Morales v. Burger King Corp.

          ORDER

          HONORABLE STEVEN P. LOGAN UNITED STATES DISTRICT JUDGE.

         Before the Court is Defendant's Motion to Transfer Venue to the United States District Court for the Southern District of Florida Pursuant to 28 U.S.C. § 1404, or Alternatively, to Dismiss Plaintiffs' Complaint (the “Motion”). (Doc. 17) The Motion was fully briefed on May 7, 2019, and oral argument was not requested. (Docs. 22, 23) For the reasons that follow, the Motion will be granted.

         I. Background

         Raymond Perry and Donna Perry (the “Decedents”) entered into two 20-year franchise agreements (together, the “Franchise Agreement”) with Burger King Corporation (the “Defendant”). (Doc. 22 at 2) Under the Franchise Agreement, the Decedents operated one Burger King restaurant located at 17015 North 7th Street, Phoenix, Arizona, and another Burger King restaurant at 4025 East Bell Road in Phoenix, Arizona. (Doc. 22 at 2) Upon the Decedents' deaths, the restaurants were left to RDP Enterprises Incorporated and Niki Enterprises Incorporated. (Doc. 22 at 2) The restaurants have been operating with the help of a personal representative of the Decedents' estates, Steve Morales (together with RDP Enterprises Incorporated and Niki Enterprises Incorporated, the “Plaintiffs”). (Doc. 22 at 2)

         The Plaintiffs initiated this case alleging causes of action for breach of contract, among other claims. (Doc. 1-1 at 6) The Plaintiffs allege that the Defendant approved the opening and operation of a competing franchise within one mile of the Plaintiffs' 7th Street restaurant and three miles of the Plaintiffs' Bell Road restaurant. (Doc. 22 at 3) In response, the Defendants filed the Motion arguing that the Franchise Agreement contains a forum selection clause which requires any dispute arising out of the Franchise Agreement to be litigated in the U.S. District Court for the Southern District of Florida.

         II. Standard of Review

         “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 or to any district or division to which all parties have consented.” 28 U.S.C. § 1404(a). “[Section] 1404(a) requires that a forum-selection clause be ‘given controlling weight in all but the most exceptional cases.'” Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Texas, 571 U.S. 49, 59-60 (2013) (stating “[w]hen the parties have agreed to a valid forum selection clause, a district court should ordinarily transfer the case to the forum specified in that clause.”). “In the typical case not involving a forum-selection clause, a district court considering a § 1404(a) motion (or a forum non conveniens motion) must evaluate both the convenience of the parties and various public-interest considerations.” Atl. Marine, 571 U.S. at 62-63. Ordinarily, the district court would weigh the relevant factors and decide whether, on balance, a transfer would serve “the convenience of parties and witnesses” and otherwise promote “the interest of justice.” Id. However, in the presence of a valid forum selection clause, the Court shifts its analysis by (i) giving the plaintiff's choice of forum no weight, as the plaintiff now bears the burden of establishing that transfer to the bargained-for forum is unwarranted; (ii) not considering any arguments about the parties' private interests, as private-interest factors weigh entirely in favor of the preselected forum and only public-interest factors may be considered by the Court; and (iii) applying the selected forum's choice-of-law rules. Id. at 62 -65.

         A party arguing the unenforceability of a forum selection clause bears a heavy burden, as forum-selection clauses should be enforced unless the party contesting 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. Petersen v. Boeing Co., 108 F.Supp.3d 726, 729 (D. Ariz. 2015) (citing M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972)); Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 514 (9th Cir. 1988) (stating “Forum selection clauses are prima facie valid, and are enforceable absent a strong showing by the party opposing the clause ‘that enforcement would be unreasonable or unjust, or that the clause [is] invalid for such reasons as fraud or overreaching.'”). The opposing party has the burden “to show that trial in the contractual forum would be so gravely difficult and inconvenient that he will for all practical purposes be deprived of his day in court.” Manetti-Farrow, 858 F.2d at 515.

         III. Discussion

         In the Motion, the Defendant argues that this case should be transferred to the U.S. District Court for the Southern District of Florida because the Franchise Agreement includes a forum-selection clause mandating that all litigation arising out of the Franchise Agreement be brought in the Southern District of Florida. (Doc. 17 at 3, 5-8) Indeed, Section 21 (C)(2) of the Franchise Agreement plainly states:

“Franchisee and [the Defendant] acknowledge and agree that the U.S. District Court for the Southern District of Florida, or if such court lacks jurisdiction, the 11th Judicial Circuit (or its successor) in and for Dade County, Florida, shall be the venue and exclusive proper forum in which to adjudicate any case or controversy arising, whether directly or indirectly, under or in connection with this Franchise Agreement except to the extent otherwise provided in this Agreement and the parties further agree that, in the event of litigation arising out of or in connection with this Agreement in these courts, they will not contest or challenge the jurisdiction or venue of these courts.”

(Doc. 17-1 at 35)

         The Plaintiffs argue that the District of Arizona is the proper forum for this case because (i) the franchises and the Plaintiffs are located in Arizona, and the Franchise Agreement was executed in Arizona; (ii) the Franchise Agreement does not apply to the Plaintiffs; and (iii) the Franchise Agreement is unconscionable, and the forum selection clause is invalid and unenforceable. (Doc. 22 at 5-13)

         First, the Court finds that the Plaintiffs have failed to meet the heavy burden of demonstrating that the forum selection clause is invalid and unenforceable. In response to the Motion, the Plaintiffs argue that the Franchise Agreement is unconscionable because the Decedents were not in the position to bargain with the Defendant, as the Decedents were not sophisticated business persons. Furthermore, the Plaintiffs argue that the forum selection clause is invalid because (i) the Decedents were not sophisticated business persons; (ii) issues with subpoenaing witnesses will arise if the case is transferred, which ...