BlueDane, LLC v. Bandura Cyber, Inc.
3:20-cv-00553
M.D. Tenn.Jul 7, 2021Background:
- Bluedane, LLC sued Bandura Cyber, Inc. in the Middle District of Tennessee alleging breach of a Reseller Agreement and multiple fraud and warranty-based claims after Bandura failed to deliver promised software functionality.
- The Reseller Agreement contains a mandatory forum-selection clause requiring suits to be filed exclusively in Maryland state or federal courts and a Maryland choice-of-law provision.
- Bandura moved under 28 U.S.C. § 1404(a) to transfer the case to the District of Maryland; it submitted a CEO declaration showing the company was headquartered in Maryland when the contract was signed and remains registered there.
- Bluedane argued the forum clause is invalid (fraud in the inducement) and that transfer is inappropriate under public-interest factors, including Tenn. Code Ann. § 47-18-113(b) (TCPA-related venue restriction).
- The court concluded it need not decide the clause’s antecedent validity now, found the forum-selection clause enforceable under federal law (rejecting Bluedane’s three-category challenges), and ordered transfer to the District of Maryland (but declined to pick a specific division).
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the originating court must decide the forum-clause validity before enforceability | Walker requires the originating court to resolve validity first | Court should apply enforceability analysis without separately deciding validity now | Court: need not decide validity first; may address enforceability and leave validity questions for transferee where appropriate |
| Whether the forum-selection clause is enforceable | Clause invalid because contract was fraudulently induced (general fraud) | Clause presumptively valid; plaintiff must show (1) fraud specific to clause, (2) designated forum would be ineffectual/unfair, or (3) extreme inconvenience | Court: clause enforceable; plaintiff failed to show any of the three disqualifying situations |
| Whether § 1404(a)/Atlantic Marine nonetheless precludes transfer based on public-interest factors (including Tennessee public policy/statute) | Transfer would be inefficient; Maryland has no interest; Tenn. statute voids out-of-state venue for TCPA claims | Maryland has interest (connections, choice-of-law); federal courts apply federal law to forum clauses post-Atlantic Marine | Court: public-interest factors do not overcome clause; transfer to District of Maryland granted |
| Whether transfer should specify a particular Maryland division | Plaintiff: not addressed | Defendant requested Northern Division | Court: denies request to pick division; leaves divisional assignment to the District of Maryland |
Key Cases Cited
- Atl. Marine Const. Co. v. U.S. Dist. Ct. for W. Dist. of Texas, 571 U.S. 49 (2013) (valid forum-selection clauses control § 1404(a) analysis; plaintiff’s forum choice displaced; only public-interest factors remain)
- Wong v. PartyGaming Ltd., 589 F.3d 821 (6th Cir. 2009) (unenforceability arises if clause was obtained by fraud specific to clause, forum would be ineffective/unfair, or enforcement would be so inconvenient as to be unjust)
- Security Watch, Inc. v. Sentinel Sys., Inc., 176 F.3d 369 (6th Cir. 1999) (articulates three situations in which forum-selection clause may be unenforceable)
- Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991) (forum-selection clauses presumptively enforceable absent strong showing to set aside)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006) (distinction between attacks on entire contract and attacks specific to a clause; formation issues may be reserved)
- Moses v. Business Card Exp., Inc., 929 F.2d 1131 (6th Cir. 1991) (general allegations of fraud do not invalidate an otherwise enforceable forum-selection clause)