the various issues. Domo contends that “Delaware law
governs the validity of Domo’s FFP” but that “its enforceability is
governed by Utah law.” In Domo’s view, the first and second
issues are issues of validity that are governed by Delaware law,
while the third through fifth issues are issues of enforceability that
are governed by Utah law. For his part, Volonte agrees with Domo
that “Utah law governs issues of [the] FFP’s enforceability,” but
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Volonte v. Domo, Inc.
he contends that Utah law also governs the issues regarding its
validity. With respect to the final issue (which, again, is a dispute
between Volonte and the Underwriter Defendants), the parties
are largely silent about the potential choice-of-law implications,
with both addressing the issue through a mixture of Utah and
non-Utah authority.
¶34 In our view, we need not decide whether there is indeed a
choice-of-law divide between the issues relating to the FFP’s
validity and its enforcement. We’ve previously recognized that a
determination about which state’s laws apply to an issue is
“[t]ypically” “preceded” by the determination that there “is a true
conflict between the laws of those states that are interested in the
dispute.” One Beacon Am. Ins. Co. v. Hunstman Polymers Corp., 2012
UT App 100, ¶ 26 n.10, 276 P.3d 1156. Other courts and authorities
have recognized this too. See, e.g., Phillips v. Marist Society, 80 F.3d
274, 276 (8th Cir. 1996) (concluding that “a court ought to satisfy
itself that there actually is a difference between the relevant laws
of the different states” “before entangling itself in messy issues of
conflict of laws” (quotation simplified)); Diamond Ranch Academy,
Inc. v. Filer, 117 F. Supp. 3d 1313, 1320 (D. Utah 2015) (“The court
only engages in a choice of law analysis if a true conflict exists
between the two state laws.”); Restatement (Second) of Conflict of
Laws § 302 cmt. d (Am. L. Inst. 1971) (suggesting that a choice of
law determination is only required when issues “would be
resolved differently under the local law rules of two or more
potentially interested states”).
¶35 As set forth below in Parts I and II, we see no determinative
difference between how Utah and Delaware would resolve the
first two issues. As a result, any resolution of the potentially
“messy issues of conflict of laws” relating to those issues proves
unnecessary. Phillips, 80 F.3d at 276 (quotation simplified). With
respect to the issues addressed in Parts III through V, we accept
the parties’ agreement that those issues should be analyzed under
Utah law and address them accordingly. Finally, with respect to
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Volonte v. Domo, Inc.
the issue addressed in Part VI, we do see at least a potential divide
between Utah and Delaware law. But in our view, Delaware law
controls the issue, not Utah law, and we further conclude that the
district court’s ruling was correct under Delaware substantive
law.
I. Assent and Notice
¶36 Volonte first argues that the FFP was invalid because of a
lack of assent and notice. Volonte’s arguments turn on a few key
assertions: namely, that the “Offering Documents issued in
connection with Domo’s IPO spanned hundreds of pages in small
print” and that the “reference to the [FFP] was made in just two
sentences buried on” two pages from the prospectus. (Emphases
omitted.) Relying on contract principles, Volonte then argues that
the FFP is “invalid” due to a lack of “sufficient notice” and a lack
of “mutual assent.” These arguments fail under both Utah and
Delaware law.
¶37 We’ll start with Utah. It “is well established precedent that
the bylaws of a corporation, together with the articles of
incorporation, constitute a contract between the members and the
corporation.” Swan Creek Village Homeowners Ass’n v. Warne, 2006
UT 22, ¶ 46, 134 P.3d 1122 (quotation simplified); accord Turner v.
Hi-Country Homeowners Ass’n, 910 P.2d 1223, 1225 (Utah 1996). As
for forum selection clauses within contracts, our supreme court
has adopted the Restatement’s view that an “agreement as to the
place of the action will be given effect unless it is unfair or
unreasonable.” Prows v. Pinpoint Retail Sys., Inc., 868 P.2d 809, 812
(Utah 1993) (quoting Restatement (Second) of Conflict of Laws
§ 80 (Am. L. Inst. Supp. 1988)); see also Energy Claims Ltd. v. Catalyst
Inv. Group Ltd., 2014 UT 13, ¶ 47, 325 P.3d 70 (“Forum selection
clauses that have been obtained through freely negotiated
agreements and are not unreasonable and unjust will be upheld
as valid.” (quotation simplified)). Because of this, a “plaintiff who
brings an action in violation of a choice-of-forum provision bears
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Volonte v. Domo, Inc.
the burden of proving that enforcing the clause is unfair or
unreasonable.” Energy Claims, 2014 UT 13, ¶ 53 n.83 (quotation
simplified).
This may be accomplished by proving (1) that the
chosen state would be so seriously an inconvenient
forum that to require the plaintiff to bring suit there
would be unjust; (2) that the choice-of-forum
provision was obtained by fraud, duress, the abuse
of economic power, or other unconscionable means;
or (3) that the courts of the chosen state would be
closed to the suit or would not handle it effectively
or fairly.
Bad Ass Coffee Co. of Hawaii, Inc. v. Royal Aloha Int’l, LLC, 2015 UT
App 303, ¶ 7, 365 P.3d 161 (quotation simplified).
¶38 Again, Volonte argues that the FFP was invalid because of
a lack of assent and notice. And the predicates for these arguments
are his assertions that that the bylaws were “unilaterally[]
adopted” and that the FFP was “buried and barely mentioned in
hundreds of pages” within the Offering Documents.
¶39 But the bylaws stated that “[a]ny person or entity
purchasing or otherwise acquiring any interest in any security of
the corporation shall be deemed to have notice of and consented
to the provisions” contained therein. Volonte has not argued that
he lacked the ability to review the bylaws before purchasing stock.
