Pepe Tools Inc v. Sunstone Engineering LLC

IN THE UNITED STATES DISTRICT COURT FOR THE

WESTERN DISTRICT OF OKLAHOMA

PEPE TOOLS, INC., )

)

Plaintiff, )

)

v. ) Case No. CIV-23-907-D

)

SUNSTONE ENGINEERING, LLC, )

)

Defendant. )

O R D E R

Before the Court is Defendant’s Motion to Dismiss, or, in the Alternative, Motion

to Transfer Venue [Doc. No. 8] under Fed. R. Civ. P. 12(b)(2) and (b)(3) and 28 U.S.C.

§ 1404(a) or § 1406(a). Defendant Sunstone Engineering, LLC alleges that personal

jurisdiction is lacking in this forum because it is a nonresident of Oklahoma and has

insufficient contacts with the state to satisfy due process. Defendant submits declarations

of its officers and employees [Doc. Nos. 8-1 to 8-7] providing relevant information and

documents. Plaintiff Pepe Tools, Inc. has filed a response [Doc. No. 11] that is similarly

accompanied by the declaration of its president [Doc. No. 12]. Defendant has replied [Doc.

No. 13]. Thus, the Motion is fully briefed and ripe for decision.

Factual and Procedural Background

Plaintiff brings suit for declaratory and injunctive relief and damages related to

Defendant’s termination of their business relationship and Defendant’s allegations that

Plaintiff misappropriated trade secrets and infringed patents and trademarks. Plaintiff

claims that Defendant breached purchase-order contracts and violated Oklahoma statutes

prohibiting certain patent-related communications and deceptive trade practices,

specifically, Okla. Stat. tit. 23, § 111 et seq. and Okla. Stat. tit. 78, § 51 et seq. Plaintiff

also seeks a determination that it has not violated federal and state laws prohibiting

misappropriation of trade secrets: Defend Trade Secrets Act, 18 U.S.C. § 1831 et seq.;

Oklahoma Uniform Trade Secrets Act, Okla. Stat. tit. 78, § 85 et seq.; and Utah Uniform

Trade Secrets Act, Utah Code § 13-24-1 et seq. Plaintiff invokes both diversity jurisdiction

under 28 U.S.C. § 1332 and federal question jurisdiction under 28 U.S.C. § 1331.1

Briefly stated, Plaintiff alleges that Defendant is a manufacturer and seller of micro

welding machines for permanent jewelry, that Plaintiff began distributing Defendant’s

products in 2020 and became its largest distributor by 2023, but that their relationship

ended after Defendant proposed the execution of written agreements to which the parties

could not agree. Plaintiff alleges that, when it would not accede to certain contract terms,

Defendant refused to fulfill substantial purchase orders that had already been accepted and

then sent a series of “cease and desist” letters that terminated their distribution relationship

and accused Plaintiff of misappropriating trade secrets and infringing unspecified patents

and trademarks. The last letter dated June 21, 2023, expressly threatened litigation. Copies

of the letters are attached to the Complaint as exhibits [Doc. Nos. 1-3 to 1-5].

1 Plaintiff does not allege facts that establish the citizenship of Defendant, a limited liability

company or LLC. An LLC has the citizenship of all its members, including members of constituent

LLC’s. See Mgmt. Nominees, Inc. v. Alderney Invs., LLC, 813 F.3d 1321, 1324 (10th Cir. 2016);

Gerson v. Logan River Acad., 20 F.4th 1263, 1269 n.2 (10th Cir. 2021). The Complaint states

only Defendant’s state of organization and principal place of business. See Compl. ¶ 2. However,

Defendant’s disclosure statements [Doc. Nos. 5 and 10] identify its members and show none is a

citizen of Oklahoma.

By its Motion, Defendant asserts that this Court lacks personal jurisdiction over it

as a Utah limited liability company operating a business in Utah and having no significant

connection to Oklahoma.2 Defendant also asserts that, absent personal jurisdiction, venue

is improper in this judicial district under 28 U.S.C. § 1391(b)(3) and that Plaintiff

consented to the terms and conditions of its product sales, which included a forum selection

agreement. Defendant seeks dismissal of the action or, alternatively, a transfer of venue to

the District of Utah under 28 U.S.C. § 1404(a) (for convenience of the parties) or § 1406(a)

(to cure a defect in jurisdiction or venue). Because personal jurisdiction is a threshold

question that a federal court must address as a preliminary matter, the Court begins with

the jurisdictional issue. See Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584 (1999).

