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Global Archery Products, Inc. v. Firgaira

United States District Court, N.D. Indiana, Hammond Division

March 22, 2017

GLOBAL ARCHERY PRODUCTS, INC., Plaintiff,
v.
ASHLEIGH RENEE FIRGAIRA, ARCHERY SPORTS, and ARCHERY ATTACK, Defendants.

          OPINION AND ORDER

          JOSEPH S. VAN BOKKELEN UNITED STATES DISTRICT JUDGE

         Defendants Ashleigh Firgaira, Archery Sports, and Archery Attack move to dismiss Plaintiff Global Archery Products Inc.'s third amended complaint for lack of personal jurisdiction over them (Rule 12(b)(2)) and for failure to state a claim (Rule 12(b)(6)).

         A. Plaintiff's third amended complaint

         Plaintiff claims the following:

         Plaintiff founded and developed a non-lethal combat archery game involving patented foam-tipped arrows. Plaintiff offers this game under the ARCHERY TAG® trademark. Plaintiff entered into a License Agreement (“agreement”) with Archery Sports (“AS”) under which Plaintiff licensed ARCHERY TAG® equipment and documentation, including an operator's manual, to AS.

         Archery Attack (“AA”) is an alter ego of AS, which are both sole proprietorships of Ms. Firgaira. Ms. Firgaira, AS, and AA all have the same business address in Australia. Ms. Firgaira formed AA in an attempt to evade the terms and conditions of the agreement.

         The agreement contains a clause by which AS (as a named party to the agreement) and AA (as an alter ego of AS) and Ms. Firgaira (as the sole proprietor of AS) consented to the application of Indiana law, and consented to personal jurisdiction in this Court:

12.4 Governing Law and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of Indiana, United States without application of conflict of law principles. The parties specifically disclaim the UN Convention on Contracts for the International Sale of Goods. For the purpose of this Agreement, Licensee acknowledges and agrees that courts of competent jurisdiction in the State of Indiana, United States shall have sole subject matter jurisdiction over any dispute related to this Agreement. Licensee hereby voluntarily submits itself to the personal jurisdiction to courts of competent jurisdiction in the State of Indiana, United States and hereby agrees not to challenge in any way such court's ability to exercise personal jurisdiction over Licensee. Should Licensor be required to obtain the assistance of local counsel in another state or foreign counsel to attempt to effectuate a court's order against Licensee, Licensor shall be entitled to recover reasonable costs, including reasonable attorneys' fees, in connection with enforcing such order. Licensee expressly waives the right to challenge the validity or enforceability of any order issued by a court of competent jurisdiction in the State of Indiana, United States in connection with the enforcement of any order issued as a result of a breach of this Agreement by Licensee in any other state or foreign jurisdiction.

(License Agreement, DE 32-1 at 10.)

         Plaintiff claims Defendants breached the agreement by violating its non-compete clause (section 12.3) and by continuing, after the agreement's expiration, to use the ARCHERY TAG® system and documentation and failing to return any of Plaintiff's equipment or documentation, in violation of the agreement's effect-of-termination clause (section 3.5).

         B. Motion to dismiss for lack of personal jurisdiction

         Defendants move for dismissal for lack of personal jurisdiction, pursuant to Rule 12(b)(2).

         (1) Legal standards regarding personal jurisdiction

         Rule 12(b)(2) requires dismissal of an action if the court lacks personal jurisdiction. When a defendant challenges personal jurisdiction pursuant to Rule 12(b)(2), the plaintiff bears the burden of establishing personal jurisdiction over the defendant. N. Grain Mktg. v. Greving, 743 F.3d 487, 491 (7th Cir. 2014). If a defendant raises the issue of personal jurisdiction by a motion to dismiss, and the court decides this issue based on written material, then the plaintiff need only make a prima facie showing of jurisdiction. Id.

         For these purposes, the court must accept as true all well-pleaded facts alleged and resolve any factual disputes in favor of the plaintiff. Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir. 2010).

         A federal district court sitting in diversity has personal jurisdiction over a nonresident defendant only if a court of the state in which it sits would have such jurisdiction. Purdue Research Found. v. Sanofi-Synthelabo, 338 F.3d 773, 779 (7th Cir. 2003). Thus the federal court must examine whether the forum state's long-arm statute reaches the defendant and whether the exercise of jurisdiction over the defendant would violate federal due process. Id.

