Blend, LLC v. Glenwood Smoked Products, Inc.

Background

Blend sued Glenwood Smoked Products, Glenwood Snacks, Mitch Scott, Clark Scott, Scott Zabriskie, and Daniel Haller. The complaint asserted breach of contract, breach of the implied covenant of good faith and fair dealing, breach of fiduciary duties, intentional and negligent interference claims, unfair competition, and punitive damages.

In April 2016, Blend and Glenwood Smoked Products entered into a Recipe/Formulation Agreement. Glenwood Smoked Products agreed to create jerky recipes for Blend, and Blend was to own the recipes. The agreement gave Glenwood Smoked Products a right of first refusal for orders using those recipes. Its forum-selection provision stated that the agreement’s covenants could be enforced in the enforcing party’s “local jurisdiction,” and that each party consented to jurisdiction there.

Blend alleged that Glenwood Smoked Products later developed recipes and manufactured products for Blend. After Glenwood Smoked Products was sold and began operating under the name Glenwood Snacks, Blend alleged that the defendants failed to provide complete recipe information when requested. Blend alleged that this prevented it from continuing production, distribution, and sales of its jerky products.

Motions and arguments

The Glenwood Snacks Defendants and the Glenwood Smoked Products Defendants separately moved under 28 U.S.C. § 1406(a) to transfer the case to the District of Idaho. They argued that venue in the Northern District of California was wrong under 28 U.S.C. § 1391. The Glenwood Snacks Defendants alternatively sought enforcement of the forum-selection clause and transfer to the Eastern District of California, arguing that Blend’s “local jurisdiction” was where its principal place of business was located.

Blend opposed both motions. It argued that the forum-selection clause applied to all defendants and that venue was proper in the Northern District of California under both the contract and the federal venue statute. Blend also argued that the transfer motions were untimely.

Court’s analysis

The court explained that a forum-selection clause generally applies to the parties to the contract, but Ninth Circuit precedent allows such a clause to apply to nonparties when their alleged conduct is closely related to the contractual relationship. The court found that all of Blend’s claims were based on the Recipe Agreement and the defendants’ alleged failure to provide the recipes. Because the claims against the Glenwood Snacks Defendants were closely tied to Blend’s contract with Glenwood Smoked Products, the court held that the forum-selection clause applied to all defendants.

The court then considered what “local jurisdiction” meant. The defendants argued that it meant the Eastern District of California because Blend alleged that its principal place of business was in Vacaville. Blend presented evidence that it executed the agreement in Santa Rosa, later conducted administrative and managerial activities in Danville, and handled important jerky-product activities in those locations. Santa Rosa and Danville are in the Northern District of California. The court found this evidence uncontested and consistent with the venue principle that a substantial part of the events giving rise to a claim may occur in a district even if other events occurred elsewhere.

Ruling

The court held that Blend properly filed the case in the Northern District of California under the forum-selection clause and denied the defendants’ motions to transfer the action to the District of Idaho or the Eastern District of California. Because of that conclusion, the court did not reach the defendants’ argument that venue was “wrong” under section 1406 or Blend’s argument that the motions were untimely. Judge Donna M. Ryu issued the order.