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Huntington Learning Center, Inc. v. Read It., N.C. , Inc.

United States District Court, Third Circuit

May 30, 2013

HUNTINGTON LEARNING CENTER, INC., Plaintiff,
v.
READ IT., N.C. , INC., WALLACE EDUCATIONAL HOLDINGS, L.L.C., SARA WALLACE, ASHLEY T. WALLACE, BRENDA WALLACE, and WILLIE T. WALLACE, Defendants

OPINION

WILLIAM H. WALLS, Senior District Judge.

Defendants Read It, N.C. , Wallace Educational Holdings, L.L.C, Sara Wallace, Ashley T. Wallace, Brenda Wallace and Willie T. Wallace ("Defendants") move to dismiss for improper venue under Federal Rules of Civil Procedure 12(b)(3), and lack of personal jurisdiction under Rule 12(b)(2). In the alternative Defendants request transfer to the United States District Court for the District of North Carolina under 28 U.S.C. § 1404(a). Defendants' motion to dismiss and request for transfer are denied.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff Huntington Learning Centers, Inc. ("HLC") is a franchisor of academic tutoring centers, with over two hundred privately owned or corporate-run franchisees nationwide. Compl. ¶ 13. HLC is a New Jersey corporation organized and existing under the laws of Delaware. Id. ¶ 2. Its principal place of business is in Oradell, New Jersey. Id.

Defendant Wallace Educational Holdings, L.C.C. ("WEH") is a limited liability company created to enter into a franchise agreement with HLC. Id. ¶ 8; Mot. to Dismiss, 3. It is owned by Defendants Ashley, Willie and Sara Wallace and is organized and exists under the laws of North Carolina. Compl. ¶ 8.

On or about August 24, 2006, WEH and HLC executed Huntington Learning Centers' Franchise Agreement ("WEH Franchise Agreement") whereby HLC granted WEH the right to establish and operate a HLC Franchise in Wilmington, North Carolina. Id. ¶ 24, Ex. B. Section 24.1.2 of the WEC Franchise Agreement contained a forum selection clause:

Except as otherwise provided herein, any action, whether or not arising out of or relating to, this Agreement, whenever and wherever incurred, whether vested or contingent, whether in law or in equity, whether directly representatively, derivatively or in any other capacity, brought by you or any Franchisee Member against the Franchisor shall be brought in the judicial district in which the Franchisor has, at the time of commencement of such action, its principle [sic] place of business, as described in Paragraph 1 above. The Franchisor shall have the right to commence an action against you in any court of competent jurisdiction. All such parties hereby waive all objections to personal jurisdiction or venue for the purposes of this Paragraph 24.1.2, and such parties agree that nothing in this Paragraph 24.1.2 shall be deemed to prevent any party to such action from removing the action from state to federal court. You acknowledge and agree that this Agreement is made in New Jersey and is to be performed in part through services rendered to you in New Jersey.

Id., Ex. B.

In the same clause, Defendants agreed to "waive all objections to personal jurisdiction or venue." Id. Defendants Sara Wallace, Ashley T. Wallace, Brenda Wallace, and Willie T. Wallace each personally guaranteed the obligations arising under the Franchise Agreement. Compl. ¶ 25, Ex. B. Defendants are all citizens of North Carolina. Id. ¶ ¶ 4-8.

On June 28, 2009, Defendants Ashley Wallace, Willie Wallace, and Sara Wallace formed the corporation Read It, N.C. , Inc. ("Read It") for the purpose of entering into another franchise agreement with HLC. Id. ¶ 7; Mot. to Dismiss, 5. Organized and existing under the laws of North Carolina, Compl. ¶ 7, on July 22, 2009, Read It entered into a franchise agreement with HLC ("Read It Franchise Agreement") whereby HLC granted Read It the right to establish and operate a HLC Franchise in Wilmington, North Carolina. Id., Ex. C. Under Section 27.1.2 of the Read It Franchise Agreement Read It and HLC agreed to an identical provision as the WEC Franchise Agreement forum selection clause. Id. Defendants again waived personal jurisdiction and venue challenges. Id. Under Exhibit A of the Read It Franchise Agreement, Defendants Sara, Ashley, Brenda, and Willie Wallace again personally guaranteed the obligations arising under the Franchise Agreement. Id. Ex. C. This guarantee agreement contained another forum selection provision with substantively the same venue and personal jurisdiction clauses as the WEC and Read It Franchise Agreement forum selection provisions. Id. Ex. A, 2-3.

On June 14, 2012, HLC filed a complaint against Defendants instituting an action for trademark infringement and breach of contract in this Court. ECF No. 1. On October 12, 2012, Defendants filed a motion to dismiss alleging lack of personal jurisdiction, improper venue, and requesting a transfer to a Federal District Court in North Carolina. ECF No. 9. HLC opposed on January 22, 2013. ECF No. 19.

DISCUSSION

I. Personal Jurisdiction

"Once the defendant raises the question of personal jurisdiction, the plaintiff bears the burden to prove, by a preponderance of the evidence, facts sufficient to establish personal jurisdiction." Carteret Sav. Bank, FA v. Shushan, 954 F.2d 141, 146 (3d Cir. 1992). Absent an evidentiary hearing, the plaintiff need only demonstrate a prima facie case of jurisdiction to defeat a motion to dismiss. See id. at 146 n.1 (citing Marine Midland Bank v. Miller, 664 F 2d. 899, 904 (2d Cir. 1981)). This court "must accept ...


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