Jet Co, Inc v. Thor Industries, Inc et al
MEMORANDUM Opinion and Order granting 15 Motion to Transfer Venue filed by Postle Operating, LLC; this case is transferred to the Northern District of Indiana in South Bend, Indiana. Signed by Judge Mark W Bennett on 4/25/2016. (File electronically transferred through CM/ECF to USDC Northern District of Indiana on 4/25/2016) (des) [Transferred from Iowa Northern on 4/26/2016.]
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
JET CO., INC.,
THOR INDUSTRIES, INC. and POSTLE
OPERATING, L.L.C., d/b/a POSTLE
MEMORANDUM OPINION AND
ORDER REGARDING DEFENDANT
POSTLE OPERATING, L.L.C.’S
MOTION TO TRANSFER VENUE
TABLE OF CONTENTS
INTRODUCTION AND BACKGROUND ............................................................. 2
LEGAL ANALYSIS ................................................................................................. 4
Standards For Motions To Transfer............................................................ 4
Applicability Of Forum Selection Clause .................................................... 7
Effect Of Forum Selection Clause ............................................................. 10
CONCLUSION ...................................................................................................... 11
Before the parties get to the merits of the dispute at issue in this case, I must decide
whether the Hawkeye State or the Hoosier State is the appropriate forum for this dispute.
Although plaintiff Jet Co., Inc. (“Jet”), an Iowa corporation, filed this case in the Northern
District of Iowa, defendant Postle Operating, L.L.C., d/b/a Postle Aluminum Co.
(“Postle”), a Delaware limited liability company with its principal place of business in
Elkhart, Indiana, contends that forum selection clauses in two of the parties’ agreements
require me to transfer it to the Northern District of Indiana in South Bend, Indiana.
INTRODUCTION AND BACKGROUND
On December 31, 2015, Jet filed a petition in the Iowa District Court for Humboldt
County naming Postle and Thor Industries, Inc. (“Thor”) as defendants. On January 20,
2016, defendants filed a notice of removal to this court on the basis of diversity jurisdiction.
Jet alleges that it is an Iowa corporation with its principal place of business in
Humboldt, Iowa. It contends that Postle is a Delaware limited liability company with its
principal place of business in Elkhart, Indiana, and Thor is a Delaware limited liability
company with its principal place of business in Elkhart, Indiana. Jet alleges that Thor
acquired Postle on May 1, 2015.
Jet manufacturers and sells aluminum grain trailers. Jet’s claims against Postle and
Thor arise from Jet’s purchase of aluminum rails known as 6061-T6 aluminum extrusion
2x5 top tubes from Postle (“Postle aluminum tubes”). Jet alleges that it purchased Postle
aluminum tubes from 2006 through 2014 and incorporated them into certain aluminum
grain trailers. Jet purchased the Postle aluminum tubes on credit pursuant to two credit
agreements, one dated February 8, 1996 (“the 1996 Agreement”) and the other dated
September 25, 2007 (“the 2007 Agreement”).
The 1996 Agreement reads, in pertinent part:
For the purpose of opening an account with Postle Distributors
Inc, (Postle), I understand and agree to the following:
In the event that failure to pay any indebtedness to
Postle in accordance with their terms leads to an action
for recovery by Postle, Postle shall be entitled to recover
from the applicant all costs and expenses, including to
attorney fees, incurred in such action. The undersigned
irrevocably consents to the subject matter and personal
jurisdiction of any state or federal court selected by
Postle located in Elkhart or St. Joseph Counties,
Indiana, concerning any dispute related to this credit
agreement or transactions to which the credit agreement
The 1996 Agreement at 1. Similarly, the 2007 Agreement reads, in relevant part, as
For the purpose of opening an account with Postle
Aluminum Company (Postle), I understand and agree to the
Postle makes no warranties that any goods sold shall be
merchantable or fit for any particular purpose. Unless
otherwise agreed to by Postle in writing, all standard
mill tolerances apply.
