Idaho Pacific Corporation v. Binex Line Corporation

Filing 26

MEMORANDUM DECISION AND ORDER. NOW THEREFORE IT IS HEREBY ORDERED: Defendants Motion to Transfer or Dismiss Case 3 is DENIED; Plaintiffs Motion to Strike Declaration of Mark Chang 10 is GRANTED; and Plaintiffs Motion to Strike Declaration of Jason Kwon 20 is GRANTED. Signed by Judge Candy W. Dale. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (st)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

IDAHO PACIFIC CORPORATION, an
Idaho corporation,

Case No. 4:15-cv-00510-CWD
MEMORANDUM DECISION AND
ORDER RE: MOTION TO TRANSFER
OR DISMISS CASE (DKT. 3);

Plaintiff,
v.

MOTION TO STRIKE
DECLARATION OF MARK CHANG
(DKT. 10); AND

BINEX LINE CORPORATION, a
foreign corporation,
Defendant.

MOTION TO STRIKE
DECLARATION OF JASON KWON
(DKT. 20)

INTRODUCTION
Pending before the Court are three motions. First, Defendant filed a Motion to
Transfer or Dismiss Case for improper venue. (Dkt. 3.) Next, Plaintiff filed two motions
to strike certain paragraphs in the Declarations of Mark Chang and Jason Kwon. (Dkts.
10, 20.) The Court heard oral argument from the parties on all three motions on February
10, 2016. After review of the record, consideration of the parties’ arguments and relevant
legal authorities, and otherwise being fully advised, the Court issues the following
memorandum decision and order on the motions.
MEMORANDUM DECISION AND ORDER - 1

BACKGROUND
Plaintiff Idaho Pacific Corporation is a potato dehydrator and sells potato flour to
its various customers. Defendant Binex Line Corporation operates in the business of
international freight forwarding. This action arises out of a return international shipment
of Idaho Pacific’s potato flour for which Binex Line was the freight forwarder.
In May of 2014, Idaho Pacific sold an order of its potato flour to Orion
Corporation, a customer located in Busan, Korea. The terms of the sale between Orion
and Idaho Pacific were F.O.B. Factory with Orion responsible for making all freight
shipment arrangements. Aff. Browning, ¶ 2. (Dkt. 11.) Orion selected Binex Line as its
freight forwarder; Idaho Pacific alleges it had no involvement in the selection of Binex
Line and did not sign any contracts with Binex Line. Idaho Pacific alleges to have never
received a copy of the full bill of lading from Binex Line for the initial outbound
shipment of potato flour to Busan. 1 Supp. Aff. Browning, ¶ 2. (Dkt. 12.)
Upon arrival in Busan, Orion took possession of the potato flour—at this point,
Idaho Pacific alleges it was no longer the cargo owner of the potato flour. 2nd. Supp. Aff.
Browning, ¶¶ 2, 10. (Dkt. 18 at 1-3.) Orion performed its own tests on the potato flour,
and for unknown reasons, sought to return portions of the product. Id. at ¶ 2. Idaho
Pacific agreed Orion could return the portion of the product that was not up to Orion’s
specifications and offered to pay the freight costs for the return shipment. Id. at ¶¶ 4, 9.
1

Wally Browning, President and CEO of Idaho Pacific, alleges, “IPC did receive, at some point, the front
page of the outbound bill of lading by which the product was sent to Orion in Korea. It is not clear if the
full original outbound bill of lading was sent to IPC; if it was, the original is not now in IPC’s files and
only a copy of the front page has now been located.” Supp. Aff. Browning, ¶ 2. (Dkt. 12) (emphasis in
original).
MEMORANDUM DECISION AND ORDER - 2

Idaho Pacific alleges it sought to use its own freight forwarder for the return shipment
and had no intent of using Binex Line. Id. at ¶ 4. However, Orion wanted to use Binex
Line and made the arrangements for the return shipment. Id. Idaho Pacific alleges it did
not receive a bill of lading from Binex Line for the return shipment.
On or about June 15, 2015, the potato flour arrived from Busan in Oakland,
California. Pursuant to Food and Drug Administration regulations, the potato flour
shipment had to be sampled upon entry into the United States. On June 23, 2015, the
FDA placed the potato flour shipment on hold so the FDA could take samples. The potato
flour was moved to a storage facility and was sampled on June 30, 2015. The FDA results
were released on July 27, 2015. Binex Line stored the potato flour in Oakland until July
29, 2015.
The parties disagree about the proper shipping protocol for the potato flour
product while awaiting FDA lab results. Binex Line’s position is that it had to continue to
store the potato flour until it received the FDA’s results. On the other hand, Idaho Pacific
alleges Binex Line was not required to wait for the FDA before shipping the potato flour
to Ririe, Idaho. Rather, Idaho Pacific alleges Binex Line was required to hold the potato
flour only until the initial sampling and inspection by the FDA, which occurred on June
30, 2015.
On or about July 29, 2015, Binex Line began shipping the potato flour from
Oakland to Ririe by rail. During a stop in Salt Lake City, Utah, Binex Line demanded
payment from Idaho Pacific for its freight charges. These charges included the costs for

