Lakeshore Technical College v. Anthology Inc

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF WISCONSIN

LAKESHORE TECHNICAL COLLEGE,

Plaintiff,

v. Case No. 24-C-1290

ANTHOLOGY INC.,

Defendant.

DECISION AND ORDER DENYING PLAINTIFF’S MOTION TO REMAND AND

GRANTING DEFENDANT’S MOTION TO DISMISS

This case presents a threshold jurisdictional question of whether Plaintiff Lakeshore

Technical College is an arm of the State of Wisconsin. Lakeshore brought a civil action in the

Circuit Court for Manitowoc County against Defendant Anthology, Inc., alleging three state-law

claims arising out of Lakeshore’s contract with Anthology for the purchase of computer software.

On October 10, 2024, Anthology filed a notice removing the case to this court, asserting diversity

jurisdiction under 28 U.S.C. § 1332 as grounds for removal. A week later, Anthology moved to

dismiss Lakeshore’s complaint pursuant to Federal Rules of Civil Procedure 12(b)(2), 12(b)(3),

and 12(b)(6). On November 7, 2024, Lakeshore timely moved to remand the action back to state

court on the ground that Lakeshore is an arm of the State of Wisconsin, not a citizen of the State,

and thus not subject to the court’s diversity jurisdiction under 28 U.S.C. § 1332. Lakeshore also

seeks costs and attorney’s fees associated with removal pursuant to 28 U.S.C. § 1447(c). Both

motions have been fully briefed and are ripe for the court’s adjudication. For the following

reasons, Lakeshore’s motion to remand will be denied and Anthology’s motion to dismiss,

construed as a motion to transfer pursuant to 28 U.S.C. § 1404(a), will be granted.

BACKGROUND

Lakeshore is a public technical college located in Cleveland, Wisconsin. Compl. ¶ 7, Dkt.

No. 1-1. Anthology is a software company incorporated in Florida, with its principal place of

business in Boca Raton, Florida. See id. ¶ 8. In 2021, Lakeshore needed to update or replace its

Enterprise Resource Planning (ERP) software as its legacy system, PeopleSoft ERP, was at “end

of life.” Id. ¶ 14. So, Lakeshore and two other Wisconsin technical colleges issued a Request for

Information (RFI)—a solicitation that asks perspective vendors to share information about their

products. Id. The RFI and subsequent communications made it clear that Lakeshore required the

new ERP system to “go-live” within two years because their legacy software was nearing

obsolescence. Id. ¶ 15. On January 5, 2022, Anthology responded to Lakeshore’s RFI. Id. ¶ 17.

Anthology represented it had the experience and “expertise to migrate Lakeshore from the legacy

PeopleSoft system to [its] system,” meet Lakeshore’s unique system requirements, and “ensure

that Lakeshore would be live with its ERP system within two years of contracting.” Id. ¶¶ 16–18.

In June and July 2022, Lakeshore and Anthology contracted for implementation of Anthology’s

ERP software. Id. ¶ 19; see generally Master Agreement, Dkt. No. 30-1.

Lakeshore alleges that the deal was “an abject failure.” Compl. ¶ 21. By Lakeshore’s

account, there were multiple shortcomings: Anthology’s software was riddled with unfixable

issues forcing Lakeshore to continue using its legacy software; Anthology failed to adequately

staff the project; Anthology consistently failed to meet implementation milestones; and Anthology

was unsuccessful in remediating issues and restoring Lakeshore’s confidence in the project. Id.

¶¶ 21–24. Lakeshore complains its “educational mission has been disrupted, its resources sapped,

. . . and it has incurred significant damages that will continue to increase.” Id. ¶ 25. Thus, on

September 12, 2024, Lakeshore filed suit against Anthology in the Circuit Court for Manitowoc

County, alleging three claims: (1) fraud in the inducement; (2) violation of the Wisconsin

Deceptive Trade Practices Act, Wis. Stat. § 100.18; and (3) breach of contract.