Nor, for that matter, has he provided us with any Utah authority
establishing that a purchaser of stock can invalidate a
corporation’s otherwise-valid bylaws through a lack-of-notice
argument of this sort. So far as we can tell, Utah has not addressed
this issue. But many other jurisdictions have, and they’ve widely
rejected claims such as this one. See, e.g., Kirleis v. Dickie, McCamey
& Chilcote, PC, 560 F.3d 156, 162–63 (3d Cir. 2009) (acknowledging
that “corporate law principles . . . generally impute to members of
the corporation knowledge and acceptance of corporate bylaws”);
20210399-CA 16 2023 UT App 25
Volonte v. Domo, Inc.
Cruise v. Castleton, Inc., 449 F. Supp. 564, 570 (S.D.N.Y. 1978)
(explaining that “members’ knowledge of the constitution and by-
laws is presumed”); North v. McNamara, 47 F. Supp. 3d 635, 643
(S.D. Ohio 2014) (explaining that “a plaintiff’s personal failure to
read or become aware of changes made to the bylaws does not
make the enforcement of the bylaw inequitable or unjust”);
Rushing v. Gold Kist, Inc., 567 S.E.2d 384, 387 (Ga. Ct. App. 2002)
(“The members of a corporation are as a general rule conclusively
presumed to have knowledge of its bylaws and cannot escape a
liability arising thereunder, or otherwise avoid their operation, on
a plea of ignorance of them.” (quotation simplified)); In re
Unexcelled, Inc., 281 N.Y.S.2d 173, 177 (N.Y. App. Div. 1967) (“The
stockholders are presumed to have knowledge of the
corporation’s by-laws.”). We find such conclusions persuasive.6
¶40 Moreover, to the extent that Volonte’s argument turns on
his assertion that this bylaw (i.e., the FFP) was “buried,” Volonte
points to no Utah authority (and we’re aware of none) holding
that an individual bylaw is invalid if the overall bylaws are
lengthy, nor does he offer any workable standard for determining
how “buried” a bylaw would have to be before it becomes
unenforceable. In any event, his argument here is belied by the
fact that the FFP was repeated several times (sometimes in bolded
and italicized font) within Domo’s Offering Documents. We
therefore reject his arguments and conclude that they fail under
Utah law.
¶41 The same would be true if this were assessed under
Delaware law. “In an unbroken line of decisions dating back
several generations, [the Delaware] Supreme Court has made
clear that the bylaws constitute a binding part of the contract
between a Delaware corporation and its stockholders.”
Boilermakers Local 154 Ret. Fund v. Chevron Corp., 73 A.3d 934, 955
(Del. Ch. 2013); accord BlackRock Credit Allocation Income Trust v.
6. As discussed shortly, Delaware treats such questions similarly.
20210399-CA 17 2023 UT App 25
Volonte v. Domo, Inc.
Saba Cap. Master Fund, Ltd., 224 A.3d 964, 977 (Del. 2020). In this
sense, “stockholders contractually assent to be bound by bylaws
that are valid.” Boilermakers, 73 A.3d at 958. And as to notice
claims, it’s settled that “[s]tockholders are on notice that, as to
those subjects that are [the] subject of regulation by bylaw[s],” a
corporation’s “board itself may act unilaterally to adopt bylaws
addressing those subjects.” Id. at 955–56. Indeed, this is precisely
“the kind of” procedure that “stockholders buy into” when they
purchase stock in a corporation. Id. at 956. By purchasing stock,
the shareholders “assent to not having to assent to board-adopted
bylaws.” Id. And “argument[s] to the contrary” therefore
“misunderstand[] the relationship between the corporation and
stockholders.” Id. at 940.
¶42 Corporate bylaws that limit forums are thus “contractually
valid as a facial matter” under Delaware law. Id. at 958. And this
includes FFPs in particular. In Salzberg, the Delaware Supreme
Court held that corporate boards have “statutory authority” to
adopt this very kind of provision and that such a provision “can
survive a facial challenge.” Salzberg v. Sciabacucchi, 227 A.3d 102,
109, 137–38 (Del. 2020) (quotation simplified).
¶43 As a result, whether viewed through Utah or Delaware
law, Volonte’s notice and assent arguments fail.7
7 . As a somewhat related matter, Volonte argues that under
Williams v. Walker-Thomas Furniture Co., 350 F.2d 445, 449 (D.C.
Cir. 1965), the FFP was unenforceable because there was an
“absence of meaningful choice.” But Williams was not a corporate
bylaw case; rather, it was about the unconscionability doctrine as
it relates to purchases of consumer goods. See id. Volonte has not
adequately briefed any argument about the applicability of the
unconscionability doctrine to a shareholder’s purchase of stock in
a corporation governed by bylaws, let alone demonstrated that he
(continued…)
20210399-CA 18 2023 UT App 25
Volonte v. Domo, Inc.
II. The Form 8-K
¶44 Volonte next argues that in the Form 8-K, Domo made a
“public commitment to not enforce” the FFP, that this
commitment “created a binding contract,” and that, “as a result,
there was no valid [FFP] in effect at the time that [Volonte]
commenced his lawsuit.”
¶45 Even if it were legally possible for a Form 8-K to create such
a contract or invalidate an otherwise valid bylaw (points that we
do not decide here), we see no basis for concluding that this Form
8-K did so in the manner suggested by Volonte. This is so because
this Form 8-K was decidedly conditional on its face. Volonte’s
argument hinges on the portion of the Form 8-K in which Domo
stated that it “does not currently intend to enforce the foregoing
federal forum selection provision.” But Volonte ignores the rest of
the sentence, wherein Domo stated that it did not “currently
intend to enforce the foregoing federal forum selection provision
unless the Sciabacucchi decision is appealed and the Delaware Supreme
Court reverses the decision.” (Emphasis added.)
¶46 The term “unless” suggests that two things are linked by a
condition. See Unless, Webster’s Third New Int’l Dictionary 2503
(2002) (defining “unless” as “except on the condition that”);
Unless, American Heritage Dictionary 1402 (2d ed. 1981) (same).
