Opinion
No. 01-4203 MMC, (Docket No. 9)
March 12, 2002
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS
Before the Court is defendants Sabate USA, Inc. ("Sabate USA") and Sabate S.A.'s ("Sabate France") motion to dismiss, filed December 11, 2001, pursuant to Rule 12(b)(3) of the Federal Rules of Civil Procedure and 28 U.S.C. § 1404 and 1406. Having considered the papers filed in support of and in opposition to the motion, the Court finds the matter appropriate for decision on the papers, VACATES the hearing scheduled for February 22, 2002, and rules as follows.
BACKGROUND
The instant action arises from the sale of cork-based closures used in bottling wine. Plaintiff Chateau des Charmes Wines Ltd., a Canadian wine maker, allegedly purchased cork-based closures from defendants, in eleven separate shipments, based on defendants' representations that such closures were of high quality and would not "taint" the wine with undesirable aromas and flavors. (See Compl. ¶¶ 11, 22, and 24.) Plaintiff alleges that, contrary to defendants' representations, defendants' closures damaged the smell, character and drinkability of plaintiff's wines. (See id. ¶ 28.)
Plaintiff alleges six causes of action: (1) Breach of Express Warranty, (2) Breach of Implied Warranties, (3) Breach of Contract, (4) Misrepresentation, (5) Strict Liability/Negligence, and (6) Violation of False Advertising and Practices Statutes, Cal. Bus. Prof. Code § 17200, et. seq., and § 17500, et. seq.
LEGAL STANDARD
Rule 12(b)(3) provides that a complaint may be dismissed for "improper venue." See Fed.R.Civ.Proc. 12(b)(3). When deciding a motion to dismiss under Rule 12(b)(3), unlike a motion to dismiss under Rule 12(b)(6), the Court need not accept the pleadings as true and may consider facts outside the pleadings. See R.A. Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 324 (9th Cir. 1996). The facts, however, "must be viewed in the light most favorable to plaintiff" and "disputed fact[s] may be resolved in a manner adverse to the plaintiff only after an evidentiary hearing." See New Moon Shipping Co. v. Man B W Diesel AG, 121 F.3d 24, 29 (1997). Where the material facts are undisputed, the Court need not hold a hearing. See id.; K.K.D. Imports. Inc. v. Karl Heins Dietrich GmbH Co., 36 F. Supp.2d 200, 203 (1999).
28 U.S.C. § 1404 (a) provides: "For the convenience of 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." See 28 U.S.C. § 1404 (a). 28 U.S.C. § 1406 (a) provides: "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." See 28 U.S.C. § 1406 (a). Where the proper venue is located in a foreign country, federal courts lack authority to transfer the action and therefore must dismiss it for improper venue. See Allen v. Lloyd's of London, 94 F.3d 923, 932 (4th Cir. 1999) (requiring dismissal where parties selected United Kingdom pursuant to forum selection clause).
DISCUSSION
Defendants assert that plaintiff's complaint should be dismissed based on the forum selection clause contained in the invoices sent to plaintiff in connection with each shipment. The invoices in question contain two similar forum selection clauses, both written in French. On the front of each invoice, a forum selection clause, translated into English, states: "Any dispute arising under the present contract is under the sole jurisdiction of the Court of Commerce of the City of Perpignan. (See Rosen Decl. Exh. 2.) The back of each invoice contains a similar clause which, translated into English, states: For any claims relating to the performance or the interpretation of this agreement, the Commercial Tribunal of Perpignan will have sole jurisdiction." (See Chaurand Decl. Exh. B.)
Plaintiff asserts that although the first invoice was received concurrently with the first shipment of corks, subsequent invoices arrived either before or after the shipment. (See Decl. of Pierre-Jean Bosc ¶¶ 18, 19; Lucenti Decl. ¶ 3; Opp'n at 3.) Differences with respect to when the invoices arrived, however, are not material to the instant dispute. See K.K.D. Imports, 36 F. Supp.2d at 202 (holding party bound by forum selection clause received after shipment where party received identical invoices with prior shipments). Nor is it material that after a dispute arose between the parties, defendant Sabate USA sent plaintiff second copies of three invoices, which copies did not included the terms at issue, as it is undisputed that the invoices received by plaintiff in the normal course of business contained those terms. (See Lucenti Decl. Exh. A.)