Postle shall not be liable for any damages resulting from
delays or failure in performance or delivery.
Should failure to pay any indebtedness to Postle in
accordance with their terms lead to an action for
recovery by Postle, Postle shall be entitled to recover
from Applicant all related costs and expenses, including
to attorney and collection agency fees, incurred in such
action. The undersigned irrevocably consents to the
exclusive subject matter and personal jurisdiction of any
state or federal court selected by Postle located in
Elkhart or St. Joseph Counties Indiana, Lowndes
County Georgia or Yolo County California, concerning
any dispute relating to this credit agreement or
transactions to which this credit agreement relates and
agrees that any litigation relating to such dispute shall
be brought and maintained only in such courts.
The 2007 Agreement at 1.
Jet used the Postle aluminum tubes to increase the rigidity of the top of the
aluminum trailer walls. Jet alleges that the Postle aluminum tubes did not have the
warranted strength and hardness levels, and were otherwise defective. As a result, Jet
contends that some of its customers experienced buckling in the walls and top rails of some
trailers. Jet asserts claims against Postle and Thor for “manufacturing defect,” breach of
express warranty, and breach of the implied warranty of merchantability.
Invoking the forum selection clauses in the 1996 and 2007 Agreements, Postle filed
a Motion To Transfer in which its seeks to transfer this case to the Northern District of
Indiana in South Bend, Indiana. Jet has resisted Postle’s motion. Jet contends that the
forum selection clauses are inapplicable to the dispute at issue here. Postle filed a timely
reply on April 18, 2016.
Standards For Motions To Transfer
Title 28 U.S.C. § 1404(a) provides: “[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.” 28 U.S. C. § 1404(a). In the “typical case,”
a court considering a § 1404(a) motion “must evaluate both the convenience of the parties
and various public-interest considerations” to determine if a transfer is warranted. Atlantic
Marine Constr. Co. v. United States Dist. Court for W. Dist. of Tex., 134 S. Ct. 568, 581
In such an analysis, the plaintiff's choice of forum, the “plaintiff’s venue
privilege,” is entitled to ““some weight,’ and the burden rests with the moving party to
overcome that weight by showing that parties’ private interests and other public-interest
considerations militate in favor of transfer.1 Id. at 581 & n. 6.
The Supreme Court observed that:
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
“The calculus changes, however, when the parties’ contract contains a valid forumselection clause.” Id. at 581. Under that circumstance, “as the party defying the forumselection clause, the plaintiff bears the burden of establishing that transfer to the forum for
which the parties bargained is unwarranted.” Id. Moreover, the plaintiff’s choice of forum
“merits no weight,” and a court “should not consider arguments about the parties’ private
interests.” Id. at 581–82. To the contrary, because the parties have waived “the right to
challenge the preselected forum as inconvenient or less convenient for themselves or their
witnesses, or for their pursuit of the litigation,” “a district court may consider arguments
about public-interest factors only.” Id. at 582. Even then, public interest factors “will
rarely defeat a transfer motion,” and, as a result, “forum-selection clauses should control
except in unusual cases. Although it is ‘conceivable in a particular case’ that the district
court ‘would refuse to transfer a case notwithstanding the counterweight of a forumselection clause,’ Stewart [Organization, Inc. v. Ricoh Corp., 487 U.S. 22,] at 30–31
[(1988)], such cases will not be common.” Id.
Although the Supreme Court did not distinguish between different kinds of forum
selection clauses in its Atlantic Marine decision, the Eighth Circuit Court of Appeals
recognizes both mandatory and permissive forum selection clauses. See Dunne v. Libbra,
330 F.3d 1062, 1063 (8th Cir. 2003). “Mandatory forum-selection clauses require a case
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.” Piper Aircraft Co. v. Reyno,
454 U.S. 235, 241, n. 6, 102 S. Ct. 252, 70 L.Ed.2d 419 (1981)
(internal quotation marks omitted). 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.
(internal quotation marks omitted).
