Harpak-Ulma Packaging, LLC v. Digi Eur. Ltd.

565 F.Supp.3d 17

HARPAK-ULMA PACKAGING, LLC, Plaintiff,

v.DIGI EUROPE LIMITED, Defendant.

Civil Action No. 21-10511-JCB

United States District Court, D. Massachusetts.

Filed October 4, 2021

George W. Skogstrom, Jr., Shatilla Shera B. Cairns, Schlossberg, LLC, Braintree, MA, for Plaintiff.

Daniel J. Cloherty, Victoria L. Steinberg, Todd & Weld, Boston, MA, for Defendant.

ORDER DEFENDANT'S MOTION TO DISMISS ¹

[Docket No. 9]

Boal, M.J.

Defendant Digi Europe Limited ("Digi") has moved to dismiss this case on grounds of forum non conveniens. Docket No. 9. I heard oral argument on September 22, 2021. For the following reasons, I deny the motion.

I. FACTUAL BACKGROUND ²

A. The Parties

Plaintiff Harpak-Ulma Packaging, LLC ("HUP") is a Delaware limited liability company with a principal place of business in Taunton, Massachusetts. Complaint at ¶ 1. HUP develops, markets, distributes, and sells automated packaging solutions to food, medical, pharmaceutical, and consumer products manufacturers. Id. at ¶ 3.

Digi is an England-based supplier of a wide range of commercial products (including scales, registers, printers, vending, and commercial equipment) for businesses operating in the retail, food, hospitality, and logistics industries. Affidavit of Oliver Richardson in Support of Defendant's Motion to Dismiss the Complaint on Forum Non Conveniens Ground [sic] (Docket No. 11) ("Richardson Aff.") at ¶¶ 2, 3.

B. The Parties’ Agreement

On or about October 18, 2013, HUP and Digi entered into an Exclusive Agreement (the "Agreement"), pursuant to which HUP was appointed as Digi's exclusive distributor for certain Digi products in North America, including Canada. Complaint at ¶ 5; see also Richardson Aff. at ¶ 4; Affidavit of Linda Harlfinger in Support of Plaintiff's Opposition to Defendant's Motion to Dismiss the Complaint on Forum Non Conveniens Grounds (Docket No. 18-2) ("Harlfinger Aff.") at ¶ 3.

Section 3 of the Agreement provided for "an initial term of three years and thereafter shall continue without limit in time unless terminated by either party by written notice to the other of not less than 180 days." Docket No. 11 at 9; see also Complaint at ¶ 9. In the event of termination of the Agreement by Digi, Digi was to pay "a termination fee equal to an amount that is equal to [HUP's] gross profit margin (as defined by GAAP) on the sale of the Products made by [HUP] to [HUP's] customers for the 24 month period immediately prior receipt of a termination notice." Docket No. 11 at 18. However, Digi was not obliged to pay this termination fee if "in the year of this Agreement ... most recently ended before [Digi's] delivery of notice of termination under Section 3, [HUP] failed to purchase a dollar amount of Products equal or greater to the Minimum Amount for that contract year." Id. Section 10 of the Agreement defines the "Minimum Amount" as an amount that either is agreed upon by the parties or is otherwise calculated based upon a 5% increase from the prior year's purchase levels. See Docket No. 11 at 14.

The Agreement provides that it "shall be governed by the laws of England and the parties agree to submit to the non-exclusive jurisdiction of the Courts in England." Docket No. 11 at 23.

C. The Parties’ Dealings Under The Agreement

Digi and HUP conducted business in accordance with the Agreement between October 2013 until approximately October 2020. Richardson Aff. at ¶ 9; Harlfinger Aff. at ¶ 8. During this period, HUP sent purchase orders from its principal office in Taunton, Massachusetts to Digi. Harlfinger Aff. at ¶ 8. Decisions over which items to purchase and the quantity of items to purchase were made from HUP's principal office. Id. The purchase orders and related emails and correspondence were initiated in Massachusetts. Id.

Under the Agreement, HUP could place orders for either "standard production products" or "non-standard production products." Docket No. 11 at 10. Standard production products are "off the shelf" and maintained as part of HUP's normal inventory as a distributor. Harlfinger Aff. at ¶ 14. Non-standard production products are special order items. Id. Pursuant to the Agreement, orders for standard production products were to be automatically accepted by Digi. Docket No. 11 at 10; Harlfinger Aff. at ¶15. With respect to non-standard production products, the parties were to "reach agreement as to specification, price and lead times, in writing, prior to Distributor placing the applicable purchase order." Docket No. 11 at 10.

