352 F.Supp.2d 177 (2005) | Cited 1 time | D. Rhode Island | January 10, 2005


This matter comes before the Court on the motion of DefendantsBallard Medical Products, Kimberly-Clark Worldwide, Inc., andKimberly-Clark Corporation (collectively "Defendants") to dismissthe Complaint for improper venue and failure to state a claimupon which relief can be granted.1 The issue at the heartof this matter, is whether the forum selection clause containedin a Confidential Disclosure Agreement ("Agreement") betweenRusso ("Plaintiff") and Defendant Ballard Medical Products ("Ballard"), requires the venue of Russo's theft of ideacomplaint to be Salt Lake City, Utah. Upon review of the parties'arguments, and in light of the factual circumstances as they arealleged in the pleadings, this Court concludes that the forumselection clause contained in the Agreement does indeed apply toRusso's claim, is reasonable and should be enforced. Therefore,in the interest of justice and for the reasons set-forth below,this Court hereby transfers this matter to the Unites StatesDistrict Court, for the District of Utah, pursuant to28 U.S.C. § 1406(a).2


For purposes of this decision and order alone, the facts, asalleged by the parties in the pleadings are as follows: Plaintiffis a medical design consultant engaged in the business ofdesigning medical devices for use by medical professionals andhospitals. Ballard is a maker of medical devices, based andincorporated in Draper, Utah while the Kimberley-Clarkdefendants, also medical device manufacturers, who are involved in this action as successors to Ballard,3 areincorporated in Delaware and have principal places of business inWisconsin and Georgia.

On August 1, 1996, Plaintiff filed an application in the UnitedStates Patent Office on a medical device, specifically, atwo-part closed tracheal suction system. The system wasultimately patented as patent number 5,775,325 (the "`325patent"). The system was apparently quite innovative and providedfor a closed method of introducing a suction tube (for removal ofmucous from the airways of assisted-breathing patients) throughthe endotracheal tube into the bronchial area so as to keep thepatient's airways clear. The design was unique in that itpermitted the extended use of the system beyond thetwenty-four-hour use limit of existing commercially availableclosed tracheal suction systems.

According to the Complaint, prior to issuance of the '325patent, Plaintiff contacted Ballard for the purposes of having itevaluate the potential commercialization of his invention. Towardthis end, Plaintiff disclosed certain confidential information toBallard, subject to the terms of the Agreement. The Agreementdefines confidential information as ". . . all disclosures of information relating to the Inventions furnished to Ballard by Russo which are disclosed in a tangible medium of expression and marked "confidential", with the exception of the follwing: (a) information that is now in the public domain or subsequently enters public domain without fault on Ballard's part; (b) information that is already known to Ballard or in Ballard's lawful possession or independently developed by Ballard; and (c) information that Ballard lawfully receives from any third party not known or reasonably expected to be under a legal obligation to Russo to keep such information confidential.

The Agreement further requires that Ballard destroy allconfidential information that Plaintiff supplied to it withinsixty days of the date of the Agreement. Most importantly to theinstant motion, the Agreement specifies that "[a]ny action underthis Agreement may be filed and maintained only in state orfederal courts located within Salt Lake County, State of Utah,and all parties hereby submit to the jurisdiction of suchcourts."

In late April, 1998, subsequent to signing the Agreement,Plaintiff met with representatives of Ballard in New York City.At that meeting, in explaining his device to Ballard'srepresentatives, Plaintiff presented them with three drawingsoutlining the specific details and advantages of the '325 patent.In response to questions from Ballard's representatives,Plaintiff produced a fourth drawing which was a re-draft of thesame device showing an additional catheter wiper and an aperturein the valve to improve catheter cleaning. The Ballard representatives inquired as to whether the improvements shown anddescribed in the fourth drawing were part of the '325 patent andPlaintiff responded that they were not. Ballard's representativesasked for and received a copy of the fourth drawing.