Atlantic Marine Constr. Co., 134 S. Ct. at 581 n. 6.
to be brought in an identified venue based on specific language indicating the parties’ intent
to make jurisdiction exclusive.” High Plains Const., Inc. v. Gay, 831 F. Supp.2d 1089,
1102 (S.D. Iowa 2011) (internal citations and quotation marks omitted); see Datacard
Corp. v. Softek, Inc., 645 F. Supp.2d 722, 729 (D. Minn. 2007); Florida State Bd. of Admin.
v. Law Eng’g & Envtl. Servs., Inc., 262 F. Supp.2d 1004, 1009 (D. Minn. 2003).
“Permissive forum-selection clauses, on the other hand, constitute nothing more than a
consent to jurisdiction and venue in the named forum and do not exclude jurisdiction or
venue in any other forum.” High Plains Const., Inc., 831 F. Supp.2d at 1102; see Datacard
Corp., 645 F. Supp.2d at 729; Florida State Bd. of Admin., 262 F. Supp.2d at 1009.
Atlantic Marine discussed a mandatory forum selection clause where “a plaintiff agrees by
contract to bring suit only in a specified forum.” Atlantic Marine, 134 S. Ct. at 582. Thus,
Atlantic Marine’s limitations on § 1404(a) transfer analysis are restricted to cases involving
mandatory forum selection clauses. See RELCO Locomotives, Inc. v. AllRail, Inc., 4 F.
Supp. 3d 1073, 1085 (S.D. Iowa 2014) (“Because Atlantic Marine’s discussion of forumselection clauses describes those where ‘a plaintiff agrees by contract to bring suit only in
a specified forum,’ the Court finds that the opinion contemplated only mandatory forumselection clauses when assessing their effect on forum non conveniens analysis.”); see also
Perficient, Inc. v. Priore, No. 4:16CV249CDP, 2016 WL 866090, at *3 (E.D. Mo. Mar. 7,
2016) ( “The Atlantic Marine analysis, however, does not apply where the forum selection
clause is permissive rather than mandatory.”); United States ex rel. MDI Servs., LLC v.
Fed. Ins. Co., No. 5:13–cv–2355(AKK), 2014 WL 1576975, at *3 (N.D. Ala. Apr. 17,
2014) (“Accordingly, the considerations relevant to altering § 1404(a) analysis [under
Atlantic Marine ] for mandatory forum-selection clauses would not apply in this case if
Plaintiffs are correct that the Subcontract’s forum-selection clause is permissive.”). But
see Radian Guaranty, Inc. v. Bolen, 18 F. Supp.3d 635, 651 (E.D. Pa. 2014) (“Without
deciding that question, I agree generally with the Supreme Court that the existence of a
forum selection clause of any kind significantly undercuts any argument that the
preselected forum is inconvenient for the parties or their witnesses.”); United American
Healthcare Corp. v. Backs, 997 F. Supp.2d 741 2014 WL 555194, at *7 (E.D. Mich. 2014)
(rejecting defendants’ argument that “Atlantic Marine does not apply here because this
case involves a permissive forum selection clause whereas the forum selection clause at
issue in Atlantic Marine was mandatory.”).
Applicability Of Forum Selection
Initially, I must address whether either of the forum selection clauses identified by
Postle are applicable to the type of claims asserted in this lawsuit.2 Jet contends that neither
forum selection clause is relevant to the claims here. Jet argues that the forum selection
clauses “apply to disputes relating to ‘an account’ opened by Jet Co. with Postle. . .But this
case has nothing to do with an ‘account.’ It has everything to do with defective products
and warranties made.” Plaintiff’s Br. at 6. Thus, interpreting the language of the forum
selection clauses is necessary to my § 1404(a) transfer analysis. “Whether . . . claims are
to be governed by forum selection provisions depends upon the intention of the parties
reflected in the wording of particular clauses and the facts of each case.” Terra Int’l, Inc.
v. Mississippi Chem. Corp., 119 F.3d 688, 693 (8th Cir. 1997) (citation and internal
quotation marks omitted).