In their initial moving papers, defendants mistakenly relied upon a more recent invoice form rather than the form sent to plaintiff. Although the forum selection language contained on the front of the invoice remains unchanged, language on the back of the invoice was modified. As noted, the invoices sent to plaintiff contain a forum selection clause that applies to "any claims relating to the performance or the interpretation of this agreement." (See Chaurand Decl. Exh. B ¶ 15). The more recent invoice states that the forum selection clause applies to "any disputes arising out of this agreement." (See Voss Decl. Ex. 1.) These differences are not material to a determination of the issues presented.
The two clauses will be collectively referred to as the "forum selection clause" where their differences are not significant to the Court's analysis.
Forum selection clauses are presumptively valid and will be enforced unless the party opposing the clause can "clearly show that enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching." See The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972). The "concern of international comity, respect for the capacities of foreign and transnational tribunals, and sensitivity to the need of the international commercial system for predictability in the resolution of disputes" strongly favor enforcement of forum selection clauses in international contracts. See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 629 (1985);see also In Re Oil Spill by Amoco Cadiz, 659 F.2d 789, 795 (7th Cir. 1981) (holding "special deference [is] owed to forum-selection clauses in international contracts"). The enforceability and interpretation of forum selection clauses are governed by federal law. See Manetti-Farrow v. Gucci America, 858 F.2d 509, 513 (9th Cir. 1988).
Plaintiff asserts that its claims should not be dismissed because (1) the forum selection clause is invalid; (2) the forum selection clause, if valid, should not be enforced under the facts presented in this case; and (3) plaintiff's claims against Sabate USA and plaintiff's statutory and tort claims against Sabate France are not subject to the forum selection clause.
A. Enforceability of the Forum Selection Clause
1. Contract Formation
Plaintiff pleads in its complaint that plaintiff and defendants entered into "one or more oral agreements, supported by written invoices, pursuant to which plaintiff agreed to purchase and defendants agreed to sell" the cork closures in question. (See Compl. ¶ 52.) Plaintiff now argues that the forum selection clause contained in those invoices is invalid, as the parties never discussed, negotiated or explicitly agreed to a forum-selection clause. (See Opp'n at 5; Pierre-Jean Bosc Decl. ¶ 16.) Plaintiff's argument is unavailing. It is well established that a non-negotiated forum selection clause included in a form contract may be enforced even if it was not the subject of bargaining. See Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 593-595 (1991) (enforcing forum selection clause contained on ticket where parties did not negotiate or discuss the clause).
Plaintiff asserts that the law of Ontario, Canada, rather than Federal law, should govern the question of whether the forum selection clause is part of the parties' agreement "in the first place." (See Opp'n at 6.) As noted, however, the enforceability of forum selection clauses is governed by federal law. See Manetti-Farrow, 858 F.2d at 513. In that regard, federal courts have not distinguished among the various issues relevant to enforceability. See id. (holding interpretation of forum selection clause governed by federal law); New Moon Shipping, 121 F.3d 24, 29-32 (applying federal law to determine whether forum selection clause contained in invoices "is a valid part of the contracts"); K.K.D. Imports, 36 F. Supp.2d at 202 (same); Batchelder v. Kawamoto, 147 F.3d 915, 919 (9th Cir. 1998) (applying federal law to determine whether plaintiff bound by choice of law clause where plaintiff claimed he never received or consented to clause incorporated by reference in agreement; analogizing choice of law to forum selection).
Moreover, "evidence of a prior course of dealing may establish a party's awareness of and consent to intended contractual terms." See New Moon Shipping Co. v. Man B W Diesel AG, 121 F.3d 24, 31 (2nd Cir. 1997). Here, evidence of plaintiff's prior course of dealing with defendants establishes plaintiff's consent to the forum selection clause. It is undisputed that plaintiff received numerous invoices containing contract terms, including the forum selection clause, and that plaintiff never objected to such terms until the instant dispute arose. (See Paul Bosc Decl. ¶ 12.) This tacit acceptance of the terms contained in the invoices demonstrates plaintiff's assent to such terms.See Pervel Industries, Inc. v. T M Wallcoverings, Inc., 871 F.2d 7 (2nd Cir. 1989) (holding buyer bound by arbitration clause contained on reverse side of printed order confirmation form where manufacturer had well-established custom of sending such confirmations and buyer retained them without objection).