ANALYSIS

A. Lakeshore’s Motion to Remand

Lakeshore has moved to remand this action back to the Circuit Court for Manitowoc

County pursuant to 28 U.S.C. § 1447(c) on the ground that this court lacks jurisdiction over it. In

its notice of removal, Anthology alleged that federal jurisdiction exists under 28 U.S.C. § 1332(a),

which provides that “district courts have original jurisdiction over all civil actions where the matter

in controversy exceeds the sum of $75,000, exclusive of interest and costs, and is between . . .

citizens of different States.” In support of its claim that this court had jurisdiction, Anthology

alleged that it is a citizen of the State of Florida, Lakeshore is a citizen of the State of Wisconsin,

and that the amount in controversy exceeds $75,000. Lakeshore does not dispute that the amount

in controversy far exceeds the sum of $75,000 but contends that the court lacks jurisdiction over

the action because it is not between citizens of different States. Lakeshore contends that it is an

arm of the State of Wisconsin, not a citizen of the State, and therefore the court lacks jurisdiction

under § 1332(a)(1).

“There is no question that a State is not a ‘citizen’ for purposes of the diversity

jurisdiction.” Moor v. Alameda Cnty., 411 U.S. 693, 717 (1973). However, “a political

subdivision of a State, unless it is simply the arm or alter ego of the State, is a citizen of the State

for diversity purposes.” Id. (internal quotations and footnote omitted). The threshold question,

then, is whether Lakeshore is an arm or alter ego of the State of Wisconsin, and thus not a citizen.

For unless Lakeshore is a citizen of the State of Wisconsin and not the State itself, this court lacks

jurisdiction.

The question of whether a party to a lawsuit is an “arm of the State” can arise in several

different contexts. It can arise, as here, where federal diversity jurisdiction is in question. It more

commonly arises in the context of a party claiming immunity from liability for damages under the

Eleventh Amendment. See, e.g., Adden v. Middlebrooks, 688 F.2d 1147 (7th Cir. 1982); DuPage

Regional Office of Ed. v. United States Dept. of Ed., 58 F.4th 326, 337 (7th Cir. 2023). It can also

arise in a civil rights action when determining whether an entity is a “person” within the meaning

of 42 U.S.C. § 1983. Parker v. Franklin Cnty. Cmty. Sch. Corp., 667 F.3d 910, 926 (7th Cir. 2012)

(citing Will v. Mich. Dep’t of State Police, 491 U.S. 58, 70 (1989)). Regardless of the context in

which it arises, however, the analysis is essentially the same. Adden, 688 F.2d at 1150, 1153–54

(applying the same test to Eleventh Amendment and diversity jurisdiction inquiries); see also Univ.

of Rhode Island v. A.W. Chesterton Co., 2 F.3d 1200, 1203 (1st Cir. 1993) (“The criteria are

substantially similar for evaluating whether an entity is a citizen of the State for diversity purposes,

or a State for Eleventh Amendment sovereign immunity purposes . . . .”).

In DuPage Regional Office of Education, the Seventh Circuit examined its own and other

circuits’ decisions addressing the issue and concluded that, consistent with the Supreme Court’s

view of intent underlying the Eleventh Amendment, the primary consideration in deciding whether

an entity created by a State is an arm of the State is whether the State would be legally liable for a

judgment entered against it:

As the courts of appeals have developed this well-trod path, the Supreme Court has

confirmed the primacy of legal liability in the analysis, observing that “prevention

of federal-court judgments that must be paid out of a State’s treasury” was the

“impetus for the Eleventh Amendment.” Therefore, the Court has instructed that

“[w]hen indicators of immunity point in different directions, the Eleventh

Amendment’s twin reasons for being”—protecting States’ dignity and financial

solvency—“remain our prime guide.”

58 F.4th at 341 (quoting Hess v. Port Auth. Trans-Hudson Corp., 513 U.S. 30, 48, 39–40 (1994))

(cleaned up). In other words, if the State would be liable for any judgment entered against the

entity, the entity is more likely an arm of the State.

