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Agnesian Healthcare Inc. v. Cerner Corp.

United States District Court, E.D. Wisconsin

December 8, 2017

AGNESIAN HEALTHCARE INC., Plaintiff,
v.
CERNER CORPORATION, Defendant.

          ORDER

          J. P. Stadtmueller U.S. District Judge

         Plaintiff, Agnesian Healthcare Inc. (“Agnesian”), filed this breach of contract action against Defendant, Cerner Corporation (“Cerner”), in Fond du Lac County Circuit Court. The case was removed to this Court based on the Court's diversity jurisdiction under 28 U.S.C. § 1332. (Docket #1). Cerner has now moved to dismiss the complaint, contending that the parties entered into a binding arbitration agreement that requires Agnesian's claims to be submitted to arbitration in Missouri. (Docket #5). Agnesian opposes the motion, claiming that if arbitration is to occur, it must be in Wisconsin. See (Docket #15). For the reasons stated below, the Court must grant Cerner's motion and dismiss this action.

         1. LEGAL STANDARD

         Federal Rule of Civil Procedure 12(b)(3) permits dismissal of a case when it is filed in an improper venue. “[A] motion to dismiss based on a contractual arbitration clause is appropriately ‘conceptualized as an objection to venue, and hence properly raised under Rule 12(b)(3).'” Faulkenberg v. CB Tax Franchise Sys., LP, 637 F.3d 801, 807 (7th Cir. 2011) (quoting Auto. Mechs. Local 701 Welfare & Pension Funds v. Vanguard Car Rental USA, Inc., 502 F.3d 740, 746 (7th Cir. 2007)). This is because arbitration clauses are considered a species of forum selection clause. Auto. Mechs. Local 701, 502 F.3d at 746; Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 533-34 (1995).

         2. RELEVANT FACTS

         Agnesian is a Wisconsin non-profit corporation based in Fond du Lac, Wisconsin. (Docket #1-1 ¶ 7). Cerner is a Delaware corporation, and its principal place of business is in Kansas City, Missouri. Id. ¶ 8. Cerner's principal place of business is located within the jurisdiction of the United States District Court for the Western District of Missouri.

         On March 25, 2004, Cerner and Agnesian entered into the Cerner Business Agreement (the “Agreement”). (Docket #1-1, Ex. B).[1] The Agreement provided for the sale and license of several Cerner software products and services. The Agreement contains the following arbitration provision:

D. Arbitration and Injunctive Relief. In the event of any disagreement or dispute between the parties, Cerner and [Agnesian] agree to work cooperatively to resolve the dispute amicably as set forth in this Section 9.3, or at other appropriate, mutually determined management levels. In the event that a resolution at such management levels does not occur, either party may submit the dispute to binding arbitration at a site in the state of the principal place of business of the non-petitioning party under the then prevailing rules of the American Arbitration Association, Inc., a New York Corporation[.]

Id. ¶ 9.3(D).

         On June 10, 2014, Cerner and Agnesian entered into a Cerner Sales Order. This document is also attached to Agnesian's complaint. (Docket #1-1, Ex. A). The June 2014 Sales Order provides that it is “subject to, and incorporates by reference, the Cerner Business Agreement, dated March 25, 2004, between the Client and Cerner.” Id. at 1.

         On August 16, 2017, Agnesian filed a complaint against Cerner in the Circuit Court of Fond du Lac County, alleging breach of warranty and misrepresentation claims. The claims in this case arise from and center around the Agreement and the June 2014 Sales Order.

         3. ANALYSIS

         The parties' dispute in this case is not whether arbitration, once invoked, is mandatory.[2] Rather, Agnesian says that if it is forced to arbitrate, it wants to do so in its home state of Wisconsin, while Cerner believes that arbitration must occur in Missouri. Cerner asks that the Court dismiss the case so that the parties can seek an order compelling arbitration in the Western District of Missouri. See Faulkenberg, 637 F.3d at 808 (a district court may not compel arbitration in another district).[3]

         Cerner's argument has two parts. First, it claims that the Agreement did not authorize Agnesian to choose between initiating a lawsuit and submitting its dispute to arbitration. (Docket #6 at 4). Rather, the Agreement leaves the parties only one recourse -arbitration-should their informal meet-and-confer efforts fail. Id. Second, it follows that Cerner is the “non-petitioning party” in this dispute and that, as a result, the Agreement mandates ...


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