FITZGIBBONS v. HILL-ROM et al

Filing 11

ORDER granting 6 Motion to Transfer to District of Indiana. Signed by Chief Judge Karen E. Schreier on 6/28/2012. (KC) [Transferred from South Dakota on 6/29/2012.]

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
SOUTHERN DIVISION
JAMES E. FITZGIBBONS,
Plaintiff,
vs.
HILL-ROM COMPANY, INC.,
Defendant.

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Civ. 12-4009

ORDER TRANSFERRING CASE

Plaintiff, James E. Fitzgibbons, brought suit against defendant, Hill-Rom
Company, Inc., alleging various claims stemming from Fitzgibbons’s
employment with Hill-Rom. Hill-Rom moves to dismiss the complaint for
improper venue pursuant to Federal Rules of Civil Procedure 12(b)(3) and
12(b)(6). Docket 6. Alternatively, Hill-Rom requests that the case be transferred
to Indiana in accordance with 28 U.S.C. § 1406(a) and the forum-selection
clause in the employment contract between Fitzgibbons and Hill-Rom.
Fitzgibbons resists both dismissal and transfer. Docket 8. For the following
reasons, the court transfers this case to the United States District Court for the
Southern District of Indiana.
BACKGROUND
The pertinent facts to this order, viewed in the light most favorable to the
nonmoving party, Fitzgibbons, are as follows:

Fitzgibbons was hired as a sales manager by Hill-Rom’s predecessor,
Advanced Respiratory, Inc. (ARI), in February of 1998. In late 2003, Hill-Rom
acquired ARI. In January 2004, Fitzgibbons and Hill-Rom entered into an
“Executive Employee Agreement” (Agreement), which contained a forumselection clause. The clause provides:
Choice of Forum. Executive acknowledges that the Companies are
primarily based in Indiana, and Executive understands and
acknowledges the Company’s desire and need to defend any
litigation against it in Indiana. Accordingly, the Parties agree that
any claim of any type brought by Executive against the Company or
any of its employees or agents must be maintained only in a court
sitting in Marion County, Indiana, or Ripley County, Indiana, or, if
a federal court, the Southern District of Indiana, Indianapolis
Division. Executive further understands and acknowledges that in
the event the Company initiates litigation against Executive, the
Company may need to prosecute such litigation in such state where
the Executive is subject to personal jurisdiction. Accordingly, for
purposes of enforcement of this Agreement, Executive specifically
consents to personal jurisdiction in the State of Indiana as well as
any state in which resides a customer assigned to the Executive.
Docket 9-1 at 28.
Additionally, the Agreement also contained a choice-of-law provision,
which stipulated that Indiana law governs claims arising from Fitzgibbons’s
employment:
Choice of Law. This Agreement shall be deemed to have been made
within the county of Ripley, State of Indiana and shall be
interpreted and construed in accordance with the laws of the State
of Indiana. Any and all matters of dispute of any nature whatsoever
arising out of, or in any way connected with the interpretation of
this Agreement, any disputes arising out of the Agreement or the
employment relationship between the Parties hereto, shall be
governed by, construed by and enforced in accordance with the
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laws of the State of Indiana without regard to any applicable state’s
choice of law provision.
Docket 9-1 at 29.
Fitzgibbons was employed by Hill-Rom until September 21, 2011, when
Hill-Rom terminated his employment. Fitzgibbons filed this lawsuit in state
court in South Dakota, alleging multiple claims related to his employment with
Hill-Rom. Docket 7 at 3. After the action was removed to federal court, Hill-Rom
moved to dismiss the complaint for improper venue under Federal Rules of Civil
Procedure 12(b)(3) and 12(b)(6) or, alternatively, to transfer the case pursuant to
28 U.S.C. S 1406(a). Docket 7 at 9.
DISCUSSION
I.

The Forum-Selection Clause: Choice-of-Law, Enforceability, and
Applicability
A.

