1

IN THE UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

AERUS LLC, §

 §

Plaintiff, §

v. § Civil Action No. 3:04-CV-1985-M

 §

PRO TEAM, INC., §

 §

Defendant. §

MEMORANDUM OPINION AND ORDER

Before the Court is Defendant’s Motion to Dismiss, or in the Alternative, to Transfer for

Improper Venue, filed on December 3, 2004. Having considered the motion, response, reply and

the applicable law, the Court GRANTS in part and DENIES in part Defendant’s Motion to

Dismiss, or in the Alternative, to Transfer for Improper Venue.

I. Background

Plaintiff Aerus LLC, formerly doing business as Electrolux, is a limited liability company

with its principal place of business in Texas. Plaintiff manufactures and distributes cleaning

equipment. Defendant ProTeam, Inc. is a corporation with its main corporate office in Idaho. 

Defendant develops and markets floor care products for the janitorial and sanitation industry. On

July 1, 2001, the parties entered into a Marketing Agreement (“2001 Agreement”), which

provided that Defendant would purchase, sell, market, and distribute Plaintiff’s commercial floor

care products. The 2001 Agreement also addressed use of Plaintiff’s trademark and intellectual

property. On May 12, 2003, the parties entered into the Termination, Transition, and Release

 

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Agreement (“2003 Agreement”), terminating the 2001 Agreement. On September 10, 2004,

Plaintiff filed suit against the Defendant, alleging the following claims: (1) Patent Infringement;

(2) Breach of Contract; (3) Unauthorized Trademark Reproduction; (4) Infringement of Common

Law Trade Dress Rights; and (5) Common Law Unfair Competition. On October 4, 2004,

Defendant filed its Answer, generally denying Plaintiff’s allegations and asserting that venue is

improper in the Northern District of Texas. On December 3, 2004, Defendant filed the subject

motion.

II. Analysis

Pursuant to 28 U.S.C. § 1406(a), Defendant moves to dismiss this case, or to transfer it to

the Southern District of California, arguing the parties contractually agreed that the forum for

their disputes would be San Diego, California. 

This Court must determine whether an enforceable forum selection clause exists, and if

so, what deference should be given to it. Federal law governs the determination of whether an

enforceable forum selection clause exists. Haynsworth v. The Corp., 121 F.3d 956, 962 (5th Cir.

1997). In this case, the Court must first determine which agreement (and which corresponding

forum selection clause) governs: the 2001 Agreement or the 2003 Agreement. The Court will

interpret these Agreements in accordance with Texas law to decide which controls. See In re

Dengel, 340 F.3d 300, 313 (5th Cir. 2003) (quoting F.D.I.C. v. Firemen’s Ins. Co. of Newark,

N.J., 109 F.3d 1084, 1087 (5th Cir. 1997)) (“ We look to state law for rules governing contract

interpretation.”).

 

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A. The Applicable Forum Selection Clause

When construing a written contract, it is the court’s primary concern “to ascertain the true

intent of the parties as expressed in the instrument.” Nat’l Union Fire Ins. Co. of Pittsburgh, Pa.

v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995); see also J.M. Davidson, Inc. v. Webster,

128 S.W.3d 223, 229 (Tex. 2003). To the extent possible, provisions should be interpreted in a

way that gives the entire agreement effect and “harmonizes potential conflicts between differing

provisions.” New Concept Constr. Co. v. Kirbyville Consol. Indep. Sch. Dist., 119 S.W.3d 468,

470 (Tex. App. - Beaumont 2003, pet. denied). Parties to a contract are presumed to intend that

each provision has meaning, and a clause will not be struck unless an irreconcilable conflict

exists. Id. at 469.

Ambiguity is a question of law for the court to decide. CBI Indus., Inc., 907 S.W.2d at

520. In determining whether a contractual provision is ambiguous, the court reviews the wording

in light of surrounding circumstances “in order to ascertain the meaning that would be attached to

the wording ‘by a reasonably intelligent person acquainted with all operative usages and knowing

all the circumstances prior to and contemporaneous with the making of the [contract], other than

oral statements by the parties of what they intended to mean.’” Watkins v. Petro-Search, Inc.,

689 F.2d 537, 538 (5th Cir. 1982) (quoting Sun Oil Co. v. Madeley, 626 S.W.2d 726, 731 (Tex.

1981)). If the contract’s wording has a definite or certain legal meaning, it is not ambiguous. 

