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Adema Technologies Inc. v. Chemie

United States District Court, N.D. California, San Jose Division

July 22, 2014

ADEMA TECHNOLOGIES INC., D/B/A GLORIA SOLAR (USA), Plaintiff,
v.
WACKER CHEMIE AG AND WACKER CHEMICAL CORPORATION, Defendants.

ORDER GRANTING MOTIONS TO DISMISS FOR FORUM NON CONVENIENS [Re: ECF 27, 33]

BETH LABSON FREEMAN, District Judge.

In this breach of contract case, the Court must decide whether the action should be dismissed in light of a forum-selection clause in the underlying contract. Plaintiff Adema Technologies Inc., D/B/A Gloria Solar (USA) ("Plaintiff") filed the original action before this Court, asserting claims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, conversion, and violation of California Business and Professions Code §§ 17200, et seq. ("UCL"). Defendants Wacker Chemie AG ("Wacker AG") and Wacker Chemical Corporation ("Wacker USA, " collectively with Wacker AG, "Defendants") have each moved to dismiss the action on the basis of forum non conveniens, requesting that the Court enforce a forum-selection clause in the underlying contract identifying Munich, Germany as the exclusive forum for disputes relating to the contract. ( See Wacker USA Mot., ECF 27; Wacker AG Mot., ECF 33) Plaintiff opposes these motions. ( See Pl.'s Opp. to Wacker USA, ECF 31; Pl.'s Opp. to Wacker AG, ECF 36) On July 17, 2014, the Court heard oral argument on the motions, after which it deemed the matter submitted. For the reasons stated herein, Defendants' Motions to Dismiss are GRANTED on the basis of forum non conveniens. [1]

I. BACKGROUND

On March 13, 2007, Plaintiff and defendant Wacker AG entered into a six year supply agreement for polycrystalline silicon (polysilicon), a raw material used in the manufacture of Plaintiff's solar panel products ("Supply Agreement").[2] (Compl. ¶¶ 1, 4, ECF 1) The Supply Agreement provided for monthly shipments of polysilicon from Wacker AG to Plaintiff for a fixed price of 42 /kg over a six year period beginning January 2011. ( Id. ¶ 4, 20) The Supply Agreement includes a forum-selection clause that designates Munich, Germany as the "exclusive place of jurisdiction." (Wacker AG Mot. 3) Although the Supply Agreement was executed between Plaintiff and Wacker AG, Plaintiff alleges that Wacker USA became the "primary point of contact" on the agreement after deliveries of polysilicon commenced, and that Wacker USA "administered deliveries, payments and negotiations from its California offices." (Compl. ¶ 21)

At the time the parties executed the Supply Agreement, the spot price (i.e., the current market price) of polysilicon was approximately 200 /kg, eventually climbing as high as 291 /kg. ( Id. ¶ 18, 23) By January 2011, when Wacker AG began delivering polysilicon to Plaintiff under the Supply Agreement, the spot price had dropped to just above 42 /kg. (Id. ¶ 23) By the time Plaintiff filed this lawsuit on December 4, 2013, the spot price was approximately 13 /kg. (Id. ¶ 24) Needless to say, it eventually became economically unfeasible for Plaintiff to accept shipments from Wacker AG at the contract price. ( Id. ¶ 40) On February 14, 2013, Plaintiff notified Defendants in writing that it was canceling the Supply Agreement, upon which Defendants allegedly confiscated the remainder of Plaintiff's prepayment deposit, totaling 14, 670, 400. (Id. ¶ 6, 61)

Plaintiff alleges that the precipitous drop in polysilicon prices was due to Defendants' "long-term campaign of flooding global markets with polysilicon and pushing down the spot price." ( Id. ¶ 22) Defendants did not inform Plaintiff of this alleged campaign in 2007, when the parties executed the Supply Agreement. ( Id. ¶ 45) Based on this theory, Plaintiff filed suit in this district, asserting claims against both Defendants for breach of contract, breach of implied covenant of good faith and fair dealing, unjust enrichment, conversion, and unfair competition in violation of California's Unfair Competition Law ("UCL") at California Business and Professions Code §§ 17200, et. seq. ( See id. ) Though Wacker USA is not a party to the Supply Agreement, Plaintiff seeks to hold it liable on the theory that Wacker USA aided and abetted Wacker AG at all times in its allegedly unfair, illegal, and tortious conduct in connection with the Supply Agreement. (Id. ¶¶ 21, 90)

In response, Defendants filed the motions before this Court, asking that the Court enforce the forum-selection clause in the Supply Agreement and dismiss this action on the doctrine of forum non conveniens.

II. LEGAL STANDARD

The enforceability of a contractual forum-selection clause in a diversity case is governed by federal law. Manetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 509, 513 (9th Cir. 1988). A district court "has discretion to respond at once to a defendant's forum non conveniens plea, and need not take up first any other threshold objection." Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp., 549 U.S. 422, 425 (2007).

"[A] freely negotiated private international agreement, unaffected by fraud, undue influence, or overweening bargaining power... should be given full effect." M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 12-13 (1972). As such, a forum-selection clause is prima facie valid unless a party challenging its enforcement can prove that "enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching." Id. at 15. Enforcement is unjust if it would "contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by judicial decision." Id.

The United States Supreme Court recently reiterated the importance of respecting a contractually valid forum-selection clause: "When parties have contracted in advance to litigate disputes in a particular forum, courts should not unnecessarily disrupt the parties' settled expecations." Atlantic Marine Const. Co., Inc. v. U.S. Dist. Court for Western Dist. of Texas, 134 S.Ct. 568, 583 (2013). "Only under extraordinary circumstances unrelated to the convenience of the parties" should a court deny a party's request to enforce a forum-selection clause. Id. at 581 (emphasis added). "[A]s the party defying the forum-selection clause, the plaintiff bears the burden of establishing that transfer to [or dismissal in favor of] the forum for which the parties bargained is unwarranted." Id.

"[T]he appropriate way to enforce a forum-selection clause pointing to a state or foreign forum is through the doctrine of forum non conveniens. " Id. at 580. The forum non conveniens analysis entails the same balancing-of-interests that courts typically conduct in considering motions to transfer venue pursuant to 28 U.S.C. § 1404(a), wherein the district court "must evaluate both the convenience of the parties and various public-interest considerations." Id. at 581. The presence of a contractually valid forum-selection clause alters this calculus in certain key respects: the district court gives no weight to a plaintiff's choice of forum and "should not consider arguments about the parties' private interests" because "[w]hen parties agree to a forum-selection clause, they waive the right to challenge the preselected forum as inconvenient or less convenient for themselves or their witnesses, or for their pursuit of the litigation." Id. at 581-82. As a consequence, a court faced with a motion for forum non conveniens based on a contractual forum-selection clause considers only public-interest factors such as "the administrative difficulties flowing from court congestion; the local interest in having localized controversies decided at home; and the interest in having the trial of a diversity case in a forum that is at home with the law." Id. at 581 n.6 (quoting Piper Aircraft Co. v. Reyno, 454 U.S. 235, 241 n.6 (1981)).

III. ENFORCEMENT OF THE FORUM-SELECTION CLAUSE WITH RESPECT TO WACKER AG

The forum-selection clause that Defendants seek to enforce here states simply that Munich, Germany shall be the "exclusive place of jurisdiction." (Wacker AG Mot. 3) The clause governs "[t]his Agreement... and the legal relations between the parties hereto." (Wacker AG Reply 7, ECF 40) Because Wacker AG is the only defendant party to the Supply Agreement, the Court ...


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