MEMORANDUM DECISION AND ORDER - 3

the storage in Oakland, which had occurred from July 1, 2015, through July 29, 2015, and
included also additional storage costs for the storage in Salt Lake City.
Binex Line continues to hold Idaho Pacific’s potato flour in Salt Lake City and
refuses to return it to Ririe until it receives payment for the total charges it claims it is
owed from Idaho Pacific. As of September 3, 2015, this amount totaled $20,799.78.
Idaho Pacific alleges it offered to pay all the ordinary and standard rail and freight
charges in the amount of $8,599.78, and has continued to offer to pay those transportation
costs throughout this dispute.
PROCEDURAL POSTURE
Idaho Pacific filed a complaint on September 18, 2015, against Binex Line, in the
district court of the Seventh Judicial District of the State of Idaho, in Bonneville County,
seeking a declaratory judgment regarding the amount it owes to Binex Line for the return
shipment of potato four. The complaint alleges also conversion and breach of duty, and
seeks monetary relief, including future lost profits and damages for the loss of the use and
possession of the potato flour. Binex Line timely removed the action to this Court on
October 29, 2015, based upon federal question jurisdiction.
The next day, Binex Line filed a Motion to Transfer or Dismiss Case. (Dkt. 3.) In
support of its motion, Binex Line attached the Declaration of Mark Chang, the Import
Export Manager of Binex Line who works at Binex Line’s Torrance, California
headquarters. Chang alleges he is responsible for the import and export shipments for all
of Binex Line’s offices throughout the United States and is an authorized custodian of

MEMORANDUM DECISION AND ORDER - 4

records for Binex Line. On November 18, 2015, Idaho Pacific moved to strike a portion
of Chang’s declaration on the ground that the statement lacks proper foundation.
On December 7, 2015, Binex Line filed the Declaration of Jason Kwon in
Response to Motion to Strike Declaration of Mark Chang. 2 (Dkt. 17.) Jason Kwon is the
Assistant Import General Manager of Binex Line and is also a custodian of records for
Binex Line. Attached to Kwon’s declaration is a chain of emails between Julian Awdry,
who appears to be an Idaho Pacific employee, and Min, who appears to be an employee
of Orion. 3 (Dkt. 17-1.) The Kwon Declaration and the emails do not specify the roles and
responsibilities of Awdry and Min. Nor does the Declaration explain Kwon’s or Binex
Line’s relationship to Awdry or Min. On December 15, 2015, Idaho Pacific moved to
strike several paragraphs in the Kwon Declaration and the attached chain of emails
between Awdry and Min.
Before taking up the Motion to Transfer or Dismiss (Dkt. 3), the Court must first
consider Idaho Pacific’s two related motions to strike. (Dkts. 10, 20.)
MOTIONS TO STRIKE (DKTS. 10, 20)
1. Standards of law
A. Fed. R. Evid. 801(c)—Hearsay
Hearsay is defined as an out-of-court statement offered to prove the truth of the
matter asserted. Fed. R. Evid. 801. Hearsay evidence is not admissible unless it falls

2

No formal response in opposition to the motion to strike the Declaration of Chang was filed with
Kwon’s declaration.
3
The recipient/sender headings of the emails are not in English.
MEMORANDUM DECISION AND ORDER - 5

within an exception set forth by federal statute, the Federal Rules of Evidence, or another
rule prescribed by the Supreme Court. Fed. R. Evid. 802.
B. Fed. R. Evid. 801(d)(2)—Statements that are not Hearsay
A statement that meets the following conditions is not hearsay:
(2) An Opposing Party's Statement. The statement is offered against
an opposing party and:
(A) was made by the party in an individual or representative
capacity;
(B) is one the party manifested that it adopted or believed to
be true;
(C) was made by a person whom the party authorized to make
a statement on the subject;
(D) was made by the party's agent or employee on a matter
within the scope of that relationship and while it existed; or
(E) was made by the party's coconspirator during and in
furtherance of the conspiracy.
Fed. R. Evid. 801(d)(2).
C. Fed. R. Evid. 602—Personal Knowledge
“A witness may testify to a matter only if evidence is introduced sufficient to
support a finding that the witness has personal knowledge of the matter. Evidence to
prove personal knowledge may consist of the witness's own testimony.” Fed. R. Evid.
602.

