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Quarum v. Mitchell International, Inc.

United States District Court, D. Oregon

April 12, 2019

MERRIT QUARUM, MD, Plaintiff,
v.
MITCHELL INTERNATIONAL, INC., Defendant.

          FINDINGS AND RECOMMENDATION

          STACIE F. BECKERMAN, UNITED STATES MAGISTRATE JUDGE

         Plaintiff Dr. Merrit Quarum (“Dr. Quarum”) brings this action against Defendant Mitchell International, Inc. (“Mitchell”), alleging claims for breach of contract, violation of the covenant of good faith and fair dealing, wrongful discharge, and unpaid wages. (ECF No. 1.)[1]

         Pending before the Court is Mitchell's motion to dismiss Dr. Quarum's complaint based on the doctrine of forum non conveniens. (ECF No. 7.) Alternatively, Mitchell asks the Court to transfer this case to the District of Delaware under 28 U.S.C. § 1404(a), or abstain under Colo. River Water Conservation Dist. v. United States, 424 U.S. 800 (1976). (ECF No. 7.) For the following reasons, the Court recommends that the district judge grant Mitchell's motion to transfer this case to the District of Delaware.

         BACKGROUND

         Dr. Quarum, an Oregon physician, founded QMedtrix Systems, Inc. (“QMedtrix”) in 1996. (Compl. ¶ 4.) QMedtrix developed software and processes to streamline the review and approval process used by insurance companies to vet physicians' claims for reimbursement in workers compensation and automobile insurance actions. (Compl. ¶ 4.)

         In 2016, Dr. Quarum and the other shareholders of QMedtrix sold the company to Mitchell through a Stock Purchase Agreement (“SPA”). (Compl. ¶ 5.) The Preamble to the SPA identifies the contracting parties:

This Stock Purchase Agreement (this “Agreement”), . . . is entered into among the shareholders listed on Appendix A hereto (collectively, “Sellers”), Mitchell International, Inc., a Delaware corporation (“Buyer”), as representative of the Sellers, Merrit Quarum (the “Sellers' Representative”), and solely for the purposes of Section 5.01 and Section 5.02, Merrit Quarum in his individual capacity (the “Managing Shareholder”).

(Declaration of Laura Salerno Owens, Dec. 20, 2018 (“Salerno Owens Decl.”), Ex. 1 at 5.) (emphasis in original).[2]

         At the same time, Dr. Quarum and Mitchell entered into two other contracts relevant here: an Earnout Agreement and an Employment Agreement. (Compl. ¶¶ 5-6.) Under these contracts, Mitchell agreed to pay Dr. Quarum in part through earnout payments, and to hire Dr. Quarum as a full-time employee. (Compl. ¶¶ 5-6.) The Employment Agreement prevented Mitchell from terminating Dr. Quarum's employment without cause before October 31, 2018, and required six months of severance pay if Mitchell terminated Dr. Quarum without cause after that date. (Compl. ¶ 6.)

         The SPA and the Earnout Agreement contain the following forum-selection clause:

Any legal suit, action or proceeding arising out of or based upon this Agreement, or the transactions contemplated hereby may be instituted in the federal courts of the United States of America or the courts of the state of Delaware in each case located in Wilmington County, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. . . . The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

(Salerno Owens Decl., Ex. 1 at 55, 104-105.) The Employment Agreement does not include a forum-selection clause. (Salerno Owens Decl., Ex. 1.)

         On January 8, 2018, Mitchell terminated Dr. Quarum's employment. (Compl. ¶ 11.) In response, Dr. Quarum sued Mitchell in the Delaware Court of Chancery, alleging that Mitchell breached the SPA and the Earnout Agreement by failing to market and promote QMedtrix's products. (Salerno Owens Decl., Ex. 2 at 5-8, 10-14.) On January 10, 2019, the Delaware Court of Chancery dismissed Dr. Quarum's complaint for lack of subject matter jurisdiction, and gave Dr. Quarum sixty days to transfer the case to Delaware Superior Court. (Declaration of Thomas J. Payne, Jan. 10, 2019, Ex. 1 at 15.) The parties indicated at oral argument that the case is now pending in the Delaware Superior Court.

         On November 16, 2018, Dr. Quarum filed this case in Multnomah Country Circuit Court, and ...


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