United States District Court, D. Arizona
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 ...