Distributorsoutlet.Com, LLC v. Glasstree, Inc.

Citation Codes

Equivalent Citations

citation codes

Docket Number

11-CV-6079 (PKC)(SLT)

Motions

Motion to dismiss : Denied Defendant

Judges

Pamela Ki Mai Chen

Acts

Judiciary And Judicial Procedure — District Courts; Venue — Jurisdiction And Venue — Venue Generally

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Smart Summary

Factual and Procedural Background

DistributorsOutlet.com, LLC, an online merchant based in Staten Island, sued Glasstree, Inc., a Michigan web-hosting and design company, two of its principals, and Glasstree Racing LLC in December 2011. Plaintiff alleged that Defendants provided incomplete and deficient website-design services. [1]

The Court had previously dismissed Carl Brown and Glasstree Racing LLC from the action with prejudice. [2] Defendants then moved to dismiss for forum non conveniens and improper venue. [1] The Court denied that motion, subject to Defendants’ opportunity to object to judicial notice of historical versions of the parties’ Terms of Usage. [1][3]

Legal Issues Presented

Whether a forum-selection clause required dismissal or transfer under the doctrine of forum non conveniens. [4][5]
Whether venue was proper in the Eastern District of New York because a substantial part of the events or omissions giving rise to the claims occurred there under 28 U.S.C. § 1391(b)(2). [6]

Arguments of the Parties

Defendants’ Arguments

Defendants relied on a Terms of Usage document containing a clause consenting to venue in Kalamazoo County, Michigan, and represented that the document had been incorporated into both contracts at issue. [4]
Defendants potentially relied on language permitting Glasstree to amend or update the Terms of Usage without notice, arguing that the later-added forum-selection clause applied. [7]

Plaintiff’s Arguments

Plaintiff argued that the Terms of Usage relied upon by Defendants did not exist when the contracts were entered into and were dated March 23, 2012, years after the contracts’ execution. [8]

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Atlantic Marine Construction Co. v. U.S. District Court for Western District of Texas, 134 S. Ct. 568, 580 (2013)	Enforcement of a forum-selection clause pointing to a state forum proceeds through forum non conveniens.	The Court used this framework in assessing the alleged Michigan forum-selection clause. [4]
Starkey v. G Adventures, Inc., 796 F.3d 193 (2d Cir. 2015)	Framework for evaluating enforcement of forum-selection clauses.	The Court sought briefing on the applicable factors for enforcing the clause. [4]
Martinez v. Bloomberg LP, 740 F.3d 211, 218 (2d Cir. 2014)	A forum-selection clause must be reasonably communicated to the end-user.	The Court held that the amendment language was insufficient to show that the later-added clause was reasonably communicated. [7]
Hepp v. Ultra Green Energy Services, LLC, 2016 WL 1073070, at *2 & n.1 (N.D. Ill. Mar. 18, 2016)	Historical web pages available through the Wayback Machine may be judicially noticed.	The decision supported the Court’s consideration of historical Terms of Usage. [5]
Erickson v. Nebraska Machine Co., 2015 WL 4089849, at *1 n.1 (N.D. Cal. July 6, 2015)	Judicial notice of Wayback Machine materials.	The Court cited the case in support of the propriety of noticing archived web content. [5]
Pond Guy, Inc. v. Aquascape Designs, Inc., 2014 WL 2863871, at *4 (E.D. Mich. June 24, 2014)	Judicial notice of historical website materials.	The Court cited it as additional support for using archived versions of web pages. [5]
In re Methyl Tertiary Butyl Ether (MTBE) Products Liability Litigation, 2013 WL 6869410, at *4 n.65 (S.D.N.Y. Dec. 30, 2013)	Judicial notice of information from archived websites.	The case supported the Court’s reliance on Wayback Machine evidence. [5]
Martins v. 3PD, Inc., 2013 WL 1320454, at *16 n.8 (D. Mass. Mar. 28, 2013)	Historical versions of websites may be judicially noticed as facts readily determinable from a source whose accuracy cannot reasonably be questioned.	The Court relied on this principle when considering archived Terms of Usage. [5]
Imagine Solutions, LLC v. Medical Software Computer Systems, Inc., 2007 WL 1888309, at *8 (E.D.N.Y. June 28, 2007)	In contract cases, venue considerations include where the contract was negotiated or executed, where it was performed, and where the breach occurred.	The Court considered Plaintiff’s New York-based telephone negotiations in determining that venue was proper. [6]
Reliance Insurance Co. v. Polyvision Corp., 474 F.3d 54, 59 (2d Cir. 2007)	Courts need not identify the best venue, only a logical venue with a substantial connection to the litigation.	The Court found New York sufficiently connected to the dispute through the contract negotiations. [6]
General Capital Partners LLC v. Liberty Ridge, LLC, 2007 WL 3010028, at *2 (S.D.N.Y. Oct. 12, 2007)	Contract negotiation and execution in New York may independently support venue there.	The Court cited the case in concluding that the New York negotiations supported venue. [6]
U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., Ltd., 241 F.3d 135, 153–54 (2d Cir. 2001)	Telephone and facsimile negotiations with a party in New York may constitute a substantial part of the events giving rise to a claim.	The Court found analogous significance in the parties’ telephone negotiations involving New York. [6]
Sacody Technologies, Inc. v. Avant, Inc., 862 F. Supp. 1152, 1157 (S.D.N.Y. 1994)	Venue may be appropriate where a communication connected to the cause of action is transmitted to or from the district.	The Court cited this principle in support of venue based on communications with Plaintiff in New York. [6]
Fteja v. Facebook, Inc., 841 F. Supp. 2d 829, 841–42 (S.D.N.Y. 2012)	Suggested in dicta that venue might be improper where the breach was carried out elsewhere, despite contract acceptance and injury in New York.	The Court noted this contrary authority but did not adopt its approach on the facts presented. [6]