MEMORANDUM DECISION AND ORDER - 6

2. Motion to Strike Declaration of Mark Chang (Dkt. 10)
Through its Motion to Strike the Declaration of Mark Chang (Dkt. 10), Idaho
Pacific claims the second sentence in paragraph seven of Chang’s Declaration lacks
foundation. Paragraph seven reads:
Upon discharge in Busan, Korea Orion Corp. inspected the shipment and
rejected it for ‘microbe counts higher than standard.’ Thereafter Plaintiff
IPC instructed Orion Corp. to ship the cargo back to IPC though IPC’s
[Non-Vessel Operating Common Carrier (NCOVV)], Defendant Binex.
Idaho Pacific argues Chang, a Binex Line representative, does not state in the
Declaration how he knows what Idaho Pacific told Orion with respect to shipping the
potato flour back to Idaho. During the hearing before this Court, Binex Line conceded the
statement in this paragraph of the Chang Declaration lacks foundation. Accordingly, the
objection will be sustained and the Court will not consider paragraph seven when
determining Binex Line’s motion to transfer or dismiss.
3. Motion to Strike Declaration of Jason Kwon (Dkt. 20)
Through its Motion to Strike the Declaration of Jason Kwon (Dkt. 20), Idaho
Pacific objects to paragraphs four, six, seven, and eight on the grounds of lack of
foundation and hearsay. Idaho Pacific seeks also to strike the chain of emails between
Awdry and Min, attached to the Declaration. Binex Line opposes the motion to strike,
alleging generally, that all challenged portions of Kwon’s Declaration are not hearsay
because they qualify as opposing party statements pursuant to Fed. R. E. 801(d)(2). The
Court will address each paragraph and the email chain attachment separately below.

MEMORANDUM DECISION AND ORDER - 7

A. Paragraph Four
Paragraph four of the Kwon Declaration states:
With regard to return of the subject cargo of potato flour that was rejected
by Korean Customs, the Korean consignee Orion Corporation advised us
that upon importation into Korea and inspection of the cargo, the Korean
Customs had rejected the shipment. At that point Binex was responsible for
the cargo as the importing freight forwarder, including all costs of detention
and storage.
(emphasis added).
Idaho Pacific objects to the underlined sentence in this paragraph on hearsay
grounds—an out of court statement offered to prove the truth of the matter asserted.
Nonetheless, the Court finds the underlined portion of paragraph four does not qualify as
an opposing party statement under Fed. R. Evid. 801(d)(2) because Orion is not a party to
this litigation and Binex Line has failed to allege facts to demonstrate that Orion was
acting as Idaho Pacific’s agent when this statement was made. Accordingly, the Court
will sustain the objection with regard to paragraph four and will not consider this
paragraph when determining Binex Line’s motion to transfer or dismiss.
B. Paragraph Six
Paragraph six in the Kwon Declaration states:
At that time Orion Corporation also asked Binex for a quote for Binex to
handle shipment of the cargo back to Ririe, ID on behalf of Plaintiff IPC.
Idaho Pacific objects to the entirety of this paragraph on the ground of hearsay.
The Court finds paragraph four does not qualify as an opposing party statement for the
same reasons stated in paragraph four. Accordingly, the Court will grant the motion to

MEMORANDUM DECISION AND ORDER - 8

strike with regard to Idaho Pacific’s objection to paragraph six and will not consider this
paragraph when analyzing Binex Line’s motion to transfer or dismiss.
C. Paragraph Seven
Paragraph seven in the Kwon Declaration states:
Binex duly provided a quote to Orion Corporation and Orion Corporation
provided that quote to Plaintiff IPC. Thereafter Orion Corporation advised
Binex that Plaintiff IPC accepted Binex’s quote.
Idaho Pacific objects to the entirety of this paragraph on the grounds of lack of
foundation and hearsay. The Court finds the statement lacks foundation as Kwon does not
explain who from Orion told him that the quote was provided to Idaho Pacific. In
addition, this statement does not qualify as an opposing party statement under Fed. R.
Evid. 801(d) (2) because Orion is a third party and Binex Line has failed to allege facts to
demonstrate that Orion was acting as Idaho Pacific’s agent when this statement was
made. Accordingly, the Court will sustain the objection will not consider this paragraph
when determining Binex Line’s motion to transfer or dismiss.
D. Paragraph Eight and Email String Attachment
Paragraph eight in the Kwon Declaration states:
A true and correct copy of an email string dated May 23, 2015 from Julian
Awdry at Plaintiff IPC to Orion Corporation accepting Binex’s quote,
which was forwarded to Binex, is attached hereto as Exhibit A.
(emphasis added).
Idaho Pacific objects to the underlined portion of statement based on lack of
foundation. Specifically, Idaho Pacific argues Kwon does not explain in his Declaration
how he knows that the emails in the chain between Awdry and Min are in fact true and
MEMORANDUM DECISION AND ORDER - 9

