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Innovative Technology Distributors, LLC v. Oracle America

April 25, 2011

INNOVATIVE TECHNOLOGY DISTRIBUTORS, LLC , PLAINTIFF,
v.
ORACLE AMERICA, INC AND ORACLE CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Linares, District Judge.

NOT FOR PUBLICATION CLOSED

OPINION

This matter comes before the Court on Defendants', Oracle America, Inc. and Oracle Corporation (collectively "Oracle" or "Defendants"), motion to dismiss Plaintiff Innovative Technology Distributors, LLC's ("ITD" or "Plaintiff") Complaint in its entirety for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3), or, in the alternative, transferring this action to the United States District Court for the Northern District of California, pursuant to 28 U.S.C. § 1404. The Court has considered the submissions of the parties and decides this matter without oral argument pursuant to Rule 78 of the Federal Rules of Civil Procedure. For the reasons set forth below, the Court declines to dismiss Plaintiff's Complaint but grants Defendants' motion to transfer.

I. BACKGROUND

ITD is a privately held limited liability company based in Edison, NJ. Complaint ("Compl.") ¶ 9. On June 29, 2005, ITD entered into an agreement with Sun Microsystems, Inc. "Sun"), a corporation with its principle place of business in California, whereby ITD was permitted to order products and/or services from Sun under the terms specified in the agreement (the "Sun-ITD Agreement"). Compl. ¶¶ 10-11. As a retailer of Sun's information technology products, ITD purchased Sun's hardware and integrated it with other hardware and software components, and resold those products to end user customers. Compl. ¶ 17; Declaration of Sean J. Kirby ("Kirby Decl."), Ex. C at Ex. A.

The Sun-ITD Agreement is comprised of two documents: the General Terms and the iForce Business Terms Exhibit. The "General Terms" contract was a form marked as Sun's "US_Template" and contained blanks reserved for the reseller's name, address, the contract's reference number, and the seller's signature. Kirby Decl., Ex. C at Ex. A. Section 8 of the General Terms, entitled Dispute Resolution, provides that:

The parties will use reasonable efforts to resolve any dispute arising out of the General Terms of any Exhibit through a meeting of appropriate managers from each party. If the parties are unable to resolve the disputes, either party may escalate the dispute to its executives. If an executive level meeting fails to resolve the dispute within thirty (30) days after escalation, either party may seek legal relief.

Id.., Ex. C at Ex. A at § 8. Section 9.1 further provides that "[a]ll disputes will be governed by the laws of California. The venue for litigation will be the appropriate courts located in Santa Clara County, California." Id., Ex. C at Ex. A at § 9.1. Section 9.4 provides that:

[n]either the General Terms nor any Agreement is intended to create a partnership, franchise, joint venture, agency, or a fiduciary or employment relationship. Neither party may bind the other party or act in a manner which expresses or implies a relationship other than that of independent contract.

Memorandum of Law in Support of Defendants' Motion to Dismiss ("Def. Brief") at 5.

The Sun-ITD Agreement was executed in New Jersey. John O'Brien, who was in 2005 employed as ITD's General Counsel on a contract basis, executed the agreement on behalf of ITD. Id.; Plaintiff's Brief in Opposition to Defendants' Motion to Dismiss ("Pl. Brief") at 8. Defendant maintains that the terms of the contract were negotiated between the parties. Def. Brief at 3. However, Plaintiff asserts that the "General Terms" Contract was not negotiable, and in fact ITD was not permitted to change any of the terms in the form contract. Pl. Brief at 8.

On September 25, 2009, Sun and ITD executed Amendment 1 to the Sun-ITD Agreement ("Amendment 1"). Kirby Decl., Ex. C at Ex. B. Amendment 1 provides that, except as otherwise provided by Amendment 1, all terms of the Sun-ITD Agreement remain unchanged and in full force and effect. Def. Brief at 5. By its terms, Amendment 1 incorporated the Dispute Resolution and Venue Provisions contained in the original Sun-ITD Agreement. Id.

In January 2010, Defendant Oracle America acquired Sun and succeeded its rights under the Sun-ITD Agreement. Compl. ¶¶ 10-11, 52. At the time of the acquisition, Sun's former head of sales noted to the press, "We built a great franchise, we built an awesome franchise at Sun Microsystems . . ." Id. ¶ 52. Sun was renamed Oracle America, Inc. Def. Brief at 8.

On July 1, 2010, Oracle sent a notice of termination to ITD on July 1, 2010. Compl. ¶ 3. However, Oracle then retracted the notice of termination stating it was "sent in error." Id. On September 30, 2010, Oracle sent another notice of termination effective December 31, 2010. Compl. ¶ 77. This notice purported to terminate all of the existing agreements between ITD and Oracle, but Oracle represented to ITD that it would send a new contract to cover ITD's existing business structure that would go into effect after December 31, 2010. Compl. ¶ 78. Plaintiff claims that it was during this period, that Oracle "effectively terminated ITD" by: (1) eliminating the discounts that Sun had previously provided to ...


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