Stability Solutions, LLC v. Medacta USA, Inc.

Background

Stability Solutions, LLC sued Medacta USA, Inc. over an independent-sales-agent agreement. The agreement appointed Stability Solutions to sell and market Medacta’s medical devices and instrumentation in California for two years. It required a minimum sales volume and allowed Medacta to limit the sales territory or terminate the agreement if the target was not met, but only after notice and an opportunity to cure. The agreement also included a forum-selection clause requiring actions arising from or related to the agreement to be brought in the U.S. District Court for the Middle District of Tennessee, along with a Delaware choice-of-law clause.

Stability Solutions alleged that Medacta terminated the agreement in July 2022 without providing notice of default or following the required cure process. The complaint asserted seven claims: violation of California’s Independent Wholesale Sales Representative Act, breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, quantum meruit, equitable accounting, and violation of California’s Unfair Competition Law.

Motions and Arguments

Medacta moved to dismiss for improper venue under Federal Rule of Civil Procedure 12(b)(3) and 28 U.S.C. § 1406(a). In the alternative, it moved under 28 U.S.C. § 1404(a) to transfer the case to the Middle District of Tennessee to enforce the forum-selection clause.

Stability Solutions argued that the forum-selection clause was unenforceable, particularly when considered with the Delaware choice-of-law clause, because it waived rights that California’s Independent Wholesale Sales Representative Act made unwaivable. It also challenged the authentication of the agreement and argued that the factors under § 1404(a) weighed against transfer.

Court’s Analysis

The court held that venue was proper because Stability Solutions originally filed the case in a state court within the Northern District of California and Medacta removed it to federal court. The court therefore denied Medacta’s motion to dismiss for improper venue.

The court considered the agreement and its forum-selection clause after Medacta submitted a declaration from its general counsel addressing authentication. It held that the California statute did not establish a public policy relating to venue. The statute’s provision treating certain non-California manufacturers as doing business in California for personal-jurisdiction purposes did not require that disputes be heard in California. The court also concluded that Stability Solutions would still have reasonable recourse for its contract dispute in Tennessee, even if it could not pursue the California statutory claim there. The court therefore held that the forum-selection clause was enforceable.

Because the clause was enforceable, the court considered only the public-interest factors under § 1404(a), and Stability Solutions had argued only that private-interest factors weighed against transfer. The court found that Stability Solutions had not carried its burden to show that transfer was inappropriate.

Disposition

The court denied the motion to dismiss and granted Medacta’s alternative motion to transfer venue to the Middle District of Tennessee under 28 U.S.C. § 1404(a). The order resolved ECF No. 5. It did not decide the merits of Stability Solutions’ underlying contract or statutory claims.