correct copies. Binex Line did not address Idaho Pacific’s foundation objection in its
response.
During the hearing, when asked whether Kwon identifies Min and Awdry in his
Declaration, Binex Line conceded that there is nothing in the record as to who Min and
Awdry are and acknowledged that more foundation is needed before the Court would
consider this statement by Kwon and the attached email string. Accordingly, the Court
will sustain Idaho Pacific’s objection and will not consider paragraph eight in the Kwon
Declaration and the attached email string (exhibit A) when determining Binex Line’s
motion to transfer or dismiss.
MOTION TO TRANSFER OR DISMISS CASE (DKT. 3)
The crux of Binex Line’s motion to transfer or dismiss rests on the Court’s
determination of the proper forum for adjudication of the complaint. If the forum
selection clause is binding and no exceptional circumstances are present which would
otherwise warrant non-enforcement of the clause, Idaho Pacific is contractually obligated
to pursue its claims in this action in the United States District Court for the Central
District of California, and this Court may transfer the case to that venue. If the forum
selection cause is inoperable, or exceptional circumstances weigh in favor of nonenforcement, the case will remain in the District of Idaho.
1. Relevant Provisions of the Bill of Lading
The content of the bill of lading for the return shipment of potato flour from
Busan, Korea, to Ririe, Idaho, is central to the resolution of Defendant’s motion. The
front page of the bill of lading lists Orion as the shipper/exporter, and Idaho Pacific as the
MEMORANDUM DECISION AND ORDER - 10

consignee. 4 Dec. Chang, Ex. B. (Dkt. 3-4.) The front page includes also the details of
delivery, identifying Busan, Korea, as the port of loading, Oakland, California as the port
of discharge, and Ririe, Idaho, as the final destination. Id.
The reverse side of the bill of lading contains a forum selection clause, mandating
that any claims relating to the freight shipment must be resolved in the United States
District Court for the Central District of California. Id. at Ex. B § 2(1). (Dkt. 3-4 at 2.) It
also indicates that, in the event the bill of lading pertains to a shipment to or from the
United States, the Carriage of Goods by Sea Act (COGSA) applies “throughout the time
the Goods are in the custody of the Carrier and/or Actual Carrier and until the Goods are
delivered to Merchant.” Id. at Ex. B § 1(1). (Dkt. 3-4 at 2.)
2. Preliminary Matter: Does the Carriage of Goods By Sea Act or the Carmack
Amendment Apply to the Instant Action?
Binex Line removed this case from Idaho state court on the grounds that Idaho
Pacific’s complaint alleges damages arising out of the Carriage of Goods by Sea Act, 46
U.S.C. § 1300, or alternatively, the complaint alleges damages arising under the Carmack
Amendment, 49 U.S.C. § 11706. However, Binex Line argued in its reply brief, that
COGSA applies. Idaho Pacific did not address either federal statute in its response, but
argued at the hearing that, once cargo leaves the port, any claim of damage to the cargo
which occurs while on railway, is governed by Carmack, which it contends is the
situation here. 5

4

A consignee is “the person named in a bill to whom or to whose order the bill [of lading] promises
delivery.” Consignee, BLACK’S LAW DICTIONARY (10th ed. 2014).
5
At the hearing, Idaho Pacific clarified it does not dispute federal question jurisdiction.
MEMORANDUM DECISION AND ORDER - 11

Though not addressed by the parties in their briefs, COGSA and the Carmack
Amendment treat forum selection clauses differently. COGSA recognizes the validity of
reasonable forum selection clauses, while the Carmack Amendment recognizes the
validity of a forum selection clause only if the parties formally opt out of the statute’s
venue restrictions. See Regal-Beloit Corp. v. Kawasaki Kisen Kaisha Ltd., 557 F.3d 985,
988 (9th Cir. 2009). Thus, as a threshold matter, the Court first must determine whether
COGSA or the Carmack Amendment applies to the instant action before addressing the
forum selection clause at issue in the motion to transfer or dismiss.
A. Background of COGSA and the Carmack Amendment
i. COGSA
The Supreme Court in Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp., 561
U.S. 89, 96 (2010), explains the COGSA as follows:
COGSA governs the terms of bills of lading issued by ocean carriers
engaged in foreign trade. 49 Stat. 1207, as amended, note following 46
U.S.C. § 30701, p. 1178. It requires each carrier to issue to the cargo owner
a bill that contains certain terms. § 3(3)-(8), at 1178–1179. Although
COGSA imposes some limitations on the parties' authority to adjust
liability, it does not limit the parties' ability to adopt forum-selection
clauses. See Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S.
528, 537–539, 115 S.Ct. 2322, 132 L.Ed.2d 462 (1995). By its terms,
COGSA only applies to shipments from United States ports to ports of
foreign countries and vice versa. §§ 1(e), 13, at 1178, 1180. The statute,
however, allows parties “the option of extending [certain COGSA terms]
by contract” to cover “the entire period in which [the goods] would be
under [a carrier's] responsibility, including [a] period of ... inland
transport.” Kirby, 543 U.S., at 29, 125 S.Ct. 385 (citing COGSA § 7, at
1180).