And as discussed, the stated condition here was triggered when
Sciabacucchi was appealed and then reversed by the Delaware
Supreme Court. Regardless of which state’s laws apply, we see no
basis for concluding that the Form 8-K created any sort of contract
under which Domo agreed to not enforce its FFP under the
somehow lacked a meaningful opportunity to review Domo’s
bylaws before he voluntarily purchased Domo stock. He’s
therefore provided us with no basis, and we see none, for
concluding that the unconscionability doctrine requires reversal
in this case.
20210399-CA 19 2023 UT App 25
Volonte v. Domo, Inc.
undisputed sequence of events at issue. Volonte’s second
argument thus fails.8
III. Estoppel
¶47 Volonte next argues that, even if the FFP is valid, it’s still
unenforceable under the promissory and equitable estoppel
doctrines. As with the argument addressed in Part II, Volonte’s
estoppel arguments largely turn on the Form 8-K.
A. Promissory Estoppel
¶48 Volonte first argues that he “acted with prudence and in
reasonable reliance on” the Form 8-K by “commencing this
action” in Utah state court. From this, he argues that the
promissory estoppel doctrine prevents Domo from enforcing the
FFP. We disagree.
¶49 “Promissory estoppel is an equitable claim for relief that
compensates a party who has detrimentally relied on another’s
promise.” E & H Land, Ltd. v. Farmington City, 2014 UT App 237,
¶ 29, 336 P.3d 1077 (quotation simplified). Of note here, the
“promise must be sufficiently clear and definite that the person
making the promise should reasonably expect the other party to
rely on it.” Id.; accord Lodge at Westgate Park City Resort & Spa
Condo. Ass’n Inc. v. Westgate Resorts Ltd., 2019 UT App 36, ¶ 26, 440
8 . In conjunction with this argument, Volonte notes that “the
[FFP] itself provides that it applies ‘unless the corporation
consents in writing to the selection of an alternative forum.’”
Volonte then asserts that the Form 8-K “amount[ed] to a ‘consent[]
in writing’ to the selection of an alternative forum.” But Volonte
points to nothing in the Form 8-K in which Domo affirmatively
consented to the selection of an alternative forum. Instead, as
discussed, Domo did nothing more than conditionally say that it
would not enforce the provision unless Sciabacucchi was appealed
and overruled, which is precisely what then happened.
20210399-CA 20 2023 UT App 25
Volonte v. Domo, Inc.
P.3d 793 (holding that the “promise must be reasonably certain
and definite, and a claimant’s subjective understanding of the
promisor’s statement cannot, without more, support a promissory
estoppel claim” (quotation simplified)); Mitchell v. ReconTrust Co.,
2016 UT App 88, ¶ 53, 373 P.3d 189 (holding that “promissory
estoppel involves a clear and definite promise” (quotation
simplified)).
¶50 So viewed, Volonte’s promissory estoppel claim fails.
Contrary to Volonte’s assertion, the Form 8-K did not make a clear
or definite promise to not enforce the FFP under all circumstances.
Instead, as discussed, the Form 8-K was decidedly conditional,
with Domo merely stating that it did not intend to enforce the FFP
“unless the Sciabacucchi decision is appealed and the Delaware
Supreme Court reverses that decision.” (Emphasis added.) But
the Sciabacucchi decision was appealed and the Delaware
Supreme Court then reversed it. Volonte therefore cannot rely on
the promissory estoppel doctrine as a means of preventing Domo
from enforcing its otherwise valid bylaw.
B. Equitable Estoppel
¶51 Volonte’s equitable estoppel argument fails for similar
reasons.
¶52 “Equitable estoppel reflects circumstances where it is not
fair for a party to represent facts to be one way to get the other to
agree, and then change positions later to the other’s detriment.”
Youngblood v. Auto-Owners Ins. Co., 2007 UT 28, ¶ 15, 158 P.3d
1088. The doctrine applies when there is (1) “a statement,
admission, act, or failure to act by one party inconsistent with a
claim later asserted”; (2) “reasonable action or inaction by the
other party taken or not taken on the basis of the first party’s
statement, admission, act or failure to act”; and (3) “injury to the
second party that would result from allowing the first party to
contradict or repudiate such statement, admission, act, or failure
to act.” Nunley v. Westates Casing Services, Inc., 1999 UT 100, ¶ 34,
20210399-CA 21 2023 UT App 25
Volonte v. Domo, Inc.
989 P.2d 1077 (quotation simplified). We see no error, let alone one
that exceeded the court’s discretion in this equitable ruling,
because Volonte’s argument fails under both the first and second
elements.
¶53 First, Volonte argues that the Form 8-K was inconsistent
with Domo’s later reliance on the FFP as the basis for moving to
dismiss his complaint. But there’s no inconsistency. Again, the
Form 8-K explained that Domo did not “currently intend to
enforce the foregoing federal forum selection provision unless the
Sciabacucchi decision is appealed and the Delaware Supreme
Court reverses the decision.” Because the Sciabacucchi decision
was appealed and then reversed, Domo’s subsequent motion to
dismiss was consistent with the Form 8-K, not inconsistent with
it.
¶54 Second, Volonte claims that he reasonably relied on the
Form 8-K by filing his suit in Utah state court. But although
Sciabacucchi had not yet been reversed when Volonte filed his suit,
it had already been appealed, and Volonte had also received
many warnings from Domo’s counsel that it intended to enforce
the FFP if Sciabacucchi was reversed. In light of these events,
Volonte’s action or inaction (i.e., his decision to file suit in Utah
and not also file suit in federal court) was not reasonable. Volonte
therefore cannot satisfy the second element of equitable estoppel
either. We accordingly reject Volonte’s equitable estoppel
argument.
