ReplyReplyCal. Super. - 4th Dist.March 13, 2018~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES MORGAN, LEWIS & BOCKIUS LLP Jason R. Scherr, SBN (pro hac vice pending) 1111 Pennsylvania Avenue, NW Washington, DC 20004-2541 Tel: +1.202.739.3000 Fax: +1.202.739.3001 jr.scherr@morganlewis.com MORGAN, LEWIS & BOCKIUS LLP Joseph Bias, SBN 257127 300 South Grand Avenue Twenty-Second Floor Los Angeles, CA 90071-3132 Tel: +1.213.612.2500 Fax: +1.213.612.2501 joseph.bias@morganlewis.com Attorneys for Defendants Michael Rapp and MLR Consulting ELECTRONICALLY FILED Superior Court of Califarnia, County of Orange 10/22/2018 at 05:01:00 PM Clerk of the Superior Court By Monique Ramirez, Deputy Clerk SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF ORANGE COLLAB9, LLC, Plaintiff, Vv. MICHAEL RAPP, an individual; MLR CONSULTING, a California corporation; and DOES 1 through 25, inclusive, Defendants. Case No. 30-2018-00979119-CU-CO-CIC ASSIGNED FOR ALL PURPOSES TO: JUDICIAL OFFICER GREGORY LEWIS DEPARTMENT C26 DEFENDANTS’ REPLY IN SUPPORT OF THEIR MOTION TO DISMISS OR STAY ACTION FOR INCONVENIENT FORUM Date: October 29, 2018 Time: 8:30 a.m. Dept: C26 Reservation Number: 72874124 Action Filed: March 13, 2018 Am. Compl. Filed: June 4, 2018 Trial Date: None DB1/ 1002232MOTION AND MEMORANDUM TO DISMISS ACTION FOR INCONVENIENT FORUM MORGAN, LEWIS Bockius LLP ATTORNEYS AT LAW Los ANGELES ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 & TABLE OF CONTENTS LL PARALLEL LITIGATION IN DELAWARE REQUIRES DISMISSAL .......cccccevvienne. 6 IL PLAINTIFF CANNOT SHOW THAT DELAWARE IS UNSUITABLE .........ccccccee.e. 8 III. THE APA’S FORUM SELECTION CLAUSE APPLIES AND IS ENFORCEABLE cuss suman awsssin ss suns asses is sas sais avs 55.50.3055 58 52505545. 55 555550 54085158 44 RGSS 48 0390.38 S450 30 9 A. The Forum Selection Clause Encompasses Plaintiff's Claims ............ccoecueevinennee. 9 1. Plaintiff Effectively Concedes That Its Claims Relate To Or Arise Out Of The APA cassis sssunas ss swans swsssin ss cases avis ss is 228550 05545 523554555 $458555 34 24752 10 2. Plaintiff Offers No Basis For Concluding The Finder's And Consulting Agreements Were Not Transaction Agreements Under ThE: AP AG sons cxunsvmness sums svn susan onus omnes uss es ame 050% 2505 SERRE CUT FERRE 10 3. Plaintiff Offers No Basis To Conclude That The Forum Selection Clause Does Not Apply To Claims Against MLR Consulting. ................ 12 B. The APA’s Jury Waiver Provision Does Not Render The Forum Selection Clause Unenforceable. ...........cociiiiiiniiiiiieiienieee cece cece e 12 I. Plaintiff Is Estopped To Challenge The Forum Selection Clause............. 12 2. Plaintiff’s Challenge To The Forum Selection Clause Fails..................... 13 IV. CONCLUSION .....ooititet eects eects sete eects sate sete ease estes sees sane eseenneens 14 -F. DB1/ 100223271.2 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES STATE CASES Berg v. MTC Elecs. Techs., 61 Cal. App. 4th 349, 353-54 (1998) ....eeiiiieie eects eters seers st esate sabe e nesses 6 Burdette v. Carrier Corp., 138 Cal. App. A, EGE. (280) xrmesmssnsnnsoonsnsommsns cossmnnesnssioanss ms stom oe 5s osm sama 13 Butler v. City of Palos Verdes Estates, 135 Cal. App. 4th 174 (2005) ....ceceeeeieiie etic etter estes te ete estes sbeebs seve ese esteesaae eens 11 Century Indem. Co. v. Bank of Am., 58 Cal. APP. 4th 408 (1997)... sees este sates teeta estes ebbe sabe anneeeseens 6 Dore v. Arnold Worldwide, Inc., 39 Cal. 4th 384 (2000) .....eeiuiietieeiie eee etter etter e teeta sabe ete e tee sate este ene estas eaae eens 11 Guimei v. Gen. Elec. Co., 172 Cal. App. 4th 689 (2009).....c..uiiiieitie tter estes sate esbe eee estes ssae sabe anneas 9 Intershop Commc’ns v. Superior Court, 104 Cals Appi. A. TIL CUOOD Ys usm. orn.osmmense coms so mss 555555.56 50505555 £55555 18 55555578 SVA035.50 35555508 SR555573855 13 Inv’rs Equity Life Holding Co. v. Schmidt, 195 Cal. APP. 4th 1519 (2011) eee eee eee sete sees saa enbe anes 9 Jenkins v. Valley Oil Co., 226 Cal. APP. 2d 41 (1964)... eee eters eee esate seers teenie ene 11 MPEG LA, L.L.C. v. Dell Glob. B.V., No. CIV.A. 7016-VCP, 2013 WL 812489 (Del. Ch. Mar. 6, 2013) ......cccceeeerierieeniereeenieenn 14 People v. Bouzas, 53 Cal. 3A 407 (1991) eee eee ete eee este eee eshte sabe e ete eabe ene 10 Rincon EV Realty LLC v. CP III Rincon Towers, Inc., 8 Cal. APP. Sth 1, 14 (2017) cuits ete sabes e ee seas 13, 14 Roman v. Liberty Univ., Inc., 162 Cal. App. 4th 670 (2008).....ccueiiiietie eit ete ette eee ete e sate este estes bee sbee sabe eseeenseesaae eens 9,14 Rowe v. Exline, 153 Cal. App. 4th 1276 (2007)..eecueeeieieiieeiie cites atest este eae este estes sbee eevee sees see saae eens 12 Shiley Inc. v. Superior Court, 4 Cal, App. AH 126 TLIDZ) sn mms sess. mms ass 5555500505555 505555558 S55535559 5555550 455555.08 SHSRE3H E5559 48 555 9 Stangvik v. Shiley Inc., S54 Cal. 3d 744 (1991) ones ee eee ebb e testes sha snbe anaes nee 8,9 -3- REPLY IN SUPPORT OF MOTION TO DISMISS ACTION FOR INCONVENIENT FORUM DB1/ 100223271.2 MORGAN, LEWIS Bockius LLP ATTORNEYS AT LAW Los ANGELES ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 & Verdugo v. Alliantgroup, L.P., 237 Cal. App. 4th 141 (2015)..... CALIFORNIA STATUTES Code of Civil Procedure § 410.30.... Code of Civil Procedure § 410.30.D _4- REPLY IN SUPPORT OF MOTION TO DISMISS ACTION FOR INCONVENIENT FORUM DB1/ 100223271.2 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES Plaintiff’s Opposition to the Motion to Dismiss or Stay Action For Inconvenient Forum (“Motion”) filed by Defendants Michael Rapp (“Rapp”) and MLR Consulting (“MLR”) fails to provide any basis to deny the Motion. Plaintiff does not dispute that its claims relate to the APA, as the claims turn on whether additional Earn Out payments are owed under the APA. Plaintiff does not dispute that it has been litigating this same issue in Delaware Superior Court for almost two years since it first filed that action. The pendency of inextricably linked claims in Delaware, coupled with Plaintiffs inability to show that Delaware is an unsuitable forum, provide independently sufficient grounds to grant the Motion consistent with prior California rulings avoiding parallel litigation of the same issues in different courts. This Court need not reach these issues, however, because the APA forum selection clause is enforceable, applies here, and mandates that APA parties like Plaintiff bring claims arising out of or relating to the APA or any Transaction Agreement exclusively in Delaware. APA § 12:12. Plaintiff’s claims relate to both the APA and the Finder's and Consulting Agreements. Because Plaintiff’s claims relate to the APA, they must be brought in Delaware without regard to the other two documents being Transaction Agreements. And Plaintiff’s sole basis to resist including the Finder’s and Consulting Agreements among the Transaction Agreements is a tortured reading of the APA that invites the Court to ignore the plain meaning of the words used. The Court may dispense easily with Plaintiff’s objection that MLR was not an APA signatory, because the forum selection clause applies to claims brought by APA signatories, irrespective of whom they are brought against, and Plaintiff has already asserted that MLR and Rapp, an APA signatory, are merely alter egos. Finally, Plaintiff is collaterally estopped to assert that the forum selection clause is unenforceable as against public policy, and enforcing the clause does not compromise Plaintiff’s jury rights in any event because Delaware would apply California substantive law or procedural law that is “inseparably interwoven” with substantive rights. And the argument is moot because Defendants have stipulated to application of California law and affirmed that they will not seek to enforce a jury waiver against Plaintiff’s claims in this case, if properly brought in Delaware. This Court should dismiss or stay this case pursuant to the forum non conveniens doctrine. -5- REPLY IN SUPPORT OF MOTION TO DISMISS ACTION FOR INCONVENIENT FORUM DB1/ 100223271.2 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES I. PARALLEL LITIGATION IN DELAWARE REQUIRES DISMISSAL. Code of Civil Procedure section 410.30 permits a court to “stay or dismiss” an action when it “finds that in the interest of substantial justice