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WCC Cable, Inc. v. G4S Technology LLC

United States District Court, W.D. Virginia, Harrisonburg Division

December 15, 2017

WCC CABLE, INC., Plaintiff,


          Michael F. Urbanski Chief United States District Judge

         This matter comes before the court on a multitude of motions. Defendants G4S Technology LLC ("G4S") and Liberty Mutual Insurance Company ("Liberty Mutual, " and collectively with G4S, "Defendants") have each filed a Motion to Stay, or in the Alternative, Dismiss or Transfer, Based Upon the First-to-File Rule, ECF Nos. 19 & 25, and a Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404(a), ECF Nos. 21 & 27. The motions to stay concerned litigation in the United States District Court for the District of Nebraska, G4S Technology. LLC v. WCC Cable. Inc.. 5:17-cv-00109-MFU (the "Nebraska Action").[1]Additionally, Defendants have each filed a Motion to Dismiss for Failure to State a Claim, ECF Nos. 23 & 29, each of which seeks dismissal of plaintiff WCC Cable, Inc's ("WCC") Complaint, ECF No. 1 (the "Complaint" or "Compl"). On October 10, 2017, on a motion by WCC, the District of Nebraska transferred the Nebraska Action to this court. See G4S Technology. LLC v. WCC Cable. Inc., 8:17CV182, 2017 WL 4564726 (D. Neb. Oct. 10, 2017). For the reasons set forth below, the court will sua sponte CONSOLIDATE this action with the Nebraska Action. The court will GRANT the motions to transfer venue, DENY AS MOOT the motions to stay, and declines to rule on the motions to dismiss, which may be taken up with the District of Nebraska.

         I. Factual and Procedural Background

         G4S entered into a contract with die Virginia Department of Transportation ("VDOT") for the design and construction of a traffic and safety management system for parts of Interstate 64 in Western Virginia (the "Project"). Compl.¶ 7. G4S and WCC entered into a Subcontract Agreement (the "Subcontract"), ECF No. 1 Ex. A, under which WCC agreed to perform a portion of the work G4S was required to perform for VDOT. Compl. ¶ 9; Subcontract § 1 & Ex. A. The Subcontract contained a choice-of-law and forum-selection clause (the "Forum-Selection Clause"):

This Subcontract shall be governed by the law of the State of Nebraska (other than its choice or conflict of laws provisions). Any dispute arising directly or indirectly from this Subcontract shall be resolved solely and exclusively in a state or federal court located in Douglas County, Nebraska.

         Subcontract § 37. While the Subcontract generally appears to be G4S' form contract, the parties appear to have dickered certain terms. For instance, WCC negotiated an accelerated payment schedule, id § 3(f), and, notwithstanding the Nebraska choice-of-law provision, incorporated Virginia Code § 2.2-4354's interest-payment provisions, id § 3(a)2. The parties do not, however, appear to have negotiated the Forum-Selection Clause.

         Further, G4S, as principal, and Liberty Mutual, as surety, entered into a Contract Payment Bond and Contract Performance Bond, ECF No. 1 Ex B. (the "Liberty Mutual Payment Bond"), for the benefit of VDOT and all parties providing labor and materials for the Project. The obligation of the Liberty Mutual Payment Bond is guaranteed jointly and severally by G4S and Liberty Mutual. The Liberty Mutual Payment Bond does not include a forum-selection clause.

         Similarly, WCC, as principal, and Ironshore Indemnity, Inc. ("Ironshore"), as surety, entered into a Performance and Payment Bond, Complaint Ex. A at 49-51, 5:17-cv-00109-MFU (the "Ironshore Payment Bond"), for the benefit of G4S. The obligation of the Ironshore Payment Bond is guaranteed jointly and severally by WCC and Ironshore. The Ironshore Payment Bond does not contain a forum-selection clause.

         The working relationship between WCC and G4S soured, with each side claiming the other side breached the Subcontract. Compare Compl. ¶¶ 14-39 (WCC allegations against G4S), with Complaint, 5:17-cv-00109-MFU, ECF No. 1 Ex. A, ¶¶ 9-14 (the "Nebraska Complaint") (G4S allegations against WCC). According to WCC, G4S improperly sent a "Notice to Cure, " despite WCC performing all work as expeditiously as G4S' mandated working parameters would allow. Compl. ¶ 26. After sending the Notice to Cure, G4S continued to interfere improperly with WCC's work. Compl. ¶ 27. Finally, G4S sent WCC a "Notice of Default and Bond Claim, " to which WCC promptly objected. Compl. ¶¶ 28-29.