The court also noted in DuPage Regional Office of Education that, like most courts, it had

generally held that a “local school district ordinarily is not a ‘State’ and hence may be sued in

federal court.” Id. (quoting Gary A. v. New Trier High Sch. Dist. No. 203, 796 F.2d 940, 945 (7th

Cir. 1986)). The Supreme Court so held in Mount Healthy School District v. Doyle in rejecting

the District’s argument in that case that it was entitled to Eleventh Amendment immunity from a

teacher’s lawsuit as an “arm of the State” under Ohio law. 429 U.S. 274, 280 (1977). In reaching

this conclusion, the Court noted that “[u]nder Ohio law the ‘State’ does not include ‘political

subdivisions,’ and ‘political subdivisions’ do include local school districts.” Id. (citing Ohio Rev.

Code Ann. § 2743.01). The Court further noted that although the District was subject to state

regulation and received a significant amount of money from the State, local school boards had

extensive powers to issue bonds and to levy taxes within certain restrictions of state law. Id. “On

balance,” the Court concluded, “the record before us indicates that a local school board such as

petitioner is more like a county or city than it is like an arm of the State.” Id. The Court therefore

held it was not an arm of the State entitled to assert any Eleventh Amendment immunity from suit

in the federal courts. Id. at 281. The same conclusion follows here.

Lakeshore is a two-year technical college located in one of the sixteen technical college

districts established and regulated by Chapter 38 of the Wisconsin Statutes. See Wis. Stat. § 38.02

(“There is established under this chapter a system of technical colleges . . . .”). Chapter 38 was

enacted “to provide a system of technical colleges which enable[] eligible persons to acquire the

occupational skills training necessary for full participation in the work force.” Id. § 38.001(1). To

accomplish this goal, the legislature divided the State into separate geographical technical college

districts that “include one or more counties, municipalities or school districts in any contiguous

combination.” Id. §§ 38.01(5), 38.06(1). Lakeshore is located in the “Lakeshore district,” which

is made up of Calumet, Manitowoc, Ozaukee, and Sheboygan counties. Lakeshore College

District Board, LAKESHORE COLLEGE, https://gotoltc.edu/about/college-leadership/district-board

(last visited May 30, 2025); see also Ciani Decl., Ex. A at 2, Dkt. No. 28-1.

Except as otherwise provided by law, a nine-member board overseeing each district has

“exclusive control of the district schools established by it and of property acquired for the use of

such schools.” Wis. Stat. § 38.12(1). The members of each district board, other than the district

board governing the Milwaukee Area Technical College, must be residents of the district and

include two employers, two employees, three additional members, a school administrator, and an

elected official who holds state or local office. Id. § 38.08(1)(a). The members of each district

board are appointed by an appointment committee, which is comprised of elected officers of the

school boards or counties within the district. Id. § 38.10(1). The district board has the power to

enter into contracts, borrow money, and sue and be sued in its own name. Id. §§ 38.14(1)–(3).

Although it receives some portion of its funding from the State, the district board also levies a tax

on the full value of property within the district. Id. § 38.16. The balance of its revenue is from

tuition and federal and state grants.

Critically, technical colleges in Wisconsin do not belong to the State. Subject to exception

not relevant here, “upon the creation of a district the property, assets, claims, contracts, obligations,

rights, duties and liabilities relating and pertaining to the existing technical colleges in the territory

included in the district shall become the property, assets, claims, contracts, obligations, rights,

duties and liabilities of the district.” Id. § 38.20(1). In sum, technical school districts under

Wisconsin law are analogous to public school districts in general. And just as the State of

Wisconsin would not incur liability for any judgment entered against a school district or a school

owned and operated by a school district, it would not incur liability for a judgment entered against

Lakeshore or the Lakeshore district. In light of this fact and considering the statutory framework

for technical college districts in the State of Wisconsin, Lakeshore is not an arm of the State for

diversity purposes.

Lakeshore spends much of its brief in support of its motion to remand the case focusing on

the statutes governing the Wisconsin Technical College System and its powers and duties through

the Wisconsin Technical College System Board (the WTCS Board). But Lakeshore is not the

WTCS Board, and the WTCS Board is not a party to this case. The WTCS Board oversees the

operation of the technical colleges. In general, its duties include determining the organization,

plans, scope, and development of technical colleges; establishing criteria for state aid, credit

determination, and other purposes; and classifying and naming the district schools. Id. § 38.04(1).