Choice-of-Law

The court must first determine whether federal or state law applies to
determine the validity and enforceability of the forum-selection clause. A forumselection clause involves both substantive contract law and procedural venue
considerations. Sun World Lines, Ltd. v. March Shipping Corp., 801 F. 2d 1066,
1068-69 (8th Cir. 1986). The Eighth Circuit Court of Appeals has not
definitively stated whether the enforceability of a forum-selection clause falls
under substantive or procedural law for the purpose of a choice-of-law analysis.
See Servewell Plumbing, LLC v. Fed. Ins. Co., 439 F.3d 786, 789 (8th Cir. 2006)

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(noting there is a circuit split about whether to classify forum-selection clause
jurisprudence as substantive or procedural). Because neither party argues that
the choice-of-law determination is determinative of the outcome on the venue
issue, this court does not need to determine whether forum-selection clauses
are directly governed by substantive or procedural law and will apply federal
law. Servewell, 439 F. 3d at 789 (holding that it is appropriate to follow federal
law instead of state law in the context of forum-selection clauses where the
relevant state law is aligned with federal law and neither party argues that the
choice of law is outcome determinative). Thus, the court will analyze the forumselection clause applying federal law.
B.

The Forum-Selection Clause Is Enforceable

Second, the court must determine whether the forum-selection clause is
enforceable. Terra Int’l, Inc. v. Miss. Chem. Corp., 119 F.3d 688, 692 (8th Cir.
1997). In M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972), the Supreme
Court held that “forum-selection clauses are prima facie valid and should be
enforced unless enforcement is shown by the resisting party to be
‘unreasonable’ under the circumstances.” Id. at 10. The Court also stated that a
“forum-selection clause should control absent a strong showing that it should be
set aside.” Id. at 15 (emphasis added). Further, forum-selection clauses have
been upheld even where the parties did not freely negotiate the terms. See
Carnival Cruise Lines, Inc. v. Shute, 499 U.S.585, 592 (1991) (holding that a

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forum-selection clause contained within a form agreement on a cruise ticket
was enforceable despite not being freely negotiated).
Fitzgibbons argues that because Hill-Rom materially breached the
contract, the forum-selection clause is not enforceable. The cases cited by
Fitzgibbons in support of this argument are distinguishable, however, because
they pertain to substantive promises, such as non-competition agreements.1
But forum-selection clauses are not substantive clauses where the
enforceability is destroyed by a material breach. Soil Shield Int’l, Inc. v. Lilly
Indus., Inc., 1998 WL 283580, at *3 (N.D. Cal. May 29, 1998). Additionally, it is
counterintuitive to require the court to determine whether a contract has been
breached and thus is unenforceable prior to determining which forum has
jurisdiction over the claim. See Portfolio Mgmt. Grp., LLC v. Bitach Fund I, LLC,
2010 WL 727993, at *2 (D. Minn. March 2, 2010) (“But if a party’s alleged
breach of contract rendered a contractual forum-selection clause inoperative,
such clauses would, as a practical matter, be unenforceable. . . . on (plaintiff’s)
theory, courts would have to litigate the merits of a breach-of-contract action
before deciding where the merits of the breach-of-contract action must be
litigated. That is clearly not the law.”). See also, Tex. Source Group, Inc. v. CCH,

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Fitzgibbons relies on Sallee v. Mason, 714 N.E.2d 757 (Ind. App. 1999)
(pertaining to a non-competition agreement), and Licocci v. Cardinal Associates,
Inc., 492 N.E.2d 48 (same). Both cases involve a substantive provision of the
agreement.
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Inc., 967 F. Supp. 234, 237 (S.D. Tex. 1997) (explaining that a validly negotiated
forum-selection clause would be rendered superfluous if found to be
unenforceable by a breaching party).
Fitzgibbons argues that litigation in Indiana would be financially
inconvenient. But the financial inconvenience of litigating in accordance with
the forum-selection clause does not bear on the validity or enforceability of the
clause itself. See Servewell, 439 F.3d at 790 (enforcing a forum-selection clause
where the plaintiff claimed that it would incur “great expense” by abiding by the
forum-selection clause); M.B. Rests., Inc. v. CKE Rests., Inc., 183 F.3d 750, 753
(8th Cir. 1999) (enforcing a forum-selection clause over the plaintiff’s assertion
that he could not afford to litigate in the contractually-stipulated forum). Cf.
McDonnell Douglas Corp. v. Islamic Republic of Iran, 758 F. 2d 341, 345-46 (8th
Cir. 1985) (excusing enforcement of a forum-selection clause where it required
the parties to litigate in post-revolutionary Iran, during the ongoing war between
Iran and Iraq). In fact, the Supreme Court has held that enforcement of a
forum-selection clause is unreasonable where “the party seeking to escape his
contract . . . show[s] that trial in the contractual forum will be so gravely
difficult and inconvenient that he will for all practical purposes be deprived of
his day in court.” Bremen, 407 U.S. at 17-18. Fitzgibbons has failed to elevate
his financial inconvenience to this level and, as a result, has failed to show that
enforcement of the clause would be unfair, unjust, or unreasonable.

