The opinion of the court was delivered by: Hon. Otis D. Wright, II United States District Judge
ORDER GRANTING Defendants' Motion to Dismiss, or in the Alternative, to Transfer Venue  (Filed 05/23/11) and VACATING Hearing Thereon ORDER TRANSFERRING Case to United States District Court for the Southern District of New York
Pending before the Court is Defendants First Funds Holdings and Principis Capital, LLC's (collectively, "Defendants") Motion to Dismiss, or in the Alternative, to Transfer Venue. (Dkt. No. 19.) Plaintiffs Cycles U.S., LLC ("Cycles") and Alan Discount ("Discount") (collectively, "Plaintiffs") filed an Opposition on June 6, 2011, to which Defendants filed a Reply on June 13, 2011. (Dkt. Nos. 21, 22.) Having carefully considered the papers filed in support of and in opposition to the instant Motion, the Court deems the matter appropriate for decision without oral argument. See Fed. R. Civ. P. 78; L.R. 7-15. Thus, the June 27, 2011 hearing on this matter is VACATED and no appearances are necessary. For the following reasons, Defendants' Motion is GRANTED.
This case arises out of several merchant cash advance transactions between Cycles and Defendants between August 2007 and August 2010, each of which was personally guaranteed by Discount. (Compl. ¶¶ 5-6; Exh. 1 at 26.) Each of these transactions was evidenced by a written agreement (collectively, the "Agreements"), all of which were allegedly substantially similar. (See Compl. ¶ 6; Exh. 1 at 26.) It is undisputed that both the main body of the Agreements and the section discussing Discount's personal guarantee contain forum selection clauses evidencing the parties' agreement to litigate in the State and County of New York.*fn1 Notwithstanding the forum selection clauses, however, on March 10, 2011, Plaintiffs filed a class action complaint against Defendants in San Bernardino County Superior Court, asserting four claims for relief under California law. (Dkt. No. 1, Exh. 1.) On April 14, 2011, Defendants removed the action to this Court based on diversity jurisdiction pursuant to 28 U.S.C. § 1332. (Dkt. No. 1.) Defendants now argue that, in light of the forum selection clauses in the Agreements, Plaintiffs' Complaint should be dismissed in its entirety on the ground of improper venue or that the case should be transferred to the United States District Court for the Southern District of New York. (Dkt. No. 19.)
A motion to dismiss based on a forum selection clause is construed as a Rule 12(b)(3) motion to dismiss for improper venue. Doe 1 v. AOL LLC, 552 F.3d 1077, 1081 (9th Cir. 2009) (citing Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 324 (9th Cir.1996)). On a Rule 12(b)(3) motion, the allegations in the complaint need not be accepted as true and the court may consider facts outside the complaint. Id.; Murphy v. Schneider Nat'l, Inc., 362 F.3d 1133, 1137 (9th Cir.2004). The court "must draw all reasonable inferences in favor of the non-moving party and resolve all factual conflicts in [their] favor . . . ." Murphy, 362 F.3d at 1138.
When determining the enforceability of a forum selection clause in this context, federal courts sitting in diversity apply federal law. See Doe 1, 552 513 (9th Cir. 1988)). Under federal law, "forum selection clauses are F.3d at 1083 (citing Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, presumptively valid" and "should be honored 'absent some compelling and countervailing reason.'" Murphy, 362 F.3d at 1140 (quoting Bremen v. Zapata Off--Shore Co., 407 U.S. 1 (1972)). Nevertheless, there are three scenarios in which enforcement of a forum selection clause may be deemed unreasonable and therefore unenforceable: (1) if the inclusion of the clause in the agreement was the product of fraud or overreaching; (2) if the party wishing to repudiate the clause would effectively be deprived of his day in court were the clause enforced; and (3) if enforcement would contravene a strong public policy of the forum in which suit is brought. Id. at 1140.
The non-moving party bears a "heavy burden" when attempting to show that a forum selection clause should not be enforced. Argueta, 87 F.3d at 325; Three Bros. Trucking, Inc. v. Exel Global Logistics, Inc., Nos. C 06-1816 WDB, C 06-2583 WDB, 2006 WL 1329883, at *2 (N.D. Cal. May 16, 2006).
Plaintiffs do not attack the validity of the forum selection clauses, which unambiguously state that all actions, proceedings or litigation arising out of or relating to the Agreements shall be instituted in the State and County of New York. Indeed, Plaintiffs concede thatthey are challenging dismissal of the case or transfer of venue solely on the ground that enforcement of the forum selection clauses would deprive them of their day in court. (Opp'n at 3.) Consequently, the Court will address only this argument.
A.ENFORCEMENT OF THE FORUM SELECTION ...