MEMORANDUM DECISION AND ORDER - 12

ii. Carmack Amendment
The “Carmack [Amendment] governs certain interstate cargo claims against rail
and motor carriers.” Meritz Fire & Marine Ins. Co. v. Hapag-Lloyd (Am.), Inc., No., 2009
WL 2916799, at *3 (C.D. Cal. Sept. 2, 2009). The Carmack Amendment provides, in
relevant part, as follows:
(a) A rail carrier providing transportation or service subject to the
jurisdiction of the [Surface Transportation Board (STB)] under this part
shall issue a receipt or bill of lading for property it receives for
transportation under this part. That rail carrier and any other carrier that
delivers the property and is providing transportation or service subject to
the jurisdiction of the [STB] under this part are liable to the person entitled
to recover under the receipt or bill of lading. The liability imposed under
this subsection is for the actual loss or injury to the property caused by:
(1) the receiving rail carrier;
(2) the delivering rail carrier; or
(3) another rail carrier over whose line or route the property is
transported in the United States or from a place in the United States
to a place in an adjacent foreign country when transported under a
through bill of lading.
49 U.S.C. § 11706(a).
Further, the Carmack Amendment limits the parties’ ability to choose the venue of their
suit as follows:
(d)(1) A civil action under this section may be brought in a district court of
the United States or in a State court.
(2)(A) A civil action under this section may only be brought—
(i) against the originating rail carrier, in the judicial district in which
the point of origin is located;

MEMORANDUM DECISION AND ORDER - 13

(ii) against the delivering rail carrier, in the judicial district in which
the principal place of business of the person bringing the action is
located if the delivering carrier operates a railroad or a route through
such judicial district, or in the judicial district in which the point of
destination is located; and
(iii) against the carrier alleged to have caused the loss or damage, in
the judicial district in which such loss or damage is alleged to have
occurred.”
49 U.S.C. § 11706(d).
B. Analysis
The Supreme Court in Regal-Beloit, 561 U.S. at 96, addressed the issue of
“whether the terms of a through bill of lading 6 issued abroad by an ocean carrier can
apply to the domestic part of the import’s journey by a rail carrier, despite prohibitions or
limitations in another federal statute [i.e., the Carmack Amendment],” and ultimately
concluded COGSA governs and displaces Carmack in such instances.
Regal-Beloit involved an import from China to Oklahoma via the port at Long
Beach, California. The shipper hired an ocean carrier, who hired a rail carrier to complete
the inland segment to Oklahoma. The ocean carrier issued a through bill of lading to the
shipper; the bill of lading included a forum selection clause, designating the Tokyo
District Court. The rail carrier did not issue a separate bill of lading. The train carrying
the cargo derailed in Oklahoma, and the parties disputed enforcement of the forum
selection clause.

6

A bill of lading is essentially a contract and a “through” bill of lading is one which provides for end-toend transportation. Norfolk S. Ry. Co. v. Kirby, 543 U.S. 18-19 (2004).

MEMORANDUM DECISION AND ORDER - 14

Regal-Beloit hits the current situation square on. The Court finds COGSA applies
here, because there is no dispute the bill of lading covered the entire journey of the
shipment, from Busan, Korea, to Ririe, Idaho (i.e. the shipment was not piecemealed out
into separate bills of lading for each segment of transportation). Accordingly, because
COGSA does not limit the parties’ abilities to adopt forum selection clauses, the forum
selection clause contained in the bill of lading will be enforced unless exceptional
circumstances weigh in favor of non-enforcement.
2. Legal Standard Re: Enforcement of a Forum Selection Clause
A forum selection clause must be “given controlling weight in all but the most
exceptional circumstances.” Atlantic Marine Const. Co. v. U.S. Dist. Court for W. Dist. of
Texas, 134 S. Ct. 568, 579 (2013); see also Wada Farms, Inc. v. Jules & Associates, Inc.,
2015 WL 128100, at *1 (D. Idaho Jan. 7, 2015). “When 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.” Id. A forum selection clause may be enforced by a motion to
transfer pursuant to 28 U.S.C. § 1404(a). 7 Atlantic Marine, 134 S.Ct. at 575. Section
1404(a) provides:
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

7

Binex Line brings its Motion to Transfer or Motion to Dismiss (Dkt. 3) pursuant to Fed. R. Civ. P.
12(b)(3), and 28 U.S.C. § 1406. However, the Supreme Court in Atlantic Marine clarified that Section
1406(a) and Fed. R. Civ. P. 12(b)(3) allow for dismissal only when venue is “wrong” or improper.”
Atlantic Marine, 134 S.Ct. at 577. “Whether venue is ‘wrong’ or ‘improper’ depends exclusively on
whether the court in which the case was brought satisfies the requirements of federal venue laws, and the
existence of a forum selection clause does not render venue in a court ‘wrong’ or ‘improper’ under these
rules.” Fine v. Cambridge Int'l Sys., Inc., 584 F. App'x 695, 696 (9th Cir. 2014) (citing Atlantic Marine,
134 S.Ct. at 578-9). Accordingly, the Court will analyze Binex Line’s argument pursuant Section 1404(a).
MEMORANDUM DECISION AND ORDER - 15

