Applied Energy of AR-LA-MS Inc v. Pall Corporation

Filing 21

ORDER granting 17 Motion to Transfer Case. The Court directs the Clerk to transfer this action immediately to the Eastern District of New York. Signed by Judge J. Leon Holmes on 12/10/2014. (ks)

IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
PINE BLUFF DIVISION
APPLIED ENERGY OF AR-LA-MS, INC.,
an Arkansas corporation
v.

PLAINTIFF

No. 5:14CV00301 JLH

PALL CORPORATION,
a New York corporation

DEFENDANT
ORDER

Applied Energy of AR-LA-MS, Inc., an Arkansas corporation, commenced this action in the
Circuit Court of Jefferson County, Arkansas, against Pall Corporation, a New York corporation,
alleging that the parties had entered into a franchise agreement pursuant to the Arkansas Franchise
Practices Act, Ark. Code Ann. §§ 4-72-201 et seq., and that Pall Corporation violated section 4-72204 by terminating the franchise without giving ninety days’ advance notice and without setting
forth the reasons for the termination. Pall Corporation removed the action to this Court. This Court
remanded the action, but after further proceedings in the state court, the action was removed a
second time, and thereafter the Court denied a second motion to remand.
Pall Corporation has now filed a motion to transfer this action to the Eastern District of New
York, relying upon the following provision in the distribution agreement into which the parties
entered:
h.

Governing Law; Venue: This Agreement is deemed to be made and executed
in New York and shall be governed by and construed and interpreted in
accordance with the laws of the State of New York, regardless of conflict of
law principles therein. The Distributor agrees to accept service of process,
by certified mail, return receipt requested to the address shown in this
Agreement, and hereby submits to the exclusive jurisdiction of the Supreme
Court of the State of New York, Nassau County, or the U.S. District Court
for the Eastern District of New York for all suits or causes of action relating
to or arising directly or indirectly from this Agreement. The Distributor
acknowledges that such venue is proper, and waives any and all rights to
object to such venue.

Document #17-1 at 14-15. Judge P.K. Holmes of the Western District of Arkansas exhaustively
analyzed the law pertaining to a similar contractual provision in Bright Harvest Sweet Potato Co.,
Inc. v. H.J. Heinz Co., L.P., No. 2:12CV02155-PKH, 2013 WL 2458685 (W.D. Ark. June 6, 2013).
Using federal law to determine whether the forum selection clause was valid and enforceable, Judge
Holmes found that it was. The same analysis applies here.
Applied Energy contends that the issue is whether the Arkansas Franchise Practices Act
applies to the relationship between the parties, so this is not an action arising in contract. The forum
selection clause to which it agreed, however, provides for exclusive venue in the Eastern District
of New York “for all suits or causes of action relating to or arising directly or indirectly from this
Agreement.” That is a broad forum selection clause, and it is not ambiguous. The present action
relates to or arises directly or indirectly from the distribution agreement, so the present action is
governed by the forum selection clause in the contract.
Applied Energy also contends that the result is unfair, arguing that it is being victimized by
a wealthy international corporation, using its vast financial resources to the detriment of a small,
local corporation. Parties to a contract need not be equal in bargaining power before a forum
selection clause can be enforced. Parsons Dispatch, Inc. v. John J. Jerue Truck Broker, Inc., 89
Ark. App. 25, 33, 199 S.W.3d 686, 691 (2004). Moreover, other than making the assertion, Applied
Energy has provided nothing to show that the forum selection clause was the product of
overwhelming bargaining power on the part of Pall Corporation. Even if the contract is a form
contract and the individual provisions were not negotiated, that does not render the forum selection
clause unenforceable. Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 593, 111 S. Ct. 1522,
1527, 113 L. Ed. 2d 622 (1991). Applied Energy does not argue that it was induced by fraud or
duress to agree to the forum selection clause. Cf. Marano Enterprises of Kan. v. Z-Teca
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Restaurants, L.P., 254 F.3d 753, 757 (8th Cir. 2001) (a forum selection clause is not enforceable if
the inclusion of that clause was the product of fraud or coercion); M.B. Restaurants, Inc. v. CKE
Restaurants, Inc., 183 F.3d 750, 752 (8th Cir. 1999) (forum selection clauses are valid and
enforceable unless they are invalid due to fraud or overreaching or would deprive a party of its day
in court). Nor has Applied Energy argued that enforcement of the forum selection clause would
violate the public policy of the State of Arkansas. Cf. Union Elec. Co. v. Energy Ins. Mut. Ltd., 689
F.3d 968, 974 (8th Cir. 2012) (consideration must be given to the public policy of the state in
deciding whether to enforce a forum selection clause).
Applied Energy entered into the distribution agreement and thereby agreed to venue in the
Eastern District of New York for all suits or causes of action relating to or arising directly or
indirectly from the agreement. No legal principle authorizes this Court to disregard the parties’
contract.
Pall Corporation’s motion to transfer venue is GRANTED. Document #17. The Court
directs the Clerk to transfer this action immediately to the Eastern District of New York.
IT IS SO ORDERED this 10th day of December, 2014.

J. LEON HOLMES
UNITED STATES DISTRICT JUDGE

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