CBI Indus., Inc., 907 S.W.2d at 520. Even if an instrument is unambiguous, a trial court may

admit extrinsic evidence, such as “parol testimony of the facts and circumstances surrounding or

pertaining to the making of the agreement, in order that the court may apply the language used in

the instrument to the facts and circumstances then existing for the purpose of ascertaining the

 

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true intention of the parties.” Templeton v. Dreiss, 961 S.W.2d 645, 657 n. 12 (Tex. App. - San

Antonio 1998, pet. denied). If the language of the contract is subject to two or more reasonable

interpretations in light of surrounding circumstances and after applying rules of contract

construction, it is ambiguous, and the Court will resolve its meaning. See Watkins, 689 F.2d at

538; Webster, 128 S.W.3d at 229; CBI Indus., Inc., 907 S.W.2d at 520.

Plaintiff argues that the 2001 and 2003 Agreements’ provisions relating to venue and

jurisdiction are “ambiguous at best,” and that the forum selection clause therefore is not

mandatory. Two provisions in the 2003 Agreement require examination. Section 2.1 of the 2003

Agreement states, 

With the sole exception of this Agreement, the Parties acknowledge and agree that

any and all written or oral agreements between the Parties related to products or

services are hereby terminated and are of no further force or effect (except those

provisions thereof that, by their terms, survive termination).

(emphasis added). Section 5.13 states, 

This Agreement, including all Exhibits attached hereto, contains the entire

agreement between the Parties as of the date concerning the subject matter hereof

and supercedes [sic] any and all prior agreements, oral or written, between the

Parties concerning the subject matter hereof . . . .

The parenthetical at the end of Section 2.1 is not present in Section 5.13. 

By virtue of Section 5.7 of the 2001 Agreement (“survival clause”), “Sections 4.4, 5.6,

and 6 through 20 will survive any termination or expiration of this Agreement.” One of the

surviving sections is Section 10, which states, “In the event [Aerus, LLC] asserts a breach or

default by ProTeam under the terms of this Agreement, the jurisdiction, venue, and applicable

law shall be the State of Texas, United States . . . .” Plaintiff argues that the forum selection

clause in the 2001 Agreement is in conflict with the 2003 Agreement. Section 5.9 of the 2003

 

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Agreement states:

In the event either Party asserts a breach or default by the other under the terms of

this Agreement, the jurisdiction, venue, and applicable law shall be [the] City of San

Diego, California, United States of America, and this Agreement shall be deemed to

have been signed at such location to the extent necessary for such jurisdiction and

venue to apply. 

The terms of the 2001 Agreement that allegedly survive termination would render the

2003 Agreement illogical and inconsistent. For example, the dispute resolution and the forum

selection clauses in the 2001 and 2003 Agreements are very similar, but they provide for

completely different fora and applicable law. If these provisions in the 2001 Agreement were

intended to survive termination, then they would render conflicting provisions in the 2003

Agreement unenforceable. Certain of these provisions, which the 2001 Agreement says survive

are nonsensical in light of the 2003 Agreement. For example, the 2001 Agreement, Section 20,

states, “This Agreement, including Schedules attached hereto, contains the entire agreement

between the parties as of the date concerning the subject matter hereof and supercedes [sic] any

and all prior agreements.” Similar wording also exists in the 2003 Agreement. Both provisions

could not logically coexist.

Defendant argues that merger occurred, and therefore, no inconsistency exists. “Merger

refers to the absorption of one contract into another subsequent contract and is largely a matter of

intention of the parties.” Fish v. Tandy Corp., 948 S.W.2d 886, 898 (Tex. App. - Fort Worth

1997, writ denied); see also Superior Laminate & Supply, Inc. v. Formica Corp., 93 S.W.3d 445,

449 (Tex. App. - Houston [14th Dist.] 2002, pet. denied). In order for one contract to be merged

into another, the parties must be the same in both contracts, the last contract must address the

same subject matter, and merger must have been intended by the parties. Smith v. Smith, 794

 

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S.W.2d 823, 828 (Tex. App. - Dallas 1990, writ withdrawn ). “[A] subsequent integration will

not supersede or invalidate a written agreement relating to the same subject matter if the

agreement is such that [it] might naturally be made as a separate agreement.” Fish, 948 S.W.2d

at 899. “However, if the parties to one contract execute another whose terms are so inconsistent

with the first that they both cannot stand, the first agreement is conclusively presumed to have

been superseded by the second.” Smith, 794 S.W.2d at 828; see also Willeke v. Bailey, 144 Tex.

