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Onyx & Rose, LLC v. T1 Payments, LLC

United States District Court, W.D. Kentucky, Louisville

December 23, 2019

ONYX & ROSE, LLC PLAINTIFF
v.
T1 PAYMENTS, LLC DEFENDANT

          MEMORANDUM OPINION

          CHARLES R. SIMPSON III, SENIOR JUDGE.

         This matter is before the Court on Defendant T1 Payments, LLC's (“T1 Payments”) motion to dismiss or, in the alternative, motion to transfer an action brought by Plaintiff Onyx & Rose, LLC (“Onyx & Rose”). DN 6. Plaintiff filed a response. DN 9. Defendant filed a reply. DN 11. This matter is now ripe for adjudication. For the reasons below, the Court will deny dismissal and transfer this matter under 28 U.S.C. § 1404(a) to the United States District Court for the District of Nevada.

         I. Background

         Onyx & Rose is a limited liability company incorporated in Colorado and headquartered in Louisville, Kentucky that sells CBD oil and hemp oil products nationwide via its website. DN 1-2 at 4-5. T1 Payments is a global merchant processing company that provides credit card payment processing services to businesses that specialize in ecommerce. DN 6 at 2. On September 12, 2018, T1 Payments and Onyx & Rose entered into a card payment processing relationship governed in part by a Card Payment Processing Agreement (“CPPA”).[1] DN 1-2 at 6. Section 30 of the CPPA states:

Choice of Law; Venue. This Agreement shall be construed and enforced in accordance with the laws of the State of Nevada, without regard to its conflicts of law provisions, in the United States, and the exclusive venue for any action, dispute or proceeding with respect to this Agreement shall be in the state or federal district court of Clark County, Nevada, and each of the parties hereby consents, and expressly waives any objections, to jurisdiction and venue including the doctrine of forum non conveniens. The parties specifically waive the right to a jury trial in connection with any dispute arising out of this Agreement, or between the parties for any reason.

DN 6-1 at 9.

         Onyx & Rose alleges that “almost immediately” after T1 began providing payment processing services on September 17, 2018, Tl Payments breached their contract “when certain Onyx & Rose's customers were unable to input credit card data to pay for their selected products.” DN 1-2 at 6. Because of these alleged material breaches to its contract with T1, “on or about November 19, 2018, Onyx & Rose elected to cease using the services of T1 Payments and terminated the previously-breached” contract. Id. at 7. Onyx & Rose claims T1 retained and continues to retain control over $204, 859.51 that rightfully belongs to Onyx & Rose. On June 4, 2019, Onyx & Rose filed suit against T1 Payments in Jefferson Circuit Court alleging (1) breach of contract, (2) conversion, and (3) unjust enrichment and/or replevin.

         On July 3, 2019 T1 Payments removed this action to the Western District of Kentucky based on diversity jurisdiction. DN 5. On July 15, 2019, T1 Payments filed a motion to dismiss under the doctrine of forum non conveniens or, alternatively, to transfer venue to the United States District Court for the District of Nevada in accordance with the forum selection clause of the CPPA. DN 6.

         II. Validity of The CPPA's Forum Selection Clause

         Defendant argues that the Court should dismiss or transfer this case based on the CPPA's Forum Selection Clause. DN 6 at 1. Onyx & Rose responds that because T1 was the first party to breach the CPPA, it cannot enforce any of its provisions, including the forum selection clause. DN 9 at 8. Onyx & Rose's argument is without merit.

         Onyx & Rose relies upon Kentucky case law for the general proposition that the first party to materially breach a contract cannot enforce other provisions of that contract. DN 9 at 8. But state common law does not apply in assessing whether the venue selection clause should compel the Court to dismiss or transfer this case-federal law does. See Wong v. PartyGaming, Ltd., 589 F.3d 821, 828 (6th Cir. 2009) (“We therefore hold that in this diversity suit, the enforceability of the forum selection clause is governed by federal law.”); Atl. Marine Constr. Co. v. United States Dist. Court, 571 U.S. 49, 63 (2013) (“The calculus [under forum non conveniens or the federal venue transfer statute] changes…when the parties' contract contains a valid forum-selection clause….”).

         Under controlling federal law, “[a] forum selection clause should be upheld absent a strong showing that it should be set aside.” Wong v. PartyGaming Ltd., 589 F.3d 821, 828 (6th Cir. 2009) (citation omitted). Before enforcing a choice of venue clause, the Court must first determine its validity based on the following factors: (1) whether the clause was obtained by fraud, duress, or other unconscionable means; (2) whether the designated forum would ineffectively or unfairly handle the suit; and (3) whether the designated forum would be so seriously inconvenient such that requiring the plaintiff to bring suit there would be unjust. Sec. Watch, Inc. v. Sentinel Sys., Inc., 176 F.3d 369, 375 (6th Cir. 1999). The party opposing the forum selection clause bears the burden of showing that the clause should not be enforced. Shell v. R.W. Sturge, Ltd., 55 F.3d 1227, 1229 (6th Cir. 1995). Onyx & Rose has not born its burden.

         First, Onyx & Rose fails to demonstrate that the venue selection clause was obtained by fraud, duress, or other unconscionable means. Onyx & Rose implies that the forum selection clause was unfair by highlighting that the CPPA was a “form contract.” DN 9 at 1. Onyx & Rose also argues that its bargain with T1 Payments was unequal because Onyx & Rose was a “small business” with one full-time employee while T1 Payments touted its “years of experience” and claimed to “own the entire payment cycle.” Id. at 12. Even if the Court accepts Plaintiff's allegations as true, a form contract, even one where one bargained for by parties on unequal financial footing, does not rise to the level of “fraud, duress, or other unconscionable means” that would invalidate a forum selection clause. See Carnival Cruise Lines v. Shute, 499 U.S. 585, 587 (1991) (finding, in a lawsuit by a cruise line customer against a cruise line, that a forum selection clause printed on the back of the customer's ticket was valid); Lyles v. RDP Co., 702 Fed.Appx. 385, 401 (6th Cir. 2017) (“Unconscionability is a narrow exception that polices the excesses of certain parties who abuse their right to contract freely. It is directed against one-sided, oppressive and unfairly surprising contracts but not against the consequences per se of uneven bargaining power or even a simple old-fashioned bad bargain.”) (brackets and quotations omitted).

         Second, Onyx & Rose fails to demonstrate how a state or federal court within Nevada would ineffectively or unfairly handle the suit. Onyx & Rose argues that the case should not be transferred because Nevada “has authorized the Nevada State Board of Agriculture to ‘[r]estrict or prohibit the use or processing of industrial hemp for the creation, manufacture, sale or use of cannabidiol or any compound, salt, derivative, mixture or preparation of cannabidiol.'” DN 9 at 14 (citing NRS 557.080). This argument has no bearing in this case because Kentucky similarly empowers its Department of Agriculture to regulate the production and sale of hemp products. See KRS 260.858(3) (“It is unlawful for a person who does not hold a license issued by the department, or who is not an agent of a licensee, to cultivate, handle, process, or market living industrial hemp plants or viable seeds, leaf materials, or floral materials derived from industrial hemp.”). Furthermore, Plaintiff presents no evidence that its contract would be unenforceable in Nevada, but instead hints at what might happen if Nevada's State Board of Agriculture ...


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