DISCUSSION

Compath moves to dismiss this case for improper venue because the contract on
which the suit is based includes a forum selection clause that limits resolution of
disputes arising under the contract to the jurisdiction of “any appropriate Court for the
Fairfax County of Virginia . . ..” (Contract § 22.) Tek-Nik opposes enforcement of the
clause for three reasons: “1) the contract as a whole and the forum selection clause in
particular were induced by fraud or overreaching; 2) enforcement of the forum
selection provision would effectively deprive Tek-Nik of its day in court; and 3) public
policy considerations disfavor enforcement of the forum selection clause.” (P1. Resp.
at 1.)

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.” M/S Bremen v. Zapata Offshore Co., 407 U.S. 1, 10 (1972); see also
Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 589 (1991). More specifically,

“ce

such clauses will only be held “‘unreasonable’ (1) if their incorporation into the
contract was the result of fraud, undue influence or overweening bargaining power;
(2) ifthe selected forum is so ‘gravely difficult and inconvenient that [the complaining

party] will for all practical purposes be deprived of its day in court’; or (3) if

enforcement of the clauses would contravene a strong public policy of the forum in

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public policy of Illinois is compromised by allowing parties to contractually bind
themselves without representation.

Although we find the forum selection clause reasonable and enforceable, Tek-
Nik asks us not to dismiss the case for improper venue but to transfer it to the U.S.
District Court for the Eastern District of Virginia. When deciding to transfer a case to
another venue rather than dismiss the case, a federal district court may, “[for the
convenience of parties and witnesses, in the interest of justice . . . transfer any civil
action to any other district or division where it might have been brought.” 28 U.S.C.
§ 1404(a). Although “[t]he decision to transfer a case on venue grounds is largely a
discretionary determination”, the party seeking the transfer must demonstrate that:
“(1) venue is proper in the transferor district; (2) the transferee district is one where the
action might have been brought (both venue and jurisdiction are proper); and (3) the
transfer will serve the convenience of parties and witnesses and will serve the interest
of justice.” Von Holdt v. Husky Injection Molding Sys., Ltd., 887 F. Supp. 185, 187-88
(N.D. Ill. 1995). Since the Northern District of Ilinois is not a proper venue, we are

not authorized to transfer the case. The case is dismissed.


Tek-Nik next argues that enforcement of the forum selection clause would
effectively deprive it of its day in court. Tek-Nik claims that: the contract was
provided by Compath for execution in Illinois; the contract was executed and
performed entirely in Illinois; all of the witnesses to this case are located in Illinois; and
all documents relative of the case are located in Illinois. Tek-Nik further claims that
it “does not believe that it will be able to bear the expense of litigating in a forum
thousands of miles from all of the evidence and witnesses in this case.” Based on these
arguments, Tek-Nik alleges that to force it to litigate in Virginia will effectively
preclude Tek-Nik of its day in court.

First of all, Fairfax County is not at least two thousand miles from Chicago as
Tek-Nik represents. Chicago and Fairfax County are approximately seven hundred
miles from one another by road and even less by air.

Second, a party claiming that inconvenience voids a forum selection clause
“bear[s] a heavy burden of proof” on the issue. M/S Bremen, 407 U.S, at 17. All Tek-
Nik musters in the face of this “heavy burden” are general arguments that it would be
so gravely difficult and inconvenient to pursue litigation in Virginia, that it does not
believe it will be able to bear the expense of the litigation in Virginia, and that it will

be effectively deprived of its day in court if forced to litigate in Virginia.


which the suit is brought, declared by statute or judicial decision.” Bonny v. Society
of Lloyd's, 3 F.3d 156, 160 (7th Cir. 1993) (citations omitted).

In the instant matter, Tek-Nik argues that the contract with Compath in its
entirety was procured through fraud, and therefore the contract is voidable and
Compath cannot enforce the forum selection provision. The Supreme Court, however,
has held that general allegations of fraud will not vitiate a forum selection clause.
Scherk v. Alberto Culver, Co., 417 U.S. 506, 519 n.14 (1974). Only if the forum
selection clause itself is “the product of fraud” will the clause be unenforceable. Jd.
Tek-Nik’s only allegation of fraud with respect to the forum selection clause fails to
allege that the clause is the product of fraud:

On information and belief, Compath included the forum selection

provision of the Contract in whole or in part to make it difficult, if not

impossible, for Tek-Nik to litigate issues arising under the Contract and

in order to further Compath’s fraudulent scheme.