The negotiations between Plaintiff and Ballard eventually brokedown, and did not result in a licensing agreement between theparties. On September 21, 1998, Ballard filed a U.S. patentapplication number 09/157/605 on a closed tracheal suctioncatheter apparatus. The application and accompanying materialsfailed to disclose Plaintiff's '325 patent. Ballard's initialpatent application was rejected, but it filed a subsequentapplication, numbered 09/357/591 and entitled "Continuation inpart of application 09/157/605 filed on September 21, 1998".Ballard's second application was successful, and patent number6,227,200 (the "`200 patent")was issued to Ballard on May 8,2001.

Plaintiff alleges that Ballard improperly incorporatedinformation that he disclosed at the April 1998 meeting intoBallard's own patent applications eventually resulting in theacquisition of the '200 patent. Plaintiff notes that Ballard'ssuccessful application also failed to identify the '325 patent asprior art, and failed to credit Plaintiff for information thatwas included as part of the '200 patent application. Plaintiff filed suit against Ballard on October 23, 2003, inRhode Island Superior Court for (1) breach of implied covenant ofgood faith and fair dealing; (2) promissory estoppel; (3) unjustenrichment; (4) unlawful conversion, and; (5) violations of theRhode Island Trade Secret Act.4 The case was removed tothis Court.


Defendants contend that the Complaint must be dismissed or thecase transferred because the parties had previously contracted toresolve any disputes between them, arising out of the Agreement,in Salt Lake County, Utah. Plaintiff claims, however, that thesubject matter of this dispute does not fall within the scope ofthe Governing Law (forum selection) clause of the Agreement.

(1) Subject Matter of Dispute

To enforce a forum selection clause, a court must firstdetermine that the subject matter of the dispute is one that iscontemplated under the applicable clause. Pascalides v. IrwinYacht Sales North, Inc., 118 F.R.D. 298, 301-301 (D.R.I. 1988).In the instant matter, Plaintiff asserts that by its nature, thedisagreement is not encompassed within the language of the forumselection clause. Indeed, Plaintiff argues that: (1) the Agreement ceased to apply once the Two Part Closed TrachealSuction System was patented and the '325 patent issued;(2)drawings one through four had not been created when theAgreement was signed, and, therefore, were not intended to fallwithin the purview of the Agreement, and; (3) the additional(fourth) drawing given to Ballard by Plaintiff at the meetingdoes not fall within the definition of "inventions" as that termis defined in the Agreement because it does not relate to the TwoPart Closed Tracheal Suction System.

Plaintiff's complaint seeks damages from Defendants forcontract-related tort claims arising from the exchange ofinformation that took place at the April, 1998 meeting betweenthe parties. Ballard drafted and Plaintiff signed the Agreementin anticipation of the meeting, and, pursuant to its terms,Plaintiff marked all of the drawings, including the ones at issueas "confidential". According to the Agreement, the forumselection clause applies to ". . . [a]ny action under [it]. . .".

Despite Plaintiff's claims to the contrary, the evidence pointsin one direction only, i.e. that the clause was intended to applyto all claims arising out of the exchange of information thattook place at the April, 1998 meeting. Regardless of howPlaintiff characterizes his causes of action, it is clear thatthis is an idea theft case and Plaintiff's main claim againstBallard is that said theft resulted in a violation of the very Agreement at issue on this motion.

Pursuant to the Agreement, Ballard was obligated to use theinformation it received from Plaintiff for the sole purpose ofevaluating the commercial viability of Plaintiff's designs. Whenthe parties could not reach an agreement regarding Ballard's useof Plaintiff's designs, Ballard was required to destroy allconfidential information (including the additional drawings) withthe exception of one copy that was to be retained for Ballard'srecords. Therefore, at its very core, Plaintiff's claim is thatBallard violated the provisions of the Agreement by using hisproprietary information in its own patent applications andproducts.

