Opinion
CIVIL ACTION 03-0722, SECTION "N" (3).
July 28, 2003.
ORDER AND REASONS
Before the Court is the Motion to Transfer Due to Forum Selection Clause Pursuant to 28 U.S.C. § 1404 (a) and/or 1406(a) filed by Defendants BellSouth Telecommunications, Inc., L.M. Berry and Company, and BellSouth Advertising and Publishing Corporation, on April 29, 2003 (Rec. Doc. No. 5), and set for hearing on June 25, 2003. For the reasons explained herein, Defendants' motion is GRANTED.
Background
On or before February 15, 2002, Plaintiff, Worker's Compensation Legal Clinic of Louisiana, Inc., through its representative, lawyer Robert Lenter, signed a contract for advertising services with Defendant BellSouth Advertising and Publishing Corporation. On February 3, 2003, Plaintiff filed a Petition for Breach of Contract, Detrimental Reliance and Damages against Defendants in Louisiana state court. Plaintiffs claims arise out of the advertising services provided to it by Defendants. On March 12, 2003, Defendants removed the matter to this Court on the basis of diversity jurisdiction. On March 31, 2003, Defendants answered, raised a defense of improper venue, and asserted a compulsory counterclaim against Plaintiff for $121,806.60 in unpaid advertising charges, plus interest, costs, and attorney fees.
The Court is not certain of the exact date that Plaintiff began receiving advertising services. The contract provided to the Court by Defendants as Exhibit 1 to their May 19, 2003 supplemental memorandum (Rec. Doc. No. 10) is dated February 15, 2002. Plaintiffs state court petition, however, suggests that Plaintiff may have received advertising services at an earlier time. See Petition at ¶¶ II-IV.
On April 29, 2003, Defendants filed the motion presently before the Court, seeking to transfer this action to the federal district court for the Northern District of Georgia. Defendants' motion is based on forum selection provisions found in Paragraph 14 of two contracts (each is titled "Advertising Order Form") signed by Mr. Lenter on behalf of Plaintiff. The clauses, which are identical, provide in pertinent part:
14. Miscellaneous. We will not be bound by, and disclaim any warranty or right to rely upon, any custom or prior course of dealing and any other agreement or representation, such as the location of your Advertising other than in accordance with our Priority Placement Policy (which policy is available upon request), any variation of color, darkness or clarity as a result of variations in paper, ink or publishing medium, or the nature of others' advertising or any changes which you may later request in your Advertising. This AO does not create any partnership, joint venture, employee, franchisee, agency or similar relationship. This AO, if accepted by us, and any other associated forms are our entire agreement with you and shall be governed by the laws of the State of Georgia. Any litigation arising hereunder shall be filed only in the Federal District Court for the Northern District of Georgia or the Superior Court of DeKalb County Georgia, and you hereby consent to the jurisdiction of such courts.
(Emphasis added).
Law and Analysis
Forum selection clauses ""are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be "unreasonable" under the circumstances.'" International Software Sys., Inc. v. Amplicon, Inc., 77 F.3d 112, 114 (5th Cir. 1996) (quoting M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907 (1972)). "Unreasonableness potentially exists where (1) the incorporation of the forum selection clause into the agreement was the product of fraud or overreaching; (2) the party seeking to escape enforcement will for all practical purposes be deprived of his day in court because of the grave inconvenience or unfairness of the selected forum; (3) the fundamental unfairness of the chosen law will deprive the plaintiff of a remedy; or (4) enforcement of the forum selection clause would contravene a strong public policy of the forum state." Haynsworth v. The Corporation, 121 F.3d 956, 963 (5th Cir. 1997) (internal quotations omitted), cert. denied, 523 U.S. 1072, 118 S.Ct. 1513 (1998). The Bremen rule, which first developed in the admiralty context, has been extended to diversity cases and applies whenever a party seeks dismissal based on a forum selection clause. Id. at 961-63; International Software Sys., 77 F.3d at 114-15.
