Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_05-cv-00902/USCOURTS-caed-1_05-cv-00902-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal- Injunctive/Declaratory Relief

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

1

IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF CALIFORNIA

WHIPPLE INDUSTRIES, INC., ) 

 )

Plaintiff, )

 )

vs. )

 )

OPCON AB; LYSHOLM TECHNOLOGIES )

AB; OPCON, INC.; & DOES 1-25, )

inclusive, )

 )

Defendants. )

 )

 ) 

No. CV-F-05-0902 REC SMS

ORDER GRANTING DEFENDANTS’

MOTION TO DISMISS.

(Doc. 5) 

On August 22, 2005, the court heard Defendants’ motion to

dismiss Plaintiff’s complaint pursuant to Rule 12(b)(3) of the

Federal Rules of Civil Procedure and forum non conveniens. Upon

due consideration of the written and oral arguments of the

parties, the court GRANTS the motion as set forth below.

I. Factual & Procedural Background

Plaintiff Whipple Industries Inc. (“Whipple”), a California

corporation, filed suit in Fresno County Superior Court against

Opcon Autorotor AB, a Swedish corporation; Lysholm Technologies,

AB (“Lysholm”), a Swedish Corporation; and Opcon Inc, a

subsidiary of Opcon AB, a New York corporation with its principal

Case 1:05-cv-00902-REC -SMS Document 19 Filed 09/08/05 Page 1 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

2

place of business in Connecticut (collectively “Defendants”). 

Defendants removed the case to federal court based on diversity. 

Defendants are not citizens of California and the amount in

controversy is in excess of $75,000.

This action involves a dispute over a distribution agreement

for screw superchargers used in internal combustion engines. 

Lysholm is the manufacturer of these screw superchargers. 

Whipple became a distributor of the screw superchargers in North

America to customers other than original equipment manufacturers

(“OEM”) pursuant to a February 26, 1999 “Aftermarket Agreement”

between Whipple and Lysholm (the “Agreement”). The Agreement was

to remain in effect at least through December 31, 2007. 

Whipple alleges that beginning in May 2004 Lysholm failed to

fill Whipple’s orders for superchargers and thereby breached the

Agreement. Compl. ¶ 34. Whipple also alleges that Defendants

are selling superchargers to manufacturers who are not OEMs as

defined in the agreement, which is a further breach of the

Agreement. Compl. ¶ 37. The Complaint contains causes of action

for breach of contract, specific performance and unfair

competition and seeks declaratory and injunctive relief.

Defendants filed a motion to dismiss on July 18, 2005. 

Defendants argue that venue is improper based on a forum

selection clause in the Agreement. Defendants assert that the

Agreement requires claims be made in the courts of Sweden. 

Plaintiff disputes the existence of a forum selection clause and

asserts that even if such a clause exists it should not be

Case 1:05-cv-00902-REC -SMS Document 19 Filed 09/08/05 Page 2 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

 Notwithstanding the choice of law provision, the parties 1

have cited and argued only United States law with respect to this

motion, with the exception of a single citation regarding a

discrete issue. See Nordenson Decl. ¶ 5. None of the papers

submitted cite the Swedish statutes governing the interpretation of

contracts or the enforceability of forum selection clauses. The

court construes the arguments in the moving papers as consent to

the application of United States law on this limited matter. 

 The court notes that the existence of the forum selection 2

clause is separate and distinct from the Rule 12(b)(3) issue. The

directive in Murphy does not appear to apply to the issue of the

existence of the forum selection clause, which is decided according

to state contract law.

3

enforced because the Agreement contravenes California public

policy and the convenience factors weigh in favor of keeping the

action in the United States.

II. Legal Standard1

A motion to dismiss based on a forum selection clause is

treated as a motion to dismiss for improper venue and is brought

under Rule 12(b)(3) of the Federal Rules of Civil Procedure. 

Argueta v. Banco Mexicano, 87 F.3d 320, 324 (9th Cir. 1996). 

Unlike the case in a motion to dismiss based on Rule 12(b)(6), in

a Rule 12(b)(3) motion a plaintiff’s pleadings are not accepted

as true and a court may consider facts outside the pleadings. 

Id. (citing Supreme Court cases). “[I]n the context of a Rule

12(b)(3) motion based upon a forum selection clause, the trial

court must draw all reasonable inferences in favor of the nonmoving party and resolve all factual conflicts in favor of the

non-moving party.” Murphy v. Schneider Nat’l, Inc., 362 F.3d

1133, 1138 (9th Cir. 2004) (finding rule for viewing facts under

Rule 56 summary judgment motion applies in Rule 12(b)(3) case).2

Case 1:05-cv-00902-REC -SMS Document 19 Filed 09/08/05 Page 3 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

4

“Federal law governs the validity of a forum selection

clause.” Argueta, 87 F.3d at 324. The Supreme Court’s decision

in The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S. Ct.