157, 160, 189 S.W.2d 477, 479 (1945); Fish, 948 S.W.2d at 899; Leon Ltd. v. Albuquerque

Commons P’ship, 862 S.W.2d 693, 700 (Tex. App. - El Paso 1993, no writ); Montgomery

Elevator Co. v. Tarrant County, 604 S.W.2d 363, 367 (Tex. App. - Fort Worth 1980, no writ). 

“An integration clause is in essence the merger doctrine memorialized.” Smith, 794 S.W.2d at

828.

The 2003 Agreement includes an integration clause in Section 5.13, which states, “[t]his

Agreement . . . contains the entire agreement between the Parties as of the date concerning the

subject matter hereof and supercedes [sic] any and all prior agreement, oral or written, between

the Parties as of the date concerning the subject matter hereof . . .” The parties explicitly set forth

their intent that the 2003 Agreement constituted the entire agreement, and that it superseded any

and all prior agreements. Any language that survived termination merged into the 2003

Agreement, and to the extent it is inconsistent, the 2003 Agreement controls. Thus, the Court

finds that the 2003 Agreement is unambiguous, and its forum selection clause controls the

Court’s examination of where venue properly lies for this suit.

 

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B. Mandatory Versus Permissive Forum Selection Language

Having determined that the 2003 Agreement controls, the Court must determine whether

the forum selection clause in the 2003 Agreement is mandatory (sometimes called “exclusive”)

or permissive. “Where the agreement contains clear language showing that jurisdiction is

appropriate only in a designated forum, the clause is mandatory.” Von Graffenreid v. Craig, 246

F. Supp. 2d 553, 560 (N.D. Tex. 2003) (citing Excell, Inc. v. Sterling Boiler & Mech., Inc., 106

F.3d 318, 321 (10th Cir. 1997)); Docksider, Ltd. v. Sea Tech., Ltd., 875 F.2d 762, 763-64 (9th

Cir. 1989); First Nat’l of N. Am., LLC v. Peavy, No. 3-02-CV-0033-R, 2002 WL 449582, at *1

(N.D. Tex. Mar. 21, 2002). A party that consents to jurisdiction in one forum does not

automatically waive its rights to have an action heard in another. City of New Orleans v. Mun.

Admin. Servs., 376 F.3d 501, 504 (5th Cir. 2004). According to the Fifth Circuit, “for a forum

selection clause to be exclusive, it must go beyond establishing that a particular forum will have

jurisdiction and must clearly demonstrate the parties’ intent to make that jurisdiction exclusive.” 

Id. at 504. The court noted, “It is important to distinguish between jurisdiction and venue when

interpreting such clauses. Although it is not necessary for such a clause to use the word ‘venue’

or ‘forum,’ it must do more than establish that one forum will have jurisdiction.” Id. A

permissive forum selection clause authorizes jurisdiction in a particular forum, but does not

prohibit litigation elsewhere. Peavy, 2002 WL 449582, at *1.

A forum selection clause is not necessarily classified as mandatory or exclusive simply

because it contains the word “shall.” Caldas & Sons, Inc. v. Willingham, 17 F.3d 123, 127 (5th

Cir. 1994) (analyzing Hunt Wesson Foods, Inc. v. Supreme Oil Co., 817 F.2d 75 (9th Cir. 1987)). 

In Hunt, the court explained that, “although the word ‘shall’ is a mandatory term, here it

 

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mandates nothing more than that the Orange County courts have jurisdiction.” Id. at 128

(reviewing a forum selection clause that stated, “the laws of the State of California shall govern

the validity, construction, [and] interpretation... of this contract. The courts of California, County

of Orange, shall have jurisdiction over the parties in any action at law relating to the subject

matter or the interpretation of this contract.”). “[W]here venue is specified [in a forum selection

clause] with mandatory or obligatory language, the clause will be enforced; where only

jurisdiction is specified [in a forum selection clause], the clause will generally not be enforced

unless there is some further language indicating the parties’ intent to make venue exclusive.” K 

& V Scientific Co. v. Bayerische Motoren Werke Aktiengesellschaft, 314 F.3d 494, 499 (10th Cir.

2002); see also Docksider, 875 F.2d at 764 (“The prevailing rule is clear from these and other

cases that where venue is specified with mandatory language[,] the clause will be enforced”).