         In late 2016, WCC asked G4S to meet in person "in an attempt to avoid protracted legal action." Mem. Opp. G4S' Mot. Stay, ECF No. 32, at 2. G4S agreed, and while the meeting was initially set for January 25, 2017, on January 20, 2017, counsel for G4S asked to postpone the meeting for thirty days, while claiming the delay "was not an intentional delay tactic." Id. at 2-3. The parties rescheduled the meeting for March 9, 2017. Id.

         On March 6, 2017, counsel for G4S confirmed the details of the March 9, 2017 meeting. Id. at 3. Two hours later on the same day, G4S filed the Nebraska Action against WCC and Ironshore in the District Court of Douglas County, Nebraska, yet did not reveal its preemptive filing at the March 9, 2017 meeting. Id. Instead, G4S only revealed it had filed the lawsuit on May 1, 2017. Id. WCC filed its own Complaint in this court on May 25, 2017, setting off the litany of motions before the court.

         II. The Nebraska Action

         A month after G4S revealed it filed the Nebraska Action, WCC and Ironshore removed the action to the United States District Court for the District of Nebraska. Notice of Removal, 5:17-cv-00109-MFU, ECF No. 1. WCC moved to dismiss the Nebraska Complaint on two grounds: improper venue and lack of personal jurisdiction, while Ironshore moved to dismiss under Federal Rule of Civil Procedure 19(b). Motion to Dismiss, 5:17-cv-00109-MFU, ECF No. 6.

         WCC first argued that 28 U.S.C. § 1391(b) did not provide for proper venue in Nebraska. None of the Nebraska defendants were incorporated or headquartered in Nebraska, and the events at issue all took place within the Western District of Virginia. Id. at 5. Under this set of facts, WCC argued that venue was only proper the Western District of Virginia, and certainly not proper in the District of Nebraska. Id.

         WCC next proceeded to argue that the Forum-Selection Clause was invalid. Id. at 6-8. WCC contended that since the Forum-Selection Clause is invalid, the District of Nebraska lacked jurisdiction over WCC. Id. at 9. This argument in large part mirrored WCC's venue discussion in the present Section 1404(a) motions, which the court will analyze below.

         G4S admitted that venue was not proper in the District of Nebraska. See Plaintiffs Brief in Response to Defendants' Motion to Dismiss ("Neb. Opp."), 5:17-cv-00109-MFU, ECF No. 11, at 13. G4S argued that even if venue were improper in the District of Nebraska, the Forum-Selection Clause would mandate that the action be brought in a court in Douglas County, Nebraska. Citing Atlantic Marine Construction Co. v. United States District Court for the Western District of Texas. __ U.S. __, 134 S.Ct. 568, 581 (2013), G4S contended that, notwithstanding Section 1391(b), the District of Nebraska "must enforce a forum selection clause to protect[ the parties'] legitimate expectations and further vital interests of the justice system." Neb. Opp. at 13 (internal quotations omitted) (quoting Atl Marine. 134 S.Ct. at 581). To this end, relying on Servpro Industries. Inc. v. JP Penn Restoration Services. No. 3-16-0298, 2016 WL 5109947 (M.D. Tenn. Sept. 20, 2016), G4S claimed that WCC necessarily waived its objections to venue by agreeing to the Forum-Selection Clause. Neb. Opp. at 15.

         The District of Nebraska rejected G4S' arguments. The District of Nebraska found Servpro distinguishable, as, unlike the contract in Servpro. the Subcontract did not contain an express venue-waiver clause. G4S Tech.. 2017 WL 4564726, at *3. Instead, the District of Nebraska found Atlantic Marine to be on point: "An application of Servpro's holding in situations where there is no express waiver of objections to venue would allow virtually all forum-selection clauses to override the § 1391 venue analysis-precisely what Atlantic Marine prohibits." Id. The District of Nebraska held that Atlantic Marine required venue to be analyzed under Section 1391(b), and "[t]he presence of a forum-selection clause has no bearing on the propriety of venue." Id. at *2.

         Because venue was not proper under Section 1391(b), the District of Nebraska transferred the Nebraska Action to this court. Id. at *3. The District of Nebraska held open the possibility that this court may, after undertaking a Section 1404(a) analysis, determine . that a transfer of the Nebraska Action back to the District of Nebraska would be appropriate. Id.

         III. Consolidation

         When "actions before the court involve a common question of law or fact, " Federal Rule of Civil Procedure 42 allows the court to "consolidate the actions." Fed.R.Civ.P. 42(a)(2). Consolidation is a "managerial device" that "makes possible the streamlined processing of groups of cases, often obviating the need for multiple lawsuits and trials." 8 Moore's Federal Practice § 42.10[l][a]. The court has wide discretion to consolidate actions. A/S J. Ludwig Mowinckles Rederi v. Tidewater Constr. Co.. 559 F.2d 928, 933 (4th Cir. 1977). That discretion extends to consolidating actions sua sponte. 8 Moore's Federal Practice § 42.10[2][a]-[b]; see also Beach Mart. Inc. v. L & L Wings. Inc.. Nos. 2:11-CV-44-F & 2:14-CV-52-F, 2014 WL 4635450, at *1 (E.D. N.C. Sept. 15, 2014) (consolidating cases sua sponte).

