UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

HAMMOND DIVISION

APEX COMPOUNDING PHARMACY, LLC, Plaintiff,

v.

eFAX CORPORATE; J2 CLOUD SERVICES, INC.; and J2 GLOBAL, INC.

Case No. 2:15-cv-00252-RL-JEM

MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO TRANSFER VENUE PURSUANT TO 28 U.S.C. § 1404(a) OR, IN THE ALTERNATIVE, TO DISMISS FOR FORUM NON CONVENIENS

VIKRAM SOHAL (California Bar No. 240251) vsohal@nemecek-cole.com
NEMECEK & COLE
A Professional Corporation
15260 Ventura Boulevard, Suite 920
Sherman Oaks, California 91403-5344
Tel: (818) 788-9500
Fax: (818) 501-0328

Attorneys for Defendants eFAX CORPORATE; j2

CLOUD SERVICES, INC.; and j2 GLOBAL, INC.

MEMORANDUM OF LAW

Defendants eFAX CORPORATE; j2 CLOUD SERVICES, INC.; and j2 GLOBAL, INC.

(collectively, “j2”) hereby respectfully submit a memorandum of law in support of their motion to transfer venue or, in the alternative, dismiss this action filed by Plaintiff APEX COMPOUNDING

PHARMACY, LLC (“Apex”).

I. INTRODUCTION

Two sophisticated entities, j2 and Apex, entered into an arm’s length agreement – namely, the eFax Corporate Customer Agreement (the “Customer Agreement” or the “Agreement”) whereby j2 agreed to provide facsimile services to Apex in exchange for a monthly fee. Before agreeing to provide those services, j2 required Apex to acknowledge and accept each and every term of the Customer Agreement. Apex did so voluntarily and without objection. Thus, the Agreement constitutes an enforceable contract between j2 and Apex that governs their relationship and forms the basis of Apex’s Complaint in this action.

Indeed, Apex admits and concedes the validity of its agreement with j2 by specifically asserting a breach of contract cause of action in the Complaint, along with a request that the Court enforce the Customer Agreement against j2. The Complaint, however, provides only Apex’s version of its purported contractual rights and makes no mention whatsoever of its contractual obligations vis-à-vis j2 under the Customer Agreement.^[1]

Specifically, the Complaint conspicuously omits that the Customer Agreement contains an express forum-selection clause which requires the parties to litigate all disputes “relating to” the Agreement in Los Angeles County, California. Despite being bound by that forum-selection

provision, Apex flouted its contractual obligations and filed this action against j2 in Lake County, Indiana.

To enforce its contractual rights, and to hold Apex accountable for its contractual

obligations, j2 hereby respectfully moves the Court to transfer the case to the District Court for the Central District of California, Western Division or, in the alternative, and if the Court deems proper, to dismiss the case without prejudice under the doctrine of forum non conveniens.

II. FACTUAL BACKGROUND

The eFax Corporate® Suite Of Products & Services j2 Cloud Services, Inc. – formerly known as j2 Global, Inc. – is a corporation organized under the laws of the State of Delaware with its principal place of business in Los Angeles, California. (Declaration of David Guerrero (“Guerrero Decl.”) ¶ 2.)^[2] j2 offers a wide array of cloud-based products and services to individuals and businesses, including the eFax Corporate® suite of facsimile products and services (the “eFax Service”).^[3] (Guerrero Decl. ¶ 5.)

The eFax Service is offered through the www.eFaxCorporate.com website. (Guerrero Decl. ¶ 6.) The eFax Service enables its registered users to send and receive electronic versions

of facsimile documents, including via electronic mail, without a traditional fax machine. The registered users can also remotely manage their faxing over the Internet through cloud computing.

(Guerrero Decl. ¶ 6.)

B. Apex’s Registration For The eFax Service

On April 2, 2014, Apex applied for an eFax Service account. That application was approved on April 4, 2014 and an account was opened on the same date. (Guerrero Decl. ¶ 7, Exhibit 1.)

As part of the registration process in place in April 2014, a prospective corporate client like

Apex had two avenues to open an account for the eFax Service: (1) submit a standard eFax Corporate Application through the eFaxCorporate.com website that required the prospective client to specifically acknowledge and accept the terms of the Customer Agreement; or (2) propose modifications to the terms of the Customer Agreement and request j2 to engage in negotiations regarding same. (Guerrero Decl. ¶ 13.) Apex did not propose any modifications to the Customer Agreement and never requested j2 to engage in negotiations regarding same. Instead, it registered for the eFax Service by completing and submitting a standard eFax Corporate Application through the eFaxCorporate.com website. (Guerrero Decl. ¶ 13.)

