Drapeau v. Airpax Holdings, Inc. Severance Plan et al
Filing
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AMENDED MEMORANDUM OPINION AND ORDER. 1. Defendants' Motion to Dismiss (Doc. No. 3 ) is GRANTED IN PART and DENIED IN PART. 2. This action is transferred to the United States District Court for the Northern District of Illinois under 28 U.S.C. § 1404(a). 3. The Clerk of Court is directed to effect the transfer. (Written Opinion). Signed by Judge Donovan W. Frank on 8/9/2011. (BJS)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Donald J. Drapeau,
Civil No. 11-64 (DWF/JSM)
Plaintiff,
v.
AMENDED MEMORANDUM
OPINION AND ORDER
Airpax Holdings, Inc. Severance Plan
and Sensata Technologies, Inc., in its
capacity as successor to Airpax
Holdings, Inc. and in its capacities as
Plan and Claims Administrator,
Defendants.
_____________________________________________________________________
Brian N. Niemczyk, Esq., and Seymour J. Mansfield, Esq., Mansfield Tanick & Cohen,
PA, counsel for Plaintiff.
David M. Wilk, Esq., Larson King, LLP, counsel for Defendants.
_____________________________________________________________________
The Court hereby amends its July 27, 2011 Order (Doc. No. 15). This Amended
Order is exactly the same as Doc. No. 15, except that the Court now removes the final
sentence of the second full paragraph on page three (3) in Doc. No. 15. The Court
amends the July 27, 2011 Order to eliminate any doubt as to the limited scope of the
Court’s findings in that Order. Specifically, the Court reiterates that it did not reach the
issue of whether Plaintiff’s claims fail as a matter of law and clarifies that it did not
make any binding determinations with respect to the scope of Section 11.01 of the stock
purchase agreement that is at issue in this litigation.
INTRODUCTION
This matter is before the Court on a Motion to Dismiss brought by Defendants
Airpax Holdings, Inc. Severance Plan (“Airpax”) and Sensata Technologies, Inc.
(“Sensata”) (together “Defendants”). Defendants assert that this case should be
dismissed or, alternatively, transferred for improper venue. For the reasons set forth
below, the Court grants Defendants’ motion in part and transfers this action to the
Northern District of Illinois.1
BACKGROUND
Plaintiff Donald Drapeau is a resident of Golden Valley, Minnesota, and a
former employee of both Airpax and its successor Sensata. (Compl. ¶ 4.) Plaintiff
entered into an employment agreement with Airpax in September 2006. (Id.) Plaintiff
was given an offer letter from Airpax (the “Airpax Offer Letter”) on or around
September 25, 2006. (Doc. 1-1 at 6-9.) The letter indicated that Airpax was offering
Plaintiff the position of Vice President, Sales and Marketing, Airpax Dimensions. The
Airpax Offer Letter also contained information regarding salary, benefits, and
severance. (Id.) In particular, the Airpax Offer Letter noted that Airpax had an
Executive Severance Policy, under which Plaintiff’s position would be eligible for
1
Defendants also argue that Plaintiff’s Complaint should be dismissed because it
fails to state a claim upon which relief can be granted. Because the Court concludes
that this action is properly transferred to the Northern District of Illinois, the Court does
not reach the issue of whether Plaintiff’s claims fail as a matter of law.
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benefits. (Id. at 9.)2 The Airpax Offer Letter also stated that it was not a contract of
employment. (Id.)
On June 8, 2007, Airpax and Sensata entered into a stock purchase agreement
(“SPA”). (Compl. ¶ 10; Aff. of Donna Kimmel (“Kimmel Aff.”) ¶ 2, Ex. A (“SPA”).)
Pursuant to the SPA, Sensata purchased all of the issued and outstanding shares of
Airpax. (SPA at §2.02.) Plaintiff was an Airpax shareholder, and therefore, was a
party to and personally signed the SPA. (Compl. ¶ 12.)
In the SPA, Airpax made certain warranties and covenants, including a covenant
to “honor all employment, severance . . . and other compensation and benefit plans,
policies, arrangements and agreements to which [Airpax] is a party in accordance with
their terms.” (SPA at § 7.05.) The Airpax Offer Letter was identified in the SPA as an
agreement binding on Airpax, and the Airpax severance policy was identified as an
Airpax written policy regarding severance compensation. (SPA at §§ 3.16, 3.20 and
Schedules 3.16(b), 3.20.)
The SPA also contained a choice of venue provision that reads in part:
[A]ny suit, action or proceeding seeking to enforce any provision of, or
based on any matter arising out of or in connection with, this Agreement
or the transactions contemplated hereby shall be brought in the United
States District Court for the Northern District of Illinois or any Illinois
2
The Executive Severance Policy provided severance packages to eligible
employees if their employment terminated involuntarily as a result of certain
occurrences, such as a permanent layoff, “change of control,” or a resignation for “good
reason.” (Doc. 1-1 at 11.) Employees were not eligible for severance if their
employment terminated due to willful misconduct. (Id. at 12.)