         When exercising its discretion to consolidate, the court must consider:

whether the specific risks of prejudice and possible confusion were overborne by the risk of inconsistent adjudications of common factual and legal issues, the burden on parties, witnesses and available judicial resources posed by multiple lawsuits, the length of time required to conclude multiple suits as against a single one, and the relative expense to all concerned of the single-trial, multiple-trial alternatives.

Arnold v. E. Ait Lines. Inc., 681 F.2d 186, 193 (4th Or. 1982); see also Antoine v. Amick Farms. LLC. Civ Nos. ELH-16-2444 & ELH-16-2938, 2017 WL 68646, at *14 (D. Md. Jan. 6, 2017) (consolidating actions after considering "duplication of discovery" and "trial testimony, " "conservation] [of] judicial resources, . . . reduction] [of] expenses associated with trial, " and the "inconvenience to witnesses for both sides").

         As the Nebraska Action has been transferred to this court, the court now has before it two actions that involve the same ultimate sets of facts, law, and witnesses. G4S' Nebraska Complaint reads like a counterclaim to WCC's Complaint. Discovery and trial testimony in the two actions will almost assuredly be duplicative, as, at base, both this action and the Nebraska Action ask the same question: Which party, if either, breached the Subcontract? Not only do the two actions "present a common question of either law or fact, " Fed.R.Civ.P. 42(a), all or nearly all questions of law or fact are shared between the two actions.

         On the one hand, because "the cases constitute mirror images of one another, " the court finds that there is no risk of prejudice or confusion if the cases are consolidated. Certain Interested Underwriters Subscribing to Policy No. B1262P20017013 v. Am. Realty Advisors. Nos. 5:16-CV-940-FL & 5:17-CV-74-FL, 2017 WL 1331245, at *2 (E.D. N.C. Apr. 11, 2017). On the other hand, if the court does not consolidate the cases, there will exist a significant risk that the parties will be subject to inconsistent adjudication of the same issues, duplicative discovery (and costs incurred in discovery), and a waste of the judicial system's time and money. See Id. The court therefore finds that this case should be consolidated with the Nebraska Action for all purposes.

         The question remains how the court should treat the dueling complaints. Consolidation "does not merge the suits into a single cause, or change the rights of the parties, or make those who are parties in one suit parties in another." Johnson v. Manhattan Ry. Co.. 289 U.S. 479, 496-97 (1933): see also Intown Props. Mgmt. Inc. v. Wheaton Van Lines. Inc.. 271 F.3d 164, 168 (4th Cir. 2001) (applying Johnson). "It is generally accepted ; that consolidated cases 'retain their separate characters.'" Yelverton v. Edmundson, Nos. 5:15-CV-00134-F & 5:16-CV-00031-F, 2017 WL 414175, at *1 (E.D. N.C. Jan. 30, 2017) (quoting Ramirez-Rodriguez v. Wal-Mart Stores E.. L.P.. No. 5:12-CV-585-BO, 2013 WL 5885459, at *2 (E.D. N.C. Oct. 31, 2013)); see also Am. Realty Advisors. 2017 WL 1331245, at *2. Yet, other than the identity of the bondholders in the each action, it is difficult to identify what the "separate character" of each action is. As the court has already noted, each complaint is essentially a mirror of the other complaint. It is clear that in the absence of dueling complaints in dueling actions, G4S' claims against WCC in the Nebraska Action would otherwise be compulsory counterclaims in this action, and WCC's claims against G4S in this action would otherwise be compulsory counterclaims in the Nebraska Action. See Fed. R. Civ. P. 13(a).

         Additionally, the court is cognizant that it can order consolidated pleadings and appoint one of the parties as plaintiff in the consolidated action. While the court will ultimately hold that Nebraska is the only proper forum for this action, the court expresses its deep concern about G4S' litigation tactics in Nebraska. From the record before the court, it appears that G4S misled WCC into thinking G4S was a willing partner in settlement negotiations when, in fact, G4S purposefully engaged in dilatory tactics to gain an unfair advantage in the dispute. Further, it appears that G4S deliberately withheld the existence of the Nebraska Action. On March 6, 2017, G4S filed the Nebraska Action a scant two hours after confirming the details of the March 9, 2017 meeting with WCC. G4S made no mention of an anticipated filing. Nor did G4S reveal the already-filed Nebraska Action to WCC at the March 9, 2017 meeting. The court refuses to condone G4S' actions.

