UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF INDIANA 

HAMMOND DIVISION 

ROBERT PAYNE ) 

 ) 

 Plaintiff ) 

 ) 

 v. ) CAUSE NO. 2:13-CV-109 JD 

 ) 

NORTHERN TOOL & EQUIPMENT ) 

COMPANY, INC, et al., ) 

 ) 

 Defendants. ) 

Memorandum Opinion and Order

Northern Tool & Equipment Company, Inc. and Northern Tool & Equipment Catalog 

Company (“Northern Tool”) move this Court to dismiss the complaint filed by Robert Payne 

d/b/a Paynes Products, Paynes Forks, and Paynes Tools (“Payne”) pursuant to Federal Rule of 

Civil Procedure 12(b)(3). This motion has been fully briefed [DE 11, 18, 20]. For the following 

reasons, Defendant’s motion to dismiss for improper venue [DE 10] is GRANTED in part and 

DENIED in part. 

Background

Payne manufactures and distributes “Paynes Forks” and other light-industrial tools, and is 

headquartered in LaPorte, Indiana. [DE 1 ¶¶ 7–8]. A Paynes Fork is an apparatus invented by 

Payne that attaches to the bucket of a tractor to allow the tractor to function as a forklift. [DE 1 

¶ 8]. Payne’s products generally all bear the mark of “Paynes Products,” and Payne has applied 

to the United States Patent and Trademark Office to register that mark as a trademark. [DE 1 ¶¶ 

12–14]. In 2005, Payne entered into a Vendor Agreement with Northern Tool pursuant to which 

Payne agreed to sell certain of its products through Northern Tool’s stores, catalogs, and internet 

presence. [DE 1 ¶¶ 10, 11]. Through its association with Northern Tool, Payne had sales from 
2

2005 to 2012 totaling approximately $6,500,000. [DE 1 ¶ 16]. The Vendor Agreement entitled 

Northern Tool to three percent of each invoice for shipped products. [DE ¶ 18]. Generally, 

when Northern Tool would receive an order for Payne products, Northern Tool would contact 

Payne, who would then ship the product directly to the buyer from Payne’s Indiana location. 

[DE 1 ¶ 21]. Occasionally, Northern Tool would hold Payne’s inventory, [DE 1 ¶ 22], though 

Payne asserts that it never actually shipped inventory directly to Northern Tool. [DE 19 ¶¶ 5–7]. 

In October 2012, however, Northern Tool informed Payne that it would no longer 

advertise or take orders for Payne’s products, which Payne asserts terminated their Vendor 

Agreement. [DE 1 ¶ 15]. Payne alleges that even after that time, Northern Tool continued 

advertising Payne’s products through their eBay marketplace website and through their catalogs. 

[DE 1 ¶ 28]. Payne further alleges that the products Northern Tool marketed after the 

termination of the agreement, “are in reality not Paynes Products,” but are “imitation” and 

“inferior” products that Northern Tool is attempting to palm off as Paynes Products. [DE 1 

¶¶ 29, 35, 37 (emphasis in original)]. Payne also alleges that Northern Tool failed to return 

certain funds following the termination of the Vendor Agreement, in violation of that agreement. 

[DE 1 ¶¶ 47–48]. As a result, Payne commenced the present suit by filing a three-count 

complaint for: (1) trademark infringement under federal law; (2) unfair competition under state 

law; and (3) breach of contract. [DE 1]. Northern Tool has moved to dismiss the complaint in 

its entirety on the basis that a forum-selection clause in the Vendor Agreement mandates that 

each of Payne’s claims be brought only in Minnesota courts. 

Analysis

The issue to be decided is whether this Court is the proper venue for this action. Even 

though Northern Tool does not dispute that this action otherwise satisfies the statutory 

requirements for proper venue, 28 U.S.C. § 1391(b), it asserts that the forum-selection clause in 
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the Vendor Agreement mandates that these claims be brought in Minnesota, which would require 

dismissal (or transfer) of this action. The Seventh Circuit has held that a Rule 12(b)(3) motion is 

the proper vehicle for advancing this argument.1 Cont’l Ins. Co. v. M/V ORSULA, 354 F.3d 603, 

606–07 (7th Cir. 2003) (“A lack of venue challenge, based upon a forum-selection clause, is 

appropriately brought as a Rule 12(b)(3) motion to dismiss.”). “When a defendant moves to 

dismiss for improper venue pursuant to Rule 12(b)(3), the plaintiff bears the burden of proving 

that venue is proper.” Buffet Crampon S.A.S. v. Schreiber & Keilwerth, Musikinstrumente 