1907, 32 L. Ed. 2d 513 (1972), set forth the applicable standard. 

A forum selection clause is prima facie valid and should be

enforced “absent some compelling and countervailing reason.” Id.

at 12. The party challenging the forum selection clause must

“clearly show that enforcement would be unreasonable or unjust,

or that the clause was invalid for such reasons as fraud or

overreaching.” Id. at 15. This “heavy” burden is on the party

seeking to avoid the forum selection clause because any

inconvenience the plaintiff would suffer by having to litigate in

the contractual forum was “clearly foreseeable at the time of

contracting.” Id. at 18. 

III. Discussion

A. Does the Agreement Contain a Forum Selection Clause?

The Agreement, which was between Lysholm and Whipple, was

negotiated and finally agreed to on or about February 26, 1999 at

the Hilton Airport Hotel in Chicago, Illinois. The Agreement was

signed in Sweden by Rolf Hasselström on behalf of Lysholm and in

Fresno by Art Whipple on behalf of Whipple. Hasselström Decl.

Ex. A § 3. Section 14 of the Agreement identifies the governing

law as follows: “This Agreement must be construed - and its

performance enforced - under the substantive law of Sweden,

without regard to any conflict of law principles.” Hasselström

Decl. Ex. A § 14. The Agreement also contains the following: 

Case 1:05-cv-00902-REC -SMS Document 19 Filed 09/08/05 Page 4 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

5

19. DISPUTE RESOLUTION

This Agreement and the liabilities and obligations

of both parties shall be interpreted pursuant to

Swedish law. Any dispute arising from this

Agreement shall be settled by Swedish court law. 

Hasselström Decl. Ex. A § 19 (emphasis added). The second

sentence of section 19, underlined above, is the basis of the

current motion and a subject of dispute between the parties.

Defendants argue that there was a typographical error in the

second sentence and that an “of” was unintentionally omitted such

that the second sentence should read “Any dispute arising from

this Agreement shall be settled by Swedish court of law.” 

Hasselström Decl. ¶ 5; Stebäck Decl. ¶ 5. Defendants seek to

have the court consider a 1998 Distributorship Agreement on which

Defendants say the Agreement was modeled. The 1998 Distribution

Agreement was between Opcon and Whipple and contained the

following language: 

This Agreement and the liabilities and obligations of

both parties shall be interpreted pursuant to Swedish

law. Any dispute arising from this Agreement shall by

settled by Swedish court of law.

Hasselström Decl. Ex. B § 11 (emphasis added).

Whipple argues that the Agreement is fully integrated and

that California’s parol evidence rule forbids the court from

looking beyond the four corners of the document. Whipple admits

that the parties chose Swedish law to govern the interpretation

and enforcement of the Agreement as well as any disputes arising

under the Agreement, but argues that there is no forum selection

clause. Whipple argues in the alternative that the evidence

Case 1:05-cv-00902-REC -SMS Document 19 Filed 09/08/05 Page 5 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

6

offered is insufficient and that the Agreement was modeled after

a 1994 aftermarket agreement between Eaton Corporation and

Magnuson Products (the “Eaton-Magnuson Agreement”), not after the

1998 Distribution Agreement. Whipple Decl. ¶ 7.

Whipple has made several objections to the evidence

proffered by Defendants. Except as discussed, infra, the

objections are overruled. 

1. The Parol Evidence Rule

The parol evidence rule, codified in section 1856 of the

California Code of Civil Procedure, prohibits the introduction of

extrinsic evidence to contradict, “vary, alter or add to the

terms of an integrated agreement.” Cal. Code Civ. P. § 1856;

Pacific State Bank v. Greene, 110 Cal. App. 4th 375, 378-79

(2003) (quoting Alling v. Universal Mfr. Corp., 5 Cal. App. 4th

1412, 1433 (1992)). An agreement is fully integrated if it

contains a clause stating that the contract is to be considered

the complete and exclusive agreement between the parties. Id. at

384. Inclusion of an integration clause typically prohibits the

introduction of parol evidence. Trident Ctr. v. Conn. Gen. Life

Ins. Co., 847 F.2d 564, 568 (9th Cir. 1988).

The parol evidence rule has exceptions. Section 1856

specifies that relevant parol evidence may be considered “[w]here

a mistake or imperfection is put in issue by the pleadings.” 

Cal. Code. Civ. P. § 1856(e). Additionally, section 1856 “does

not exclude other evidence of the circumstances under which the

agreement was made or to which it relates, as defined in Section

Case 1:05-cv-00902-REC -SMS Document 19 Filed 09/08/05 Page 6 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

7

1860, or to explain an extrinsic ambiguity or otherwise interpret

the terms of the agreement, or to establish illegality or fraud.” 

