GE Renewable North America, LLC v. SKF USA Inc.

Background

GE Renewables North America, LLC ("GERNA") sued SFK USA Inc. over main bearings used in wind turbines. GERNA asserted claims for breach of contract, breach of express warranty, breach of the implied warranty of fitness for a particular purpose, indemnification, and a declaration of liability. GERNA alleged that bearings supplied by SFK failed and that replacing them would cost at least $107 million.

The parties entered into a Supply Agreement, later amended to include the main bearing at issue. They also entered into a later confidentiality, standstill, and tolling agreement while investigating the alleged failures and discussing settlement. SFK moved to dismiss for lack of personal jurisdiction, improper venue, and failure to state a claim. SFK alternatively sought transfer to the U.S. District Court for the Northern District of Georgia. The motion also referred to compelling arbitration, although the court noted that SFK made no substantive arbitration argument in the motion’s body.

Personal jurisdiction

The court held that GERNA made the required preliminary showing that New York’s long-arm statute permitted personal jurisdiction over SFK. The court relied on allegations that SFK negotiated part of the agreement in New York, maintained an ongoing contractual relationship with GERNA, used a New York-law provision, continued meeting with GERNA in New York, and sent notices to GERNA’s New York office.

The court also held that exercising jurisdiction was consistent with due process. SFK had sufficient contacts with New York because it visited the state to negotiate the agreement and continued visiting. The court concluded that defending the action in New York would not be unreasonable.

Venue and forum-selection clause

GERNA conceded that venue was improper in the Southern District of New York. The court agreed because SFK did not reside in New York and the negotiations for the relevant addendum occurred in Schenectady, New York, outside the Southern District.

The court considered two different forum-selection clauses. It held that the clause in the later tolling agreement did not govern because GERNA’s claims arose from the Supply Agreement, not from an alleged violation of the tolling agreement. By contrast, the Supply Agreement’s clause applied because it stated that litigation arising from the purchase order could be brought only in the Northern District of Georgia.

The court found that the Supply Agreement communicated the clause clearly, that the clause was mandatory, and that it covered GERNA’s claims. GERNA argued that the Northern District of Georgia had no connection to the dispute, but the court found no extraordinary circumstance making enforcement unreasonable or unjust. GERNA therefore did not overcome the clause’s presumption of enforceability.

Disposition

The court granted SFK’s motion to transfer venue to the U.S. District Court for the Northern District of Georgia. It did not rule on SFK’s motion to dismiss for failure to state a claim or its alternative request to compel arbitration; those matters were reserved for the transferee court. The clerk was directed to transfer the action and close the case in the Southern District of New York. Judge P. Kevin Castel signed the order.