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Key Equipment Finance v. Barrett Business Services Inc.

United States District Court, W.D. Washington, Tacoma

June 14, 2019

KEY EQUIPMENT FINANCE, a subdivision of KeyBank National Association, an Ohio Corporation, assignee of ORACLE CREDIT CORPORATION, Plaintiff,
BARRETT BUSINESS SERVICES, INC., a Washington Corporation, Defendant.


          Ronald B. Leighton, United States District Judge


         THIS MATTER is before the Court on Defendant Barrett Business Services, Inc.'s Motion to Dismiss or Stay for Forum Non Conveniens.[1] Dkt. #9. This dispute concerns Barrett's alleged failure to make payments under an agreement establishing a payment plan for a suite of cloud services designed to assist with administrative functions. Although Barrett entered the payment plan agreement with Oracle Credit Corporation (“OCC”), which assigned its interest to Plaintiff Key Equipment Finance (“Key), the cloud services themselves were obtained from Oracle America, Inc., (“Oracle”) pursuant to another agreement. Barrett claims that both of these agreements are part of a single transaction and seeks to enforce the forum selection clause in the contract with Oracle against Key. Key, in opposition, contends that the forum selection clause cannot be enforced because it is part of a separate contract to which Key and its predecessor were never parties.

         For the following reasons, the Court GRANTS Barrett's Motion to Dismiss for Forum Non Conveniens.


         Barrett, a Maryland company headquartered in Vancouver, WA, is in the business of establishing co-employment relationships between small and medium-sized companies and assuming responsibility for their administrative functions, such as payroll. Barrett's payroll and invoicing needs are therefore quite complicated. To address these needs, Barrett sought to make use of Oracle's human capital management (HCM) cloud system. Barrett states that it explained how complex and atypical its business structure and requirements are and Oracle assured Barrett that its services would be customized to meet Barrett's needs. Oracle's implementation partner, KBACE Technologies, Inc., apparently made similar assurances and provided Barrett with an estimate of how much the system would cost to implement. KBACE was later acquired by Cognizant Worldwide Limited and Cognizant Technology Solutions Corporation.

         On February 28, 2018, Barrett contracted with Oracle for a suite of cloud services and with KBACE for implementation. The resulting Cloud Services Agreement (“CSA”) between Barrett and Oracle contains the following forum selection clause: “. . . each party agrees to submit to the exclusive jurisdiction of, and venue in, the courts in San Francisco or Santa Clara counties in California in any dispute arising out of or relating to this Agreement.” Dkt. #1-1 at 7. An additional Ordering Document (“Order”) was executed the same day and included a list of prices for the services Barrett had contracted for, which totaled $15, 128, 787.20. Dkt. #1-2 at 3. The Order also contained a section entitled “Oracle Financing” that stated: “Oracle agrees that if, concurrent with the delivery of this Ordering Document, you deliver Oracle Financing Contract #92667 . . . that is satisfactory to Oracle Financing, then payment terms in [Contract #92667] shall replace the payment terms of this Ordering Document to the extent specified in [Contract #92667].” Id. at 8. Both the CSA and the Order state that payment is due within 30 days of the invoice date. Dkt. #1-1 at 2; Dkt. #1-2 at 5.

         Barrett did indeed execute Contract #92667, or the Payment Plan Agreement (“PPA”), on February 28. The PPA describes itself as an agreement “entered into by Customer and Oracle Credit Corporation (“OCC”) for payment of Customer's acquisition of the System, ” which is “acquired from Oracle Corporation.” Dkt. #1-2 at 2. The PPA strains to emphasize that it is an “independent” contract creating an obligation to pay that “shall not be subject to any set-off, recoupment, claim or defense for any reason, including . . . any claim(s) against the Supplier, ” a.k.a. Oracle. Dkt. #1-2. The PPA also incorporates a separate Payment Schedule (“Schedule”), which divides Barrett's obligations into 19 separate payments due between May 1, 2018, and December 1, 2022. Dkt. #1-3. These payments add up to the same amount due under the Order: $15, 128, 787.20. Id. The Schedule states that it “replaces [Barrett's] payment obligations when due under the Order to Supplier to the extent of the System Price listed above and Customer agrees to pay the System Price on an installment basis.” Id.

         On April 20, 2018, OCC assigned its rights under the PPA and Schedule to Key Equipment Finance. Dkt. #1-4. The letter of assignment is on Oracle letterhead and states that “Assignee assumes none of Supplier's obligations under the Order.” Id. It also provides that all payments should be remitted to OCC's corporate trust. Id.

         Several months after executing these agreements, Barrett became dissatisfied with the HCM system promised by Oracle. KBACE also informed Barrett that implementing the system would cost millions more than originally estimated. Meanwhile, Barrett began missing its payments under the Schedule, resulting in a warning letter from Key on October 6, 2018. Dkt. #1-5. Key followed this up with another letter in November informing Barrett that it was in default, accelerating the remaining payments. Dkt. #1-6.

         On January 2, 2019, Barrett sued Oracle and the Cognizant entities in the Superior Court of San Francisco County.[2] Dkt. #9, Ex. A. The complaint alleges causes of action for negligent misrepresentation, breach of contract, and rescission of the contracts with Oracle and the Cognizant entities. Id. at 13-19. Key then filed this lawsuit against Barrett on February 14, 2019, to enforce the payment obligations in the PPA and Schedule. Dkt. #1.


         1. Legal Standard

         The doctrine of forum non conveniens allows a court to dismiss a case outright when a foreign or state forum would be substantially more convenient. Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Texas, 571 U.S. 49, 60 (2013). The question is “whether defendants have made a clear showing of facts which establish such oppression and vexation of a defendant as to be out of proportion to plaintiff's convenience, which may be shown to be slight or nonexistent.” Bos. Telecommunications Grp., Inc. v. Wood, 588 F.3d 1201, 1206 (9th Cir. 2009) (quoting Dole Food Co. v. Watts, 303 ...

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