ConTeyor International N.V. v. Bradford Company
Filing
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Memorandum of Opinion and Order denying Defendant's Motion to dismiss (Related Doc # 10 ). Judge Dan Aaron Polster on 1/13/14.(P,R)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
CONTEYOR INT’L, N.V.,
Plaintiff,
vs.
BRADFORD CO.,
Defendant.
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CASE NO. 1:13 CV 2413
JUDGE DAN AARON POLSTER
MEMORANDUM OF OPINION
AND ORDER
Before the Court is Defendant Bradford Company’s “Motion to Dismiss the Complaint
for Improper Venue or Alternatively to Transfer the Case (to the Western District of Michigan).”
(Doc #: 10 (“Motion”)). For the following reasons the Motion is DENIED.
I.
On October 30, 2013, Plaintiff Conteyor International, N.V. (“Conteyor”) filed the
instant Complaint on Application to Confirm Arbitration Award under 9 U.S.C. § 9. (Doc #: 1
“Comp.”) The Complaint alleges the following facts.
Conteyor is a Belgian entity and Defendant Bradford Company (“Bradford”) is a
Michigan corporation with its principal place of business in Holland, Michigan. (Comp. ¶¶ 1-2.)
On or about February 1999, Conteyor and Bradford entered into a License Agreement which
provided, among other things, that the parties would settle any dispute arising out of the
Agreement by arbitration in accord with the rules of the American Arbitration Association
(“AAA”). (Id. ¶ 5.) The Agreement provided, in pertinent part:
XI. GOVERNING LAW AND JURISDICTION
11.1
This Agreement and any other additional or related agreement between the
Parties shall in all respects be solely and exclusively governed by and
construed in accordance with the laws of the State of Michigan, U.S.C.;
11.2
Any and all disputes or claims arising out of or in connection with this
Agreement or the breach thereof, shall be referred to a mediator mutually
selected by the Parties, or if the Parties cannot agree upon a mediator, by a
mediation administered by the American Arbitration Association under its
Commercial Mediation Rules before resorting to arbitration;
Any and all disputes or claims arising out or in connection with
this Agreement or breach thereof that is not settled by mediation,
shall be settled by a single arbitrator sitting in Cincinnati, Ohio in
accordance with the rules of the American Arbitration Association
and judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof.
(Comp. ¶ 5; Doc #: 7-1, at 11-12.)
After mediation attempts failed, Conteyor served an arbitration demand on Bradford and
the AAA for monetary damages due to Bradford’s alleged violation of the Agreement. (Id. ¶ 6.)
Bradford timely filed a counterclaim against Conteyor. (Id. ¶ 7.)
By agreement of the parties, the arbitration was not conducted by a single arbiter sitting
in Cincinnati; rather, it was conducted by a mutually selected arbiter having an office in
Cleveland, Ohio (D. Peter Hochberg, Esq.) which, as Conteyor correctly points out, is located in
this judicial district. (Id. ¶ 8.) Arbiter Hochberg conducted hearings in both Cleveland, Ohio
and Holland, Michigan. (Id. ¶ 13.)
On April 30, 2013, Arbiter Hochberg issued a 94-page decision denying each of
Bradford’s claims. (Comp. ¶ 17; Doc #: 7-2.) He also concluded that this particular arbitration
proceeding constituted the “exceptional case” where Bradford deliberately extended the
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proceeding by several years “with apparently the only goal of increasing the disruption to the
business operations of Conteyor and to significantly increase Conteyor’s legal expenses in this
Arbitration proceeding.”1 (Doc #: 7-2 at 90.) Accordingly, he ordered Bradford to pay 75% of
Conteyor’s legal fees and costs, to the tune of $1,213,147.64. (Id. at 91; Doc #: 7-3 at 23.)
On October 30, 2013, Conteyor filed the instant action seeking confirmation of the
arbitration award. (Doc #: 1.) This case is before the Court on Bradford’s fully briefed Motion
to Dismiss the Complaint for Improper Venue or Alternatively to Transfer the Case (to the
United States District Court for the Western District of Michigan). (Doc #: 10.)
II.
A.
