Opinion

Art of Manliness, LLC v. UrbanDaddy, Inc.

Court
District Court, N.D. Oklahoma
Filed
Aug 11, 2020
Cited by
0 cases
Authority
More cited than 28.5%

The opinion

UNITED STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF OKLAHOMA

ART OF MANLINESS, LLC, )

)

Plaintiff, )

)

v. ) Case No. 19-CV-493-CVE-JFJ

)

URBANDADDY, INC. and )

LANCE BROUMAND, )

)

Defendants. )

OPINION AND ORDER

Now before the Court is the Opening Motion of Defendants UrbanDaddy, Inc. and

Broumand to Dismiss for Lack of Personal Jurisdiction and Improper Venue, and Alternatively for

Change of Venue, and Brief in Support (Dkt. # 13). Defendants UrbanDaddy, Inc. (UrbanDaddy)

and Lance Broumand argue that they are not subject to personal jurisdiction in Oklahoma and they

ask the Court to dismiss the case. In the alternative, they argue that the parties’ contract contains

a forum selection clause, and the case should be transferred to the United States District Court for

the Southern District of New York pursuant to the forum selection clause. Dkt. # 13. Plaintiff Art

of Manliness, LLC (AOM) responds that UrbanDaddy and Broumand knowingly entered into a

long-term business relationship with an Oklahoma entity, and they are subject to personal

jurisdiction in this Court. Dkt. # 21, at 6-7. As to the forum selection clause, AOM argues that the

clause was contained only in an older contract that had expired, and the new version of the contract

entered by the parties in 2017 did not contain a forum selection clause. Id. at 7. Defendants filed

a reply. Dkt. # 26.

I.

UrbanDaddy is a Delaware corporation with its principal place of business in New York,

New York, and Broumand states that he is a citizen of New York for the purpose of diversity

jurisdiction. Dkt. # 13, at 29. Broumand, the president of UrbanDaddy, states that UrbanDaddy

“has had various internet websites, newsletters, and computer applications providing local and

general, luxury men’s lifestyle content . . . targeted to relevant audiences in the largest cities across

the country . . . .” Id. at 30. UrbanDaddy does not regularly conduct or solicit business in

Oklahoma, and does not have offices or employees in Oklahoma. Id. AOM is an Oklahoma

corporation operating in Tulsa, Oklahoma, and AOM states that it manages a men’s interest website

from Tulsa. Dkt. # 21-1, at 1. Brett McKay, the president of AOM, resides in Tulsa, and he states

that AOM has always conducted business from Tulsa. Id. at 1-2.

In July 2014, UrbanDaddy’s head of business development, LeBaron Meyers, contacted

McKay by sending a message on Linkedin seeking to discuss a potential partnership, and McKay

was originally uninterested in the services offered by UrbanDaddy. Dkt. # 21-4, at 2-4. Despite

McKay’s lack of interest, representatives of UrbanDaddy continued to contact him and he agreed

to have a phone conference on September 17, 2014 with Meyers and Karim Farag, a freelance

contractor for Urban Daddy. Dkt. # 21-1, at 3. McKay remained in contact with Meyers and Farag

over the next few months and, in January 2015, Meyers and Farag expressed interest in traveling to

Tulsa to discuss a business relationship between UrbanDaddy and AOM. Id. at 4. Meyers and

Farag flew to Tulsa in February 2015 and met with McKay, and this meeting led to negotiations for

a contractual relationship between UrbanDaddy and AOM. Id. On March 10, 2015, UrbanDaddy

submitted a proposed advertising and licensing agreement to McKay. Id. UrbanDaddy claims that

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it conducted negotiations from its office in New York, and AOM states that the negotiations

occurred in Tulsa. Dkt. # 21-1, at 4. Dkt. # 13, at 33. UrbanDaddy claims that AOM’s location in

Tulsa, Oklahoma was not relevant to UrbanDaddy’s decision to enter a business relationship with

AOM, but by the time the parties entered contractual negotiations it is undisputed that UrbanDaddy

knew that AOM was based in and conducted business from Tulsa. See Dkt. # 13, at 10.

The parties entered a written agreement under which UrbanDaddy had the exclusive right

to “represent, manage and sell all of the Display Advertising and Sponsorships available” on AOM’s

websites through December 31, 2016. Dkt. # 13, at 47. The agreement required AOM to maintain

a minimum monthly average of unique visitors to its website, and AOM also agreed to a minimum

number of “impressions,” or views of advertisements, on a monthly and quarterly basis. Id. at 44.

