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Qualtex Corporation v. Atm Group Corporation

United States District Court, N.D. Illinois, Eastern Division

July 14, 2014

QUALTEX CORPORATION d/b/a SKY PROCESSING, Plaintiff,
v.
ATM GROUP CORPORATION, Defendant.

MEMORANDUM OPINION AND ORDER

EDMOND E. CHANG, District Judge.

Plaintiff Qualtex Corporation, doing business as Sky Processing, filed this action against Defendant Automated Teller Machine Group Corporation (ATM Group), alleging that ATM Group breached the exclusivity clause of the parties' ATM transaction-processing agreement. R. 1, Compl.[1] ATM Group now moves to dismiss for lack of personal jurisdiction or improper venue, to transfer venue, or to stay the case based on the Colorado River abstention doctrine. R. 19, Mot. Dismiss. For the following reasons, ATM Group's motion to transfer venue is granted. The Court therefore does not reach the questions of personal jurisdiction, improper venue, or abstention.

I. Background

Qualtex is an Illinois-based company that provides ATM transaction processing services. Compl. ¶ 1. ATM Group is a Puerto Rico-based company that owns and operates ATMs in Puerto Rico. Id. ¶ 2. In 2010, Qualtex and ATM Group entered into an agreement for Qualtex to provide data processing services for ATMs owned by ATM Group in Puerto Rico. Id. ¶¶ 7-10. The parties' relationship was governed by two documents executed in May 2010: an Independent Distributor and Services Agreement (Distributor Agreement) and an ATM Location Agreement. R. 1-1, ATM Location Agreement; R. 19-2, Distributor Agreement.

Under the Distributor Agreement, ATM Group agreed to "utilize Qualtex as its exclusive Transaction processing source" for ATMs located in Puerto Rico. Distributor Agreement pt. 2(f). For each ATM location, ATM Group further agreed to submit an ATM Location Agreement to Qualtex. Id. The ATM Location Agreement likewise states that Qualtex agreed to provide, and ATM Group agreed to "utilize exclusively, " Qualtex's ATM data processing services. ATM Location Agreement pt. D. The ATM Location Agreement designated Illinois as both the source of governing law and the venue for any legal proceeding arising from the agreement. Id. pt. Q. The Distributor Agreement, on the other hand, is to be construed under Puerto Rican law. Distributor Agreement pt. 19.

Qualtex provided ATM Group with transaction processing services for more than three years until 2013, when the parties' relationship broke down. Compl. ¶¶ 9, 15-19. On December 6, 2013, ATM Group filed a complaint against Qualtex in a Puerto Rico state court, alleging that Qualtex breached the Distributor Agreement.[2] R. 19-3, Puerto Rico Compl. ¶¶ 5.4-5.6. Seven days later, on December 13, 2013, Qualtex filed this lawsuit against ATM Group, alleging that ATM Group breached the ATM Location Agreements. Compl. ¶¶ 26-31. ATM Group now moves to dismiss the suit for lack of personal jurisdiction or improper venue, to transfer venue to the District of Puerto Rico, or to stay the case pending the outcome of Puerto Rico litigation. Mot. Dismiss. As stated above, the Court directs its focus to ATM Group's motion to transfer venue, because transfer is clearly warranted (and federal courts are authorized to decide venue-convenience issues before other threshold issues, even subject matter jurisdiction, Sinochem Int'l Co. Ltd. v. Malaysia Int'l Shipping Corp., 549 U.S. 422, 432 (2007).

II. Legal Standard

The change-of-venue statute, 28 U.S.C. § 1404, provides that "[f]or the convenience of the 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." Thus, a transfer under § 1404(a) is appropriate if (1) venue is proper in the proposed transferee district, (2) the transferee district is more convenient for the parties and witnesses, and (3) transfer would serve the interests of justice. Delta Air Lines, Inc. v. Perfekt Marketing, Inc., 861 F.Supp.2d 919, 920 (N.D. Ill. 2012). "In passing on a motion for transfer, the [Court] must consider the statutory factors in light of all the circumstances of the case." Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219 (7th Cir. 1986). Qualtex's Puerto Rican entity (Qualtex Puerto Rico, Inc.) that are not parties to this lawsuit. Id.

III. Analysis

A. Proper Venue

Venue is proper in any district (1) in which any defendant resides, if all defendants are residents of the state in which the district is located; (2) in which a substantial part of the events or omissions giving rise to the claim occurred; or, if there is no such district, (3) in which any defendant is subject to personal jurisdiction. 28 U.S.C. § 1391. Because ATM Group is a Puerto Rico corporation with its principal place of business in Puerto Rico, Mot. Dismiss at 14, Qualtex could have brought this suit in the United States District Court for the District of Puerto Rico under § 1391(b)(1). In addition, because Qualtex's claims are based on events or omissions that occurred in Puerto Rico, venue would also have been proper there under § 1391(b)(2).

Qualtex argues that the ATM Location Agreement's forum-selection clause renders venue proper only in Illinois. R. 24, Pl.'s Br. at 1-2; ATM Location Agreement pt. Q. ATM Group argues, in turn, that the ATM Location Agreement is merely ancillary to the Distribution Agreement, which must be construed under Puerto Rico law. Mot. Dismiss at 4-5; Distributor Agreement pt. 19. Because the Puerto Rico Dealer's Act requires that distribution agreements be construed and resolved by Puerto Rico courts under Puerto Rico law, P.R. LAWS ANN. tit. 10, § 278, ATM Group argues that the ATM Location Agreement's forum-selection clause is void. Mot. Dismiss at 5, n. 4.

Regardless which contract controls the present dispute, a forum-selection clause is not dispositive for venue-transfer purposes. See IFC Credit Corp., 437 F.3d 606, 613 (7th Cir. 2006). Despite a general presumption against transfer from the district agreed upon in a valid forum-selection clause, the presumption can be overcome on account of inconvenience to a third party (other than the movant) or to the judicial system itself. Id. (citing Nw. Nat'l Ins. Co. v. Donovan, 916 F.2d 372, 377 (7th Cir. 1990)). Thus, whether this case is governed by ...


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