Cal. Code. Civ. P. § 1856(g).

Section 1860, in turn, provides that “for the proper

construction of an instrument, the circumstances under which it

was made, including the situation of the subject of the

instrument, and of the parties to it, may also be shown, so that

the judge may be placed in the position of those whose language

he is to interpret.” Cal. Code Civ. P. § 1860. The official

comment offers the following guidance:

To arrive at the intention of an instrument, the

situation of the parties and the subject-matter at the

time of contracting should be considered. The whole

instrument should be taken together, and, if possible,

effect be given to all its parts, even though the

immediate object of inquiry is the meaning of an

isolated clause. If the words be ambiguous, the

meaning may be gathered from contemporaneous facts

which intrinsic testimony establishes.

Cal. Code Civ. P. § 1860 commissioner’s note (emphasis added).

2. Integration

Whipple argues that the Agreement is fully integrated

because section 20 states that it “represents the parties’ final

and mutual understanding” and “is the parties’ entire agreement

on this subject.” Hasselström Decl. Ex. A § 20. Defendants have

not argued that the Agreement is not fully integrated.

The court agrees with Whipple that the Agreement is a fully

integrated document. This defeats Defendants’ argument to the

extent it relies on section 1856(b), which provides that the

terms of a writing “may be explained or supplemented by evidence

Case 1:05-cv-00902-REC -SMS Document 19 Filed 09/08/05 Page 7 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

8

of consistent additional terms unless the writing is intended

also as a complete and exclusive statement of the terms of the

agreement.” Cal. Code. Civ. P. § 1856(b).

3. The Plain Language of the Agreement

California law states that contracts must be “interpreted as

to give effect to the mutual intention of the parties as it

existed at the time of contracting, so far as the same is

ascertainable and lawful.” Cal. Civ. Code § 1636. The parties’

intent is to be ascertained from the language of the contract, so

long as the “language is clear and explicit, and does not involve

absurdity.” Id. at § 1638. 

“Although the intent of the parties determines the meaning

of the contract [citation], the relevant intent is ‘objective’ -

that is, the objective intent as evidenced by the words of the

instrument, not a party’s subjective intent.” Shaw v. Regents of

the Univ. of California, 58 Cal. App. 4th 44, 54-55 (1997). 

Additionally, the undisclosed intention of a party is “immaterial

under the objective theory of contract” and the “true intent of a

contracting party is irrelevant if it remains unexpressed.”

Houghton v. Kerr Glas Mfg. Corp., 261 Cal. App. 2d 530, (1968)).

California law also provides that “[w]hen, through fraud,

mistake or accident, a written contract fails to express the real

intention of the parties, such intention is to be regarded, and

the erroneous parts of the writing disregarded.” Cal. Civ. Code

§ 1640; Defs.’ Mot. at 9. Civil Code section 3399 similarly

provides that:

Case 1:05-cv-00902-REC -SMS Document 19 Filed 09/08/05 Page 8 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

 Mr. Hasselström obviously cannot attest to what Whipple’s 3

actual intent was; this statement is construed as what Mr.

Hasselström believed Whipple’s intent to be.

9

When, through fraud or mutual mistake of the parties,

or a mistake of one party, which the other at the time

knew or suspected, a written contract does not truly

express the intention of the parties, it may be

revised, on the application of the party aggrieved, so

as to express that intention, so far as it can be done

without prejudice to rights acquired by third persons,

in good faith and for value.

 

Cal. Civ. Code § 3399. This provision has been used to correct

mistakes made by a draftsman. See Shupe v. Nelson, 254 Cal. App.

2d 693, 701 (1967); Berendsen v. McIver, 126 Cal. App. 2d 347,

352 (1954).

Here, the Agreement states that disputes “shall be settled

by Swedish court law.” Defendants assert that the Agreement does

not reflect the intent of the parties. Mr. Hasselström, the

managing director of Defendant Opcon AB, the parent company of

Defendant Lysholm, avers that the choice of law provisions and

the forum selection clause were discussed at a meeting of the

parties in Chicago late in 1998. Hasselström Decl. ¶ 3. Mr.

Hasselström further avers that it was his and Lysholm’s intent as

well as the intent of Whipple that Swedish law would govern and 3

that disputes would be settled in a Swedish court of law.

Whipple argues in response that there was no mistake made.

Mr. Whipple avers that he did not intend to agree that disputes

regarding the Agreement must be resolved in Sweden by a Swedish

court and that the issue was never discussed. Whipple Decl. ¶ 9. 

Case 1:05-cv-00902-REC -SMS Document 19 Filed 09/08/05 Page 9 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

10

Whipple argues that it agreed “that the contract be interpreted

according to Swedish law and any dispute be resolved according to

‘Swedish court law.’” Pl.’s Opp’n at 3. 