an action should be heard in a forum outside this state.” Century Indem. Co. v. Bank of Am., 58 Cal. App. 4th 408, 411 (1997). California courts have long recognized that the standard is met where, as here, the same issues and the same relief are being litigated in another forum. In Klein v. Superior Court, the plaintiffs sought to litigate similar claims in California that were then the subject of a criminal proceeding and a potential civil proceeding in Switzerland. See 198 Cal. App. 3d 894, 898-99 (1988). Despite that some of the defendants in the California case were not parties to the Swiss litigation and that the plaintiffs would not have a right to a jury trial in Switzerland, the court determined that the California case should have been stayed pending resolution of the litigation in Switzerland. See id. at 899-900, 905, 916. After noting that all defendants were “amenable to Swiss process,” the court held that “permitting parallel proceedings to go forward” would be inefficient, and it would be “unconscionable” to require litigation of the same defense in different legal systems. Id. at 901, 903, 905. Similarly, the plaintiffs in Celotex Corp. v. Am. Ins. Co. filed declaratory relief actions in California state court regarding an insurer’s obligation to defend or indemnify property damage claims. 199 Cal. App. 3d 678, 680 (1987). But three actions were already pending in Ohio federal courts involving “some” of the same parties and similar, though not identical, claims. See id. at 681. The court upheld the trial court’s decision to stay the California litigation under Section 410.30 because the cases were “inextricably intertwined” in that they likely would require interpretation of the same contract and effectively sought the same relief. See id. at 683-85. In Berg v. MTC Elecs. Techs., shareholders filed three class actions in New York federal court against MTC and others based on alleged misrepresentations regarding MTC’s business activities. See 61 Cal. App. 4th 349, 353-54 (1998). Three years later MTC shareholders filed a similar suit in California state court naming additional defendants. See id. at 355. The court upheld the trial court’s decision to stay the California lawsuit pending resolution of the New York cases, despite dissimilarities between the suits and plaintiffs’ California residency, because the -6- REPLY IN SUPPORT OF MOTION TO DISMISS ACTION FOR INCONVENIENT FORUM DB1/ 100223271.2 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES cases were seeking to adjudicate the same issues that if tried “in parallel litigations in different fora,” would create unnecessary “burdens and inefficiencies.” See id. at 363. Plaintiff’s claims in this case turn on whether PCM fulfilled its obligations under the APA regarding the quarterly Earn Out payments. See Mot. at 9-11:14, 14:14-15:2, 16:5-28, 17:23- 18:19. Indeed, Plaintiff here relies on the same allegation—that PCM and the Defendants failed, or purposefully avoided an obligation, to maximize the Earn Out payments, and seeks the same relief—the difference between the Earn Out paid and the amounts that Plaintiff believes it should have received. See id. Plaintiff not only fails to deny but also affirmatively admits that this overlap exists. See Opp’n at 14:22-15:2. Plaintiff inaptly asserts only that the Delaware case “involves a far more expansive set of disputes,” but that implicitly admits that the issues and relief sought here are already among those being litigated in Delaware. Opp’n at 15:2-3.! The rights of the parties must be determined in a single forum. It is undisputed that Defendant Rapp was Seller’s President before the APA purchase transaction. See Defendants’ Request for Judicial Notice (“Defendants’ RIN”) at Ex. B-2 18. Similarly undisputed is that Rapp was hired by PCM as President of En Pointe Technology Sales, LLC (“Purchaser”) as part of the bargained-for consideration of the Transaction. See id. 63. Indeed, the APA specifically conditions the Purchaser’s obligations on Rapp agreeing to execute an employment agreement to stay on as President of the acquired business. See Defendants’ RIN Ex. A-2 (APA) § 3.2(d)(v1) & APA Ex. G. Thus, both Seller and Purchaser were aligned in ensuring that Rapp’s obligations—and compensation—were addressed and resolved in connection with the APA, because failure to agree on these matters meant that the APA would not close. See id. These provisions also demonstrate Seller’s awareness that after the closing, Rapp’s fiduciary obligations would run to the Purchaser rather than to it. Collab9 (Seller) now claims that Rapp breached duties owed to Seller that he allegedly retained post-closing to maximize the Earn Out payable by PCM. See Am. Compl. 