As this Court has held in the past: If forum selection clauses are to be enforced as a matter of public policy, that same public policy requires that they not be defeated by artful pleading of claims such as negligent design, breach of implied warranty, or misrepresentation.Pascalides, 118 F.R.D at 302 (quoting Coastal Steel Corp. v.Tilghman Wheelabrator Ltd., 709 F.2d 190, 197 (3rd Cir. 1983)).

Thus, this Court concludes that the forum selection clause inthis case applies to the subject matter of this litigation.

(2) Reasonableness of Enforcement

Next, this Court must determine whether or not the enforcementof the forum selection clause is reasonable. In the past, a forumselection clause was per se invalid on the grounds that it attempted to oust a court of its jurisdiction. However,since that time, the Supreme Court has held that the correctapproach is to specifically enforce the forum selection clauseunless the party opposing enforceability clearly shows thatenforcement would be unreasonable, unjust, or that the clauseitself was rendered invalid by reason of fraud. M/S Bremen v.Zapata Off-Shore Co., 407 U.S. 1, 15 (1972).

Since 1972 this Court and others have had frequent occasion toreview the reasonableness of forum selections clauses and, in sodoing, have considered a variety of factors to determinereasonableness under Bremen. In D'Antuono v. CCH ComputaxSystems, Inc., 570 F. Supp. 708 (D.R.I. 1983), then DistrictJudge Bruce M. Selya, identified a series of factors to aidcourts in deciding whether or not to enforce a given forumselection clause. Pursuant to D'Antuono, this Court identifiedand applied the nine factors in Pascalides5 and thesesame factors are relevant here. They are: (1) The identity of the law that governs the construction of the contract. (2) The place of execution of the contract. (3) The place where the transactions are to be performed. (4) The availability of remedies in the designated forum. (5) The public policy of the initial forum state. (6) Location of the parties, the convenience of prospective witnesses, and the accessibility of evidence. (7) The relative bargaining power of the parties and the circumstances surrounding their dealings. (8) The presence or absence of fraud, undue influence (or other extenuating) circumstances. (9) The conduct of the parties.Id. (quoting D'Antuono, 570 F. Supp. at 712).

Of course, each factor is important, but there are no set rulesfor their application. Rather, the totality of the circumstances,coupled with the interests of justice must control. Id.(quoting D'Antunono, 570 F. Supp. at 712. As this Court hasnoted, it is the party opposing the enforcement of the forumselection clause that must provide the Court with evidence thatapplication of the clause would be unreasonable Id. No suchevidence has been offered here, and this Court concludes that asimple application of the reasonableness factors as listed abovequite clearly bears this out.

For example, none of the first four factors, taken eitherindividually, or as a whole convince this Court that the forumselection clause is unreasonable. Under the clear language of theAgreement, Utah law governs the construction and interpretationof the contract. The Agreement itself was executed betweenPlaintiff and Ballard, presumably via mail or telefax, andneither party claims that the actual place of execution must havebeen Rhode Island or any other jurisdiction outside of Utah.Plaintiff does not point to any specific locale where the originof Ballard's alleged bad acts occurred. The actual transaction atissue took place in New York; neither party asserts that New Yorklaw must be applied. Moreover, neither party argues that lawfulremedies are unavailable in Utah or that the public policy of Rhode Island is at issue here.

Next, as in the past, this Court considers the conveniencefactors and notes that the parties, in consenting to the Utahforum, have in effect subordinated their convenience to thebargain. See e.g. Pascalides, 118 F.R.D at 303. WhilePlaintiff will have to travel to Utah for trial in the chosenforum, such a journey was apparently within the contemplation ofthe parties when the bargain was struck. Id. "Plaintiff cannotbe heard to complain about inconveniences resulting from anagreement (he) freely entered into." Id. (quoting D'Antuono,570 F. Supp. at 713).

