Sanchez et al v. Lasership, Inc.

Filing 37

Chief Judge Mark L. Wolf: ORDER entered. MEMORANDUM AND ORDER Accordingly, for the reasons described, plaintiffs' Motion to Alter or Amend the Court's Order of Dismissal Without Prejudice (Docket No. 32) is DENIED without prejudice.(Hohler, Daniel) Modified on 5/1/2012 (Hohler, Daniel).

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
MILTON MANUEL SANCHEZ, et al.,
Plaintiffs,
v.
LASERSHIP, INC.,
Defendant.

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C.A. No. 11-10990-MLW

MEMORANDUM AND ORDER
WOLF, D.J.

April 30, 2012

On February 23, 2012, the court allowed defendant Lasership,
Inc.'s ("Lasership") Motion for Judgment on the Pleadings and
dismissed the claims of plaintiffs Milton Manuel Sanchez, Carmelo
Medina, Gerard Edmond, and other similarly situated individuals,
without prejudice. See Feb. 23, 2012 Order. Specifically, the court
found that a mandatory forum selection clause included in the
contracts signed by plaintiffs and Laser Courier, Inc. and assigned
to defendants was enforceable and required plaintiffs to bring
their claims in state or federal court in the Eastern District of
Virginia. See Feb. 23, 2012 Tr. at 50, 60-61. Accordingly, the case
was dismissed without prejudice on February 23, 2012.
Plaintiffs have now filed a Motion to Alter or Amend the
Court's

Order

of

Dismissal

Without

Prejudice

(the

"Motion"),

arguing that federal law requires that the case be transferred
rather than dismissed. Defendants oppose the Motion. For the
reasons

described

prejudice.

below,

the

Motion

is

being

denied

without

Plaintiffs file the Motion pursuant to Federal Rule of Civil
Procedure 59(e) ("Rule 59(e)"), which provides that "[a] motion to
alter or amend a judgment must be filed no later than 28 days after
the entry of the judgment." Though Rule 59(e) does not describe the
specific requirements for allowing such a motion, the First Circuit
has held that a Rule 59(e) motion may be granted based on "a
manifest error or law or fact." DiMarco-Zappa v. Cabanillas, 238
F.3d 25, 34 (1st Cir. 2001) (quoting Aybar v. Crispin Reyes, 118
F.3d 10, 16 (1st Cir. 1997)). Courts may exercise considerable
discretion when deciding a Rule 59(e) motion. Venegas-Hernandez v.
Sonolux Records, 370 F.3d 183, 190 (1st Cir. 2004). However, "[t]he
rule does not provide a vehicle for a party to undo its own
procedural failures, and it certainly does not allow a party to
. . . . advance arguments that could and should have been presented
to the district court prior to judgment." DiMarco-Zappa, 238 F.3d
at 34 (quoting Aybar, 118 F.3d at 16).
Plaintiffs argue that, when a court finds a mandatory forum
selection clause enforceable, the court is required to transfer the
case, pursuant to 28 U.S.C. §1404(a), rather than dismiss the case
pursuant to 28 U.S.C. §1406(a). 28 U.S.C. §1404(a) governs change
of venue, and states that, "[f]or the convenience of parties and
witnesses, in the interest of justice, a district court may
transfer any civil action to any other district or division where
it might have been brought or to any district or division to which

2

all parties have consented."

28 U.S.C. §1406(a) addresses cure or

waiver of defects, and states that "[t]he 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."
Plaintiffs did not raise this argument prior to the February
23, 2012 hearing. In fact, neither party raised the issue of
transfer or invoked the venue statutes at any time, although the
court briefly raised the issue of whether it had the authority to
transfer the case sua sponte. See Feb. 23, 2012 Tr. at 14-15, 6061. Rather, both parties acknowledged that in the First Circuit,
motions to dismiss based on forum selection clauses are properly
reviewed as motions to dismiss for failure to state a claim under
Federal Rule of Civil Procedure 12(b)(6). See Silva v. Encyclopedia
Britannica Inc., 239 F.3d 385, 387 & n.3 (1st Cir. 2001).
Plaintiffs have identified no legal basis for their failure to
argue earlier that the court was required to transfer the case
rather than dismiss it. Their sole explanation is that "it would
have been against the plaintiffs' interests for counsel to argue in
favor of a transfer while at the same time attempt to preserve the
then current venue." Mot. at 5. However, this explanation is not
persuasive as parties frequently argue in the alternative in order
to preserve all viable options. See Bath Iron Works Corp. v.