Whipple fails to argue that Mr. Whipple’s purported intent

was communicated to Defendants and it is irrelevant to the

objective question of the parties’ mutual intent in entering into

the Agreement. Additionally, the phrase “Swedish court law” as

used in the Agreement is not a term that is “clear and explicit”

so as to facilitate interpretation of the Agreement. The

question thus becomes whether parol evidence is admissible to aid

in that interpretation which, as mentioned, requires the

applicability of an exception.

4. Exceptions to the Parol Evidence Rule

As mentioned, the parol evidence rule does not prohibit the

consideration of extrinsic evidence either “to explain an

extrinsic ambiguity or otherwise interpret the terms of the

agreement” or when “mistake or imperfection” is asserted. Cal.

Code. Civ. P. §§ 1856(g), 1856(e). 

a. Ambiguity or to Otherwise Interpret

Throughout its papers Defendants argue that the phrase

“Swedish Court law” is subject to only the interpretation it

offers because, viewed any other way, the phrase makes no sense

or is ambiguous. See McKeon v. Santa Claus of California, Inc.,

230 Cal. App. 2d 359, 364 (1964) (“[t]he fact that one party

questions the meaning of the words and clauses used in an

agreement is at least evidence that there may be ambiguity”). If

Case 1:05-cv-00902-REC -SMS Document 19 Filed 09/08/05 Page 10 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

 Notably, in restating the language of the Agreement, 4

Whipple substitutes the phrase “settled by Swedish court law” with

the unambiguous phrase “according to Swedish court law.” Pl.’s

Opp’n at 3.

11

a term is “fairly susceptible of either one of two constructions

contended for,” extrinsic evidence may be considered. MacIntyre

v. Angel, 109 Cal. App. 425, 430 (1952). The California Supreme

Court has stated that the admissibility of extrinsic evidence

depends upon “whether the offered evidence is relevant to prove a

meaning to which the language of the instrument is reasonably

susceptible.” Pacific Gas & Elec. Co. v. G. W. Thomas Drayage &

Rigging Co., 69 Cal. 2d 33, 37 (1968).

Here, the parties offer two constructions of the phrase

“Swedish court law.” Defendants argue that the phrase “is

clearer if the word ‘of’ is included, so that the typographically

correct phrase becomes ‘Swedish court of law.’ As written, the

only interpretation that can be given is that contract disputes

are to be resolved by Swedish courts.” Defs.’ Mot. at 9. 

Whipple argues in contrast that it agreed that disputes would “be

resolved according to ‘Swedish court law.’” Pl.’s Opp’n at 3. 

Whipple does not argue that the word “court” was mistakenly

included in the Agreement. 

As an initial matter, it is doubtful that Whipple’s

construction of the Agreement is a meaning to which the Agreement

is “reasonably susceptible.” Whipple has presented no evidence

to support the contention that “Swedish court law” is a phrase

typically used, either in contracts or generally. In contrast, 4

Case 1:05-cv-00902-REC -SMS Document 19 Filed 09/08/05 Page 11 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

 A search for “Swedish court law” in the all cases databases 5

of both LEXIS and Westlaw resulted in two hits in LEXIS, both of

which were to the phrase “Swedish court of law.” The same search at

www.Google.com and www.Yahoo.com returned only the sentence

“Swedish court law system,” which, even if citable authority, is

not what the Agreement states.

12

Defendants’ counsel, Jan Gregorsson avers that the term “Swedish

court law” is “unknown to Swedish lawyers.” Gregorsson Decl. ¶

7. The court’s own research revealed no explanation for the

phrase “Swedish court law” other than the existence of a

typographical error. Under Whipple’s interpretation, both 5

sentences of section 19 serve to designate Swedish law as the

governing law and the second sentence is redundant. California

law provides that contracts be interpreted as a whole and every

part should be given effect “so that no clause is redundant.” 

Super 7 Motel Assocs. v. Wang, 16 Cal. App. 4th 541, 546 (1993)

(citing Lawrence Block Co. v. Palston, 123 Cal. App. 2d 300

(1954), diapproved on other grounds, Mattei v. Hopper, 51 Cal. 2d

119 (1958)); Cal. Civ. Code § 1641.

In short, the phrase “Swedish court law” is without

definition; only if the word “of” is included does the phrase

have a reasonable meaning. Assuming for purposes of this motion

that the Agreement is reasonably susceptible of the

interpretation asserted by Whipple, the Agreement is nonetheless

ambiguous and subject to interpretation. The parol evidence rule

does not prohibit extrinsic evidence in such circumstances. Cal.

Code Civ. P. § 1856(g). 

