Global Net Lease, Inc. v. Blackwells Capital LLC

Background

Global Net Lease, Inc. and The Necessity Retail REIT, Inc. sued under the Securities Exchange Act of 1934, alleging that Blackwells Capital LLC, Blackwells Onshore I LLC, Jason Aintabi, and other defendants distributed misleading proxy materials before the companies’ 2023 annual stockholder meetings. The plaintiffs alleged that the materials omitted information about a joint venture intended to replace each company’s external advisor.

Blackwells and Aintabi had filed a Maryland state-court lawsuit accusing the plaintiffs of improperly blocking Blackwells from nominating two individuals to each company’s board and from presenting business proposals at the annual meetings. They sought declarations about the companies’ bylaws, an order prohibiting interference with their nomination and voting rights, an order requiring votes for their nominees to be counted, damages, and attorneys’ fees. They later asserted counterclaims in this federal case that mirrored the Maryland claims.

Motion and arguments

The plaintiffs moved to dismiss the state-law counterclaims. They argued that a forum-selection clause in each company’s bylaws required the counterclaims to be heard in Maryland. They also argued that this court lacked supplemental jurisdiction—authority to hear certain state-law claims related to federal claims—over counterclaims concerning director qualifications.

The bylaws provided that, unless the company agreed in writing to another forum, the Circuit Court for Baltimore City, Maryland, or, if that court lacked jurisdiction, the United States District Court for the District of Maryland, Northern Division, would be the sole and exclusive forum for specified corporate claims, including claims arising under the bylaws. The clause excluded actions arising under federal securities laws.

Blackwells did not dispute that it had notice of the bylaws, that the clause was mandatory, or that it covered the parties and claims involved in the Maryland action. Instead, Blackwells argued that the plaintiffs waived the clause by filing the federal securities case in this district after Blackwells filed in Maryland, and that enforcing the clause would be unreasonable and unjust because stockholders might have to litigate related matters in multiple courts.

Court’s analysis

The court enforced the clause through forum non conveniens, a doctrine allowing a court to dismiss a case when a designated alternative forum is the proper place to hear it. Under the governing test, the court considered whether the clause was communicated to the opposing party, mandatory, and applicable to the claims and parties. If those conditions are met, the clause is presumed enforceable unless enforcement would be unreasonable or unjust, or the clause was invalid because of fraud or overreaching.

The court found no waiver. The plaintiffs had not represented that this federal court was the proper forum for the bylaw and board-nomination claims, and they promptly challenged the counterclaims in this court. Filing the federal securities claims here was not inconsistent with the clause because the clause expressly excluded federal securities-law actions from the Maryland forum requirement.

The court also rejected Blackwells’ fairness arguments. Blackwells did not allege that the clause resulted from fraud or overreaching or that Maryland law was fundamentally unfair. The possibility of parallel proceedings and reduced efficiency was not enough to overcome a valid forum-selection clause. The court also concluded that Blackwells had not shown it would effectively lose its opportunity to litigate in Maryland, despite concerns about timing before the companies’ annual meetings.

Because the court found that the forum-selection clause required the counterclaims to be heard in Maryland, it did not reach the plaintiffs’ supplemental-jurisdiction argument.

Disposition

Judge J. Paul Oetken granted the plaintiffs’ letter motion to dismiss the Blackwells defendants’ state-law counterclaims. The court dismissed those counterclaims. The opinion does not add a "with prejudice" or "without prejudice" designation. The court also treated a separate letter motion at ECF No. 57 as moot and directed the clerk to close that motion, while allowing defendants five days to identify any outstanding requests for relief if the court’s interpretation was incorrect.