(Complaint, { 36). All Tek-Nik states is that it believes inclusion of the clause by
Compath was partly due to furthering its general scheme of fraud. Thus, rather than
alleging the clause is a product of fraud, Tek-Nik has alleged it was a tool of fraud.
Moreover, to the extent Tek-Nik alleges the clause had anything to do with the alleged

fraudulent scheme, it has failed to state such circumstances with particularity as

required by the Federal Rules of Civil Procedure. FED. R. CIv. P. 9(b).


font type and size as the rest of the contract and is included in a paragraph entitled
“DISPUTES”. (Complaint 22.) The fact that the “DISPUTES” section is placed at
the end of the contract is logical and of no moment. Third, “it is a fundamental
principle of contract law that a person who signs a contract is presumed to know its
terms and consents to be bound by them.” Paper Express, 972 F.2d at 757 (enforcing
forum selection clause despite plaintiff’s assertion that it was unlikely that anyone for
plaintiff ever read the clause because it was in extremely fine print and in German).
If there was a term that appeared to be contrary to the intent that Tek-Nik and AT&T
had expressed to Compath, Tek-Nik had the opportunity and should have addressed the
concer prior to executing the contract. See Dace Int'l, Inc. v. Apple Computer, Inc.,
275 Ill. App. 3d 234, 240 (Ill. App. Ct. 1995) (declining to set aside a forum selection
clause in a standard form contract due to complaining party’s “failure or inability to
object to the clause at the time of contracting”). Tek-Nik also argues that enforcing
boilerplate language is unfair due to its corporate size being dwarfed by that of
Compath. A failure to object to a forum selection clause at the time of contracting,
however, does not release a party even when the parties are corporate entities “of vastly
different size”. Jd. Fourth, the fact that Tek-Nik chose to contractually bind itself

without the benefit of legal counsel does not implicate public policy concerns; no


Minute Order Form (06/97)

Se.

United States District Court, Northern District of Mlinois

Name of Assigned Judge Sitting Judge if Other
or Magistrate Judge Charles P. Kocoras than Assigned Judge
CASE NUMBER 02 C9198 DATE 3/18/2003
CASE Tel-Nick, Inc. vs. Compath, Inc.
TITLE
[In the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented]
DOCKET ENTRY:
qd) Oo Filed motion of [ use listing in “Motion” box above.]
(2) ao Brief in support of motion due
(3) a Answer brief to motion due. . Reply to answer brief due.
(4) im Ruling/Hearing on set for at
(5) Oo Status hearing[held/continued to] [set for/re-set for] on set for at
(6) a Pretrial conference[held/continued to] [set for/re-set for] on set for at :
(7) o Trial[set for/re-set for] on at
(8) a [Bench/Jury trial] [Hearing] held/continued to at
(9) oO This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OOFRCP4(m) COlLocal Rule 41.1 OFRCP4i(a(1) O FRCP41(a)(2).
qo) «x [Other docket entry] ENTER MEMORANDUM OPINION: We grant Compath’s motion (Doc
4-1) to dismiss the complaint.

(1) om [For further detail see order attached to the original minute order.]

No notices required, advised in open court.

No notices required. numbes of notices

‘Notices mailed by judge’s staff.

Notified counsel by telephone, MAR 19 2003
wv | Docketing to mail notices. ,
~¥ | Mail AO 450 form. detearecpudviuihs

Copy to juaghfhsisuate judge.

date mailed notice
Courtroom

deputy’s
initials

scT

icaaaainl ee
atd/fimne received in

central Clerk's Office mailing deputy initials



CONCLUSION

Based on the foregoing analysis, we grant Compath’s motion to dismiss the

complaint.
Charles P. Kocoras
Chief Judge
United States District Court
MAR 18 2003
Dated:

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Additionally, the cases on which Tek-Nik relies do not support its inconvenience
argument: M/S Bremen, 407 U.S. 1 (requiring litigation filed in Florida to be pursued
in London as provided by contract) and Carnival Cruise Lines, 499 U.S. 585 (requiring
litigation filed in Washington state to be pursued in Florida as provided by contract).
Both cases enforced forum selection clauses that required the disputes to be litigated
in places even farther away than Fairfax County is from Chicago. M/S Bremen, 407
U.S. 1; Carnival Cruise Lines 499 U.S. 585; see also Paper Express, Ltd. v. Pfankuch
Maschinen GmbH, 972 F.2d 753 (7th Cir. 1992) (requiring litigation filed in Illinois
to be pursued in Germany as provided by contract).