The Plaintiff argues that because in the 2003 Agreement the forum selection clause

(Section 5.9) and the dispute resolution clause (Section 5.3) provide for two different fora, the

forum selection clause is not mandatory, and trademark and confidentiality disputes between the

parties can be brought in any court with jurisdiction. The Court disagrees with Plaintiff’s

argument.

In Personal Security & Safety Systems, Inc. v. Motorola Inc., 297 F.3d 388 (5th Cir.

2002), the Fifth Circuit distinguished between arbitration clauses and forum selection clauses. In

Motorola, the Plaintiff argued that the forum selection clause’s specific forum precluded only

lawsuits in other than the designated forum, not arbitration elsewhere. Id. at 395. The court

explained that the forum selection clause must be interpreted in the context of the entire

agreement. Id. The forum selection clause in Motorola was interpreted to mean cases should be

 

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litigated in Texas, only when they were not subject to arbitration. Id. at 396. The forum

selection clause governed “any suit or proceeding,” while the arbitration clause governed “all

disputes or all claims,” evidencing the parties’ desire to apply the forum selection clause only

when the dispute was not subject to arbitration. Id. The court further noted that this was

consistent with cases that hold “a forum selection clause cannot nullify an arbitration clause

unless the forum selection clause specifically precludes arbitration.” Id. at n. 11 (citing In re

Winter Park Constr., Inc., 30 S.W.3d 576, 578 (Tex. App. - Texarkana 2000, no pet.)). In Winter

Park, the court held the forum selection clause did not supersede the arbitration clause,

explaining that the forum selection clause simply provided where venue would exist and the law

that governed in lawsuits. Id. at 578. “A contractual choice of law provision will not supersede

or obviate an arbitration provision unless the choice of law provision specifically excludes

arbitration.” Id. 

In this case, the dispute resolution provision and the forum selection clause apply to

different types of disputes. According to Section 5.3 of the 2003 Agreement, “Any disputes

arising under Section 3.7 [Trademarks; Branding] or 5.4 [Confidentiality] hereof may be

introduced into and heard by any court having jurisdiction, without any requirement to comply

with the procedures described above in this Section 5.3.” Section 5.9 provides, “In the event

either Party asserts a breach or default by the other under the terms of this Agreement, the

jurisdiction, venue, and applicable law shall be [the] City of San Diego, California, United States

of America . . .” As in Motorola, the forum selection clause in issue here specifically addresses

suits for breach or default of the 2003 Agreement. The dispute resolution provision governs

“disputes,” which encompasses an array of other conflicts. Therefore, the more general language

 

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of the dispute resolution clause is not in conflict with the more specific language of the forum

selection clause. “It is a fundamental axiom of contract interpretation that specific provisions

control general provisions.” Baton Rouge Oil & Chem. Workers Union v. ExxonMobil Corp.,

289 F.3d 373, 377 (5th Cir. 2002) (citing RESTATEMENT (SECOND) OF CONTRACTS § 203(c)). 

Thus, even if the dispute resolution and forum selection clauses provide for different fora, the

forum selection clause applies to claims of breach or default. 

Plaintiff argues that the conflicting venue language of the forum selection clause and the

dispute resolution clause renders the forum selection clause permissive. Courts have held forum

selection provisions permissive when the language does not prescribe venue nor provide for

exclusivity. See Mun. Admin. Servs., Inc., 376 F.3d at 504-05 (“The undersigned Contractor

does further hereby consent and yield to the jurisdiction of the State Civil Courts of the Parish of

Orleans...”); Caldas & Sons, Inc., 17 F.3d at 127-28 (“The laws of the Courts of Zurich are

applicable.”); Keaty v. Freeport Indonesia, Inc., 503 F.3d 955, 956 (5th Cir. 1974) (“This

agreement shall be construed and enforceable according to the law of the State of New York and

the parties submit to the jurisdiction of the courts of New York.”); K & V Scientific Co., 314

F.3d at 496, 500 (“Jurisdiction for all and any disputes arising out of or in connection with this

agreement is Munich. All and any disputes arising out of or in connection with this agreement

are subject to the laws of the Federal Republic of Germany.”); Watson v. John K. Burch Co., No.

