San Miguel Produce, Inc. v. L.G. Herndon Jr. Farms, Inc.

Filing 22

ORDER denying 5 Motion to Dismiss; denying 20 Motion to Dismiss. Signed by Judge J. Randal Hall on 10/27/16. (cmr)

IN THE UNITED
FOR THE

STATES DISTRICT COURT

SOUTHERN DISTRICT OF GEORGIA
STATESBORO DIVISION

SAN MIGUEL PRODUCE,

INC.,

*

Plaintiff,

*
*

v.

*

L.G.

HERNDON JR.

FARMS,

INC.,

CV

616-035

*
*
*

Defendant.

L.G.

HERNDON JR.

FARMS,

INC.,

*
*
*

Plaintiff,

*
*

v,

*

SAN MIGUEL PRODUCE,

INC.,

CV 616-043

*

Defendant.

*
*

ORDER

In these
seeks

to

enforce

grower-shipper
Produce, Inc.
to

cases,

enforce

the

L.G.

Herndon

forum-selection

agreement

it

("San Miguel").
the

Jr.

entered

motion to remand (CV 616-043,

clause

into

Inc.

("Herndon")

contained

with

San

in

the

Miguel

Because Herndon waived its right

forum-selection

Herndon's motions to dismiss

Farms,

clause,

the

(CV 616-035, docs.

doc.

4).

Court

5,

DENIES

20)

and its

In its briefs,

Herndon

also requests attorneys' fees.

Because attorneys' fees are not

warranted, the Court DENIES that request.

I.

San Miguel,

a California corporation,

distributes produce.

(CV

Georgia

corporation,

(Id.

3-4.)

ffl

Background

In

616-035,

grows,

2014,

1 11

Doc.

distributes,

San Miguel

grows,

processes,

1-2.)

and

and

Herndon,

brokers

a

produce.

and Herndon entered into a

grower-shipper agreement,1 under which Herndon was responsible
for growing, harvesting,

Toombs

County,

agreement
clause.

and delivering produce to a facility in

Georgia.2

contains

a

1

(Id.

mediation

20.)

clause

The
and

grower-shipper

a

forum-selection

The mediation clause provides:

The parties agree to mediate any dispute or claim
arising out of this Agreement before resorting to
any legal action.
Mediation fees, if any, shall be
apportioned equally among the parties involved.
If
any party commences legal action without first
attempting to resolve the matter through mediation,
or refuses to mediate after a request is made,

that

party

attorney's

shall

fees,

not

even

otherwise be available
other proceeding.

(CV

616-035,

Doc.

1-1

1

be

if
to

7.)

entitled

attorney's
that

The

party

to

recover

fees
in

then

any

would
such

forum-selection

clause

provides:

1 The parties also executed a co-packing agreement, an equipment-lease

agreement, a building-lease agreement, and an operating agreement.
035,

Doc.

(CV 616-

1 SI 18.)

2 This facility was owned by Robo Produce, LLC, which the parties
formed together for the purpose of operating the facility. (CV 616-035, Doc.
1 ff 24-25.)

This Agreement, and any dispute arising from the
relationship between the parties to this Agreement,
shall be governed by, construed and determined in
accordance with the Laws of the State of Georgia,
without regard to its conflict of laws rules.
Any
dispute
that
arises
under
or
Agreement (whether contract, tort,

relates
or both)

to
this
shall be

resolved in the Superior Court of Toombs County,
Georgia, and the parties expressly waive any right
they may otherwise have to cause any such action or
proceeding to be brought or tried elsewhere, waive
all defenses of lack of personal jurisdiction and
forum non conveniens.

(Id.
turn

1

24.)

for the

On

At

some

point,

the

parties'

relationship

took

a

worse.

February

1,

2016,

Herndon

filed

an

informal

complaint

with the USDA under the Perishable Agricultural Commodities Act
("PACA")

based on San Miguel's failure to pay under the grower-

shipper agreement.