At all times relevant hereto, the standard eFax Corporate Application was divided into four sections and each section was identified in bolded text as “Contact Information for Corporate Administrator,” “Contact Information for Accounts Payable,” “Contract Terms,” and “Billing Terms.” (Guerrero Decl. ¶ 8, Exhibit 2; The Application, at pgs. 1-2.) The “Contract Terms” section contained a link to the complete text of the Customer Agreement. (Guerrero Decl. ¶ 8, Exhibit 2; The Application at pgs. 1-2.) As part of the registration process in place in April 2014, j2 required Apex to review and accept the terms of the Customer Agreement before submitting the eFax Corporate Application. J2 also required Apex to electronically check a checkbox field in the

application confirming that Apex had “read and agreed to the j2 Customer Agreement.” (Guerrero Decl. ¶ 8, Exhibit 2; The Application at pg. 2.)

Apex was permitted to submit its application only after it specifically acknowledged reading and accepting the terms of the Agreement. Indeed, at all times relevant hereto, the eFaxCorporate.com website was programmed to automatically prevent submission of applications that did not have the contract acknowledgement checkbox field checked. (Guerrero Decl. ¶ 9.) Had Apex attempted to submit the eFax Corporate Application without checking the checkbox, it would have received the following error message: “Oops! Before we can continue, please see if you can fix this: -‘I have read and agreed to the j2 Customer Agreement’ must be checked.”

(Guerrero Decl. ¶ 9, Exhibit 3.)

Thus, by submitting the eFax Corporate Application, Apex specifically agreed to be bound by the terms of the Corporate Agreement and that agreement became the contract governing the relationship between Apex and j2. (Guerrero Decl. ¶ 10, Exhibit 4.)

C. The Forum-Selection Clause Of The Customer Agreement

The Customer Agreement between j2 and Apex contains an unambiguous forum-selection clause governing any and all disputes between the parties that relate to the Agreement.

Specifically, Section 19 of the Agreement provides in part:

This CUSTOMER AGREEMENT is governed in all respects by the laws of the State of California as such laws are applied to agreements entered into and to be performed entirely within California between California residents. The UN Convention on Contracts for the International Sale of Goods is expressly disclaimed. Both parties submit to personal jurisdiction in California and further agree that any cause of action relating to this CUSTOMER AGREEMENT shall be brought in a court in Los Angeles County, California.

(Guerrero Decl. ¶ 10, Exhibit 4, The Agreement, at § 19 (emphasis added).)

When Apex registered its account for the eFax Service, it necessarily agreed to be bound by all of the provisions of the Customer Agreement – including the foregoing mandatory forumselection clause that required Apex to litigate its claims in Los Angeles County, California.

D. Apex’s Lawsuit Against j2

On July 2, 2015, Apex filed a Complaint against j2 with this Court in direct violation of the forum-selection clause of the Customer Agreement.

In its Complaint, Apex contends that it is a “pharmaceutical compounding company specializing in providing custom pharmaceutical compounds through utilization of highest quality ingredients and latest technology.” (Complaint, at ¶ 12.) Apex claims that many of its customer orders are submitted via fax. (Complaint, at ¶¶ 19-20.)

Apex alleges that it switched over to j2’s eFax Service after it was assured “better service for a reasonable rate.” (Complaint, at ¶ 23.) Apex alleges that the eFax Service experienced

“dropped, unanswered, disconnected, or failed fax transmissions” that “resulted in lost sale[s] for Apex.” (Complaint, at ¶¶ 26-28.)

Based on the foregoing allegations, the Complaint asserts two causes of action for breach of contract and fraudulent misrepresentation against j2 and seeks over $500,000 in “damages.”

(Complaint, at ¶¶ 29-34, 35-42.)

Markedly, notwithstanding the admission that Apex entered into an enforceable contract with j2 for the eFax Service (Complaint, at ¶ 35), the Complaint conspicuously leaves out any discussion of the forum-selection clause within that contract. Moreover, the Complaint contains no allegations to justify Apex’s blatant violation of the forum-selection clause. That is because there is no justification for Apex to flout its contractual obligation.

j2, therefore, respectfully requests the Court to enforce the forum-selection clause against Apex by transferring the case to the District Court for the Central District of California, Western

Division, or, in the alternative, dismissing the Complaint without prejudice under the doctrine of forum non conveniens.

III. LEGAL ARGUMENT

A. The Governing Law

In determining the validity and enforceability of a forum-selection clause, there is a threshold question about what law applies. The Customer Agreement contains a choice-of-law provision which mandates that its terms be “governed in all respects by the laws of the State of California[.]” (Guerrero Decl. ¶ 10, Exhibit 4; The Agreement at § 19.)

