FORD v. EF EXPLORE AMERICA, INC et al
Filing
49
OPINION and ORDER denying Defendant's 5 Motion to Dismiss and Motion to Transfer WITHOUT PREJUDICE, etc. Signed by Judge Kevin McNulty on 11/19/2018. (gl, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
NATASHA FORD, individually and
on behalf of her minor child C.F.
(Minor),
Civ. No. 18-2800 (1KM)
Plaintiffs,
OPINION & ORDER
V.
EF EXPLORE AMERICA, INC.;
HOLIDAY CLARK, LLC; and U.S.
SECURITY ASSOCIATES, INC.,
Defendants.
KEVIN MCNULTY, U.S.D.J.:
Natasha Ford, a citizen of Texas, brings this diversity action individually
and on behalf of her child, C.F. (together, “Ford”). This matter comes before the
court on the motion of defendant EF Explore America, Inc. (“EF”) under 28
U.S.C. 1404(a) to transfer venue to the U.S. District Court for the District of
§
Massachusetts, pursuant to a contractual forum-selection clause. I find that
the forum-selection clause is valid and enforceable as between EF and the
plaintiff. The parties have failed, however, to consider the effect of the presence
of two defendants who are not parties to the contract or its forum selection
clause. Their presence might stand in the way of a transfer of venue that would
otherwise be appropriate. Under recent Third Circuit case law, a different and
rather complex analysis is required. I will therefore deny this motion without
prejudice to refiling within 21 days. All defendants shall state their legal and
factual positions on the motion to transfer. The parties will also be directed to
clarify the facts pertinent to diversity jurisdiction, including the state of
1
incorporation and principal place of business of the defendant corporations,
and the citizenship of all members of Holiday Clark, ftC.
C.F. was 13 years old at the time of the events. This action arises from
an educational tour to the New York area that took place in June 2017.
Defendant EF, located in Massachusetts, is in the business of organizing and
sponsoring tours. Defendant Holiday Clark, LLC (“Holiday Inn”), operates a
lodging facility in Clark, New Jersey, where the children and parent chaperones
stayed overnight during the tour. Defendant U.S. Security Associates, Inc.
(“U.S. Security”), apparently a Georgia corporation with offices in New Jersey,’
provided a guard (the “Guard”; his precise name is unknown). The Guard’s job
was to ensure the security of the children while they were staying at the
Holiday Inn. The complaint alleges that the Guard roused some of the boys in
the middle of the night, tried to show C.F. pornography, touched him sexually
through his clothing, and tried to get in the shower with him.
A. Validity of forum selection clause as between Ford and EF
The issue here is whether venue of this case, or at least the portion of
the case that is brought against EF, must be transferred to the U.S. District
Court for the District of Massachusetts. EF moves to transfer the case
pursuant to 28 U.S.C.
§ 1404(a), based on a forum-selection clause. That
forum-selection clause was included in a Release and Agreement signed by
Ford on behalf of herself and C.F. when they booked the tour on the website
maintained by EF. The forum selection clause provides as follows:
[T]his agreement shall be governed in all respects, and
performance hereunder shall be judged, by the laws of the
Commonwealth of Massachusetts. In the event of any claim,
dispute or proceeding arising out of my relationship with EF, or
any claim which in contract, tort, or otherwise at law or in equity
EF states that it actually contracted for security services with a predecessor
entity, McRoberts Protective Agency, Inc., which was acquired by U.S. Security in
2016, before the events in suit occurred. A copy of the contract between EF and
McRoberts is at DE 5-5, p. 21. As it happens, this agreement, too, contains a
Massachusetts forum selection clause for disputes arising between EF and McRoberts.
This agreement states, by the way, that EF is a California corporation.
2
arises between the Released Parties, whether or not related to this
agreement, the parties submit and consent to the exclusive
jurisdiction and venue of the courts of the commonwealth of
Massachusetts and of the United States District Court for the
District of Massachusetts.
(Release and Agreement
¶
17).2
EF says that a straightforward application of the forum selection clause
dictates that it may be sued only in Massachusetts. Under Atlantic Marine
Construction Co. a U.S. District Court,
—
U.S.