Bradford contends that venue in this district is improper. “[A] Rule 12(b)(3) motion to
dismiss for improper venue is simply the procedural vehicle by which to challenge improper
venue; the rules of Civil Procedure do not contain any venue provisions or requirements. The
requirements for venue are set by statute, as are the remedies available for improper and
inconvenient venue.” Contech Bridge Solutions, Inc. v. Keaffaber, No. 1:11-cv-216, 2011 WL
5037210, at *5 (S.D. Ohio Oct. 24, 2011) (quoting Kerobo v. Southwestern Clean Fuels, Corp.,
285 F.3d 531, 538 (6th Cir. 2002)). Once challenged, the plaintiff bears the burden of
establishing that its chosen venue is proper. Ring v. Roto-Rooter Servs. Co., No. 1:10-cv-179,
2010 WL 3825390, at *3 (S.D. Ohio Sep. 28, 2010), in turn citing Centerville ALF, Inc. v.
Balanced Care Corp., 197 F.Supp.2d 1039, 1046 (S.D. Ohio 2002)). If, after construing the
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Specifically, Hochberg found that Bradford’s conduct in demanding numerous
unnecessary hearings, seeking immaterial discovery, and filing multiple weakly grounded motions
for reconsideration (in one instance, three reconsideration motions over the same topic) justified the
award to Conteyor. (See Doc #: 7-2 at 86-94.)
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pleadings and affidavits in the light most favorable to the plaintiff, the court concludes that the
plaintiff has presented a prima facie case that venue is proper, the defendant’s motion to dismiss
the case must be denied. Id. (citing Zimmer Enters., Inc. v. Atlandia Imports., Inc., 478
F.Supp.2d 983, 986 (S.D. Ohio 2007)).
The venue statute for confirming arbitration awards is 9 U.S.C. § 9. This statute
provides:
If the parties in their agreement have agreed that a judgment of the court shall be
entered upon the award made pursuant to the arbitration, and shall specify the
court, then at any time within one year after the award is made any party to the
arbitration may apply to the court so specified for an order confirming the award,
and thereupon the court must grant such an order unless the award is vacated,
modified, or corrected as prescribed in sections 10 and 11 of this title. If no court
is specified in the agreement of the parties, then such application may be made to
the United States court in and for the district within which such award was made.
. . .”
9 U.S.C. § 9 (emphasis added). The parties did not specify, in the License Agreement, the
district in which to confirm the arbitration award. The Supreme Court has held that the venue
provisions of the FAA are permissive and allow a motion to confirm to be brought “either where
the award was made or in any district proper under the general venue statute.” Cortez Byrd
Chips, Inc. v. Bill Harbert Construction Co., 529 U.S. 193 (2000) (syllabus). In other words, the
Supreme Court ensured that the FAA venue statutes would be construed liberally rather than
restricting venue to only one judicial district. Id., 529 U.S. at 195. Since the parties agreed to
select an arbiter from Cleveland, Ohio, since proceedings were held in Cleveland, Ohio, and
since the judicial district in which the decision was made was Arbiter Hochberg’s office on East
6th Street in Cleveland, Ohio, (See Doc #: 7-2 at 94), the Court concludes that venue here, in the
Northern District of Ohio, is entirely proper.
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Amazingly, Bradford argues that the proper venue for confirming the arbitration award is
the district court in Atlanta, Georgia – the regional AAA office from which Arbiter Hochberg’s
decision was emailed to the parties. (See Motion at 3; Reply at 1.) Bradford fails to cite a single
case to support this novel position. Indeed, when the Cortez court discussed where the
arbitration award “was made,” it referred to where the “arbitration was conducted,” id., 529 U.S.
at 194, 195-96, 200, and “the location of the arbitration,” id. at 201. More importantly, the
defendant in Cortez invoked the arbitration provision by filing the request for arbitration in the
regional AAA office in Atlanta, Georgia – yet neither party argued that venue was proper in the
Atlanta district court. Id. at 195-96.
Bradford argues that the only other proper venue for bringing this case is the district in
which Bradford resides (i.e., Holland, Michigan) because more proceeding days were conducted
in Holland, Michigan than in Cleveland, Ohio. While Bradford is correct that Conteyor could
have properly filed this case in the Western District of Michigan under the general venue statute,
28 U.S.C. § 1391(b)(1) (i.e., where the defendant resides), it has failed to cite a single case to
support the position that Conteyor was confined to filing this case in that district because more
proceeding days were conducted there. Such a restrictive construction of the FAA venue statute
ignores the point of Cortez – which was to expand the venues wherein these types of cases could
properly be brought. Id., 529 U.S. at 199.