Standard of Decision

Plaintiff “bears the burden of establishing personal jurisdiction over defendant.”

Intercon, Inc. v. Bell Atl. Internet Sol., 205 F.3d 1244, 1247 (10th Cir. 2000); see Shrader

v. Biddinger, 633 F.3d 1235, 1239 (10th Cir. 2011). Where the issue is presented for

decision on the basis of allegations and affidavits, Plaintiff “need only make a prima facie

showing that jurisdiction exists.” Intercon, 205 F.3d at 1247; see Shrader, 633 F.3d at

1239; Dental Dynamics, LLC v. Jolly Dental Grp., LLC, 946 F.3d 1223, 1228 (10th Cir.

2020). At this stage, the Court must accept “as true all well-pled (that is, plausible, non-

2 In asserting that it is not a resident of Oklahoma for purposes of personal jurisdiction,

Defendant properly focuses on facts that establish the LLC’s domicile in Utah, rather than facts

showing its citizenship for purposes of diversity jurisdiction. See Hood v. Am. Auto Care, LLC,

21 F.4th 1216, 1219 & n.1 (10th Cir. 2021) (nonresident defendant was Florida LLC with sole

office in Florida; personal jurisdiction over its members “was derivative of” jurisdiction over the

LLC).

conclusory, and non-speculative) facts alleged in plaintiff’s complaint” and “resolve any

factual disputes in the plaintiff’s favor.” Shrader, 633 F.3d at 1239; see Intercon, 205 F.3d

at 1247. But “even well-pleaded jurisdictional allegations are not accepted as true once

they are controverted by affidavit . . . based on personal knowledge of the party with direct

access to the operative facts.” Shrader, 633 F.3d at 1248.

“To show personal jurisdiction over a nonresident in a diversity action, [a plaintiff]

must demonstrate that jurisdiction is proper under the laws of the forum state – in this case

Oklahoma – and that the exercise of jurisdiction complies with the Due Process Clause of

the Fourteenth Amendment.” Dental Dynamics, 946 F.3d at 1228. Under Oklahoma law,

the personal jurisdiction inquiry is simply a due process analysis. Intercon, 205 F.3d at

1247; see Monge v. RG Petro-Mach. (Grp.) Co., 701 F.3d 598, 613 (10th Cir. 2012). This

familiar standard requires “minimum contacts” between the defendant and the forum state

and a finding that the exercise of jurisdiction comports with “fair play and substantial

justice.” See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985); World-Wide

Volkswagen Corp. v. Woodson, 444 U.S. 286, 292(1980); Intercon, 205 F.3d at 1247. 3

3 Even without diversity jurisdiction, similar principles would apply. “[B]efore a federal

court can assert personal jurisdiction over a defendant in a federal question case, the court must

determine (1) whether the applicable statute potentially confers jurisdiction by authorizing service

of process on the defendant and (2) whether the exercise of jurisdiction comports with due

process.” Klein v. Cornelius, 786 F.3d 1310, 1317 (10th Cir. 2015) (internal quotation omitted);

see Trujillo v. Williams, 465 F.3d 1210, 1217 (10th Cir. 2006). Because the federal statute invoked

by Plaintiff does not authorize nationwide service of process, the federal rules authorize the

application of the Oklahoma long-arm statute. See Fed. R. Civ. P. 4(k)(1)(A); Hood, 21 F.4th at

1220 (applying Rule 4(k)(1)(A) under Telephone Consumer Protection Act, 47 U.S.C. § 227);

Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, 1070 (10th Cir. 2008) (same

under Copyright Act, 17 U.S.C. § 101 et seq., and Declaratory Judgment Act, 28 U.S.C. § 2201);

Trujillo, 465 F.3d at 1217 (42 U.S.C. § 1983).

Discussion

A. Minimum Contacts – Legal Standard

The minimum contacts standard may be satisfied by showing general or specific

personal jurisdiction. See Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S.