3:02-CV-2555-D, 2003 WL 21145755, at *3 (N.D. Tex. May 14, 2003) (“All lawsuits will be

handled in the State of Michigan.”); Von Graffenreid, 246 F. Supp. 2d at 557, 561 (“Borrower

and each other Loan Party hereby consents and agrees that the district court of Dallas County,

Texas, or, at Agent’s option, the United States District Court for the Northern District of Texas,

 

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Dallas Division, shall have jurisdiction to hear and determine any claims or disputes between

Borrower and/or any other Loan Party and Agent and/or Guarantors pertaining to this Agreement

or to any matter arising out of or related to this Agreement.”); Blue Cross & Blue Shield of Tex.,

Inc. v. Dimark Mktg., Inc., No. 3:97-CV-1257-D, 1997 WL 405169, at *1 (N.D. Tex. July 15,

1997) (“each party ‘agrees to’ the jurisdiction of the courts of ‘the Commonwealth of

Pennsylvania and the Eastern District of the Courts of the United States.’”).

On the other hand, courts have held that forum selection clauses are mandatory and

enforceable when they provide for exclusivity as to where a case can be brought. See Kevlin

Servs., Inc. v. Lexington State Bank, 46 F.3d 13, 14-15 (5th Cir. 1995) (emphasis added) (“This

contract shall be interpreted and construed in accordance with the laws of the State of Texas. 

The legal venue of this contract and any disputes arising from it shall be settled in Dallas County,

Texas.”); Docksider Ltd., 875 F.2d at 763-64 (emphasis added) (“This agreement shall be

deemed to be a contract made under the laws of the State of Virginia, United States of America,

and for all purposes shall be interpreted in its entirety in accordance with the laws of said State. 

Licensee hereby agrees and consents to the jurisdiction of the courts of the State of Virginia. 

Venue of any action brought hereunder shall be deemed to be in Gloucester County, Virginia.”);

Klinghoffer v. Mama Fu’s Noodle House, Inc., No. 3-04-CV-1695-L, 2004 WL 2583632, at *1,

*3 (N.D. Tex. Nov. 12, 2004) (emphasis added) (“Each party agrees that any legal action or

proceeding against the other party that arises out of or is related to this Agreement may only be

brought in the courts of the State of Georgia or of the United States of America for the Northern

District of Georgia and by entering into this Agreement each party accepts and consents to the

jurisdiction of the aforesaid courts.”); Dorsey v. N. Life Ins. Co., No. 04-0342, 2004 WL

 

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2496214, at *1, *4 (E.D. La. Nov. 5, 2004) (emphasis added) (citing Docksider, Ltd., 875 F.2d at

763) (“This Agreement is governed by the laws of the State of Washington. In the event of a

lawsuit arising out of this Agreement, the Executive General Agent agrees that venue shall be

laid in King County, Washington.”); Marengo Films, Inc. v. Koch Int’l LLC, No. 3:03-CV-0369-

P, 2003 WL 21435728, at *1, *5 (N.D. Tex. June 16, 2003) (emphasis added) (“This agreement

shall be governed exclusively by the laws of the State of New York applicable to contracts made

and to be performed entirely in such State. The parties agree to the exclusive jurisdiction of the

Southern District Court of New York, New York.”); Bonded Inspections, Inc. v. Northrop

Grumman Corp., No. 3:98-CV-0214-D, 1998 WL 185518, at *1-*2 (N.D. Tex. Apr. 10, 1998)

(emphasis added) (“Exclusive jurisdiction and venue shall lie in the State of New York, County

of Nassau, including the United States Federal Courts therein.”).

In Docksider, the Ninth Circuit distinguished its earlier decision in Hunt (in which the

court held the forum selection clause was permissive) by explaining that the forum selection

clause at issue specifically prescribed venue. Docksider, Ltd., 875 F.2d at 763. The Ninth

Circuit explained that the clause required enforcement because the parties not only consented to

jurisdiction in Virginia, but agreed to mandatory venue in Virginia. Id. “This mandatory

language makes clear that venue, the place of suit, lies exclusively in the designated county.” Id.

In Dorsey, the court held the explicit venue language in the forum selection clause was not

ambiguous regarding its exclusivity, and was therefore mandatory. Dorsey, 2004 WL 2496214,

at *4. 

The forum selection clause in this case is similar to the clauses in Dorsey and Docksider. 

The 2003 Agreement forum selection clause states, “the jurisdiction, venue, and applicable law

 

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shall be [the] City of San Diego, California, United States of America . . .” This clause addresses

jurisdiction and venue, fixing such in the City of San Diego, California. While the clause does

not expressly use the language “exclusively” or “only,” the Court construes it, in context, to be so

limited. The specific venue requirement makes this forum selection clause mandatory and

pursuant to it, a lawsuit must be brought in state or federal court in San Diego, California.

