pertain to distributorship agreements between the same parties, each deals with different products
and different distribution agreements,

On September 30, 2002, Defendants filed a counterclaim in this case alleging thal
Plaintiff violated the Beer Act and the Sherman Antitrust Act, engaged in tortious interference
with prospective economic advantage and promissory fraud, and breached it contracts. The
counterclaim alleges, in cssence, that Plaintiff improperly terminated Defendants’ distributorship
agreements, inappropriately conditioned Defendants’ distributorship agreements and failed to
make sufficient support payments to Defendants, Plaintiff now seeks to transfer Defendants’
counterclaim, as well as the entire case, to the Eastern District of California.

ANALYSIS
I, Legal Standards

Plaintiff has moved to transfer this case to the Eastern District of California pursuant to
28 U.S.C. § 1404(a). “Section 1404(a) authorizes a district court to transfer a case in the interest
of justice and for the convenience of the parties and witnesses,” Lexecon Inc. v. Milberg Weiss
Bershad Hynes & Lerach, 523 U.S. 26, 34, 118 S.Ct. 956, 961, 140 L.Ed.2d 62 (1998). Under
Section 1404(a), the Court may transfer a case if the moving party demonstrates the following:
(1) venue was proper in the transferor district; (2) venue and jurisdiction would be proper in the
transferee district; and (3) the transfer will serve the convenience of the parties and the witnesses
as well as the interests of justice. Vandeveld v. Christoph, 877 F. Supp. 1160, 1167 (N.D. Il.
1995).

In analyzing the third prong of Section 1404(a), the Court must look to both private and

public interests. United Air Lines, Inc. v. Mesa Airlines, Inc., 8 F. Supp. 2d 796, 798 (N.D. ILL.



here. The venuc provision in the Illinois Beer Act and the public policy bchind that Act trump
any contractual agreement between the parties. Accordingly, the California forum selection
clause is unenforceable in this case.

IV. The Convenience of the Parties and Witnesses Would Not be Served By Transfer

In order to transfer a case under Scction 1404(a), the moving party must prove that the
transferee forum “is clearly more convenient.” Coffey, 796 F.2d at 219. Plaintiff claims that
Defendants are estopped from claiming inconvenicnee because of the forum selection clausc.
Further, Plaintiff maintains that California will be a more convenient forum because of the
location of the documents, information, and parly witnesses. Defendants, however, point out that
a transfer to California would merely shilt the inconvenience from Plaintiff to Defendants.

Plaintiff claims that Defendants cannot “end run around” a forum selection clause by
claiming inconvenience. The Court, having already found the forum selection clause to be
unenforecable, does not find this argument compelling. It is incumbent upon the Plaintiff, as
movant, to show that California is clearly morc convenient than this forum. It is not for the
Defendant to show that California is inconvenient.

Plaintiff claims that California is morc convenient than Illinois because its management is
located in California, as are the key documents, information and party witnesses that relate to
Romano’s Counterclaim. (R. 11-2, Mem. in Supp. of Mot. to Transfer at 10.) Plaintiff's Rule
26(a)(1) disclosures, however, list many documents and some witnesses that are located in
Illinois. Further, Plaintiff admits that it employs Tlinois-based sales representatives, (/d.) Also,

it does not appear that anyone besides the Plaintiff will find California to be a more convenient

forum. At most, the inconvenience would simply shift from Plaintiffto Defendants. This is not



argues that Defendants’ “cflort to litigate the entire dispute in Illinois,” including the issues in the
California case, warrants a transfer of the counterclaim and the entire case to Califorma.

Plaintiff initiated the Illinois case in the Northern District of Illinois, Tt is clear that
Plaintiff cannot object to the venuc of Defendants’ counterclaim. As the Supreme Court has
noted: “The sctting up of a counterclaim against one already in a court of his own choosing is
very different, in respect to venue, from hailing him into that court. . . . [OJne who sucs ina
federal court .. . thereby submits himself to the jurisdiction of the court with respect to all the
issues of the case, including those pertaining to a counterclaim . .. ."" General Elec. Co. v.
Marvel Rare Metals Co., 287 U.S. 430, 435, 53.8.Ct. 202, 204, 77 L.Ed. 408 (1932); see also
RWM Kinetics Enter., inc. v. Kinetic Concepts, Inc., No. 95 C 5376, 1996 WL 238753, at *2
(N.D. Ill. May 7, 1996) (‘Tt is well established, however, that Plaintiffs cannot object to the
venue of a counterclaim.”), Accordingly, the Court will not transfer this case on the basis of the
scope of the issues raised in Defendants’ counterclaim.!
Ill. Public Policy Interests

Plaintiff also argues that the California forum selection clause favors transferring this
case to the Eastern District of California. Defendants counter that the Court should not enforce
the forum selection clause because it would contravene the strong public policy promulgated by
the Illinois legislature in the Beer Act to have suits under that Act litigated m Thinois,