The fact that the forum selection clause was written in French does not alter the Court's analysis. A party has a duty to read contractual terms even if such terms are written in a foreign language. See Karlberg European Tanspa, Inc. v. JK-Josef Kratz Vertriebsgesellschaft, 618 F. Supp. 344, 347 (N.D. Ill. 1985) (holding plaintiff bound by forum selection clause written in German where plaintiff did not understand German and parties did not discuss the forum selection clause); Gaskin v. Stumm Handel GmbH, 390 F. Supp. 361, 366-367 (S.D. N.Y. 1975) (holding plaintiff bound by contract written in German where plaintiff could not read or understand German).
Accordingly, the Court concludes that plaintiff is bound by the forum selection clause contained in the invoices.
2. Reasonableness of Enforcement
As noted above, forum selection clauses are presumed valid, and will be enforced unless such enforcement would be "unreasonable and unjust, or the clause [is found to be] invalid for such reasons as fraud or overreaching." See Bremen, 407 U.S. at 15.
Here, plaintiff asserts that enforcement of the forum selection clause would be "unreasonable and unjust" for a number of reasons. First, plaintiff argues that it would be unreasonable to enforce the forum selection clause, as only one of the three parties to the instant litigation resides in France. This argument is not persuasive. As noted in the reply, each of the parties resides in a different country and, thus, the perceived inequity would exist regardless of whether the forum selection clause were enforced.
Plaintiff also argues that the agreement in question was negotiated, formed, and performed in Ontario and that Ontario law will "likely" govern plaintiff's breach of contract claims. (See Opp'n at 13.) Assuming plaintiff is correct in that regard, plaintiff cites no authority for the proposition that these considerations would render a forum selection clause unenforceable.
Nor has plaintiff demonstrated that enforcement would be unreasonable merely because plaintiff conducts its business in English and the parties negotiated the terms of their agreement in English. As discussed above, forum selection clauses are enforceable even where the clause requires the dispute to be litigated in a forum where one party does not speak the language. See Karlberg European Tanspa, Inc., 618 F. Supp. at 347 (holding plaintiff bound by forum selection clause written in German; requiring plaintiff to litigate in Germany where plaintiff did not understand German and parties negotiated terms in English).
Finally, plaintiff asserts that enforcement of the forum selection clause would impose enormous hardship and inconvenience on plaintiff and its employees. To avoid enforcement of a forum selection clause on the grounds of inconvenience, plaintiff must demonstrate that "trial in the contractual forum will be so gravely difficult and inconvenient that [plaintiff] will for all practical purposes be deprived of his day in court." See Bremen, 407 U.S. at 18. Plaintiff has failed to make such a showing, as plaintiff states only that its business would be "adversely affected" if its employees were forced to travel to France to litigate this dispute. (See Opp'n at 14.)
The Court notes that plaintiff's employees will be forced to travel regardless of whether the Court enforces the forum selection clause, as plaintiff chose to litigate the dispute in California rather than in Ontario, where the winery is located.
Accordingly, the Court finds that enforcement of the forum selection clause would not be unreasonable or unjust.
B. Scope of the Forum Selection Clause
Plaintiff contends that many of its claims are not subject to dismissal even if the Court enforces the forum selection clause. Specifically, plaintiff asserts that the forum selection clause does not apply to plaintiff's claims against Sabate USA or to plaintiff's tort and statutory claims against Sabate France.