C. Applicability of Forum Selection Clause to Claims

The Court must next determine whether the forum selection clause applies to the claims

asserted in this case. Soil Bldg. Sys. v. CMI Terex Corp., No. 3:04-CV-0210-G, 2004 WL

1283966, at *4 (N.D. Tex. June 9, 2004); Woolf v. Mary Kay, Inc., 176 F. Supp. 2d 642, 647

(N.D. Tex. 2001). The court must examine the language of the contract to determine which

causes of action are governed by the forum selection clause. Marinechance Shipping, Ltd. v.

Sebastian, 143 F.3d 216, 222 (5th Cir. 1998); Soil Bldg. Sys., 2004 WL 1283966, at *5. “If the

substance of [the plaintiff’s] claims, stripped of their labels, does not fall within the scope of the

[forum selection] clause [ ], the clause[ ] cannot apply.” Soil Bldg. Sys., 2004 WL 1283966, at *4

(quoting Roby v. The Corp. of Lloyd’s, 996 F.2d 1353, 1361 (2d Cir. 1993)) (alteration in

original). “Claims that arise out of the contractual relationship and implicate the agreement are

subject to the forum selection clause.” Kessmann & Assoc., Inc. v. Barton-Aschman Assoc., Inc.,

10 F. Supp. 2d 682, 688 (S.D. Tex. 1997); see also Tex. Source Group, Inc. v. CCH, Inc., 967 F.

Supp. 234, 238 (S.D. Tex. 1997); Hoffman v. Burroughs Corp., 571 F. Supp. 545, 547 (N.D.

Tex. 1982). In other words, 

the precise issue before this Court is whether the facts and claims alleged in the. . .

complaint have a direct or indirect connection, link or association with, or relation

 

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to (1) the contractual relationship evidenced by the . . . Agreement; (2) an

interpretation of the . . . Agreement; (3) the facts that would support a breach of

contract action based on the . . . Agreement; or (4) the subject matter of the . . .

Agreement. In arriving at its decision, the Court, taking the allegations in the . . .

complaint as true and resolving factual conflicts in the documentary submissions

in favor of the plaintiff, looks to whether a connection, link, association with or

relation to the . . . Agreement, exists by reason of an established or discoverable

relation.

Smith v. Lucent Techs., Inc., No. 02 - 0481, 2004 U.S. Dist. LEXIS 4074, at *37 (E.D. La., Mar.

16, 2004). If such a connection is found between the claims at issue and the 2003 Agreement,

the forum selection clause applies.

The Plaintiff argues the forum selection clause does not apply to any of its claims. It is

asserting the following claims: (1) Count I - Patent Infringement; (2) Count II - Breach of

Contract; (3) Count III - Unauthorized Trademark Reproduction in Violation of the Lanham Act;

(4) Count IV - Infringement of Common Law Trade Dress Rights; and (5) Count V - Common

Law Unfair Competition. The relevant language at issue from the 2003 Agreement forum

selection clause is, “In the event either Party asserts a breach or default by the other under the

terms of this Agreement, the jurisdiction, venue, and applicable law shall be [the] City of San

Diego, California . . .”

1. Count I - Patent Infringement

Plaintiff argues that resolution of the Patent Infringement claim does not depend on

interpretation of either the 2001 Agreement or the 2003 Agreement. Plaintiff explains that

because the contracts do not explicitly address patents or patent infringement, the forum selection

clause is inapplicable to such a claim. Defendant argues that the 2003 Agreement authorized it to

manufacture and sell Plaintiff’s products embodying inventions in the patent at issue, without a

 

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time limit to market and sell such products. Thus, one of the Defendant’s defenses to the patent

infringement claim is based on the 2003 Agreement. “If enforcement of a provision in the

[Agreement] is . . . a defense to a claim, that claim involves a right or remedy under the contract

and should fall within the scope of the forum selection clause.” Penn, L.L.C. v. New Edge

Network, Inc., No. 03 C 5496, 2003 U.S. Dist. LEXIS 17664, at *7 (N.D. Ill. Oct. 1, 2003). 

Thus, the Court finds that the allegations in this claim have a “direct or indirect connection, link

or association with, or relation to” the 2003 Agreement. See Lucent Techs., Inc., 2004 U.S. Dist.

LEXIS 4074, at *37. Therefore, the forum selection clause is applicable to this claim.