GmbH, No. 3:09-cv-347, 2009 WL 3675807, at *4 (N.D. Ind. Nov. 2, 2009) (citing Carr v. ABC 

Fin., No. 1:08-cv-318, 2009 WL 1615396, at *1 (S.D. Ind. June 9, 2009)). When deciding a 

motion to dismiss for improper venue, the Court may consider documents presented outside of 

the pleadings. Id. However, the Court must still take all allegations in the complaint as true, and 

the Court must resolve all factual disputes in favor of the party contesting the motion to dismiss. 

Id. 

Payne raises two threshold arguments in response to the motion to dismiss. The first is 

that Northern Tool has waived or forfeited its objection to venue by citing authority from outside 

its preferred forum in its brief in support of the motion to dismiss. However, this argument is 

neither factually nor legally grounded. Though Northern Tool cited some authority from the 

Seventh Circuit and elsewhere, it expressly based its argument on Minnesota law. Additionally, 

Payne cited no authority whatsoever for the curious argument that merely citing authority outside 

 

1

 A circuit split currently exists as to the proper vehicle for advancing this argument, see J.B. Harris, Inc. v. Razei 

Bar Indus., Ltd., 181 F.3d 82, 82 (1999) (“[A] motion to dismiss based on a forum-selection clause is properly 

founded on [Rule] 12(b)(6) rather than [Rule] 12(b)(3)); Salovaara v. Jackson Nat’l Life Ins. Co., 246 F.3d 289, 298 

(3d Cir. 2001) (“[A] 12(b)(6) dismissal is a permissible means of enforcing a forum selection clause that allows suit 

to be filed in another federal forum.”), and the Supreme Court has granted certiorari in a case that may resolve this 

question, Atlantic Marine Constr. Co., Inc. v. U.S. Dist. Court for the W. Dist. of Tex., 133 S.Ct. 1748 (2013). 

Though the Court analyzes this motion under Rule 12(b)(3), in accord with Seventh Circuit precedent, the result 

would be the same if construed as either a Rule 12(b)(6) motion for failure to state a claim or as an affirmative 

defense. 
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a party’s preferred forum can constitute a waiver of that party’s objection to venue. The Court 

finds that this argument is without merit, and also deems it waived because it has not been 

developed or supported. See Weinstein v. Schwartz, 422 F.3d 476, 477 n.1 (7th Cir. 2005) 

(holding that a party waived an argument by addressing it cursorily and failing to cite any legal 

authority in its support). Second, Payne argues that venue properly lies in this district because 

this Court has personal jurisdiction over Northern Tool. However, Northern Tool does not 

dispute that this Court has personal jurisdiction over it, and while venue can sometimes be based 

on the existence of personal jurisdiction, see 28 U.S.C. § 1391(b)(1), (b)(3), (c)(2), a forumselection clause can defeat venue in a judicial district where the statutory requirements for venue 

have otherwise been met. See, e.g., Muzumdar v. Wellness Int’l Network, Ltd., 438 F.3d 759, 

760 (7th Cir. 2006); Cont’l Ins. Co., 354 F.3d at 606–07. Northern Tool does not dispute that 

venue would otherwise be proper in this district, but bases its argument solely on the forumselection clause, so Northern Tool’s motion turns on the validity and applicability of the forumselection clause, and not the existence of personal jurisdiction. 

A. The Forum-Selection Clause is Enforceable 

Turning to the substance of Northern Tool’s arguments, the forum-selection clause in the 

Vendor Agreement at issue states: 

This agreement shall be deemed to be made under the laws of the State of 

Minnesota. All interpretations, regardless of the forum, shall be made applying 

Minnesota law. Vendor hereby irrevocably consents to the jurisdiction of the 

courts of Minnesota with respect to the adjudication of any case or controversy 

arising under or in connection with this Agreement, and agrees that such courts 

will be the proper and only forum in which to adjudicate any such cause or 

controversy. . . . Vendor hereby irrevocably waives any objection based on any 

alleged impropriety of venue or personal jurisdiction of such courts and hereby 

agrees not to institute an action arising under or relating to this Agreement in any 

other court. 
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[DE 1-1 at 9]. The validity and construction of a forum-selection clause, “depends on the law of 

the jurisdiction whose rules will govern the rest of the dispute.” IFC Credit Corp. v. United Bus. 

