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Netstandard Inc. v. Citrix Systems, Inc.

United States District Court, D. Kansas

June 21, 2017

NETSTANDARD INC., Plaintiff,
v.
CITRIX SYSTEMS, INC., Defendant.

          MEMORANDUM AND ORDER

          CARLOS MURGUIA United States District Judge.

         Plaintiff Netstandard, Inc. brought this action for breach of contract and various torts against defendant Citrix Systems, Inc., claiming that software that plaintiff purchased from defendant did not perform as advertised, causing damages exceeding $4 million. Defendant filed Defendant Citrix Systems, Inc.'s Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404(a) (Doc. 30). The parties agreed to conduct discovery relevant to the motion before completing briefing. The motion is now ripe, and defendant has also filed a related motion-Citrix Systems, Inc.'s Motion to Strike Declaration of Walt Lane (Doc. 76). For the following reasons, the court denies both motions.

         Defendant wants this case heard in the Southern District of Florida. Defendant bases its transfer request on a forum selection clause contained in two End User License Agreements (“EULAs”). Defendant argues alternatively that (1) plaintiff's contract was subject to defendant's EULAs or (2) plaintiff had notice that the software was subject to the EULAs.

         The federal statute governing transfer of venue 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.” 28 U.S.C. § 1404(a). The intent of § 1404(a) is to “place discretion in the district court to adjudicate motions for transfer according to an individualized, case- by-case consideration of convenience and fairness.” Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d 1509, 1516 (10th Cir. 1991) (citations omitted). “The party moving to transfer a case pursuant to § 1404(a) bears the burden of establishing that the existing forum is inconvenient.” Id. at 1515 (citation omitted).

         The analysis, however, changes when a forum selection clause is involved. A forum selection clause will be enforced, absent a strong showing that transfer would be “unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching.” M/S Bremen v. Zapata OffShore Co., 407 U.S. 1, 10, 15, (1972) (citation omitted); Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Tex., 134 S.Ct. 568, 581 (2013) (“When the parties have agreed to a valid forum-selection clause, a district court should ordinarily transfer the case to the forum specified in that clause.”). In fact, the Supreme Court has gone so far as to state, “Only under extraordinary circumstances unrelated to the convenience of the parties should a § 1404(a) motion be denied.” Id. Of course, this presupposes that the parties in fact agreed to provisions including a forum selection clause-something that plaintiff denies here. Plaintiff claims that the EULAs were not part of the contract to purchase software; instead, they were a request to amend the contract, which plaintiff never accepted. And plaintiff further claims that it had no notice that the EULAs would apply to this contract. The court addresses each of these arguments below.

         When was the contract formed?

         The first question concerns when the contract was formed. The Uniform Commercial Code (“UCC”) applies to the sale of the software. See Wachter Mgmt. Co. v. Dexter & Chaney, Inc., 144 P.3d 747, 750 (Kan. 2006) (“Computer software is considered to be goods subject to the UCC even though incidental services are provided along with the sale of the software.”). Under Kan. Stat. Ann. § 84-2-204, a contract for the sale of goods is formed “in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.” Wachter, 144 P.3d at 751.

         Here, there are several key events evidencing when plaintiff entered into the contract to purchase software through Redapt (who was defendant's authorized reseller).

June 25, 2013: Quote from Redapt to Leo Hart (plaintiff s employee) for $101, 155.
June 28, 2013: Mr. Hart told defendant and Redapt that plaintiff needed a 35% discount on the software if they were going to complete the purchase.
June 28, 2013: Second quote from Redapt to Mr. Hart for $93, 325. The quote included an itemized list of software, including the quantity, time period for execution, and cost for incidental maintenance. Although this quote was dated June 28, plaintiff did not receive it that day.
June 28, 2013: Christopher Austin, an employee of defendant, emailed Mark Herron (Redapt's V.P. for Technology Solutions) and Mr. Hart (with plaintiff) to state that he did get the 35% discount that plaintiff requested on the products, but said that defendant would not discount maintenance beyond 25%. Mr. Austin encouraged Mr. Hart to “work out the numbers with Mark [Herron (Redapt)] and get the [purchase order] over to Redapt as soon as possible.”
June 28 or 29, 2013: Mr. Herron received notification by e-mail and a phone call that plaintiff had agreed to purchase the software.
June 29, 2013: Defendant claims that Ingram (the distributor) registered plaintiff for the purchase of the software in defendant's system under the Enterprise License Program. Defendant claims that this would have automatically generated a Registration Notice to Mr. Hart, which notified him that placing a purchase order with Redapt constituted an acceptance of the EULAs, with a direct hyperlink to the EULAs.
• June 29, 2013: Defendant sent Mr. Hart the Citrix License Access Code Delivery email, which contained the License Access Code that allowed plaintiff to download the software. The email says, “Dear Citrix Customer, Thank you for your recent purchase.” Testifying in a deposition about this email, Steward Byrne (defendant's corporate counsel for all commercial transactions in the Americas) stated that “the purchase had already occurred.” Although there is no evidence showing the date that plaintiff ...

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