(See CV 616-035,

February

Herndon's

3,

2016,

counsel

counsel of the informal complaint.

February 18,

2016,

Doc.

13-1 at 6-10.)

notified

(Id. at 5.)

San

On

Miguel's

In response,

on

San Miguel's counsel contacted the USDA and

learned that the complaint had been assigned a PACA caseworker

and that it could

That same day,

only be dismissed by Herndon.

(Id.

at 2.)

San Miguel's counsel e-mailed Herndon's counsel

and asked him to dismiss the PACA complaint pending a mediation

the parties had scheduled.

(Id. at 12.)

In his reply e-mail,

Herndon's counsel stated that he could not dismiss the complaint

because "[i]f the mediation doesn't work we need to have the

track record for pursuing the claim through PACA.

PACA doesn't

seem to

[be] moving too fast in any event.

I would think our

mediation will be completed before a case gets moving in PACA in
any event."

(Id.

at 12.)

Subsequently,

Herndon's

counsel

learned

that

the

dismissing the PACA complaint in two separate letters.
035,
18,

Doc.

5-2 at

2016,

clause

28;

in

this

Doc.

15-1 at

20.)

the

grower-shipper

letter,

agreement

(CV 616-043,

Herndon's

Doc.

prevented

2,

(CV 616-

On February

2016,

the

USDA

the

15-1 at 20.)

USDA

from

Upon receipt

counsel apparently contacted the USDA

and requested that it reconsider its decision.
March

was

the USDA informed Herndon's counsel that the mediation

hearing the case.
of

CV 616-043,

USDA

informed

Herndon's

(Id.

at 4. )

counsel

that

On
the

forum-selection clause also prevented the USDA from hearing the
case.

(IcL

at 22.)

On March 25, 2016, San Miguel filed case number CV 616-035
in

this

Court.

Miguel alleges,

(CV

616-035,

Doc.

among other things,

grower-shipper agreement.

(Id.

M

1.)

In

its

complaint,

San

that Herndon breached the

56-64.)

On April 5,

2016,

Herndon filed suit against San Miguel in the Superior Court of
Toombs County, Georgia,

alleging, among other things,

Miguel breached the grower-shipper agreement.
1-1.)
as

(CV 616-043, Doc.

San Miguel removed the Toombs County case to this Court

case number CV 616-043.

moves

that San

to

dismiss

CV

616-035

(CV 616-043,

Doc.

and remand CV

1.)

616-043

Herndon now

because

the

forum-selection

clause

requires

the

parties

to

litigate

all

claims arising under the agreement in the Toombs County Superior
Court.

(CV

616-035,

Docs.

5,

20;

CV

616-043,

Doc.

4.)

San

Miguel claims that these matters are properly before this Court
because Herndon waived its
clause when it
its briefs,

filed its

right to

informal

enforce the

complaint

Herndon also requests attorneys'

II.

forum-selection

with the

USDA.

In

fees.

Discussion

1. Herndon's Motions to Dismiss and Motion to Remand

In CV 616-035,
on

Herndon's original motion to dismiss relies

Federal Rule of

Civil Procedure 12(b)(3)

and argues that the

forum-selection clause renders venue improper in this Court.

In

its response brief, San Miguel points out that under the Supreme
Court's holding in Atlantic Marine Construction Company, Inc. v.
U.S.

District

Court

for

the

Western

District

of

Texas,

134

S.

Ct.

568 (2013), a Rule 12(b)(3) motion is not the proper motion

to

enforce

therefore,

a

forum-selection

Herndon

asks

properly filed under
points

out,

§ 1404

federal forums.

("Section 1404(a)
forum

non

clause.

In

the Court to view

28

U.S.C.

allows

§ 1404.

for

transfers

its

reply

brief,

its motion

as one

But,

as

between

See Atl. Marine Const. Co., 134 S.

San Miguel
different
Ct. at 580

is merely a codification of the doctrine of

conveniens

for

the

subset

of

cases

in

which

the

transferee

forum

Accordingly,
dismiss,

the

in

is

within

issue

which

has

in

enforce

federal

court

system .