Court's Reasoning and Analysis

The Court first examined the purported forum-selection clause requiring venue in Kalamazoo County, Michigan. Defendants asserted that the clause appeared in Terms of Usage incorporated into the two contracts. [4]

Historical versions of the Terms of Usage showed that the versions existing around the contracts’ execution in 2006 did not contain a forum-selection clause. The clause appeared to have been added between March 14, 2008, and May 9, 2008. [8]

The Court explained that courts may judicially notice archived web pages under Federal Rule of Evidence 201 when their contents can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned. Because Rule 201(e) entitled Defendants to be heard on the propriety of judicial notice, the Court allowed them until June 17, 2016, to object. [5]

Absent a timely objection, the Court would find that the 2006 Terms of Usage accepted by Plaintiff lacked the forum-selection clause and would deny dismissal under forum non conveniens. [5] The Court also rejected the argument that Glasstree’s unilateral amendment authority made the later clause applicable, reasoning that the language did not establish that the clause was reasonably communicated to Plaintiff. [7]

As to venue, the Court applied 28 U.S.C. § 1391(b)(2) and considered where the contracts were negotiated and executed, where they were performed, and where the alleged breach occurred. Plaintiff was located in New York, called Glasstree in Michigan to discuss the services, negotiated the contracts by telephone, and electronically accepted them on Glasstree’s website. [6]

Although the web-design work was performed by designers in Michigan, the Court concluded that the New York telephone discussions and negotiations provided a substantial connection to the litigation. Venue was therefore proper in the Eastern District of New York. [6]

Holding and Implications

DENIED: The Court denied Defendants’ motion to dismiss for forum non conveniens or improper venue, subject to any timely objection to judicial notice of the 2006 Terms of Usage. [3]

If no objection was filed by June 17, 2016, the case would proceed to discovery under the designated magistrate judge, with the Third Amended Complaint serving as the operative complaint. If Defendants timely objected, the Court would decide whether to reconsider its denial. Glasstree Racing LLC and Carl Brown were administratively terminated from the action. [3] No broader implication was discussed, and the direct effect was that the action remained pending in the Eastern District of New York subject to the stated condition. [3]

Show full summary ...

DISTRIBUTORSOUTLET.COM, LLC, Plaintiff, v. GLASSTREE, INC., GLASSTREE RACING, LLC, MARCUS ANTHONSEN, CARL BROWN, Defendants.

