# Pepe Tools Inc v. Sunstone Engineering LLC

> District Court, W.D. Oklahoma · July 1, 2024

URL: https://www.frixlaw.com/law-library/cases/10665878

## Case

- **Court:** District Court, W.D. Oklahoma
- **Decided:** July 1, 2024
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

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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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10665878. Public record. Not legal advice.