2. Counts II & III- Breach of Contract & Unauthorized Trademark Reproduction in

Violation of the Lanham Act

Because the Plaintiff asserts the same argument for both of these claims, the Court

considers them together. Plaintiff argues the forum selection clause does not apply to the breach

of contract claim because the breach asserted involves use of licensed marks and confidentiality. 

Plaintiff further states that such subject matter is expressly allowed to “be introduced into and

heard by any court having jurisdiction,” pursuant to Section 5.3 of the 2003 Agreement. In

addition, Plaintiff asserts that the breach related to Plaintiff’s licensed marks falls under Section

7 [Intellectual Property] of the 2001 Agreement, and that Texas is the proper venue and

jurisdiction to bring such a claim under Section 10 [Forum Selection] of the 2001 Agreement,

and both Sections survive termination according to the Survival Clause, Section 5.7 of the 2001

Agreement. Plaintiff makes a similar argument regarding the Lanham Act claim.

The forum selection clause specifically addresses breach or default under the 2003

 

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Agreement. The breach of contract and Lanham Act claims fall within the purview of the 2003

Agreement’s forum selection clause because the 2003 Agreement must be interpreted to

determine whether the Defendant violated such rights of the Plaintiff, or whether it was acting in

accordance with the Agreement. In addition, the 2003 Agreement is the controlling agreement as

explained above. Thus, the forum selection clause is applicable with regard to both claims.

3. Count IV - Infringement of Common Law Trade Dress Rights

Plaintiff argues that because trade dress rights are another form of trademark rights, and

trademark claims can be brought in any jurisdiction pursuant to Section 3.7 [Trademarks;

Branding] of the 2003 Agreement, the forum selection clause does not apply. As explained

above regarding the Lanham Act claim, interpretation of the 2003 Agreement is necessary to

determine whether the Defendant violated the Plaintiff’s trademark rights. Therefore, the forum

selection clause applies to this claim.

4. Count V - Common Law Unfair Competition

Plaintiff argues that Defendant “unfairly competed by infringing [Plaintiff’s] common

law trade dress rights.” Plaintiff further states that this claim falls under Section 3.7

[Trademarks; Branding] of the 2003 Agreement, and can be brought in “any court having

jurisdiction,” since the forum selection clause does not apply. To determine whether Defendant

violated Plaintiff’s trade dress rights, interpretation of the contract is necessary. If no violation

occurred, then no unfair competition occurred. Because interpretation of the contract is

necessary to determine if such claim can stand, the forum selection clause applies to this claim.

 

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D. Deference

The Court must next determine the amount of deference to be given to the forum

selection clause. The amount of deference a court should give to a forum selection clause is

determined by whether the Defendant has requested dismissal for improper venue under 28

U.S.C. § 1406(a) or requested transfer under § 1404(a). See Int’l Software Sys., Inc. v. Amplicon,

Inc., 77 F.3d 112, 115-16 (5th Cir. 1996); Pugh v. Arrow Elecs., Inc., 304 F. Supp. 2d 890, 893

(N.D. Tex. 2003); Von Graffenreid, 246 F. Supp. 2d at 561; Beauticontrol, Inc. v. Burditt, No.

3:01-CV-0744-M, 2001 WL 1149360, at *2 (N.D. Tex. Sept. 26, 2001). In this case, the

Defendant has moved to dismiss, or in the alternative, to transfer for improper venue pursuant to

§ 1406(a). 28 U.S.C. § 1406(a) states, “The district court of a district in which is filed a case

laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice,

transfer such case to any district or division in which it could have been brought.” 

Where a party seeks dismissal under § 1406(a), the forum selection clause is “prima facie

valid and should be enforced unless enforcement is shown by the resisting party to be

unreasonable under the circumstances.” M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10

(1972). Enforcement may be “unreasonable” when: 

(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 ofthe 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, 121 F.3d at 963. However, the party seeking to avoid enforcement of the forum

selection clause bears a heavy burden of proof. Id. “Where the contract contains a valid forum

 

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selection clause, dismissal rather than transfer is appropriate if the case is filed in the wrong

district.” Von Graffenreid, 246 F. Supp. 2d at 562 (citing Amplicon, 77 F.3d at 115). The Fifth

Circuit has upheld dismissal as an appropriate means of enforcement of a forum selection

clause. Amplicon, Inc., 77 F.3d at 114. The Plaintiff does not specifically address whether the

forum selection clause is unreasonable. Rather, the Plaintiff only sets forth reasons why the case

should not be transferred pursuant to the “interest of justice” balancing of 28 U.S.C. § 1404(a).