420, 21, 27. Yet, it is undisputed that after the closing, Purchaser—the entity to which Rapp owed his ! The Delaware action has been pending for almost two years, with delays attributable to Plaintiff’s repeated amendment of its pleadings. See Mot. 9:3-11:12. _7- REPLY IN SUPPORT OF MOTION TO DISMISS ACTION FOR INCONVENIENT FORUM DB1/ 100223271.2 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES fiduciary duty as President—had “sole discretion with regard to all matters relating to the operation of the Business,” and all parties agreed that it “shall have no express or implied obligation to the Seller . . . to take any action, or omit to take any action, to seek to maximize the Earn Out Payment.” APA § 2.2(e). Collab9’s theory thus reduces to an argument that Rapp both embraced and simultaneously disclaimed duties to maximize the Earn Out for Collab9’s benefit, while also discharging his duties to the acquired business to operate it consistent with the interests of the Purchaser. No matter the merit or lack of merit in Collab9’s theory, it is apparent from the mere stating that any determination of what exactly Rapp and the Purchaser were obligated to do and not do with respect to the Earn Out are inextricably linked. There is no meaningful way to resolve Collab9’s claim independently of the dispute Collab9 previously filed in Delaware against the Purchaser, in which Collab9 similarly seeks additional Earn Out payments. Because Delaware law governs the APA, Plaintiffs claims premised on interpreting that document would require the Court to apply Delaware law, before reaching the Consulting and Finder's Agreements. See APA § 12.11; see also Celotex, 199 Cal. App. 3d at 683 (noting that having to apply the contract law of a foreign state where litigation was already pending favored staying the subsequently filed California litigation); Klein, 198 Cal. App. 3d at 902 (same). And it would need to do so to adjudicate competing claims of performance under the APA between two Delaware companies, Plaintiff and Purchaser. See Mot. 14:6-11; see also Klein, 198 Cal. App. 3d at 902 (recognizing that foreign jurisdictions have “a significant interest” in regulating the affairs of its corporate citizens); Am. Compl. {{ 1-2. These factors, when combined with the threat of inconsistent rulings on the proper interpretation of the APA as well as the inefficiencies of parallel litigation of the same disputes, necessitates granting Defendants’ Motion. II. PLAINTIFF CANNOT SHOW THAT DELAWARE IS UNSUITABLE. “In determining whether to grant a motion based on forum non conveniens, a court must first determine whether the alternate forum is a ‘suitable’ place for trial.” Stangvik v. Shiley Inc., 54 Cal. 3d 744, 751 (1991). “Suitability” is only relevant where “the remedy in the alternative forum ‘is so clearly inadequate or unsatisfactory that it is no remedy at all.” Id. at 753. “[A] showing that recovery would be more difficult or even impossible in a foreign forum does not -8- REPLY IN SUPPORT OF MOTION TO DISMISS ACTION FOR INCONVENIENT FORUM DB1/ 100223271.2 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES demonstrate that the alternative forum is inadequate.” Shiley Inc. v. Superior Court, 4 Cal. App. 4th 126, 133 (1992). “The ‘no remedy at all’ exception applies “only in ‘rare circumstances,’ such as where the alternative forum is a foreign country whose courts are ruled by a dictatorship, so that there is no independent judiciary or due process of law.” Guimei v. Gen. Elec. Co., 172 Cal. App. 4th 689, 697 (2009). Plaintiff’s two challenges to