United States District Court, N.D. Oklahoma
OPINION AND ORDER
V. EAGAN UNITED STATES DISTRICT JUDGE.
before the Court are the following motions: Defendant Push
Software Interactions, Inc.'s Motion to Dismiss for Lack
of Personal Jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2)
(Dkt. # 12); Defendant Andre Doucette's Motion to Dismiss
for Lack of Personal Jurisdiction pursuant to Fed.R.Civ.P.
12(b)(2) (Dkt. # 14); Defendant Chad Jones' Motion to
Dismiss for Lack of Personal Jurisdiction pursuant to
Fed.R.Civ.P. 12(b)(2) (Dkt. # 16); and Sleepbit, LLC's
Motion to Transfer Venue and Brief in Support (Dkt. # 22).
Each of the defendants argues that it/he is not subject to
personal jurisdiction in Oklahoma and each asks the Court to
dismiss plaintiff's claims against it/him for lack of
personal jurisdiction. Plaintiff responds that each of the
defendants knowingly entered a business relationship with an
Oklahoma business, and the Court can exercise personal
jurisdiction over defendants. Plaintiff also argues that its
claims fall within a mandatory forum selection clause in a
confidentiality agreement, and it asks the Court to transfer
this case to the United States District Court for the Eastern
District of Oklahoma.
LLC (Sleepbit) is in the business of designing tools and
products “pertaining to individuals' sleep related
health and airflow during sleep.” Dkt. # 2-1, at 6.
Sleepbit is a limited liability company organized under
Oklahoma law with its principal place of business in Tulsa,
Oklahoma. Id. at 5. The membership of Sleepbit
consists of individuals who are citizens of Oklahoma and
Arkansas and a limited liability company whose members are
citizens of Oklahoma. Id. Sleepbit states that it
has developed a “non-prescription home airflow
self-assessment system . . . which uses a combination of
airflow measurements during sleep and a lifestyle/health
survey to determine issues related to an individual's
sleep health.” Id. at 6. Sleepbit's system
requires an individual to purchase an airflow recording
device and a mobile app that is compatible with iOS and
Android devices. Id. Sleepbit had developed a device
that would gather data about a user's airflow during
sleep, but it still needed a mobile app that could collect
the data from the Sleepbit device. Id.
February 13, 2015, the manager of Sleepbit, Steve Wood,
contacted Push Software Interactions, Inc (PSI) about
developing the mobile app, and the chief executive officer of
PSI, Chad Jones, represented that PSI would be willing to
develop the mobile app. Id. at 7. Sleepbit and PSI
executed a confidentiality agreement under which the parties
agreed to keep any confidential information exchanged during
the course of their business relationship confidential.
Id. The confidentiality agreement contains the
following choice of law and forum selection clause:
This Agreement shall be construed under the laws of the State
of Oklahoma, notwithstanding any conflict of law provision to
the contrary. The forum for any proceeding or suit in law or
equity arising from or incident to this Agreement shall be
located in the applicable federal court for the Eastern
District, Oklahoma, or state court in Tulsa County, Oklahoma.
22-1, at 21. Sleepbit subsequently sent a request for
proposal to PSI for the development of a Bluetooth-enabled
app from testing to commercial launch. Dkt. # 2-1, at 7. On
February 23, 2015, PSI submitted a mobile app proposal to
Sleepbit and represented that development of the mobile app
would take approximately nine to eleven weeks. Id.
at 8. PSI submitted an updated proposal eliminating one
feature of the mobile app and reducing the contract price by
$7, 000. Id. at 9. After the updated proposal was
submitted by PSI, Sleepbit began to gather funding and PSI
did not immediately begin to work on the mobile app.
Id. On June 8, 2015, Jones and Wood spoke about
funding for the mobile app project, and Wood advised Jones
that Sleepbit had not finalized arrangements to secure the
necessary financing. Id.
acquired the funding needed to proceed with development of
the mobile app and, pursuant to the mobile app proposal,
wired 50 percent of contract price to PSI. Id.
Sleepbit primarily interacted with Jones and Andre Doucette,
product director for PSI, and Jones and Doucette represented
to Sleepbit that they were progressing with the mobile app.
Id. at 10. Based on these representations, Sleepbit
made another payment to PSI in the amount of $5, 075, and
Sleepbit sent a Sleepbit device to PSI to use in testing the
mobile app. Id. PSI could not collect data using the
Sleepbit device and Sleepbit sent a dongle to PSI to use for
beta testing. Id. By June 2016, Sleepbit was
finalizing a promotional video for its product based on
PSI's representations concerning the status of the mobile
app. Id. at 11. On July 22, 2018, Sleepbit sent a
payment of $15, 881.25 to PSI, but Sleepbit was starting to
doubt that PSI was making progress with the mobile app.
Id. Sleepbit states that an individual assisting
with the development of the Sleepbit device, Bill Ardrey, was
able to connect to the mobile app using an iPad and he
discovered that the mobile app was not functioning properly.
Id. On November 10, 2016, Ardrey contacted Jones and
asked for assistance in looking at the data saved to mobile
device by the app. Id. Jones responded promptly to
Ardrey's request and informed Ardrey that PSI was able to
get the mobile app working on iOS devices. Id. at
8-9. Difficulties arose with communication between the
Sleepbit device and mobile app, and PSI claimed that any
problems were caused by Sleepbit's device. Id.
at 12. Sleepbit delivered another Sleepbit device to PSI on
January 30, 2017, but the problems with the mobile app were
not getting resolved. Id. Jones and Doucette
allegedly stopped communicating with Wood about the status of
the mobile app. Id.