& Indus. Fed. Credit Union, 512 F.3d 989, 991 (7th Cir. 2008). Because the Vendor Agreement 

chose Minnesota law to govern the agreement as well as a Minnesota judicial forum, Minnesota 

law governs the analysis of the agreement. See id. (“Illinois law determines the validity of the 

waiver in the contract, for the pact selects Illinois substantive law as well as an Illinois judicial 

forum.”). Payne does not dispute that Minnesota law governs the agreement, but claims for 

various reasons that the agreement does not apply here. Since the parties have not identified any 

material difference among the laws in question, the Court need not further consider this question. 

See Kochert v. Adagen Medical Intern, Inc., 491 F.3d 674, 677 (7th Cir. 2007). 

Forum-selection clauses will be enforced, “unless it is shown by the party seeking to 

avoid the agreement that to do so would be unfair or unreasonable.” Hauenstein & Bermeister, 

Inc. v. Met-Fab Indus., Inc., 320 N.W.2d 886, 890 (Minn. 1982); see M/S Bremen v. Zapata OffShore Co., 407 U.S. 1, 10 (1972) (holding that 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” under federal law). Payne does not suggest that enforcing the forumselection clause here would be unfair or unreasonable. [DE 18 at 3 (“Plaintiff concedes that the 

forum-selection clause within the Vendor Agreement, if the contract was still in force, would 

dictate where this case should be litigated.”)]. Rather, Payne’s only defense against the 

enforceability of the provision is that it should not survive the termination of the contract. 

However, whether or not the Vendor Agreement was terminated is inconsequential to 

whether the forum-selection clause is enforceable here. Courts routinely enforce forum-selection 

clauses after a contract is terminated unless the terms of the contract itself indicate otherwise: 
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“In the absence of contractual language expressly or implicitly indicating the contrary, a forum 

selection clause survives termination of the contract. . . . The intent of the parties as to the 

continued applicability of a forum selection clause controls.” Advent Electronics, Inc. v. 

Samsung Semiconductor, Inc., 709 F. Supp. 843, 847 (N.D. Ill. 1989); see also Nolde Bros., Inc. 

v. Local No. 358 Bakery & Confectionery Workers Union, 430 U.S. 243, 250–51 (1977) (holding 

that the termination of a contract does not extinguish the contract’s arbitration clause); Claber, 

S.p.A. v. Lowe’s Cos., Inc., No. 98 C 4760, 1999 WL 166974, at *3 (N.D. Ill. Mar. 23, 1999) 

(“Whether the contract was terminated . . . is irrelevant because forum selection clauses survive 

termination of a contract.”). Here, the provision states that Payne, “irrevocably consents to the 

jurisdiction of the courts of Minnesota,” and, “irrevocably waives any objection based on any 

alleged impropriety of venue or personal jurisdiction of such courts.” [DE 1-1 at 9 (emphasis 

added)]. This implies that the provision is intended to extend beyond the life of the contract, and 

at the very least, neither expressly nor implicitly indicates an intent for the provision terminate 

along with the contract. The clause is therefore enforceable regardless of whether the agreement 

is still in effect, though that is not to say it is necessarily applicable to Payne’s specific claims. 

The authorities Payne cites are not to the contrary, as they do not address whether forumselection clauses terminate upon the termination of the agreement, but whether the claims at 

issue arose under the versions of the agreements that contained the forum-selection clauses. 

Thus, though Payne frames its argument as that the termination of the contract actually 

terminates the effect of the forum-selection clause, its arguments are better understood as arguing 

that the post-termination conduct at issue here did not actually arise under the contract. The 

Court therefore turns next to whether Payne’s claims fall within the scope of the forum-selection 

clause. 
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B. Only the Breach of Contract Claim Arises Under or In Connection With the Vendor 

Agreement and Is Subject to its Forum-Selection Clause 

The forum-selection clause in the Vendor Agreement applies to all cases or controversies 

“arising under or in connection with this Agreement.” [DE 1-1 at 9]. Because the clause is 

stated in mandatory terms—stating that “[Minnesota] courts will be the proper and only forum,” 

and that Payne “agrees not to institute an action . . . in any other court”—any such claims 

brought outside of Minnesota courts would require dismissal. See Muzumdar, 438 F.3d at 762 

(“We have found such mandatory language to require enforcing a forum selection clause. We 

have said that where venue is specified with mandatory or obligatory language, the clause will be 

enforced . . . .”). The complaint at issue presents three separate claims: (1) trademark 

infringement under federal law; (2) unfair competition under state law; and (3) breach of 

contract. The first two claims are essentially based on the same facts and assert that Northern 

Tool used the Paynes Products mark to advertise and sell products that are not in fact Payne’s 

products. The third claim is distinct and relates only to Northern Tool’s alleged failure to 

perform certain obligations under the Vendor Agreement. 

