United States District Court, D. Nevada
J. DAWSON UNITED STATES DISTRICT JUDGE
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. The Court construes both motions
as motions to transfer venue under 28 U.S.C. §
1404(a). 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.
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
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.
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.
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.
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.
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
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.
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
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).
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.
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
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.
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