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Serac Inc. v. United Packaging Group, LLC

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

March 26, 2018

SERAC INC., Plaintiff,
v.
UNITED PACKAGING GROUP, LLC, Defendant.

          MEMORANDUM OPINION AND ORDER

          HONORABLE MARVIN E. ASPEN UNITED STATES DISTRICT JUDGE.

         Plaintiff Serac Inc. (“Serac”) filed this diversity suit against Defendant United Packaging Group, LLC (“UPG”), asserting claims of breach of contract and account stated based on an unpaid sum UPG allegedly owes Serac for the purchase of liquid filling equipment. (Compl. (Dkt. No. 1).) Presently before us is UPG's motion to dismiss Serac's complaint for improper venue or, in the alternative, to transfer venue to the Central District of California. (Mot. (Dkt. No. 19).) For the following reasons, we deny UPG's motions to dismiss and to transfer.

         BACKGROUND

         The dispute at issue in this case arose from UPG's purchase of Serac bottle filling and capping equipment. On or about February 12, 2014, Serac, an Illinois corporation with its principal place of business in Carol Stream, Illinois, prepared and issued a quote to UPG for a piece of liquid filling machinery, the Serac model LF24C12/720. (Compl. ¶¶ 1, 7; Serac Quotation # 14-030-C (“Serac Quotation”) (Dkt. No. 1-1).) UPG manufactures and distributes packaging products; it is headquartered and has its sole facility in Colton, California. (Mot. ¶¶ 1-4.)[1] Serac's quotation included terms of sale, which stated the “quotation shall be subject to the General Terms and Conditions set forth in the enclosed attachment #12290.” (Serac Quotation at 6.) Attachment #12290 included further Terms and Conditions that apply to “all quotations made and orders accepted by Serac.” (Id. at 8.) Section 12.7 of the Terms and Conditions (“forum selection clause”) states: “The Equipment Agreement shall be construed in accordance with, and governed by the laws of the State of Illinois, excluding the conflicts of law provisions. Seller and Buyer agree only to jurisdiction and venue in an appropriate state or federal court in the State of Illinois.” (Id. at 12.) It is uncontested that UPG received the entire quotation, including the Terms and Conditions that included the forum selection clause. (See Mot. ¶ 9.)

         After UPG received the quotation, on February 21, 2014, [2] UPG issued a Purchase Order for the filling equipment referring to quotation #14-030-C, which Serac accepted. (Feb. 21, 2014 Purchase Order (Dkt. No. 23-2); Compl. ¶ 9; Mot. ¶ 10.) Serac delivered the ordered equipment and parts to UPG's California facility in 2014 and 2015, although the parties dispute the exact dates. (Compl. ¶¶ 10-11 (indicating the deliveries were made between September 2014 and March 2015); Mot. ¶¶ 11-20 (claiming the deliveries occurred between June 2014 and April 2015).) Serac claims that it has fully performed its obligations under the contract with UPG and that UPG owes Serac $677, 304.34 for the filling equipment and related fees. (Compl. ¶¶ 12-14.) UPG, on the other hand, states the originally purchased 24-valve filling system did not meet the filling capacity Serac represented during negotiations, and that Serac upgraded the filling system to a 36-valve machine in early 2015. (Mot. ¶¶ 7-20.) UPG claims the upgraded 36-valve filling system still does not meet UPG's production requirements and fails to meet Serac's representations. (Id. ¶¶ 7, 19-21.) Based on UPG's dissatisfaction with Serac's filling equipment, UPG refuses to sign Serac's Final Acceptance Form. (Id. ¶¶ 19-22.)

         On November 1, 2017, Serac filed a complaint in the Northern District of Illinois alleging breach of contract and account stated claims against UPG. (Compl. ¶¶ 6-20.) Serac claims that after an initial payment, UPG has failed to pay its remaining $448, 432.74 balance owed to Serac despite repeated demands by Serac. (Id. ¶¶ 13, 15.)

         ANALYSIS

         UPG argues Plaintiff's lawsuit should be dismissed for improper venue because the forum selection clause in Serac's quotation does not control the instant dispute. (Mot. at 5-6.) In the alternative, UPG requests that this matter be transferred to the Central District of California because it is the “most convenient forum for the parties and witnesses to this matter” and is in the interest of justice. (Id. at 7-9.) In response, Serac argues the forum selection clause is binding and renders venue proper in Illinois. (Pl's Resp. to Def.'s Mot (“Resp.”) (Dkt. No. 23) at 3-4.) In addition, Serac argues that transfer is inappropriate because it “would merely shift the inconvenience from one party to another, rather than eliminate it.” (Id. at 5-7.)

