FUTURE SANITATION, INC. v. SOUTHEAST PERSONNEL LEASING, INC.

Filing 10

MEMORANDUM AND ORDER granting 5 Motion to Transfer Case to the District Court for the Middle District of Florida, Tampa Division. ***CIVIL CASE TERMINATED. Signed by Judge Peter G. Sheridan on 11/27/2017. (mmh)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

FUTURE SANITATION, INC.,

Civil Action No.: 17-cv-06544 (PGS)

Plaintiff,
MEMORANDUM AND
ORDER

v.
SOUTHEAST PERSONNEL LEASING, INC.,
Defendant.

SHERIDAN, U.S.D.J.
This matter comes before the Court on Defendant Southeast Personnel Leasing, Inc.’s
motion to transfer the case to the District Court for the Middle District of Florida, Tampa Division,
pursuant 28 U.S.C. § 1404(a) (ECF No. 5). Plaintiff Future Sanitation, Inc. opposes the motion
on the basis that the parties’ prior forum selection clause is unenforceable. For the reasons set
forth below, Defendant’s motion to transfer will be granted.
BACKGROUND
This case arises from a breach of contract. Plaintiff Future Sanitation is a New Jerseybased corporation that provides waste removal and hauling services. (SAC at ¶¶1- 3). Defendant
SouthEast is a Florida-based “personnel company” that “provides ‘back office’ administrative
services to companies, including payroll services, processing of workers’ compensation insurance
premiums, and other bookkeeping-type services.” (Id. at ¶¶ 2-4).
In 2013, Future Sanitation and SouthEast entered into a “Customer Service Agreement,”
wherein SouthEast essentially took control of Future Sanitation’s workforce and operations. (Id.
at ¶ 7). “As part of the parties’ contract, SouthEast was obligated to pay the workers’ compensation

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insurance premiums for Future Sanitations’ employees, and then in turn, would charge Future
Sanitation a weekly amount equal to the insurance premium.” (Id. at ¶ 10). The agreement also
contained a choice of law and forum selection clause, which provided:

(ECF No. 5-4, “Exhibit B”).
In March 2015, the parties entered a “Client Leasing Agreement,” which set forth
essentially the same terms described above. (ECF No. 5-3, “Exhibit A”). Specifically, the parties
agreed to the same mandatory forum selection clause as the 2013 agreement:

(Id.).
According to the Complaint, over the course of the parties’ contract, disputes arose due to
SouthEast purportedly overcharging Future Sanitation. For instance, although Future Sanitation
reduced the workers’ compensation premium, it continued to charge Future Sanitation at the higher
rate. (SAC at ¶¶ 13-14). Future Sanitation claims, “SouthEast used its control over Future
Sanitation’s workforce and payroll to force Future Sanitation to pay the unlawfully inflated
workers’ compensation rates.” (Id. at ¶ 23). Nevertheless, on April 12, 2016, SouthEast terminated
their Client Leasing Agreement with Future Sanitation, due to its failure to make timely payments.
(ECF No. 8-2 “Exhibit C”).
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Plaintiff raises six contract-based causes of action: (1) breach of contract; (2) breach of
obligation of good faith and fair dealing; (3) tortious interference with contractual relationships;
(4) tortious interference with prospective economic advantage; (5) unjust enrichment; and (6)
breach of fiduciary duty. Defendant responds, contending that venue is improper, and seeks a
transfer to the Middle District of Florida.
LEGAL STANDARD
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.” It is within the sound discretion of the trial court to transfer an action.
See Cadapult Graphic Sys. v. Tektronix, Inc., 98 F. Supp. 2d 560, 564 (D.N.J. 2000). In exercising
such discretion, the court is free to consider “all relevant factors,” and the Third Circuit directs
district courts to consider private and public interest factors, such as the plaintiff’s choice of forum,
the defendant’s preference, where the claim arose, the convenience of parties and witnesses, and
the location of books and records, as well as relative court congestion, any local interest in deciding
localized controversies, and public policies of the fora. See Jumara v. State Farm Ins. Co., 55 F.3d
873, 879-80 (3d Cir. 1995)
Under federal law, a forum selection clause is presumed to be valid and enforceable.
Coastal Steel Corp. v. Tilghman Wheelabrator, Ltd., 709 F.2d 190, 202 (3d Cir. 1983). As such,
“[t]he presence of a valid forum-selection clause requires district courts to adjust their usual
§1404(a) analysis in three ways.” Atl. Marine Constr. Co. v. United States Dist. Court, 134 S. Ct.
568, 581 (2013). First, “the plaintiff bears the burden of establishing that transfer to the forum for
which the parties bargained is unwarranted.” Id. Second, the court “must deem the private-interest
factors to weigh entirely in favor of the preselected forum.” Id. at 582. Finally, “when a party