There is no question that the breach of contract count “arises under or in connection 

with” the Vendor Agreement, as it is expressly founded on responsibilities allegedly imposed by 

the agreement. Payne conceded as much in its response to the motion to dismiss. Additionally, 

given the distinct nature of this claim, as compared to the trademark infringement claim over 

which this Court has original jurisdiction, it is unclear whether this claim would even fall within 

the Court’s supplemental jurisdiction. However, since this claim clearly arises under the Vendor 
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Agreement and is therefore subject to the forum-selection clause, this count should be dismissed 

for improper venue.2

Counts I and II require closer attention, however. Initially, the fact that these claims are 

not framed as breaches of the contract is not dispositive as to whether the forum-selection clause 

applies. “[A] plaintiff cannot defeat a forum-selection clause ‘by its choice of provisions to sue 

on, of legal theories to press, and of defendants to name in the suit.’” Kochert, 491 F.3d at 679 

(quoting Am. Patriot Ins. Agency, Inc. v. Mutual Risk Mgmt., Ltd., 364 F.3d 884, 889 (7th Cir. 

2004)). Thus, the fact that the claims allege violations of federal law and state common law do 

not mean that they do not “arise under” the Vendor Agreement. As the Seventh Circuit has 

explained: 

[T]he existence of multiple remedies for wrongs arising out of a contractual 

relationship does not obliterate the contractual setting, does not make the dispute 

any less one arising under or out of or concerning the contract, and does not point 

to a better forum for adjudicating the parties’ dispute than the one they had 

selected to resolve their contractual disputes. 

Am. Patriot, 364 F.3d at 889. 

In arguing to the contrary, Payne cites Justice Holmes’ statement that, “a suit arises under 

the law that creates the cause of action.” Am. Well Works Co. v. Layne & Bowler Co., 241 U.S. 

257, 260 (1916). However, this statement was made in an entirely different context—the 

statutory scope of federal courts’ subject matter jurisdiction. Even in that context, this 

construction is recognized as “an inclusive, though not an exclusive, definition.” Int’l Armor & 

Limousine Co. v. Moloney Coachbuilders, Inc., 272 F.3d 912, 916 (7th Cir. 2001). As the 

Supreme Court recognized in Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 

 

2

 Neither party has requested that the Court transfer claims subject to the forum selection clause instead of 

dismissing them without prejudice. Because the statute of limitations on this claim has not yet run, Minn. Stat. 

§ 541.05 subd. 1(1) (stating that the statute of limitations for breach of contract is six years), Payne will not be 

prejudiced by dismissing this claim without prejudice rather than transferring it, so dismissal is appropriate. 
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U.S. 1, 13 (1983), “Even though state law creates appellant’s causes of action, its case might still 

‘arise under’ the laws of the United States if a well-pleaded complaint established that its right to 

relief under state law requires resolution of a substantial question of federal law in dispute 

between the parties.” This is a decidedly broader definition than Justice Holmes’. 

However, just because the parties have entered an agreement containing a forumselection clause does not mean that any potential dispute they may encounter will be subject to 

that clause, even where the dispute would not have occurred but for the agreement. In analyzing 

a similar forum-selection clause, the Seventh Circuit addressed this issue by posing a 

hypothetical: “Let us suppose that while inspecting [Plaintiff’s] facilities, a manager of 

[Defendant] stepped on a baby rattle and fell. Would the ensuing tort litigation go to the [chosen 

forum] just because, but for the distribution agreement, none of [Defendant’s] employees would 

have been on [Plaintiff’s] premises?” Omron Healthcare, Inc. v. Maclaren Exports Ltd., 28 F.3d 

600, 602 (7th Cir. 1994). The court interpreted the clause by stating that “all disputes the 

resolution of which arguably depend on the construction of an agreement ‘arise out of’ that 

agreement” for purposes of a forum-selection clause. Id. at 603. 