UrbanDaddy agreed to pay AOM 50 percent of the net advertising revenue from the placement of

advertisements on AOM’s websites., and the parties agreed to minimum quarterly payments to AOM

through the end of 2016. Id. at 45. The payments to AOM could be increased or decreased

depending on various factors, including the number of visitors to AOM’s websites, the number of

impressions, and the click through rate (CTR). Id. at 45. The agreement gave AOM the right to

request an audit of UrbanDaddy’s books and records by an independent certified accounting firm

if a dispute arose over the amount of UrbanDaddy’s payments to AOM. Id. If either party wanted

to terminate the agreement before December 31, 2016, the party seeking to terminate the agreement

was required to provide notice in writing and give the other party 30 days to cure any alleged breach

of the agreement. Id. at 47. The agreement also provided that it could be terminated for the

bankruptcy of either party or if the CTR fell below a minimum standard for a three month time

period, but either party would be in breach of contract if they attempted terminate the agreement for

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a reason not specified in Section 8 of the agreement. Id. The parties agreed that the “Agreement

may be modified only by writing executed by a duly authorized company officer” and no course of

dealing by the parties could waive this right. Id. at 48. The agreement also contains a choice of law

provision selecting New York law, and the parties “irrevocably agree that any action at law or in

equity arising out of or relating to these terms shall be filed only in state or federal courts located

in New York County, New York and the parties hereby consent and submit to the personal

jurisdiction of such courts for the purposes of litigating any such action.” Id. at 49.

The agreement was executed by UrbanDaddy and AOM in March 2015, but it quickly

became apparent to AOM that it would not be able to meet the minimum website traffic

requirements of the agreement. Dkt. # 21-1, at 5. In August 2015, Urban Daddy agreed to make

a one time exception to contractual requirements for the number of “impressions” and the CTR, but

UrbanDaddy advised AOM that it could be penalized in 2016 if these numbers failed to improve.

Dkt. # 26, at 32. In September 2015, McKay proposed eliminating the minimum quarterly payment

and amending the CTR, and UrbanDaddy agreed to the proposed changes to the parties’ agreement.

Id. at 35-36. On November 22, 2015, UrbanDaddy sent an e-mail to McKay stating that

UrbanDaddy’s attorneys were reviewing a new draft of the parties’ agreement and a subsequent e-

mail sent by UrbanDaddy on December 28, 2015 shows that UrbanDaddy was open to renegotiating

certain aspects of the parties’ agreement. Dkt. # 21-6. McKay states that he believed that the

Agreement had been so materially altered that the parties mutually understood that the original

agreement was no longer in effect. Dkt. # 21-1, at 6. However, there is no evidence that either party

invoked the termination procedure required by the agreement to terminate the contract, and the e-

mails from UrbanDaddy do not show that there was a mutual understanding that the original

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agreement had been terminated. UrbanDaddy prepared amendments to the contract and sent the

amendments to McKay, and the amendments left all portions of the original contract in effect that

were not changed by the amendments. Dkt. # 26, at 39. The copy of the amendments attached to

UrbanDaddy’s reply is unsigned and it does not appear that the parties formally executed the

amendments to the contract.

McKay states that AOM was contemplating terminating its business relationship with

UrbanDaddy and, on October 6, 2016, Broumand and Meyers traveled to Tulsa to make a sales pitch

for continuation of the business relationship. Dkt. # 21-1, at 6-7. In an October 14, 2016 e-mail,

Broumand wrote to McKay that he was not “looking to lock [AOM] into a contract” and he wanted

to “figure out what the right thing to do is . . . .” Dkt. # 21-7, at 2. UrbanDaddy presented a 40 page

powerpoint presentation to AOM in November 2016, and UrbanDaddy proposed a business

relationship that essentially tracked the parties’ existing contractual arrangement with some

amendments. Dkt. # 26, at 57-96. Broumand followed up with McKay in a November 29, 2016 e-

mail and stated that he was “not asking [AOM] to commit to us for any contract term,” but

Broumand noted that AOM would be receiving a third-quarter statement and payment pursuant to

the existing contract within a few days. Dkt. # 21-8, at 2. McKay responded that AOM intended

to reduce the amount of original content on its websites from one or two pieces per day to three

pieces per week, and McKay wanted to know if Broumand would view AOM as a “valuable long-

term partner” with this reduced amount of original content on its websites. Dkt. # 13, at 76. In a

subsequent e-mail, McKay stated he still felt like AOM and UrbanDaddy had a “good partnership”

and that the “only change with this shift of ours to the original plan (besides planning on less traffic)

is that we wouldn’t [be] up for doing underwritten sponsored content anymore . . . .” Id. at 78.

