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Gemini Technologies, Inc. v. Smith & Wesson Corp.

United States Court of Appeals, Ninth Circuit

July 24, 2019

Gemini Technologies, Inc., Plaintiff-Appellant,
v.
Smith & Wesson Corp., a Delaware corporation; American Outdoor Brands Corporation, a Massachusetts corporation, Defendants-Appellees.

          Argued and Submitted May 13, 2019 Seattle, Washington

          Appeal from the United States District Court 1:18-cv-00035-CWD for the District of Idaho Candy W. Dale, Magistrate Judge, Presiding

          Kim J. Trout (argued), Trout Law PLLC, Boise, Idaho, for Plaintiff-Appellant.

          Jason E. Prince (argued) and Brett C. Ruff, Holland & Hart LLP, Boise, Idaho, for Defendants-Appellees.

          Before: Michael Daly Hawkins, William A. Fletcher, and Mark J. Bennett, Circuit Judges.

         SUMMARY [*]

         Forum Selection Clause

         The panel reversed the district court's dismissal of an action on the basis of a forum selection clause in the parties' Asset Purchase Agreement.

         The panel applied the decision in Yei A. Sun v. Advanced China Healthcare, Inc., 901 F.3d 1081 (9th Cir. 2018), which was decided after the district court decision in this case, and M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972). The panel held that the district court abused its discretion in enforcing the forum-selection clause that contravened the strong public policy announced by Idaho Code § 29-110(1), and was therefore unenforceable; and remanded so that the district court could apply a traditional forum non conveniens balancing analysis. The panel clarified that satisfaction of Bremen's public policy factor continues to suffice to render a forum-selection clause unenforceable.

          OPINION

          W. FLETCHER, CIRCUIT JUDGE

         Gemini Technologies, Inc. ("Gemtech") is an Idaho-based manufacturer of gun silencers. In 2017, Smith & Wesson Corp. and parent company American Outdoor Brands Corp. (collectively "Smith & Wesson") offered to purchase Gemtech's assets. Gemtech accepted and entered into an Asset Purchase Agreement with Smith & Wesson. The Agreement contained a forum-selection clause requiring "any action or proceeding arising out of or relating to this Agreement" to be brought in Delaware. Gemtech subsequently sued Smith & Wesson for breach of the Agreement in Idaho federal district court. The district court enforced the forum-selection clause and dismissed the action. On appeal, Gemtech argues that the forum-selection clause is unenforceable because it contravenes the strong public policy declared by Idaho Code § 29-110(1). Applying our decision in Yei A. Sun v. Advanced China Healthcare, Inc., 901 F.3d 1081 (9th Cir. 2018) ("Advanced China Healthcare"), decided after the district court ruled in this case, we agree. We reverse and remand.

         I. Background

         In January 2018, Gemtech filed a diversity action against Smith & Wesson in the United States District Court for the District of Idaho alleging breach of contract. In the Asset Purchase Agreement, Smith & Wesson promised to make two payments to Gemtech, a cash payment and an earn-out payment. According to Gemtech's complaint, Smith & Wesson breached the Agreement in several material respects that "violated, nullified, and significantly impaired the cash payments and the earn-out payments to Gemtech."

         On February 21, 2018, Smith & Wesson moved to dismiss the action because of the forum-selection clause in the ...


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