It is clear that the Malt Agreements each contain a forum sclcction clause requiring that

any cause of action arising between the parties be litigated in California. “[T]he presence of a

1 The scope of Defendants’ counterclaim is more appropriately addressed in a motion to strike or
dismiss the counterclaim. Indeed, Plaintiff filed such a motion on October 31, 2002. (See R 10-

1)



1998). The private interests include: (1) plaintiff's choice of forum; (2) the situs of the material
events; (3) the relative case of access to sources of proof; and (4) convenience to the witnesses
and parties. /d. Public interests include, among other things, the court's familiarity with
applicable law. Chukwu v. Air France, 218 F. Supp. 2d 979, 989 (N.D, Ill. 2002). “The
weighing of factors for and against transfer necessarily involyes a large degree of subtlety and
latitude, and therefore, is committed to the sound discretion of the trial judge.” Coffey v. Van
Dorn Iron Works, 796 F.2d 217, 219 (7 Cir, 1986). Here, Plaintiff “has the burden of
establishing, by reference to particular circumstances, that the transferee forum is clearly more
convenicnt” than the transferor court, /d. at 219-20.

Plaintiff argues that transfer will best serve the interests of justice and the convenience of
the parties and witnesses. Plaintiff also claims that a transfer will prevent Defendant from
gaining a tactical advantage through ils counterclaim and will uphold the forum selection clause
in the Malt Agreements. Defendants counter that transfer to California is not appropriate
because: (1) their counterclaim was compulsory and does not provide a basis for transfer; (2) the
forum selection clause docs not mandate transfer; and (3) the interests of justice and the
convenience of the parties and witnesses does not warrant transfer to California.

Il, The Counterclaim

The center of Plaintiffs argument is that Defendants’ counterclaim exceeds the scope of
the claims in the Illinois case and addresses issues raised solely in the California case. Plaintitf
contends that Defendants have filed a “strategic Counterclaim” seeking “to change the focus of
this case in order to bolster a § 1404(a) transfer motion filed by Romano in California to have

that case transferred to this Court.” (R. 11-2, Mem. in Supp. of Mot. to Transler at 3.) Plaintiff



Illinois’ strong public policy in favor of having these issues litigated within its borders.
Allowing a privately contracted forum selection clause to supersede the Beer Act and its policies
would frustrate the intention of the statute. The forum selection clause, therefore, is
unenforceable under the Seventh Circuit’s standards?

Plaintiff's reliance on Wilkinson Co. v. Krups N, Am. Inc., 48 F.Supp.2d 816 (N.D.II.
1999), is misplaced, In Wilkinson, the court upheld a forum selection clause and transferred the
case to New Jersey. The court found that the public policy behind the Illinois Sales
Representatives Act (“TISRA”) did not preclude transfer of the case to New Jersey because the
ISRA’s public policy pertained to substantive protections, not venue selection. Jd. at 819. In
contrast, the Beer Act contains a specific venue sclection clause evidencing the strong public
policy in having such claims litigated in Tllinois.

Plaintiff also asserts that the Beer Act only requires that a party file a lawsuit governed by
the Beer Act in Illinois, rather than /itigate it in Illinois. This argument is not compelling, The
State’s interest is in having these type of actions litigated within its borders. Plaintiff’s hyper-
technical reading of the statute would render the mandatory venue provision of the statute
meaningless. Indeed, such an interpretation would Icad to lawsuits filed in Illinois and then
transferred elsewhere, which could hardly be what the legislature intended when it enacted the

statute. The actual filing of complaints within Ilinois is merely the step that begins the litigation

Plaintiff argues that only a small percentage of Defendants’ total business with Plaintiff is
governed by the Malt Agreements, and “94% of the F.O.B. dollar value of [Defendants’]
business relationship with [E&J] Winery was for products sold under the Wine Agreements.”
(Reply in Supp. Mot. to Transfer at 2). Plaintiff reasons that the case should therefore proceed
before the court in California because the California case pertains to the wine agreements. This
argument is not compelling.



* Minute Order Fein (i812)

United States District Court, Northern District of Tllinois

Name of Assigned Judge Amy J. St. Eve Sitting Judge if Other
ov Magistrate Judge ou than Assigned Judge
CASE NUMBER 02 C 4599 DATE 11/14/2002
CASE E & J Gallo Winery vs. Morand Bros., et al
TITLE

MOTION;

[In the tatlowing box (a) indicate the party filing the motion, e.z., plaintiff, defendant, 3rd party plaintitf, and (b) state briefly the nature
of the motion being presented.)

