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DMC Machinery America, Corp. v. Heartland Machine & Engineering, LLC

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

November 2, 2016

DMC MACHINERY AMERICA, CORP., Plaintiff,
v.
HEARTLAND MACHINE & ENGINEERING, LLC; FFG DMC CO., LTD.; HANHWA CORPORATION; and ILRIM NANO TEC CO., LTD., Defendants.

          MEMORANDUM OPINION AND ORDER

          JOHN W. DARRAH United States District Court Judge

         On October 26, 2015, Plaintiff, DMC Machinery America, Corp. (“DMCA”), filed a Complaint against Defendants, Heartland Machine & Engineering, LLC (“Heartland”); FFG DMC Co., Ltd. (“FFG”); Hanhwa Corporation; and Ilrim Nano Tec Co., Ltd. (“Ilrim”). The Complaint alleges one count of breach of contract, Count I, against FFG and Ilrim. FFG filed a Motion to Dismiss [37] Count I pursuant to forum non conveniens and Federal Rule of Civil Procedure 12(b)(6). FFG's Motion to Dismiss [37] pursuant to forum non conveniens is granted.

         BACKGROUND

         DMCA is a Michigan corporation registered to conduct business in Illinois that imports and distributes computer numerical control (“CNC”) machine tools. (Compl. ¶ 1.) Heartland is an Indiana limited-liability company that sells and services CNC machine tools. (Id. at ¶ 2.) FFG is a Korean CNC machine manufacturing company that exports and sells its products in the United States. (Id. at ¶ 3.) Hanhwa is a Korean corporation that exports CNC machine tools internationally, including in the United States. (Id. at ¶ 4.) Ilrim is a Korean CNC machine manufacturing company that exports and sells its machine tools in the United States. (Id. at ¶ 5.)

         DMC Co., Ltd. (“DMC”) is a Korean CNC machine tool manufacturer that established DMCA in August 2012. (Id. at ¶ 9.) DMCA, since its organization, has operated as the exclusive importer and master distributor of DMC products in the United States. (Id. at ¶ 10.) DMCA distributes DMC products in the United States through several dealers. (Id. at ¶ 11.) Heartland purchases DMC products from DMCA and sells them to customers located in Indiana, Ohio, Michigan, and Kentucky. (Id.)

         On October 23, 2014, DMC spun-off its machinery division and established a separate entity named, FFG DMC Co., Ltd. (“FFG”), which now produces the CNC machine tools. (Id. at ¶¶ 16, 17.) FFG was created when DMC entered into an agreement with Fair Friend Enterprises Co. Ltd. (Id. at ¶ 17.) The agreement was called “Investment Agreement for M&A of Machinery Division of Daehan Machinery Corporation” (the “Investment Agreement”). (Id.) In Article 2(e), the Investment Agreement states that “[a]ny contracts entered into by DMC as a contracting party related to the machinery division shall be transferred to [FFG DMC].” (Compl. Exh. 3, p. 16.)

         On January 28, 2015, DMC entered into a Share Transfer Agreement with Ilrim and sold all DMCA shares to Ilrim. (Id. at ¶ 12.) In Article 3, ¶ 4, the Share Transfer Agreement states that “[DMC] shall maintain the dealer network and distributorship of DMCA in the American market . . . for 10 years.” (Compl. Exh. 1, p. 3.) In Article 3, ¶ 8, the Share Transfer Agreement also states that the obligations of Article 3 shall be effective “[no] matter whether [Ilrim] transfers the shares of DMCA to a third party.” (Id. at p. 4.) In Article 7, the Share Transfer Agreement states: “If [the parties are] required to file litigations [sic] on any right and obligation prescribed by this Agreement, Changwon District Court shall have the exclusive jurisdiction over the first instance trials.” (Id. at p. 5.)

         On the same date, DMC and Ilrim also executed an Export Agency Agreement. The Export Agency Agreement, in Article 5, ¶ 2, states that DMC “shall respect the dealer network and the sales agency right of DMCA . . . in the American market . . . and acknowledge [Ilrim's] exclusive export agency status for 5 years from the date when this Agreement was made.” (Compl. Exh. 2, p. 4.) In Article 9, the Export Agency Agreement states: “If [the parties are] required to file litigations [sic] on any right and obligation prescribed by this Agreement, Chan[g]won District Court shall have the exclusive jurisdiction over the first instance trials.” (Id. at p. 4.)

         The Complaint alleges that DMC and Ilrim intended to maintain DMCA's status as the exclusive importer and master distributor of DMC products in the United States. (Compl., ¶ 13.) In September 2015, DMCA learned that FFG was selling CNC machine tools to Hanhwa and that Hanhwa was selling machines to Heartland. (Id. at ¶ 20.) DMCA met with Heartland and confirmed that Heartland was purchasing CNC machine tools through Hanhwa from FFG. (Id. at ¶ 21.) On January 6, 2016, DMCA received an e-mail from one of their dealers, stating that FFG had told the dealer that Heartland is “in charge of [the] North [A]merican market.” (Id. at ¶ 22.)

         LEGAL STANDARD

         The appropriate method for enforcing “a forum-selection clause pointing to a state or foreign forum is through the doctrine of forum non conveniens.” Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Texas, 134 S.Ct. 568, 580 (2013). When a defendant files a motion to dismiss under the doctrine of forum non conveniens pursuant to a mandatory forum-selection clause, “a district court should transfer the case unless extraordinary circumstances unrelated to the convenience of the parties clearly disfavor a transfer.” Id. at 575. The plaintiff bears the burden of establishing that a transfer is unwarranted. Id. at 581. When evaluating a mandatory forum-selection clause: (1) the plaintiff's choice of forum is given no weight; (2) private-interest factors are given no weight, as the court may only consider public-interest factors; and (3) a § 1404(a) transfer based on a forum-selection clause does not carry with it the original venue's choice-of-law rules. Atl. Marine, 134 S.Ct. at 581-83.

         Rule 12(b)(6) permits a defendant to move to dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). A complaint must allege enough facts to support a claim that is “plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 547 (2007). Facial plausibility exists when the court can “draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). All well-pleaded allegations are presumed to be true, and all inferences are read in the light most favorable to the plaintiff. Lavalais v. Village of Melrose Park, 734 F.3d 629, 632 (7th Cir. 2013). This presumption is not extended to “‘legal conclusions, or threadbare recitals of the elements of a cause of action, supported by mere conclusory statements.'” Alam v. Miller Brewing Co., 709 F.3d 662, 666 (7th Cir. 2013) (quoting Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009)). Plaintiffs are not required to “plead the elements of a cause of action along with facts supporting each element.” Runnion ex rel. Runnion v. Girl Scouts of Greater Chicago & Nw. Indiana, 786 F.3d 510, 517 (7th Cir. 2015). Rather, the complaint must provide a defendant “with ‘fair notice' of the claim and its basis.” Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008) (quoting Fed.R.Civ.P. 8(a)(2) and Twombly, 550 U.S. at 555).

         ANALYSIS

         Forum ...


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