IV. The Securities Act
¶55 The Securities Act is set forth in 15 U.S.C. section 77, and it
“require[s] companies offering securities to the public to make full
and fair disclosure of relevant information.” Cyan, Inc. v. Beaver
County Emps. Ret. Fund, 138 S. Ct. 1061, 1066 (2018) (quotation
simplified). This act “create[s] private rights of action” for private
citizens, and it also “authorize[s] both federal and state courts to
exercise jurisdiction over those private suits.” Id. Volonte argues
20210399-CA 22 2023 UT App 25
Volonte v. Domo, Inc.
that the FFP is either invalid or unenforceable because it violates
two provisions from the Securities Act. We disagree on both
fronts.
¶56 Volonte first claims that the FFP violates the Securities
Act’s anti-removal provision, which states that “no case arising
under [the Securities Act] and brought in any State court of
competent jurisdiction shall be removed to any court of the
United States.” 15 U.S.C. § 77v(a). But on its face, the statute
simply says that “no case . . . shall be removed” to federal court if
a plaintiff brought it in state court. Id. (emphasis added). Domo,
however, did not seek removal of Volonte’s case from state to
federal court. Rather, Domo sought dismissal of that suit, and
again, it did so based on a valid bylaw under which a suit such as
this one could only be brought in federal court in the first instance.
¶57 Two recent California appellate decisions have examined
this exact issue and have separately concluded that the Securities
Act’s anti-removal provision is not violated by a motion to
dismiss. See Wong v. Restoration Robotics, Inc., 293 Cal. Rptr. 3d 226,
237–39 (Cal. Ct. App. 2022) (“The removal bar of [the Securities
Act] prohibits the removal of cases to federal court, but does not
prohibit the enforcement of a forum selection clause concerning
1933 [Securities] Act claims that is part of a company’s certificate
of incorporation.”); Simonton v. Dropbox, Inc., No. A161603, 2022
WL 1514619, at *4 (Cal. Ct. App. 2022) (holding that the
corporation’s “forum selection provision does not conflict with
the anti-removal provision of the 1933 [Securities] Act”).9 Based
9. Though Wong and Simonton were issued by panels from the
same district (albeit not the same division) of the California Court
of Appeal, we note that “there is no horizontal stare decisis in the
California Court of Appeal.” Sarti v. Salt Creek Ltd., 85 Cal. Rptr.
3d 506, 510 (Cal. Ct. App. 2008); see also McCallum v. McCallum,
235 Cal. Rptr. 396, 400 n.4 (Cal. Ct. App. 1987) (noting that “one
(continued…)
20210399-CA 23 2023 UT App 25
Volonte v. Domo, Inc.
on the plain text of the anti-removal provision, we reach the same
result here and hold that Domo’s motion to dismiss was not
barred by the Securities Act’s anti-removal provision.
¶58 Second, Volonte claims that Domo violated the Securities
Act’s anti-waiver provision, which states that “[a]ny condition,
stipulation, or provision binding any person acquiring any
security to waive compliance with any provision of [the Securities
Act] . . . shall be void.” 15 U.S.C. § 77n. According to Volonte, the
FFP violates this provision by requiring “shareholders to waive
their ability to bring Securities Act claims in any state court.”
¶59 But in interpreting the Securities Act, the United States
Supreme Court has distinguished between the “substantive”
provisions of the Act (such as “the provision placing on the seller
the burden of proving lack of scienter when a buyer alleges
fraud”) and the Act’s “procedural” provisions (such as “the grant
of concurrent jurisdiction in the state and federal courts without
possibility of removal”). Rodriguez de Quijas v. Shearson/American
Express, Inc., 490 U.S. 477, 481–82 (1989). In the Court’s view,
“[t]here is no sound basis for construing” the Securities Act’s
anti-waiver provision “to apply to these procedural provisions.”
Id. at 482. And, notably, the Court has expressly held that the
Securities Act’s anti-waiver provision is not “properly construed
to bar any waiver” of “the right to select the judicial forum and
the wider choice of courts.” Id. at 481.10
district or division may refuse to follow a prior decision of a
different district or division” (quotation simplified)).
10. This is consistent with the Supreme Court’s conclusion two
years earlier when interpreting an identical anti-waiver provision
in the Securities Exchange Act of 1934. See Shearson/American
Express, Inc. v. McMahon, 482 U.S. 220, 227–28 (1987). There, the
(continued…)
20210399-CA 24 2023 UT App 25
Volonte v. Domo, Inc.
¶60 Rodriguez remains good law and we are bound by it. See
Ramos v. Louisiana, 140 S. Ct. 1390, 1416 n.5 (2020) (Kavanaugh, J.,
concurring in part) (“[T]he state courts and the other federal
courts have a constitutional obligation to follow a precedent of
this Court unless and until it is overruled by this Court.”). Given
this, we conclude that enforcement of Domo’s FFP does not
violate the Securities Act’s anti-waiver provision. Volonte’s
arguments thus fail.
V. Forum Non Conveniens
¶61 Volonte next argues that the FFP should not be enforced
under the forum non conveniens doctrine. This is so, according to
Volonte, because he lacks “an adequate alternative forum” in
federal court due to the expiration of the statute of limitations
during the pendency of this case. We reject Volonte’s arguments
for several reasons.
¶62 First, it’s “a general rule that the trial court’s discretion to
invoke the doctrine of forum non-conveniens will not be
interfered with by an appellate court, absent an abuse of
discretion.” Kish v. Wright, 562 P.2d 625, 628 (Utah 1977); accord
Energy Claims, 2014 UT 13, ¶ 27. We see no reason why an
appellate court would not give the same deference to a trial
court’s decision not to invoke the doctrine. And under this
standard of review, a court’s decision to apply (or, as here, not
apply) the forum non conveniens doctrine is reversed “only if (1)
the district court relied on an erroneous conclusion of law or (2)
there was no evidentiary basis for its ruling.” Energy Claims, 2014
UT 13, ¶ 27 (quotation simplified).
