Lion Federal Credit Union v. Worldpay, LLC
Filing
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ORDER granting in part and denying in part 38 Motion to Dismiss; ORDER TRANSFERRING CASE to Southern District of Ohio, Western Division (Cincinnati). Docket Sheet and case documents sent to receiving court. Signed by Honorable Susan O. Hickey on March 26, 2024.(mll)
IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
EL DORADO DIVISION
LION FEDERAL CREDIT UNION
v.
PLAINTIFF
Case No. 1:23-cv-1001
WORLDPAY, LLC
DEFENDANT
ORDER
Before the Court is Defendant Worldpay, LLC’s Motion to Dismiss First Amended
Complaint. ECF No. 38. Plaintiff Lion Federal Credit Union has responded. ECF No. 44. The
Court finds the matter ripe for consideration.
I. BACKGROUND
On March 2, 2012, Lion Federal Credit Union (“LFCU”) and Worldpay, LLC
(“Worldpay”) executed a Master Services Agreement (“MSA”) in which Worldpay agreed to
provide terminal services, card services, debit card services, card production services, and gateway
services to LFCU in connection with LFCU’s business as a credit union in El Dorado, Arkansas.
After the initial term expired, the MSA automatically renewed for a period of seven (7) years.
The MSA contains a forum selection clause:
Applicable Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Ohio. The parties
hereby consent to service of process, personal jurisdiction, and venue in the
state and federal courts in Cincinnati, Ohio or Hamilton County, Ohio, and
select such courts as the exclusive forum with respect to any action or
proceeding brought to enforce any liability or obligation under this
Agreement.
ECF No. 35-1, at 4, ¶ 13(f). LFCU states that it is a citizen of Arkansas and alleges that Worldpay
is a Delaware limited liability company with its principal place of business in Ohio.
LFCU alleges that Worldpay has been unable to provide adequate and reliable services
promised under the MSA. LFCU further alleges that Worldpay is wrongly withholding a debit
card file, and as a result, LFCU has been unable to undergo a changeover to another card service
provider, which was originally scheduled for June 2, 2022.
On July 10, 2023, LFCU filed its amended complaint in this Court, alleging breach of
contract, unjust enrichment, negligence, deceptive trade practices, and intentional interference
with business expectancy and contractual relationships.
LFCU also requests a declaratory
judgment. In the instant motion, Worldpay argues that this action was filed in an improper venue
and should be dismissed, or alternatively, transferred to the United States District Court for the
Southern District of Ohio, Western Division (Cincinnati). Worldpay also argues that LFCU’s
amended complaint should be dismissed for failure to state a claim. LFCU opposes the motion.
II. DISCUSSION
Worldpay argues that LFCU’s complaint must be dismissed pursuant to Federal Rules of
Civil Procedure 12(b)(3) and (6) for improper venue and failure to state a claim upon which relief
may be granted. Alternatively, Worldpay argues that the Court should transfer this case to the
United States District Court for the Southern District of Ohio pursuant to 28 U.S.C. § 1404(a) and
the MSA’s forum selection clause.
As a preliminary matter, LFCU argues that Worldpay’s motion to dismiss should be denied
because its venue argument is improperly presented to the Court in the form of a Rule 12(b)(3)
motion. LFCU also argues that the forum selection clause is unenforceable and ambiguous.
Finally, LFCU argues that its complaint contains sufficient factual allegations to avoid dismissal
under Rule 12(b)(6).
A. Legal Basis for Motion to Dismiss
The Supreme Court has determined that the exclusive avenue for relief when seeking to
enforce a forum selection clause, such as the one in the MSA, is either a motion brought pursuant
to 28 U.S.C. § 1404(a) or the doctrine of forum non conveniens, not Rule 12(b)(3). Atl. Marine
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Constr. Co. v. U.S. Dist. Court for the W. Dist. of Tex., 571 U.S. 49, 58-59 (2013). Thus, the Court
will construe Worldpay’s motion as it relates to venue as a motion to transfer pursuant to 28 U.S.C.
§ 1404(a), which is an alternative argument that Worldpay has presented in its motion.
B. Proper Venue
Section 1404(a) states that, “[f]or 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).
