WCC Cable, Inc. v. G4S Tech. LLC

WCC CABLE, INC., Plaintiff, v. G4S TECHNOLOGY LLC n/k/a G4S SECURE INTEGRATION, et al. Defendants.

Case No. 5:17-CV-00052

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF VIRGINIA HARRISONBURG DIVISION

December 15, 2017

By: Michael F. Urbanski Chief United States District Judge

MEMORANDUM OPINION

This matter comes before the court on a multitude of motions. Defendants G4S Technology LLC ("G4S") and Liberty Mutual Insurance Company ("Liberty Mutual," and collectively with G4S, "Defendants") have each filed a Motion to Stay, or in the Alternative, Dismiss or Transfer, Based Upon the First-to-File Rule, ECF Nos. 19 & 25, and a Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404(a), ECF Nos. 21 & 27. The motions to stay concerned litigation in the United States District Court for the District of Nebraska, G4S Technology, LLC v. WCC Cable, Inc., 5:17-cv-00109-MFU (the "Nebraska Action").¹ Additionally, Defendants have each filed a Motion to Dismiss for Failure to State a Claim, ECF Nos. 23 & 29, each of which seeks dismissal of plaintiff WCC Cable, Inc's ("WCC") Complaint, ECF No. 1 (the "Complaint" or "Compl."). On October 10, 2017, on a motionby WCC, the District of Nebraska transferred the Nebraska Action to this court. See G4S Technology, LLC v. WCC Cable, Inc., 8:17CV182, 2017 WL 4564726 (D. Neb. Oct. 10, 2017). For the reasons set forth below, the court will sua sponte CONSOLIDATE this action with the Nebraska Action. The court will GRANT the motions to transfer venue, DENY AS MOOT the motions to stay, and declines to rule on the motions to dismiss, which may be taken up with the District of Nebraska.

I. Factual and Procedural Background

G4S entered into a contract with the Virginia Department of Transportation ("VDOT") for the design and construction of a traffic and safety management system for parts of Interstate 64 in Western Virginia (the "Project"). Compl. ¶ 7. G4S and WCC entered into a Subcontract Agreement (the "Subcontract"), ECF No. 1 Ex. A, under which WCC agreed to perform a portion of the work G4S was required to perform for VDOT. Compl. ¶ 9; Subcontract § 1 & Ex. A. The Subcontract contained a choice-of-law and forum-selection clause (the "Forum-Selection Clause"):

This Subcontract shall be governed by the law of the State of Nebraska (other than its choice or conflict of laws provisions). Any dispute arising directly or indirectly from this Subcontract shall be resolved solely and exclusively in a state or federal court located in Douglas County, Nebraska.

Subcontract § 37. While the Subcontract generally appears to be G4S' form contract, the parties appear to have dickered certain terms. For instance, WCC negotiated an accelerated payment schedule, id. § 3(f), and, notwithstanding the Nebraska choice-of-law provision, incorporated Virginia Code § 2.2-4354's interest-payment provisions, id. § 3(a)2. The parties do not, however, appear to have negotiated the Forum-Selection Clause.

Further, G4S, as principal, and Liberty Mutual, as surety, entered into a Contract Payment Bond and Contract Performance Bond, ECF No. 1 Ex B. (the "Liberty Mutual Payment Bond"), for the benefit of VDOT and all parties providing labor and materials for the Project. The obligation of the Liberty Mutual Payment Bond is guaranteed jointly and severally by G4S and Liberty Mutual. The Liberty Mutual Payment Bond does not include a forum-selection clause.

Similarly, WCC, as principal, and Ironshore Indemnity, Inc. ("Ironshore"), as surety, entered into a Performance and Payment Bond, Complaint Ex. A at 49-51, 5:17-cv-00109-MFU (the "Ironshore Payment Bond"), for the benefit of G4S. The obligation of the Ironshore Payment Bond is guaranteed jointly and severally by WCC and Ironshore. The Ironshore Payment Bond does not contain a forum-selection clause.

The working relationship between WCC and G4S soured, with each side claiming the other side breached the Subcontract. Compare Compl. ¶¶ 14-39 (WCC allegations against G4S), with Complaint, 5:17-cv-00109-MFU, ECF No. 1 Ex. A, ¶¶ 9-14 (the "Nebraska Complaint") (G4S allegations against WCC). According to WCC, G4S improperly sent a "Notice to Cure," despite WCC performing all work as expeditiously as G4S' mandated working parameters would allow. Compl. ¶ 26. After sending the Notice to Cure, G4S continued to interfere improperly with WCC's work. Compl. ¶ 27. Finally, G4S sent WCC a "Notice of Default and Bond Claim," to which WCC promptly objected. Compl. ¶¶ 28-29.

In late 2016, WCC asked G4S to meet in person "in an attempt to avoid protracted legal action." Mem. Opp. G4S' Mot. Stay, ECF No. 32, at 2. G4S agreed, and while the meeting was initially set for January 25, 2017, on January 20, 2017, counsel for G4S asked topostpone the meeting for thirty days, while claiming the delay "was not an intentional delay tactic." Id. at 2-3. The parties rescheduled the meeting for March 9, 2017. Id.