3

Director, Office of Workers' Compensation Programs, United States
Dep't of Labor, 950 F.2d 56, 59 n.13 (1st Cir. 1991) ("Inconsistent
and alternative claims or defenses, however, are a well-accepted
feature of modern practice." (internal quotations and citations
omitted)); see also Fed. R. Civ. P. 8(d)(3) ("A party may state as
many

separate

claims

or

defenses

as

it

has,

regardless

of

consistency.").
As previously stated, Rule 59(e) "certainly does not allow a
party to . . . . advance arguments that could and should have been
presented to the district court prior to judgment." DiMarco-Zappa,
238 F.3d at 34 (quoting Aybar, 118 F.3d at 16). Accordingly, the
court is not required to consider the merits of the plaintiffs'
contention, as it was not raised in a timely manner. However, the
court has considered the argument, finds it without merit and, in
any

event,

inadequate

to

demonstrate

that

the

court

made

a

"manifest error of law or fact" by dismissing the case without
prejudice rather than transferring it. See DiMarco-Zappa, 238 F.3d
at 34 (quoting Aybar, 118 F.3d at 16).
Plaintiffs now assert that when venue is proper but for a
valid forum selection clause, an action must be transferred to the
appropriate federal venue rather than dismissed. They rely heavily
upon Stewart Org. Inc. v. Ricoh Corp., a 1988 Supreme Court case in
which defendant, in reliance upon a forum selection clause, moved
to transfer the case pursuant to 28 U.S.C. §1404(a) or dismiss it

4

pursuant to 28 U.S.C. §1406(a). See 487 U.S. 22, 24 (1988). The
Court held 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." Id. at 32. Plaintiffs argue that this holding
demonstrates that a request to enforce a forum selection clause
authorizing venue in another federal district should be treated as
a motion to transfer pursuant to 28 U.S.C. §1404(a), and the
court's only option upon enforcing the forum selection clause is to
transfer the case to the District Court of the Eastern District of
Virginia.
However, Stewart addressed a motion to transfer or dismiss
pursuant to the federal venue statutes, rather than a motion to
dismiss for failure to state a claim under Federal Rule of Civil
Procedure 12(b)(6). See Stewart, 487 U.S. at 24. Further, the Court
in Stewart addressed the issue in the context of whether federal or
Alabama law applied to determine the enforceability of the forum
selection

clause.

Id.

at

24-25.

Accordingly,

Stewart

is

distinguishable from the instant case.
Although the First Circuit has not decided the issue, several
other circuits have held that a district court is not required to
transfer a case pursuant to an enforceable forum selection clause,
but may dismiss it depending on the manner in which the motion is
made. The Second Circuit, in holding that dismissal is permitted,

5

distinguished

Stewart,

finding

that

"[t]he

better

reading

of

Stewart . . . . is that Stewart deals with motions to transfer
pursuant to §1404(a), while Bremen and Shute address the grant of
dismissal or summary judgment based on a forum selection clause."
TradeComet.com LLC v. Google, Inc., 647 F.3d 472, 478 (2d Cir.
2011).1 Accordingly, the Second Circuit held that "Stewart does not
compel a district court to enforce a forum selection clause under
§1404(a) where that clause permits suit in an alternative federal
forum." Id. The court found that "a defendant may seek to enforce
a forum selection clause under Rule 12(b)," and, in such a case, a
district court may properly dismiss the case rather than transfer
it. Id. at 478-79.
Several other circuits have similarly held that a court is not
required to transfer a case based on a forum selection clause, but
may allow a motion to dismiss the case. See, e.g., Slater v. Energy
Servs. Grp. Int'l, Inc., 634 F.3d 1326, 1333 (11th Cir. 2011)
(where clause designated a federal or state court in Virginia,
holding "that §1404(a) is the proper avenue of relief where a party
seeks the transfer of a case to enforce a forum-selection clause,

1

In The Bremen v. Zapata Off-Shore Co., the Supreme Court
held that forum selection clauses are prima facie valid, and
enumerated the factors to be considered in their enforceability.
See 407 U.S. 1, 15-17 (1972); see also Carnival Cruise Lines v.
Shute, 499 U.S. 585 (1991) (holding a forum selection clause
enforceable based on the Bremen factors in confirming a district
court's grant of summary judgment; Court did not make any
reference to 28 U.S.C. §§1404(a) and 1406(a).).
6

while Rule 12(b)(3) is the proper avenue for a party's request for
dismissal based on a forum-selection clause"); Salovaara v. Jackson
Nat. Life Ins. Co., 246 F.3d 289, 298 (3d Cir. 2001) (there is "no
doubt that a 12(b)(6) dismissal is a permissible means of enforcing
a forum selection clause that allows suit to be filed in another
federal forum."; also noting that "[a]dding § 1404 to the mix does
nothing to abrogate a district court's authority to dismiss under
Rule 12");