The factors encompassing the conveniences of the witnesses andaccessibility of evidence deserve independent consideration. Theoperative complaint alleges (1) breach of implied covenant ofgood faith and fair dealing; (2) promissory estoppel; (3) unjustenrichment; (4) unlawful conversion, and; (5) violations of theRhode Island Trade Secret Act. The witnesses involved in theevaluation, development, patent application and eventualmanufacture of the device at issue and all critical witnesses arein Utah at Ballard's principal place of business. Additionally,whether the alleged bad acts occurred in New York at the April1998 meeting, or at a later date — perhaps even at Ballard's Utahoffices — such considerations seem less important given thenature of this particular case. In any event, in cases where noforum is wholly convenient (or wholly obvious), a forum selectionclause can and should tip the scales. Pascalides, 118 F.R.D at 303(quoting D'Antuono, 570 F. Supp. at 714).

The final three reasonableness factors involve the relationshipbetween the Plaintiff and Ballard and their behavior during thetime-period at issue. In this case none of three lead this Courtto question the reasonableness of the forum selection clause. Thenegotiations culminating in the execution of the Agreement wereat arms length (there are no allegations to the contrary), andPlaintiff is a sophisticated and successful medical devicedesigner and consultant. Moreover, nothing in the record suggeststhat Ballard coerced Plaintiff into signing the agreement or thatPlaintiff grudgingly acceded to a forum designation demand. Onthe contrary, there are allegations that the Agreement wasdrafted and entered into at Plaintiff's urging. Lastly, Plaintiffdoes not allege, nor do the facts suggests the existence of fraudor undue influence at the time the Agreement was drafted andsigned.

After considering all the relevant factors, this Courtconcludes that the forum selection clause agreed to by theparties is reasonable and appropriate in this particular matter.Therefore, under Bremen, and its more local progeny, this Courtholds that, pursuant to the Agreement, proper venue forresolution of this matter is in Salt Lake City, Utah.


As noted above, having upheld the forum selection clause, this Court finds that in the interest of justice transfer of thismatter to Utah pursuant to 28 U.S.C. § 1406(a) is mostappropriate. Janko v. Outboard Marine Corp., 605 F. Supp 51(W.D. Okla. 1985) (holding that when action arising undercontract containing venue selection clause is filed in courtother than that specified in clause, case will be transferred toforum selected by contract unless venue selection clause isunreasonable and unjust or invalid due to fraud or overreaching),See also Hoffman v. Burroughs Corp., 571 F. Supp. 545, 551(N.D. Tex. 1982) (holding that transfer most appropriate under28 U.S.C. § 1406(a)).

While "the interest of justice" is less than the clearest ofstandards, all of the traditional factors are at play here.Transfer, rather than dismissal provides all parties with anopportunity for a speedy resolution of the matter. Transferprevents Plaintiff from facing unnecessary statute of limitationissues, and lastly, transfer rather than dismissal provides for amore efficient use of judicial resources. See Goldlawr, Inc.v. Heiman, 369 U.S. 463, 466-67(1962) (holding that purpose oftransfer is "that of removing whatever obstacles may impede anexpeditious and orderly adjudication of cases and controversieson their merits").


For the foregoing reasons, this matter is hereby transferred tothe United States District Court, for the District of Utah. It is so ordered.

1. The Motion to Dismiss also contains argument that thisCourt lacks personal jurisdiction over Defendants. Defendantshave since withdrawn this claim; it is therefore no longer beforethis Court and is not a part of this decision. Because this Court has concluded that transfer is the mostappropriate remedy, Defendants' 12(b)(6) motion is not thesubject of this ruling.

2. Section 1406(a)(2004) provides: The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought. (Emphasis added).

3. According to Plaintiff, the Kimberley-Clark defendants areliable because the patent at issue was assigned to them via their1999 acquisition of Ballard. Defendants dispute this allegation.

4. Rhode Island General Laws §§ 6-41-1 — 6-41-11 (1956), asamended (2004).

5. 118 F.R.D at 302.

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