¶63 As noted, Volonte made his forum non conveniens
argument below for the first time at oral argument on the motion
Court explained that the anti-waiver provision at issue in that case
“only prohibits waiver of the substantive obligations imposed by
the Exchange Act.” Id. at 228.
20210399-CA 25 2023 UT App 25
Volonte v. Domo, Inc.
to dismiss. When he did, however, he gave the court “very little
to consider regarding” this issue. Of note, when the court later
rejected Volonte’s argument, it stated that Volonte “did not
present a convincing argument or present any facts” showing that
he “was precluded from filing” his suit “in federal court.” And
the court further stressed that it could not “overstate the
importan[ce]” of Volonte’s “omission” to its ultimate decision not
to rely on this doctrine.
¶64 Volonte was “the party defying the forum-selection
clause,” Atlantic Marine Constr. Co., v. United States Dist. Ct., 571
U.S. 49, 63 (2013), and he thus bore “the burden of proving that
enforcing the clause” would be “unfair or unreasonable,” Energy
Claims, 2014 UT 13, ¶ 47 (quotation simplified). Insofar as
Volonte’s argument about the purported unfairness or
unreasonableness of the FFP turned on the forum non conveniens
doctrine—the application of which, again, is discretionary with
the district court—we can hardly conclude that the district court
abused its discretion by concluding that Volonte had not carried
his burden, where Volonte raised that argument for the first time
at oral argument and then provided the court with an inadequate
record to support his own claims.11
11 . Volonte later attempted to cure this defect in his rule 59
motion, but the district court “decline[d] to further revisit or
disturb [the] legal conclusions within the subject ruling.” We see
no reversible error here either.
To the extent that Volonte’s motion was rule-based, we
note that Volonte only invoked rule 59(a)(7), which applies when
the decision in question was “contrary to law or based on an error
in law.” Utah R. Civ. P. 59(a)(7). As explained in this opinion, we
see no legal error in the district court’s grant of Domo’s motion to
dismiss. And to the extent that Volonte’s motion was understood
as a motion for reconsideration, there was still no reversible error.
(continued…)
20210399-CA 26 2023 UT App 25
Volonte v. Domo, Inc.
¶65 Second, the district court also did not abuse its discretion
because Volonte has not established that he was even making a
proper forum non conveniens argument. The forum non
conveniens doctrine allows “a court with jurisdiction over a
lawsuit to decline to exercise that jurisdiction, as a matter of
discretion, when the cause could better be tried in a more
convenient court.” Edwards v. Carey, 2019 UT App 182, ¶ 20, 454
P.3d 73 (emphasis added, quotation otherwise simplified); accord
Rocky Mountain Builders Supply Inc. v. Marks, 2017 UT App 41, ¶ 5
n.3, 392 P.3d 981. Citing precedent from our supreme court, we
have recognized that the doctrine’s purpose “is to provide
protection against a plaintiff selecting a remote court where
added time, trouble, and expense would result in unreasonable
inconvenience and hardship to the defendant.” Edwards, 2019 UT
App 182, ¶ 20 (citing Summa Corp. v. Lancer Indus., Inc., 559 P.2d
544, 545–46 (Utah 1977)).
¶66 This doctrine is commonly framed in similar terms. As
noted in one oft-invoked treatise, for example, the doctrine
“allows a district court with jurisdiction over the subject matter
and the parties discretion to decline jurisdiction over a cause of
action when another forum would be more convenient for the
“Trial courts are under no obligation to consider motions for
reconsideration,” and “any decision to address or not to address
the merits of such a motion is highly discretionary.” Mower v.
Simpson, 2017 UT App 23, ¶ 43, 392 P.3d 861 (quotation
simplified). A court does not abuse its discretion in denying such
a motion when the “evidence and arguments” presented “existed
and could have been asserted when the underlying motion” was
litigated. Blueridge Homes Inc. v. Method Air Heating & Air
Conditioning, 2019 UT App 149, ¶ 21, 450 P.3d 114. Volonte’s
arguments about the alleged unavailability of the federal forum
all could have been presented during litigation on the underlying
motion to dismiss. The district court therefore did not abuse its
discretion in denying the motion to reconsider.
20210399-CA 27 2023 UT App 25
Volonte v. Domo, Inc.
parties, the witnesses, and the court,” and the “principle of forum
non conveniens is simply that a court may resist imposition upon
its jurisdiction even when jurisdiction is authorized by the letter
of a general venue statute.” 20 Am. Jur. 2d Courts § 109 (2023).
Thus, “properly used,” the doctrine “protects courts from being
compelled to hear cases when doing so would be fundamentally
unfair to the defendants or the public or both.” Id. Others have
framed it similarly. See, e.g., Forum non conveniens Black’s Law
Dictionary (11th ed. 2019) (citing authority for the proposition that
the doctrine “allows a court to exercise its discretion to avoid the
oppression or vexation that might result from automatically
honoring plaintiff’s forum choice”); 21 C.J.S. Courts § 82 (2023)
(“Forum non conveniens allows a court to decline the exercise of
jurisdiction of a case if it appears that another forum can better
serve the convenience of the parties and the ends of justice.”);
Restatement (Second) of Conflict of Laws § 84 (Am. L. Inst. 1971)
(“A state will not exercise jurisdiction if it is a seriously
inconvenient forum for the trial of the action provided that a more
appropriate forum is available to the plaintiff.”). Moreover, since
the question before a court in a forum non conveniens action is
whether the court should decline to exercise jurisdiction, the
“traditional remedy” associated with a successful forum non
conveniens motion is “outright dismissal” of the plaintiff’s case.
Atlantic Marine Constr. Co., 571 U.S. at 60, 66 n.8.
