Court Opinion

ID: 7010098
Source: CourtListenerOpinion
Date Created: 2022-07-24 04:03:23.627723+00
Date Added: 2024-06-11T16:10:11.509394
License: Public Domain

BERTELSMAN, District Judge,
dissenting.
I respectfully dissent. I have a fundamental problem with the majority’s approach. The majority seems to hold that if venue is proper under the federal venue statutes, a motion to dismiss based on a valid forum selection clause will not lie. This is contrary to the decisions of the Supreme Court of the United States in M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972) and Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991) and also the Sixth Circuit decisions Shell v. R.W. Sturge, Ltd., 55 F.3d 1227 (6th Cir.1995) and Security Watch, Inc. v. Sentinel Systems, Inc., 176 F.3d 369 (6th Cir.1999), and those of many other courts.1
There are cases presenting situations where only a motion to dismiss will be filed. One is where the forum selection clause requires a forum in a foreign country or state court.2 Another is where all or most of the documents and witnesses are in the forum state.3
If a motion to dismiss is filed, whether alone or in conjunction with a motion to transfer that is without merit, the motion to dismiss must be dealt with. Stewart is not to the contrary in that the lower court posture in that case was a “motion to enforce.” Stewart Organization, Inc. v. Ricoh, 810 F.2d 1066 (11th Cir.1987), aff'd *540487 U.S. 22, 108 S.Ct. 2239, 101 L.Ed.2d 22. This was treated by both the Eleventh Circuit and the Supreme Court of the United States as a motion to transfer. Stewart did not hold that a motion to dismiss is always improper if venue under the federal venue statutes is correct.
As pointed out in the eases cited by the district court herein, although forum selection clauses were at one time disfavored by American courts on the ground that they ousted the jurisdiction of the local courts, this view has been resoundingly rejected by the Supreme Court of the United States in cases where federal procedure applies. See M/S Bremen, 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (clause is prima facie valid and should control absent a strong showing that it should be set aside); accord Carnival Cruise Lines v. Shute, 499 U.S. 585, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991) (consumer contract); cf. Stewart, 487 U.S. 22, 108 S.Ct. 2239, 101 L.Ed.2d 22 (federal procedural law applies to application of forum selection clauses in diversity cases on motions to transfer under 28 U.S.C. § 1404(a); such clauses presumptively valid).
I am in substantial agreement with the majority’s treatment of the motion to transfer, but am of the opinion that, if the motion to transfer is denied, the motion to dismiss is not automatically to be denied, just because the federal venue statutes have been satisfied.
A separate analysis is required concerning the motion to dismiss and the motion to transfer under § 1404(a) filed in this case.4
The Motion to Dismiss
As noted above, the motion to dismiss was filed pursuant to Fed.R.Civ.P. 12(b)(3). Some courts have considered motions to dismiss on the basis of forum selection clauses as motions going to the subject matter jurisdiction of the court, while others have considered a complaint alleging a contract containing such a clause as not stating a claim for relief.5 Many have used the device employed by the defendant here and moved to dismiss for improper venue.6
It seems clear to me that the jurisdiction of the court is established if proper under the applicable statutes. Further, a claim for relief is stated, if the required allegations are made, although the forum where it is to be heard may be in question. Venue is also proper if the requirements of the federal venue statutes have been met. Here, for example, the propriety of venue under 28 U.S.C. § 1391 and § 1441 is not challenged.
I believe the proper approach is to regard a motion raising a forum selection clause, however labeled, as one to specifically enforce the clause. See M/S Bremen, 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513; Shell, 55 F.3d at 1229; Licensed Practical Nurses v. Ulysses Cruises, Inc., 131 F.Supp.2d 393, 407-09 (S.D.N.Y.2000)(extensive discussion). This approach gives *541the federal jurisdictional and venue statutes their due effect, whereas the other methods of analysis violate the express terms of these statutes. See discussion in Licensed Practical Nurses, 131 F.Supp.2d at 404.

