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Canters Deli Las Vegas, LLC v. Banc of America Merchant Services, LLC

United States District Court, D. Nevada

July 10, 2019

CANTERS DELI LAS VEGAS, LLC, et al., Plaintiffs,
v.
BANC OF AMERICA MERCHANT SERVICES, LLC, et al., Defendants.

          ORDER

          KENT J. DAWSON UNITED STATES DISTRICT JUDGE

         There are three motions pending before the Court. The first is a motion to dismiss or, in the alternative, to transfer venue (#10), filed by defendant FreedomPay, Inc. The second is a motion to dismiss under Rule 12(b)(3) for improper venue (#12), filed by defendants Banc of America Merchant Services, LLC and Bank of America, N.A.[1] The Court construes both motions as motions to transfer venue under 28 U.S.C. § 1404(a).[2] Plaintiffs Canters Deli Las Vegas, LLC and Canters Deli Tivoli Village, LLC filed a consolidated opposition to the two motions (#20). FreedomPay (#24) and Bank of America (#27) replied.

         Also before the Court is FreedomPay's freestanding motion to transfer venue to the Eastern District of Pennsylvania (#30), which it filed to correct a procedural defect in its original motion to dismiss. Canters Deli responded (#31), and FreedomPay replied (#32). Although Bank of America's motion to dismiss suffers from the same procedural defect as FreedomPay's first motion, it has not filed a motion to transfer venue.

         This is a dispute between a deli and its credit card processors over missing credit-card deposits. In June of 2018, non-party Mikhail Siretskiy allegedly siphoned thousands of dollars of Canters Deli credit-card proceeds to his own checking account by designating that account as the payee account for Canters Deli credit card deposits. Whether Siretskiy was authorized to reroute those funds is the subject of a corresponding state-court case. This case will determine whether Bank of America and FreedomPay are liable for the missing funds.

         These motions present the narrow issue whether Canters Deli may sue Bank of America and FreedomPay in this district when the credit card processors' terms of service explicitly designate other forums to resolve such disputes. If those forum selection clauses are enforceable, and if the clauses apply to Canters Deli's claims, the Court must transfer the case to the designated forums absent extraordinary circumstances. For the reasons below, the Court finds that the forum selection clauses here are valid, and there is no evidence of extraordinary circumstances that warrant departure from the terms of the parties' respective agreements. Accordingly, the Court grants FreedomPay and Bank of America's respective motions to dismiss, which the Court has construed as motions to transfer venue.

         I. Background

         Until recently, Canters Deli owned and operated two locations in Las Vegas. Both locations used Bank of America's merchant-card processing services, which allowed the deli to accept credit and debit cards. Compl. 3, ECF No. 1. For its part, Bank of America was responsible for facilitating credit- and debit-card sales, batching those payments, and depositing the batches into a Canter Deli deposit account. The delis' respective processing agreements with Banc of America Merchant Card Services are governed by two documents: The Merchant Processing Application and Agreement and the “Program Guide.” Def.'s Mot. Dismiss 2, ECF No. 12. The bank refers to these documents collectively as “the Agreement.” Id. Among other things, the Program Guide set out the operating procedures for the merchant-card program, disclosed the fee schedules for the various services, and outlined the terms and conditions of the merchant-card agreement. See Program Guide 1, ECF No. 12-1.

         The terms and conditions included a forum-selection clause and a choice-of-law clause. Those clauses designated North Carolina as the bank's preferred forum for “any actions or claims arising under or related to [the merchant-services] Agreement.” Program Guide 48, ECF No. 12-1. Specifically, the bank elected the Charlotte Division of the Western District of North Carolina as the only acceptable forum to litigate disputes arising out its agreement with Canters Deli. Id.

         In June of 2017, Canters Deli contracted with FreedomPay, a third-party “switcher, ” to act as an intermediary between the deli and Bank of America. Def.'s Mot. Dismiss 2, ECF No. 10. The deli signed a “Switching Agreement” with FreedomPay that outlined the switcher's services and associated costs. Id. at 2-3. The Switching Agreement also contained a forum-selection clause and a choice-of-law clause. Those clauses designated the Eastern District of Pennsylvania-and Pennsylvania law-as the only acceptable forum and governing law for “any action by the Parties relating to or arising in whole or part under or in connection with [the Switching] Agreement.” Def.'s Mot. Dismiss 19, ECF 10-1.

         In June of 2018, Mikhail Siretskiy managed to designate his personal checking account as the deposit account for the Canters Deli credit card deposits. Compl. 4-5, ECF No. 1. At the time, Siretskiy held an “indirect” interest in the deli. Id. at 3. Before Siretskiy connected his checking account to the merchant-service account, he had to obtain certain verifications. These verifications-known as a VAR Sheet-came from Banc of America Merchant Services. Id. The VAR Sheet contained the merchant-services identification numbers and corresponding deposit account numbers of Canters Deli's merchant accounts. Id. Siretskiy used the VAR Sheet to connect his own checking account to the merchant-services account and divert “tens of thousands of dollars” of batched credit card deposits away from Canters Deli. Id. at 5. Canters Deli claims that Siretskiy lacked authority to reroute those funds and has sued him in state court. Id.