¶67 In light of these principles, Volonte’s invocation of the
forum non conveniens doctrine is misplaced. Volonte is not a
defendant who asked the court to decline jurisdiction or dismiss
a case because the plaintiff filed it in a geographically distant
forum. Rather, Volonte is a plaintiff who invoked the doctrine in
an effort to render a forum selection clause unenforceable and
thereby compel litigation in the forum of his choosing.
¶68 Volonte points to no authority that allows the forum non
conveniens doctrine to be used by a plaintiff to defy a forum
selection clause and defeat a motion to dismiss. But again, the
20210399-CA 28 2023 UT App 25
Volonte v. Domo, Inc.
doctrine is discretionary with the district court, and a district
court’s decision to apply (or not apply) this doctrine is reversed
“only if (1) the district court relied on an erroneous conclusion of
law or (2) there was no evidentiary basis for its ruling.” Energy
Claims, 2014 UT 13, ¶ 27 (quotation simplified). In the absence of
any authority even allowing this doctrine to be used this way, let
alone any authority requiring a court to use this doctrine this way,
we see no abuse of discretion in the district court’s refusal to rely
on this doctrine as reason for denying Domo’s motion to dismiss.
VI. The Underwriter Defendants’ Motion to Join
¶69 As noted, the FFP was contained within Domo’s bylaws,
and those bylaws act as a contract between Domo and its
shareholders. Unlike Domo, the Underwriter Defendants are not
parties to that contract. But even so, the district court allowed
them to rely on the FFP and thus join in Domo’s FFP-based motion
to dismiss. Volonte’s final argument is a challenge to that
decision.
¶70 Unlike the issues discussed in Parts I and II above, there’s
at least some reason to think that the choice of law might matter
on this issue. The Underwriter Defendants’ primary argument is
that they can rely on the FFP as “third-party beneficiaries” of
Domo’s bylaws. But under controlling Utah authority, a “third
party may claim a contract benefit only if the parties to the
contract clearly express an intention to confer a separate and
distinct benefit on the third party.” VCS, Inc. v. Countrywide Home
Loans, Inc., 2015 UT 46, ¶ 29, 349 P.3d 704 (quotation simplified).
Of note, “the contract itself must affirmatively make this intention
clear.” SME Indus., Inc. v. Thompson, Ventulett, Stainback & Assocs.,
Inc., 2001 UT 54, ¶ 47, 28 P.3d 669 (quotation simplified). The
contract at issue here is Domo’s bylaws, but the Underwriter
Defendants point to nothing in the bylaws that clearly expresses
an intention to confer a separate and distinct benefit on the
Underwriter Defendants.
20210399-CA 29 2023 UT App 25
Volonte v. Domo, Inc.
¶71 Relying on Ellsworth v. American Arbitration Ass’n, 2006 UT
77, ¶ 19, 148 P.3d 983, the Underwriter Defendants also invoke the
nonsignatory estoppel rule. In the passage at issue, Ellsworth
suggested that “under certain circumstances, a nonsignatory to an
arbitration agreement can enforce or be bound by an agreement
between other parties.” Id. Ellsworth said nothing about this rule
extending outside the arbitration context, however, and our
supreme court has recently clarified that it has “never formally
adopted” the nonsignatory estoppel principle. Gold’s Gym Int’l,
Inc. v. Chamberlain, 2020 UT 20, ¶ 45, 471 P.3d 170.
¶72 But we need not definitively decide whether the
Underwriter Defendants can rely on the FFP under Utah law. In
light of what’s at least a potential conflict with how Delaware
would approach this issue, we have reason to engage with the
question of which state’s laws govern this issue. And in our view,
it’s Delaware law, not Utah law, that controls whether the
Underwriter Defendants can rely on the FFP. Because the
Underwriter Defendants can rely on the FFP under Delaware law,
the district court did not err in granting their motion to dismiss.
A. Choice of Law
¶73 When determining which state’s laws apply to a dispute
between two contracting parties, the “law of the forum state”
governs the “choice of law analysis.” One Beacon, 2012 UT App
100, ¶ 27; see also Restatement (Second) of Conflict of Laws § 2
cmt. a(3) (Am. L. Inst. 1971) (explaining that “[e]ach state has rules
to determine which law (its own local law or the local law of
another state) shall be applied by it to determine the rights and
liabilities of the parties resulting from an occurrence involving
foreign elements,” and that while the forum state’s “choice-of-law
rules” “do not themselves determine the rights and liabilities of
the parties,” they do “guide decision as to which local law rule
will be applied to determine these rights and duties”).
20210399-CA 30 2023 UT App 25
Volonte v. Domo, Inc.
¶74 When determining which state’s laws will apply to a
dispute, Utah courts first look to whether there was an “effective
choice of law” by the parties. One Beacon, 2012 UT App 100, ¶ 28
(quoting Restatement (Second) of Conflict of Laws § 188 (Am. L.
Inst. 1971)). If there wasn’t, our courts “apply the most significant
relationship approach as described in the Restatement (Second) of
Conflict of Laws in determining which state’s laws should apply
to a given circumstance.” Waddoups v. Amalgamated Sugar Co., 2002
UT 69, ¶ 14, 54 P.3d 1054 (quotation simplified); see also American
Nat’l Fire Ins. Co. v. Farmers Ins. Exch., 927 P.2d 186, 188 (Utah
1996). Here, no party has pointed to anything in Domo’s bylaws
that dictates which state’s laws will govern a dispute between a
shareholder and purported third-party beneficiary. This
choice-of-law determination accordingly turns on application of
the Restatement’s “most significant relationship” test.
¶75 Under that test, the “rights and duties of the parties with
respect to an issue in contract are determined by the local law of
the state which, with respect to that issue, has the most significant
relationship to the transaction and the parties under the principles
stated in § 6.” Restatement (Second) of Conflict of Laws § 188(1).
But section 188(2) also directs courts to consider a series of
“contacts” between the parties, and our appellate courts have
commonly started their choice-of-laws analyses there. See, e.g.,
American Nat’l Fire Ins. Co., 927 P.2d at 188; One Beacon, 2012 UT
App 100, ¶ 28. We do so here too.