Erie Analysis of the Motion to Dismiss

If, however, the issue is whether to specifically enforce a clause of a contract, should not state law apply, including its public policy regarding the forum selection clause? At least two courts have so held. Farmland Industries, Inc. v. Frazier-Parrott Commodities, Inc., 806 F.2d 848, 852 (8th Cir.1986), rev’d on other grounds, Lauro Lines S.R.L. v. Chasser, 490 U.S. 495, 109 S.Ct. 1976, 104 L.Ed.2d 548 (1989), and General Engineering Corp. v. Martin Marietta Alumina, Inc., 783 F.2d 352, 356-57 (3d Cir.1986).7
Nevertheless, the vast majority of circuits have held that federal law applies to all questions regarding the propriety of the forum for an action, including application of a forum selection clause.8 This is an issue of first impression in this circuit,9 but we are squarely faced with it here. I submit that the majority rule must prevail under a proper Erie analysis.
Although Stewart concerned a motion to transfer under § 1404(a), its teachings are also instructive in dealing with the motion to dismiss.
In Stewart, the Supreme Court, applying principles announced in Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), held that application of a forum selection clause to a § 1404(a)10 motion to transfer in a diversity case is a matter of federal procedural law. The Court reasoned that 28 U.S.C. § 1404(a) governing transfers to another district due to an inconvenient forum was a federal statute covering the situation. Thus, the Court continued, § 1404(a) controlled despite the fact that forum selection clauses were against the public policy of the forum state.11
State law re-entered the picture, however, when a § 1404(a) analysis was performed. For, said the Stewart Court, that statute provided that no one factor was controlling in deciding whether the case should be transferred. Rather, the usual factors of convenience of the parties, location of witnesses, and the interest of justice applied, but the forum selection clause was an additional factor to be considered in reaching a § 1404(a) determination. The Court observed:
The premise of the dispute between the parties is that Alabama law may refuse to enforce forum-selection clauses ... as a matter of state public policy. If that is so, the District Court will have either to integrate the factor of the forum-selec*542tion clause into its weighing of considerations as prescribed by Congress, or else' to apply, as it did in this case, Alabama’s categorical policy disfavoring forum-selection clauses. Our cases make clear that, as between these two choices ... the instructions of Congress are supreme.
‡ i¡! ‡
Section 1404(a) directs a district court to take account of factors other than those that bear solely on the parties’ private ordering of their affairs. The district court also must weigh in the balance 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 “the interest of justice.” ... Congress has directed that multiple considerations govern transfer within the federal court system, and a state policy focusing on a single concern or a subset of the factors identified in § 1404(a) would defeat that command .... The forum-selection clause, which represents the parties’ agreement as to the most proper forum, should receive neither dispositive consideration ... nor no consideration (as Alabama law might have it), but rather the consideration for which Congress provided in § 1404(a).
Stewart, 487 U.S. at 30, 108 S.Ct. at 2244-45 (footnote and internal citations omitted).
The Erie analysis of the motion to dismiss, although distinct from that for the motion to transfer, must be performed with these principles in mind.
As noted above, the majority of circuits hold that federal law applies to a motion to dismiss as well as a § 1404(a) motion.12 In Manetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 509 (9th Cir.1988), the court reasoned that the federal statutes concerning venue13 sufficiently occupy the field to trigger the application of federal law to all issues relating to where an action will be heard in federal court.14 Such federal law includes the federal common law principles prescribed in The Bremen, relied on by the district court herein. Accord Royal Bed and Spring Co., Inc. v. Famossul Industria e Comercio de Moveis Ltda., 906 F.2d 45 (1st Cir.1990); Evolution Online Systems, Inc. v. Koninklijke PTT Nederland N.V., 145 F.3d 505 (2d Cir.1998); cf. Licensed Practical Nurses, 131 F.Supp.2d at 396, n. 1; 17A James Wm. Moore et al., Moore’s Federal Practice § 124.006[2] (3d ed.1997).
Further, I believe that the application of federal law to all issues of venue, including the effect of a forum selection clause, is required by the most recent Supreme Court Erie decisions such as Stewart, supra, and Burlington Northern R. Co. v. Woods, 480 U.S. 1, 107 S.Ct. 967, 94 L.Ed.2d 1 (1987) (state statute providing for automatic 10% penalty against appellant on affirmance displaced by federal statute allowing for penalty only if appeal frivolous); see also discussion in Wm. H. McGee Company v. Liebherr America, Inc., 789 F.Supp. 861 (E.D.Ky.1992).
As noted by the district court herein, in The Bremen the Supreme Court pre*543scribed 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.”15 Unless affected by fraud, undue influence, or overweening bargaining power, the forum selection clause should be given full effect.16