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State court sitting in Chicago, Illinois, and each of the parties hereby
consents to the jurisdiction of such courts . . . in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law,
any objection which it may now or hereafter have to the laying of the
venue of any such suit, action or proceeding in any such court or that any
such suit, action or proceeding which is brought in any such court has
been brought in an inconvenient form [sic].
(SPA § 12.07.)
On May 6, 2010, Sensata terminated Plaintiff’s employment for allegedly
providing false information in response to a survey that asked whether Plaintiff had
held himself out as a consultant without company approval. (Compl. ¶ 18 & Doc. 1-1
at 40-41.) Plaintiff asserts that he was actually terminated for “business reasons.”
(Compl. ¶ 42.) Plaintiff sought pay and benefits under the Airpax severance policy.
(Compl. ¶¶ 43-44.) Sensata denied Plaintiff’s claim and asserted that any severance
obligation ended 15 months after the Airpax/Sensata closing and that Plaintiff was not
eligible because he was terminated for willful misconduct. On September 7, 2010,
Plaintiff appealed the denial of severance. (Compl. ¶ 45.) Sensata’s plan administrator
denied Plaintiff’s appeal on November 8, 2010. (Compl. ¶ 49.) On January 10, 2011,
Plaintiff filed the present lawsuit.
DISCUSSION
Defendants move to dismiss this action under Rules 12(b)(3), 12(b)(6),3 and 28
U.S.C. § 1406(a), or, in the alternative, to transfer the action under 28 U.S.C. § 1404(a)
3
The Eighth Circuit has not determined whether Rule 12(b)(3) or Rule 12(b)(6) is
the proper vehicle for bringing a motion to dismiss for improper venue based on a
(Footnote Continued on Next Page)
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and/or § 1406(a). Defendants argue that the SPA’s forum selection clause requires this
action to be brought in the Northern District of Illinois or a state court in Chicago,
Illinois. Specifically, Defendants assert that the action should be dismissed pursuant to
28 U.S.C. § 1406(a). That section provides:
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).
Plaintiffs do not dispute that the SPA contains a forum selection clause requiring
all disputes seeking to enforce the SPA to be filed in the Northern District of Illinois or
a state court in Chicago. (SPA § 12.07.) Nor do Plaintiffs dispute the presumptive
validity and enforceability of forum selection clauses in this district. See, e.g., Siebert
v. Amateur Athletic Union of U.S., Inc., 422 F. Supp. 2d 1033, 1046 (D. Minn. 2006)
(citing M.B. Rests., Inc. v. CKE Rests., Inc., 183 F.3d 750, 752 (8th Cir. 1999)) (“Forum
selection clauses are presumptively valid and enforceable, unless unjust, unreasonable,
procured through fraud or overreaching, or unless they would effectively deprive the
opposing party of a meaningful day in court.”)). Instead, Plaintiff argues that this case
does not arise from the SPA but rather from Plaintiff’s severance agreement with
(Footnote Continued From Previous Page)
forum selection clause in the parties’ underlying contract. Rainforest Cafe, Inc. v.
EklecCo., L.L.C., 340 F.3d 544, 546 n.5 (8th Cir. 2003). Because Defendants have
moved under both rules, the Court need not address the issue. Id.
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Airpax, which did not contain a forum selection clause. Plaintiff also argues that venue
in Minnesota (where Plaintiff lives and worked) is appropriate under ERISA’s forum
selection provision.
The Court respectfully disagrees. In his Complaint, Plaintiff alleges that,
pursuant to the SPA, Sensata became obligated to honor Plaintiff’s severance
agreement with Airpax. (Compl. ¶¶ 7-11.) In addition, Plaintiff alleges that when he
signed the SPA, he “noted” the provisions requiring Sensata to honor the Airpax
severance agreement. (Id. ¶¶ 12-14.) According to Plaintiff’s own allegations, Sensata
would not owe him severance, or even be a party to this action, but for the SPA.
Because it is apparent that the SPA is central to Plaintiff’s claims in this case, the Court
concludes that the SPA’s forum selection clause applies to this action.
Plaintiff attempts to avoid the forum selection clause by arguing that (1) the
SPA’s forum selection clause is not explicit enough to be enforceable because it was
“buried” in the SPA and does not specifically reference Plaintiff’s severance agreement;
(2) forum selection clauses are not enforceable under ERISA; and (3) the forum
selection clause is unreasonable. The Court respectfully disagrees with these arguments
and addresses each in turn.
First, the forum selection clause in the SPA is unambiguous and clearly sets
forth that any suit based on any matter arising out of or in connection with the SPA
“shall be brought in the United States District Court for the Northern District of Illinois
or any Illinois state court sitting in Chicago, Illinois” and that “each of the parties
hereby consent to the jurisdiction of such courts . . . and irrevocably waives . . . any
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objection . . . to the laying of venue of any such suit . . in any such court.” (SPA
§ 12.07.) This clause is set forth separately under the bolded heading “Jurisdiction.”