Defendants offer several pieces of evidence in support of

Case 1:05-cv-00902-REC -SMS Document 19 Filed 09/08/05 Page 12 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

 This order relies only on the above-quoted language and Mr. 6

Gregorsson’s qualifications for giving his opinion. To the extent

Whipple’s objection to the Gregorsson declaration relates to this,

it is overruled. 

 Sweden’s legal system is based on civil rather than common 7

law. See The Central Intelligence Agency, The World Fact Book,

Sweden, http://www.odci.gov/cia/publications/factbook/geos/sw.html

(updated August 30, 2005). This, at the very least, makes it

unlikely that there is a significant body of court-made law in

Sweden, unlike the United States’ common law system.

13

its contention that the phrase “Swedish court law” is ambiguous

and that the proper construction of the phrase is “Swedish court

of law.” First is the declaration of Mr. Gregorsson, a member of

the Swedish bar who is familiar with the applicable principles of

Swedish law. Gregorsson Decl. ¶¶ 1, 3. He avers that: 

The phrase “settled by Swedish court law” is unknown to

Swedish lawyers, but is close to an expression that is

used regularly when the parties chose to have a dispute

resolved in the Swedish courts, rather than by

arbitration, namely that the dispute shall be “settled

by Swedish court of law.”

Gregorsson Decl. ¶ 7. This statement is relevant opinion

testimony as to the meaning of the phrase “Swedish court law” in

the Agreement. 

6

Whipple argues in response that, in essence, there is a

Swedish equivalent to, for example, California common law as

opposed to California statutory law. As mentioned, Whipple

offers no evidence in support of this assertion.7

Defendants also offer the 1998 Distribution Agreement

between Whipple and Opcon, which includes the phrase “Swedish

court of law,” as evidence that the Agreement should be

interpreted to find a forum selection clause. Whipple argues in

Case 1:05-cv-00902-REC -SMS Document 19 Filed 09/08/05 Page 13 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

 Whipple’s foundational objection to Mr. Hasseltröm’s 8

declaration is overruled. 

14

response that the Agreement was based on the Eaton-Magnuson

Agreement rather than the 1998 Agreement.

Whipple is correct that on December 16, 1998, Lysholm faxed

a copy of the Eaton-Magnuson Agreement to Whipple with the

request that Mr. Whipple let Lysholm know if the wording was

acceptable and “we [Lysholm] will send you an Agreement with the

same wording.” Whipple Decl. Ex. E at 1. On February 22, 1999,

Whipple provided Lysholm with a copy of Whipple’s agreement with

Opcon. Whipple Decl. Ex. E at 13 (“I’m sending you the Opcon

contract for you to read. I would like my contract with Lysholm

to state I’m not in violation with my Opcon contract”). On

February 24, 1999, Lysholm faxed Whipple a copy of the final

Agreement, which contained the phrase “Swedish court law.” 

Whipple Decl. Ex. E at 15 - 22. 

When Lysholm drafted the Agreement, it was in possession of

both the 1998 Agreement and the Eaton-Magnuson Agreement. Mr.

Hasselström, the managing director of Lysholm’s parent company,

was personally involved in the negotiations with Whipple and

avers that the Agreement was modeled after the 1998 Agreement.8

To the extent Whipple argues that the 1998 Agreement is not

relevant because Mr. Whipple requested that the Agreement be

based on the Eaton-Magnuson Agreement, the objection is

overruled. Whipple provided Lysholm with the 1998 Agreement and

it is obvious from the face of the Agreement that Lysholm

Case 1:05-cv-00902-REC -SMS Document 19 Filed 09/08/05 Page 14 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

15

incorporated both documents. As Defendants point out, the two

agreements may be read together. The Eaton-Magnuson Agreement

contains a choice of law provision stating that “This Agreement

must be construed - and its performance enforced - under the

substantive law of the state of Ohio, without regard to any

conflict of law principles.” Whipple Decl. Ex. E at 6 § 14. 

Section 14 of the Agreement is identical except that “Sweden” is

substituted for “Ohio.”

Section 19 of the Eaton-Magnuson Agreement is a detailed

dispute resolution provision and bears no resemblance to section

19 of the Agreement. Rather, section 19 of the Agreement is

identical - except for the word “of” - to the 1998 Distribution

Agreement between Opcon and Whipple. Because the two earlier

agreements do not conflict with each other, because Whipple was a

party to the 1998 Agreement, and because Lysholm had both

agreements before the draft of the Agreement was completed, both

agreements are admissible evidence regarding the proper

interpretation of the Agreement. The Eaton-Magnuson Agreement

does not offer any guidance in interpreting section 19 of the

Agreement; the 1998 Distribution Agreement supports Defendants’

explanation of the Agreement. It is only with the aid of this

evidence that the phrase “Swedish court law” becomes meaningful,

i.e. by inserting the word “of” such that the phrase becomes

“Swedish court of law.”

b. Mistake or Imperfection

Defendants argue in the alternative that extrinsic evidence

Case 1:05-cv-00902-REC -SMS Document 19 Filed 09/08/05 Page 15 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

16

is admissible pursuant to section 1856(e) because “mistake or

imperfection of the writing” has been “put in issue by the

pleadings.” Cal. Code Civ. P. § 1856(e). The court agrees that

subsection (e) is a second permissible means by which Defendants’

evidence would be admissible.