Here, Defendants do not seek dismissal based on the forum selection clause. They instead seek a transfer of venue to the Northern District of Georgia pursuant to 28 U.S.C. § 1404 (a). Although the Bremen test is "instructive" to this inquiry, the mere existence of a valid forum selection clause is not determinative of a motion to transfer venue. Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 28-31, 108 S.Ct. 2239, 2243-45 (1988). Rather, § 1404(a) requires the Court to "adjudicate motions for transfer according to a "flexible and "individualized, case-by-case consideration of convenience and fairness.'" Stewart, 487 U.S. at 29, 108 S.Ct. at 2244. Relevant factors include the convenience of the designated forum to the parties and witnesses, in light of the contractually expressed preference for that forum, and the fairness of the transfer in light of the forum selection clause and the parties' relative bargaining power. Id. at 29-30; 108 S.Ct. at 2244. Additionally, in applying § 1404(a)'s interest of justice standard, the Court also must weigh into the balance public interest factors such as (1) administrative difficulties due to docket congestion, (2) the court's familiarity with the law governing the action, (3) local interest in having localized controversies resolved at home, (4) the unfairness of burdening citizens in an unrelated forum with jury duty and (5) judicial economy. Id; see also Premiere, Inc. v. Commercial Underwriters Ins. Co., 2003 WL 1594812 at *1-2 (discussing private and public interest factors relevant to § 1404(a) transfer inquiry).
Defendants actually seek transfer under 28 U.S.C. § 1404 (a) and/or § 1406(a). Section 1404(a) applies to transfers from one proper venue to another; § 1406(a) applies to transfers — from an improper venue to a proper venue. Citing Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 n. 8, 108 S.Ct. 2239, 2243 n. 8 (1988), other courts in this circuit have concluded that the mere existence of a forum selection clause does not render venue improper in a court other than that designated in the contractual provision. See Arctic Equip. of Texas, Inc. v. IMI Cornelius, Inc., 2001 WL 257981, at *1 (ND. Tex. 2001); Shaw Group, Inc. v. Natkin Co., 907 F. Supp. 201, 203 n. 3 (M.D. La. 1995). Here, although Defendants asserted "improper venue" in their answer, they have offered no explanation for their assertion that venue in this Court is improper. Accordingly, the Court will consider Defendants' request for transfer only under § 1404(a).
Although the § 1404(a) analysis outlined in Stewart contemplates a multi-factored case-by-case inquiry, which may render transfer inappropriate "notwithstanding the counterweight of a forum-selection clause," the parties' expression of their preferred venue in a valid forum selection clause is entitled to some deference. Stewart, 487 U.S. at 29-31, 108 S.Ct. at 2244-46. In Stewart, the Supreme Court explained that "the presence of a forum-selection clause . . . will be a significant factor that figures centrally in the district court's calculus." Stewart, 487 U.S. at 29, 108 S.Ct. at 2244. Consistent with this approach, Justice Kennedy emphasized, in his concurring opinion in Stewart, that "a valid forum-selection clause [should be] given controlling weight in all but the most exceptional cases." Id. at 33, 108 S.Ct. at 2246 (Kennedy, J. concurring). Indeed, because a party seeking transfer based on a forum selection clause is attempting to enforce a forum choice already made, rather than limit a plaintiffs right to choose a forum, some courts applying the § 1404(a) test outlined in Stewart have concluded that the party opposing the transfer bears the burden of demonstrating the impropriety of transfer to the contractual forum. See PS Bus. Mach., Inc. v. Canon USA, Inc., 331 F.3d 804, 807 (11th Cir. 2003); In re Ricoh Corp., 870 F.2d 570, 573 (11th Cir., 1989); Columbia Energy Serv. Corp. v. TDC Energy Corp., 2002 WL 272382 at *3 (E.D. La.); Shaw, 907 F. Supp. at 205.
In opposing Defendants' motion, Plaintiff contends that transfer in accordance with the forum selection clause would be fundamentally unfair because the contract in question is an adhesion contract, and because the existence of the forum selection clause was not reasonably communicated to Plaintiff. Additionally, according to Plaintiff, litigating in Georgia would be such a serious inconvenience to Plaintiff and third party witnesses that it would deprive Plaintiff of having a meaningful day in court. Plaintiff also argues that the claims asserted in this suit, and those it seeks to add through its supplemental and amending complaint, should be addressed in one suit and in one forum. Finally, Plaintiff argues that, because two of the three defendants are located in Georgia, but Plaintiff has no connection with that state, Georgia is not an alternative neutral forum.