suitability of a Delaware forum fail. First, Plaintiff argues that MLR and potentially Rapp are not subject to jurisdiction in Delaware. Opp’n 13:13-21. As a party to the APA, Rapp is plainly subject to Delaware jurisdiction, and Plaintiff alleges that MLR is Rapp’s alter ego. But even independently as to MLR, Plaintiff is well aware that both Defendants previously stipulated to Delaware jurisdiction for these claims. Decl. of Jason Scherr at 16, Ex. A> Having so stipulated, Plaintiff's argument fails. See Stangvik, 54 Cal. 3d at 752. Second, Plaintiff raises, albeit in another context, the potential absence of a jury trial right in Delaware. Opp’n 7:12-12:23. If considered on the question of suitability at all, that Plaintiff may not be entitled to a jury trial in Delaware does not make Delaware an unsuitable forum and is not a factor “justifying denial of a forum non conveniens motion.” Inv’rs Equity Life Holding Co. v. Schmidt, 195 Cal. App. 4th 1519, 1535 (2011). III. THE APA’S FORUM SELECTION CLAUSE APPLIES AND IS ENFORCEABLE. Plaintiff does not dispute that if the APA’s forum selection clause is applicable and enforceable, then the above analysis is unnecessary and the only question is whether enforcement would be unfair or unreasonable. See Mot. 13:1-9. Instead, Plaintiff argues that the clause does not apply to its claims and even if it did, it would be unenforceable as contrary to fundamental California policy. See Opp’n 5:3-12. Neither argument has merit. A. The Forum Selection Clause Encompasses Plaintiff’s Claims. The APA forum selection clause applies to Plaintiff’s claims because: (1) they arise out of, and are in fact inextricable from, the APA; and (2) they are related to the Finder’s and Consulting Agreements, which are Transaction Agreements, as that term is defined in the APA, a 2 Defendants reiterate that stipulation here. See Roman v. Liberty Univ., Inc., 162 Cal. App. 4th 670, 683 (2008) (holding that such representations by counsel should be accepted “as equivalent, in binding effect, to a stipulation”). _9. REPLY IN SUPPORT OF MOTION TO DISMISS ACTION FOR INCONVENIENT FORUM DB1/ 100223271.2 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES fact that is confirmed by the Side Letter executed at closing. See Mot. 16:3-18:19. 1. Plaintiff Effectively Concedes That Its Claims Relate To Or Arise Out Of The APA. Plaintiff offers almost no response to Defendants’ first argument, other than to compare the Finder's and Consulting Agreements to a brokerage engagement agreement, that it baldly concludes would not be covered by the APA’s forum selection clause. See id. at 6:27-6. There is no comparison. First, it would be impossible to determine whether claims relating to that hypothetical brokerage agreement would arise out of, or relate to the APA, given that Plaintiff provides no insight on the nature of those claims. Second, the failure to include this information in the hypothetical is telling because the claims at issue here turn on the interpretation and application of the APA, specifically PCM’s Earn Out provisions. If Plaintiff received all of the payments to which it was entitled, then it has no claim against Defendants and no damages to collect. The lack of a meaningful response to this first argument effectively concedes the point, and this alone would justify finding that the APA’s forum selection clause applies to Plaintiff’s claims. See People v. Bouzas, 53 Cal.3d 467, 480 (1991) (failing to respond to an argument is construed as concession). 2. Plaintiff Offers No Basis For Concluding The Finder's And Consulting Agreements Were Not Transaction Agreements Under The APA. Plaintiff’s primary argument is that the Finder's and Consulting Agreements are not “Transaction Agreements.” See Opp’n 5:3-7:9. Plaintiff does not dispute that if those agreements are “Transaction Agreements,” then the forum selection clause applies. “Transaction Agreements” is defined as: “this Agreement and all other agreements, certificates, instruments, documents and writings delivered by Purchaser, Seller and/or the Primary Stockholder in connection with the Transaction.” APA Ex. A (Certain Definitions). Because