On March 6, 2017, counsel for G4S confirmed the details of the March 9, 2017 meeting. Id. at 3. Two hours later on the same day, G4S filed the Nebraska Action against WCC and Ironshore in the District Court of Douglas County, Nebraska, yet did not reveal its preemptive filing at the March 9, 2017 meeting. Id. Instead, G4S only revealed it had filed the lawsuit on May 1, 2017. Id. WCC filed its own Complaint in this court on May 25, 2017, setting off the litany of motions before the court.

II. The Nebraska Action

A month after G4S revealed it filed the Nebraska Action, WCC and Ironshore removed the action to the United States District Court for the District of Nebraska. Notice of Removal, 5:17-cv-00109-MFU, ECF No. 1. WCC moved to dismiss the Nebraska Complaint on two grounds: improper venue and lack of personal jurisdiction, while Ironshore moved to dismiss under Federal Rule of Civil Procedure 19(b). Motion to Dismiss, 5:17-cv-00109-MFU, ECF No. 6.

WCC first argued that 28 U.S.C. § 1391(b) did not provide for proper venue in Nebraska. None of the Nebraska defendants were incorporated or headquartered in Nebraska, and the events at issue all took place within the Western District of Virginia. Id. at 5. Under this set of facts, WCC argued that venue was only proper the Western District of Virginia, and certainly not proper in the District of Nebraska. Id.

WCC next proceeded to argue that the Forum-Selection Clause was invalid. Id. at 6-8. WCC contended that since the Forum-Selection Clause is invalid, the District of Nebraskalacked jurisdiction over WCC. Id. at 9. This argument in large part mirrored WCC's venue discussion in the present Section 1404(a) motions, which the court will analyze below.

G4S admitted that venue was not proper in the District of Nebraska. See Plaintiff's Brief in Response to Defendants' Motion to Dismiss ("Neb. Opp."), 5:17-cv-00109-MFU, ECF No. 11, at 13. G4S argued that even if venue were improper in the District of Nebraska, the Forum-Selection Clause would mandate that the action be brought in a court in Douglas County, Nebraska. Citing Atlantic Marine Construction Co. v. United States District Court for the Western District of Texas, --- U.S. ---, 134 S. Ct. 568, 581 (2013), G4S contended that, notwithstanding Section 1391(b), the District of Nebraska "must enforce a forum selection clause to protect[ the parties'] legitimate expectations and further vital interests of the justice system." Neb. Opp. at 13 (internal quotations omitted) (quoting Atl. Marine, 134 S. Ct. at 581). To this end, relying on Servpro Industries, Inc. v. JP Penn Restoration Services, No. 3-16-0298, 2016 WL 5109947 (M.D. Tenn. Sept. 20, 2016), G4S claimed that WCC necessarily waived its objections to venue by agreeing to the Forum-Selection Clause. Neb. Opp. at 15.

The District of Nebraska rejected G4S' arguments. The District of Nebraska found Servpro distinguishable, as, unlike the contract in Servpro, the Subcontract did not contain an express venue-waiver clause. G4S Tech., 2017 WL 4564726, at *3. Instead, the District of Nebraska found Atlantic Marine to be on point: "An application of Servpro's holding in situations where there is no express waiver of objections to venue would allow virtually all forum-selection clauses to override the § 1391 venue analysis—precisely what Atlantic Marine prohibits." Id. The District of Nebraska held that Atlantic Marine required venue tobe analyzed under Section 1391(b), and "[t]he presence of a forum-selection clause has no bearing on the propriety of venue." Id. at *2.

Because venue was not proper under Section 1391(b), the District of Nebraska transferred the Nebraska Action to this court. Id. at *3. The District of Nebraska held open the possibility that this court may, after undertaking a Section 1404(a) analysis, determine that a transfer of the Nebraska Action back to the District of Nebraska would be appropriate. Id.

III. Consolidation

When "actions before the court involve a common question of law or fact," Federal Rule of Civil Procedure 42 allows the court to "consolidate the actions." Fed. R. Civ. P. 42(a)(2). Consolidation is a "managerial device" that "makes possible the streamlined processing of groups of cases, often obviating the need for multiple lawsuits and trials." 8 Moore's Federal Practice § 42.10[1][a]. The court has wide discretion to consolidate actions. A/S J. Ludwig Mowinckles Rederi v. Tidewater Constr. Co., 559 F.2d 928, 933 (4th Cir. 1977). That discretion extends to consolidating actions sua sponte. 8 Moore's Federal Practice § 42.10[2][a]-[b]; see also Beach Mart, Inc. v. L & L Wings, Inc., Nos. 2:11-CV-44-F & 2:14-CV-52-F, 2014 WL 4635450, at *1 (E.D.N.C. Sept. 15, 2014) (consolidating cases sua sponte).

When exercising its discretion to consolidate, the court must consider:

whether the specific risks of prejudice and possible confusion were overborne by the risk of inconsistent adjudications of common factual and legal issues, the burden on parties, witnesses and available judicial resources posed by multiple

...