—,
134 S. Ct. 568 (2013), the
on
usual multifactor venue analysis is simplified when there is a forum-selecti
clause:
Specifically, district courts (1) must give no weight to the forum
preferred by “the party defying the forum-selection clause”; (2)
must deem the private interests to “weigh entirely in favor of the
preselected forum” because the parties agreed to the preselected
forum and thereby waived the right to challenge it as inconvenient;
and (3) must proceed to analyze only public interests. [Atlantic
Marine, 134 S. Ct.] at 58 1-82. The Supreme Court explained that,
with these modifications to the typical [28 U.S.C.] § 1404(a)
analysis, district courts should enforce valid forum-selection
clauses “[i]n all but the most unusual cases.” Id. at 583.
In re: Howmedica Osteonics Corp, 867 F.3d 390, 402 (3d Cir. 2017), cert.
denied, 138 S. Ct. 1288 (2018).
This is not that “most unusual case.” The forum-selection clause—as far
as it goes, see infra—is valid and enforceable.
Of course, a prerequisite to enforcement of any contractual provision is
find
that there be a valid contract. Contrary to plaintiffs’ argument, I do not
When
any procedural unfairness that would undermine the agreement itself.
Ms. Ford booked the tour online, the transaction was blocked from going
forward unless and until she affirmatively checked a box agreeing to two
g
contracts. Those contracts, available by clicking a link, were the Bookin
selection
Conditions and the Release and Agreement that contained the forum-
2
A copy of the Release and Agreement is at DE 5-5, p. 17.
3
clause. (DE 5-5) The consumer’s attention would have been focused; this was
not, e.g., a routine consumer purchase, but the booking of a tour which cost
$2000 or more. There are no indicia of coercion or unequal bargaining power.3
As noted in Howmedica, quoted supra, the forum preference of a plaintiff
who agrees to a forum-selection clause is not entitled to weight. In addition, the
private interests that usually figure in the venue analysis will not be
considered.
Only public interests remain relevant. These may include “‘the
enforceability of the judgment’; ‘the relative administrative difficulty in the two
bra resulting from court congestion’; ‘the local interest in deciding local
of
controversies at home’; ‘the public policies of the fora’; and ‘the familiarity
the trial judge with the applicable state law in diversity cases.”’ Homedica, 867
F.3d at 402 (quoting Jumara u. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir.
1995)). As to those public interests, Ford offers little. I have nothing before me
federal
regarding the relative congestion of the Massachusetts and New Jersey
courts. As to familiarity with state law, I note that the contract between Ford
law, so
and EF provides for the application of Massachusetts, not New Jersey
local
this factor tilts toward transfer. There is a general interest in deciding
controversies at home, and the alleged tort occurred in New Jersey; that
state
interest is offset, however, by the fact that both Ford and EF are out-ofparties.
Counsel for Ford cites Hoffman v. Supplements Toga Mgmt., LLC, 419 N.J.
declined
Super. 596, 607, 18 A.3d 210, 217 (App. Div. 2011), in which the state court
nable
to enforce a forum-selection clause because the plaintiff did not have “reaso
nt. The reader of the website
notice” of it. The circumstances, however, were far differe
d down
in Hoffman would not have seen the forum-selection clause unless she scrolle
t, the
and found it in a “submerged” location. By selecting an advertised produc
ing cart,” which did not contain the
consumer would skip immediately to the “shopp
ent was
forum selection clause. Not so here. As noted in text, the Release and Agreem
tion unless she had
not hidden, and the consumer could not proceed with the transac
to
affirmatively given her assent by checking a box. Indeed, these facts are similar
528
those in Caspi v. Microsoft Network, L.L.C., 323 N.J. Super. 118, 122, 732 A.2d
. Hoffman approvingly
(App.Div.), certif denied, 162 N.J. 199, 743 A.2d 851 (1999)
on
cites Caspi as a case in which reasonable notice was given and the forum-selecti
clause was enforced.
3
4
Public policies of the states are a neutral factor. Ford cites New Jersey’s
it cites
“extraordinary” public interest in the protection of minors. In support,
8. To
statutory speed limits that apply in school zones. N.J. Stat. Ann. § 39:4-9
. It is true
me, New Jersey’s interest seems not extraordinary, but fairly generic
Jersey. Still,
that the alleged abuse of this Texas plaintiff took place in New
less
there is no reason to think that a Massachusetts forum would be any
likely to
solicitous of an out-of-state minor’s safety. A transfer would not be
n.4
impair any public policy against the infliction of harm on childre
In short, there are no unusual factors at play that would justify the
court’s setting aside this garden-variety forum selection clause.