Finally, Tek-Nik argues that enforcement of the forum selection clause would
contravene public policy. Pursuant to this argument, Tek-Nik states that the clause was
not negotiated at arm’s length but instead was strategically included at the very end of
the contract and that the clause was a boilerplate provision in a form contract. First,
Tek-Nik fails to state what public policy of Illinois would be contravened and fails to
cite any statute or case in support. See Bonny, 3 F.3d at 160 (courts will not enforce
forum selection clauses “if enforcement of the clauses would contravene a strong

public policy of the forum in which the suit is brought, declared by statute or judicial

decision.” (emphasis added). Second, the forum selection clause was not “buried” at

the end of the contract as Tek-Nik describes. The clause is printed in the exact same

-7-


Pursuant to their contract, Tek-Nik provided installation services for AT&T
customers as a subcontractor to Compath. There is an alleged outstanding balance
owed to Tek-Nik by Compath in the amount of $166,712. Tek-Nik alleges that
Compath has failed and refuses to pay this amount. Negotiations were conducted
between the parties but each side has rejected the other party’s final position.

On December 20, 2002, Tek-Nik brought a four-count complaint against
Compath. Count I is for breach of contract. Count II is for fraud in the inducement.
Count IL seeks a declaration that the forum selection provision of the contract is
unenforceable. Count IV seeks a declaration that Tek-Nik is not precluded from
conducting its business by the non-compete provision of the contract. Compath moves
to dismiss the complaint for improper venue pursuant to Rule 12(b)(3) of the Federal
Rules of Civil Procedure because the contract limits the parties’ choice of forum to
those courts serving Fairfax County, Virginia.

LEGAL STANDARD

When deciding a motion to dismiss, we look only to the pleadings. Thompson
y. Illinois Dept. of Prof’! Regulation, 300 F.3d 750, 754 (7th Cir. 2002). In so doing,
we must accept all well-pleaded facts in the complaint as true. Coates v. Illinois State
Bad. of Educ., 559 F.2d 445, 447 (7th Cir. 1977). It is with these principles in mind that

the Court evaluates Compath’s motion to dismiss for improper venue.

-3-


cable hook-ups for home subscribers. Compath’s business is considerably larger than
Tek-Nik’s.

In 1995 Tek-Nik began installing hook-ups as a contractor for AT&T Broadband
Cable in the Chicago area. In 1999 Compath also began installing hook-ups as a
contractor for AT&T in the Chicago area. In 2001 AT&T reduced the number of its
installation contractors in the Chicago area, retaining Compath as a contractor but
letting Tek-Nik go. At that time, however, both AT&T and Tek-Nik wanted to
continue a business relationship. Accordingly, AT&T and Tek-Nik arranged for
Compath to hire Tek-Nik as a subcontractor to provide cable hook-ups for AT&T
customers. It was further contemplated that, when AT&T was able to expand the
number of its contractors, it would again directly retain Tek-Nik to install hook-ups.

Pursuant to the above agreement, Compath and Tek-Nik entered into a contract
whereby Tek-Nik would install hook-ups for AT&T subscribers as a subcontractor of
Compath. The contract included a non-compete provision as well a forum selection
provision. The non-compete provision provided that Tek-Nik could not sell, or
contract to provide, products or services to Compath clients that would be in
competition with products or services that Compath had disclosed to Tek-Nik. The
forum selection provision provided that the exclusive forum for any dispute arising

under the contract was any appropriate court for Fairfax County, Virginia.

2.


UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION DOCKETED

MAR 1 9 2003
TEL-NICK, INC., an Illinois corporation, )
)
Plaintiff, )
)

vs. ) 02 C 9198
)
COMPATH, INC., a Virginia corporation, )
)
Defendant. )
MEMORANDUM OPINION

CHARLES P. KOCORAS, Chief District Judge:

This matter comes before the Court on Defendant Compath, Inc.'s (“Compath”)
Rule 12(b)(3) motion to dismiss for improper venue. For the reasons set forth below,
we grant the motion.

BACKGROUND

Plaintiff Tek-Nik Cable, Inc. (“Tek-Nik”) is a small, privately owned Illinois
corporation with its principal place of business in Illinois. Tek-Nik contracts with
cable television companies to install cable hook-ups in the homes of cable television
company subscribers. Compath is a Virginia corporation with its principal place of

business in Virginia. Compath also contracts with cable television companies to install