Muzumdar v. Wellness Intern. Network, Ltd., 438 F.3d

759, 761 (7th Cir. 2006) ("A challenge to venue based upon a forum
selection clause can appropriately be brought as a motion to
dismiss

the

complaint

under

Federal

Rule

of

Civil

Procedure

12(b)(3)."); Langley v. Prudential Mortg. Capital Co., LLC, 546
F.3d 365, 369 (Moore, J., concurring) ("When a party seeks to
enforce a forum-selection clause through a properly brought motion
to dismiss, the district court may enforce the forum-selection
clause through dismissal." (citing Security Watch, Inc. v. Sentinel
Sys., Inc., 176 F.3d 369, 371, 374-76 (6th Cir. 1999))).
In the First Circuit, as the parties have acknowledged, "we
treat a motion to dismiss based on a forum selection clause as a
motion alleging the failure to state a claim for which relief can
be granted under Rule 12(b)(6)." Rivera v. Centro Medico De Turabo,
Inc., 575 F.3d 10, 15 (1st Cir. 2009) (citing Silva, 239 F.3d at
387 & n.3). The First Circuit has repeatedly upheld dismissals
based on forum selection clauses without requiring the district

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court to consider transfer, even when there is an available
alternate federal forum. See, e.g., Rafael Rodriguez Barril, Inc.
v. Conbraco Industries, Inc., 619 F.3d 90, 95 (1st Cir. 2010);
Silva, 239 F.3d at 386-89.
Plaintiffs cite a Third Circuit case, Jumara v. State Farm
Ins. Co., in which the Third Circuit held that the district court
was

required

to

consider

transfer

of

the

case

when

a

forum

selection clause provided an alternate federal forum even though
the parties did not invoke the federal transfer and venue statutes.
55 F.3d 873, 878 (3d Cir. 1995). However, the persuasive value of
this holding is limited, as the Third Circuit has not relied upon
Jumara for that point since the decision was issued. In fact, eight
years

later

in

MoneyGram

Payment

Systems,

Inc.

v.

Consorcio

Oriental, S.A., the Third Circuit affirmed a district court's
dismissal of a suit based on the sua sponte consideration of a
forum selection clause, and did not require the court to consider
transfer before dismissing the case. See 65 Fed. App'x 844 (3d Cir.
2003). In addition, as previously discussed, in Salovaara the Third
Circuit explicitly held that a court may dismiss a case based on an
enforceable forum selection clause.

See 246 F.3d at 298. There,

the court found that, though the District Court did not err in sua
sponte considering 28 U.S.C. §1404's factors to determine whether
transfer was the better course, "[a]dding § 1404 to the mix does
nothing to abrogate a district court's authority to dismiss under

8

Rule 12." Id.; see also Kahn v. Am. Heritage Life Ins. Co., No. 0601832, 2006 WL 1879192 at *6 (E.D. Pa. June 29, 2006) ("When only
a 12(b)(6) motion to dismiss is filed, and not a motion to transfer
venue, as is the case here, this Court has the power to dismiss the
action in order to enforce the forum selection clause without
considering the possibility of transfer to another federal forum."
(citing Salovaara, 246 F.3d at 288-89)).
Accordingly, plaintiffs' argument, that federal law requires
the court to transfer rather than dismiss the case based on a forum
selection

clause,

lacks

merit,

and

fails

to

demonstrate

the

material error of law necessary to make the granting of a Rule
59(e)

motion

appropriate.

See

DiMarco-Zappa,

238

F.3d

at

34

(quoting Aybar, 118 F.3d at 16).
Finally, plaintiffs have failed to identify any specific
prejudice they have suffered as a result of the court's dismissal
of the case without prejudice. They have already refiled the case
in the Eastern District of Virginia. See Def's Opp. to Mot., Ex. 1.
They now argue that the decision creates an "enormous risk of
prejudice" to plaintiffs, as there is "surprising [sic] little case
law available to guide courts in determining the appropriate time
frame for the award of damages when a case must be refiled due to
change of venue," although there is "some case law suggesting the
doctrine of equitable tolling would apply." Mot. at 6. However,
this generalized, speculative risk of prejudice is insufficient to

9

justify a modification to the court's dismissal of the case without
prejudice.
If plaintiffs had requested a transfer in the event the forum
selection clause at issue was found to be enforceable, and had
cited cases indicating the court's authority to do so, the court
might have transferred the case to the Eastern District of Virginia
rather than dismissing it without prejudice to refiling there.
However,

whether

due

to

inexcusable

oversight

or

a

tactical

decision, plaintiffs did not do so. Plaintiffs have not persuaded
the court that it should in these circumstances exercise its
considerable discretion when deciding a Rule 59(e) motion and grant
the transfer now requested. See Venegas-Hernandez, 370 F.3d at 190;
DiMarco-Zappa, 238 F.3d at 34. Therefore, the Motion is being
denied. However, in view of the speculative claim that plaintiffs
may be prejudiced by being required to refile the case in Virginia,
the

Motion

is

reconsideration

being
if

denied

plaintiffs

without

prejudice

demonstrate

that

to

real

possible
harm

has

occurred because of their counsel's oversight or tactical error.
Accordingly, for the reasons described, plaintiffs' Motion to
Alter or Amend the Court's Order of Dismissal Without Prejudice
(Docket No. 32) is DENIED without prejudice.

/s/ Mark L. Wolf
UNITED STATES DISTRICT JUDGE

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