Thus, as a general rule, the Court should look to California’s substantive law. See Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938). However, as recognized by the court in Jackson v. Payday Fin., LLC, 764 F.3d 765 (7th Cir. 2014), district courts sitting in diversity are without clear guidance from the United States Supreme Court on the issue of whether federal or state law applies to their evaluation of forum-selection clauses. Id. at 774-775.

Recently, the United States Supreme Court provided clarity on the issue of “enforceability” of forum-selection clauses by promulgating a new test to determine whether such clauses are enforceable in federal court diversity actions. See Atlantic Marine Construction Co., Inc. v. United States District Court for the Western District of Texas, 134 S. Ct. 568 (2013).^[4] However, since the Supreme Court in Atlantic Marine presupposed that the parties had a contractually valid forum-

selection clause and there were no disputes regarding the interpretation of said clause (see id. at 581), it did not provide any guidance on whether federal law also applied to a district court’s determination of the validity and interpretation of forum clauses. Therefore, the split in the federal circuits (discussed infra) continues.^[5]

At present, the majority of the federal circuits hold that, since the enforceability of a forum selection clause implicates federal procedure, federal law applies to not only the question of enforceability, but also to the issues surrounding validity and interpretation of contractual forumselection clauses. See, e.g., Manetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 509, 513 (9th Cir. 1998) (“We conclude that the federal procedural issues raised by forum selection clauses significantly outweigh the state interest, and the federal rule . . . controls enforcement of forum clauses in diversity cases . . . Moreover, because enforcement of a forum clause necessarily entails interpretation of the clause before it can be enforced, federal law also applies to interpretation of forum selection clauses.”); see also Wong v. PartyGaming Ltd., 589 F.3d 821, 827-828 (6th Cir. 2009) (adopting the approach “used in the majority of the circuits” that federal law governs the interpretation, validity and enforceability issues relating to forum-selection clauses).

Under the minority rule, on the other hand, courts have held that while federal law governs enforceability of forum-selection clauses, state law that governs the contract as a whole also governs the issues of interpretation and validity of a forum-selection clause. See, e.g., Martinez v. Bloomberg LP, 740 F.3d 211, 217-24 (2d Cir. 2014) (holding that where a contract contains a choice-of-law provision and a forum-selection clause, the substantive law identified in the choiceof-law clause governs the contractual validity and interpretation of the forum selection clause, while federal law governs the enforceability of the forum selection clause).

Based on j2’s research, it is not entirely clear whether the Seven Circuit has adopted the majority or the minority approach. While a recent opinion applied the minority approach, the majority approach was endorsed by the Seventh Circuit in a prior opinion (albeit in dicta). Compare Jackson v. Payday Fin., LLC, 764 F.3d 765 (7th Cir. 2014) (“In contracts containing a choice of law clause . . . the law designated in the choice of law clause would be used to determine the validity of the forum selection clause.”), with Northwestern Nat’l Ins. Co. v. Donovan, 916 F.2d 372, 374 (7th Cir. 1990) (“Probably . . . the parties before us are correct to concede that the issue of validity [of a forum-selection clause] is one of federal law, though we need not decide this, since litigants are, within limits not exceeded here, permitted to designate what law shall control their case.”).

Due to the apparent uncertainty and split of authority in the federal circuits (and out of abundance of caution), j2 will address the issues of validity and interpretation under both federal and California state laws. Moreover, any potential conflict of law is illusory here because, as detailed below, California law on forum-selection clauses is materially the same as federal law.

B. The Forum-Selection Clause At Issue Is Valid Under Both Federal And California Laws Because, After Receiving Sufficient Notice, And Without Any “Fraud” or “Overreaching” by j2, Apex Freely And Voluntarily Accepted All Terms Of the Customer Agreement

Under federal law, it is well settled that the parties to a contract may bargain in advance to select the forum in which their disputes will be adjudicated. See M/S Breman v. Zapota Off-Shore Co., 407 U.S. 1, 12-14 (1972). According to the United States Supreme Court, a forum clause is valid if it is “a freely negotiated private . . . agreement, unaffected by fraud, undue influence, or overweening bargaining power.” Id. at 12. Indeed, under federal law, forum clauses are “prima facie valid” and should be enforced “unless [the party resisting enforcement] could clearly show that enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching.” Id. at 10, 15. The party opposing enforcement of a forum clause bears the heavy burden of “clearly show[ing]” the invalidity of the clause. Id. at 15; see also Mitsui & Co (USA) v. Mira M/V, 111 F.3d 33, 35 (5th Cir. 1997) (“The burden of proving unreasonableness is a heavy one, carried only by a showing that the clause results from fraud or overreaching, that it violates a strong public policy, or that enforcement of the clause deprives the plaintiff of his day in court.”).