B. Effect of other defendants not subject to forum selection clause
Release
Neither Holiday Inn nor U.S. Security, however, is a party to the
discusses
and Agreement that contains the forum selection clause. No party
the transferwhether the presence of those nonsignatory codefendants affects
of-venue issue. It does.
cited by plaintiff,
Silvis v. Ambi Energy, LP., 90 F. Supp. 3d 393 (E.D. Pa. 2015),
on the unique ties of
is distinguishable. It overrode a forum-selection clause, based
“historical and ongoing”
the local forum to the issues, which implicated Pennsylvania’s
Jersey, for its part,
regulation of its electrical power markets. Id. at 399—400. New
specific areas such
seems to confine the public policy factor to specialized, New Jerseys, Inc. v. Tektronix, Inc.,
as the Franchise Practices Act. See Cadapult Graphic System
98 F. Supp. 2d 560, 564 (D.N.J. 2000).
on clause
Ford cites pre-Atlantic Marine case law, stating that a forum-selecti
aching; (2)
will not be enforced where (1) it is the product of fraud or overre
enforcement
enforcement would violate a strong public policy of the forum; or (3)
as to be
would result in litigation in a jurisdiction so seriously inconvenient
Tektronix, Inc., 98 F. Supp. 2d
unreasonable. See Cadapult Graphic Systems, Inc. v.
Spruce, 14 F. Supp.
560, 564 (D.N.J. 2000); United Steele America Co. u. M/VSanko
with Atlantic Marine
2d 682, 686 (D.N.J. 1998). Although to some extent inconsistent
would not change the
(they seem, for example, to consider private factors), these cases
only that the factor of
result, for the reasons stated in text, above. I would add
t transfer. The
convenience (strictly as between Ford and EF) does not weigh agains
ts. Presumably, if this
plaintiffs are from Texas, and defendant EF is in Massachuset
e to plaintiffs in
were a two-party case, there would be no particular inconvenienc
Jersey. (Issues arising from
litigating the case in Massachusetts, as opposed to New
infra.)
the multiparty nature of the litigation will be addressed later. See
4
5
Last year, the U.S. Court of Appeals for the Third Circuit announced a
complex “four-step framework” for deciding a change-of-venue motion when
some, but not all, defendants are parties to a forum-selection clause. In re
Howmedica Osteonics Corp., 867 F.3d 390, 403—05 (3d Cir. 2017), ced. denied,
138 S. Ct. 1288 (2018). Because Howmedica is fairly recent, I quote it at
length, omitting footnotes and other material not essential to understanding;
Step One: Forum-Selection Clauses. At the first step, the
court assumes that Atlantic Marine applies to parties who agreed
to forum-selection clauses and that, “[i]n all but the most unusual
cases,” claims concerning those parties should be litigated in the
fora designated by the clauses. AU. Marine, 134 S.Ct. at 583.
Step Two: Private and Public Interests Relevant to NonContracting Parties. Second, the court performs an independent
analysis of private and public interests relevant to non-contracting
parties, just as when adjudicating a § 1404(a) transfer motion
involving those parties in the absence of any forum-selection
[C]ourts at Step Two should consider the private and
clauses.
public interests “of the parties who have not signed a forumIf, at this juncture, the Step One and
selection agreement.”
Step Two analyses point to the same forum, then the court should
allow the case to proceed in that forum, whether by transfer or by
retaining jurisdiction over the entire case, and the transfer inquiry
ends there.
.
.
.
.
.
.
Step Three: Threshold Issues Related to Severance. Third, if
the
the Step One and Step Two analyses point different ways, then
court considers severance. See Fed. R. Civ. P. 21. In some cases,
severance clearly will be warranted to preserve federal diversity
;
jurisdiction; to cure personal jurisdiction, venue, or joinder defects
or to allow for subsequent impleader under Federal Rule of Civil
Procedure 14. In such cases, the court should sever and transfer
claims as appropriate to remedy jurisdictional and procedural
defects. If only one severance and transfer outcome satisfies the
constraints identified at this step, then the court adopts that
outcome and the transfer inquiry ends. But if more than one
outcome satisfies the threshold severance constraints, then the
court continues to Step Four.