         In addition to its state-court case, Canters Deli sued Bank of America and FreedomPay in this Court for their failure to prevent Siretskiy's alleged scheme. Both defendants move to dismiss under Rule 12(b)(3) for improper venue, citing the forum selection clauses in their respective terms of service. In its response, Canters Deli argued that a motion to dismiss is improper where, as here, venue would be proper but for the forum selection clause. Both defendants have since consented to transfer instead of dismissal, and FreedomPay has filed an alternative motion to transfer venue under 28 U.S.C. § 1404(a). The motions have been fully briefed and are ripe for decision.

         II. Legal Standard

         In a civil action, venue is proper if it falls into one of three categories under 28 U.S.C. § 1391(b). Section 1391(b) allows an action to proceed in the desired venue if: (1) every defendant resides in the state where the federal district is located; (2) a substantial part of the events or omissions giving rise to the claim occurred in that federal district; or if no other federal district is appropriate, (3) venue is proper in any district where any defendant is subject to the Court's personal jurisdiction. Id. § 1391(b)(1)-(3). Where there is a dispute over venue, the Court looks to 28 U.S.C. §§ 1404(a) and 1406(a) to determine whether to transfer or dismiss the case. Section 1406 applies where venue is improper or wrong under the § 1391(b) factors. It allows the Court to dismiss the case or transfer it to a federal district where the case could have been brought. 28 U.S.C. § 1406(a). Section 1404(a), on the other hand, allows the Court to transfer a case filed in an appropriate venue if it is “in the interest of justice.” Section 1404(a) codified the doctrine of forum non conveniens, which allows transfer from an otherwise proper venue if the defendant meets the “heavy burden in opposing the plaintiff's chosen forum. Sinochem Intern. Co. Ltd. v. Malyasia Intern. Shipping Corp., 549 U.S. 422, 430 (2007).

         The presence of a valid forum-selection clause alters the analysis because the clause represents the parties' prior agreement on the acceptable forum. Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 31 (1988). However, the forum-selection clause itself has no bearing on the appropriateness of the plaintiff's selected forum. In fact, whether the venue is “wrong or improper” depends entirely upon whether the case satisfies one of the three venue conditions in § 1391(b). Atl. Marine Const. Co., Inc. v. U.S Dist. Ct. for W. Dist. Of Tex., 571 U.S. 49, 55 (2013) (internal quotations omitted). Accordingly, when a party challenges venue, the Court must first determine whether the plaintiff's chosen venue is proper under § 1391(b). If the venue does not meet one of § 1391(a)'s three categories, it is improper, and the Court must dismiss the case under § 1406(a). Atl. Marine, 571 U.S. at 56. If the plaintiff's selected venue is proper under § 1391(b), but the forum-selection clause designates a different forum, Rule 12(b)(3) and § 1406 do not apply. The Court is left with § 1404(a)'s forum non conveniens analysis. Id.

         Generally, the Court will transfer those cases to the agreed-upon forum absent extraordinary circumstances. Atl. Marine, 571 U.S. at 62 quoting Stewart, 487 U.S. at 31 (“a valid forum-selection clause [should be] given controlling weight in all but the most exceptional cases”). Three factors control whether the Court should honor the forum-selection clause and transfer the case. First, the plaintiff's choice of forum is irrelevant. Id. at 63; Van Dusen v. Barrack, 376 U.S. 612, 635 (1964). A plaintiff surrenders its so-called “venue privilege” when it agrees to sue in one specific forum. Atl. Marine, 571 U.S. at 63-64. Presumably, the plaintiff bargained for some benefit in exchange for the forum-selection clause. In so doing, the plaintiff “effectively exercised its ‘venue privilege' before a dispute [arose].” Id. at 63. Accordingly, the Court need only defer to the plaintiff's first choice for venue, which is found in the forum-selection clause.

         Second, the Court does not consider the parties' private interests. Like venue preference, the plaintiff waives its right to contest any inconvenience it may face litigating in the forum it already agreed to. Id. at 64. The Court must interpret the private-interest factors in favor of the preselected venue. Id. After all, “[w]hatever ‘inconvenience' [the parties] would suffer by being forced to litigate in the contractual forum as [they] agreed to do was clearly foreseeable at the time of contracting.” The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 17-18 (1972). As a result, the Court will only consider the public's interest in rejecting the forum-selection clause. However, these considerations “will rarely defeat a transfer motion.” Atl. Marine, 571 U.S. at 64.

         Finally, if the Court determines transfer is appropriate because of the forum-selection clause, the case will not retain the transferor-district's choice-of-law rules. Generally, when a court employs § 1404(a) to transfer a case to a more convenient forum, the transferee court applies the choice of law provisions from the original forum. See Van Dusen, 376 U.S. at 639. By attaching the original forum's choice of law provisions to the case, parties are less inclined to use § 1404 to shop for a more amenable forum. Id. at 638. However, where the plaintiff has defied a valid forum-selection clause, it loses the right to any “state-law advantages” it would have received in ...


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