915, 919 (2011); Bristol-Myers Squibb Co. v. Superior Ct., 582 U.S. 255, 262 (2017).

General jurisdiction refers to a court’s power to hear claims against a nonresident defendant

whose “affiliations with the State in which suit is brought are so constant and pervasive ‘as

to render [it] essentially at home in the forum State.’” See Daimler AG v. Bauman, 571

U.S. 117, 122 (2014) (quoting Goodyear, 564 U.S. at 919) (alteration in Daimler).4

Specific jurisdiction requires that “the suit must arise out of or relate to the defendant’s

contacts with the forum.” Bristol-Myers, 582 U.S. at 262 (quoting Daimler, 571 U.S. at

127, with alteration and emphasis added in Bristol-Myers). Specific personal jurisdiction

“requires, first, that the out-of-state defendant must have ‘purposefully directed’ its

activities at residents of the forum state, and second, that the plaintiff’s injuries must ‘arise

out of’ defendant’s forum-related activities.” Dudnikov v. Chalk & Vermilion Fine Arts,

Inc., 514 F.3d 1063, 1071 (10th Cir. 2008) (quoting Burger King, 471 U.S. at 472); see

Intercon, 205 F.3d at 1247; Pro Axess, Inc. v. Orlux Distrib., Inc., 428 F.3d 1270, 1277

(10th Cir. 2005). To satisfy the first element, Plaintiff must demonstrate that Defendant

4 “For an individual, the paradigm forum for the exercise of general jurisdiction is the

individual’s domicile; for a corporation, it is an equivalent place, one in which the corporation is

fairly regarded as at home.” Goodyear, 564 U.S. at 924; see Bristol-Myers, 582 U.S. at 262;

Daimler, 571 U.S. at 137. “‘[O]nly a limited set of affiliations with a forum will render a defendant

amenable to’ general jurisdiction in that State.” Bristol-Myers, 582 U.S. at 262 (quoting Daimler,

571 U.S. at 137).

“‘purposefully directed’ its activities at the forum state . . . [or] ‘purposely availed’ itself

of the privilege of conducting activities or consummating a transaction in the forum state.”

Dudnikov, 514 F.3d at 1071; see Pro Axess, 428 F.3d at 1277. This element requires

affirmative conduct that creates a substantial connection to the state; “random, fortuitous,

or attenuated contacts” or “the unilateral activity of another party” is insufficient. See

Burger King, 471 U.S. at 475 (internal quotations omitted).

Plaintiff makes a conclusory argument for general jurisdiction that disregards the

applicable standard. Plaintiff relies on facts regarding Defendant’s course of business with

Plaintiff that, at most, may establish specific jurisdiction for this lawsuit. See Pl.’s Resp.

Br. at 8. The Court thus considers whether Plaintiff’s showing is sufficient to establish

specific personal jurisdiction in this forum for the underlying controversy with Defendant.

B. Minimum Contacts – Application to Plaintiff’s Case

The Court first observes that Plaintiff’s jurisdictional theory is not entirely clear.

Although Plaintiff refers to its breach of contract claim, Plaintiff does not present sufficient

facts to show specific jurisdiction for a contract action. “In order to assess whether

minimum contacts occurred in a contract case, we look at ‘prior negotiations and

contemplated future consequences, along with the terms of the contract and the parties’

actual course of dealing.’” AST Sports Science, Inc. v. CLF Distrib. Ltd. 514 F.3d 1054,

1058 (10th Cir. 2008) (quoting Burger King, 471 U.S. at 479). “A contract alone does not

subject a nonresident defendant to the jurisdiction of the subject forum,” but additional

facts that demonstrate the pursuit of an ongoing business relationship connected to the

forum will support jurisdiction. Id. at 1059; see Dental Dynamics, 946 F.3d at 1230

(business relationship between Oklahoma LLC and Arkansas LLC did not establish

sufficient contacts with Oklahoma for breach of contract action here).