DOCKET ENTRY:

ql)
2)
Q)
(4)
(3)
(6)
(7)
(8)
(9)

(10)

ql)

o Filed motion of [ use listing in “Motion” box above, |

Brief in support of motion due

Answer brief to motion due___._ Reply to answer brief due
Ruling/Hearingon ssetfor_ at.
Status hearing[held/continued to] |sct for/rc-set forlon__—set fora

Pretrial conterencc[held/continued to] [set for/re-set for] on _ ___ set for at

Trial[set for/re-set for] on___ at

[RBench/Jury trial] [Hearing] held/continued to al

o0oooaanaoao ga

‘This case is dismissed [with/without] prejudice and without costs{hy/agreement/pursuant to]
OFRCr4n) OLocal Rule 41.1 OFRCP41(ay(t) CO FRCP41(a)(2)

| [Other docket entry] Enter Memorandum Opinion and Order. Plaintiff's motion to transfer this
case lo the Eastern District of California pursuant to 28 U.S.C. § 1404(a) is denied.

eee

| [For further detail see order attached to the original minute order,]

No notices requited, advised in open court.

No nntices required,
nba of nis

Notices mailed by judge’s staff. voy
Ney.

Notified counsel by telephone, date dackered,

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a compelling reason to allow a transfer. See Ameritech Mobile Communications, Inc. v. Cellular
Communications Corp., 664 F. Supp. 1175, 1182 (N.D. Ill. 1987) (forum should not be disturbed
where transfer merely shifts rather than eliminates inconvenience to the parties). Moreover, even
Plaintilf agrees with Defendants’ statement that “the location of witnesses, relevant documents,
and sources of proof are, at best, fairly evenly divided between Illinois and California.” (Reply
in Supp. of Mot. to Transfer at 11). Plaintiff cannot show that Califomia is clearly more
convenient.
CONCLUSION

A venue transfer is not appropriate here, The forum selection clause in the Malt
Distributorship Agreements is unenforceable because of Illinois’ stated public policy to have the
Beer Act litigation adjudicated here. Plaintiffhas not made the requisite showing that the foram
in California would be clearly more convenient. For these reasons, Plaintiffs Motion to Transfer

the case to the Easter District of California is denied.

Dated: November 14, 2002 ENTERED:

[i.e

AMY J. &D/EVE
United States District Judge

10



forum selection clause . . . figure[s] centrally in the calculus.” Steward Org., inc., v. Ricoh
Corp., 487 U.S. 22, 29, 108 S.Ct. 2239, 2244, 101 L.Ed.2d 22 (1988). The Court will not,
however, give such a clause “dispositive consideration.” /d. at 30, 108 S.Ct, at 2245, The
Supreme Court has held that “[a] contractual choice-of-forum clause should be held
unenforceable if enforcement would contravene a strong public policy of the forum in which suit
is brought, whether declared by statute or by judicial decision.” M/S Bremen v. Zapata Off-Shore
Co., 407 U.S. 1, 15, 92 §.Ct. 1907, 1916, 32 L.Ed.2d 513 (1972) (citing Boyd v. Grand Trunk
WR. Co., 338 U.S. 263, 70 S.Ct. 26, 94 L.Ed. 55 (1949) (finding provision that limited the venue
in which employee could bring suit under the Federal Employers’ Liability Act to be void).

Tn this case, enforcement of the California forum selection clause here would contravene
Illinois public policy. Plaintiff filed the instant action in Illinois based on the requirements of the
Beer Act,? which has a specific venue provision requiring lawsuits relating to agreements
governed by the Act to be filed in state or federal court in Illinois:

Tf the brewer or wholesaler who is a party to an agreement pursuant

to this Act fails to comply with this Act or otherwise engages in

conduct prohibited under this Act, the affected party may maintain

a civil suit in court if the cause of action directly relates to or stems

from the relationship of the individual parties under the agreement,

provided that any such suit shall be filed in a State or federal court

of competent jurisdiction located in Illinois.
See 815 ILCS 720/9(1). The Mlinois legislature further enacted the Beer Act “to promote the
public's interest in fair, efficient and competitive distribution of malt beverage products by

regulation and encouragement of brewer and wholesaler vendors to conduct their business

relations toward these ends.” 815 ILCS 720/2(A). It is clear that the Illinois Beer Act embodies

2 The parties do not dispute that the dispute is governed by the Illinois Beer Act.

7



Souther acquired an interest in thom, Plaintiff would terminate the Malt Agrcements and it
would need to transition its malt beverage products to a new distributor of its choosing. (/d.)