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The parties do not dispute that the original contract expired on December 31, 2016, but there

is a significant dispute concerning the contractual arrangement underlying the parties’ business

dealings after December 31, 2016. McKay claims that the parties had a “2017 Agreement” that was

not reduced to writing and the agreement was be reflected solely by the parties’ conduct. Dkt. # 21-

1, at 7. McKay’s affidavit does not explain whether the parties agreed to any specific terms to

govern their conduct or the parties had any binding contractual obligations to one another under the

2017 Agreement. Id. UrbanDaddy argues that the parties continued to operate under the original

written agreement subject to certain agreed amendments, and UrbanDaddy states that it continued

to make quarterly payments to AOM as required by the written agreement. Dkt. # 26, at 22.

UrbanDaddy has also attached numerous e-mails to its reply showing that the parties’ continued to

comply with their obligations under the original written agreement in 2017 and 2018. Id. at 99-107.

AOM alleges that UrbanDaddy failed to make quarterly payments beginning in the third quarter of

2017 and continuing through 2018 and, on December 7, 2018, McKay sent an e-mail to Broumand

demanding that UrbanDaddy pay AOM $150,000 no later than December 12, 2018. Dkt. # 13, at

74. McKay also demanded an audit of UrbanDaddy’s records and books if UrbanDaddy failed to

pay the full amount demanded by McKay. Id. The parties’ written agreement does provide both

parties a contractual right to demand an audit of the other party’s books and records, but there is no

record of an oral agreement to this term. Id. at 45.

AOM alleges that UrbanDaddy failed to pay the amount owed under the parties’ contract

and, on July 12, 2019, AOM filed this case in Tulsa County District Court. AOM asserts claims of

breach of contract (Count I), fraud (Count II), negligence (Count III), breach of fiduciary duty

(Count IV), unjust enrichment (Count V), accounting and disgorgement (Count VI), and constructive

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trust (Count VII), and AOM seeks damages in excess of $75,000. Dkt. # 2, at 10-19. UrbanDaddy

removed the case to this Court and filed a motion to dismiss the case for lack of personal jurisdiction

or to transfer venue based on the forum selection clause (Dkt. # 13).

II.

Defendants argue that they do not have sufficient minimum contacts with Oklahoma for the

Court to exercise personal jurisdiction over them and, even if minimum contacts exist, it would

offend traditional notions of fair play and substantial justice for the Court to exercise personal

jurisdiction over UrbanDaddy and Broumand. Dkt. # 13, at 16. AOM responds that UrbanDaddy

initiated a long-term business relationship with an Oklahoma entity and had numerous contacts with

Oklahoma, and UrbanDaddy and Broumand could reasonably have foreseen being sued in

Oklahoma for claims arising out of this business relationship. Dkt. # 21, at 17-19.

When a defendant moves to dismiss for lack of personal jurisdiction under Rule 12(b)(2),

the plaintiff bears the burden of establishing that the Court has personal jurisdiction over the

defendant. OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1091 (10th Cir. 1998).

“When a district court rules on a Fed. R. Civ. P. 12(b)(2) motion to dismiss for lack of personal

jurisdiction without holding an evidentiary hearing, . . . the plaintiff need only make a prima facie

showing of personal jurisdiction to defeat the motion.” Id. (citations omitted). “The plaintiff may

make this prima facie showing by demonstrating, via affidavit or other written materials, facts that

if true would support jurisdiction over the defendant.” Id. at 1091. “In order to defeat a plaintiff’s

prima facie showing of jurisdiction, a defendant must present a compelling case demonstrating ‘that

the presence of some other considerations would render jurisdiction unreasonable.’” Id. (quoting

Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985)). The allegations of the complaint must

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be accepted as true to the extent they are uncontroverted by a defendant’s affidavit. Taylor v. Phelan,

912 F.2d 429, 431 (10th Cir. 1990). If the parties provide conflicting affidavits, all factual disputes

must be resolved in the plaintiff’s favor. Id.

For a court to exercise personal jurisdiction over a nonresident defendant in a diversity

action, the plaintiff must demonstrate the existence of every fact required to satisfy both the forum’s

long-arm statute and the Due Process Clause of the United States Constitution. See OKLA. STAT. tit.

12, § 2004(F). “Because Oklahoma’s long-arm statute permits the exercise of jurisdiction that is

consistent with the United States Constitution, the personal jurisdiction inquiry under Oklahoma law

collapses into the single due process inquiry.” Intercon, Inc. v. Bell Atl. Internet Solutions, Inc., 205

F.3d 1244, 1247 (10th Cir. 2000) (citing Rambo v. Am. S. Ins. Co., 839 F.2d 1415, 1416 (10th Cir.