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bound by a forum-selection clause flouts its contractual obligation and files suit in a different
forum, a §1404(a) transfer of venue will not carry with it the original venue’s choice-of-law rules—
a factor that in some circumstances may affect public-interest considerations.” Id. The party
seeking to challenge the enforceability of the forum selection clause must demonstrate: “(1) that it
is the result of fraud or overreaching, (2) that enforcement would violate a strong public policy of
the forum, or (3) that enforcement would in the particular circumstances of the case result in
litigation in a jurisdiction so seriously inconvenient as to be unreasonable.” Coastal Steel Corp.,
709 F.2d at 202.
ANALYSIS
SouthEast contends that transfer of this matter to the Middle District of Florida is warranted
since the forum section clause in the 2015 agreement is valid and enforceable. Future Sanitation
does not contend that the forum selection clause was the result of fraud, or that it was overreaching;
instead, it contends that because SouthEast terminated the parties’ 2015 agreement, the mandatory
forum selection clause no longer has legal effect.
Here, Future Sanitation cites two cases in support of its assertion that, “this forum selection
clause was terminated prior to this litigation and is unenforceable” (Pl’s Brief at 3); however, these
cases are factually distinguishable. In Mobilificio San Giacomo S.p.A. v. Stoffi, No. 96-415, 1998
U.S. Dist. LEXIS 3288, at *5-7 (D. Del. Jan. 29, 1998), the District of Delaware was tasked with
determining whether a forum-selection clause was enforceable against parties who thereafter
entered a settlement agreement, which terminated all prior agreements. However, because the
dispute before the court arose from the party’s settlement agreement, the court concluded that the
prior forum selection clause was of no import. Id. at *30. Similarly, in Lockwood Corp. v. Black,
501 F. Supp. 261, 263-64 (N.D. Tex. 1980), which the Mobilicio court cited, the Northern District

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of Texas found a forum-selection clause unenforceable, where the dispute arose from transactions
that took place after the contract was terminated. However, unlike Mobilificio and Lockwood
Corp., the present matter arises directly from the parties’ 2015 agreement, which contained the
forum-selection clause.
In fact, courts have consistently rejected Future Sanitation’s argument that a forum
selection clause no longer applies once the contract is terminated. See Aamco Transmissions, Inc.
v. Romano, 42 F. Supp. 3d 700, 707 (E.D. Pa. 2014) (listing cases). “In the absence of contractual
language expressly or implicitly indicating the contrary, a forum selection clause survives
termination of the contract.” Advent Electronics, Inc. v. Samsung Semiconductor, Inc., 709 F.
Supp. 843, 846 (N.D. Ill. 1989). As such, whether a contract containing a forum selection clause
has been terminated is irrelevant where a party seeks to enforce rights arising from the same. Id.
at n.4; Aamco Transmissions, Inc., 42 F. Supp. 3d at 707 (“Unless otherwise expressed, a choice
of forum clause does not expire upon termination of the contract from which it derives. . . . [T]o
read the contract so as to disregard the forum-selection clause for actions brought following
termination would be to distort its usual, common sense meaning and applicability” (internal
quotation mark and citation omitted)); TriState HVAC Equip., LLP v. Big Belly Solar, Inc., 752 F.
Supp. 2d 517, 535 (E.D. Pa. 2010) (“Although termination and cancellation of an agreement
extinguish future obligations of both parties to the agreement, neither termination nor cancellation
affect those terms that relate to the settlement of disputes or choice of law or forum selection
clauses.” (quoting 13 Corbin on Contracts § 67.2, at 12 (rev. ed. 2003)). Here, given that Future
Sanitation’s cause of action arises from the party’s 2015 agreement, the Court sees no reason for
refusing to enforce the parties’ forum selection clause.

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Future Sanitation’s alternative public policy argument is unconvincing.

Relying

principally on New Jersey’s statutory regulations of employee leasing companies, Future
Sanitation contends that New Jersey has a “strong public interest in regulating the activity of the
Defendant,” which weighs in favor of refusing to enforce the forum selection clause. (Pl’s Brief at
4). However, as noted above, the Supreme Court’s decision in Atlantic Marine, significantly
changed the traditional Section 1404(a) analysis, when a party seeks to challenge the enforcement
of a forum selection clause:
The enforcement of valid forum-selection clauses, bargained for by the parties,
protects their legitimate expectations and furthers vital interests of the justice
system. For that reason, and because the overarching consideration under §1404(a)
is whether a transfer would promote “the interest of justice,” a valid forum-selection
clause [should be] given controlling weight in all but the most exceptional cases.
134 S. Ct. at 581 (internal quotation marks and citation omitted). Guided by Atlantic Marine, the
Third Circuit has held, “in most cases, district courts must enforce valid forum-selection clauses
when adjudicating § 1404(a) transfer motions.” In re Howmedica Osteonics Corp., 867 F.3d 390,
401 (3d Cir. 2017). “When all parties in the litigation are also parties to the forum-selection clause,
as is the case here, there is ‘a strong presumption in favor of enforcing forum-selection clauses.’”
Steinmetz v. Scholastic Inc., No. 16-3583, 2017 U.S. Dist. LEXIS 149952, at *5 (D.N.J. Sept. 15,
2017) (quoting In re Howmedica Osteonics Corp, 867 F.3d at 403). Here, Future Sanitation has
not overcome this strong presumption; as such, consistent with Atlantic Marine and In re
Howmedia Osteonics, the Court will enforce the party’s valid forum-selection clause. See id.
ORDER
Having carefully reviewed and taken into consideration the submissions of the parties, as
well as the arguments and exhibits therein presented, and for good cause shown, and for all of the
foregoing reasons,

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IT IS on this 27th day of November, 2017,
ORDERED that Defendant Southeast Personnel Leasing, Inc.’s, motion to transfer the case
to the District Court for the Middle District of Florida, Tampa Division (ECF No. 5) is GRANTED
pursuant to 28 U.S.C. § 1404(a).

s/Peter G. Sheridan
PETER G. SHERIDAN, U.S.D.J. 

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