PAMELA K. CHEN, United States District Judge

ORDER DENYING DEFENDANTS' MOTION TO DISMISS FOR FORUM NON CONVENIENS OR IMPROPER VENUE PAMELA K. CHEN, United States District Judge:

Plaintiff DistributorsOutlet.com, LLC, an online merchant, brought this action in December 2011 against Glasstree, Inc., a web hosting and design company; two Glasstree principals; and Glasstree Racing LLC (collectively, "Defendants"). Plaintiff is based in Staten Island and alleges that Defendants, based in Michigan, provided slipshod and incomplete website design services to Plaintiff. Presently before the Court is Defendants' motion to dismiss for forum non conveniens and improper venue. (See Dkts. 67, 68; 5/19/16 Order.) For the reasons set forth below, Defendants' motion is DENIED, subject to Defendants filing an objection by June 17, 2016, to the Court's taking of judicial notice as to certain information relating to this dispute.

In its March 31, 2016 Order, however, this Court dismissed Defendants Carl Brown and Glasstree Racing from the action with prejudice. (See Dkt. 65 at ECF 16, 18.)

DISCUSSION I. Forum Non Conveniens

The Court previously found potentially dispositive the fact that the Terms of Usage policy submitted by Defendants (Dkt. 59-3) contained a forum selection clause providing that "Customer [DistributorsOutlet.com LLC] consents and agrees that venue shall be in Kalamazoo County, Michigan for any action brought with regard to this Agreement." (Dkt. 59-3 at ECF 7; see Dkt. 65 at ECF 18.) Defendants represented that Dkt. 59-3 was "a true and correct copy of the Terms of Usage which were incorporated by reference into both the First Contract and the Second Contract" (i.e., the two contracts executed by Plaintiff that are at issue in this litigation). (Dkt. 59 ¶ 9.) Accordingly, on May 9, 2016, the Court sought additional briefing on whether the Martinez-Starkey factors were met so as to warrant enforcement of the forum selection clause under the doctrine of forum non conveniens. See Atl. Marine Const. Co. v. U.S. Dist. Court for W Dist. of Tex., 134 S. Ct. 568, 580 (2013) ("[T]he appropriate way to enforce a forum-selection clause pointing to a [state forum] is through the doctrine of forum non conveniens."); Starkey v. G Adventures, Inc., 796 F.3d 193 (2d Cir. 2015) (setting forth framework for evaluating enforcement of forum selection clauses); Martinez v. Bloomberg LP, 740 F.3d 211, 218 (2d Cir. 2014).

In its opposition, however, Plaintiff asserts that "the terms of service that the defendants rely on did not even exist when the contracts were entered into. They are dated March 23, 2012—some 6 years after the contracts were executed." (Dkt. 68 at ECF 2.) Although Plaintiff offers no evidence of the Terms of Usage that existed in 2006, the Court notes that the Terms of Usage submitted by Defendants is indeed dated "3/23/2012." The Court took the additional step of searching for historical versions of the Terms of Usage used by Defendants at the URL "http://glasstree.com/hosting_terms.asp" using the Internet Archive Wayback Machine (https://archive.org/web/). That search reveals that snapshots of the Terms of Usage contract as of July 19, 2006 and August 13, 2006—roughly around the time that the two contracts in question were executed—did not, in fact, contain a forum selection clause. Rather, it appears to the Court that the clause was not added until some time between March 14, 2008 and May 9, 2008.

With respect to its reliance on the Wayback Machine, the Court notes that courts have taken judicial notice of the contents of web pages available through the Wayback Machine as facts that can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned under Federal Rule of Evidence 201. See, e.g., Hepp v. Ultra Green Energy Servs., LLC, No. 13-cv-4692, 2016 WL 1073070, at *2 & n.1 (N.D. Ill. Mar. 18, 2016); Erickson v. Nebraska Mach. Co., No. 15-cv-1147, 2015 WL 4089849, at *1 n.1 (N.D. Cal. July 6, 2015); Pond Guy, Inc. v. Aquascape Designs, Inc., No. 13-cv-13229, 2014 WL 2863871, at *4 (E.D. Mich. Jun. 24, 2014); In re Methyl Tertiary Butyl Ether (MTBE) Prods. Liab. Litig., MDL No. 1358, 2013 WL 6869410, at *4 n.65 (S.D.N.Y. Dec. 30, 2013); Martins v. 3PD, Inc., No. 11-cv-11313, 2013 WL 1320454, at *16 n.8 (D. Mass. Mar. 28, 2013) (taking judicial notice of "the various historical versions of [a website] available on the Internet Archive at Archive.org as facts readily determinable by resort to a source whose accuracy cannot reasonably be questioned"). However, because under Federal Rule of Evidence 201(e), Defendants are entitled to be heard on the propriety of taking judicial notice of the Wayback Machine, Defendants may submit a letter by June 17, 2016 on this issue. In the absence of such a letter, the Court finds that the 2006 versions of the Terms of Usage that Plaintiff executed did not contain a forum selection clause, and therefore denies Defendants' motion to dismiss under the doctrine of forum non conveniens.