this definition uses the term “delivered,” Plaintiff concludes that Transaction Agreements can only be the items listed among the “deliveries” in Section 3.2(d) of the APA, which sets forth conditions on PCM’s obligation to close the transaction. Opp’n 5:18-6:26. The definition of “Transaction Agreements,” however, uses language far broader than -10 - REPLY IN SUPPORT OF MOTION TO DISMISS ACTION FOR INCONVENIENT FORUM DB1/ 100223271.2 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES Section 3.2, drawing within its scope “all other agreements, certificates, instruments, documents and writings delivered by Purchaser, Seller and/or the Primary Stockholder in connection with the Transaction.” Plaintiff’s limited interpretation of this definition would require the Court to ignore this broad language and assume that instead of simply referencing Section 3.2(d)—as several other defined terms referenced APA sections for their meaning—or using the same language, “deliveries” and “items,” or even just referencing documents required to trigger PCM’s closing obligation, the parties chose to limit this broad definition through the word “delivered.” California courts do not ignore plain language to adopt such absurd constructions. See Dore v. Arnold Worldwide, Inc., 39 Cal. 4th 384, 393 (2006) (“When a dispute arises over the meaning of contract language, the first question to be decided is whether the language is ‘reasonably susceptible’ to the interpretation urged by the party. If it is not, the case is over.”); Butler v. City of Palos Verdes Estates, 135 Cal. App. 4th 174, 183 (2005) (words in contracts “must be understood in their ordinary and popular sense”); Jenkins v. Valley Oil Co., 226 Cal. App. 2d 41, 46 (1964) (holding that if a party has an expectation that differs from the plain meaning of a basic term, then it should have ensured that was “plainly spelled out in the instrument”). Moreover, “delivered” is not a defined term in the APA, and Plaintiff’s attempt to transform it into one would work mischief throughout the APA, which repeatedly uses the term “delivered” in a variety of contexts. See, e.g., APA § 12.4 (Notices). Plaintiff’s interpretation of “Transaction Agreements” also ignores the Side Letter executed at closing. Mot. 17:13-22. That letter repeats similarly broad language, incorporating “all documents and instruments delivered at the Closing,” and then expressly confirms the parties’ agreement that the forum selection clause applies to all such documents and instruments. RIN Ex. A-7, at 149-50. If the parties’ intent was to limit the scope of the incorporation to the items listed in Section 3.2(d), the adoption of such broad language at the closing would be nonsensical, particularly given the sophistication of the parties and their counsel advising on this transaction. Therefore, the Finder's and Consulting Agreements are Transaction Agreements, further justifying application of the APA’s forum selection clause. “11 - REPLY IN SUPPORT OF MOTION TO DISMISS ACTION FOR INCONVENIENT FORUM DB1/ 100223271.2 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES 3. Plaintiff Offers No Basis To Conclude That The Forum Selection Clause Does Not Apply To Claims Against MLR Consulting. Plaintiff also attempts to avoid the APA’s forum selection clause on the grounds that MLR was not a party to the APA. Opp’n at 2:13-16. This argument fails for two reasons. First, the forum selection clause applies to all claims arising out of or relating to the APA, which includes Plaintiff’s claims against both Defendants. APA § 12.12. It is not limited to claims against APA signatories, but applies to all APA-related claims brought by signatories. The forum selection clause applies to the claims brought by Plaintiff against MLR. Second, Plaintiff cannot have it both ways. It asserts in the amended complaint that Rapp and MLR are alter egos, such that an action by one is an action by the other. Am. Compl. | 4. Now it argues that the two are separate, to avoid the forum selection clause. Contrary to Plaintiff’s argument, Defendants are not the ones playing fast and loose with the alter ego doctrine; Plaintiff