It does not own or operate Lakeshore or any of the other technical schools within the State. It thus

follows that whether the WTCS Board is an arm of the State is irrelevant.

For the reasons set forth above, the court concludes that Lakeshore is not an arm of the

State of Wisconsin but instead a citizen of the State. Because Anthology is a citizen of the State

of Florida, complete diversity exists, and the court has jurisdiction under 28 U.S.C. § 1332(a)(1).

Lakeshore’s motion to remand the case back to the Circuit Court for Manitowoc County is

therefore denied.

B. Anthology’s Motion to Dismiss

Anthology has moved to dismiss Lakeshore’s complaint pursuant to Federal Rules of Civil

Procedure 12(b)(2) for lack of personal jurisdiction, (b)(3) for improper venue, and (b)(6) for

failure to state a claim upon which relief can be granted. The court will begin and end its analysis

on the issue of venue since, together with personal jurisdiction, it is also a threshold issue, and

both are based on the same provision of the contract between the parties. That provision reads:

16.2 Jurisdiction; Venue. If the Parties are unable to reconcile their differences in

accordance with the procedures specified in Section 16.1, each Party hereby agrees

that any controversy or claim, whether based on contract, tort or other legal theory,

arising out or relating to this Agreement, shall be maintained exclusively in the

jurisdiction and venue of the courts sitting in and for Palm Beach County and the

Southern District of Florida. The prevailing Party shall be entitled to reimbursement

of reasonable attorneys’ fees and costs. The Parties expressly waive right to trial by

jury.

The foregoing choice of venue shall not apply to publicly funded state institutions

to the extent applicable state laws expressly prohibit the institution from litigating

outside of its home state.

Master Agreement ¶ 16.2. Anthology argues on the basis of this provision that Lakeshore’s action

against it should be dismissed for lack of personal jurisdiction and improper venue. Although

Anthology’s argument over personal jurisdiction is questionable, it is true that the venue chosen

by Lakeside is not the one to which the parties agreed in the contract.

In Atlantic Marine Construction Co., Inc. v. United States District Court for the Western

District of Texas, the Supreme Court made clear that, absent exceptional circumstances, a forum

selection clause should be given effect. 571 U.S. 49, 62 (2013). In so ruling, however, the Court

held that “a forum-selection clause does not render venue in a court ‘wrong’ or ‘improper’ within

the meaning of § 1406(a) or Rule 12(b)(3).” Id. at 59. Instead, where a forum selection clause

authorizes the litigation in a specific federal forum, it “may be enforced through a motion to

transfer under § 1404(a).” Id. That section provides, “[f]or the convenience of parties and

witnesses, in the interest of justice, a district court may transfer any civil action to any other district

or division where it might have been brought or to any district or division to which all parties have

consented.” 28 U.S.C. § 1404(a).

“Ordinarily,” the Court explained, “the district court would weigh the relevant factors and

decide whether, on balance, a transfer would serve ‘the convenience of parties and witnesses’ and

otherwise promote ‘the interest of justice.’” Atl. Marine, 571 U.S. at 62–63 (quoting 28 U.S.C.

§ 1404(a)). But the calculus changes when the parties’ contract contains a forum-selection clause.

Id. at 63. Because a valid forum-selection clause protects the parties’ “legitimate expectations and

furthers vital interests of the justice system,” it “should be given controlling weight in all but the

most exceptional cases.” Id. (quoting another source) (cleaned up). Specifically, the Court in

Atlantic Marine observed two ways in which the calculus changes that are relevant here. First, “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. Second, the court is not

to consider the parties’ arguments about private interests—they waived these arguments when they

agreed to the forum-selection clause. Id. at 64. Stated differently, “when a forum-selection clause

is in play, the analysis is limited to public-interest factors.” Mueller v. Apple Leisure Corp., 800

F.3d 890, 894 (7th Cir. 2018) (citing Atl. Marine, 571 U.S. at 64).