1988)); see also Hough v. Leonard, 867 P.2d 438, 442 (Okla. 1993).

“Due process requires that the nonresident defendant’s conduct and connection with the

forum state are such that the nonresident could reasonably anticipate being haled into court in that

state.” Conoco, Inc. v. Agrico Chem. Co., 115 P.3d 829, 835 (Okla. 2004) (citing World-Wide

Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)). “The Due Process Clause permits the

exercise of personal jurisdiction over a nonresident defendant ‘so long as there exist minimum

contacts between the defendant and the forum State.’” Intercon, 205 F.3d at 1247 (quoting World-

Wide Volkswagen, 444 U.S. at 291). The existence of such minimum contacts must be shown to

support the exercise of either general jurisdiction or specific jurisdiction. Id. “When a plaintiff’s

cause of action does not arise directly from a defendant’s forum related activities, the court may

nonetheless maintain general personal jurisdiction over the defendant based on the defendant’s

business contacts with the forum state.” Id. (citing Helicopteros Nacionales de Colombia v. Hall,

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466 U.S. 408, 414-16 & n.9 (1984)). Alternately, a court “may, consistent with due process, assert

specific jurisdiction over a nonresident defendant ‘if the defendant has purposefully directed his

activities at the residents of the forum, and the litigation results from alleged injuries that arise out

of or relate to those activities.’” Id. (quoting Burger King Corp., 471 U.S. at 472).

AOM does not argue that the Court has general personal jurisdiction over UrbanDaddy, and

the Court does not find that it could exercise general personal jurisdiction over UrbanDaddy. In

order to have general personal jurisdiction over a defendant, the defendant’s contacts with the state

must be so continuous and systematic that the defendant is “essentially at home in the State.”

Xmission, L.C. v. Fluent LLC, 955 F.3d 833, 840 (10th Cir. 2020). AOM has offered no evidence

that UrbanDaddy conducts business with any other Oklahoma entity and UrbanDaddy does not

maintain an office in Oklahoma. During 2015 and 2016, UrbanDaddy had about 80 employees and

most of those employees resided in New York City. Dkt. # 13, at 29. Broumand states that AOM

is the only Oklahoma entity with which UrbanDaddy has conducted business and that less than 0.1

percent of UrbanDaddy’s annual audience traffic comes from Oklahoma. Id. at 30. AOM does not

dispute that UrbanDaddy does not generally conduct business in Oklahoma and the Court finds that

UrbanDaddy’s contacts with Oklahoma are not so systematic and continuous that it could generally

expect to be sued in Oklahoma.

AOM argues that UrbanDaddy could have reasonably expected to be sued in Oklahoma

based on its business relationship with AOM, because this was a long-term business relationship

between UrbanDaddy and AOM and UrbanDaddy had numerous contacts with Oklahoma as part

of this business relationship. The parties do not dispute that UrbanDaddy reached out to AOM and

solicited AOM’s business and, even if UrbanDaddy was not initially aware that AOM was based in

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Tulsa, UrbanDaddy sent representatives to meet with McKay in Tulsa in February 2015. Dkt. # 21-

1, at 4. As part of the contract negotiations, UrbanDaddy requested information about AOM’s

corporate status, and AOM advised UrbanDaddy that AOM was a limited liability company

organized under the laws of Oklahoma with its principal place of business in Tulsa. Dkt. # 21-5,

at 2. UrbanDaddy claims that it was not “relevant” to it that AOM was located in Oklahoma, but

this does not change the fact that UrbanDaddy knew it was negotiating a potential business

relationship with an Oklahoma entity. Dkt. # 13, at 10. UrbanDaddy does not dispute that

numerous phone calls and e-mails were exchanged by representatives of UrbanDaddy and AOM

during the negotiation process, but UrbanDaddy characterizes the negotiations as taking place from

its office in New York. Dkt. # 13, at 10. This is not an accurate characterization of the evidence

and AOM has shown that many of the communications between the parties, including the initiation

of contract negotiations, were the result of UrbanDaddy purposefully reaching out to an Oklahoma

business. The Court also notes that many of e-mails from UrbanDaddy were personally sent by

Broumand and the evidence shows that he was actively involved in the initial negotiations with

AOM.