In applying that standard, Northern Tool relies heavily on Omron, 28 F.3d 600, and 

Buffet Crampon, 2009 WL 3675807, to argue that Payne’s trademark infringement and unfair 

competition claims arise under the Vendor Agreement. Both of those cases are similar to this 

case in many respects, as both involved trademark infringement claims brought after the 

termination of distribution agreements containing forum-selection clauses. In Omron, the 

defendant had a substantial amount of inventory of strollers left over after the termination of the 

distributorship agreement. 28 F.3d at 601. The defendant pasted new labels on the strollers 

identifying their new reseller, but the plaintiff brought a trademark infringement action because 
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the plaintiff’s trademarks were still visible on the products. Id. The Seventh Circuit enforced the 

forum-selection clause, holding that because the dispute would require the court to interpret 

implicit terms in the contract as to how to dispose of the remaining inventory, the action arose 

under the contract, even though the claim was for post-termination trademark infringement. Id. 

at 602. Buffet Crampon similarly involved a trademark dispute prompted by a party’s attempt to 

dispose of materials produced during the course of the agreement. 2009 WL 3675807, at *7. 

Noting that analyzing the claims at issue would “require an interpretation of the express and 

implied terms of” the agreement containing the forum-selection clause, the court held that the 

claim arose under the contract and was subject to the clause. Id.

Under Northern Tool’s theory of the case, this case would be on all fours with Omron 

and Buffet Crampon. They claim that the Paynes Products they marketed after the termination of 

the Vendor Agreement were simply inventory they had on hand from customers who had 

returned products directly to them from sales made pursuant to the Vendor Agreement, and that 

the Vendor Agreement authorized them to sell those products. Because the Court would have to 

interpret the Vendor Agreement to determine the parties’ rights relative to those sales, the 

trademark and unfair competition claims would necessarily arise under the Vendor Agreement 

and be subject to its forum-selection clause, they argue. 

If those were actually the allegations underlying Payne’s claims, then the claims would 

indeed arise under the Vendor Agreement. However, Payne’s allegations are that Northern Tool 

was selling products that were not Paynes Products, and that had no connection to Payne or the 

Vendor Agreement. [DE 1 ¶ 37]. Payne alleges that Northern Tool was actually manufacturing 

the products on its own, and then using the Paynes Products mark to palm those products off on 

unsuspecting customers. Id. 
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Based on these specific allegations, which for purposes of this motion the Court must 

accept, resolving the claims will not require an interpretation of the express or implied terms of 

the Vendor Agreement. If the facts ultimately support Northern Tool’s theory, then there will be 

no trademark infringement or unfair competition in the first place, regardless of whether the 

agreement would otherwise permit such activity, and the claims would fail on factual grounds. If 

the facts ultimately support Payne’s allegations, however, the Vendor Agreement would not 

provide Northern Tool with any protection—Northern Tool has not suggested that any express or 

implied term in the Vendor Agreement gives it the right to use the Paynes Products trademark to 

market products that are not and never were Payne’s products and that were not produced in 

connection with the agreement. In either case, resolving this dispute will not require 

interpretation of the Vendor Agreement. See Andersen v. Res-Care, Inc., No. 1:05-cv-391, 2006 

WL 842394, at *4 (N.D. Ind. Mar. 27, 2006) (holding that a forum-selection clause contained in 

an employment agreement did not apply to an employee’s claim under the Americans with 

Disabilities Act where the “Employment Agreement, and its terms, are simply not relevant to the 

Plaintiff’s ADA claim”). This result would be the same even under the “but for” test that the 

court in Crampon rejected as over-inclusive, since Northern Tool could manufacture its own 

products and palm them off as Payne’s even without the Vendor Agreement. Therefore, these 

claims do not arise under, in connection with, or in relation to the contract, so the forumselection clause does not apply. As a result, Northern Tool’s motion to dismiss must be denied 

as to these claims. 

Conclusion

For the reasons stated above, Defendants’ motion to dismiss for improper venue is 

GRANTED in part and DENIED IN PART. Count III, alleging breach of contract, is 

DISMISSED WITHOUT PREJUDICE. Plaintiff may proceed in this action on Counts I and II. 
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 SO ORDERED. 

 ENTERED: November 12, 2013 

 /s/ JON E. DEGUILIO 

 Judge 

 United States District Court