According to Digi, the interactions between Digi and HUP relating to purchases under the Agreement generally adhered to the following procedures:³ Once HUP determined to purchase a certain product from Digi, HUP would send a signed purchase order for the product to Digi's sales team and administrative team, both of which were based exclusively in England. Richardson Aff. at ¶ 9(a). In addition to the purchase order, HUP would also typically send to Digi a sheet that contained the various technical specifications for the order. Id. On many occasions, Digi's sales personnel would be required either to complete the specification sheet or to provide additional information to supplement the specification sheet in a manner necessary to allow the Digi administrative team to evaluate properly the purchase order. Id.

Upon receipt of the purchase order and specification sheet, the Digi sales team in England, which included its now former Head of Sales Colin Smith and its Account Manager Glenn Fruish, would review and approve the documents provided by HUP and then pass those documents on to Digi's administrative team, which included Digi's Team Leader Jennifer Coleman and another former employee, Georgina Hammon. Id. at ¶ 9(b). The Digi administrative team would then communicate with Digi's procurement team lead by Connor Keown and with Digi's production team lead by another Digi employee, Nicholas Brierley, in order to ensure that Digi had the capacity to complete the proposed order. Id. All personnel working for Digi's procurement team and the production team were based in Suffolk, England. Id.

Digi's administrative team would review the documentation relating to the purchase order in order to ensure that the pricing, specifications, and proposed completion date set forth in the purchase order and its accompanying documents were acceptable to Digi. Id. at ¶ 9(c). At the conclusion of this administrative review, Digi would either (1) accept the purchase order, or (2) reject the purchase order and return it to HUP with proposed amendments or other proposed changes or questions. Id. If the purchase order was rejected and returned to HUP after the administrative review, the ordering process would then commence again (if at all) from the beginning, with HUP issuing a new purchase order to Digi. Id. at ¶ 9(d).

If the purchase order was approved by Digi after its administrative review, Digi's England-based administrative team would then issue an order confirmation to the sales teams for both Digi and HUP, agreeing to the proposed price, specifications and the proposed shipping timeline for the product. Id. at ¶ 9(e). Upon receipt of the order confirmation, HUP was then generally required to make a 50% deposit to Digi Europe in order to proceed with the purchase of the product. Id. at ¶ 9(f). For certain smaller orders, HUP was required to make full payment for the product to Digi within 30 days. Id.

Once the manufacturing of the requested product was completed by Digi at its Suffolk-based production facilities, Digi Europe's administrative team would contact HUP to confirm shipping details. Id. at ¶ 9(g). At this point, an invoice reflecting the balance owed would be issued by Digi to HUP. Id. Consistent with the terms of the Agreement and other documents provided to HUP, the product would be considered to be purchased and delivered to HUP when it was picked up from Digi's factory in Suffolk, England. Id. at ¶ 9(h).

D. The Parties’ Dispute

On April 14, 2020, Digi provided notice of termination under Section 3 of the Agreement. Complaint at ¶ 18. HUP alleges that, pursuant to the Agreement, Digi was required to pay a termination fee of $607,257. See Complaint at ¶¶ 19, 21. Digi, however, maintains that HUP failed to purchase the Minimum Amount of product necessary to trigger the termination fee. Id. at ¶ 20. According to HUP, the dispute regarding whether HUP had met the Minimum Amount involves the inclusion of Purchase Orders 9013 and 9014, dated October 4 and October 7, 2019, respectively in the contract year ending October 18, 2019. Harlfinger Aff. at ¶ 11. HUP maintains that both of these purchase orders were for standard production products. Id. Digi, on the other hand, maintains that the October purchase orders involved special requests and products that were not "off the shelf," and, therefore, qualified as non-standard production products. Supplemental Affidavit of Oliver Richardson in Support of Defendant's Motion to Dismiss the Complaint on Forum Non Conveniens Grounds (Docket No. 22-1) ("Richardson Supp. Aff.") at ¶¶ 4-5.

On March 25, 2021, HUP filed this action, alleging that Digi's failure to pay the termination fee is a breach of the Agreement. Complaint at ¶¶ 23-31. HUP has also brought a claim for unjust enrichment. Id. at ¶¶ 32-39.

II. ANALYSIS

"The doctrine of forum non conveniens ... permits a court to dismiss a case because the chosen forum (despite the presence of jurisdiction and venue) is so inconvenient that it would be unfair to conduct the litigation in that place." Nandjou v. Marriott Int'l, Inc., 985 F.3d 135, 140 (1st Cir. 2021) (quoting Howe v. Goldcorp Invs., Ltd., 946 F.2d 944, 947 (1st Cir. 1991) ). " ‘[T]he practical effect’ of a dismissal on these grounds is to require the plaintiff ‘to file his complaint in a more convenient forum elsewhere’ in order to obtain relief." Id.

A defendant moving for dismissal on forum non conveniens grounds "bears the burden of showing...