where it might have been brought or to any district or division to which all
parties have consented.
“Only under extraordinary circumstances unrelated to the convenience of the parties
should a [Section] 1404(a) motion be denied.” Atlantic Marine, 134 S. Ct. at 581.
Typically, a district court considering a Section 1404(a) motion “evaluate[s] both
the convenience of the parties and various public-interest considerations” and “weigh[s]
the relevant factors 8 and decide[s] whether, on balance, a transfer would serve ‘the
convenience of parties and witnesses’ and otherwise promote ‘the interest of justice.’”
Atlantic Marine, 134 S. Ct. at 581; § 1404(a). However, the presence of a forum selection
clause, like the one here, alters the Section 1404(a) analysis in three ways. Id. at 582; see
also Wada Farms, Inc. v. Jules & Associates, Inc., 2015 WL 128100, at *1 (D. Idaho Jan.
7, 2015).
“First, the plaintiff's choice of forum merits no weight.” Atlantic Marine, 134 S.Ct.
at 582. “Rather, as the party defying the forum-selection clause, the plaintiff bears the
burden of establishing that transfer to the forum for which the parties bargained is
unwarranted” Id.
8

“Factors relating to the parties' private interests include ‘relative ease of access to sources of proof;
availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of
willing, witnesses; possibility of view of premises, if view would be appropriate to the action; and all
other practical problems that make trial of a case easy, expeditious and inexpensive.’” Atlantic Marine,
134 S. Ct. 581, n. 6 (citing Piper Aircraft Co. v. Reyno, 454 U.S. 235, 241, n. 6 (1981)). “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.’” Ibid. “The Court must also give some weight to the plaintiffs'
choice of forum.” Ibid.

MEMORANDUM DECISION AND ORDER - 16

“Second, a court evaluating a defendant's [Section] 1404(a) motion to transfer
based on a forum-selection clause should not consider arguments about the parties'
private interests,” such as convenience. Id. “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.” Id. “A
court accordingly must deem the private-interest factors to weigh entirely in favor of the
preselected forum.” Id. And, “[a]s a consequence, a district court may consider arguments
about public interest factors only.” Id.
Third and finally, “when a party bound by a forum-selection clause flouts its
contractual obligation and files suit in a different forum, a [Section] 1404(a) transfer of
venue will not carry with it the original venue's choice-of-law rules—a factor that in
some circumstances may affect public-interest considerations.” Id.
3. Discussion
Binex Line argues that the bill of lading’s forum selection clause precludes
litigation in this Court because the forum selection clause is valid, binding upon the
parties, and reasonable. To the contrary, Idaho Pacific contends the forum selection
clause is void because of Idaho’s strong public policy against such clauses, and
alternatively, that enforcement of the clause is unreasonable because Idaho Pacific was
not a party to and did not bargain for the forum selection clause or any of the other terms
contained in the bill of lading. For the reasons more fully explained below, the Court
finds exceptional circumstances warrant non-enforcement of the forum selection clause.

MEMORANDUM DECISION AND ORDER - 17

A. Idaho’s public policy against forum selection clauses, on its own, does not
qualify as an “exceptional circumstance”
Idaho Pacific argues that Idaho’s strong public policy against forum selection
clauses 9 renders the current forum selection clause in the bill of lading void. Idaho Pacific
relies on the Ninth Circuit’s holding in Jones v. GNC Franchising, Inc., 211 F.3d 495,
496 (9th Cir. 2000), for the contention that the presence of a state public policy against
forum selection clauses, on its own, can render any forum selection clause unenforceable.
However, the holding in Jones is not as black and white as Idaho Pacific contends.
Jones involved a dispute between a franchisor and franchisee. Id. Despite the fact
the parties’ franchise agreement contained a forum selection clause designating venue in
the Western District of Pennsylvania, the franchisee filed suit in California. Id. The
franchisor sought to either dismiss or transfer the case to the Western District of
Pennsylvania pursuant to 28 U.S.C. § 1406, and alternatively sought a transfer of venue
under 28 U.S.C. § 1404(a). Id. The franchisee argued the forum selection clause was
invalid due to California’s strong public policy against forum selection clauses. Id. The
Ninth Circuit analyzed the enforcement of the forum selection clause under each federal
statute, and concluded that neither statute warranted a transfer of venue. Id. at 498-99.

9

Idaho Code Section 29-110 provides in relevant part:
(1) Every stipulation or condition in a contract, by which any party thereto is restricted
from enforcing his rights under the contract in Idaho tribunals, or which limits the time
within which he may thus enforce his rights, is void as it is against the public policy of
Idaho. Nothing in this section shall affect contract provisions relating to arbitration so
long as the contract does not require arbitration to be conducted outside the state of
Idaho.

