Carl Zeiss Microscopy, LLC v. Vashaw Scientific, Inc.

Background

Carl Zeiss Microscopy, LLC brought a diversity action against Vashaw Scientific, Inc. asserting breach of contract, or alternatively account stated and unjust enrichment. The court stated that it had subject-matter jurisdiction under 28 U.S.C. § 1332(a).

The parties entered an agreement under which Vashaw would operate as a “non-exclusive reseller” of Carl Zeiss’s microscopy products, services, and related accessories. The agreement became effective January 1, 2016. It included provisions stating that the sole venue for arbitration or actions arising from the agreement would be in the courts in Westchester County, New York, and that disputes would be resolved by a bench trial in those courts.

Carl Zeiss alleged that Vashaw failed to meet minimum purchase requirements and owed an outstanding balance for products it purchased. Carl Zeiss alleged that Vashaw owed approximately $1 million in arrearages by 2017 and that Carl Zeiss gave notice of breach in 2018 after learning Vashaw could not meet its sales and payment obligations.

Vashaw moved to dismiss under Federal Rules of Civil Procedure 12(b)(1), 12(b)(3), and 12(b)(6), arguing that the forum-selection clause required dismissal so the case could proceed in a New York State court in Westchester County.

Analysis

The court first addressed how to analyze the forum-selection clause. It explained that the doctrine of forum non conveniens is generally the proper method for enforcing a clause pointing to a state or foreign forum. But the clause here referred to “the courts in Westchester County” without specifying a state forum. Because a federal court is physically located in Westchester County, the court held that forum non conveniens did not apply and analyzed the motion under Rule 12(b).

The court applied a four-part framework for forum-selection clauses: whether the clause was reasonably communicated; whether it was mandatory or permissive; whether it covered the parties and claims; and whether enforcement would be unreasonable, unjust, or invalid because of fraud or overreaching.

The court found that the clause was reasonably communicated because it appeared in the agreement signed by both parties, used clear language, and involved two sophisticated entities. The clause was mandatory because it stated that actions “shall be” in the courts in Westchester County. However, the court concluded that the clause did not clearly require litigation exclusively in New York State court. It specified Westchester County but did not say that federal courts were excluded. The court therefore refused to resolve the ambiguity in favor of state-court exclusivity.

The court also found that the clause covered this dispute because it applied to actions and claims arising from or relating to the agreement, including contract claims. The court noted that the parties agreed the clause was enforceable. It held that the clause selected Westchester County as the required venue but did not preclude litigation in the federal court located in White Plains.

Disposition

The court denied Vashaw’s motion to dismiss. It ordered Vashaw to file an answer by January 16, 2020, and instructed the Clerk to terminate the motion. Judge Vincent L. Briccetti did not decide whether Vashaw breached the contract or owed the amounts alleged; the ruling concerned whether the case could proceed in federal court despite the forum-selection clause.