A transfer for improper venue falls under § 1406(a). Jackson v. W. Telemarketing Corp.

Outbound, 245 F.3d 518, 523 (5th Cir. 2001); Soil Bldg. Sys, 2004 WL 1283966, at *6. The

court has broad discretion in determining whether to dismiss or transfer a case in the interest of

justice under 28 U.S.C. § 1406(a). Soil Bldg. Sys., 2004 WL 1283966, at * 6. “[I]n considering

a defendant’s motion to transfer, courts in this circuit should use an ‘interest of justice’

balancing test based on § 1404 and § 1406 in which the forum selection clause is only one

consideration among many, whereas with a motion to dismiss, a court should presume that the

clause is valid unless a defendant proves fraud or overreaching in relation to the clause itself.” 

Beauticontrol, Inc., 2001 WL 1149360, at *5. The court should look at convenience of the

forum given the parties’ expressed preference in the forum selection clause, the fairness of

transferring the case in light of the forum selection clause, and the relative bargaining power of

the parties. Id. at *6 The court should also weigh the convenience of the witnesses and “those

public-interest factors of systemic integrity and fairness that, in addition to private concerns,

come under the heading of ‘the interest of justice.’” Id. (quoting Stewart Org., Inc. v. Ricoh

Corp., 487 U.S. 22, 30 (1988)). In most cases, the movant bears the burden of proving transfer

is appropriate. Watson, 2003 WL 21145744, at *4. However, “the presence of a valid and

 

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enforceable forum selection clause shifts the burden of persuasion to the nonmovant who is

attempting to avoid enforcement.” Id.

Defendant argues that the parties’ expressed preference in the 2003 Agreement was San

Diego, California. Defendant avers Plaintiff has the burden of persuading the Court why the

forum selection clause should not be enforced. It explains that Plaintiff is “a sophisticated

business entity that has been in business for nearly 80 years, has over 500 franchise-owned

centers throughout the United States and Canada, and has sold products or services to nearly 50

million households and businesses.” In addition, the 2003 Agreement was executed in San

Diego, California, and California law is applicable in interpretation of the contract. Defendant

also argues both parties were represented by counsel in drafting this agreement. Therefore,

Defendant asserts the case should be transferred to San Diego, California.

Using the interest of justice analysis, and considering the convenience of the parties, and

witnesses the Plaintiff suggests the Northern District of Texas is the appropriate venue. 

Plaintiff’s headquarters are in Dallas, Texas, and Plaintiff’s representatives would have to travel

over 1,000 miles to San Diego, California. Plaintiff also argues its “officers and key employees

are located in Dallas, Texas,” “most, if not all” documents related to Plaintiff’s claims are

located in Dallas, no relevant documents or witnesses are located in San Diego, it would

significantly burden resources of the company to travel to San Diego for court appearances, and

Plaintiff would have to retain local counsel in California. Additionally, Plaintiff argues whether

venue is in San Diego or Dallas, Defendant will still have to travel over 1,000 miles. Defendant

will have to retain local counsel in either city, Defendant does not have a sales representative in

either city, and Defendant has a comparable number of warranty centers in both cities. Thus,

 

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Plaintiff asserts there is no reason to override its choice of forum in Dallas.

In analyzing the interest of justice factors, the Court agrees with the Defendant. In the

2003 Agreement, both parties contractually agreed to choose San Diego, California, as the

forum. Plaintiff’s concerns should have been raised at the time of drafting the forum selection

provision, not after the fact. Both parties were represented by attorneys, and there is no

evidence of any unequal bargaining power. It is not unfair or unreasonable to enforce a forum

selection provision to which both parties contractually agreed to be bound.

This Court will enforce the contract’s forum selection clause. Because the forum

selection clause mandates the case be filed in San Diego, California, venue in this Court is

“wrong.” However, as transfer is an appropriate means under § 1406 to enforce the forum

selection clause when a case is filed in the wrong district, this Court transfers the case to the

United States District Court for Southern District of California, located in San Diego,

California. See 28 U.S.C. § 1406(a) (2005).

III. Conclusion

For the reasons stated above, the Defendant’s Motion to Dismiss is DENIED and

Defendant’s Motion to Transfer Venue is GRANTED.

SO ORDERED.

May 9, 2005.

_________________________________

BARBARA M. G. LYNN

UNITED STATES DISTRICT JUDGE

 

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