After the contract was executed, the parties communicated regularly by phone and e-mail

and Broumand personally visited Tulsa after AOM expressed dissatisfaction with certain aspects of

the parties’ contractual arrangement. Dkt. # 13, at 31; Dkt. # 21-1, at 6. UrbanDaddy refers to

Broumand’s trip to Tulsa as a “customer relation trip” that has nothing to do with AOM’s claims

in this case, but the trip is evidence that Broumand personally visited Tulsa to further a business

relationship with an entity based in Oklahoma. See Dkt. # 13, at 18. The Court must also consider

the context of Broumand’s trip to Tulsa, because AOM was considering ending its relationship with

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UrbanDaddy. UrbanDaddy sought to maintain its relationship with an Oklahoma business and

Broumand actively participated in UrbanDaddy’s efforts, and both UrbanDaddy and Broumand

could have reasonably foreseen being sued in Oklahoma for claims arising out of the business

relationship between UrbanDaddy and AOM.

In its reply, UrbanDaddy cites the Supreme Court’s decision in Walden v. Fiore, 571 U.S.

277 (2014), for the proposition that a defendant’s minimum contacts with a state must be based on

the defendant’s actions, not merely on a plaintiff’s unilateral decision to create ties with a state. Dkt.

# 26, at 8. In Walden, the defendant was a police officer who was working at an airport located in

Atlanta, Georgia, and the plaintiffs were airline passengers flying from San Juan, Puerto Rico to Las

Vegas, Nevada. Id. at 279-80. The plaintiffs had to catch a connecting flight in Atlanta, and agents

of the Transportation Security Administration in San Juan notified law enforcement officials in

Atlanta that a pre-flight search uncovered over $97,000 in cash in the plaintiffs’ carry-on bags. Id.

at 280. The defendant and a Drug Enforcement Agency (DEA) agent approached the plaintiffs at

their departure gate to ask them about the money, and the plaintiffs claimed that they were

professional gamblers and the cash was their gambling “bank.” Id. The defendant seized the cash

and allowed the plaintiffs to board their connecting flight, and he advised the plaintiffs that the

money would be returned to them if their story could be confirmed. Id. The money was eventually

returned to the plaintiffs, but the plaintiffs brought suit against the defendant in federal court in

Nevada. Id. at 281. The district court dismissed the case for lack of personal jurisdiction, but that

decision was reversed by the Ninth Circuit Court of Appeals. The Supreme Court found that the

focus must be on the defendant’s conduct directed toward the forum state, and the plaintiff cannot

be the sole link between the defendant and the forum state. Id. at 285-86. The defendant in Walden

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did not engage in any conduct in Nevada or directed toward the state of Nevada, nor did he contact

any person in Nevada or send any communications to any person in Nevada. Id. at 288. The sole

link between the defendant and Nevada was the location of the plaintiff, and the mere fact that a

forum resident allegedly sustained an injury does not show that the defendant had any significant

contacts with the forum. Id. at 289-90.

This is not a case where the plaintiff’s unilateral decision to reside in a particular location

is the sole link between the defendant and the forum state and Walden has no application. As the

Court has discussed, UrbanDaddy sought out a relationship with AOM and it was well aware that

AOM was based in Oklahoma. UrbanDaddy could have terminated contractual negotiations with

AOM after learning that AOM was based in Oklahoma, but UrbanDaddy and Broumand made a

voluntary and informed decision to pursue a relationship with an Oklahoma business. AOM’s

physical presence in Oklahoma may not have originally been the reason for UrbanDaddy’s contacts

with Oklahoma, but UrbanDaddy’s continued relationship with AOM created a link between it and

the forum state that is not based solely on AOM’s physical presence in the state. The Court has

already determined that UrbanDaddy and Broumand have sufficient minimum contacts with

Oklahoma to support the exercise of personal jurisdiction over them, and defendants have not shown

that AOM is the only link between defendants and the forum state. Instead, defendants’ actions

directed toward the forum state provide the necessary connection allowing the Court to exercise

personal jurisdiction over them.

As the Court has found that UrbanDaddy and Broumand have minimum contacts with

Oklahoma, the Court must now “consider whether the exercise of personal jurisdiction over the

defendant offends ‘traditional notions of fair play and substantial justice.’” OMI Holdings, 149 F.3d

12

at 1091. The touchstone of this analysis is whether the exercise of personal jurisdiction would be

“reasonable.” Id. The determination of reasonableness “evokes a sliding scale: the weaker the

plaintiff’s showing on [minimum contacts], the less a defendant need show in terms of

unreasonableness to defeat jurisdiction. The reverse is equally true: an especially strong showing

of reasonableness may serve to fortify a borderline showing of [minimum contacts].” Id. at 1092

(quoting Ticketmaster-New York, Inc. v. Alioto, 26 F.3d 201, 210 (1st Cir. 1994)).