The Court must begin by determining whether the Western District of Arkansas is a proper
venue for this case, without regard to the MSA’s forum selection clause. This is because “[s]ection
1404(a) applies only if the initial federal forum is a proper venue.” 14D Arthur R. Miller, Federal
Practice & Procedure: Jurisdiction § 3829 (4th ed. 2020). “Where no special venue statute is
applicable, the general venue statute, 28 U.S.C. § 1391, applies.” Catholic Order of Foresters v.
U.S. Bancorp Piper Jaffray, Inc., 337 F. Supp. 2d 1148, 1154 (N.D. Iowa 2004). Under that
statute, a civil action founded on diversity of citizenship, like this case, may ordinarily be brought
only in:
(1) a judicial district in which any defendant resides, if all defendants are
residents of the State in which the district is located; (2) a judicial district in
which a substantial part of the events or omissions giving rise to the claim
occurred, or a substantial part of the property that is the subject of the action
is situated; or, (3) if there is no district in which an action may otherwise be
brought as provided in this section, any judicial district in which any
defendant is subject to personal jurisdiction with respect to such action.
28 U.S.C. § 1391(b).
LFCU alleges that venue is proper in the Western District of Arkansas because a substantial
part of the events or omissions giving rise to the claims occurred in the Western District of
Arkansas. ECF No. 35, at 2, ¶7. Worldpay’s motion does not discuss whether the Western District
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of Arkansas is a proper venue, but the Court agrees with LFCU that venue is proper in this Court,
putting aside analysis of the MSA’s forum selection clause.
C. Forum-Selection Clause
Although the Western District of Arkansas is a proper venue for this case, Worldpay
nevertheless argues that the Court should transfer this case to the United States District Court for
the Southern District of Ohio pursuant to 28 U.S.C. 1404(a) and the MSA’s forum selection clause,
which selects Ohio as the exclusive venue for any disputes arising from the MSA.
1. Legal Standard
District courts considering a motion to transfer under § 1404(a) “must establish both the
convenience of the parties and various public-interest factors.” Atl. Marine, 571 U.S. at 62.
“Public-interest factors may include the administrative difficulties flowing from court congestion;
the local interest in having localized controversies decided at home; and the interest in having the
trial of a diversity case in a forum that is at home with the law.” Id. In addition to the factors
identified in Atlantic Marine, the Eighth Circuit has identified factors appropriate to consider when
resolving motions to transfer, which it categorized into “balance of convenience factors” and
“interest of justice” factors. Terra Int’l, Inc. v. Miss. Chem. Corp., 119 F.3d 688, 696 (8th Cir.
1997). The Eighth Circuit has approved the consideration of “all relevant factors” in making a
“case-by-case evaluation of the particular circumstances at hand.” Id. at 691. Ultimately, the
Court enjoys “much discretion” when deciding whether to grant a motion to transfer. Id. at 697.
The Court’s analysis of a motion to transfer changes when the parties have agreed to a valid
forum selection clause, which “[should be] given controlling weight in all but the most exceptional
cases.” Atl. Marine, 571 U.S. at 60. When there is a valid forum selection clause, the section
1404(a) analysis is altered in three ways: (1) the plaintiff’s choice of forum holds no weight and
the plaintiff consequently bears the burden of establishing that a transfer pursuant to the forum4
selection clause is unwarranted; (2) the Court “must deem the private-interest factors 1 to weigh
entirely in favor of the preselected forum,” and consider only the public-interest factors, which
defeat a forum-selection clause only in “unusual cases”; and (3) a transfer will not carry with it the
original forum’s choice-of-law rules, which could affect public-interest considerations. Id.
Forum selection clauses are prima facie valid and are enforced unless they are unjust and
unreasonable or invalid for reasons such as fraud or overreaching. M/S Bremen v. Zapata OffShore Co., 407 U.S. 1, 15 (1972). The Eighth Circuit recognizes both mandatory and permissive
forum selection clauses. Dunne v. Libbra, 330 F.3d 1062, 1063 (8th Cir. 2003). “Mandatory
forum-selection clauses require a case to be brought in an identified venue based on ‘specific
language indicating the parties’ intent to make jurisdiction exclusive.’” High Plains Constr., Inc.
v. Gay, 831 F. Supp. 2d 1089, 1102 (S.D. Iowa 2011) (citing DataCard Corp. v. Softek, Inc., 645
F. Supp. 2d 722, 729 (D. Minn. 2007)). On the other hand, “[p]ermissive forum-selection clauses
. . . constitute nothing more than a consent to jurisdiction and venue in the named forum and do
not exclude jurisdiction in any other forum.” Id. (internal quotation omitted). Generally, courts
apply Atlantic Marine’s limitations on a § 1404(a) transfer analysis only to cases involving
mandatory forum selection clauses. Waste Mgmt. of La., L.L.C. v. Jefferson Parish ex rel.