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Fitzgibbons also contends that Hill-Rom utilized its bargaining power in
an unconscionable way. But Fitzgibbons has made no showing that the
inclusion of the forum-selection clause in the Agreement was the result of fraud
or overreaching. The mere existence of unequal bargaining positions is not
sufficient to show that the forum-selection clause was unconscionable. See
Dexter Axle Co. v. Baan USA, Inc., 833 N.E.2d 43, 49 (Ind. App. 2005) (“A
standardized contract is not unenforceable merely because of the unequal
bargaining power of the parties–there must also be a showing that the contract
is unconscionable.”). The record before the court does not support a conclusion
that Hill-Rom engaged in unconscionable acts in drafting and including the
forum-selection clause in the contract.
C.

The Forum-Selection Clause is Applicable

Next, the court will examine whether the forum-selection clause applies to
the types of claims asserted in the lawsuit. Terra, 119 F.3d at 692. The scope of
a forum-selection clause is a matter of contractual interpretation. See Servewell,
439 F.3d at 788 (indicating that contractual interpretation governs the
“meaning, scope, or applicability of [a] forum-selection clause.”). Because this
forum-selection clause governs “any claim of any type” brought by Fitzgibbons
against Hill-Rom, and because the parties do not dispute the meaning, scope, or
applicability of the clause, the court finds that the forum-selection clause is
applicable to Fitzgibbons’s claim.

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D.

The Forum-Selection Clause Is Both Enforceable and Applicable

For the foregoing reasons, the court finds that the forum-selection clause
contained in the Agreement is enforceable and applicable. The court must now
determine if dismissal or transfer is appropriate pursuant to 28 U.S.C.
§ 1406(a). See Terra, 119 F.3d at 695 (“The fact that we have found the [forumselection] clause applicable merely allows us to consider it as one factor, albeit a
very important one, in the overall transfer analysis.”).
II.

Dismissal or Transfer
Hill-Rom moves for dismissal pursuant to Federal Rules of Civil Procedure

12(b)(3) and/or 12(b)(6) and 28 U.S.C. § 1406(a), or, in the alternative, for
transfer to the United States District Court for the Southern District of Indiana,
in accordance with the dictates of the forum-selection clause. The court will first
address the motion to dismiss and then address the transfer request.
A.

Dismissal is Not Appropriate

Under Federal Rule of Civil Procedure 12(b)(3), a party may move to
dismiss a claim that was filed in an improper venue. Fed. R. Civ. P. 12(b)(3). In
the Eighth Circuit, a party may move to dismiss a case for improper venue
under Federal Rules of Civil Procedure 12(b)(3) or 12(b)(6), pursuant to 28
U.S.C. § 1406(a).2 See Rainforest Café, Inc. v. EklecCo, LLC, 340 F.3d 544, 546

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The Supreme Court has explained that the congressional purpose
behind 28 U.S.C. § 1406(a) was to avoid unjust dismissals by providing an
effective remedy–transfer. See Goldlawr, Inc. v. Heiman, 369 U.S. 463, 466
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n.5 (8th Cir. 2003) (noting a circuit split as to whether Federal Rule of Civil
Procedure 12(b)(3) or 12(b)(6) is the appropriate procedural vehicle for a motion
to dismiss for improper venue and explaining that this issue need not be
determined where a party moves to dismiss under both 12(b)(3) and 12(b)(6)).
When the moving party bases the motion to dismiss on Federal Rules of Civil
Procedure 12(b)(3) and 12(b)(6), the court reviews the motion as a 12(b)(6)
motion. See Transocean Grp. Holdings Pty Ltd. v. S.D. Soybean Processors, LLC,
505 F. Supp. 2d 573, 575 (D. Minn. 2007) (explaining that Rule 12(b)(3)
motions to dismiss for improper venue are reviewed under the same standard
as other motions to dismiss). When the court relies on pleadings and affidavits,
then “the court must look at the facts in the light most favorable to the
nonmoving party, and resolve all factual conflicts in favor of that party.”
Pangaea, Inc. v. Flying Burrito LLC, 647 F. 3d 741, 745 (8th Cir. 2011) (quoting
Dakota Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir.
1991); Johnson v. Arden, 614 F. 3d 785, 793-94 (8th Cir. 2010)).
Hill-Rom’s argument for dismissal over transfer relies primarily on the
district court decision in Alliance Communications Coop., Inc. v. Global Crossing
Telecomm., Inc., Civ. Nos. 06-4221 and 06-3023, 2007 WL 1964271 (D.S.D.
July 2, 2007). In Alliance, the defendant moved to dismiss the action for failure