The language in the forum selection clause in the 1996 Agreement varies
significantly from the forum selection clause in the 2007 Agreement in one important
aspect. The forum selection clause in the 1996 Agreement states, in relevant part, that:
The undersigned irrevocably consents to the subject matter
and personal jurisdiction of any state or federal court selected
by Postle located in Elkhart or St. Joseph Counties, Indiana,
Jet does not contend that the forum-selection clauses are invalid due to fraud,
duress, misrepresentation, or other misconduct.
concerning any dispute related to this credit agreement or
transactions to which the credit agreement relates.
The 1996 Agreement at 1 (emphasis added). There is no language in this forum selection
clause that, in its ordinary meaning, would suggest that the consented to forum is the
exclusive forum in which suits can be brought. See Dunne, 330 F.3d at 1064. This forum
selection clause does not use any words of exclusivity, such as “exclusive,” “only,” “must,”
or “shall.” Id. In Dunne, the Eighth Circuit Court of Appeals concluded that the clause
“the parties consent to jurisdiction” was permissive because it “does not use the words
‘exclusive,’ ‘only,’ ‘must,’ or any other terms that might suggest exclusivity.” Id. at 106364. Likewise, given the total lack of words of exclusivity in the 1996 Agreement, I find
that the forum selection clause in the 1996 Agreement was considered permissive by the
parties at the time that agreement was executed. See id.; see also Autoridad de Energia
Electrica de Puerto Rico v. Ericsson Inc., 201 F.3d 15, 18-19 (1st Cir. 2000) (finding forum
selection clause that stated parties “expressly submit to the jurisdiction of all Federal and
State Courts in Florida” to be “an affirmative conferral of personal jurisdiction by consent,
and not a negative exclusion of jurisdiction in other courts.”).
In stark contrast, the forum selection clause in the 2007 Agreement provides, in
pertinent part, that:
The undersigned irrevocably consents to the exclusive subject
matter and personal jurisdiction of any state or federal court
selected by Postle located in Elkhart or St. Joseph Counties
Indiana, Lowndes County Georgia or Yolo County California,
concerning any dispute relating to this credit agreement or
transactions to which this credit agreement relates and agrees
that any litigation relating to such dispute shall be brought and
maintained only in such courts.
The 2007 Agreement at 1 (emphasis added). Unlike the forum selection clause in the 1996
Agreement, the language in this forum selection clause uses words of exclusivity: shall
and exclusive. This choice of words indicates a clear intention that the forum selection
clause in the 2007 Agreement was considered mandatory by the parties at the time that
agreement was executed. See Pelleport Investors, Inc. v. Budco Quality Theatres, Inc., 741
F.2d 273, 280 (9th Cir. 1984) (holding that the language, “this Agreement shall be litigated
only in the Superior Court for Los Angeles (and in no other ),” was mandatory); Maley v.
Design Benefits Plan, Inc., 125 F. Supp 2d 836, 838 (E.D. Tex. 2000) (finding a forum
selection clause which provided that “[v]enue for any action, suit or other proceeding,
including non-contract disputes, shall be exclusively in Winnebago County, Illinois,” was
mandatory); see also Samuels v. Medytox Solutions, Inc., No. 13-7212, 2014 WL
4441943, at *7 (D.N.J. Sept. 8, 2014) (finding that “use of the word ‘shall’ renders the
forum selection clause mandatory and not permissive”).