         I. MOTION TO DISMISS FOR IMPROPER VENUE

         We turn first to UPG's motion to dismiss for improper venue under Federal Rule of Civil Procedure 12(b)(3). The plaintiff bears the burden of establishing venue is proper. Marzano v. Proficio Mortg. Ventures, LLC, 942 F.Supp.2d 781, 787 (N.D. Ill. 2013). When ruling on a 12(b)(3) motion to dismiss, we take all allegations in the complaint as true, unless contradicted by an affidavit, and we can consider facts outside the complaint. Nagel v. ADM Inv'r Servs., Inc., 995 F.Supp. 837, 843 (N.D. Ill. 1998).

         UPG's sole argument for dismissal under Rule 12(b)(3) is that venue is improper in our district because UPG did not agree to the forum selection clause in Serac's quotation. (Mot. at 4-7.) However, the Supreme Court clarified in a unanimous opinion that “Rule 12(b)(3) allow[s] dismissal only when venue is ‘wrong' or ‘improper, '” which “depends exclusively on whether the court in which the case was brought satisfies the requirements of federal venue laws, and those provisions say nothing about a forum-selection clause.” Atl. Marine Const. Co., Inc. v. U.S. Dist. Court for W. Dist. of Tex., 571 U.S. 49, 134 S.Ct. 568, 577 (2013). Accordingly, “[w]hether the parties entered into a contract containing forum-selection clause has no bearing on whether a case falls into one of the categories of cases listed in [28 U.S.C.] § 1391(b).” Id.

         We thus analyze UPG's motion to dismiss for improper venue under § 1391 without reference to the disputed forum selection clause. Section 1391(b) dictates that a civil case can be properly brought in a judicial district where: (1) “any defendant resides, if all defendants are residents of the State in which the district is located”; (2) “a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated”; or (3) “if there is no district in which an action may otherwise be brought as provided in this section, ” where any defendant is subject to the court's personal jurisdiction. 28 U.S.C. § 1391(b). Notably, UPG does not argue that venue is improper based on § 1391. (Mot. at 5-7.)

         In this instance, § 1391(b)(2) provides a basis for venue because a substantial part of the events giving rise to the Serac's claims occurred in the Northern District of Illinois. Serac negotiated with UPG through its headquarters in Carol Stream, Illinois. (Resp. at 2.) UPG sent its purchase orders to Serac's Illinois headquarters, and in May 2014, UPG's member Tom Hamic visited Serac's facilities to inspect and examine the filling equipment. (Id. at 2-3.) Serac also designed and manufactured the filling machine in Carol Stream, Illinois. (Id. at 6.) Because Serac performed virtually all of its obligations under the contract in this district, we find venue in this district is proper under § 1391(b)(2). See Citadel Grp. Ltd. v. Wash. Reg'l Med. Ctr., No. 07 C 1394, 2008 WL 5423553, at *3 (N.D. Ill.Dec. 29, 2008) (“Where the underlying events [in a contract action] are essentially communications made by two parties located in separate districts, ‘[t]he requirements of [§ 1391(b)(2)] may be satisfied by a communication transmitted to or from the district in which the cause of action was filed, given a sufficient relationship between the communication and the cause of action.'”) (citing Interlease Aviation Inv'rs II (Aloha) LLC v. Vanguard Airlines, Inc., 262 F.Supp.2d 898, 913 (N.D. Ill. 2003)). UPG's contacts with the Central District of California do not render venue improper in Illinois. See Caldera Pharms., Inc. v. Los Alamos Nat. Sec., LLC, 844 F.Supp.2d 926, 929 (N.D. Ill. 2012) (“If the selected district's contacts are ‘substantial, ' it should make no difference that another's are more so, or the most so.”) (citing Chem. Waste Mgmt. v. Sims, 870 F.Supp. 870, 875 (N.D. Ill. 1994)); TruServ Corp. v. Neff, 6 F.Supp.2d 790, 792 (N.D. Ill. 1998) (“The test is not whether a majority of the activities pertaining to the case were performed in a particular district, but whether a substantial portion of the activities giving rise to the claim occurred in the particular district.”). We accordingly find venue proper and deny UPG's motion to dismiss.

         II. ...


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