On March 4, 2002, Southern issued a press release stating that it had entered into an
agreement in principle with the Defendants for the salc and purchase of Defendants. (R. 1-1,
Compl., Ex. F | 25.) Plaintiff alleges that it subsequently was told that Southern’s purchase of
Defendants would close on June 14, 2002. (/d, 29.) Plaintiff and Defendants met on June 13,
2002 to discuss the transition of E&J’s business to a new distributor. (/d. 30.) Plaintiff asserts
that Defendants failed to execute a transition agrecment or provide for an orderly transition in
their agreement with Southem as previously promised. (Jd.) On June 19, 2002, E&J issued a
wrilten notice to Defendants of termination of the Malt Agreements. (/d., Ex. L)

On June 27, 2002, Plaintiff filed this case in the Northern District of Mlinois against
Romano, Central, Mueller and Paramount. Lator that same day, Plaintiff filed a similar action in
the United States District Court for the Eastern District of California, E&/ Winery v. Morand
Bros. Beverage Co., et al., No. CIVF-02-5776 (E.D. Cal.) (hereinafter the “California case”),
naming the same parties as defendants.

In the proceeding before this Court, the Malt Agreements are the only contracts at issuc.
Plaintiff seeks a declaration under the Malt Agreements and the Illinois Beer industry Fair
Dealing Act, 815 ILCS 720/1, et. seq. (the “Beer Act”) that E&J’s termination of the Malt
Agreements was proper and further seeks damages for Defendants’ alleged breach of the Malt
Agreements. At issue in the California Case are the wine distributorship agreements. There,

Plaintiff seeks a declaratory judgment that i properly terminated ils long-standing wine

distributorship agreements with Defendants. Thus, while both this case and the California case



Distributing Company, Inc. (“Mueller”) and Paramount Distributing Company, Inc.
(“Paramount”) are Illinois corporations with thcir principal places of business in Minois. (R. 1-1,
Compl. 4.) Each Defendant cntered into various agreements with E&J, including a Malt
Beverage Distributorship Agreement (the “Malt Agreements”). (dd. | 8.) Each Mall Agreement,
dated Junc 19, 1998, sets forth the terms under which Defendants would distribute certain of
E&J’s malt beverage products in Illinois. (See id., Exs. A-D.)

The Malt Agreements provide that the Defendants shall “sell, distribute, promote, and
merchandise” E&J products, (R. 1-1, Compl., Exs. A-D §1C.) They further provide that the
Defendants shall “Notify Winery in writing and fully of... any proposed, attempted or actual
assignment of its rights under this Agreement; any proposed or actual change whatsoever in its
ownership, control or management, including its Winery malt beverage manager... ." (Jd.) In
addition, the Malt Agreements explicitly state that “[nJeither Distributor nor Winery may sell,
assign, or transfer its rights under this agreement.” (/d., § 14 F.) Additionally, each Malt
Agreement contains a forum selection clause providing that the parties must file lawsuits
between them in a California court. (/d., § VL 4] A.)

The current dispute arose in late 2001 when Plaintiff and Defendants had discussions
regarding the possible salc of Defendants’ distributing businesses. Plaintiff alleges that
Defendants had discussed a potential sale of their businesses with three compcting distributors:
Glazer, Merinoff and Southern. (R. 1-1, Compl. $17.) Plaintiff also asserts that it informed the
Defendants that it would consider doing business with a new entity that was owned at Icast in
part by Glazer or Merinoff, but that it would not do business with onc that was even partially

owned by Southern. (/d. 19.) Plaintiff further claims that il told the Defendants that if



IN THE UNITED STATES DISTRICT COURT DOCKE
FOR THE NORTHERN DISTRICT OF TLLINOTS Nov 45 200?
EASTERN DIVISION

E & J GALLO WINERY,

)
)
Plaintiff/Counter Defendant, )
) No. 02 C 4599
v. )
) Judge Amy J, St. Eve
MORAND BROS. BEVERAGE CO., d/b/a )
ROMANO BROS. BEVERAGE CO., an Illinois)
corporation, CENTRAL WHOLESALE CO., INC., )
an Illinois corporation, MUELLER )
DISTRIBUTING CO,, INC., an Mlinois )
corporation, and PARAMOUNT DISTRIBUTING )
COMPANY, INC., an Llinois corporation, )
)
)

Defendants/Counter-Plaintiffs.

MEMORANDUM OPINION AND ORDER
Plaintiff E&J Gallo Winery has moved to transfer this case to the Eastern District of
Califormia pursuant to 28 U.S.C. §1404(a). For the reasons sct forth below, Plaintiff's motion is
denied.

FACTUAL AND PROCEDURAL BACKGROUND

E&J Winery (“E&J”) is a California corporation with its principal place of business in
Modesto, California. (R. 1-1, Compl. 4] 3.) E&J produces and distributes wines, malt beverage
coolers and similar flavored malt beverage products such as Bartles & Jaymes Wine Coolers.
(Id)

Defendants Morand Brothers Beverage Company, which does business as Romano

Brothers Beverage Company (“Romano”), Central Wholesale Company (“Central”), Mucller

Vv