1. Sabate USA
Plaintiff asserts that the forum selection clause is inapplicable to Sabate USA because Sabate USA was not a party to the agreement containing the clause and there is no evidence that either party intended it to be a third party beneficiary. Plaintiff's argument is not persuasive. A valid forum selection clause may both bind and be enforceable by the contracting parties as well as others whose conduct is "so closely related to the contractual relationship" that they "should benefit from and be subject to" the clause. See Manetti Farrow v. Gucci America, 858 F.2d at 514 n. 5 (upholding dismissal under forum selection clause of claims against non-signatory subsidiary alleged to have fraudulently obtained plaintiff's customer lists in connection with termination of exclusive dealership agreement entered between plaintiff and another subsidiary). Here, Sabate USA is a wholly-owned subsidiary of Sabate France, formed to pursue sales and marketing opportunities on behalf of its parent corporation. (See Sabate Decl. ¶ 3.) In the instant action, plaintiff asserts that Sabate USA was "directly involved in the transaction at issue here," as Sabate USA acted as the local contact for the sale of defendants' products in North America and investigated plaintiff's complaint with respect to the performance of defendants' cork closures once a problem was detected. (See Decl. of Paul Bosc ¶¶ 6, 9.) Under such circumstances, Sabate USA's conduct was "closely related to the contractual relationship" at issue and the forum selection clause contained therein is applicable to plaintiff's claims against Sabate USA. See Manetti Farrow, 858 F.2d at 514 n. 5; Coastal Steel Corp. v. Tilghman Wheelabrator Ltd., 709 F.2d 190, 202-204 (3rd Cir. 1983) (holding non-signatory defendant bound by forum selection clause as third party beneficiary where such defendant's involvement in dispute was foreseeable), overruled on other grounds by Lauro Lines v. Chasser, 490 U.S. 495 (1989).
2. Statutory and Tort Claims
Plaintiff asserts that the forum selection clause is inapplicable to the statutory and tort claims asserted against Sabate France because such claims do not arise under the parties' contract. Plaintiff states no authority in support of this proposition.
As noted, the forum selection clauses at issue state that the Commerical Tribunal of Perpignan will have sole jurisdiction to resolve "any dispute arising under the present contract" and "for any claims relating to the performance or the interpretation of this agreement." (See Rosen Decl. Ex. 2; Chaurand Decl. Exh. B ¶ 15.)
"[W]here the relationship between the parties is contractual, the pleading of alternative non-contractual theories of liability" does not prevent enforcement of a forum selection clause. See Coastal Steel, 709 F.2d at 203 (holding "claims such as negligent design, breach of implied warranty, or misrepresentation" subject to dismissal based on forum selection clause). For example, a forum selection clause "can be equally applicable to contractual and tort causes of action." See Manetti Farrow, 858 F.2d at 514. Whether a forum selection clause applies to non-contractual claims depends on whether resolution of the claims "relates to interpretation of the contract." See id. (holding unfair trade practices and other non-contractual claims properly dismissed based on forum selection clause); Lambert v. Kysar, 983 F.2d 1110, 1121-22 (1st Cir. 1993) (holding tort claims subject to dismissal based on forum selection clause where tort claims "involv[e] the same operative facts as a parallel claim for breach of contract.")
The Court sees no reason to distinguish between tort and statutory claims in this regard.
Here, plaintiff's breach of contract claim is based on defendants' alleged agreement to sell cork closures that were "free of any defects" and that would "eliminate cork taint." (See Compl. ¶ 53.) Plaintiff's tort and statutory claims relate to defendant's performance under that contract and involve the same operative facts. Specifically, plaintiff alleges that defendants breached express and implied warranties by selling corks that caused cork taint; that defendants misrepresented the quality of the corks to induce plaintiff to purchase them; that defendant placed defective products, i.e. products that cause "cork taint," in the stream of commerce; and that defendants made false and misleading statements about their corks in advertising materials. (See Compl. ¶¶ 37-76.) Such claims are governed by the forum selection clause, as their resolution "relates to interpretation of the contract,"see Manetti Farrow, 858 F.2d at 514, and the claims "involv[e] the same operative facts as a parallel claim for breach of contract," see Lambert v. Kysar, 983 F.2d at 1121-22.
Accordingly, the forum selection clause is applicable to plaintiff's tort and statutory claims.
In light of the Court's ruling that all of the claims alleged in the Complaint are subject to the forum selection clause, and thus subject to dismissal under Rule 12(b)(3), the Court will not address defendants' alternative motion to dismiss under §§ 1404 and 1406.
C. Additional Discovery
Plaintiff argues that, if the Court does not deny defendants motion, plaintiff should be allowed to conduct additional discovery with respect to a variety of "critical matters." (See Opp'n at 19.) Plaintiff, however, has failed to demonstrate how such matters relate to the issue of whether plaintiff's complaint should be dismissed based on the forum selection clause.
Accordingly, the Court denies plaintiff's request to conduct additional discovery.
CONCLUSION
For the reasons stated, defendants' motion to dismiss pursuant to Rule 12(b)(3) is hereby GRANTED and plaintiff's complaint is hereby DISMISSED.
This order closes Docket No. 9.