6
In other cases, severance is clearly disallowed, such as when
a party is indispensable under Federal Rule of Civil Procedure
and the case
In these cases, the court cannot sever,
19(b).
must continue with all parties present in a forum where
,
jurisdiction and venue are proper as to the indispensable party
t
which could be either the originating district court or the cour to
as to
which transfer is sought. If jurisdiction and venue are proper
the indispensable party in only one of those courts, then the
transfer inquiry ends there and the case must continue in that
court. If, however, jurisdiction and venue are proper as to the
osed
indispensable party in both the originating court and the prop
ld
transferee court, then, in deciding where the whole case shou
proceed, the court proceeds to Step Four.
Likewise, in cases where severance is neither clearly
the
warranted nor clearly disallowed and is therefore committed to
parties
court’s discretion (such as when there are no indispensable
on to
or defects in jurisdiction, venue, or joinder), the court goes
ests
select the appropriate fora based on a combination of inter
addressed at the next step.
Private
Step Four: Efficiency and Non-Contracting Parties’
(which we
Interests. Fourth, a district court exercises its discretion
will review for abuse of discretion) in choosing the most
but it measures its decision
appropriate course of action,
t
against two key sets of interests. On the one hand, the cour
tion,
considers efficiency interests in avoiding duplicative litiga
reduce
taking into account case management techniques that can
as well as any other
inefficiencies accompanying severance,
-selection
public interests that may weigh against enforcing a forum
On the other hand, the court also considers the nonclause
a
contracting parties’ private interests and any prejudice that
those
particular transfer decision would cause with respect to
interests.
ld
In exercising its discretion to determine whether it shou
ety, or
retain the case in its entirety, transfer the case in its entir
, the court
sever certain parties or claims in favor of another forum
rcement
considers the nature of any interests weighing against enfo
of any forum-selection clause; the relative number of non
contacting
contracting parties to contracting parties; and the nonon, venue,
parties’ relative resources, keeping in mind any jurisdicti
determines
or joinder defects that the court must resolve. Only if it
.
.
.
.
.
.
.
.
.
.
.
.
7
.
.
that the strong public interest in upholding the contracting parties’
settled expectations is “overwhelmingly” outweighed by the
countervailing interests can the court, at this fourth step, decline
to enforce a valid forum-selection clause.
cchi,
Howmedica, 867 F.3d at 403—05. See also Piazza Family Trust v. Ciarro
g
2017 WL 5146007 (E.D. Pa. Nov. 6, 2017) (applying Howmedica, severin
selected
claims subject to forum-selection clause, and transferring them to the
forum)
.
of a
No party has addressed the Howmedica issue, i.e., the application
n, I
forum-selection clause agreed to by some but not all parties. In this opinio
is valid
have in effect decided Howmedica step one: The forum-selection clause
to it. But I
and enforceable as between Ford and EF, the parties who agreed
steps
can go no farther. I will not attempt to extract findings on Howmedica
t those
two, three, and four from a presentation that was submitted withou
factors in mind. Instead, I will order as follows:
ORDER
as
1. The forum selection clause is deemed valid and enforceable
between Ford and EF.
t
2. EF’s motion to transfer (DE 5) is nevertheless denied withou
sing
prejudice. EF may, if it wishes, refile its motion to transfer, addres
the Howmedica factors, within 21 days.
Security
3. If EF does refile, defendants Holiday Clark, LLC, and U.S.
factual
Associates, Inc., shall file a response stating their legal and
positions on EF’s renewed motion.
brief
4. In any event, within 21 days each defendant shall file a
ty
declaration or certification stating the facts relevant to diversi
al
jurisdiction. These include the state of incorporation and princip
each
place of business of each corporation, and the citizenship of
member of the LLC, including corporate members.
prescribes
Where both fora are within the federal court system, Atlantic Marine
sal. 571 U.S. at 60.
a transfer of venue, rather than the alternative remedy of dismis
8
5. EF’s request for the alternative relief of dismissal is denied.
KEVIN MCNULIY, U.S.D.J.
Date: November 19, 2018
/
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