Public Policy and the Motion to Dismiss

However, such a 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 a judicial decision.” 17
The trial court here had no opportunity to consider whether the Michigan statute voiding the forum selection clause embodied the strong public policy of the state.18 In a similar case, the Ninth Circuit considered the legislative history of the statute in classifying the public policy of the forum as being strong enough to justify refusing to enforce the forum selection clause. Jones v. GNC Franchising, Inc., 211 F.3d 495, 499 (9th Cir.2000). Certainly legislative history is a proper factor, but it may not be the only factor to be considered.
It is clear that just because there is an applicable statute does not mean that the court must automatically refuse to enforce the forum selection clause. See, e.g., Shell, 55 F.3d 1227; accord Afram Carriers, Inc. v. Moeykens, 145 F.3d 298 (5th Cir.1998); Richards v. Lloyd’s of London, 135 F.3d 1289 (9th Cir.1998).
Therefore, in my opinion, the case should be remanded for further consideration of the motion to dismiss, rather than automatic denial thereof. The trial court should be directed to consider whether the Michigan statute embodies a public policy of sufficient strength to justify a refusal to enforce the forum selection clause and thus prevent dismissal of the case.
The § 1404(a) Motion
As stated, I am in substantial agreement with the majority’s treatment of the § 1404(a) motion, but wish to make note of the following regarding the role public policy plays in deciding this motion.
Under the principles laid down by the Supreme Court in Stewart, the § 1404(a) motion, made in the alternative by the defendant in the district court but not reached by the court, is governed by federal law. In my opinion, if the district court were to determine that the state public policy is strong enough to prevent dismissal of the case, it must then take up the motion to transfer.19 Although under The Bremen principles governing the motion to dismiss the public policy is determinative if strong enough, under the § 1404(a) principles governing the motion to transfer the public policy is just one factor to be considered along with the other factors prescribed by that section.
Stewart holds that such public policy is not conclusive on the motion to transfer. The majority opinion in Stewart does not spell out what weight state public policy is to be given in the analysis it prescribes. See Jones, 211 F.3d at 499 (public policy of forum state is at least as significant a factor as the forum selection clause itself); *544Shell, 55 F.3d 1227 (public policy a factor to be considered but forum state did not have strong enough public policy to overcome forum selection clause). In 15 Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure, § 3803.1 (2d ed.1986), it is suggested that nine factors be applied,20 but that the totality of circumstances, measured in the interests of justice, control.
Therefore, I would remand the case for reconsideration of the alternative motions in light of the above principles.

. See e.g., Silva v. Encyclopedia Britannica, Inc., 239 F.3d 385 (1st Cir.2001); Lipcon v. Underwriters at Lloyd’s, London, 148 F.3d 1285 (11th Cir.1998); International Software Systems, Inc. v. Amplicon, Inc., 77 F.3d 112 (5th Cir.1996); Manetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 509 (9th Cir.1988); Bryant Electric Co., Inc. v. City of Fredericksburg, 762 F.2d 1192 (4th Cir.1985).