California also strongly favors contractual forum-selection clauses, so long as they are entered into freely and voluntarily. Am. Online, Inc. v. Superior Court, 90 Cal. App. 4th 1, 11 (2001). Over 39 years ago, the California Supreme Court decided to follow the lead of the federal courts and adopted a policy favoring validity and enforcement of forum selection clauses. See Smith, Valentino & Smith v. Superior Court, 17 Cal. 3d 491 (1976). The Smith court embraced the United States Supreme Court’s opinion in Bremen and the “modern trend” of enforcement of forum clauses, concluding that “forum selection clauses are valid and may be given effect, in the court’s discretion and in the absence of a showing [that] enforcement of such a clause would be

unreasonable. Id. at 496. The court defined “unreasonable” as a case where “the forum selected would be unavailable or unable to accomplish substantial justice.” Id. at 494. The Smith court also placed the burden of demonstrating unreasonableness on the party opposing enforcement. Id.

1. Apex Freely and Voluntarily Agreed to Litigate Its Claims in Los Angeles County, California

There cannot be any dispute that Apex voluntarily agreed to be bound by the terms and conditions of the Customer Agreement.

As detailed in Section II above, Apex voluntarily assented, without objection, to the Customer Agreement when it registered for the eFax Service. In accordance with the established company-wide practice of j2, Apex completed the online registration process for the eFax Service which required it to specifically confirm acknowledgement and acceptance of the Customer Agreement containing the forum-selection clause. (See Guerrero Decl. ¶¶ 7-13.)

Moreover, Apex was on proper notice of the forum-selection clause. That clause was not anyhow inconspicuous. The language used was clear. It “was not misleading.” Azadi v. Berry Network, Inc., 858 F. Supp. 83, 84 (E.D. Tex. 1994). “[N]or was it cast in ‘legalese’ terms which might not be understood . . .” Id. Apex, a sophisticated entity, had the opportunity and an affirmative obligation to read the Customer Agreement before submitting its application on j2’s website, and it is presumed that Apex read the entire Agreement, including Section 19 containing the forum-selection clause. Of course, Apex could have decided to submit the Application without reading the Agreement, but it is nonetheless bound the Agreement’s terms – including the forumselection clause. See, e.g., Haynsworth v. Corporation, 121 F.3d 956, 965 (5th Cir. 1997) (“The plaintiffs were sophisticated parties contracting voluntarily; it is not for us to impose a duty upon one party to counsel the other as to the risks and benefits of a contract . . . The duty was the plaintiffs’ to read the plain terms of the agreement, not [Defendant’s] to lecture them about it.”);

Intership Communications AG v. Superior Court, 104 Cal. App. 4th 191, 202 (2002) (“Plaintiff had full notice that he was agreeing to Hamburg [Germany] as the place of trial, even though he may have chosen not the read the four-page contract.”).

Finally, just because Apex accepted the terms of the Customer Agreement as part of an online registration process does not mean that it did not receive proper notice or did not voluntary assent to the terms of that agreement. See, e.g., Salco Distribs. LLC v. Icode, Inc., No. 8:05-cv642-T, 2006 U.S. Dist. LEXIS 9483, at *7-*8 (M.D. Fl. Feb. 21, 2006) (“In Florida and the federal circuits, shrinkwrap and clickwrap agreements are valid and enforceable contracts.”); ProCD, Inc.

Zeidenberg, 86 F.3d 1447, 1449 (7th Cir. 1996) (enforcing the forum selection clause of a software shrinkwrap agreement); DVD Copy Control Assn., Inc. v. Kaleidescape, Inc., 176 Cal. App. 4th 697 (2009) (citing ProCD and recognizing that shrinkwrap license agreements are “not at all uncommon and have numerous commercial benefits”).^[6]

2. The “Adhesionary” Nature of the Customer Agreement Does Not Render the Forum-Selection Clause Invalid

Apex may argue against validity by claiming that the clause was part of a contract that it did not freely negotiate with j2. That argument should be rejected because Apex, as a corporate client, did have the option to negotiate the terms of the Customer Agreement with j2. (See

Guerrero Decl. ¶ 13.) Apex did not do so and instead submitted the standard eFax Corporate Application. (Id.) Moreover, even if Apex did not have the option to negotiate, the Court should still enforce the forum-selection clause because both federal and state courts have repeatedly enforced forum clauses even when they were part of boilerplate and adhesive contracts.