Plaintiff’s contract claim is based on two purchase orders that Plaintiff submitted,

and Defendant allegedly accepted, in May 2023. See Compl. ¶¶ 18-19, 51-52. Plaintiff

does not identify any facts regarding these alleged contracts that would support specific

jurisdiction over Defendant in Oklahoma. To the extent Plaintiff contends the parties had

a contractual relationship regarding the distribution of Defendant’s products, Plaintiff

provides few facts regarding their negotiations, course of dealing, contractual obligations,

or ongoing consequences, and these facts do not link Defendant to Oklahoma. For

example, Plaintiff’s president and manager of operations, David Aizenman, states that

representatives of the two companies worked together “at trade shows for over a decade”

and began doing business “as a result of a trade show in Hong Kong” and email

correspondence that he initiated. See Aizenman Decl. ¶¶ 3-4 and Ex. 1 [Doc. No. 12-1].

Defendant later offered to promote Plaintiff’s business in its marketing publications, to

provide free advertising in an industry magazine, and to join in a “co-branded webinar”

and a trade show in New York. See Aizenman Decl. ¶¶ 5-8 and Exs. 2-5 [Doc. Nos. 12-2

to 12-5]. Plaintiff does not state where the publications or magazine were distributed or

provide any information about the webinar.

Plaintiff relies heavily on the “amount of business that Sunstone and Pepetools

conducted between 2019 and 2023” and cites “two instances in which Sunstone

representatives visited Oklahoma for reasons directly related to its business with

Pepetools,” and a time period when Mr. Aizenman had frequent telephone communications

with Defendant’s representatives. See Pl.’s Resp. Br. at 6; Aizenman Decl. ¶¶ 9-12.5

However, these facts do not establish the existence of a distribution contract between the

parties with significant ties to Oklahoma.6 The Court therefore finds that Plaintiff has

failed to establish specific jurisdiction for a contract action against Defendant in this forum.

Plaintiff appears to rely for its jurisdictional showing on the analysis for tort actions

established by Calder v. Jones, 465 U.S. 783 (1984). In a tort-based action, “‘purposeful

direction’ has three elements: (a) an intentional action . . . that was (b) expressly aimed at

the forum state . . . with (c) knowledge that the brunt of the injury would be felt in the

forum state.” Niemi v. Lasshoffer, 770 F.3d 1331, 1348 (10th Cir. 2014) (internal quotation

omitted); see Anzures v. Flagship Rest. Grp., 819 F.3d 1277, 1280 (10th Cir. 2016);

Dudnikov, 514 F.3d at 1072. The Supreme Court clarified the “purposeful direction”

standard in Walden v. Fiore, 571 U.S. 277 (2014). “Walden teaches that personal

jurisdiction cannot be based on [a defendant’s] interaction with a plaintiff known to bear a

strong connection to the forum state.” Rockwood Select Asset Fund XI(6)-1, LLC v.

Devine, Millimet & Branch, 750 F.3d 1178, 1180 (10th Cir. 2014). Instead, “the

defendant’s suit-related conduct must create a substantial connection with the forum State.”

Walden, 571 U.S. at 284. This “defendant-focused” inquiry requires that “the relationship

5 About the two visits by Defendant’s representatives, Plaintiff states only that “the

purpose of their [first] visit was unclear” and the second was to make a presentation at an industry

convention sponsored by Plaintiff in Oklahoma City. See Aizenman Decl. ¶¶ 10-11.

6 To the contrary, Mr. Aizenman describes failed negotiations for a distribution contract

and states that the parties had no “formal agreement” other than “the purchase order process as

outlined in Pepetools’ Complaint.” See Aizenman Decl. ¶¶ 13-15.

between a defendant and the forum State must arise out of contacts that the defendant

himself creates with the forum State” and those contacts must be “with the forum State

itself, not the defendant’s contacts with persons who reside there.” Id. at 284, 285 (internal

quotation omitted, emphasis in original); see Anzures, 819 F.3d at 1280.

