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Bella And Rosie Rock, LLC v. We Rock Spectrum, LLC

United States District Court, D. New Jersey

February 13, 2018




         I. Introduction

         This matter comes before the Court on Defendants' motion to dismiss or transfer, D.E. 5. The Court has considered the motion, opposition, reply, and applicable law. Pursuant to Federal Rule of Civil Procedure 78, the Undersigned did not hear oral argument and has considered this matter on the papers. For the reasons below, the Court will grant Defendants' motion and transfer this case to the United States District Court for the Central District of California.

         II. Background

         This matter arises from a franchise agreement between Defendant We Rock the Spectrum LLC (the franchisor) and Plaintiff Bella and Rosie Rock LLC (“BRR”) (the franchisee), to open and operate a specialty gym for special needs children at 10 Franklin Turnpike, in Waldwick, New Jersey. We Rock The Spectrum is a California limited liability company and its sole member is Defendant Dina Kimmel (“Kimmel”). Defendant WRTS, LLC is a California limited liability company whose sole member is also Kimmel. Plaintiff alleges that WRTS, LLC and We Rock The Spectrum have common ownership, and that We Rock The Spectrum is the successor-in-interest to WRTS, LLC. Complaint, D.E. 1, at ¶ 5.[1] Plaintiff alleges that Gail Fields is a WRTS representative who at one point owned a WRTS facility in Boca Raton, Florida. Id. at ¶¶ 30, 31. Plaintiff further alleges that Defendant My Brother Rocks the Spectrum is a California non-profit corporation. Id. at ¶ 3.

         Defendant Kimmel opened up the first gym, called We Rock The Spectrum, in California in September 2010. Plaintiff alleges that WRTS began to sell franchises to operate children's gyms under the same name in October 2013. Id. at ¶¶ 11-14.

         On January 6, 2016, BRR and WRTS entered into a Franchise Agreement to operate a We Rock The Spectrum gym in Bergen County, New Jersey. Id. at ¶ 19; see also Franchise Agreement, Declaration of Dina Kimmel (“Kimmel Decl.”) Ex. A, D.E. 5-8 (“Franchise Agreement”). Dina Kimmel executed the Franchise Agreement on behalf of We Rock The Spectrum LLC. Kim Casey and Arnaud Casey executed the Franchise Agreement on behalf of BRR. Franchise Agreement, D.E. 5-8, at 49. The Franchise Agreement had a mediation clause which provided in pertinent part as follows:

Mediation. Franchisor and Franchisee pledge to attempt first to resolve any dispute pursuant to mediation conducted in accordance with the Commercial Mediation Rules of the AAA unless Franchisor ad Franchisee agree on alternative rules and a mediator within fifteen (15) days after either party first gives notice of mediation. Mediation shall be conducted in Los Angeles County, California, and shall be conducted and completed within forty-five (45) days following the date either party first gives notice of mediation . . . .

         Franchise Agreement § 23.1, at 45. The Franchise Agreement also designated California as the forum for any litigation, and provided that California law would govern any such dispute. That clause provided in pertinent part as follows:

Judicial Relief. Franchisor and Franchisee agree that (i) all disputes arising out of or relating to this Agreement shall be brought in the Superior Court of California, County of Los Angeles, or the United States District Court of the Central District of California (“Courts”). To the fullest extent that the parties may do so under applicable law, the parties waive the defense of inconvenient forum to the maintenance of an action in these Courts and agree not to commence any action of any kind except in these Courts. California law shall govern the construction, interpretation, validity and enforcement of this Agreement, except to the extent the subject matter of the dispute arises exclusively under federal law, in which event federal law shall govern. . . .

Id. § 23.2, at 45-46.

         The Bergen County, New Jersey We Rock The Spectrum location was set to open on August 13, 2016. Complaint, D.E. 1, at ¶ 35. But it appears that almost immediately, the relationship between the parties soured. Plaintiff alleges that Kimmel and Field came to New Jersey to assist BRR with the opening of the gym, but that Kimmel was “unhelpful, demeaning and abusive” to the Caseys. Id. at ¶¶ 35-36.

         On September 2, 2016, WRTS served BRR with a default notice claiming BRR committed numerous breaches of the Franchise Agreement. Id. at ¶ 40; see also Default Notice, Exhibit A to Certification of Kim Casey, (“Casey Cert.”), D.E. 6-2. These breaches include claims that BRR did not have a licensed contractor, that BRR was not in compliance with the Americans with Disabilities Act, and that BRR did not pay $1, 500 to WRTS for Kimmel's travel expenses. Id. at ¶ 40. On September 28, 2016, WRTS served a Notice of Breach and Opportunity to Cure on BRR. See Notice of Breach, Exhibit A to Declaration of Kasey Diba (“Diba Decl.”), D.E. 5-3. Plaintiff disputes those breaches, and claims that WRTS breached the Franchise Agreement by “failing to provide meaningful email and internet marketing support for the grand opening” and generally failing to seek local media coverage or provide support and training. Id. at ¶¶ 41, 132.

         On October 13, 2016, BRR's counsel sent a notice of rescission to WRTS's counsel. Certification of Kim Casey, July 24, 2017, Ex. B, D.E. 6-3 (notice of rescission). The notice stated that rescission was effective at 11:59 p.m. on October 13, 2016. It also demanded damages, including but not limited to any money that BRR had paid Defendants. According to BRR, Defendants failed to contest the rescission letter, and instead pursued mediation. In fact, WRTS petitioned the American Arbitration Association (“AAA”) to pursue mediation, consistent with § 23.1 of the Franchise Agreement. See Diba Decl., D.E. 5-2, at ¶¶ 4-7. Although it appears that Plaintiff initially agreed to mediate, it reconsidered and filed the instant action in lieu of engaging in the AAA proceeding. See Casey Cert., D.E. 6-1, ¶ 15. BRR filed this action on May 19, 2017. See Complaint, D.E. 1.

         The Complaint alleges that Defendants made myriad false representations designed to induce Plaintiffs to enter into the Franchise Agreement, made other false representations after the parties had entered into the agreement, and otherwise breached their obligations under the Franchise Agreement. Plaintiffs allege violations of the California Franchise Investment Law, Cal. Corp. Code §§ 31200-312002, the California Business and Professions Code, Cal. Bus. and Prof. Code § 17200 et seq., the New Jersey Franchise Practices Act, N.J.S.A. 56:101 et seq. (“NJFPA”), and common law.

         Defendants now move to either dismiss or transfer this matter based on forum non conveniens and 28 U.S.C. §1404(a). See generally Movant's Brief (“Movant Br.”), D.E. 5-1. Specifically, Defendants argue that (i) the forum selection clause is enforceable; and (ii) even if the forum selection clause is not enforceable, a traditional balancing of the factors under § 1404(a) favors transfer. BRR opposes the motion, and contends that because it rescinded the Franchise Agreement, the forum selection clause is unenforceable. See generally Opposition Brief (“Opp'n Br.”), D.E. 6.

         III. Discussion

         Title 28 Section 1404(a) of the United States Code provides that for the “convenience of the 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.” Section 1404(a) exists to “prevent the waste of time, energy and money and to protect litigants, witnesses and the public against unnecessary inconvenience and expense.” Ricoh Co. v. Honeywell, Inc., 817 F.Supp. 473, 479 (D.N.J. 1993) (internal citations and quotations omitted). The Third Circuit has recognized that the moving party bears the burden of establishing the propriety of transferring the case “with any affidavits, depositions, stipulations, or ...

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