The United States Supreme Court’s landmark decision in Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991), recognized that forum-selection clauses in contracts of adhesion should be enforced. Id. at 594. As the Shute court explained, such “form” contracts serve the salutary purposes of limiting the fora in which the defendant could be sued; reducing the expense of determining the proper locale for suit; and ultimately lowering the cost for the product or service for the end user. See id. at 593-94 (passengers who purchase tickets with forum clauses “benefit in the form of reduced fares”).

Numerous subsequent decision of the Seventh Circuit and the California courts likewise have enforced forum selection clauses contained in “boilerplate” terms and conditions in consumer contracts or other agreements that were not the subject of negotiation. See, e.g., IFC Credit Corp.

Aliano Bros. Gen. Constrs., Inc., 437 F.3d 606, 610 (7th Cir. 2006) (interpreting and accepting the controlling Shute opinion “to mean that even in [an adhesive contract] between a business firm and a consumer, but a fortiori in a contract between two business firms, a forum selection clause is enforceable to the same extent as the usual terms of a contract[.]”); Intershop Communications, 104 Cal. App. 4th at 201-02 (enforcing forum selection clause of an adhesive contract by reasoning that “a contract of adhesion is nonetheless a valid and existing contract . . . [and such contracts] are an inevitable fact of life for all citizens – businessman and consumer alike”); Hunter v. Superior Court, 81 Cal. App. 4th 901, 908 (2000) (“Although the forum selection clause here is contained in an adhesion contract, that clause in an adhesion contract is enforceable even though the defendant did not actually read it . . . as long as the clause provided adequate notice to the defendant that he was agreeing to the jurisdiction cited in the contract.”).

There is No Evidence and/or Allegation of “Fraud” or

“Overreaching” Relative to the Forum-Selection Clause Itself

For a party to resist enforcement of a forum selection clause on grounds of “fraud” or “overreaching,” the party must show that such wrongful conduct was directed towards inducement of assent to the forum selection clause itself, rather than the contract as a whole. “Fraud and overreaching must be specific to a forum selection clause in order to invalidate it.” Haynsworth v. The Corp., 121 F.3d 956, 963 (5th Cir. 1997). A “forum selection clause in a contract is not enforceable if the inclusion of that clause in the contract was the product of fraud or coercion.”

Id. (citing Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 n.14 (1974)) (emphasis in original).

“Thus, allegations of such conduct as to the contract as a whole – or portions of it other than the [forum-selection] clause – are insufficient; the claims of fraud or overreaching must be aimed straight at the [forum-selection] clause in order to succeed.” Id. (citations omitted).

Here, the Complaint makes no allegation that the forum-selection clause itself resulted from any purported “fraud” or “overreaching.” Instead, Apex’s “fraudulent misrepresentation” cause of action is directed towards j2’s alleged “misrepresentations” regarding the quality and level of performance of the eFax Service. That allegation relates to Apex’s claim of “fraud” relating the eFax service, not the forum-selection clause itself.

Accordingly, Apex has not made (and cannot make) any allegations remotely sufficient to avoid the forum-selection clause on the basis of “fraud” or “overreaching” related to that clause

itself.

4. The Forum-Selection Clause is Reasonable and Does Not Deprive Apex of Its Day in Court

j2 did not include the forum-selection clause to the Agreement in an attempt to deprive Apex of its day in court. j2 admits that its principal place of business is in Los Angeles County,

California. (Guerrero Decl. ¶ 2.) Apex, therefore, will face no personal jurisdiction or improper venue hurdles if its claims against j2 are brought in Los Angeles County.

Moreover, the courts in Los Angeles County are just as open and capable of adjudicating

Apex’s claims for breach of contract and fraud against j2 as the courts in Lake County, Indiana. Indeed, since the Customer Agreement also contains a California choice-of-law provision, Apex cannot argue that the courts in Indiana are better equipped to adjudicate its claims under California law than the courts in California.

Also, Apex is a sophisticated entity being represented by a large law firm (Hinshaw & Culbertson LLP) with offices all over the United States – including five offices in California, two of which are located in Los Angeles County. There will be no need for Apex to retain new counsel to litigate its claims in the selected forum.

Finally, just because it could be more expensive or inconvenient for Apex to litigate its claims in Los Angeles County is not a sufficient reason to relieve Apex of the contractual obligation it freely and voluntarily accepted. See Intershop Communications, 104 Cal. App. 4th at 199 (“Neither inconvenience nor the additional expense of litigating in the selected forum is a factor to be considered [in determining validity and enforceability of a forum-selection clause].”).

In sum, the forum-selection clause at issue is valid under both the federal and state laws.

C. The “Fraudulent Misrepresentation” Cause Of Action Falls Within TheAmbit Of The Forum-Selection Clause

With validity established, the next issue for the Court is to ascertain the proper scope of the forum-selection clause.