Plaintiff contends Defendant purposely directed its business and sales activities at

Oklahoma through a distribution relationship with an Oklahoma-based business and

through targeted efforts to enforce Defendant’s intellectual property rights in this state

through cease-and-desist letters demanding the removal of its products from Plaintiff’s

website and threating litigation. These enforcement efforts came through correspondence

sent by a Utah attorney to an Oklahoma attorney addressed as counsel for Plaintiff. See

Compl. Ex. Nos. 3-5 [Doc. Nos. 1-3 to 1-5]. Defendant’s business efforts included sending

its representatives to visit Plaintiff’s facilities and participating in an industry convention

here, and like a copyright owner in Dudnikov, Defendant demanded that Plaintiff halt sales

of existing inventory in Oklahoma and stop any plans to develop or sell competing products

from Oklahoma.

The individual plaintiffs in Dudnikov sold goods produced by a small business

operated from their home in Colorado through an internet auction website, eBay. The

defendants were a British corporation that owned the copyrights to famous images and its

American agent, a Delaware corporation with its principal place of business in Connecticut.

The defendants claimed certain fabric prints made and offered for sale by the plaintiffs

infringed the copyrights, and they invoked eBay’s program for resolving infringement

claims by giving notice to eBay in California. Under the program, the notice caused the

automatic termination of an ongoing auction and had other adverse consequences,

including the possible suspension of the plaintiffs’ eBay account. The court found that the

plaintiffs had sufficiently shown “purposeful direction under Calder” for specific

jurisdiction over the defendants in Colorado for a tortious interference lawsuit. Dudnikov,

514 F.3d at 1078. The defendants’ notice to eBay intentionally halted an auction taking

place in Colorado, and they subsequently emailed the plaintiffs directly in Colorado

threatening to sue them to prevent future sales of the allegedly infringing product. Also,

the “plaintiffs’ injury was suffered entirely in the forum state, Colorado.” Id. at 1077.

Upon consideration, the Court finds that Plaintiff’s showing is minimally sufficient

to establish suit-related conduct by Defendant that was purposely directed at Oklahoma

and creates a substantial connection for Plaintiff’s suit in this forum. Similar to Dudnikov,

Defendant took intentional actions aimed at halting Plaintiff’s Oklahoma-based sales of

Defendant’s products held in inventory here, and communicated directly with Plaintiff in

Oklahoma its demands to remove Defendant’s products from Plaintiff’s online sales

platform and cease development of Plaintiff’s own products. Through their informal

distribution arrangement, Defendant knew Plaintiff’s Oklahoma-based activities involved

a significant volume of sales of Defendant’s products, and Defendant was aware that its

infringement claims would significantly impact Plaintiff’s existing and planned business

in Oklahoma. Plaintiff’s alleged injury was suffered entirely in Oklahoma. Defendant’s

actions directed at Oklahoma form the basis of Plaintiff’s claims. Thus, this lawsuit arose

out of Defendant’s contacts with Oklahoma.

C. Substantial Justice

The remaining question is “whether the exercise of personal jurisdiction would

offend ‘traditional notions of fair play and substantial justice.’” Dudnikov, 514 F.3d at

1080 (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)); see Burger King,

471 U.S. at 476. “[W]here a defendant who purposefully has directed activities at forum

residents seeks to defeat jurisdiction, he must present a compelling case that the presence

of some other considerations would render jurisdiction unreasonable.” Burger King, 477

U.S. at 478; see Dudiknov, 514 F.3d at 1080; Pro Axess, 428 F.3d at 1280. Relevant factors

include:

(1) the burden on the defendant, (2) the forum state’s interest in resolving the

dispute, (3) the plaintiff’s interest in receiving convenient and effective

relief, (4) the interstate judicial system’s interest in obtaining the most

efficient resolution of controversies, and (5) the shared interest of the several

states in furthering fundamental substantive social policies.

Dudiknov, 514 F.3d at 1080 (internal quotation omitted); Pro Axess, 428 F.3d at 1279-80;

see Dental Dynamics, 946 F.3d at 1229. In this case, Defendant acknowledges these

factors but presents only conclusory arguments regarding them, largely colored by its view

that this case is about sales transactions completed in Utah. See Def.’s Mot. at 14.

Upon consideration, the Court finds that Defendant has failed to carry its burden to

demonstrate facts that would render the Court’s exercise of jurisdiction unreasonable.