Jefferson Parish Council, 594 Fed. App’x. 820, 821-22 (5th Cir. Nov. 28, 2014) (declining
interlocutory appeal of district court’s decision not to transfer case to enforce a permissive forum
selection clause, noting that the vast majority of courts have refused to apply Atlantic Marine to
permissive forum selection clauses).
Determining whether a forum selection clause is mandatory or permissive is a legal issue
of contract construction. Dunne, 330 F.3d at 1063. The Eighth Circuit has determined that words
Private factors generally relate to the “practical problems that make trial of a case easy, expeditious, and
inexpensive.” Atl. Marine, 571 U.S. at 62.
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such as “exclusive,” “only,” and “must” suggest exclusivity. Id. at 1064. The Fifth Circuit Court
of Appeals has explained, “[a] party’s consent to jurisdiction in one forum does not necessarily
waive its right to have an action heard in another. For a forum selection clause to be exclusive, it
must go beyond establishing that a particular forum will have jurisdiction and must clearly
demonstrate the parties’ intent to make that jurisdiction exclusive.” City of New Orleans v. Mun.
Admin. Servs., 376 F.3d 501, 504 (5th Cir. 2004).
2. Analysis
As stated earlier, the forum selection clause at issue here is as follows:
Applicable Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Ohio. The parties
hereby consent to service of process, personal jurisdiction, and venue in the
state and federal courts in Cincinnati, Ohio or Hamilton County, Ohio, and
select such courts as the exclusive forum with respect to any action or
proceeding brought to enforce any liability or obligation under this
Agreement.
ECF No. 35-1, at 4, ¶ 13(l). LFCU does not expressly argue that this forum selection clause is
permissive but rather that it is ambiguous and should be construed against the drafter of the
agreement. LFCU explains that the ambiguity is found in the phrase “such courts.” According to
LFCU, the phrase is “internally ambiguous because it purports to select the state and federal courts
of both Cincinnati and Hamilton County as a singular, exclusive forum.” ECF No. 44, at 9. It
argues that the phrase “such courts . . . is unclear whether it limits the lone forum to a state or
federal court situated in both Cincinnati and Hamilton County . . . another court, or multiple other
courts.” ECF No. 44, at 9.
To render the Court’s disposition in this case, it is not necessary that the Court choose
between these specific venue options as defined by LFCU. The Court is not aware of any precedent
that requires a forum selection clause to identify a single agreed upon venue for the clause to be
deemed mandatory and not permissive. Considering the language of the forum selection clause as
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a whole, it clearly states that state and federal courts in either Cincinnati, Ohio or Hamilton County,
Ohio are the ”exclusive” forum the parties select with respect to claims brought under the
agreement. This makes sense given that disputes could arise under the MSA that involve only
state claims, only federal claims, or both. The forum selection clause indicates an intent by the
parties to go beyond establishing simply that the identified Ohio courts will have jurisdiction
because the clause identifies specific courts in Ohio that will have “exclusive” jurisdiction over
claims brought under the MSA. Thus, the Court is convinced, based on the MSA’s choice of
language, that the forum selection clause at issue is mandatory and not permissive.
Because the clause is mandatory, the Court will apply Atlantic Marine’s limitations on the
Court’s § 1404(a) transfer analysis. As stated earlier, those limitations as they relate to this case
are: (1) LFCUS’s choice of forum holds no weight and LFCU consequently bears the burden of
establishing that a transfer pursuant to the forum selection clause is unwarranted; (2) the Court
“must deem the private-interest factors to weigh entirely in favor of [Ohio],” and consider only the
public-interest factors, which defeat a forum-selection clause only in “unusual cases”; and (3) a
transfer will not carry with it Arkansas’s choice-of-law rules, which could affect public-interest
considerations. Atl. Marine Const., 571 U.S. at 60.