Finally, Bradford argues that the proper venue for confirming the award is Holland,
Michigan, because Conteyor filed suit against it in the Western District of Michigan. The
lawsuit that Conteyor filed in Holland, Michigan – which suit preceded the arbitration – was
against Bradford and another company that was not a party to the License Agreement. Within
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one week after Conteyor dismissed the other party, it initiated the arbitration proceeding
conducted by a Cleveland lawyer in both Cleveland, Ohio and Holland, Michigan.
Because Conteyor has presented a prima facie case that venue is proper in the Northern
District of Ohio, the Court denies Bradford’s motion to dismiss this case due to improper venue.
Ring, 2010 WL 3825390, at *3; Zimmer Enters., 478 F.Supp.2d at 986.
B.
Alternatively, Bradford asks the Court to transfer this action to the Western District of
Michigan pursuant to 28 U.S.C. § 1404(a). Section 1404(a) provides 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.” Id. The Court’s analysis
involves weighing relevant factors and deciding whether, on balance, a transfer would serve the
convenience of the parties and witnesses, and otherwise promote the interest of justice. Atlantic
Marine Const. Co., Inc. v. U.S. Dist. Court for the Western Dist. of Texas, 134 S.Ct. 568, 581
(2013).
Factors relating to the parties’ private interests include the relative ease of access to
sources of proof; the availability of compulsory process for the attendance of unwilling
witnesses; the cost of obtaining the attendance of willing witnesses; the possibility to view the
premises if viewing it would be appropriate to the action; and all other practical problems that
make trial of a case easy, expeditious and inexpensive.2 Id. (citing Piper Aircraft Co. v. Reyno,
454 U.S. 235, 241 n.6 (1981). Public-interest factors include the difficulties flowing from court
2
As will be shown infra, at 10-11, all but one of these factors assumes that we are talking
about a typical civil lawsuit with expectation of going to trial – not the confirmation of an
arbitration award which is a summary proceeding.
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congestion; the forum’s familiarity with the governing law; and the plaintiff’s choice of forum.
Id. (citing Piper Aircraft, 454 U.S. at 241 n.6 and Norwood v. Kirkpatrick, 349 U.S. 29, 32
(1955)). See also Cincinnati Ins. Co. v. O’Leary Paint Co., Inc., 676 F.Supp.2d 623, 632-33
(W.D. Mich. 2009).
District courts have broad discretion to determine when party convenience and the
interest of justice make a transfer appropriate. Reese v. CNH America LLC, 574 F.3d 315, 320
(6th Cir. 2009). The district court’s decision will be reversed only when it clearly abuses its
discretion in balancing these considerations. Id. (citing Phelps v. McClellan, 30 F.3d 658, 663
(6th Cir. 1994). The movant has the burden of demonstrating, by a preponderance of the
evidence, that a transfer is appropriate. Choon’s Design, LLC v. Larose Indus., LLC, 2013 WL
5913691, at *2 (E.D. Mich. Nov. 1, 2013) (citations omitted). “Merely shifting the
inconvenience from one party to another does not meet the defendant’s burden.” Id. (inner
quotation marks omitted) (citing McGadgon v. Fresh Mkt., Inc., 05-2151, 2005 WL 3879037, at
*2 (W.D. Tenn. Oct. 21, 2005)). If the court determines that the balance between the plaintiff’s
choice of forum and the defendant’s desired forum is fairly even, the plaintiff’s choice of forum
should prevail. Id. (citing Stewart v. Am. Eagle Airlines, Inc., 10-00494, 2010 WL 4537039, at
*2 (M.D. Tenn. Nov. 3, 2010)).
Bradford first argues that by filing its civil complaint preceding the arbitration in the
Western District of Michigan, Conteyor “implicitly consented to venue in that district for
purposes of confirming the Arbitration Award. The case law from the Western District of
Michigan is quite clear in that regard.” (Motion at 4.) The only case cited by Bradford for this
sweeping proposition is Allen Group, Inc. v. Allen Deutschland GMBH, 877 F.Supp.395, 399
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(W.D. Mich. 1994). The only thing that the district court in Allen decided was whether a court
that ordered arbitration pursuant to a consent judgment could retain the jurisdiction to confirm
the arbitration award, even though it had not expressly retained such jurisdiction in the consent
judgment. No one disputes jurisdiction in the Northern District of Ohio or whether this case
could be properly venued in the Western District of Michigan. The only question is whether the
Court should transfer the instant case, which is properly venued in this judicial district, to the
Western District of Michigan for the convenience of the parties and in the interest of justice.3
That said, Bradford has identified the following factors that it contends favor transfer.