Defendant does not identify a significant burden on it from litigating this case in Oklahoma,

stating only that it may be unable to obtain compulsory attendance of a witness who is a

former employee. Also, Defendant incorrectly states that Oklahoma has a minimal interest

in adjudicating this dispute. A state has “an important interest in providing a forum in

which [its] residents can seek redress for injuries caused by out-of-state actors,”

particularly where the dispute involves “a general application of the forum’s state laws.”

Pro Axess, 428 F.3d at 1280. Notably, Plaintiff seeks redress under Oklahoma statutes that

provide a remedy for the alleged patent-related communications at issue. Defendant’s

assertion that “efficiency in judicial resolution favors Utah” is based on a bare assertion

that “the majority of relevant events occurred” in Utah; Defendant does not address the

location of witnesses and evidence. See Def.’s Mot. at 14. Defendant also does not identify

a fundamental social policy at stake. In short, the Court finds that Defendant has not shown

that a lawsuit against it in Oklahoma offends notions of fair play and substantial justice.

D. Permissive Transfer of Venue

If the case is not dismissed for lack of personal jurisdiction, Defendant moves for a

transfer of venue to the United States District Court for the District of Utah under 28 U.S.C.

§ 1404(a) “[f]or the convenience of parties and witnesses, in the interest of justice.”

Plaintiff does not disagree that this case might have been brought in the federal district

court in Utah but opposes a § 1404(a) transfer there. The parties also dispute whether a

valid forum selection clause was part of a sales agreement allegedly created by Plaintiff’s

implied consent to Defendant’s terms and conditions of sale stated on its internet website.

Ordinarily, “[t]he party moving to transfer a case pursuant to § 1404(a) bears the

burden of establishing that the existing forum is inconvenient.” Employers Mut. Cas. Co.

v. Bartile Roofs, Inc., 618 F.3d 1153, 1167 (10th Cir. 2010) (internal quotation omitted).

And as a general rule, district courts considering a permissive transfer under § 1404(a)

should “weigh the following discretionary factors:”

the plaintiff’s choice of forum; the accessibility of witnesses and other

sources of proof, including the availability of compulsory process to insure

attendance of witnesses; the cost of making the necessary proof; questions as

to the enforceability of a judgment if one is obtained; relative advantages and

obstacles to a fair trial; difficulties that may arise from congested dockets;

the possibility of the existence of questions arising in the area of conflict of

laws; the advantage of having a local court determine questions of local law;

and all other considerations of a practical nature that make a trial easy,

expeditious and economical.

Id. (quoting Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d 1509, 1516 (10th

Cir. 1991)). “The calculus changes, however, when the parties’ contract contains a valid

forum-selection clause, which represents the parties’ agreement as to the most proper

forum.” Atl. Marine Const. Co. v. U.S. Dist. Ct., 571 U.S. 49, 62 (2013) (internal quotation

omitted). “When the parties have agreed to a valid forum-selection clause, a district court

should ordinarily transfer the case to the forum specified in that clause. Only under

extraordinary circumstances unrelated to the convenience of the parties should a § 1404(a)

motion be denied.” Id. (footnote omitted). Further, “as the party defying the forum-

selection clause, the plaintiff bears the burden of establishing that transfer to the forum for

which the parties bargained is unwarranted.” Id. at 63.

Defendant relies on a mandatory forum selection provision that appears on its

website as part of the “Terms and Conditions” for sales of its products. See Def.’s Mot.,

Exs. 3 & 4 [Doc. No. 8-3 and 8-4], § 24 (Dispute Resolution). The provision covers “any

dispute . . . arising out of or relating to this Agreement.” Id. The “Agreement” is comprised

collectively of “[t]he accompanying quotation of sale (the “Sales Quotation”) provided to

Buyer, and/or sales order acknowledgement (“Acknowledgement”) and these Terms,”

which is defined as “[t]hese terms and conditions of sale.” Id. § 1. Defendant does not

address whether this case arises out of or relates to an “Agreement,” as defined by the

Terms and Conditions.