Based on the circumstances of this particular case, the Court disagrees with Plaintiff and finds that transfer of this action to the Northern District of Georgia, consistent with the forum selection clause, is proper. First, as explained above, federal courts will enforce valid forum selection clauses. Such clauses likewise have been enforced by Louisiana state courts. See, e.g., Piqué-Weinstein-PiquéArchitects, Inc. v. New Orleans Aviation Bd., 762 So.2d 76, 78-79 (La.App. 5 Cir.), writ denied, 767 So.2d 41 (La. 2000); Digital Enterprises, Inc. v. Arch Telecom, Inc., 658 So.2d 20, 20-21 (La.App. 5 Cir. 1995).
The Court notes that Defendants seek transfer to federal court in the Northern District of Georgia, though the forum selection clause at issue authorizes litigation in that court or the Superior Court of DeKalb County, Georgia. Additionally, had Plaintiff filed suit in Georgia state court, it appears that the "local defendant" rule set forth in 28 U.S.C. § 1441 (b) may have prevented removal to federal court. Significantly, however, Plaintiff has not argued that either of these facts should preclude the transfer requested by Defendants. Although the Court presumably could dismiss this action based on the forum selection clause, rather than transferring, neither party has sought such a remedy. Based on the memoranda submitted, the Court is not certain of what impact, if any, a dismissal might have on the timeliness of Plaintiff's action. Accordingly, the Court will transfer, rather than dismiss, this action to ensure that Plaintiff can proceed on its claims in some forum. Once in the Northern District of Georgia, Plaintiff can seek remand or dismissal if it desires to proceed in Georgia state court rather than federal court.
Second, and even more important, the Court does not find the forum selection clause at issue to be invalid because of the particular form or manner in which it was agreed to by Plaintiff. Louisiana courts generally have defined an adhesion contract to be a "standard contract, usually in printed form [and often in small print], prepared by a party of superior bargaining power for adherence or rejection of the weaker party." Golz v. Children's Bureau of New Orleans, Inc., 326 So.2d 865, 869 (La. 1976). Although offered on a "take it or leave it" basis, adhesion contracts "are not per se unenforceable, but rather lend themselves to an inquiry as to whether the weaker party consented to the fine print, and if so whether the adhesionary clause is unduly burdensome or extremely harsh." Andry v. New Orleans Saints, 820 So.2d 602, 603-04 (La.App. 5 Cir.), writ denied, 828 So.2d 1120 (La. 2002); see also Dillard v. MerrillLynch, Pierce, Fenner Smith, Inc., 961 F.2d 1148, 1154-55 (1992) (adhesion contracts not void unless unconscionable), cert. denied, 506 U.S. 1079, 113 S.Ct. 1046 (1993). Notwithstanding Plaintiff's implicit assertion that the forum selection clause here was not at all negotiable, and thus was adhesionary, there is no evidence of this. In any event, the Court does not find Plaintiff's consent to the forum selection clause to be defective. The Court similarly finds the clause to be neither unduly burdensome nor extremely harsh.
Significantly, forum selection clauses have been enforced when presented in form adhesion contracts. See Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 593-95, 111 S.Ct. 1522, 1527-28 (1991); Marinechance Shipping, Ltd. v. Sebastian, 143 F.3d 216, 221 (5th Cir.), cert. denied, 525 U.S. 1055, 119 S.Ct. 620 (1998). Further, although the Court agrees that the forum selection clause at issue was part of the contract's "fine print," the Court disagrees that this particular clause was not reasonably communicated to Plaintiff. Notably, the contract in question was for a business, not personal, transaction and was between two commercial entities. While the Court might be less inclined to enforce the forum selection provision had the contract been signed by a representative of a closely held corporation or other small business, who is relatively unsophisticated in the law, the contract here was signed by a lawyer with ten years' legal experience. Nor is the Court impressed by the contention that Mr. Lenter primarily handles worker's compensation litigation. He certainly is or should be aware of the need to review agreements that he signs. See, e.g., Rodriguez v. Class Travel Worldwide, L.L.C., 2000 WL 222165, at *4 (E.D.La.) (one cannot avoid the effects of a contractual provision simply by failing to read the contract) (citing Diero v. American Airlines, 816 F.2d 1360, 1365 (9th Cir. 1987)); see also, e.g. Mobil Exploration Producing US., Inc. v. Certain Underwriters, 837 So.2d 11, 13 (La.App. 1 Cir. 2002) (party signing contract presumed to have consented to the contract), writ denied, 841 So.2d 805 and 843 So.2d 1129 (La. 2003); Bogalusa Cmty. Med. Ctr. v. Batiste, 603 So.2d 183, 186 (La.App. 1 Cir. 1992) (party cannot avoid contractual obligation by contending that he did not read or understand it).
