WILLIAM GIBBS, an individual; JOHN WAGNER, an individual, Plaintiffs, vs. RIVERS TRANSPORTATION GROUP, LLC, a Nevada corporation; RIVERS TRANSPORTATION GROUP, LLC, a Delaware limited liability company; GRYPHON HOLDINGS, LLC, a Texas limited liability company d/b/a/ GRYPHON AIRLINES; EARL D. GIBBS, an individual; THOMAS ROLL, an individual; JARED SUZUKI, an individual; RASHED ABDULLA AL TAMAR, an individual; DOES I through X, inclusive; and ROE CORPORATIONS I through X, inclusive, Defendants.
Case No.: 2:13-cv-935-JAD-NJK
UNITED STATES DISTRICT COURT DISTRICT OF NEVADA
March 28, 2014
Jennifer A. Dorsey, United States District Court Judge
This is a business dispute among several members of Gryphon Holdings, LLC, a Delaware company with its headquarters in Vienna, Virginia.1 At the heart of the plaintiffs’ claims lies Gryphon Holdings’ operating agreement,2 which contains a venue-selection clause that gives the company “the absolute right to select the venue in which disputes relative to” the
Background5
In January 2005, Plaintiff William Gibbs—a commercial pilot—and his brother Defendant Earl Gibbs conceived the idea of starting an airline to serve markets in the Middle East.6 One of the earliest steps in the formation of the company was the creation of Rivers Transportation Group, Inc. (“RTGI“) under the laws of the state of Nevada.7 RTGI was reformed under Delaware law in May 2006.8 Gryphon Holdings, LLC, a Delaware company, was then formed as a subsidiary of RTGI.9
Gryphon Holdings, in which plaintiffs William Gibbs and John Wagner, and defendants Earl Gibbs, Thomas Roll, and Abdullah Al Tamar are members, is governed by a Second
Plaintiffs William Gibbs and John Wagner filed suit against their co-members Roll, Al Tammar, and Earl Gibbs, along with RTGI, Gryphon Holdings, LLC, and Gryphon Holdings’ Chief Financial Officer Jared Suzuki in the United States District Court for the District of Nevada, alleging claims for breach of fiduciary duty, fraud, an accounting, breach of the implied covenant of good faith and fair dealing, unjust enrichment, and conversion, all arising from the operation of the airline through Gryphon Holdings.13 They allege that venue is proper in this district because “the onset of the relationship between the parties as it relates to the legal entities named herein began with the establishment of a corporation organized under the laws of the state of Nevada, from which all subsequent transactions between the parties extended.”14
The operating agreement that lies at the heart of this suit, however, contains a forum-selection clause that gives Gryphon Holdings the “absolute right” to select the venue for disputes related to the operating agreement:
13.2 Governing Law. This Agreement and the rights of the parties hereunder will be governed by, interpreted, and enforced in accordance with the laws of the State of Delaware. The company shall have the absolute right to select the venue in which disputes relative to this Agreement are to be heard, including the State of Delaware or the Principle Office of the Company.15
Discussion
In diversity suits like this one, federal courts apply federal law to procedural issues arising from forum selection clauses.22 “Forum selection clauses are to be specifically enforced unless the party opposing the clause clearly shows ‘that enforcement would be unreasonable and
Defendants have offered a prima-facie-valid forum selection clause. They‘ve provided the Court with a full copy of the Operating Agreement, along with Thomas Roll‘s26 Declaration attesting that the document is a true and correct copy of the operative agreement for the company. It contains the merger document that makes it clear that RTGI merged into Gryphon Holdings “as the Surviving Entity.”27 And both plaintiffs’ signatures appear on the signature blocks of the Operating Agreement and the Merger Agreement.28 Plaintiffs do not dispute the authenticity or validity of this document.
Instead, they offer the general comment that the venue-selection clause contains “nothing definitive with regard to Delaware, Virginia, or any other state or possession, for that matter. Under the terms of the operating agreement, if Defendants believed it is in their best interests,
Plaintiffs’ myopic argument blindly ignores—and asks the Court to similarly ignore—the elephant in this room: the forum-selection clause they contractually agreed to and—more importantly—its legal effect. Yes, the clause leaves the choice of venue very broadly up to Gryphon Holdings. And, yes, the breadth of the language in that clause means that Gryphon Holdings could pick just about anywhere for the litigation to proceed. But that was the broad and “absolute right” that these very plaintiffs and their co-members (now adversaries) gave Gryphon Holdings, and they should not now be heard to complain about its scope. When parties contract for a choice of venues, they take much of the discretion away from the district court to “favor one venue over another” in a venue fight. And Gryphon Holdings has not blindly chosen just any venue at random; it selected the court in the district of its principal office, as was expressly permitted by the parties’ venue agreement.
Plaintiffs’ generalized references to
Plaintiffs have not identified extraordinary circumstances or any legitimate reason not to transfer the case to Gryphon Holdings’ chosen venue. The worst they say about Virginia is that “nothing binds this litigation to Virginia or to Delaware,” even if that is where the company‘s “principal office” is located, and really, “one of the western states would be most convenient.”38 They acknowledge that the witnesses are located in several states, including Virginia, and in other countries, but none are located in Nevada;39 and their suggestion that “Nevada is the perfect venue as no party can expect to enjoy any more ‘home cooking’ than any other,”40 is, as defendants accurately note, “not only speculative, it ‘reflects something of a provincial attitude regarding the fairness of” the Eastern District of Virginia.41 Regardless, plaintiffs have not
Conclusion
Based on the foregoing and for good cause appearing, IT IS ORDERED that Defendants Gryphon Holdings, LLC‘s and Thomas Roll‘s Motion to Dismiss (Doc. 10) is granted in part:
- Defendants’ request to transfer this case to the United States District Court for the Eastern District of Virginia is GRANTED. the Clerk of Court is directed to transfer this case to the Eastern District of Virginia;
- All remaining requests in that motion (Doc. 10) are DENIED without prejudice to their reassertion in the transferee forum;
IT IS FURTHER ORDERED that Defendants’ Motion for Summary Judgment (Doc. 11) and Motion to Strike (Doc. 12) are DENIED without prejudice to their reassertion in the transferee forum.
Dated this 28th day of March, 2014.
Jennifer A. Dorsey
United States District Court Judge