Application of the forgoing calculus is contingent upon the forum-selection clause being

mandatory and enforceable. A forum-selection clause is mandatory where it vests jurisdiction and

venue exclusively in the place specified. IAC/InterActiveCorp v. Roston, 44 F.4th 635, 643 (7th

Cir. 2022). Language like “shall be litigated” or “will be litigated” is mandatory. Id.; see also

Muzumdar v. Wellness Intern. Network, Ltd., 438 F.3d 759, 762 (7th Cir. 2006) (holding that

“[j]urisdiction and venue over any disputes arising out of this agreement shall be proper only in

the federal or state courts in Dallas County, Texas” is mandatory language). There can be no

doubt, the clause at issue here is mandatory. It reads in plain terms that “any controversy or claim

. . . arising out or relating to this Agreement, shall be maintained exclusively in the jurisdiction and

venue of the courts sitting in and for Palm Beach County and the Southern District of Florida.”

Master Agreement ¶ 16.2 (emphasis added).

Unable to contest the mandatory nature of the forum-selection clause, Lakeshore resorts to

challenging its enforceability on two separate grounds. First, Lakeshore argues that an exception

renders the clause inapplicable. That exception provides: “The foregoing choice of venue shall

not apply to publicly funded state institutions to the extent applicable state laws expressly prohibit

the institution from litigating outside of its home state.” Id. But Lakeshore’s argument on this

point rests entirely on its assertion that it is an arm of the State. Because the court has concluded

that Lakeshore is not an arm of the State, the exception does not apply.

Lakeshore next argues that the forum-selection clause in unenforceable because the Master

Agreement was procured by fraud. As a threshold matter, the court must apply federal law in

determining whether the forum-selection clause is enforceable, not state law as Lakeshore

suggests. IFC Credit Corp. v. Aliano Bros. Gen. Contractors, 437 F.3d 606, 608 (7th Cir. 2006)

(citing Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 30–31 (1988); Nw. Nat’l Ins. Co. v.

Donovan, 916 F.2d 372, 373–74 (7th Cir. 1990)). Under federal law, “a forum selection clause

will be enforced unless it can be clearly shown ‘that enforcement would be unreasonable and

unjust, or that the clause was invalid for such reasons as fraud or overreaching.’” Muzumdar, 438

F.3d at 762 (quoting M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972)). Importantly,

the court’s focus is on the clause itself, not the agreement as a whole. Id. (“Appellants make no

attempt to show that the forum selection clause was itself obtained by fraud.”). Here, Lakeshore,

relying on a state-law theory, argues that the Master Agreement as a whole was procured by fraud.

Lakeshore does not, however, offer any argument calling into question the forum-selection clause

itself. Accordingly, the clause is not unenforceable on the basis of fraud. Id.; see also AB Data

Ltd v. Ricoh USA Inc, No. 23-CV-0978-BHL, 2024 WL 343301, at *3—-4 (E.D. Wis. Jan. 30, 2024).

In sum, the forum-selection clause in the parties’ Master Agreement is both mandatory and

enforceable.

The court therefore returns to the 28 U.S.C. § 1404(a) calculus as modified by Atlantic

Marine. Lakeshore does not explicitly proffer any public-interest arguments. And if it had, it is

unlikely they would overcome the forum-selection clause. See Mueller, 880 F.3d at 894 (“[Public-

interest] factors are ‘rarely’ strong enough to override the parties’ preselected forum.” (quoting

Atl. Marine, 571 U.S. at 64)). The forum-selection clause in the parties’ Master Agreement will

therefore be given “controlling weight.” At/. Marine, 571 U.S. at 63 (quoting Stewart Org., Inc.,

487 U.S. at 33). Accordingly, construing Anthology’s motion as a motion to transfer pursuant to

28 U.S.C. § 1404(a), the court will give effect to the parties’ forum-selection clause and transfer

this case to the United States District Court for the Southern District of Florida.

CONCLUSION

For these reasons, Lakeshore’s motion to remand (Dkt. No. 17) is DENIED. Anthology’s

motion to dismiss (Dkt. No. 8), construed as a motion to transfer pursuant to 28 U.S.C. § 1404(a),

is GRANTED. The Clerk is directed to transfer this case to the United States District Court for

the Southern District of Florida.

SO ORDERED at Green Bay, Wisconsin this 30th day of May, 2025.

the C. Vipahac

William C. Griesbach

United States District Judge

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