The Court additionally notes that to the extent Defendants rely on the Terms of Usage language that "Glasstree may amend, modify or update this agreement or The Terms of Usage Policy at our sole discretion [without notice to the customer], and customer shall be bound by any such amendment, modification or update" to argue that the later-added forum selection clause applies, the Court rejects that language as insufficient to establish that the forum selection clause was "reasonably communicated" to the end-user. See Martinez, 740 F.3d at 218. --------

II. Venue

The Court also solicited briefing on whether a "substantial part of the events or omissions giving rise to the claim" occurred in this District so as to make venue proper under 28 U.S.C. § 1391(b)(2). (Dkt. 65 at ECF 19-20 n.18; 5/9/2016 Order.) As the Court previously noted, in breach of contract cases, relevant considerations include "where the contract was negotiated or executed, where it was to be performed, and where the alleged breach occurred." Imagine Sols., LLC v. Med. Software Computer Sys., Inc., No. 06-cv-3793, 2007 WL 1888309, at *8 (E.D.N.Y. June 28, 2007). "[C]ourts are not, in general, required to determine the 'best venue,' but merely a logical one with a substantial connection to the litigation." Reliance Ins. Co. v. Polyvision Corp., 474 F.3d 54, 59 (2d Cir. 2007) (citations omitted). Here, Plaintiff, located in New York, called Defendant Glasstree in Michigan to discuss the web design services Glasstree was to provide to Plaintiff. The parties negotiated the terms of the contract over the phone, and Plaintiff electronically accepted the contract on Glasstree's website. The contract was then performed by web designers located in Michigan. The Court is satisfied that venue is proper in this District based on the telephone discussions and negotiations between Plaintiff and Defendants leading up to the execution of the contracts in question. See, e.g., Gen. Capital Partners LLC v. Liberty Ridge, LLC, No. 07-cv-4089, 2007 WL 3010028, at *2 (S.D.N.Y. Oct. 12, 2007) ("[T]he fact that the underlying contract was at least partially negotiated and executed in New York is, standing alone, sufficient for this action to proceed in this District."); U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., Ltd., 241 F.3d 135, 153-54 (2d Cir. 2001) (fact that terms of arbitration agreement were negotiated by telephone and facsimile with party in New York meant that "substantial part of the events giving rise to the claim" occurred in New York); Sacody Techs., Inc. v. Avant, Inc., 862 F. Supp. 1152, 1157 (S.D.N.Y. 1994) (where a communication is "transmitted to or from the district in which the cause of action is filed," venue is appropriate in that district "given a sufficient relationship between the communication and the cause of action."); but see Fteja v. Facebook, Inc., 841 F. Supp. 2d 829, 841-42 (S.D.N.Y. 2012) (suggesting in dicta that the Southern District was "possibly an improper venue for this action" where the breach—the wrongful disabling of plaintiff's Facebook account—was "carried out" in California by Facebook employees, even though the user accepted the Terms of Service from New York and felt the injury in New York).

CONCLUSION

For all of the foregoing reasons, Defendants' motion to dismiss for forum non conveniens or improper venue is denied, subject to any objections by Defendants to the Court's taking judicial notice of the 2006-version of the Defendants' Terms of Usage through the Wayback Machine. If Defendants do not file such an objection by June 17, 2016, this case shall proceed to discovery under the oversight of the Honorable Steven L. Tiscione, with the Third Amended Complaint (Dkt. 66) functioning as the operative complaint. If, however, Defendants timely file an objection, the Court will decide whether to reconsider its denial of the motion. In addition, consistent with this Court's 3/30/16 Order and the Third Amended Complaint, Defendants Glasstree Racing LLC and Carl Brown are administratively terminated from this action.

SO ORDERED:

/s/ Pamela K . Chen

Pamela K. Chen

United States District Judge Dated: June 10, 2016

Brooklyn, New York