As discussed above, the claims asserted in the Complaint are primarily based on

Defendant’s conduct in terminating the parties’ distribution relationship and accusing

Plaintiff of infringement. However, one claim concerns Defendant’s alleged breach of

sales contracts created by Plaintiff’s submission of two purchase orders that Defendant

accepted but did not fulfill. Defendant does not provide any information regarding these

alleged transactions. In response to the Motion, Plaintiff presents evidence that appears to

consist of a purchase order submitted by Plaintiff and an invoice issued by Defendant. See

Aizenman Decl. ¶ 15, Ex. 7 [Doc. No. 12-7]. It is unclear whether these documents satisfy

the definition of an “Agreement.” If they do, the question becomes whether the Terms and

Conditions on Defendant’s website are enforceable as part of it.

The focus of Defendant’s argument for the enforceability of the Terms and

Conditions is whether Plaintiff had sufficient notice of them to create an implied contract,

commonly referred to as a “browsewrap” agreement. See Def.’s Mot. at 20-23. This term

refers to internet or web-based contracts that “generally post terms and conditions on a

website” to be viewed “via a hyperlink at the bottom of the screen” or electronic document.

See Meyer v. Uber Techs., Inc., 868 F.3d 66, 75 (2d Cir. 2017); Nguyen v. Barnes & Noble

Inc., 763 F.3d 1171, 1176 (9th Cir. 2014). It differs from a “clickwrap” agreement, which

is a web-based contract “requiring a computer user to consent to any terms or conditions

by clicking on a dialogue box on the screen in order to proceed with a transaction.”

Hancock v. Am. Tel. & Tel. Co., 701 F.3d 1248, 1255 (10th Cir. 2012) (internal quotation

omitted). A browsewrap agreement involves no similar manifestation of assent, as required

by traditional principles of contract formation. “Because no affirmative action is required

by the website user to agree to the terms of a contract other than his or her use of the

website, the determination of the validity of the browsewrap contract depends on whether

the user has actual or constructive knowledge of a website’s terms and conditions.” Meyer,

868 F.3d at 75 (quoting Nguyen, 763 F.3d at 1176).

Neither the Tenth Circuit nor the highest court of Oklahoma has addressed

browsewrap agreements, but consistent with other jurisdictions, these courts have applied

basic contract law principles to other web-based contracts.7 In Hancock, for example, the

Tenth Circuit determined that clickwrap agreements between consumers and providers of

television, internet, and voice services were valid and enforceable under Oklahoma law.

Hancock, 701 F.3d at 1258. Applying contract law principles, the court held that “if a

clickwrap agreement gives a consumer reasonable notice of its terms and the consumer

affirmatively manifests assent to the terms, the consumer is bound by the terms.” Id. at

1256 (footnote omitted).

Similarly, the Oklahoma Supreme Court determined in Walker v. BuildDirect.Com

Technologies, Inc., 349 P.3d 549, 554 (Okla. 2015), that a manufacturer’s “Terms of Sale”

on its internet website were not incorporated into a sales contract with a consumer because

“[n]o reasonable prudent person, under the particular facts of this case, would have [had]

notice” of the additional terms. The supreme court applied a rule of Oklahoma contract

7 Defendant does not raise a choice of law issue.

law that “parties may incorporate by reference separate writings, or portions thereof,

together into one agreement where (1) the underlying contract makes clear reference to the

extrinsic document, (2) the identity and location of the extrinsic material may be

ascertained beyond doubt, and (3) the parties to the agreement had knowledge of and

assented to its incorporation.” Id. The court in Walker viewed a chief consideration to be

“whether the party to be bound had reasonable notice of and assented to the terms to be

incorporated.” Id. at 553. It articulated a general rule: “A party is deemed to have notice

of incorporated terms where a reasonable prudent person, under the particular facts of the

case, should have seen them.” Id.

Here, Defendant provides no evidence that any document used to form the alleged

contracts in this case referred to the Terms and Conditions. Defendant instead relies on the

testimony of its employees stating facts to show that Plaintiff knew of, and implicitly

assented to, the Terms and Conditions. These facts include that Defendant’s employees

had referred to them in past dealings with Mr. Aizenman when discussing Defendant’s

express warranties and customers’ warranty claims, and that Plaintiff followed the shipping

requirements stated in them. Defendant does not contend any representative of Plaintiff

visited its website or was expressly informed that the Terms and Conditions were part of

the parties’ sales contracts. At most, Defendant presents facts to show inquiry notice of

the Terms and Conditions, that is, a reasonable person in Plaintiff’s position should have

investigated and seen them. See Def.’s Mot at 22 (arguing that its employees responses to