(1962) (explaining that Section 1406(a) was drafted to prevent unjust
dismissals where the plaintiff mistakenly thought that venue was appropriate).
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to comply with a forum-selection clause that required the action to be
“instituted and maintained in the Federal Court of the Western District of New
York, or if jurisdiction is not available in Federal Court, then a state court
located in Rochester, New York.” 2007 WL 1964271, at *8. The court enforced
the forum-selection clause and dismissed the case. Id. at *13. In the present
case, however, the forum-selection clause requires that the present claim be
maintained in a specific forum, rather than requiring the action to be both
instituted and maintained in a specific forum.
The court finds that dismissal pursuant to 28 U.S.C. § 1406(a) is
inappropriate here because this court is a proper venue for this case. Were it
not for the forum-selection clause, the litigation could remain in South Dakota.
Accordingly, the court finds that the resolution of the present case is governed
by 28 U.S.C. § 1404(a), not § 1406(a). Thus, the court denies Hill-Rom’s motion
to dismiss.
B.

Transfer to the Southern District of Indiana is Appropriate

A party may request a court to transfer a case pursuant to 28 U.S.C.
§ 1404(a) or § 1406(a). The court construes Hill-Rom’s transfer request as being
made pursuant to 28 U.S.C. § 1404(a) rather than § 1406(a) because this court
has venue over the case and there is a forum-selection clause.3 Courts are

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One difference between 28 U.S.C. § 1404(a) and § 1406(a) is that
1404(a) applies where the case was brought in an inconvenient venue, whereas
1406(a) applies where the case was brought in an incorrect venue. Van Dusen
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generally deferential to the plaintiff’s choice of forum and thus the “party
seeking a transfer under section 1404(a) typically bears the burden of proving
that a transfer is warranted.” Terra, 119 F.3d at 695.
28 U.S.C. § 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 where it might have been brought or to any
district or division to which all parties have consented.” Transfer requests
pursuant to 28 U.S.C. § 1404(a) “place discretion in the district court to
adjudicate . . . according to an ‘individualized, case-by-case consideration of
convenience and fairness.’ ” Stewart, 487 U.S. at 29. Forum-selection clauses
are to “figure centrally” in the court’s analysis, but federal law, and not the
forum-selection clause, governs the transfer analysis. Id. (holding that federal
law governed the decision to grant a motion to transfer a diversity case to the
venue that was stipulated in a forum-selection clause). The court must,
therefore, analyze both the convenience and interest of justice factors regarding

v. Barrack, 376 U.S. 612, 634 (1964). Most courts prefer forum-selection clause
transfer requests to be brought pursuant to 1404(a), especially where the case
was initiated in a court that would otherwise, if not for the clause, have venue.
See Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 32 (1988) (“We find that
federal law, specifically 28 U.S.C. § 1404(a), governs the District Court’s
decision whether to give effect to the parties’ forum-selection clause and
transfer this case to a court in Manhattan.”). The statutory language of 1404(a)
requires the court to review a transfer request in a more comprehensive
manner considering both convenience and “interest of justice,” while a 1406(a)
transfer request focuses solely on “interest of justice.” 28 U.S.C. §§ 1404(a) and
1406(a).
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the requested transfer. In addition, forum-selection clauses are to figure
centrally in the court’s analysis of a request for transfer pursuant to § 1404(a).
Stewart, 487 U.S. at 29-31.
1.

