DataCatalyst, LLC v. Infoverity, LLC
1:20-cv-00310
S.D.N.Y.Mar 17, 2020Background
- DataCatalyst (New York company) provided business-development services to Infoverity (Ohio company) under a July 14, 2017 Subcontractor Services Agreement and Statement of Work No. 008, which promised 7% of "sourced or influenced" revenue tracked via Salesforce.
- Section IX of the Agreement selects Ohio law and states that actions "may be brought" in state or federal courts in Columbus, Ohio and that those courts are a "convenient forum."
- The relationship ended in January 2019; DataCatalyst alleges Infoverity withheld commissions on multiple credited opportunities (159 opportunities credited to DataCatalyst) and concealed revenue (specific example: Interface Flooring).
- DataCatalyst sued in New York State court for breach of contract, Ohio Rev. Code §1335.11, and accounting; Infoverity removed to SDNY and moved to dismiss under Rule 12(b)(6) or, alternatively, to transfer venue to S.D. Ohio under 28 U.S.C. §1404(a).
- The court applied Ohio law to interpret the forum-selection clause, found the clause permissive (uses "may" and lacks exclusivity), and therefore applied the usual §1404(a) convenience factors rather than the Atlantic Marine truncated analysis.
- The court denied Infoverity's motion to transfer (weighing non-party witness convenience and plaintiff's forum choice) and denied the Rule 12(b)(6) motion, finding the complaint plausibly alleges breach with factual detail and at least one concrete example.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether to transfer venue to S.D. Ohio under §1404(a) given the forum-selection clause | Forum-selection clause is permissive; SDNY is appropriate because non-party witnesses and performance are tied to New York | Clause designates Columbus, Ohio and consents to Ohio jurisdiction; apply Atlantic Marine and transfer | Clause is permissive; Atlantic Marine not applicable; balancing §1404(a) factors favors keeping case in SDNY; transfer denied |
| Whether complaint should be dismissed under Rule 12(b)(6) for lack of specificity | Complaint pleads contract terms, method for identifying sourced/influenced revenue, factual basis for belief revenue was concealed, and a concrete example | Complaint is speculative and fails to identify specific accounts/amounts | Complaint meets plausibility standard under Iqbal/Twombly; dismissal denied |
Key Cases Cited
- ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87 (2d Cir. 2007) (Rule 12(b)(6) pleading standard and assumption of complaint allegations)
- DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104 (2d Cir. 2010) (courts may consider documents incorporated by reference on a Rule 12(b)(6) motion)
- In re Collins & Aikman Corp. Sec. Litig., 438 F. Supp. 2d 392 (S.D.N.Y. 2006) (first-step §1404(a) inquiry: whether action "might have been brought" in transferee court)
- Atlantic Marine Constr. Co. v. United States Dist. Court for the Western Dist. of Tex., 571 U.S. 49 (2013) (framework for enforcing mandatory forum-selection clauses)
- NY Marine & Gen. Ins. Co. v. LaFarge N. Am., Inc., 599 F.3d 102 (2d Cir. 2010) (party seeking transfer bears heavy burden)
- Filmline (Cross-Country Prods., Inc.) v. United Artists Corp., 865 F.2d 513 (2d Cir. 1989) (transfer burden discussion)
- State ex rel. Cordray v. Makedonija Tabak 2000, 937 N.E.2d 595 (Ohio Ct. App. 2010) (distinguishing permissive versus mandatory forum clauses)
- Huber v. Inpatient Med. Servs., Inc., 124 N.E.3d 382 (Ohio Ct. App. 2018) (use of "may" signals permissive forum clause)
- Fteja v. Facebook, Inc., 841 F. Supp. 2d 829 (S.D.N.Y. 2012) (locus of operative facts factors for transfer analysis)
- Am. Steamship Owners Mut. Prot. & Indem. Ass'n, Inc. v. LaFarge N. Am., Inc., 474 F. Supp. 2d 474 (S.D.N.Y. 2007) (documents/e-discovery minimize weight of document location in transfer analysis)
- Indian Harbor Ins. Co. v. Factory Mut. Ins. Co., 419 F. Supp. 2d 395 (S.D.N.Y. 2005) (greater weight afforded to convenience of non-party witnesses)