The Tenth Circuit has provided district courts five factors to consider in determining whether

exercise of personal jurisdiction would offend the traditional notions of fair play and substantial

justice. The first factor is the burden on defendant of litigating in plaintiffs’ chosen forum. Id. The

Tenth Circuit has said that “[t]his factor is of special significance, because it serves to prevent the

filing of vexatious claims in a distant forum where the burden of appearing is onerous.” Id. at 1096

(citing World-Wide Volkswagen, 442 U.S. at 292). The second factor analyzes Oklahoma’s interest

in resolving the parties’ dispute. OMI Holdings, 149 F.3d at 1095. Oklahoma “generally has a

‘manifest interest’ in providing its residents with a convenient forum for redressing injuries inflicted

by out-of-state actors.” Burger King, 471 U.S. at 474 (quoting McGee v. Int’l Life Ins. Co., 355

U.S. 220, 223 (1957)). The third factor examines “the plaintiff’s interest in receiving convenient

and effective relief” in the forum state. OMI Holdings, 149 F.3d at 1095. “This factor may weigh

heavily in cases where a [p]laintiff’s chances of recovery will be greatly diminished by forcing him

to litigate in another forum because of that forum’s laws or because the burden may be so

overwhelming as to practically foreclose pursuit of the lawsuit.” Id. at 1097 (citing P. Atl. Trading

Co. v. M/V Main Express, 758 F.2d 1325, 1331 (9th Cir. 1985)). The fourth factor concerns “the

interstate judicial system’s interest in obtaining the most efficient resolution of controversies,”

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which the Tenth Circuit has stated is the examination of “whether the forum state is the most

efficient place to litigate the dispute.” Id. “Key to the inquiry are the location of witnesses, where

the wrong underlying the lawsuit occurred, what forum’s substantive law governs the case, and

whether jurisdiction is necessary to prevent piecemeal litigation.” Benton, 375 F.3d at 1079

(quoting OMI Holdings, 149 F.3d at 1097). The fifth and final factor examines “the interests of the

several states, in addition to the forum state, in advancing fundamental substantive social policies.”

OMI Holdings, 149 F.3d at 1097.

The Court initially notes that AOM has made a strong showing of minimum contacts and

UrbanDaddy and Broumand must show that the factors significantly support a finding that it would

offend traditional notions of fair play and substantial justice to require them to defend against

AOM’s claim in Oklahoma. The first factor (burden on defendant) somewhat favors defendants.

UrbanDaddy represents that it does not regularly conduct business in Oklahoma and that it would

potentially have to shut down its office in New York to attend hearings in Oklahoma. Dkt. # 13, at

18-19. The second and third factors (forum state’s interest and convenience for plaintiff) both

support AOM’s position that Oklahoma is an appropriate forum for this case. Defendants dispute

that the forum state has any interest in adjudicating the dispute between the parties, because the

parties agreed that New York law would apply and the agreement was executed by UrbanDaddy in

New York. Id. at 19. However, there is no dispute that AOM is an Oklahoma entity with its

principal place of business in Tulsa, and Oklahoma has a significant interest in providing a forum

for its citizens to resolve legal disputes. Dkt. # 21, at 22. Defendants argue that there is no reason

why AOM could not litigate its claims in New York, but they has not shown that it would be more

convenient or effective for AOM to litigate its claims outside of Oklahoma. The fourth factor

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(interests of interstate judicial system) somewhat favors defendants. Both AOM and defendants

have identified witnesses located in their preferred forum and it will be inconvenient for some of the

witnesses regardless of where the case proceeds. As will be discussed below, the choice of law

provision in the original agreement is part of the parties’ implied contract and the courts of New

York have a significant interest and expertise in applying New York law. Finally, neither Oklahoma

nor New York has a significant social policy that will be affected by resolution of this case. As

defendants note, this is a garden-variety breach of contract case and New York has a greater interest

in applying its own laws to this dispute. Dkt. # 13, at 20. The Court finds that the five factors do

not significantly favor either party and, combined with a strong showing of minimum contacts, the

Court finds that it has personal jurisdiction over UrbanDaddy and Broumand.

III.

Defendants argue that the parties’ written agreement includes a forum selection clause

requiring that any claims “arising out of or relating to the terms” of the parties’ original agreement

be filed in the state or federal courts located in New York County, New York, and defendants ask

the Court to transfer this case to the United States District Court for the Southern District of New

York. Dkt. # 13, at 23-24. AOM responds that the forum selection clause in the original agreement

is unenforceable, because the forum selection clause was not part of the 2017 Agreement that

governed the parties’ relationship after December 31, 2016. Dkt. # 21, at 26.