As discussed, the only objectively reasonable interpretation

of the Agreement is that proffered by Defendants, that a

typographical error was made when section 19 of the EatonMagnuson Agreement was incorporated into the Agreement and that

the phrase “settled by Swedish court of law” was intended to be

included. Only if the phrase reads that “disputes shall be

settled by Swedish court of law” is it meaningful. Given the

senselessness of the construction proposed by Whipple, the plain

language of the 1998 Distribution Agreement to which Whipple was

a party and by which Whipple unarguably intended a forum

selection clause, and the failure of Whipple to communicate an

alternate intent, the mistake in section 19 of the Agreement is

apparent and Whipple at the very least ought to have suspected

the error. Reformation in such circumstances is appropriate,

Cal. Civ. Code § 3399, and the court finds that the Agreement

contains a forum selection clause. The next inquiry is whether

or not the clause should be enforced.

B. Should the Clause be Enforced - The Bremen Factors

In Richards v. Lloyd’s of London, the Ninth Circuit

explained that the Supreme Court in Bremen 

identified three grounds for repudiating a forum

Case 1:05-cv-00902-REC -SMS Document 19 Filed 09/08/05 Page 16 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

 Whipple argues that “[o]n balance, Lysholm has not shown 9

that it would suffer comparable inconvenience by litigating in the

plaintiff’s forum of choice.” Pl.’s Opp’n at 14 (emphasis added).

The Court in Bremen placed the burden of demonstrating

inconvenience squarely on Whipple. 407 U.S. at 18-19.

17

selection clause: first, if the inclusion of the clause

in the agreement was the product of fraud or

overreaching; second, if the party wishing to repudiate

the clause would effectively be deprived of his day in

court were the clause enforced; and third, “if

enforcement would contravene a strong public policy of

the forum in which suit is brought.”

135 F.3d 1289, 1294 (9th Cir. 1998) (quoting Bremen, 407 U.S. 12-

13, 15, 18). Whipple has not argued that the inclusion of the

forum selection clause was the product of fraud or overreaching. 

1. Deprivation of Whipple’s Day in Court

Mr. Whipple avers that “Whipple has been forced to lay off

most of its employees and faces the loss of its business, harm to

its reputation, and possible bankruptcy.” Whipple Decl. ¶13. 

Whipple further asserts that both it and Mr. Whipple “would

suffer serious inconvenience if forced to litigate this action in

Sweden.” Id. Defendants argue in response that each party would

be equally inconvenienced by having to litigate in the other’s

desired forum and assert that the “bottom line is that location

of the witnesses in this day and age is both equally difficult

for each side, yet both can travel to the other’s location in

less than a day.” Defs.’ Mot. at 8-9. 

The Court in Bremen stated that a party seeking to avoid the

forum selection clause must show “not only that the balance of 9

convenience is strongly in favor of trial” in the plaintiff’s

Case 1:05-cv-00902-REC -SMS Document 19 Filed 09/08/05 Page 17 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

18

chosen forum but also that a trial in the location designated by

the clause would “be so manifestly and gravely inconvenient to

[the plaintiff] that it will effectively be deprived of a

meaningful day in court.” Bremen, 407 U.S. at 19. 

Whipple’s argument is insufficient given this standard. Mr.

Whipple’s declaration lacks specific facts from which the court

could conclude that convenience strongly favors Fresno. See

Murphy, supra, 362 F.3d at 1142 (considering declaration of

plaintiff regarding sources and use of income and plaintiff’s

inability to travel due to medical disability to find that

litigating in designated forum would effectively deprive

plaintiff of his day in court). 

Whipple cited Red Bull Assoc. v. Best Western Int’l Inc.,

862 F.2d 963 (2d Cir. 1988), in support of its opposition. The

situation here is dissimilar to that in Red Bull. There, a hotel

filed a civil rights suit as a private attorney general against

Best Western, its affiliated hotel chain, alleging that Best

Western terminated the hotel’s membership in the affiliation due

to race discrimination. Id. at 964-965. The Second Circuit

upheld the non-enforcement of the forum selection clause based on

the district court’s conclusion that if the case were

transferred, the hotel would be “unable or unwilling to pursue

it” and there were “significant public policy concerns” that

favored the hotel’s activity as a private attorney general. 

Accordingly, transfer of venue would have deprived the hotel of

its day in court. Id. at 966. 

