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Wisconsin Freeze Dried LLC v. Redline Chambers, Inc.

United States District Court, E.D. Wisconsin

March 21, 2019




         Wisconsin Freeze Dried LLC filed a complaint in Waukesha County Circuit Court alleging breach of contract and other claims. The defendant, Redline Chambers, Inc., removed the case to this court under the diversity jurisdiction. See 28 U.S.C. § 1332. The pleadings allege that Wisconsin Freeze Dried's sole member is a natural person who is a citizen of Wisconsin, that Redline Chambers is incorporated under Utah law and has its principal place of business in Utah, and that the amount in controversy exceeds $75, 000. Therefore, this court has subject-matter jurisdiction. However, Wisconsin Freeze Dried has moved to remand on the ground that its claims fall within the scope of a contractual forum-selection clause that requires litigation in Waukesha County Circuit Court. I consider this motion below. See Roberts & Schaefer Co. v. Merit Contracting, Inc., 99 F.3d 248, 252 (7th Cir. 1996) (“Enforcing a forum selection clause in a contract is a permissible basis for remand.”).

         I. BACKGROUND

         Wisconsin Freeze Dried produces freeze-dried animal food. In Fall 2017 it began communicating with Redline Chambers regarding the construction and delivery of custom-built freeze-drying equipment. On December 15, 2017, the parties signed a non- disclosure agreement “to facilitate discussions and negotiations surrounding the potential contract between [the parties] and to protect the confidential and proprietary information held secret by [Wisconsin Freeze Dried].” Compl. ¶ 7. The non-disclosure agreement contained the following choice-of-law provision and forum-selection clause:

This Agreement shall be constructed [sic] in accordance with the laws of the State of Wisconsin, without regard to its conflict of law rules. The forum shall be with the Circuit Court of Waukesha County, State of Wisconsin.

Affidavit of Chris Bessent, Ex. A. ¶ 14, ECF No. 11-3.

         After the parties signed the non-disclosure agreement, Wisconsin Freeze Dried shared information with Redline Chambers about the equipment it needed. Eventually, Redline Chambers sent Wisconsin Freeze Dried a proposal. On April 24, 2018, Wisconsin Freeze Dried sent Redline Chambers a purchase order for the equipment. It made a down payment on the equipment on May 2, 2018 and a further installment payment on June 19, 2018.

         Wisconsin Freeze Dried alleges that Redline Chambers represented that the equipment would be shipped for delivery in August 2018. However, on August 1, 2018, Redline Chambers told Wisconsin Freeze Dried that production was behind schedule and that delivery would be delayed until November or later. Thereafter, the parties agreed to cancel part of the order. But they could not reach agreement on what to do with certain components that Redline Chambers had already manufactured. The resulting impasse caused Wisconsin Freeze Dried to demand a refund.

         On November 30, 2018, Redline Chambers commenced an action against Wisconsin Freeze Dried in the United States District Court for the District of Utah. Redline Chambers alleged, among other things, that Wisconsin Freeze Dried breached the parties' contract by failing to pay the full purchase price for the equipment.

         One week later, Wisconsin Freeze Dried commenced the present action against Redline Chambers in the Waukesha County Circuit Court. Wisconsin Freeze Dried alleges primarily that Redline Chambers breached the parties' contract by failing to deliver the promised equipment within the specified time. It also alleges claims for fraud, various forms of misrepresentation, and conversion arising out of Redline Chambers' failure to deliver the promised equipment. Finally, it alleges that Redline Chambers breached the parties' non-disclosure agreement by sending an email “blast” to all or nearly all its clients and prospective clients that included photos of the equipment Wisconsin Freeze Dried had ordered. Compl. ¶ 26. Wisconsin Freeze Dried alleges that these photos were confidential information protected by the non-disclosure agreement and that the photos are trade secrets. It alleges that Redline Chambers committed trade-secret theft by disclosing the photos to its customers.

         As noted, Redline Chambers removed the Wisconsin action to this court under the diversity jurisdiction. Wisconsin Freeze Dried now moves to remand the entire case on the ground that the forum-selection clause found in the non-disclosure agreement requires litigation of all claims in the Waukesha County Circuit Court.[1]


         Redline Chambers does not dispute that the forum-selection clause in the nondisclosure agreement requires litigation of all claims within its scope in state rather than federal court. However, it contends that some of the claims Wisconsin Freeze Dried alleges in its complaint are not within the scope of the clause. This dispute over the meaning of the non-disclosure agreement must be resolved under Wisconsin law, which, the parties agree, applies to this question.

         Under Wisconsin law, the court's goal in interpreting a contract is to give effect to the parties' intentions. Ash Park, LLC v. Alexander & Bishop, Ltd., 363 Wis.2d 699, 712 (2015). The language of the contract controls the court's interpretation. Id. When the terms of a contract are clear and unambiguous, the court construes the contract's language according to its literal meaning. Id. Contract language is ...

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