Further, although undeniably set forth in small print and located in a paragraph entitled "Miscellaneous," rather than "Entire Agreement/Governing Law/Venue" as Defendants contended in their original supporting memorandum, and not in bold or all capital letters, Mr. Lenter certainly could have read and understood the relevant provision if he had taken the time to do so. Indeed, although the forum selection clause was found on the reverse side of the contract, language just above the signature line referred Mr. Lenter to the additional terms and conditions, and their binding effect, on the back side of the contract. Additionally, the Court notes that the entire contract consists only of a single, two-sided document. It is not as if the forum selection clause was buried in a voluminous document. Rather, the party signing the document need only flip it over to see the clause.
Nor was it so inconspicuous such that it is equivalent to that found on the reverse side of a ski lift ticket, bearing no instructions on the front of the ticket to read the back, that was affixed to the plaintiffs jacket upon purchase in O'Brien v. Okemo Mountain, Inc., 17 F. Supp.2d 98, 103 (D. Conn. 1998).
Additionally, although the Court understands that the circumstances might not have lent themselves to careful analysis of the contract's terms at the exact moment it was signed, Plaintiff's representatives certainly had an opportunity to do so in the days following acceptance of the contract. Significantly, Plaintiff does not assert that it ever sought to reject the contract because of objections to litigating in Georgia, or otherwise complained about the forum selection provision prior to opposing the motion to transfer presently before the Court.
Third, for these and other reasons, the Court does not find that the forum selection clause resulted from fraud, overreaching, or bad faith. Plaintiff has presented no evidence of fraud with respect to the forum selection provision — there is no evidence that any Defendant made a misrepresentation or sought to conceal the clause from Plaintiff. Nor did Defendants propose a faraway location bearing no connection to any of the contractual parties or their business operations in hopes of discouraging litigation of legitimate claims. Instead, the parties chose to allow litigation in federal or state court in Georgia — the state in which two Defendants are incorporated and have their principal places of business. Because these two Defendants have their principal places of business in Georgia, but also do business in various other states, it is not unreasonable for them to desire to centralize in Georgia litigation arising out of their contractual relationships.
According to Defendants' Notice of Removal, Defendant L.M. Berry and Company is incorporated in Georgia but has its principal place of business in Ohio.
Fourth, the Court does not find Plaintiff's conclusory assertion regarding inconvenience to demonstrate that it would be fundamentally unfair or overly inconvenient for Plaintiff to litigate in Georgia. Certainly much case preparation can be handled by telephone, through the mail, or through other means of communication. When necessary, party representatives, lawyers, and witnesses can be in Georgia by suffering a flight of only a few hours or a day's drive.
To the extent that Plaintiff's complaint of inconvenience is based on additional costs associated with litigating in Georgia, it does not assert that it is incapable of bearing these costs. Nor is there any indication of whether the unidentified 5-10 third party witnesses referenced in Plaintiff's opposition are key witnesses, the likelihood that their testimony actually will be needed, or the nature of that testimony. In any event, the parties can and should take advantage of measures that could reduce the costs associated with such witnesses, such as entering into stipulations and submitting deposition testimony in lieu of live testimony. Indeed, that the principal places of business of two Defendants are located in Georgia actually may facilitate and reduce the discovery and trial costs. Finally, although it may not be possible to completely avoid incurring some additional costs, if required to litigate in Georgia, Plaintiff may be able to obtain some relief from the Georgia court through motion practice and/or in the form of a cost award, if it prevails at trial.