The Western District of Michigan is more convenient to Bradford because that is where Bradford
is headquartered and its lawyers practice. Conteyor’s lawyers are also based in Michigan. Since
Conteyor is a Belgian company, it has no connection to the Northern District of Ohio. Should
there be a need for Bradford witnesses to appear, those witnesses reside within the Western
District of Michigan. The terms of the License Agreement are governed by Michigan law.
Bradford concedes, however, that “to accommodate all concerned,” several days of arbitration
hearings were conducted in Cleveland because foreign witnesses were able to fly to Cleveland
easier than going to either Holland, Michigan or Cincinnati, Ohio, and counsel for each party
could travel to Cleveland easier than traveling to Holland, Michigan. (Motion at 5.)
Conteyor counters that its choice of forum is consistent with the choice of forum
provision in the License Agreement, the FAA venue-conferring statute, the parties’ contractual
agreement that the arbitration proceedings should not be conducted in Bradford’s backyard,
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This argument also ignores the FAA statute conferring venue in the judicial district in
which the arbitration decision “was made.” 9 U.S.C. § 9.
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Bradford’s selection of a Cleveland arbiter, the parties’ attendance at hearings in Cleveland, the
fact that Cleveland is a more convenient forum to Conteyor than the district court in Grand
Rapids, Michigan, and that the parties previously agreed that Cleveland was convenient to all
concerned. Conteyor also notes that the involvement of witnesses and the collection of
documents not already made of record are not contemplated by this action as it is a summary
proceeding.
The Court understands that the Western District of Michigan is more convenient to
Bradford because that is where it is headquartered. But Conteyor asserts that the present district
is more convenient to Conteyor since it is easier for it to attend proceedings in Cleveland, Ohio
than Grand Rapids, Michigan. So this factor is evenly balanced. The fact that Bradford’s
lawyers and one of Conteyor’s lawyers are located in the Western District of Michigan (the other
lawyer is located in Cleveland) is entitled to little or no weight. Cincinnati Ins., 676 F.Supp.2d
at 633 (little weight); Floyd’s 99 Holding, LLC v. Judes Barbershop, Inc., No. 12-cv-14696,
2013 WL 4607370, at *3 (E.D. Mich. Aug. 29, 2013) (no weight). The Court also gives little
weight to Bradford’s contention that Conteyor has no connection to the Northern District of Ohio
because Conteyor agreed to hold arbitration proceedings in Cleveland, Ohio, it traveled to
Cleveland for those proceedings, and the parties previously agreed that Cleveland was more
convenient to everyone than Holland, Michigan or Cincinnati, Ohio. Furthermore, it is
undisputed that the reason Conteyor agreed to hold some of the arbitration proceedings in
Holland, Michigan was as a courtesy to Bradford – which made the request to alleviate the
burden of bringing certain large exhibits to the arbitration proceedings there, but never
introduced them. (See Opp. Br. at 6 n.2.) The fact that Michigan law governs the terms and
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conditions of the License Agreement is entitled to little weight as well since “federal courts are
deemed capable of applying the substantive law of other states” when it comes to factorbalancing under § 1404(a). William M. Yarbrough Found. v. Garcoa Labs., Inc., No. 1:11-cv907, 2013 WL 4068176, at *7 (W.D. Mich. Aug. 12, 2013) (citing Tole v. Glenn Miller Prods.,
Inc., No. 12 Civ. 6660(NRB), 2013 WL 4006134, at *5 (S.D.N.Y.)).