In addition to a breach of contract claim, the Complaint also asserts a cause of action for “fraudulent misrepresentation.” That claim is entirely inappropriate and constitutes Apex’s thinlyveiled attempt to turn an ordinary contract dispute into tort claim to heighten the stakes and to seek

recovery of amounts not available in the contract realm. In addition, and more relevant to the motion, Apex asserted the fraud cause of action in an attempt to defeat the forum selection clause with a claim it believes to surpass the scope of that clause. Apex is mistaken, however, and the

“fraudulent misrepresentation” cause of action falls within the reach of the forum-selection clause.

That clause provides that, “any cause of action relating to this CUSTOMER

AGREEMENT shall be brought in a court in Los Angeles County, California.” (Guerrero Decl. ¶ 10, Exhibit 4; The Customer Agreement, at § 19.) The term “customer agreement” is defined broadly to include, inter alia, the eFax Service that J2 provided to Apex. (Id. at § 1.) Thus, the forum selection clause at issue is very broad and encompasses not only a breach of contract claim, but also a fraud claim based on J2’s provision of the eFax Service.

J2’s position is consistent with the controlling federal and state authorities. In Insurance Agency v. Mutual Risk Management, Ltd., 364 F.3d 884 (7th Cir. 2004), for instance, the plaintiff sued for breach of contract and fraudulent inducement. The parties’ forum-selectin clause provided that “any dispute concerning the Agreement shall be resolved exclusively by the courts of Bermuda.” Id. The plaintiff argued that because its claims were not purely contractual, the forum-selection clause should not apply. The court disagreed, noting that a plaintiff cannot defeat a forum-selection clause “by its choice of provisions to sue on, of legal theories to press, and of defendants to name in the suit.” Id. at 888. That the plaintiff alleged fraud was not enough to make the contract’s forum-selection clause inapplicable:

[A] dispute over a contract does not cease to be such merely because instead of charging breach of contract the plaintiff charges a fraudulent breach, or fraudulent inducement, or fraudulent performance . . . The reason is not that contract remedies always supersede fraud remedies in a case that arises out of a contract; sometimes they don’t . . . It is that the existence of multiple remedies for wrongs arising out of a contractual relationship does not obliterate the contractual setting, does not make the dispute any less one arising under or out of or concerning the contract, and does

not point to a better forum for adjudicating the parties’ dispute than the one they had selected to resolve their contractual disputes.

Id. at 889.

Similarly, in Cal-State Bus. & Serv. v. Ricoh, the California court of appeal gave broad meaning to a forum-selection clause providing that “any case or controversy arising under or in connection with the Agreement shall be heard in a New York court.” 12 Cal. App. 4th 1666 (1993). The court held that the foregoing language made the forum clause applicable to plaintiff’s causes of action for restraint of trade, unfair trade practices, breach of contract, fraud, and negligent misrepresentation. Id. at 1673, 1676-77. The court relied on a California’s Supreme Court’s opinion addressing the scope of the contractual scope-of-law provision and held that the same reasoning applied to contractual forum-selection clauses:

Our Supreme Court has recently expressed its view of the expansiveness of the scope to be accorded to a choice-of-law contractual clause, an issue closely related to choice-of-forum provisions. “When two sophisticated commercial entities agree to a choice-of-law clause like the one in this case, the most reasonable interpretation of their actions is that they intended for the clause to apply to all causes of action arising from or related to their contract . . . Our conclusion in this regard comports with common sense and commercial reality. When a rational businessperson enters into an agreement establishing a transaction or relationship and provides that disputes arising from the agreement shall be governed by the law of an identified jurisdiction, the logical conclusion is that he or she intended that law to apply to all disputes arising out of the transaction. We seriously doubt that any rational businessperson, attempting to provide by contract for an efficient and business-like resolution of possible future disputes, would intend that the laws of multiple jurisdictions would apply to a single controversy having its origin in a single, contract-based relationship . . .” We see no reason to read any differently language in a choice-of-forum clause.

Id. at 1676-77 (emphasis in original; citations omitted).

There is no reason for the Court to give any narrower interpretation to the forum-selection clause at issue than that given to similar clauses in Cal-State and Mutual Risk Management, supra.

D. The Forum-Selection Clause Is Mandatory And Requires Apex To Litigate Its Claims In Los Angeles County, California

A permissive clause allows the parties to litigate in several jurisdictions. Robeson v. Twin Rivers Unified School District, 69 F.3d 1034, 1036 (7th Cir. 1995). By contrast, a mandatory clause requires that any litigation take place in a particular venue. Id. Language such as “exclusive” or “shall be brought in” denotes that the clause is mandatory and not permissive. Id.; see also Animal Film, LLC v. D.E.J. Productions, Inc., 193 Cal. App. 4th 466, 471-72 (2011) (citing to cases where forum selection clauses containing the “shall be litigated” language held to be mandatory and not permissive).