         Indiana's long-arm statute, Indiana Trial Rule 4.4(A), provides that an Indiana court “may exercise jurisdiction on any basis not inconsistent with the Constitutions of this state or the United States.” Ind. R. Trial P. 4.4(A). Therefore, Indiana courts determine their personal jurisdiction over nonresident defendants by applying the long-arm statute which extends personal jurisdiction to the limits allowed under the Fourteenth Amendment's due process clause. See LinkAmerica Corp. v. Cox, 857 N.E.2d 961, 967 (Ind. 2006).

         (2) Forum-selection clause

         A defendant with no other contacts to the forum may waive challenges to personal jurisdiction by either express or implied consent, such as by contracting to litigate a matter in a particular forum. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 n.14 (1985); Heller Fin. v. Midwhey Powder Co., 883 F.2d 1286, 1290 (7th Cir. 1989). Consent to suit in a particular forum is an independent ground for the exercise of personal jurisdiction, separate and distinct from any personal jurisdiction based on minimum contacts. See Burger King, 471 U.S. at 472 n.14. In other words, consent to personal jurisdiction is enough by itself to satisfy any due process concerns. Ins. Corp. of Ireland v. Campagine des Bauxite de Guniee, 456 U.S. 694, 703-04 (1982).

         Here, the parties agree that the only basis for personal jurisdiction over the Defendants is section 12.4 of the agreement, which provides, in part:

“Licensee hereby voluntarily submits itself to the personal jurisdiction to courts of competent jurisdiction in the State of Indiana, United States and hereby agrees not to challenge in any way such court's ability to exercise personal jurisdiction over Licensee.”

         (License Agreement, DE 32-1 at 10.)

         A forum-selection clause should control unless there is a “strong showing that it should be set aside.” M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972); Heller, 883 F.2d at 1290-91. People enjoy general liberty to contract. See Sportsdrome Speedway v. Clark, 49 N.E.3d 653, 660 (Ind.Ct.App. 2016) (“As a general rule, the law allows competent adults the utmost liberty in entering into contracts that, when entered into freely and voluntarily, will be enforced by the courts.”). People may consent to personal jurisdiction where it would otherwise not exist. See Burger King, 471 U.S. at 472 n.14, (1985); Adsit Co. v. Gustin, 874 N.E.2d 1018, 1022 (Ind.Ct.App. 2007) (“Parties may consent by contract to the exercise of personal jurisdiction by courts that otherwise might not have such jurisdiction.”).

         Someone who consents to suit in a particular forum can reasonably anticipate being sued there. See Costello v. Haller, No. 05-C-0726, 2006 WL 1762131, at *3 (N.D. Ill. June 20, 2006). Forum-selection clauses “are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be ‘unreasonable' under the circumstances” or “would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by judicial decision.” M/S Bremen, 407 U.S. at 10 and 15. Forum-selection clauses should be “given controlling weight in all but the most exceptional cases.” Stewart Org. v. Ricoh Corp., 497 U.S. 22, 33 (1988).

         Therefore, if the forum-selection clause here is valid and enforceable, then parties governed by the clause waived challenges to personal jurisdiction. See Pollas v. Hardware Wholesalers, 663 N.E.2d 1188, 1191 (Ind.Ct.App. 1996); see also TrueServ Corp. v. Flegeles, Inc., 419 F.3d 584, 589 (7th Cir. 2005).

         To determine the validity and enforceability of a forum-selection clause, a federal district court uses the law designated in the contract's choice-of-law clause. Jackson v. Payday Fin., 764 F.3d 765, 774-75 (7th Cir. 2014). Here, the agreement provides that it “shall be governed by and construed in accordance with the laws of the State of Indiana . . . .” (License Agreement, DE 32-1 at 10.)

         In Indiana, forum-selection clauses are generally enforceable. Adsit, 874 N.E.2d at 1022. Indiana courts have “repeatedly held that parties may consent by contract to the exercise of personal jurisdiction by courts that otherwise might not have such jurisdiction.” Everdry Mktg. & Mgmt. v. Carter, 885 N.E.2d 6, 10 (Ind.Ct.App. 2008).

         Forum selection clauses (even those contained in form contracts) are enforceable if:

1) “they are reasonable and just under the circumstances”;
2) “there is no evidence of fraud or overreaching such that the agreeing party, for all practical purposes, would be deprived of a day in court”; and
3) they were “freely negotiated.”

Grott v. Jim Barna Log Sys.-Midwest, 794 N.E.2d 1098, 1102 (Ind.Ct.App. 2003). The party claiming unfairness bears a heavy burden of proof even where the forum-selection clause establishes a ...


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