. See e.g., Haynsworth v. The Corporation, 121 F.3d 956 (5th Cir.1997); Shell v. A.W. Sturge. Ltd., 55 F.3d 1227 (6th Cir.1995); Royal Bed and Spring Co., Inc. v. Famossul Industria e Comercio de Moveis Ltda., 906 F.2d 45 (1st Cir.1990).

. See e.g., Manetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 509 (9th Cir.1988); Insurance Products Marketing, Inc. v. Indianapolis Life Ins., 176 F.Supp.2d 544 (D.S.C.2001).

. See Jones v. GNC Franchising, Inc., 211 F.3d 495 (9th Cir.2000); International Software Systems v. Amplicon, 77 F.3d 112, 114 (5th Cir.1996) (citing Jones v. Weibrecht, 901 F.2d 17 (2d Cir.1990)); Northwestern Nat. Ins. Co. v. Donovan, 916 F.2d 372, 375 (7th Cir.1990).

. Fed.R.Civ.P. 12(b)(3) states that "the following defenses may at the option of the pleader be made by motion: (1) lack of jurisdiction over the subject matter, ... (3) improper venue, ... (6) failure to state a claim upon which relief can be granted...."

.See discussion in Licensed Practical Nurses v. Ulysses, 131 F.Supp.2d 393 (S.D.N.Y.2000) and Mead v. Future Medicine Publishing, Inc., 1999 WL 1939256, at **2-3 (M.D.N.C. Feb.22, 1999).

. Certainly differing results on the enforcement of a forum selection clause might lead to forum shopping. See 17A James Wm. Moore et al., Moore’s Federal Practice § 124.06[1] (3d ed.1997).

. Id. at § 124.08[2].

. The issue did not arise in Security Watch, Inc. v. Sentinel Systems, Inc., 176 F.3d 369 (6th Cir.1999) and Shell, 55 F.3d 1227, because federal and state law concerning forum selection clauses were the same.

. 28 U.S.C. § 1404(a) reads: "For the convenience of the parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought."

. For a discussion of the developments of the Erie doctrine, see Wm. H. McGee & Co. v. Liebherr America, Inc., 789 F.Supp. 861 (E.D.Ky.1992); Boggs v. Blue Diamond Coal Co., 497 F.Supp. 1105 (E.D.Ky.1980); W. Bertelsman, The Present Status of the Erie Doctrine, 54 Ky. Bench & Bar 10 (Winter 1990).

. The issue was not settled by the Supreme Court in The Bremen, because jurisdiction in that case was based on maritime law. Therefore, there was no Erie issue.

. 28 U.S.C. §§ 1391, 1404-1413.

.If federal law covers the point in dispute, a court should not proceed "to evaluate whether application of federal judge-made law would disserve the so-called 'twin aims of the Erie rule: discouragement of forum-shopping and avoidance of inequitable administration of the laws.’ ” Stewart, 108 S.Ct. at 2243, n. 6.

. 407 U.S. at 10, 92 S.Ct. 1907. There is no claim here of fraud or overreaching in including the forum selection clause in the franchise.

. Id. at 12-13, 92 S.Ct. 1907.

. Id. at 15, 92 S.Ct. 1907 (emphasis added).

. Neither party brought MCLA § 445.1527(f) to the attention of the district court.

. I believe the district court should have discretion to decide which to take up first.

. The nine factors are: "(1) the identity of the law that governs the construction of the contract; (2) the place of execution of the contract; (3) the place where the transactions have been or are to be performed; (4) the availability of remedies in the designated forum; (5) the public policy of the initial forum state; (6) the location of the parties, the convenience of prospective witnesses, and the accessibility of evidence; (7) the relative bargaining power of the parties and the circumstances surrounding their dealings; (8$ the presence or absence of fraud, undue influence or other extenuating (or exacerbating) circumstances; and (9) the conduct of the parties.”