seeks to use the doctrine as a sword and a shield, first invoking it to bring claims against the Defendants and then selectively abandoning it to avoid the forum selection clause. Opp’n 13:25-28. Having alleged that Rapp and MLR are alter egos, Plaintiff has no basis to resist applying the clause to the claims against MLR. See Rowe v. Exline, 153 Cal. App. 4th 1276, 1285 (2007) (holding that non-signatories could enforce an arbitration provision because they were alleged to be alter egos of a signatory). B. The APA’s Jury Waiver Provision Does Not Render The Forum Selection Clause Unenforceable. Plaintiff argues that the APA forum selection clause cannot be enforced because the APA includes a pre-dispute jury waiver that is contrary to a fundamental policy of California law. Opp’n 7:10-12:23. Plaintiff’s argument fails for multiple reasons. 1. Plaintiff Is Estopped To Challenge The Forum Selection Clause. Defendants argued in the Motion that Plaintiff was collaterally estopped from challenging the enforceability and broad scope of the APA’s forum selection clause based on the prior ruling in the Los Angeles County Superior Court that held it to be enforceable and applicable to any litigation that arises from the APA. Mot. 18:21-19:16. Plaintiff’s only response is that it “is not -12- REPLY IN SUPPORT OF MOTION TO DISMISS ACTION FOR INCONVENIENT FORUM DB1/ 100223271.2 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES challenging the enforceability of the APA’s forum selection clause” and that it is instead arguing that the clause “is inapplicable to [Plaintiff’s] claims.” Opp’n 15:17-23. Plaintiff’s response is curious, given that it devotes almost six pages of its brief to arguing that the forum selection clause is unenforceable. Nevertheless, Plaintiff’s response effectively concedes it is collaterally estopped from raising such an argument here, given that it previously litigated the issue of enforceability and lost. See Burdette v. Carrier Corp., 158 Cal. App. 4th 1668, 1688, (2008) (“The doctrine of collateral estoppel applies on issues litigated even though some factual matters or legal arguments which could have been raised were not.”); RIN Ex. B-11. 2. Plaintiff’s Challenge To The Forum Selection Clause Fails. Plaintiff does not dispute that the APA’s forum selection clause is mandatory in nature, or that such clauses are “generally given effect unless enforcement would be unreasonable or unfair.” Verdugo v. Alliantgroup, L.P., 237 Cal. App. 4th 141, 147 (2015). “California courts will refuse to defer to the selected forum if to do so would substantially diminish the rights of California residents in a way that violates our state’s public policy,” (id.), but while Rincon EV Realty LLC v. CP III Rincon Towers, Inc., 8 Cal. App. 5th 1, 14 (2017) held that pre-dispute jury waivers are contrary to fundamental California policy, Plaintiff provides no explanation how its claims in this case “are based on [this] unwaivable right[]” and therefore has not provided any basis for shifting its “substantial burden” to Defendants. See Verdugo, 237 Cal. App. 4th at 147; Intershop Commc’ns v. Superior Court, 104 Cal. App. 4th 191, 200 (2002) (holding that the absence of a cause of action based on an unwaivable right precluded the argument that enforcement of a forum selection clause would be unreasonable). Also, Plaintiff’s argument is premised on the unsupported supposition that Delaware courts would treat the right to a jury trial as a procedural matter to be governed by Delaware law, instead of recognizing it to be a substantive matter controlled by the California choice of law provision in the Finder’s and Consulting Agreements. Opp’n 10:23-11:17. Plaintiff cites no cases for this proposition. Verdugo, 237 Cal. App. 4th at 157 (“Simply stated, a comparison is necessary to determine whether enforcing a forum selection and choice-of-law clause would violate California’s public policy embodied in its governing statutes.”) (departing from cases -13- REPLY IN SUPPORT OF MOTION TO DISMISS ACTION FOR INCONVENIENT FORUM DB1/ 100223271.2 MORGAN, LEWIS Bockius LLP ATTORNEYS AT LAW Los ANGELES NS N NN O N W