¶76 The contacts identified in section 188 include “(a) the place
of contracting, (b) the place of negotiation of the contract, (c) the
place of performance, (d) the location of the subject matter of the
contract, and (e) the domicil, residence, nationality, place of
incorporation and place of business of the parties.” Restatement
(Second) of Conflict of Laws § 188(2). And section 188 further
acknowledges that “[t]hese contacts are to be evaluated according
to their relative importance with respect to the particular issue.”
Id. Having considered these contacts, we find their application to
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Volonte v. Domo, Inc.
this case to be inconclusive. For example, the contract at issue is
Domo’s bylaws, but the record and briefing are unclear as to
where it was contracted or negotiated. Moreover, Domo is
incorporated in Delaware, but it’s headquartered in Utah. And as
for the place of performance, this contact’s applicability seems
uncertain in a situation like this one where the contract is a bylaw
for a corporation that provides services on a national and even
international basis.
¶77 But as noted, in addition to the contacts-based analysis,
section 188 directs courts to consider “the principles stated in § 6.”
Id. § 188(1). And given what’s at issue, those principles seem to be
a more apt guide for our decision. In section 6, the Restatement
states that “the factors relevant to the choice of the applicable rule
of law include” the following:
(a) the needs of the interstate and international
systems, (b) the relevant policies of the forum,
(c) the relevant policies of other interested states
and the relative interests of those states in the
determination of the particular issue, (d) the
protection of justified expectations, (e) the basic
policies underlying the particular field of law,
(f) certainty, predictability and uniformity of result,
and (g) ease in the determination and application of
the law to be applied.
Restatement (Second) of Conflict of Laws § 6(2) (Am. L. Inst.
1971).
¶78 When applying these factors, we keep in mind the interests
underlying the Restatement’s choice of law rules in general. As
explained by the Restatement, “[p]robably the most important
function of choice-of-law rules is to make the interstate and
international systems work well.” Id. § 6 cmt. d. The interstate and
international systems, in turn, benefit from “predictability and
uniformity of result.” Id. § 6 cmt. i. And these outcomes are “of
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Volonte v. Domo, Inc.
particular importance in areas where the parties are likely to give
advance thought to the legal consequences of their transactions,”
such as contract or corporate law. See id.; see also id. § 302 cmts. a, e.
¶79 In light of these principles and interests, we can’t help but
note that this dispute is primarily national, not local, in nature. It
involves allegedly false statements made in an IPO by a
corporation that, though headquartered in Utah, is incorporated
in Delaware and does business worldwide. And though not
dispositive on its own, the Delaware component to this is
certainly relevant—particularly in light of the Restatement’s
directive to consider the needs of the interstate system. After all,
it is a “well-documented fact that for-profit corporations
frequently elect to incorporate out-of-state, and their choices are
concentrated in the state of Delaware,” in part, so as to “achieve a
great degree of uniformity in the laws” that govern the “business
sector.” Garry W. Jenkins, Incorporation Choice, Uniformity, and the
Reform of Nonprofit State Law, 41 Ga. L. Rev. 1113, 1118–19 (2007).
The Delaware Supreme Court reiterated this in Salzberg, noting
that Delaware law seeks to promote the “policies” of “certainty,”
“predictability,” and “uniformity” in the resolution of “corporate
disputes.” 227 A.3d at 137.
¶80 Moreover, as noted by the Delaware Supreme Court in
Salzberg, there’s a particular “need for uniformity and
predictability” relating to judicial decisions regarding FFPs. Id. at
136. Salzberg noted that after the United States Supreme Court’s
decision in Cyan (wherein the Court held that federal and state
courts have concurrent jurisdiction over Securities Act claims),
there was an “uptick” in state court filings of Securities Act suits,
with a “parallel action” being filed in federal court in “about 45
percent” of these cases. 227 A.3d at 114 (quotation simplified).
Because there’s “no procedural mechanism” for consolidating or
coordinating “parallel state and federal actions,” however, this
development produced “obvious” “costs and inefficiencies” for
corporations as these cases were “litigated simultaneously in both
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Volonte v. Domo, Inc.
state and federal courts.” Id. at 115. Salzberg noted that
corporations began adopting FFPs as a direct response to this—
i.e., these provisions were intended to force such suits into federal
court to curb the duplicative litigation costs and, also, to produce
more certainty and predictability for the corporations themselves.
Id.
¶81 Above, we’ve held that Domo can rely on the FFP, and the
particular question before us now is whether the Underwriter
Defendants can too. Like Domo, the Underwriter Defendants are
not Utah-based actors. Rather, they’re national actors who
assisted Domo with its IPO. But Volonte’s claims against them are
based on the same federal statutes that are at issue in his claims
against Domo. And as discussed in more detail below in Part
VI(B), his claims against them are also based on conduct that’s
largely intertwined with the conduct at issue in his claims against
Domo. Further, Volonte does not dispute the Underwriter
Defendants’ assertion that Domo entered an agreement with the
Underwriter Defendants in which Domo is required to indemnify
them for any losses arising from securities litigation of this sort.
This, too, suggests that both Domo and the Underwriter
Defendants see their interests as being linked with respect to this
kind of Securities Act claim.
¶82 Given the litigation landscape described by Salzberg, it
seems to us that if different states were to adopt different rules
regarding the ability of parties such as these Underwriter
Defendants to rely on an FFP in suits like this one, this would
promote uncertainty and inconsistency in such cases, which could
have deleterious effects on the “interstate and international
systems.” Restatement (Second) of Conflict of Laws § 6 cmt. d.
This is at odds with the understood purposes of the choice-of-law
rules themselves.
¶83 In short, given that the Underwriter Defendants are
national (not local) actors, that this suit is based on federal (not
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Volonte v. Domo, Inc.