MEMORANDUM DECISION AND ORDER - 18

In its analysis under 28 U.S.C. § 1406, the Ninth Circuit in Jones found that the
California statute against enforcement of forum selection clauses expressed “a strong
public policy of the State of California to protect California franchisees from the expense,
inconvenience, and possible prejudice of litigating in a non-California venue,” and thus,
concluded the forum selection clause was unenforceable. Jones, 211 F. 3d at 498; see
M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972) (“[a] contractual choice-offorum clause should be held unenforceable if enforcement would contravene a strong
public policy of the forum in which suit is brought, whether declared by statute or by
judicial decision.”). In its analysis under 28 U.S.C. § 1404(a), the court considered the
California public policy against forum selection clauses among other factors, 10 and
concluded the franchisor failed to meet its burden of showing that the Pennsylvania
forum was the more appropriate forum for the action. Jones, 211 F.3d at 499.
The Court finds Idaho Pacific’s reliance on Jones is misplaced in light of the more
recent Supreme Court decision in Atlantic Marine Const. Co. v. U.S. Dist. Court for W.
Dist. of Texas, 134 S. Ct. 568, 579 (2013), which clarified the proper procedure to
enforce a forum selection clause. Atlantic Marine also altered the analysis/balancing test
the Court must employ when interpreting a motion to transfer venue when a forum
section clause is at play.

10

Those factors included: “the vast majority of the other agreements underlying Jones' claims were
negotiated and executed in California;” “[Jones’] choice [was] supported by California's strong public
policy to provide a protective local forum for local franchisees;” “the extent of the parties' contacts with
Pennsylvania and California clearly favored California;” “Jones' claims arose out of the construction and
initial operation of the store located in LaVerne, California;” “the relative financial burdens of litigating
in each of the forums favored California;” and more of the relevant witnesses and other sources of proof
were located in California.” Jones v. GNC Franchising, Inc., 211 F.3d 495, 499 (9th Cir. 2000).

MEMORANDUM DECISION AND ORDER - 19

Atlantic Marine explained the proper procedure available for a defendant in a civil
case who seeks to enforce a forum selection clause is through a motion to transfer under
§ 1404(a), and not through a motion to dismiss under § 1406(a). Idaho Pacific relies
heavily upon the Jones analysis pursuant to § 1406, which concluded that the particular
California public policy against forum selection clauses, on its own, invalidated the
forum selection clause contained in the parties’ franchise agreement. The Court, however,
declines to rely on Jones, as § 1406 is not the proper procedure for Binex Line to seek
enforcement of the forum selection clause.
Further, Atlantic Marine altered the burden of proof when analyzing a § 1404(a)
motion for transfer of venue when a forum selection clause is at issue. Specifically,
Atlantic Marine held that the forum selection clause “deserves deference, and the plaintiff
must bear the burden of showing why the court should not transfer the case to the forum
where the parties agreed.” Atlantic Marine, 134 S.Ct. at 582. Jones placed the burden on
the defendant to demonstrate why the selected forum was more appropriate than
plaintiff’s forum selection in California. Id. at 499; see also Stewart Org. v. Ricoh Corp.,
487 U.S. 22, 29 (1988) (a forum selection clause is not dispositive in § 1404(a) balancing
test). Because the burden of proof rests here on Idaho Pacific, the holding in Jones,
pursuant to its analysis under § 1404(a), is not persuasive.
More persuasive, and consistent with the principles in Atlantic Marine, is this
Court’s recent holding in Wada Farms, Inc. v. Jules & Associates, Inc., 2015 WL
128100, at *2 (D. Idaho Jan. 7, 2015), where the Court concluded a plaintiff “must point
to something more than just the statute itself to warrant ignoring the forum selection
MEMORANDUM DECISION AND ORDER - 20

clause,” because “[i]f Idaho Code § 29–110(1) was determinative, striking down the
forum selection clause would be routine rather than extraordinary, standing Atlantic
Marine on its head.” (emphasis in original). Accordingly, the Court rejects Idaho
Pacific’s argument that Idaho’s public policy against forum selection clauses, without
more, is sufficient to invalidate the clause at issue here.
B. Idaho Pacific’s Complete Lack of Bargaining for the Forum Selection
Clause Constitutes an Extraordinary Circumstance
Idaho Pacific argues enforcement of the forum selection clause would be
unreasonable, because it was not the owner of the potato flour cargo and not a party to the
bill of lading for the return shipment of the potato flour from Busan, Korea, to Ririe,
Idaho. In support of its argument, Idaho Pacific contends it only offered to cover Orion’s
shipping costs for the return shipment, and did not contract or negotiate with Binex Line
for any terms contained within the bill of lading, including the forum selection clause.
Idaho Pacific alleges Orion selected Binex Line as the freight forwarder, and that Idaho
Pacific had no input in Orion’s selection of Binex Line. And, Idaho Pacific alleges also
that it never received a copy of the bill of lading until after this lawsuit was filed.
On the other hand, Binex Line argues that, because Idaho Pacific is listed on the
bill of lading as the consignee, the bill of lading must be enforced against Idaho Pacific.
Binex Line contends it does not matter that Idaho Pacific did not choose Binex Line as
the freight forwarder because Idaho Pacific had the option to hire a different freight
forwarder, and failed to exercise that option. Binex Line argued also at the hearing that
“standard industry practice” weighs in favor of enforcement of the clause. Alternatively,