         With this in mind, the court appoints WCC as plaintiff and construes its Complaint as the lead complaint in the consolidated action. The court construes G4S' Nebraska Complaint as a counterclaim in the consolidated action. See Norfolk & W. Ry. Co. v. Bhd. of R.R. Signalmen. 164 F.3d 847, 851 (4th Cir. 1998) (noting that related cases were consolidated and the original claims of one consolidated defendant "were taken as a counterclaim" in the consolidated action); see also Norfolk & W. Ry. Co. v. Bhd. of R.R. Signalmen. 11 F.Supp.2d 833, 836 (W.D. Va. 1998) ("That action was subsequently transferred to this Court, docketed . . ., and consolidated with the instant case ... as a compulsory counterclaim to plaintiff railroads' complaint."), rev'd in part on other grounds. 164 F.3d 847 (1998).

         As provided for in the accompanying order, this action and the Nebraska Action shall proceed for purposes of discovery, dispositive motions, and trial under one consolidated case number, 5:17-cv-00052 (the "Consolidated Action"). Given the present posture of the case, the following parties are parties to the Consolidated Action:

• WCC, as plaintiff and counter-defendant;
• G4S, as defendant and counter-plaintiff;
• Liberty Mutual, as defendant; and
• Ironshore, as third-party defendant.

         IV. Venue and Forum Statutes

         The patties' disagreements on the motions to transfer ultimately involve the interplay between three statutes: 28 U.S.C. § 1391(b), 28 U.S.C. § 1406(a), and 28 U.S.C. § 1404(a). Section 1391 governs proper venue, and provides:

A civil action may be brought in-
(1) a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located;
(2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated; or
(3) if there is no district in which an action may otherwise be brought as provided in this section, any judicial district in which any defendant is subject to the court's personal jurisdiction with respect to such action.

28 U.S.C. § 1391(b). Section 1391(b) does not take the presence of a forum-selection clause into account. See Atl. Marine, 134 S.Ct. at 577 ("Whether the parties entered into a contract containing a forum-selection clause has no bearing on whether a case falls into one of the categories of cases listed in § 1391(b).").

         Section 1406(a) provides: "The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought." 28 U.S.C. § 1406(a). A court may only invoke Section 1406(a) when venue is "wrong" under Section 1391(b)-that is, "a district other than 'those districts in which Congress has provided by its venue statutes that the action may be "brought."'" Atl. Marine. 134 S.Ct. at 578 (quoting Van Dusen v. Barrack. 376 U.S. 612, 618 (1964)).

         Finally, Section 1404(a) provides: "For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented." 28 U.S.C. § 1404(a). Section 1404(a) is broader than Section 1406(a), and allows a court to transfer a case "to any other district where venue is proper ... or to any district to which the parties have agreed by contract or stipulation." Atl. Marine. 134 S.Ct. at 579.

         V. The Forum-Selection Clause

         Defendants base their motions to transfer solely on the Forum-Selection Clause. As the District of Nebraska determined, this district is the only district in which a substantial part of the events underlying this suit occurred. G4S Tech., 2017 WL 4564726, at *2. In the absence of the Forum-Selection Clause, it is unquestionable that the Consolidated Action should be heard here. It follows that if the Forum-Selection Clause is invalid, as WCC suggests, then Defendants' motions to transfer necessarily fail. The court finds, however, that the Forum-Selection Clause is valid.[2]

         A. Enforceability of Forum-Selection Clause

         Forum-selection clauses have historically been disfavored. See M/S Bremen v. Zapata Off-Shore Co.. 407 U.S. 1, 9 (1972). The Bremen, which instructed federal courts to recognize forum-selection clauses as "prima facie valid and [to] be enforced unless enforcement is shown by the resisting party to be 'unreasonable' under the circumstances, " marked a sea change in federal law. Id. at 10. This is because "enforcement of valid forum- selection clauses, bargained for by the parties, protects their legitimate expectations and furthers vital interests of the justice system." Stewart Org, v. Ricoh Corp., 487 U.S. 22, 33 (1988) (Kennedy, J., concurring).

         The Bremen recognized that an otherwise-valid forum-selection clause may be invalidated if it is unreasonable. Interpreting the Supreme Court's analysis in The Bremen, the Fourth Circuit has identified four factors that may render a forum-selection clause invalid:

(1) [its] formation was induced by fraud or overreaching; (2) the complaining party "will for all practical purposes be deprived of his day in court" because of the grave inconvenience or unfairness of the selected forum; (3) the fundamental unfairness of the chosen law may deprive the plaintiff of a remedy; or (4) [its] ...

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