The Court must initially determine if the parties’ agreement contains a venue selection clause

or a forum selection clause. Unlike a forum selection clause, a venue selection clause authorizes, but

does not require, litigation in certain forums and it may permit multiple acceptable forums for

litigation. SBKC Serv. Corp. v. 1111 Prospect Partners, L.P., 105 F.3d 578, 582 (10th Cir. 1997).

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“The existence of a venue selection clause does not impose an absolute duty nor does it endow a

party with an absolute right to have every dispute between the parties litigated in the named forum.”

Hospah Coal Co. v. Chaco Energy Co., 673 F.2d 1161, 1163 (10th Cir. 1982). On the other hand,

forum selection clauses are presumed to be valid and the burden is on the party resisting

enforcement to show that enforcement of the clause would be unreasonable under the circumstances.

Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 589 (1991); M/S Bremen v. Zapata Off-Shore

Co., 407 U.S. 1, 15 (1972); Milk ‘N’ More, Inc. v. Beavert, 963 F.2d 1342, 1346 (10th Cir. 1992).

The party resisting enforcement of a forum selection clause “carries a heavy burden of showing that

the provision itself is invalid due to fraud or overreaching or that enforcement would be

unreasonable and unjust under the circumstances.” Riley v. Kingsley Underwriting Agencies, Ltd.,

969 F.2d 953, 957 (10th Cir. 1992). The Tenth Circuit has found that forum selection clauses fall

into two general categories - mandatory or permissive. Excell, Inc. v. Sterling Boiler & Mechanical,

Inc., 106 F.3d 318, 321 (10th Cir. 1997). A mandatory forum selection clause must contain “clear

language showing that jurisdiction is appropriate only in the designated forum.” Id. (quoting

Thompson v. Founders Group Int’l, 886 P.2d 904, 910 (Kan. Ct. App. 1994)). A permissive forum

selection clause permits suit to be brought in a particular jurisdiction, but does not prevent the

parties from litigating in a different forum. SBKC Serv. Corp., 105 F.3d at 581-82. The Supreme

Court has explained that the appropriate mechanism for the enforcement of a forum selection clause

in federal court is 28 U.S.C. § 1404(a) through the doctrine of forum non conveniens. Atlantic

Marine Constr. Co., Inc. v. United States District Court for the Western Dist. of Texas, 571 U.S. 49,

60 (2013). However, for cases in which the parties have selected another federal forum, Congress

replaced the traditional remedy of dismissal with transfer to the selected forum. Id.

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In this case, the parties included choice of law and forum selection clauses in the original

written agreement:

Governing Law. This Agreement shall be governed by the laws of the state of New

York, without regard to the choice of law provisions thereof. The parties hereby

irrevocably agree that any action at law or in equity arising out of or relating to these

terms shall be filed only in the state or federal courts located in New York County

and the parties hereby consent and submit to the personal jurisdiction of such courts

for the purposes of litigating any such action.

Dkt. # 13, at 49. This provision contains language exclusively selecting a particular forum, rather

than merely permitting litigation in a designated forum, and the clause prohibits litigation arising

under or relating to the agreement in any forum other than the state or federal courts located in New

York County. This type of language of exclusivity shows that the parties intended for this to be a

mandatory forum selection clause. See Elna Sefcovic, LLC v. TEP Rocky Mountain, LLC, 953 F.3d

660, 673 (10th Cir. 2020).

AOM argues that the original written agreement expired under its own terms and the parties

entered a new agreement in 2017 that did not include a forum selection clause. Dkt. # 21, at 26.

AOM states that the “present action arises from obligations under the 2017 Agreement that resulted

from the parties’ mutual agreement and understanding and by the parties’ conduct after the

Agreement terminated or, alternatively, expired.” Id. Defendants do not dispute that the parties

continued to operate under an agreement after the original written agreement expired, but they argue

that the parties’ relationship only makes sense if the terms of the original agreement remained in

force. Dkt. # 26, at 9. McKay states that the “2017 Agreement was not reduced to writing, but was

instead reflected by the parties’ conduct.” Dkt. # 21-1. Oklahoma law recognizes an implied

contract “the existence and terms of which are manifested by conduct.” OKLA. STAT. tit. 15, § 133.

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The Oklahoma Supreme Court has provided the following guidance to determine the existence and

scope of an implied contract:

When determining whether an implied contract exists, the Court will consider (a) the

parties’ acts, conduct and statements as a whole, (b) whether there was a meeting of

the minds on the agreement’s essential elements, (c) the parties’ intent to enter into

a contract upon defined terms, and (d) whether one of the parties has relied in good

faith upon the alleged contract. While making its assessment, the Court is mindful

of the legal principle that the law will not make for a party a better contract than it

made itself or alter an agreement for one party's benefit and another’s detriment.