The central purpose of the forum non conveniens doctrine, from which § 1404(a) derives,
is to ensure that a civil trial will be convenient. Atlantic Marine, 134 S.Ct. at 581; Cincinnati
Ins., 676 F.Supp.2d at 632. A proceeding to confirm an arbitration award, however, is another
matter. It has been described by numerous courts within the Sixth Circuit as a “summary
proceeding.”4 A district court’s review of the arbitrator’s decision is “one of the narrowest
standards of judicial review in all of American jurisprudence.” Stonebridge Equity v. China
Auto. Sys., Inc., 520 Fed.Appx. 331, 336 (6th Cir. 2013) (quoting Lattimer-Stevens Co. v. United
Steelworkers, Dist. 27, Sub-Dist. 5, 913 F.2d 1166, 1169 (6th Cir. 1990)). “It does not extend to
reviewing arguments over contract interpretation that the arbitrators have decided. So long as
the arbitrators’ conclusions do not ‘fly in the face of clearly established legal precedent,’ they
stand.” Id. (quoting Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Jaros, 70 F.3d 418, 421 (6th
Cir. 1995)). The review is “‘strikingly deferential,’ and courts review ‘only to determine
whether the Arbitrator was arguably construing or applying the contract and acting within the
scope of his authority.’” Braganza Assoc., 2011 WL 4565466, at *1 (quoting Bixby Med.Ctr.,
4
See, e.g., Sheet Metal Employers Indus. Promotion Fund v. Absolute Balancing Co., Inc.,
No. 12-10752, 2013 WL 362893, at *2 (E.D. Mich. Jan. 30, 2013); Braganza Assoc., P.C. v.
Houck, No. 10-00049, 2011 WL 4565466, at *1 (W.D. Tenn. Sep. 29, 2011); Nationwide Mut. Ins.
Co v. Randall & Quilter Reinsurance Co., No. C2-07-120, 2008 WL 207854, at *3 (S.D. Ohio Jan.
24, 2008).
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Inc. v. Mich. Nurses Ass’n, 142 Fed.Appx. 843, 845 (6th Cir. 2005)). “So long as the Arbitrator
does not ‘commit fraud, have a conflict of interest, or otherwise act dishonestly’ a court must
uphold the arbitration award.” Id. (quoting Mich. Family Res., Inc. v. SEIU Local 517M, 475
F.3d 746, 753 (6th Cir. 2007)). See also Wachovia Securities, Inc. v. Gangale, 125 Fed.Appx.
671, 676-77 (6th Cir. 2005) (“The parties have contracted for a decision by arbitrators, not the
Court.”). In sum, because this is a summary proceeding, all of the private-interest factors
relating to the convenience of a trial do not apply.
Finally, a plaintiff’s choice of forum is generally entitled to substantial weight. Piper
Aircraft, 454 U.S. at 255-56. However, when the chosen forum is not the plaintiff’s residence,
as here, the choice is given less deference. Id. This is not to say, as Bradford repeatedly
contends, that the foreign plaintiff’s choice of forum warrants no deference at all. See Iragorri v.
United Techs. Corp, 274 F.3d 65, 71 (2d Cir. 2001) (en banc) (“[t]he degree of deference to be
given to a plaintiff’s choice of forum moves on a sliding scale depending on several relevant
considerations.”) The more it appears that a foreign plaintiff’s choice of forum has been dictated
by reasons that the law will recognize as valid, the greater the deference that will be given to the
plaintiff’s forum choice. Id. at 71-72. On the other hand, if it appears the foreign plaintiff is
motivated by invalid reasons such as forum-shopping, its choice of forum deserves less
deference. Id. at 72. There is no allegation, let alone suggestion, that Conteyor has chosen this
venue to confirm its arbitration award for any invalid purpose.
On balance, the Court concludes that the factors here are pretty evenly weighted.
Although Bradford intends to file a motion to vacate the arbitration award, it is nonetheless a fact
that the Court’s review of the arbitration decision is a summary proceeding. Thus, all the venue-
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transferring factors concerned with conducting discovery and a civil trial become markedly less
relevant. And while the Western District of Michigan may be more convenient to Bradford, it is
less convenient to Conteyor. As previously noted, merely shifting the inconvenience from
Conteyor to Bradford is insufficient to carry Bradford’s burden. Choon’s Design,, 2013 WL
5913691, at *2 ; McGadgon, 2005 WL 3879037, at *2. Because the arbitration proceeding
occurred here by agreement of the parties, the arbitration award was made here, venue is proper
here, confirmation of the arbitration award is a summary proceeding, the Court is capable of
analyzing Michigan law, and this district is a more convenient forum for Conteyor which filed
the instant case, the Court concludes that Bradford has failed to carry its burden of showing that
transfer is appropriate under § 1404(a).
III.
For all these reasons, Defendant Bradford Company’s Motion to Dismiss the Complaint
for Improper Venue or Alternatively to Transfer the Case (Doc #: 10) is DENIED.
IT IS SO ORDERED.
/s/ Dan A. Polster January 13, 2014
Dan Aaron Polster
United States District Judge
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