Case 1:05-cv-00902-REC -SMS Document 19 Filed 09/08/05 Page 18 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

 Whipple asserts that the court in Hall v. Sup. Ct. of 10

Orange County, 150 Cal. App. 3d 411, 416, “noted that the United

States Supreme Court ‘did not give blanket approval to forum

selection clauses; the holding was limited to cases where “[n]o

satisfying reason of public policy has been suggested . . .” to

deny enforcement of the forum selection clause.’” Pl.’s Opp’n at

10. This is incorrect; the court in Hall was discussing the

California Supreme Court case of Smith, Valentino & Smith, Inc. v.

Sup. Ct., 17 Cal. 3d 491, 496 (1976), not a United States Supreme

Court case. As mentioned supra, federal law governs the

enforcement of a forum selection clause in federal courts, which

requires more than a suggestion of a “satisfying reason of public

19

The situation here is different. In Red Bull, the civil

rights suit was filed by the hotel as a private attorney general

and was encouraged by Congress, and the court found that it would

be contrary to Congress’ intent if the forum selection clause,

which could result in the hotel not prosecuting the claim, were

enforced. This case is a contract dispute between private

entities, not an encouraged civil rights action. Unlike the

hotel in Red Bull, which did not have a personal stake in the

litigation and was simply acting to enforce civil rights laws,

Whipple’s interest in this case is manifest. Finally, Whipple

does not aver that it would be wholly unable to prosecute the

case if the forum selection clause is enforced. 

In sum, Whipple has not carried its “heavy burden” of

demonstrating that litigating this case in Sweden would be so

inconvenient as to deprive Whipple of its day in court. 

2. Contravention of California Public Policy

The third Bremen factor supports repudiation of a forum

selection clause “if enforcement would contravene a strong public

policy of the forum in which suit is brought.” Whipple argues 10

Case 1:05-cv-00902-REC -SMS Document 19 Filed 09/08/05 Page 19 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

policy.” 

 Section 5 of the Agreement provides: 11

5. TECHNICAL ASSISTANCE AND NON-COMPETITION

Lysholm will provide Whipple with reasonable technical

assistance . . . including copies of Lysholm’s

proprietary drawings and specifications if needed.

Whipple must keep in confidence any proprietary

information whether or not marked or otherwise noted or

referred to as being confidential - including written or

oral information . . .. Whipple must not disclose any

information concerning Lysholm’s proprietary information

to any other person or entity without Lysholm’s prior

written consent. During the term of this Agreement and

for three years after the termination of this Agreement,

Whipple must not manufacture superchargers for combustion

engines for which Lysholm or Eaton sold screw

superchargers at any time during this Agreement, except

as specifically permitted in this Agreement. After the

termination of this Agreement Whipple must not use any

proprietary information furnished to it by Lysholm and

shall promptly return all such information to Lysholm,

upon Lysholm’s request.

Hasselström Decl. Ex. A § 5.

20

that the forum selection clause should not be enforced because

enforcement of section 5 of the Agreement “would contravene

California’s strong public policy against restraints on trade,”

and Swedish law may enforce section 5. Pl.’s Opp’n at 10. 11

Whipple is correct that section 16600 of the California

Business and Professions Code provides that “every contract by

which anyone is restrained from engaging in lawful profession,

trade, or business of any kind is to that extent void.” Cal.

Bus. & Prof. Code § 16600. Whipple cites Application Group, Inc.

v. Hunter Group, Inc., 61 Cal. App. 4th 881, 900-902 (1998), in

which the court of appeal refused to enforce a contractual choice

of law provision because doing so would contravene California’s

Case 1:05-cv-00902-REC -SMS Document 19 Filed 09/08/05 Page 20 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

21

strong public policy against enforcement of contractual noncompetition provisions. Whipple acknowledges in a footnote that

the validity of the Agreement’s choice of law provisions in

Sections 14 and 19 is not before the court but asserts that they

are not enforceable. Pl.’s Opp’n at 12 n.6. 

Defendants argue that Whipple’s complaint is, at its core, a

breach of contract claim and point out that Lysholm has not

sought to enforce the restraint in section 5. Defendants also

argue that the facts alleged in Whipple’s declaratory relief

claim are insufficient because they do not allege an actual

dispute. Additionally, Defendants disagree that a California

court would strike section 5 because it is a restriction that

protects Defendants’ trade secrets, proprietary information and

confidential information and such restrictions are valid.

Whipple cites Jones v. GNC Franchising, Inc., 211 F.3d 495

(9th Cir. 2000), in support of its argument. In Jones, a

franchisee filed suit against the franchisor in California,

despite a forum selection clause requiring cases be filed in

Pennsylvania. Id. at 496. The court upheld the district court’s

repudiation of a forum selection clause because California law

specifically provides that a “provision in a franchise agreement

restricting venue to a forum outside this state is void . . ..” 

