Arcsona Inc. v. Appirio Inc.

Background

Arcsona Inc. filed the action in Santa Clara County Superior Court against Appirio Inc., Daniel Lascell, and Does 1–10. The complaint asserted one claim for promissory fraud against Appirio and Lascell and sought more than $25,000, with Arcsona later informing Lascell’s counsel that it sought more than $75,000.

Lascell removed the action to federal court under 28 U.S.C. § 1332, which provides jurisdiction over cases involving more than $75,000 and citizens of different states. Appirio consented to removal. The court noted that Arcsona did not dispute that the citizenship and amount-in-controversy requirements for diversity jurisdiction were met.

The parties had entered an Independent Contractor Agreement in June 2012. Its forum-selection clause stated: “Any suit or proceeding arising out of or relating to this Agreement shall be commenced in a federal court in the Northern District of California or in state court in Santa Clara County, California, and each party irrevocably submits to the jurisdiction and venue of such courts.”

Motion for Remand

Arcsona moved to remand, meaning to return the action to state court. It argued that the forum-selection clause allowed it to choose either state or federal court and made that choice mandatory, automatically waiving the defendants’ right to remove the action after Arcsona filed in state court.

Appirio and Lascell did not object to enforcement of the clause, but they disagreed that it expressly or implicitly waived removal. The court explained that federal law governed interpretation of the clause and that ordinary contract-interpretation principles applied. The court considered the clause’s plain language and noted that the Ninth Circuit does not require a removal waiver to be stated in “clear and unequivocal” terms, nor does a party have to expressly reserve the right to remove to preserve it.

Court’s Analysis

The court interpreted the clause as requiring actions related to the Agreement to be commenced either in federal court in the Northern District of California or in state court in Santa Clara County. The parties also agreed to submit to the jurisdiction and venue of “such courts.” Because the clause referred to multiple courts, the court concluded that the parties had agreed that more than one court could exercise jurisdiction over such actions.

The clause did not mention removal or waiver of removal. The court was not persuaded that a waiver had to be implied. Removing the state-court action to the Northern District of California was consistent with the requirement that the action be commenced in either of the specified forums and did not challenge the personal jurisdiction or venue of either forum.

The court distinguished the clause from one in another case that included language waiving rights associated with a party’s domicile, which supported finding a waiver of removal. The court also distinguished a clause using “any such court” in the singular, which had been interpreted as requiring submission to the single court where the suit was filed. Here, the Agreement used the plural phrase “such courts,” which supported preserving the right to remove to the specified federal court.

Disposition

The court concluded that the forum-selection clause could not be interpreted to prevent removal of Arcsona’s state-court action to the Northern District of California. Judge Virginia K. Demarchi denied Arcsona’s motion for remand. The opinion concerns the location of the litigation and does not decide the underlying promissory fraud claim.