Plaintiff’s warranty questions “should have caused [Plaintiff] to investigate”).8

Upon consideration of Defendant’s factual materials and legal authorities, the Court

is not persuaded that Defendant has established an enforceable agreement incorporating

the Terms and Conditions on its website into the parties’ sales contracts. In the Court’s

view, for this case to relate to an “Agreement” as defined in the Terms and Conditions,

Defendant must show Plaintiff had reasonable notice that the sales contracts at issue in this

case included the Terms and Conditions on Defendant’s website.

The only contract documents are provided by Plaintiff and those documents contain

no reference to the Terms and Conditions. Plaintiff contends, and Defendant does not

dispute, that the parties’ course of conduct involved making sales agreements in the same

manner, that is, by an exchange of documents by email without using Defendant’s internet

website or making any reference to the Terms and Conditions that appear there. The Court

accepts the facts presented by Defendant that its representatives sometimes referred to the

website when Plaintiff sought information about warranties for dissatisfied customers.

These facts would not necessarily suggest to Plaintiff, however, that Defendant viewed the

Terms and Conditions as applicable to the parties’ sales transactions. Further, the fact that

Plaintiff complied with shipping terms stated on the website does not show that Plaintiff

8 Defendant also relies, in part, on the fact that Plaintiff is a sophisticated user of e-

commerce that makes internet sales to retail customers and includes terms of sale on its own

website. See Reply Br. at 7-8.

obtained Defendant’s shipping instructions there instead of receiving them from another

source, such as its account representative or another employee of Defendant.

In short, the Court finds that Defendant has not presented sufficient facts to establish

that Plaintiff had notice of the Terms and Conditions on Defendant’s website and that the

sales contracts at issue included them. Under these circumstances, the Court finds that

Defendant has failed to show the existence of an implied forum selection agreement that is

enforceable in this lawsuit.

Turning then to the usual § 1404(a) analysis, the Court considers the relevant factors

and finds that Defendant has failed to justify a permissive transfer of venue. Plaintiff has

chosen this forum and prefers the place where its business, witnesses, and evidence are

located. The parties do not address any questions of appreciable difference in costs, the

enforceability of any judgment, congested dockets, conflicts in state laws, or a need to

decide local-law issues. Defendant focuses instead on a contention that one of its witnesses

is a former employee who could not be compelled to attend proceedings here and that

Defendant would have better access to its sources of proof in Utah. See Def.’s Mot. at 18.

The Court finds that Defendant has not carried its heavy burden to show that this

forum is inconvenient. “Merely shifting the inconvenience from one side to the other . . .

is not a permissible justification for a change of venue.” Emps. Mut. Cas. Co. v. Bartile

Roofs, Inc., 618 F.3d 1153, 1167 (10th Cir. 2010) (internal quotation omitted). “Unless

weighing [the discretionary] factors demonstrates that the balance is strongly in favor of

the movant, the plaintiff’s choice of forum should rarely be disturbed.” Id. (internal

quotation omitted). Further, “[t]he convenience of witnesses is the most important factor

in deciding a motion under § 1404(a).” Jd. at 1169. To demonstrate inconvenience, “the

movant must (1) identify the witnesses and their locations; (2) indicate the quality or

materiality of their testimony; and (3) show that any such witnesses were unwilling to come

to trial, that deposition testimony would be unsatisfactory, or that the use of compulsory

process would be necessary.’” /d. (internal quotation and alterations omitted). Defendant

fails to make a satisfactory showing regarding its potential witnesses.

Conclusion

For these reasons, the Court finds that personal jurisdiction and venue are proper in

this forum and Defendant has not shown, on the present record, that this case should be

transferred to Utah.

IT IS THEREFORE ORDERED that Defendant’s Motion to Dismiss, or, in the

Alternative, Motion to Transfer Venue [Doc. No. 8] is DENIED.

IT IS SO ORDERED this 1* day of July, 2024.

\

yO

TIMOTHY D. DeGIUSTI

Chief United States District Judge

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