.

.

.").

Herndon subsequently filed a supplemental motion to
it

relies

forum-selection

Herndon

the

filed

CV

clause.

the

616-035

the

on

(CV

is

Likewise,

whether

in

non

Doc.

motion,

Herndon

clause

CV

conveniens

616-035,

appropriate

forum-selection

complaint.

forum

616-043,

the

it

Because

only

was

only if Herndon waived its right to enforce the

disputed

its

filed

removal

enforce

20.)

waived

when

to

right
the

to

PACA

appropriate

forum-selection

clause.3

The parties take subtly different positions with respect to
what

constitutes

a

waiver

of

a

forum-selection

clause.

San

Miguel argues that a party waives its right to enforce a forumselection

clause

with

right

the

when

or

it

[its]

acts

"in

intention

Woods v.

Christensen Shipyards,

5654643,

at

*2

(S.D.

Fla.

for a two-pronged test,
(1)

"the

party

inconsistently
inconsistent
Sales

Assoc.

acts
v.

have

Sept.

way

to

Ltd.,
23,

that

rely

No.

is

the

right."

04-61432-CIV,

2005 WL

2005).

upon

inconsistent

Herndon

advocates

under which waiver will exist only if:

seeking

with

a

the

to

enforce

clause's

prejudiced

Byers,

No.

the

the

clause

right";

and

other

party."

3:08-cv-1012-J-32JRK,

acted

(2)

"the
Bahamas

2014

WL

3
The dispute surrounding the forum-selection clause is governed by
federal law.
See Pappas v. Kerzner Int'l Bahamas Ltd., 585 F. App'x 962, 966
n.4 (11th Cir. 2014) ("[I]t is well-settled that the enforceability of a
forum-selection clause in a diversity case is governed by federal law.'').

2772468,

at

approach,
to

*1

(M.D.

Fla.

June

18,

2014).4

Under

either

the Court is satisfied that Herndon waived its right

enforce

the

forum-selection

clause

when

it

filed

the

PACA

in the

grower-shipper agreement

complaint.

The

forum-selection

requires

that

all

clause

disputes

arising

from

the

litigated in the Toombs County Superior Court.
of the

agreement,

Nevertheless,

enforce

the

Herndon

filed

the

Herndon maintains

clause.

5

it

has

not

waived

Herndon

be

In contravention

PACA action with

Essentially,

attempt to bring the PACA action,

agreement

the

its

argues

USDA.

right

that

to

its

which lasted only thirty days,

4 Herndon also claims that Byers adds a third prong to the test: that
the party seeking to enforce the clause "participated substantially in the
case."

(CV 616-035,

substantial
clause.

Doc.

participation

See Byers,

5

is

at

3.)

But

indicative

2014 WL 2772468,

at

the

Byers

of

acting

*1

("First,

court

stated only that

inconsistently
courts

with

the

look to whether

the party seeking to enforce the clause acted inconsistently with the
clause's right.
This most commonly occurs where the party seeking to enforce
the clause substantially participated in litigation prior to demanding the
case be heard in another forum."

(citation omitted)).

5
For the first time in its reply briefs, Herndon argues that its
informal PACA complaint was merely a request for mediation.
But the record
establishes the opposite.
While the USDA provides an avenue for parties to
mediate PACA claims, parties must request mediation.
See PACA Mediation
Services,
http://www.ams.usda.gov/sites/default/files/media/PACAMediation
Services.pdf (last visited Sept. 30, 2016).
Herndon's original brief states
that the PACA complaint was an "attempt by Herndon to bring a reparations
claim before the reparations forum of the USDA . . . ."
(CV 616-035, Doc. 5
at 4.)
And while the PACA complaint was pending, the parties participated in
a separate mediation.
Indeed, in a letter to San Miguel's counsel, dated
February 16, 2016, Herndon's counsel stated: "With regard to the PACA
informal complaint, my thought is to allow that process to continue while we

try to schedule an independent mediation."
(emphasis added).)
Furthermore, the USDA

(CV 616-043, Doc. 15-1 at 18
informed Herndon that it was

"unable to handle [its] claim based on [its] election of remedies" because of
the mediation clause.
(CV 616-043, Doc. 15-1 at 20.)
Accordingly, nothing
in

the

record

indicates

through the USDA.

that

Herndon

ever

intended

to

pursue

mediation

was too short-lived to constitute a waiver and that San Miguel
was

not

prejudiced

substantially

by

the

participate

filing

in

the

because

PACA

it

did

action.