Utah) statutes, that the conduct in question occurred during the
IPO of a corporation that is incorporated in Delaware, that this
corporation has an indemnification agreement that would require
it to cover the losses for the Underwriter Defendants in a suit like
this one, and that this corporation also has a bylaw that expressly
requires suits filed under these federal statutes to be filed in
federal court, we believe that Delaware, not Utah, has the most
significant relationship to the question of whether the
Underwriter Defendants can rely on the FFP. We accordingly
apply Delaware law to resolve this issue.
B. Delaware Law
¶84 In Ashall Homes Ltd. v. Rok Entertainment Group Inc., 992
A.2d 1239, 1249 (Del. Ch. 2010), the Delaware Court of Chancery
allowed several nonsignatory defendants to enforce a contract’s
forum selection clause against a signatory plaintiff. The court
noted that the nonsignatory defendants in that case had
“solicited” the plaintiffs to invest in the transaction at issue in the
suit, had “managed” some of the funds in question, and were now
“being sued . . . as a result of acts” that “directly implicate[d] the
negotiation” and “performance” of the very agreements that also
contained the forum selection clause. Id. In light of these
circumstances, and because the nonsignatory defendants were
also “closely related to one of the signatories,” Ashall Homes held
that it should have been “foreseeable” to the signatory plaintiff
that the nonsignatory defendants “would invoke” and “enforc[e]”
the forum selection clause. Id. The court favorably cited cases
suggesting that when a plaintiff’s claims against a nonsignatory
defendant are closely related to contractual obligations, the forum
selection clause would apply to and benefit parties and non-
parties alike. Id. at 1249 n.51. In such circumstances, the court held
that it would “be inequitable to permit” signatory plaintiffs “to
escape their contractual promise to litigate all disputes” in the
chosen forum. Id. at 1249.
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Volonte v. Domo, Inc.
¶85 Delaware courts have since construed Ashall Homes’s test
as “rest[ing] on the public policy that forum selection clauses
promote stable and dependable public relations,” thus
“foreclos[ing] an end-run around an otherwise enforceable forum
selection provision.” Neurvana Med., LLC v. Balt USA, LLC, No.
2019-0034-KSJM, 2019 WL 4464268, at *5 (Del. Ch. Sept. 18, 2019)
(quotation simplified). While acknowledging that some aspects of
the test have “been criticized” and that it might be of limited
utility in some scenarios, id. at *1, Delaware courts have
nevertheless continued to apply it in the scenario at issue in Ashall
Homes—namely, to allow “non-signatory defendant[s] to enforce
forum selection clauses against signatory plaintiffs,” id. at *5
(emphasis in original); accord Buzzfeed, Inc. v. Anderson, No.
2022-0357-MTZ, 2022 WL 15627216, at *12 (Del. Ch. Oct. 28, 2022)
(recognizing that the Ashall Homes’s “foreseeability test
operates . . . when nonsignatory defendants seek to enforce a
forum selection clause against signatory plaintiffs”). In this sense,
Delaware courts recognize the rule as being an “application of
equitable estoppel” that applies “when a signatory should be
required to bring claims against a non-signatory in a contractually
selected forum.” Neurvana Med., 2019 WL 4464268, at *5 n.42
(emphasis in original).
¶86 The situation at issue here fits comfortably under Ashall
Homes’s test. Though this is not a standard contract in which the
parties in the case were both signatories to the contract, this is a
corporation/shareholder scenario that, again, is interpreted under
contract-based principles. And in such a scenario, the shareholder
effectively becomes a signatory to the corporation’s bylaws by
purchasing stock. See Boilermakers, 73 A.3d at 956 (noting that
when “stockholders buy into” a corporation by purchasing stock,
they “assent to not having to assent” to any “board-adopted
bylaws”).
¶87 Thus, as in Ashall Homes, this case involves a party to a
contract (Volonte) who is trying to find an “end-run around an
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Volonte v. Domo, Inc.
otherwise enforceable forum selection provision” in his suit
against third-party beneficiaries (the Underwriter Defendants).
Neurvana Med., 2019 WL 4464268, at *5 (quotation simplified). But
the Underwriter Defendants’ decision to invoke and enforce the
forum selection clause was foreseeable under Ashall Homes’s rule.
As noted, Volonte is suing the Underwriter Defendants for
“helping to solicit investors to buy Domo stock in the IPO,” failing
“to conduct adequate due diligence,” and “act[ing] as financial
advisors for and assist[ing] in the preparation and dissemination
of” Domo’s allegedly “false and misleading” Offering
Documents. This is similar to the conduct at issue by the
third-party beneficiaries in Ashall Homes, which, again, was
“solicit[ing]” others to participate in the transaction,
“manag[ing]” some of the funds, and performing other acts
involved in the “negotiation” and “performance” of the
agreements that led to the suit. 992 A.2d at 1249.
¶88 In these circumstances, we conclude that it was foreseeable
that, like Domo, the Underwriter Defendants would invoke the
FFP in response to a suit such as Volonte’s. As a result, we
conclude that under Delaware law, the Underwriter Defendants
can rely on the FFP as well.
¶89 Because Delaware law allows the Underwriter Defendants
to enforce this provision, the district court did not err in
permitting them to join in Domo’s motion to dismiss. And
because we concluded above that Domo’s motion to dismiss was
correctly granted under that FFP, the motion to dismiss was
correctly granted as to the Underwriter Defendants too.
CONCLUSION
¶90 We affirm the district court’s ruling. The FFP was
enforceable as a binding contract between Domo and its
shareholders. Because Volonte filed his suit in contravention of it,
it was properly dismissed. Moreover, under applicable Delaware
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Volonte v. Domo, Inc.
law, the Underwriter Defendants were entitled to enforce the FFP
against Domo’s shareholders who sued them. They were
accordingly entitled to dismissal as well.
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Volonte v. Domo, Inc.
Combined Opinion