Id. at 498 (quoting Cal. Bus. & Prof. Code § 20040.5). 

The situation here is different from that in Jones. There,

the California law specifically held that restrictions on venue

were void. Here, the California law relates to restrictions on

Case 1:05-cv-00902-REC -SMS Document 19 Filed 09/08/05 Page 21 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

 This is unlike the case in Hall, 150 Cal. App. 3d at 416, 12

cited by Whipple, in which both issues were before the court and

the court stated that “a determination as to the validity of the

choice of law provision [was] a prerequisite to a determination of

whether the forum selection clause should be enforced.” 

Whipple submits a declaration from a Swedish attorney who 13

avers that the law in Sweden regarding non-competition clauses is

one of reasonableness and not an outright prohibition. Whipple

correctly points out that in enacting section 16600 California

rejected the “reasonableness” analysis. Hill Medical Corp. v.

Wycoff, 86 Cal. App. 4th 895, 901 (2001).

22

competition and is unrelated on its face to venue. The forum

selection clause determines where the case will be heard. It is

separate and distinct from the choice of law provisions which,

Whipple acknowledges, are not before the court. 

12

Whipple’s assertion that California public policy would be

contravened if the forum selection clause is upheld is

speculative. For the court to determine that enforcing the forum

selection clause would violate California’s public policy based

on Whipple’s argument, the court would have to surmise that

Whipple will be able to successfully argue that California law

applies despite the choice of law provision in the contract.13

More importantly, as mentioned, Defendants are “not

attempting to enforce paragraph 5 in this action” and argue that

Whipple’s declaratory relief claims as alleged is conclusory. 

Defs.’ Reply at 6-7. That Defendants are not seeking to enforce

section 5 distinguishes this case from those cited by Whipple in

support of its position. Whipple is correct that covenants not

to compete were held invalid under California law in both

Application Group, Inc. v. Hunter Group, Inc., 61 Cal. App. 4th

Case 1:05-cv-00902-REC -SMS Document 19 Filed 09/08/05 Page 22 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

Even if a Swedish court were to reject Whipple’s section 14

5 declaratory relief claim, there is no harm since Defendants are

not seeking to enforce it. The situation would, of course, be

entirely different if Defendants were seeking to enforce the

clause. See Hill Medical, 86 Cal. App. 4th at 900-02. 

23

881 (1998), and Hill Medical Corp. v. Wycoff, 86 Cal. App. 4th

895 (2001). Application Group and Hill Medical are unlike the

situation here because in both of those cases an action seeking

to enforce the covenant not to compete had been filed. 

Application Group, 61 Cal. App. 4th at 887 (California suit

seeking declaratory relief brought after employer had sued to

enforce covenant not to compete in Maryland state court; Maryland

case failed for lack of damage); Hill Medical, 86 Cal. App. 4th

at 897 (employer sought injunction based on covenant not to

compete). In order to find that California public policy would

be contravened the court would have to assume without supporting

authority that Whipple’s declaratory relief claim is sufficient

absent an attempt to enforce section five.14

Section 5 is tangential to this case at best. Whipple’s

complaint is, at its base, one for breach of contract and unfair

competition. Notably absent from Whipple’s arguments is any

assertion that Swedish courts are ill-equipped to address the

legal issues related to those causes of action. Whipple’s

argument regarding contravention of public policy is speculative

and insufficient to demonstrate that enforcement of the forum

selection clause would be “unreasonable and unjust.” See

Manetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 509, 515

Case 1:05-cv-00902-REC -SMS Document 19 Filed 09/08/05 Page 23 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

24

99th Cir. 1988) (upholding enforcement of forum selection clause

where plaintiff’s contention of unreasonableness “speculative”

and reflecting provincial attitude toward foreign tribunal).

IV. Conclusion

The Agreement contains a forum selection clause, albeit with

a typographical error, designating that disputes regarding the

Agreement shall be settled by the courts of Sweden. Whipple has

failed to carry the “heavy” burden placed in it by Bremen of

demonstrating that the forum selection clause should not be

enforced and Defendants are entitled to dismissal. Because the

court finds in favor of Defendants as to the Rule 12(b)(3) issue,

Defendants’ arguments related to the doctrine of forum non

conveniens will not be addressed. 

ACCORDINGLY, IT IS ORDERED that Defendants’ motion to

dismiss pursuant to Rule 12(b)(3) of the Federal Rules of Civil

Procedure is hereby GRANTED. The clerk shall close the case. 

IT IS SO ORDERED.

Dated: September 7, 2005 /s/ Robert E. Coyle 

ia40ij UNITED STATES DISTRICT JUDGE

Case 1:05-cv-00902-REC -SMS Document 19 Filed 09/08/05 Page 24 of 24