The

not
Court

disagrees.
Herndon

acted

inconsistently

clause when,

on its own accord,

an

forum.

improper

See

and Health Care Workers

131

F.

Supp.

New

York

in

undoubtedly

2d 393,
violation

has

of N.Y.,

of

Practical
Inc.

(S.D.N.Y.
the

waived

v.

Nurses,

any

right

was

great

and

Cruises,

clause,

to

Miguel

Technicians
Inc.,

("By bringing suit

forum-selection

Herndon may be correct

not

forum-selection

Ulysses

2000)

enforcement.").

suffered

the

it chose to pursue its claims in

Licensed

410

with

that

plaintiff

insist

that

the

San

on

prejudice

Miguel

"substantially participate" in the PACA action.

in

did

its
San

not

But this is not

a case where a plaintiff files suit in an improper court and the

defendant

briefly

litigates

dismiss

or

transfer

it was

only after the

Herndon

decided

Indeed,

when

6

to

San

based

in

on

a

that

forum

before

forum-selection

clause.

USDA dismissed Herndon's

acknowledge

Miguel's

the

counsel

moving

Rather,

complaint that

forum-selection

asked

Herndon's

Herndon appears to take the position that

the

to

fact

clause.6

counsel

that

to

the USDA

summarily dismissed the PACA complaint supports enforcing the forum-selection
clause.

That is,

Herndon essentially argues that the USDA's interpretation

of the forum-selection clause validates its enforceability.
But the USDA's
view is evidence that Herndon's action violated the clause: it dismissed the

complaint because the clause prevented it from hearing
interpretation, therefore, supports a finding of waiver.

the

case.

Its

voluntarily

"need[ed]

dismiss

to

the

the

have

PACA complaint,

track

record

he

refused because

for

pursuing

through PACA."7

(CV 616-035, Doc. 1-3 at 2. )

Herndon

to

wrong

intended

forum.

litigate

Because

forum-selection

its

claim

Herndon waived

clause,

the

to

its

Court DENIES

the

he

claim

It is clear that
resolution

right

the

enforce

to

in

the

its motions

to

dismiss

in CV 616-035 and its motion to remand in CV 616-043.

2 . Attorneys'
In

its

fees.

Fees

briefs

In

CV

in

both

616-035,

cases,

Herndon

Herndon
claims

requests
it

is

attorneys'

entitled

to

attorneys'

fees under the grower-shipper agreement and 28 U.S.C.

§ 1927.

In

because,

it

CV

616-043,

claims,

San

Herndon

Miguel

requests

did

not

attorneys'

have

an

fees

objectively

reasonable basis for removing to this Court.
a. CV 616-035

Herndon claims that it is entitled to attorneys'

the

grower-shipper

agreement,

which

contains

a

fees under

clause

that

provides:

If any party shall bring any action against the
other party under this Agreement, the prevailing
party in such action shall be entitled to judgment
for reasonable attorneys' fees and costs to be fixed
7
As San Miguel points out, Herndon' s refusal to dismiss the PACA
complaint may have been strategic.
PACA claims must be filed with the USDA
within

nine

months

from the

date

the

cause

of

action

accrues.

See

Bemel,

Inc. v. U.S. Produce Brokers, Inc., 53Agric. Dec. 1859, 1859-60 (1994).

filing an informal complaint will toll the statute of limitations.
Herndon's

counsel's

statement

that

he

needed

a

"track

record"

of

Id.
the

And

So
PACA

claim indicates that he was ensuring that he avoided a statute-of-limitations
defense.

by the court, including without limitation, the cost
of collection of any judgment awarded by the court.