D 10 11 12 13 14 15 16 17 18 19 20 21 22 43 24 25 26 27 28 & holding otherwise, including those cited in Plaintiff's Opposition). Delaware will apply the law of the chosen state for each agreement with a choice of law provision, in this case California. MPEG LA, L.L.C. v. Dell Glob. B.V., No. CIV.A. 7016-VCP, 2013 WL 812489, at *3 (Del. Ch. Mar. 6, 2013). This includes the procedural laws of the chosen state where they are “inseparably interwoven with a party’s substantive rights.” Id. Insofar as Rincon held that jury waivers violate a substantive right, Delaware courts would apply California law to the jury waiver issue. Regardless, Verdugo makes clear that the matter is resolved if the parties agree that California law would control in the chosen forum. 237 Cal. App. 4th at 158. Here, the parties have agreed that California law would govern the Finder’s and Consulting Agreements. RIN Exs. A-5 138, A-6 144. To avoid any confusion, Defendants reaffirm that they will not seek to enforce the APA’s jury waiver provision against the claims that Plaintiff has brought in this case, should the Motion be granted. See Roman, 162 Cal. App. 4th at 683 (accepting stipulations by counsel in representations to court). IV. CONCLUSION There is no basis for denying the Motion. Plaintiff does not dispute that the parties have been litigating the issues at the heart of this case in Delaware for two years or that litigating them here would be inefficient and raise unnecessary problems of inconsistent rulings. Plaintiff also cannot dispute that the APA’s forum selection clause applies to its claims or that the forum selection clause is enforceable. For all of these reasons, Defendants respectfully ask the Court to grant this Motion and either dismiss or stay this case pursuant to Code of Civil Procedure section 410.30. Dated: October 22, 2018 Respectfully submitted, MORGAN, LEWIS & BOCKIUS LLP AS By /- 25 2 a n R. Scherr oseph Bias Attorneys for Defendants Michael Rapp and MLR Consulting or Pls REPLY IN SUPPORT OF MOTION TO DISMISS ACTION FOR INCONVENIENT FORUM DB1/ 100223271.2 NN O N wn» BA oo 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW LoS ANGELES PROOF OF SERVICE I am a citizen of the United States and employed in Los Angeles County, California. I am over the age of eighteen years and not a party to the within-entitled action. My business address is 300 South Grand Avenue, Twenty-Second Floor, Los Angeles, CA 90071-3132. Tam readily familiar with this firm’s practice for collection and processing of correspondence for mailing with the United States Postal Service. On October 22, 2018, I placed with this firm at the above address for deposit with the United States Postal Service a true and correct copy of the within documents: DEFENDANTS’ REPLY IN SUPPORT OF THEIR MOTION TO DISMISS OR STAY ACTION FOR INCONVENIENT FORUM [x] BY MAIL: (C.C.P.§1013(a)) - by placing the document(s) listed above in a sealed envelope with postage thereon fully prepaid, in the United States mail at Los Angeles, California addressed as set forth below. Iam readily familiar with the firm's practice of collection and processing correspondence for mailing. Under that practice it would be deposited with the U.S. Postal Service on that same day with postage thereon fully prepaid in the ordinary course of business. I am aware that on motion of the party served, service is presumed invalid if postal cancellation date or postage meter date is more than one day after date of deposit for mailing in affidavit. [x] by transmitting via electronic mail the document(s) listed above to each of the person(s) as set forth below. RICHARD D. ROBINS Attorneys for Plaintiff GARY GANCHROW COLLABY, LLC MICHAEL B. MELLEMA PARKER, MILLIKEN, CLARK O’HARA & SAMUELIAN A Professional Corporation 555 S. Flower Street, 30th Floor Los Angeles, CA 90071 gganchrow(@pmcos.com rrobins(@pmcos.com Executed on October 22, 2018, at Los Angeles, California. I declare under penalty of perjury under the laws of the State of California that the above is true and correct. 7 Brenda Susan Reimers -15- REPLY IN SUPPORT OF MOTION TO DISMISS ACTION FOR INCONVENIENT FORUM DB1/ 100223271.2