The forum-selection clause in the Customer Agreement is mandatory. It specifically provides that any disputes relating to the Agreement “shall be brought in a court in Los Angeles County, California.” (Guerrero Decl. ¶ 10, Exhibit 4; The Customer Agreement at § 19 (emphasis added).)

Therefore, should it decide to push forward with its meritless claims against j2, Apex has no option but to litigate those claims in Los Angeles County, California.

E. The Forum-Selection Clause Is Enforceable And Requires Transfer Of Venue Or Dismissal Without Prejudice

Given the validity of the mandatory forum-selection clause that covers both causes of action asserted in the Complaint, the next, and final, step is to determine the enforceability of the clause.

The Court’s analysis should be guided by the United States Supreme Court’s holding in Atlantic Marine, which set forth a test for analyzing the enforceability of a forum-selection clause on a 28 U.S.C. 1404(a) motion to transfer venue or a motion to dismiss based on forum non

conveniens.^[7] In Atlantic Marine, the Supreme Court explained that a court’s §1404(a) (or forum non conveniens) analysis changes when it involves a valid forum-selection clause. 134 S. Ct. at 581. The Supreme Court noted that, “[i]n the typical case not involving a forum-selectin clause, a district court considering a §1404(a) motion (or a forum non conveniens motion) must evaluate both the convenience of the parties and various public-interest considerations.” Id.

However, when a court’s analysis involves a valid forum-selection clause, as it does here, the usual §1404(a)/forum non conveniens analysis changes in three ways. “First, the plaintiff’s choice of forum merits no weight.” Id. at 581. Second, a court “should not consider arguments about the parties’ private interests.” Id. at 582. And third, “when a party bound by a forumselection clause flouts its contractual obligation and files suit in a different forum, a § 1404(a) transfer of venue will not carry with it the original venue’s choice-of-law rules – a factor that in some circumstances may affect public-interest considerations.” Id.

After promulgating the foregoing standard, the Supreme Court held in no uncertain terms that the burden rests on the party resisting transfer to prove “extraordinary circumstances unrelated to the convenience of the parties.” Id. at 581. That is a heavy burden. The Supreme Court explained that, while a court may consider public interest facts (such as “the administrative difficulties flowing from court congestion; the local interest in having localized controversies

decided at home; [and] the interest in having the trial of a diversity case in a forum that is at home with the law”), rarely will these factors defeat a transfer motion. Id. at 581-82. The Supreme Court articulated that although it is “conceivable” for a court to deny a transfer motion, these “cases will not be common.” Id. at 582.

Here, there are no conceivable “extraordinary circumstances unrelated to the convenience of the parties” that could prevent enforcement of the forum-selection clause. Apex cannot point to any public interest for its claims to be litigated in Indiana, especially when the Agreement also contains a California choice-of-law provision.

IV. CONCLUSION

Apex has breached its contractual obligations set forth in the Customer Agreement by

improperly filing suit in this Court. Accordingly, j2 respectfully requests the Court to transfer this case to the District Court for the Central District of California, Western Division, under 28 U.S.C.

1404(a). In the alternative, if the Court would rather have Apex refile the case in Los Angeles

County, j2 requests that the case be dismissed without prejudice based on forum non conveniens.

Respectfully submitted,

NEMECEK & COLE

s/Vikram Sohal________________ VIKRAM SOHAL, ESQ.

Counsel for Defendants

CERTIFICATE OF SERVICE

I certify that on the 2^nd day of September, 2015, the foregoing was served upon the following CM/ECF participants by electronic mail:

John R. Terpstra, III

jterpstra@hinshawlaw.com

Michael T. Terwilliger

mterwilliger@indycounsel.com

s/Vikram Sohal________________ VIKRAM SOHAL, ESQ.

Counsel for Defendants

NEMECEK & COLE

A Professional Corporation

15260 Ventura Boulevard, Suite 920

Sherman Oaks, California 91403-5344

Tel: (818) 788-9500

Fax: (818) 501-0328

[1] Presumably, that is the reason Apex did not attach a copy of the Customer Agreement to the Complaint.