(CV 616-035, Doc. 1-1 at 12.)

On this issue, San Miguel argues,

and Herndon does not

that

Georgia

law,

to

dispute,

be

considered

Georgia law applies.

a

prevailing

party,

Under

the

party

seeking fees must have obtained "actual relief on the merits of
a claim."

Ct. App.

Floyd v.

2002).

the agreement,

Herndon
28

U.S.C

expenses
case

Inc.,

its request for attorneys'

§ 1927,

an

unreasonably

claims

attorneys'

425

(Ga.

which

allows

attorney
and

unreasonable

fees is DENIED.

fees

a

are

court

"multiplies

the

appropriate

to

and

vexatious

award

28

U.S.C.

under

fees

proceedings

vexatiously . . . ."

For an award under § 1927 to be proper,
in

566 S.E.2d 423,

Because Herndon is not a prevailing party under

also

when

Logisticare,

in

and

any

§ 1927.

"an attorney must engage

conduct;

this

conduct

must

multiply the proceedings; and the amount of the sanction cannot
exceed the costs occasioned by the objectionable conduct."

v.

Lewis,

omitted)

606

F.3d

1306,

1314

(11th

Cir.

(internal quotation marks omitted).

2010)

Peer

(citation

This standard is

met "only when the attorney's conduct is so egregious that it is
tantamount to bad faith," which "is an objective standard that
is satisfied when an attorney knowingly or recklessly pursues a

frivolous

claim."

Id.

(citations omitted)

marks omitted).

10

(internal

quotation

On this issue,
the

forum-selection

Herndon argues that San Miguel disregarded
clause

Herndon's PACA claim.

and that

PACA claim was

the

complaint was

filed.

was

not

that

before

sent

this

to

either

Doc.

15-1

Court.

was

Herndon's

letter.

Miguel's

the

case

at

San

CV

made

any

whether

Miguel

the

PACA
and

complaint
a

counsel
had

review

of

the

shows

that

she

was

616-035,

Doc.

5-2

at

there

intentional
the

is

no

not

copied
CV

evidence

still

is not

on

616-043,

that

San

to

the

pending

at

dispositive

of

forum-selection

no evidence that San Miguel's

engaged in unreasonable or vexatious conduct,

she

dismissed

misrepresentation

complaint

time

notifications

28;

PACA claim was

filed its

Because there is

for attorneys'

about

claims

been

whether Herndon waived its right to enforce the
clause.

Court

still pending at the

San Miguel's

Accordingly,

Moreover,

time

the

filed,

(See

counsel

But

counsel

20.)

lied to

In its complaint, San Miguel incorrectly

stated that Herndon's

notified

it

counsel

Herndon's request

fees under § 1927 is DENIED,

b. CV 616-043

Herndon

requests

attorneys'

fees because,

it

claims,

San

Miguel's removal of this case to this Court was not objectively
reasonable.

(11th

Cir.

reasonable

See Bauknight v.

2006).
basis

Monroe Cty.,

Because
for

San

removing

Miguel

this

Herndon's request for attorneys' fees.
11

case,

446 F.3d

had
the

an

1327,

1329

objectively
Court

DENIES

Conclusion

Ill

For

the

reasons

motion to dismiss
to dismiss

616-043,

stated

(CV 616-035,

(CV 616-035,

doc.

above,

4) .

doc.

the

doc.

20),

Court

5), its

DENIES

supplemental motion

and its motion

The Court also declines

Herndon's

to

to

remand

(CV

award attorneys'

fees.

ORDER ENTERED
October,

at

Augusta,

Georgia

this C^J_^ day

2016.

HO^RABfL&XI. RANDAL HALL

united/states DISTRICT JUDGE
SOUTHERN

12

DISTRICT

OF GEORGIA

of