The Court concludes that this clause is not ambiguous and was not hidden in the
parties’ agreement.
Second, Plaintiff asserts that forum selection clauses are not enforceable under
ERISA. In support, Plaintiff relies on a district court case from the Eastern District of
Texas, Nicolas v. MCI Health & Welfare Plan No. 501, 453 F. Supp. 2d 972 (E.D. Tex.
2006). In that case, the court held that the policies of the ERISA statutory framework
supersede the general policy in the Fifth Circuit of enforcing forum selection clauses.
Id. at 974. That case, however, conflicts with the reasoning of the court in Schoemann
ex rel. Schoemann v. Excellus Health Plan, Inc., 447 F. Supp. 2d 1000 (D. Minn. 2006).
In Schoemann, the court considered the question of whether a forum-selection clause
should be disregarded because it is found in a welfare-benefit plan governed by ERISA.
447 F. Supp. 2d at 1006. The court went on to explain that “[p]erhaps . . . a
forum-selection clause in an ERISA plan should be entitled to less weight than other
forum-selection clauses” but that “[n]othing in ERISA compels” the conclusion that all
forum-selection clauses in ERISA are invalid as a matter of law. Id. at 1007. Here, the
SPA is not a welfare-benefits plan covered by ERISA, and therefore the question of
whether its forum selection clause can be invalidated under ERISA is not relevant.
Even if it were, the Court agrees that ERISA does not require the Court to disregard, as
a matter of law, a forum-selection clause.
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Third, Plaintiff argues that the SPA’s forum selection clause is unreasonable.
Specifically, Plaintiff argues that because he resides in Minnesota, litigation in Illinois
would add considerable expense and delay. Plaintiff also argues that the relevant
events giving rise to his claims occurred in Minnesota.
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 where it might have been brought.” 28 U.S.C. § 1404(a). When deciding a
motion to transfer pursuant to § 1404(a), the Court must consider the convenience of
the parties, the convenience of the witnesses, and the interests of justice. See Terra
Int’l, Inc. v. Miss. Chem. Corp., 119 F.3d 688, 691 (8th Cir. 1997). In considering these
factors, the Court must make a “case-by-case evaluation of the particular circumstances
at hand and a consideration of all relevant factors.” Id. Generally, the burden is on the
party seeking the transfer “to show that the balance of factors ‘strongly’ favors the
movant.” Graff v. Qwest Commc’ns Corp., 33 F. Supp. 2d 1117, 1121 (D. Minn. 1999).
However, where there is a valid and applicable forum selection clause, that becomes a
“significant factor that figures centrally into the district court’s calculus.” Terra Int’l,
119 F.3d at 691. A forum selection clause is “prima facie valid and should be enforced
unless enforcement is shown . . . to be ‘unreasonable’ under the circumstances.” M/S
Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972) (quotation omitted). Absent a
compelling and countervailing reason, a forum selection clause should be enforced by
the courts. Id. at 12.
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Here, Plaintiff’s action arises from the SPA, which contains a forum selection
clause that requires this case to be heard in Illinois. Plaintiff has not demonstrated that
the forum selection clause was the product of fraud or overreaching or that Plaintiff was
unaware of the clause before signing the SPA. Thus, the forum selection clause should
be enforced absent a compelling and countervailing reason. Plaintiff has demonstrated
no such reason here and Plaintiff’s assertions that the forum selection clause is
unreasonable do not suffice. While the fact that Plaintiff resides in Minnesota will,
indeed, make it less convenient for him to litigate this case in Illinois, Plaintiff agreed to
the forum selection clause and waived any venue objection when he signed onto the
SPA. Thus, the convenience of the parties does not weigh in favor of maintaining this
action here. The remaining convenience factors do not weigh so heavily in favor of
litigating the action in Minnesota so as to justify disregarding the forum selection
clause. In addition, the interests of justice will be served by honoring the forum
selection clause that was agreed upon by the parties.
Based on the above, the Court concludes that the forum selection clause is
enforceable. The Court could properly dismiss or transfer this action under 28 U.S.C.
§ 1406(a). Even so, the Court is of the belief that this case is more appropriately
analyzed under 28 U.S.C. § 1404(a), and concludes that under that section, as discussed
above, the case is properly transferred to the Northern District of Illinois.
CONCLUSION
Based on the files, records, and proceedings herein, and for the reasons set forth
above, IT IS ORDERED that:
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1.
Defendants’ Motion to Dismiss (Doc. No. [3]) is GRANTED IN PART
and DENIED IN PART.
2.
This action is transferred to the United States District Court for the
Northern District of Illinois under 28 U.S.C. § 1404(a).
3.
The Clerk of Court is directed to effect the transfer.
Dated: August 9, 2011
s/Donovan W. Frank
DONOVAN W. FRANK
United States District Judge
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