MEMORANDUM DECISION AND ORDER - 21

Binex Line argues, even if the Court finds Idaho Pacific is not a party to the bill of lading,
Idaho Pacific accepted the bill of lading and should be bound by it because Idaho Pacific
brought suit upon it. For the reasons that follow, the Court finds Idaho Pacific has met its
burden by demonstrating exceptional circumstances to warrant non-enforcement of the
forum selection clause.
Binex Line had failed to provide the Court with sufficient authority or other
evidence to enable the Court to make such findings in its favor. Binex Line contends,
without providing authority, that because Idaho Pacific is listed as the consignee on the
return bill of lading, Idaho Pacific is bound by it. Further, Binex Line cites to a New York
District Court case for the proposition that the owner of cargo can be bound by a forum
selection clause in a bill of lading accepted by a NVOCC (Non-Vessel Operating
Common Carrier). See Laufer Grp. Int'l v. Tamarack Indus., LLC, 599 F. Supp. 2d 528,
531 (S.D.N.Y. 2009). However, if the Court were to adopt the holding of this out of
circuit case, the record here still is unclear as to whether Idaho Pacific was in fact the
owner of the cargo at the time of the return shipment. Likewise, Binex Line, for the first
time at the hearing, raised its standard industry practice argument without articulating
facts or authority supporting or clarifying what the “standard industry practice” is and
how it applies to the case at hand. This issue is not properly before the Court at this time.
Binex Line’s alternative argument that Idaho Pacific accepted the bill of lading by
bringing suit upon it is also unsupported by the record. In support of this argument, Binex
Line cites the Ninth Circuit case of Kukje Hwajae Ins. Co., Ltd. v. M/V Hyundai Liberty,
408 F.3d 1250, 1254 (9th Cir.2005), which found a cargo owner who is not a party to a
MEMORANDUM DECISION AND ORDER - 22

bill of lading can be bound by a forum selection clause contained in the bill of lading if
the party “accepts” the bill of lading by bringing suit upon it. Id. In that case, the plaintiff
filed suit against the defendant on all “applicable bills of lading;” the Ninth Circuit found
“all applicable bills of lading” included the bill of lading between the plaintiff and
defendant in that case. Id. Ultimately, the Ninth Circuit held that the plaintiff accepted
the bill of lading “by the express terms of the complaint.” Id. at 1255.
Here, Idaho Pacific does not reference the bill of lading or any of its terms in its
complaint. Instead, in its response to this motion, Idaho Pacific specifically alleges it
neither negotiated nor received the bill of lading for the return shipment until after it filed
suit. Accordingly, the Court declines to find Idaho Pacific accepted the bill of lading by
filing suit upon it.
An underlying policy in favor of upholding forum selection clauses, and present in
a majority of the cases and authorities provided by the parties, stresses the importance of
upholding forum selection clauses which were bargained for by the parties. See Atlantic.
Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Texas, 134 S. Ct. 568, 579 (2013)
(“‘interest of justice’ is served by holding parties to their bargain.”); M/S Bremen v.
Zapata Off-Shore Co., 407 U.S. 1, 15 (1972) (“There are compelling reasons why a freely
negotiated private international agreement, unaffected by fraud, undue influence, or
overweening bargaining power, [ ], should be given full effect.”); Stewart Org., Inc. v.
Ricoh Corp., 487 U.S. 22, 29 (1988) (“the District Court will be called on to address such
issues as the convenience of a Manhattan forum given the parties' expressed preference
for that venue, and the fairness of transfer in light of the forum-selection clause and the
MEMORANDUM DECISION AND ORDER - 23

parties' relative bargaining power.”); and Wada Farms, Inc. v. Jules & Associates, Inc.,
2015 WL 128100, at *2 (D. Idaho Jan. 7, 2015) (“A valid forum selection clause
bargained for by the parties, protects their legitimate interests and further vital interests of
the justice system.”).There is no evidence that any bargaining occurred in the present
case between Binex Line and Idaho Pacific for the forum selection clause or any of the
other terms contained in the bill of lading. Accordingly, the Court finds Idaho Pacific’s
lack of bargaining power qualifies as an exceptional circumstance to warrant nonenforcement of the forum selection clause contained in the bill of lading.
CONCLUSION
For the reasons articulated above, the Court will deny Defendant’s motion to
transfer venue (Dkt. 3) as it finds exceptional circumstances are present which weigh
against enforcement of the forum selection clause. Further, the Court will grant Plaintiff’s
motions to strike the challenged paragraphs in the Declarations of Chang (Dkt. 10) and
Kwon (Dkt. 20) for lack of foundation and hearsay as explained above.

MEMORANDUM DECISION AND ORDER - 24

ORDER
NOW THEREFORE IT IS HEREBY ORDERED:
1)

Defendant’s Motion to Transfer or Dismiss Case (Dkt. 3) is DENIED;

2)

Plaintiff’s Motion to Strike Declaration of Mark Chang (Dkt. 10) is
GRANTED; and

3)

Plaintiff’s Motion to Strike Declaration of Jason Kwon (Dkt. 20) is
GRANTED.
March 01, 2016

MEMORANDUM DECISION AND ORDER - 25