[2] In considering a motion to dismiss or transfer venue, “the district court is not obligated to limit its consideration to the pleadings.” Faulkenberg v. CB Tax Fran. Sys., LP, 637 F.3d 801, 809-10 (7th Cir. 2011); see also Payne v. N. Tool & Equip. Co., No. 2:13-CV-1019-JD, 2013 U.S. Dist.LEXIS 161397, at *5 (N.D. Ind. Nov. 12, 2013) (“When deciding a motion to dismiss for improper venue, the court may consider documents presented outside of the pleadings.”); Citibank, N.A. v. Affinity Processing Corp, 248 F. Supp. 2d 172, 176 (E.D.N.Y. 2003) (“The defendant must support [a Section 1404(a)] motion with affidavits and other materials outside the pleadings.”).

[3] The Complaint names “eFax Corporate” as a defendant even though it is not a legal entity. As explained in the Declaration of David Guerrero, eFax Corporate® is a brand name for one of j2’s suite of services. (Guerrero Decl. ¶ 5.) The Complaint also improperly names “J2 Global, Inc.” as a defendant. j2 Cloud Services, Inc. was formerly known as j2 Global, Inc. (which in turn, was formerly known as j2 Global Communications, Inc.). While j2 Global, Inc. is now the legal name of a holding company, that holding company does not offer products and services except through its direct and indirect subsidiaries, including j2 Cloud Services, Inc. (Guerrero Decl. ¶ 4.) Should the Court be disinclined to enforce the express forumselection clause contained in the Customer Agreement, j2 requests the Court to strike these misnomers from the Complaint.

[4] Prior to Atlantic Marine, it appears that the majority of the circuits had already adopted the approach of applying federal law to determine enforceability of forum-selection clauses, with the exception of just one circuit (namely, the Third Circuit). Compare Jones v. Weibrecht, 901 F.2d 17, 19 (2d Cir. 1990) (applying federal law to determine enforceability for contractual forum-selection clause), and Stewart Org. Inc. v. Ricoh Corp., 810 F.2d 1066, 1068 (11th Cir. 1984) (same), aff’d, 487 U.S. 22 (1988) (agreeing that federal law governs enforceability of forum selection clause), with Gen. Eng’g Corp. v. Martin Marietta Alumina, 783 F.2d 352, 357-58 (3d Cir. 1986) (applying state law to determine enforceability of a forum-selection clause in a diversity action).

[5] There is a tendency by litigants and even courts to blur the distinction between enforceability versus contractual validity/interpretation of forum-selection clauses. See Martinez v. Bloomberg LP, 740 F.3d 211, 222 (2d Cir. 2014) (“We do not identify as clear a prevailing approach on the question of what law governs the interpretation of forum selection clauses. In part, this derives from courts’ tendency to blur the distinction between enforceability and interpretation.”). Those are distinct issues, however, and Atlantic Marine addressed the issue of enforceability only. See, e.g., Mendoza v. Microsoft, Inc., 1 F. Supp. 3d 533, 542 (W.D. Tex. 2014) (“[B]efore addressing the Atlantic Marine decision, the Court must first determine whether the forum-selection clause is a contractually valid forum-selection clause.”); Union Elec. Co. v. Energy Ins. Mut. Ltd., No. 4:10-CV-1153-CED, 2014 U.S. Dist. LEXIS 126833, at *11 (E. D. Mo. Sept. 10, 2014) (“[T]he validity of a forum-selection clause ‘must first be determined under general contract law, and where a contractually valid forum-selection clause exists, the extremely high bar of Atlantic Marine applies to the question of whether that clause is enforceable.”); Guest Assocs, Inc. v. Cyclone Aviation Prods., Ltd., 30 F. Supp. 3d 1278, 1281 (N.D. Ala. June 30, 2014) (drawing distinction between validity and enforceability of forum-selection clauses).

[6] Indeed, recognizing the copious benefits of electronic transactions, California has adopted laws favoring such transactions, including the Uniform Electronic Transactions Act. See Cal. Civ. Code §§ 1633.1 – 1633.17.

[7] Importantly, the Supreme Court in Atlantic Marine clarified that the appropriate way to enforce a forum-selection clause pointing to another federal district court is through a motion to transfer under 28 U.S.C. § 1404(a). Id. 579-80. To enforce a forum-selection clause pointing to a state or foreign forum, the party must file a motion to dismiss based on forum non conveniens. However, the enforceability test for both motions is identical: “Section 1404(a) is merely a codification of the doctrine of forum non conveniens for the subset of cases in which the transferee forum is within the federal court system; in such cases, Congress has replaced the traditional remedy of outright dismissal with transfer . . . [B]ecause both § 1404(a) and the forum non conveniens doctrine from which it derives entail the same balancing-of-interests standard, courts should evaluate a forumselection clause pointing to a nonfederal forum in the same way that they evaluate a forumselection clause pointing to a federal forum.” Id. at 580 (emphasis added).