Russo v. Omadi

Background

Wayne Russo and Private Property Impound, Inc. sued Omadi Inc. and Traxero North America LLC. They alleged that they operated an impound business and contracted with Omadi for software intended to streamline towing operations. According to the complaint, the software repeatedly malfunctioned, failed to store and back up important information, and did not adequately address plaintiffs’ concerns. Plaintiffs asserted claims against defendants, including breach of contract.

The case began in Alameda Superior Court and was later removed to federal court. Defendants moved to dismiss or, alternatively, to transfer the case. They argued that the parties’ agreement included both a limitation-of-liability provision and a forum-selection clause requiring disputes concerning Omadi’s software to be litigated in Utah.

Forum-selection clause

Defendants initially submitted a sample sales agreement that plaintiffs had not signed. Plaintiffs opposed the motion by arguing that defendants had not produced the actual signed contract. After briefing ended, defendants located and submitted the signed Omadi Sales Agreement between Omadi and Private Property Impound. The court allowed plaintiffs to supplement their opposition, but plaintiffs did not file another brief.

The sales agreement incorporated Omadi’s End User License Agreement and Terms of Service. The Terms of Service stated that actions to enforce them had to be brought in federal or state courts nearest Salt Lake City, Utah. They also stated that the parties agreed to personal jurisdiction in those courts and waived jurisdiction, venue, and inconvenient-forum objections.

The court explained that a forum-selection clause may be enforced through a transfer under 28 U.S.C. § 1404(a). A plaintiff seeking to avoid enforcement generally must show that the clause is invalid because of fraud or overreaching, that enforcement would violate a strong public policy, or that litigating in the selected forum would be so difficult and inconvenient that the plaintiff would effectively be denied a chance to present the case.

Ruling

The court found that plaintiffs had not argued that the forum-selection clause was invalid, did not cover their claims, or presented an exceptional case warranting non-enforcement. The court concluded that plaintiffs’ failure to respond after receiving the signed agreement showed that they had no meaningful response to it.

The court therefore granted the motion to transfer the case to the District of Utah under the parties’ forum-selection clause. It granted in part and denied in part the motion overall, and otherwise denied the motion to dismiss without prejudice to defendants’ raising those arguments before the transferee court. The clerk was directed to transfer the case to the District of Utah and close the case.