Considering public interest factors relevant to the § 1404(a) inquiry, there also is no indication that the docket of the Northern District of Georgia is so congested that it will unduly delay the progress of this proceeding. Nor has Plaintiff contended that a Georgia federal court will be unfamiliar with applicable substantive law. To the contrary, Plaintiff has acknowledged that Georgia law may control. If so, a Georgia federal court conceivably might have an easier time determining and applying substantive state law principles than would this Court. Because neither party has requested a jury trial, a transfer will not impose additional duties on Georgia citizens. Finally, the Court does not find there to be a heightened interest in having the claims at issue determined locally.
Plaintiff has not contended that transfer to federal court in Georgia will deprive it of any legal remedy to which it would be entitled in this Court.
Plaintiff also contends that transfer is inappropriate because it wishes to assert additional state law claims in this action against some or all Defendants, and that judicial economy would be served by having all of those claims litigated in a single Louisiana forum. Assuming that is true, Plaintiff has not yet been granted leave to assert those claims in this suit; nor is certain that it will be allowed to do so. Indeed, the Court notes that litigation commenced on the additional claims in Louisiana state court in 2001, and that no effort was made to join litigation of those claims and the claims raised here until the Defendants sought to transfer this action to Georgia. In any event, at least for purposes of this motion, Plaintiff has neither adequately demonstrated the connexity between the additional claims and the ones presently at issue, nor shown that the previously filed state court litigation is not so far advanced that now seeking to assert those claims in this action would be appropriate.
Finally, although not binding on this Court, other courts have enforced comparable choice of forum clauses in apparently similar contracts entered into by one or more Defendants. See Neyland v. L.M. Berry and Co., No. 3:01-CV-402WS (S.D. Miss. Feb. 11, 2002); Volunteer Pest Control, Inc. v. BellSouth Telecomm., Inc., No. 3:00-CV-602 (E.D. Tenn. October 2001); see also Ex parte Rymer and BellSouth Adver. Publ'g Corp., 2003 WL 257414 (Ala. Feb. 7, 2003). In Rymer, like here, Plaintiff's representative also was a lawyer.
The Court notes that, while the forum selection language involved in these cases is very similar to that at issue here, the caption of the paragraphs in which they were located, and certain of the other provisions in the paragraph, are somewhat different. Consistent with the excerpt quoted in Defendants' original memorandum in support of their motion to transfer, the contracts in Volunteer, Neyland, and Rymer apparently provided:
14. Entire Agreement/Governing Law/Venue. This DAO, if accepted by us, and any Associated Printing Order, Detailed Confirmation, Proof Copies, and any Special Advertising agreements are our entire Agreement with you and shall be governed by the laws of the State of Georgia. We will not be bound by and disclaim any warranty or right to rely upon any other agreement or representation, such as the location of your Advertising in association with a heading, the nature of other's advertising or changes which you may later request in your Advertising. Any litigation arising hereunder shall be filed in either the Federal District Court for the Northern District of Georgia or the Superior Court of DeKalb County Georgia, and you hereby consent to the jurisdiction of such courts.
(Emphasis added). Defendants additionally contend that the forum selection clauses providing the bases for transfers in Rent Rave v. BellSouth Telecommunications, Inc., et al., No. 3:02-CV-645-H (W.D. Ky. Jan. 2, 3003), and Agiss Floor Cleaning Systems v. L.M. Berry Company, et al., No. 03-18-C (W.D. Ky. June 6, 2003), contained the same or similar choice of forum language as that involved here. Although the Court suspects this is true, the courts', opinions in those cases do not quote the relevant language. Nor did Defendants provide the Court with a copy of the contracts.
Conclusion
Based on the showing made, the Court has determined that transferring this action to the federal district court for the Northern District of Georgia, based on a contractual forum selection clause, is consistent with the fairness and convenience concerns protected by 28 U.S.C. § 1404 (a). Accordingly, for the reasons stated herein, IT IS ORDERED that the Motion to Transfer Due to Forum Selection Clause Pursuant to 28 U.S.C. § 1404 (a) and/or 1406(a) filed by Defendants is GRANTED insofar as it seeks a transfer of this action, pursuant to 28 U.S.C. § 1404 (a), to the United States District Court for the Northern of Georgia.
The Court emphasizes that its decision turns on the specific facts of this case and cautions that its ruling should be limited to those facts. Had certain circumstances differed, the Court may have refused to order the transfer sought by Defendants.