Lastly, we are also cognizant of the rule that an implied contract encompasses all

provisions—discernible from the circumstances under which the agreement was

reached—which are indispensable to effectuate the parties’ intentions.

Dixon v. Bhuiyan, 10 P.3d 888, 891 (Okla. 2000). A court may consider the terms of any prior

written contract between the parties to ascertain the terms and conditions of a subsequent contract

implied by conduct. Id. at 892. New York law also recognizes that a “contract may be implied in

fact where inferences may be drawn from the facts and circumstances of the case and the intention

of the parties as indicated by their conduct.” Ellis v. Provident Life & Accident Ins. Co., 3 F. Supp.

2d 399, 409 (S.D.N.Y. 1998). When a written agreement expires under its own terms, the parties

can create an implied contract under substantially the same terms by continuing to provide services,

accept services, or make payments as if the written agreement were still in effect. Nasdaq, Inc. v.

Exchange Traded Managers Group, LLC, 431 F. Supp. 3d 176, 238 (S.D.N.Y. 2019).

The Court has reviewed the evidence submitted by AOM and finds that the terms of the

“2017 Agreement” are too vague to constitute an enforceable contract unless the Court considers

the terms of the original written agreement as an integral part of the subsequent implied contract.

AOM offers no evidence outlining the terms of the implied contract, but it seems apparent that the

parties’ relationship continued to operate in a similar manner after the original agreement expired.

McKay states that AOM expected to be paid on a quarterly basis for allowing UrbanDaddy to place

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advertisements on AOM’s websites, and this was the basic component of the parties’ original

agreement. However, AOM also sought to enforce provisions of the original agreement after

December 31, 2016, even though it has offered no evidence that the parties expressly agreed to these

terms after the original agreement expired. See Dkt. # 26, at 100 (September 7, 2017 e-mail from

AOM requesting technical support from UrbanDaddy as authorized by Section 1(d) of written

agreement); id. at 102 (July 3, 2018 e-mail referencing AOM’s agreement to place no more than 3

advertisements on a single page); id. at 107 (December 6, 2018 e-mail showing that AOM would

no longer comply with its obligations under Section 2(e) of the written agreement). When

demanding payment from UrbanDaddy, AOM invoked its right under Section 4(g) of the written

agreement to audit UrbanDaddy’s books and records. Dkt. # 13, at 8. The clear implication of the

parties’ conduct is that they were following the terms of the original agreement except for any

changes that were specifically agreed upon by the parties, and there is no evidence suggesting that

the parties completely abandoned the original agreement and formed a new contract.

The Court will give AOM the benefit of the doubt and assume that AOM has alleged a

plausible breach of contract claim but, in order to do so, the Court must also assume that the implied

contract was a continuation of the parties’ original agreement. The “2017 Agreement” referenced

by AOM is simply too vague to constitute an enforceable contract without reference to the terms of

the original agreement, and it is clear that AOM relied upon many aspects of the original agreement

as the parties’ relationship continued past December 31, 2016. AOM cannot simply pick and choose

aspects of the original agreement that it finds favorable and recast the contract as the “2017

Agreement,” and AOM has offered no evidence that it specifically sought to re-negotiate or amend

the choice of law or forum selection provisions of the original agreement. The Court finds that the

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implied contract governing the parties’ relationship after December 31, 2016 includes all provisions

of the original agreement that were not specifically amended by the parties, and the forum selection

clause in the original agreement is enforceable. AOM agreed to litigate “any action in law or in

equity arising out of or relating to” the original agreement in the state or federal courts located in

New York County, New York. The Court has reviewed AOM’s petition and all of AOM’s claims

relate to the business relationship governed by the parties’ contractual agreement. The forum

selection provision agreed to by the parties is very broad and encompasses claims “arising under or

relating to” the agreement, and all of AOM’s claims arise under the agreement or relate to the

parties’ obligations under the terms of the contract. The Court will enforce the forum selection

clause and transfer this case to the United States District Court for the Southern District of New

York.

IT IS THEREFORE ORDERED that Opening Motion of Defendants UrbanDaddy, Inc.

and Broumand to Dismiss for Lack of Personal Jurisdiction and Improper Venue, and Alternatively

for Change of Venue, and Brief in Support (Dkt. # 13) is granted in part and denied in part:

defendants’ request to dismiss the case for lack of personal jurisdiction is denied, but defendants’

motion to transfer venue based on a forum selection clause is granted.

IT IS FURTHER ORDERED that the Court Clerk is directed to transfer this case to the

United States District Court for the Southern District of New York.

DATED this 11th day of August, 2020.

UNITED STATES DISTRICT JUDGE

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This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.

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