Jet argues that the 2007 Agreement’s forum selection clause was limited only to
credit agreement disputes between it and Postle. I find that the 2007 Agreement’s forum
selection clause is quite broad, much broader than Jet asserts. First, the forum selection
clause is part of an agreement that governs the parties’ understanding of Postle’s product
warranties and obligations. Thus, the scope of the 2007 Agreement is broader than just
credit disputes. Moreover, the forum selection clause clearly provides that it covers “any
dispute relating to this credit agreement or transactions to which this credit agreement
relates. . .” The 2007 Agreement at 1 (emphasis added). If, as Jet argues, the 2007
Agreement’s forum selection clause was limited only to credit agreement disputes, there
would be no need for the second part of the clause. Clearly, the dispute, here, over the
quality of the Postle aluminum tubes purchased by Jet, constitutes a “dispute relating to
this credit agreement or. . . [the] transactions.” The transactions, of course, are Jet’s
purchase of the Postle aluminum tubes. These transactions, in turn, relate to the credit
agreement since Jet purchased the Postle aluminum tubes on credit pursuant to the 2007
Agreement. Thus, I conclude that Jet’s claims in this lawsuit all fall within the scope of
the broad forum selection clause in the 2007 Agreement.
Effect Of Forum Selection Clause
Because I have found the forum selection clause in the 2007 Agreement to be
mandatory and the claims in this lawsuit to be covered by it, I must conduct a modified
Atlantic Marine analysis instead of the traditional § 1404(a) analysis.
Jet’s choice of forum and its arguments regarding private interest factors are not
entitled to any weight. See Atlantic Marine, 134 S. Ct. at 581–82 (concluding that ‘the
plaintiff's choice of forum merits no weight,’ and that the private interests are not relevant
because “[w]hen parties agree to a forum selection clause, they waive the right to challenge
the preselected forum”); see also In re Lloyd’s Register N. Am., Inc., 780 F.3d 283, 294
(5th Cir. 2015) (recognizing that under Atlantic Marine, “[t]he plaintiff's choice of forum
will not be given any weight, unlike in the ordinary FNC context.”). Jet must establish that
transfer to the Northern District of Indiana, the forum designated by the parties, is
unwarranted and “that public-interest factors overwhelmingly disfavor a transfer.”
Atlantic Marine, 134 S. Ct. at 582–83; see also In re Rolls Royce Corp., 775 F.3d 671, 67483 (5th Cir. 2014) (discussing Atlantic Marine). The public interest factors I must consider
are: (1) the administrative difficulties flowing from court congestion; (2) the local interest
in having localized interests decided at home; (3) the familiarity of the forum with the law
that will govern the case; and (4) the avoidance of unnecessary problems of conflict of laws
or in the application of foreign law. See American Dredging Co. v. Miller, 510 U.S. 443,
Jet incorrectly places on Postle the burden of establishing that the public interest
factors favor transfer. Jet does not explain which of the four public interest factors that it
believes weigh against transfer. Jet has, at most, set forth facts to establish a local interest
in having this court consider the case because the “vast majority” of the owners of the Jet
trailers containing allegedly defective Postle aluminum tubs are located in Iowa or an
adjacent state. This showing does not establish that the four public interest factors
“overwhelmingly disfavor a transfer.” Atlantic Marine, 134 S. Ct. at 583. If Jet could
prevail on such an argument, then merely filing a lawsuit alleging that the majority of the
those effected by the defendant’s conduct live in a particular district would also be
sufficient to make any such case one of those “most unusual cases” in which the public
interest overwhelmingly disfavors transfer. Atlantic Marine, 134 S. Ct. at 583. I cannot
square the logical conclusion of Jet’s argument with the Supreme Court’s directive in
Atlantic Marine that the public interest “factors will rarely defeat a transfer motion” based
on a forum selection clause. Id. at 582. Accordingly, I find that Jet had failed to sustain
its heavy burden to demonstrate that public interest factors “overwhelmingly disfavor”
transfer to the Northern District of Indiana under the 2007 Agreement’s forum selection
clause. Therefore, Postle’s Motion To Transfer is granted.
For the reasons discussed above, Postle’s Motion To Transfer is granted and this
case is transferred to the Northern District of Indiana in South Bend, Indiana, pursuant to
28 U.S.C. § 1404(a). The Clerk of the Court is directed to effect the transfer.
IT IS SO ORDERED.
DATED this 25th day of April, 2016.
MARK W. BENNETT
U.S. DISTRICT COURT JUDGE
NORTHERN DISTRICT OF IOWA
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