Everybody loves a penguin, or at least I think that is
so. But Penguin Toilets, the Defendant in Roth
v. Penguin Toilets, LLC, 2011 NCBC 45, can't be loving the result it
got on its Motion to Dismiss, which was denied in the Business Court by Judge
Murphy on Wednesday.
The Motion to Dismiss was based on Penguin's argument
that litigation against it had to be brought in Michigan and that North
Carolina was therefore an improper venue. This was premised on a forum
selection clause in the LLC's operating agreement which said that:
Any dispute or other legal action concerning
this Agreement, including any arbitration or litigation proceedings shall be
conducted in Wayne County, Michigan.
I don't know why even a penguin would choose to litigate
in Wayne County, which boasts of being the home of the City of Detroit, over
the North Carolina Business Court, but Wayne County is where Penguin has its
headquarters, so that provides some explanation.
Roth was the former President of Penguin. He had
sued Penguin after his termination, claiming violations of the terms of his
Employment Agreement. He was also a member of the LLC. Penguin said
that venue was improper in North Carolina because of the forum selection clause
in the Operating Agreement, although there was no forum selection language in
the Employment Agreement. Judge Murphy held that the terms of the
Operating Agreement had not been incorporated by reference into the Employment
Agreement and that the lawsuit was about the obligations owed to Roth under his
Employment Agreement, not his rights as an LLC member.
Read this article in
its entirety on North
Carolina Business Litigation Report, a blog for lawyers focusing on issues
of North Carolina business law and the day-to-day practice of business
litigation in North Carolina courts.
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