Because LFCU filed suit against Worldpay in Arkansas in contravention of the MSA’s
mandatory forum selection clause, the Court gives no deference to LFCU’s choice of forum or the
comparative costs or convenience to the parties of litigating in each forum. As to the Atlantic
Marine public-interest factors and the “interest of justice” factors identified in Terra International,
the Court determines that the MSA’s mandatory forum selection clause should be enforced. LFCU
has not argued that there is extraordinary congestion in Ohio courts currently. While LFCU does
argue that Arkansas is the proper forum for this suit because substantial events giving rise to
LFCU’s claims took place in Arkansas, the Court notes that there is an Ohio choice-of-law
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provision in the MSA, indicating that Ohio law may apply to the claims at issue, which weighs in
favor of enforcing the MSA’s forum selection clause. With respect to each party’s ability to
enforce a judgment and obstacles to a fair trial, there is no indication that these factors weigh
against enforcement of the MSA’s mandatory forum selection clause.
LFCU points out that most of the evidence is in Arkansas and most of the witnesses live in
Arkansas. However, because of the mandatory forum selection clause, the Court must deem these
private-interest or convenience factors to weigh entirely in favor of Ohio. Id. at 64 (“When parties
agree to a forum-selection clause, they waive the right to challenge the preselected forum as
inconvenient or less convenient for themselves or their witnesses, or for their pursuit of the
litigation.”).
Bearing in mind that the forum selection clause should be “given controlling weight in all
but the most exceptional cases,” the Court finds that LFCU has not met its burden of establishing
that the transfer of this case to Ohio is unwarranted. Id. at 60, 63 (quoting Stewart Organization,
Inc. v. Ricoh Corp., 487 U.S. 22, 33 (1988) (holding that when the parties have agreed to a valid
forum-selection clause, a § 1404 transfer motion should be denied only under extraordinary
circumstances unrelated to the convenience of the parties).
Section 1404(a) provides that “a district court may transfer any civil action to any other
district or division where it might have been brought.” (emphasis added). Hence, section 1404(a)
plainly authorizes only the transfer of an entire lawsuit. 2 In re Flight Transp. Corp. Sec. Litig.,
764 F.2d 515, 516 (8th Cir. 1985) (noting that section 1404(a) “contemplates a plenary transfer”);
see also Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d 1509, 1518 (10th Cir. 1991)
(“Section 1404(a) only authorizes the transfer of an entire action, not individual claims.”). LFCU’s
In certain “rare circumstances,” it may be appropriate for a court to sever specific claims under Federal Rule of Civil
Procedure 21 to effectuate their separate transfer. Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d 1509,
1518 (10th Cir. 1991). Worldpay has not proposed this course of action, so the Court does not consider it.
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complaint includes a claim for breach of the MSA. Neither party disputes that this claim is subject
to the MSA’s forum-selection clause, which applies to “any action or proceeding brought to
enforce any liability or obligation under [the MSA].” Thus, the Court finds it appropriate to
transfer the entire case to the United States District Court for the Southern District of Ohio,
Western Division (Cincinnati) pursuant to 28 U.S.C. § 1404(a) and the MSA’s mandatory forumselection clause.
D. Motion to Dismiss Under Rule 12(b)(6)
Because the Court finds that transfer of this case to Ohio is appropriate, the Court declines
to address the merits of Worldpay’s motion to dismiss for failure to state a claim under Federal
Rule of Civil Procedure 12(b)(6).
III. CONCLUSION
For the above-stated reasons, the Court finds that Worldpay’s Motion to Dismiss (ECF No.
38) should be GRANTED IN PART and DENIED IN PART. The Court declines to dismiss
the case based on improper venue but grants Worldpay’s alternative motion to transfer the case
pursuant to 28 U.S.C. § 1404(a) and the MSA’s mandatory forum selection clause. The Clerk of
Court is DIRECTED to immediately transfer this case to the United States District Court for the
Southern District of Ohio, Western Division (Cincinnati) for all further proceedings.
IT IS SO ORDERED, this 26th day of March, 2024.
/s/ Susan O. Hickey
Susan O. Hickey
Chief United States District Judge
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