Convenience

When evaluating convenience considerations, the Eighth Circuit has
utilized a case-by-case approach and considered: (1) the convenience of the
parties; (2) the convenience of key witnesses; (3) the location of documentary
evidence; (4) the location where the relevant conduct occurred; and (5) the
applicability of each state’s substantive law. Terra, 119 F.3d at 696. Courts
typically refuse to change venue when doing so would merely shift the burden of
inconvenience from one party to the other. Id. at 696-97.
Hill-Rom has not argued that the current venue is inconvenient for HillRom and Hill-Rom’s key witnesses, that the location of documents or physical
evidence warrants transfer, or that the relevant conduct occurred in Indiana.4
The court presumes that litigation in Indiana would be more convenient for HillRom, an Indiana corporation, than litigation in South Dakota. The court also
presumes that litigation in South Dakota would be more convenient for

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Hill-Rom’s argument is based solely on § 1406(a), which does not
consider the convenience of the parties and/or witnesses. “The district court of
a district in which is filed a case laying venue in the wrong division or district
shall dismiss, or if it be in the interest of justice, transfer such case to any
district or division in which it could have been brought.” 28 U.S.C. § 1406(a).
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Fitzgibbons. The choice-of-law provision in the contract states that Indiana law
governs and both parties cite Indiana law in their briefs, apparently conceding
the application of Indiana law. Thus, because of the applicability of Indiana law,
the court finds that this factor favors Hill-Rom slightly.
2.

Interest of Justice

When evaluating the “interest of justice,” courts should consider:
(1) judicial economy; (2) the plaintiff’s choice of forum; (3) the comparative costs
to the parties of litigating in each forum; (4) each party’s ability to enforce a
judgment; (5) obstacles to a fair trial; (6) conflict of law issues; and (7) the
advantages of having a local court determine questions of local law. Terra, 119
F.3d at 696.
Hill-Rom failed to articulate why the “interest of justice” warrants
transferring this case, so the court will conduct its own analysis. Neither party
identified how the interests of judicial economy would be served. “Federal courts
give considerable deference to a plaintiff’s choice of forum.” Terra, 119 F.3d at
695. Fitzgibbons chose South Dakota as the forum to file his lawsuit.
Fitzgibbons has offered evidence that tends to show that transfer would
be financially inconvenient for him and would increase his cost of litigation.
Hill-Rom has not shown that it faces any obstacles to a fair trial in this venue,
and the court cannot think of a reason why a fair trial would be unlikely.
Because it is appears that the parties agree that Indiana law applies to this

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action, there may be advantages to having a federal court sitting in Indiana
apply Indiana law. After considering all the factors, the court finds that the
interest of justice factor weighs slightly in favor of Fitzgibbons because
Fitzgibbons chose South Dakota as the forum.
3.

The Analytic Centrality of the Forum-Selection Clause

The Supreme Court has stated that forum-selection clauses, generally,
are not dispositive to a § 1404(a) transfer analysis but “[t]he presence of a
forum-selection clause . . . will be a significant factor that figures centrally in
the district court’s calculus” when evaluating a § 1404(a) transfer request.
Stewart, 487 U.S. at 29. The presence of an enforceable forum-selection clause
is entitled to weighty consideration in a § 1404(a) analysis. See Stewart, 487
U.S. at 29. “[A] forum-selection clause is ‘a significant factor that figures
centrally in the district court’s calculus’ in a motion to transfer[.]” Terra, 119
F.3d at 697 (citing Stewart, 487 U.S. at 29).
The court’s analysis of the convenience considerations weighs slightly in
favor of Hill-Rom, while the interest of justice considerations weighs slightly in
favor of Fitzgibbons. The court finds that the presence of an enforceable and
applicable forum-selection clause requiring this action to be maintained in the
United States District Court for the Southern District of Indiana is entitled to
great weight. While the Supreme Court has stated that forum-selection clauses

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are not generally dispositive, this is an instance where a forum-selection clause
should have a dispositive effect.
CONCLUSION
This court finds that dismissal is inappropriate because this court is a
proper venue for this case. The court also finds that because the convenience
factor weighs slightly in favor of Hill-Rom and the interest of justice factor
weighs slightly in favor of Fitzgibbons, the presence of a valid forum-selection
clause compels a finding that the proper resolution of this action is to transfer
the case to the United States District Court for the Southern District of Indiana.
Therefore, it is
ORDERED that Hill-Rom’s Motion to Transfer (Docket 6) is granted, and
this case is transferred to the United States District Court for the Southern
District of Indiana, Indianapolis Division.
Dated June 28, 2012.
BY THE COURT:

/s/ Karen E. Schreier
KAREN E. SCHREIER
CHIEF JUDGE

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