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Blend, LLC v. Glenwood Smoked Products, Inc.

United States District Court, N.D. California

January 9, 2020

BLEND, LLC, Plaintiff,
v.
GLENWOOD SMOKED PRODUCTS, INC., et al., Defendants.

          ORDER ON DEFENDANTS' MOTIONS TO TRANSFER VENUE RE: DKT. NOS. 41, 42

          DONNA M. RYU JUDGE.

         Plaintiff Blend, LLC (“Blend”) filed this lawsuit against Defendants Glenwood Smoked Products, Inc. (“Glenwood Smoked Products”); Glenwood Snacks, LLC (“Glenwood Snacks”); Mitch Scott; Clark Scott; Scott Zabriskie; and Daniel Haller alleging breach of contract and related claims. Glenwood Snacks, Zabriskie, and Haller (the “Glenwood Snacks Defendants) filed a motion to transfer venue pursuant to 28 U.S.C. § 1406(a). [Docket No. 41.] Glenwood Smoked Products, Mitch Scott, and Clark Scott (the “Glenwood Smoked Products Defendants”) separately move to transfer venue pursuant to 28 U.S.C. § 1406(a). [Docket No. 42.] Blend filed a consolidated opposition to both motions (Docket No. 44). This matter is appropriate for determination without oral argument. Civil L.R. 7-1(b). For the following reasons, the motions are denied.

         I. BACKGROUND

         The following facts are taken from Blend's complaint. Blend is a California company that “owns and manages food product brands.” Its principal place of business is in Vacaville, California. Compl. ¶ 6. Both Glenwood Smoked Products and Glenwood Snacks are Idaho corporations with their principal places of business in Idaho. Id. at ¶¶ 7, 8. Mitch Scott and Clark Scott are officers, directors, shareholders, and/or managing agents of Glenwood Smoked Products and citizens of Idaho. Id. at ¶¶ 9, 10. Zabriskie is an officer, director, shareholder, and/or managing agent of Glenwood Smoked Products and/or Glenwood Snacks and is an Idaho citizen. Heller is an officer, director, shareholder, and/or managing agent of Glenwood Snacks and is an Idaho citizen. Id. at ¶¶ 12, 13.

         On April 1, 2016, Blend entered into a “Recipe/Formulation Agreement” with Glenwood Smoked Products. Compl. Ex. A (the “Recipe Agreement”). Pursuant to that agreement, Glenwood Smoked Products agreed to “create jerky recipes for Blend according to Blend's specifications, ” and the parties agreed that Blend would “have full ownership rights to these recipes.” Id. In exchange, Blend granted Glenwood Smoked Products “the right of first refusal for any and all orders received by Blend which use the recipes developed by Glenwood [Smoked Products].” Id. The Recipe Agreement contains the following forum selection provision:

Blend LLC and Glenwood [Smoked Products] agrees [sic] that the covenants of this Agreement may be enforced by the other party in the local jurisdiction of the enforcing party; and, to that end, each party consents to jurisdiction (and waves [sic] any objection based on inconvenient forum) in the jurisdiction of the other party.

Id. Clark Scott signed the Recipe Agreement on behalf of Glenwood Smoked Products as its President/CEO. An individual named David Ngo signed on behalf of Blend. Id.

         From July 2016 to December 2017, Glenwood Smoked Products developed recipes for Blend's jerky products and manufactured the products for Blend under Blend's direction. Compl. ¶ 2. In January 2018, Blend learned that Glenwood Smoked Products had been sold to new owners and would operate under a new name, Glenwood Snacks, LLC. Blend alleges that “Glenwood Snacks did not dispute that it succeeded to the rights and liabilities of Glenwood Smoked Products after the acquisition, which included the rights and obligations pertaining to the Recipe Agreement.” Id. at ¶ 21. Shortly thereafter, Glenwood Snacks purported to give notice of its cancellation of a separate manufacturing agreement between Glenwood Smoked Products and Blend. Id. Blend alleges on information and belief that Glenwood Snacks had its own preexisting line of jerky products that competed with Blend's jerky products. Id. at ¶¶ 2, 22.

         In February 2018, after attempting to negotiate the terms of a manufacturing agreement with the new owners of Glenwood Smoked Products, Blend repeatedly demanded that Defendants “turn over complete Recipe information as was its right under the Recipe Agreement” so that it could “line up a new manufacturer” and fill existing orders. Id. at ¶¶ 3, 24-28. Defendants failed to do so, preventing Blend from continued production, distribution, and sales of its jerky products, which damaged damaging Blend. Id. at ¶ 4.

         Blend filed a complaint in July 2019 alleging the following claims: 1) breach of contract, against Glenwood Smoked Products and Glenwood Snacks; 2) breach of the implied covenant of good faith and fair dealing against Glenwood Smoked Products and Glenwood Snacks; 3) breach of fiduciary duties against all Defendants; 4) intentional interference with contractual relations against the Glenwood Snacks Defendants; 5) intentional interference with prospective economic relations against the Glenwood Snacks Defendants; 6) negligent interference with prospective economic advantage against the Glenwood Snacks Defendants; 7) unfair competition against all Defendants; and 8) punitive damages against all Defendants.

         In the complaint, Blend alleges that venue is proper pursuant to 28 U.S.C. § 1391(b)(2) because a substantial part of the events or omissions giving rise to its claims occurred in this district. It also alleges that venue is proper “because Glenwood specifically agreed to the local jurisdiction of the enforcing party, Blend, as per the Recipe Agreement[.]” Compl. ¶ 16.

         Defendants now separately move pursuant to 28 U.S.C. § 1406(a) to transfer the case to the District of Idaho. The Glenwood Snacks Defendants argue that only Glenwood Smoked Products is a party to the Recipe Agreement, and thus they are not subject to its forum selection clause. According to the Glenwood Snacks Defendants, 28 U.S.C. § 1391 governs and the District of Idaho is the proper venue under 28 U.S.C. § 1391(b)(1) and (2).

         In the alternative, if the court concludes that the forum selection clause in the Recipe Agreement is enforceable as to all Defendants, the Glenwood Snacks Defendants move to transfer the case to the Eastern District of California, arguing that Blend's “local jurisdiction” is located where Blend has its principal place of business in Vacaville, California, which is in that district.

         The Glenwood Smoked Products Defendants also move pursuant to 28 U.S.C. § 1406(a) to transfer the case to the District of Idaho. They also argue that under 28 U.S.C. § 1391, the District of Idaho is the proper venue for this action, and that if the forum selection clause in the Recipe Agreement applies, then venue is proper in the Eastern District of California. Blend opposes the motions.

         II. ...


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