Arp Wave, LLC v. Salpeter
364 F. Supp. 3d 990
D. Me.2019Background
- ARPwave (plaintiffs) licensed and leased proprietary muscle-stimulation devices and protocols to Garrett Salpeter under three agreements (2008, 2010, 2012) that contained forum-selection clauses designating Hennepin County, Minnesota courts.
- Salpeter formed ARPwave Austin (2009) and later two Neurological Fitness LLCs (2016–2017) and is alleged to exercise control over them; defendants now operate a competing system (Neufit) and use a device called the Neubie.
- ARPwave asserts patent-infringement claims (three patents issued 2014–2016) and state-law claims: misappropriation of trade secrets/confidential information, breach of contract, conversion, interference with contractual/business relationships, and unjust enrichment.
- Defendants moved to dismiss for improper venue (all defendants as to patent claims; all but Salpeter as to other claims). Plaintiffs do not dispute that absent the forum clauses venue would not lie in Minnesota.
- The court found (1) all four defendants are bound by the forum-selection clauses under the “closely related/foreseeable” non‑signatory theory, and (2) Minnesota venue is proper under the clauses for the state-law claims but not for the patent-infringement claims; patent counts were dismissed without prejudice.
- The court ordered plaintiffs to show cause on whether federal subject-matter (diversity) jurisdiction exists over the remaining state-law claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are non-signatory entities (ARPwave Austin, Neurological Fitness LLCs) bound by forum-selection clauses in agreements they did not sign? | Forum clauses should bind because the entities are controlled by Salpeter and closely related to the agreements and dispute. | A non-party cannot be bound by a forum clause unless it signed the agreement. | Bound: court applied the “closely related/foreseeable” doctrine and held all defendants are bound by the forum clauses. |
| Do ARPwave’s patent-infringement claims fall within the scope of the forum-selection clauses (i.e., "relate to" the 2012 agreement or "enforcement" of 2008/2010 agreements)? | Patent claims relate because defendants were licensed under the agreements to use devices that later were patented; thus disputes implicate the agreements. | Patent claims do not "relate to" the agreements because the patents postdate the contracts and adjudication does not require interpreting the agreements. | Not within scope: court held patent claims do not “relate to” the agreements and dismissed patent counts for lack of venue. |
| Can the court exercise pendent venue over patent claims because it has venue over state-law claims? | Even if patents fall outside clauses, pendent venue is permissible because the court has venue over the state-law claims. | Pendent venue is unavailable under §1400(b) post-TC Heartland; patent venue must independently satisfy §1400(b). | Rejected: court concluded pendent venue over patent claims is unavailable and declined to exercise it. |
| Is there subject-matter jurisdiction over the remaining state-law claims? | Plaintiffs had not clearly pleaded diversity of citizenship for all LLC members. | Defendants argued lack of properly pleaded diversity jurisdiction. | Unresolved: court ordered plaintiffs to show cause because complaint did not establish diversity jurisdiction; state-law claims remain pending subject to jurisdictional demonstration. |
Key Cases Cited
- Marano Enters. of Kan. v. Z-Teca Rests., L.P., 254 F.3d 753 (8th Cir. 2001) (non‑signatory may be bound by forum clause when closely related to dispute and foreseeable to be bound)
- Hugel v. Corp. of Lloyd’s, 999 F.2d 206 (7th Cir. 1993) (formulation of the closely related/foreseeable test for binding non‑signatories)
- TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017) (patent‑venue rule under §1400(b) limits where patent suits may be filed)
- Terra Int’l, Inc. v. Miss. Chem. Corp., 119 F.3d 688 (8th Cir. 1997) (approaches for assessing whether tort claims fall within forum‑selection clause scope)
- Manetti‑Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509 (9th Cir. 1988) (test whether resolution of tort claims requires interpretation of the contract)
- C.H. Robinson Worldwide, Inc. v. FLS Transp., Inc., 772 N.W.2d 528 (Minn. Ct. App. 2009) (Minnesota application of closely related standard to bind non‑signatories)