February 16, 2017, representatives of Sleepbit and PSI held a
conference call, and Jones agreed to send the iOS and Android
source code to Sleepbit. Id. at 13. Sleepbit claimed
that it needed the source code to troubleshoot the alleged
problems with the device identified by PSI, but Sleepbit had
not received the source code as of February 21, 2017.
Id. The source code for iOS devices was produced to
Sleepbit on March 7, 2018, and Sleepbit claims that there
were several problems with the source code. Id. at
13-14. The source code contained “To Do” notes
indicating that the source code was not complete, and it
appeared that PSI had not worked on the source code for
several months. Id. at 14. Sleepbit continued to
request status updates on PSI's work on the mobile app,
and Jones represented to Sleepbit that PSI was successfully
testing the mobile app with the Sleepbit device on iOS and
Android devices. Id. Jones informed Wood that PSI
was “starting to piece together the elements needed to
move to server testing, ” but PSI refused to give an
estimate as to when the mobile app would be ready.
April 4, 2017, Jones advised Wood that PSI was able to get
data off of the mobile app, but the device would return to
the wrong page and it appeared that there was a bug or a
problem with the software code. Id. at 15. Sleepbit
set a firm deadline of April 20, 2017 to submit
Sleepbit's iOS platform to Apple for approval and to
conduct control group testing on iOS and Android platforms.
Id. Jones claimed that there were issues with the
risk assessment that affected how the mobile app was working,
but Sleepbit believed that this was outside the scope of
PSI's work under the parties' contract. Id.
Sleepbit informed PSI that it was responsible only for making
sure that the mobile app correctly converted in accordance
with a risk assessment algorithm. Id. On April 24,
2017, PSI sent builds for the mobile app to Sleepbit, but the
builds did not work for alpha testing and the builds appeared
to be incomplete. Id. at 16. Wood advised Jones of
these problems with the builds, and Jones responded that the
builds were intended for review but not for testing.
Id. Jones claimed that this was PSI's standard
procedure and PSI typically sought customer feedback before
completing the builds. Id. In May 2017, Ardrey began
testing the mobile app and got an error message when he
attempted to download the app onto an iOS device.
Id. On May 15, 2017, Sleepbit directed PSI to stop
working on the mobile app. Id. The parties continued
to communicate over the summer of 2017 and PSI represented
that it was close to finishing the mobile app. Id.
at 17. However, by August 2017, Sleepbit had decided to cease
working with PSI and it intended to hire a new designer for
the mobile app. Id. Sleepbit hired another developer
to complete the mobile app and none of the work performed by
PSI could be used to expedite the new developer's work.
11, 2018, Sleepbit filed this case in Tulsa County District
Court alleging claims of breach of contract, unjust
enrichment, and fraud against PSI, Jones, and Doucette.
Defendants removed the case to this Court on the basis of
diversity jurisdiction. Each defendant has filed a motion to
dismiss the case for lack of personal jurisdiction. Dkt. ##
12, 14, 16. Sleepbit asks the Court to transfer this case to
the Eastern District of Oklahoma based on the forum selection
clause in the confidentiality agreement. Dkt. # 22.
asks the Court to transfer this case to the Eastern District
of Oklahoma, because the confidentiality agreement contains a
forum selection clause requiring claims arising under the
agreement to be litigated in Tulsa County District Court or
the Eastern District of Oklahoma. Dkt. # 22. PSI responds
that plaintiff's claims do not arise out of the
confidentiality agreement, even under a broad interpretation
of that agreement, and Jones and Doucette are not parties to
the confidentiality agreement. Dkt. # 28.
Court must initially determine if the parties' agreement
contains a venue selection clause or a forum selection
clause. Unlike a forum selection clause, a venue selection
clause authorizes, but does not require, litigation in
certain forums and it may permit multiple acceptable forums
for litigation. SBKC Serv. Corp. v. 1111 Prospect
Partners, L.P., 105 F.3d 578, 582 (10th Cir. 1997).
“The existence of a venue selection clause does not
impose an absolute duty nor does it endow a party with an
absolute right to have every dispute between the parties
litigated in the named forum.” Hospah Coal Co. v.
Chaco Energy Co., 673 F.2d 1161, 1163 (10th Cir. 1982).
On the other hand, forum selection clauses are presumed to be
valid and the burden is on the party resisting enforcement to
show that enforcement of the clause would be unreasonable
under the circumstances. CarnivalCruise Lines,
Inc. v. Shute, 499 U.S. 585, 589 (1991); M/S Bremen
v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972); Milk
‘N' More, Inc. v. Beavert, 963 F.2d 1342, 1346
(10th Cir. 1992). The party resisting enforcement of a forum
selection clause “carries a heavy burden of showing
that the provision itself is invalid due to fraud or
overreaching or that enforcement would be unreasonable and
unjust under the circumstances.” Riley v. Kingsley
Underwriting Agencies, Ltd., 969 F.2d 953, 957 (10th
Cir. 1992). The Tenth Circuit has found that forum selection
clauses fall into two general categories - mandatory or
permissive. Excell, Inc. v. Sterling Boiler &
Mechanical, Inc., 106 F.3d 318, 321 (10th Cir. 1997). A
mandatory forum ...