Yummy Yogurt Indy LLC et al v Orange Leaf Licensing LLC et al
Filing
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ORDER granting Defendants' 8 Motion to Transfer Case. Clerk is ordered to transfer this case to the Western District of Oklahoma. Signed by Judge Richard L. Young on 3/18/2015. (TMD) [Transferred from Indiana Southern on 3/18/2015.]
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
YUMMY YOGURT INDY, LLC a/k/a
RANGE LEAF INDY 1, LLC, d/b/a
ORANGE LEAF OF BLUFF ROAD, d/b/a
ORANGE LEAF OF MASS AVENUE,
d/b/a ORANGE LEAF OF EMERSON,
d/b/a ORANGE LEAF OF THE AVENUE,
d/b/a ORANGE LEAF OF BROAD
RIPPLE, d/b/a ORANGE LEAF OF
ZIONSVILLE;
YUMMY YOGURT MUDGA, LLC, d/b/a
ORANGE LEAF OF GROVETOWN,
d/b/a ORANGE LEAF OF COLUMBUS,
d/b/a ORANGE LEAF OF
INDIANAPOLIS, d/b/a ORANGE LEAF
OF TERRE HAUTE;
CHINTU PATEL d/b/a
ORANGE LEAF OF PLAINFIELD;
ADITI 3 YUMMY YOGURT, LLC a/k/a
ADITI 3 ORANGE LEAF, LLC, d/b/a
ORANGE LEAF OF SHELBYVILLE;
S&A RESTAURANT IV, LLC d/b/a
ORANGE LEAF OF FRANKLIN;
YUMMY YOGURT MUDFL, LLC d/b/a
ORANGE LEAF OF BOCA RATON,
d/b/a ORANGE LEAF OF DELRAY
BEACH, d/b/a ORANGE LEAF OF LAKE
MARY, d/b/a ORANGE LEAF OF
MELBOURNE, d/b/a ORANGE LEAF OF
NAPLES, d/b/a ORANGE LEAF OF
OCOEE, d/b/a ORANGE LEAF OF
STUART, d/b/a ORANGE LEAF OF
ALAMONTE SPRINGS, d/b/a ORANGE
LEAF OF APOPKA, d/b/a ORANGE
LEAF OF JACKSONVILLE BEACH,
d/b/a ORANGE LEAF OF
JACKSONVILLE, d/b/a ORANGE LEAF
OF MARCO ISLAND, d/b/a ORANGE
LEAF OF MIRAMAR BEACH, d/b/a
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1:14-cv-01800-RLY-TAB
ORANGE LEAF OF PORT ORANGE,
d/b/a ORANGE LEAF OF TAMPA;
YUMMY YOGURT MUDIL, LLC d/b/a
ORANGE LEAF OF CHICAGO, d/b/a
ORANGE LEAF OF DEERFIELD, d/b/a
ORANGE LEAF OF ELK GROVE, d/b/a
ORANGE LEAF OF HOFFMAN
ESTATES, d/b/a ORANGE LEAF OF LA
GRANGE, d/b/a ORANGE LEAF OF
ORLAND PARK, d/b/a ORANGE LEAF
OF WINNETKA, d/b/a ORANGE LEAF
OF WOODRIDGE;
YUMMY YOGURT MUDTN, LLC d/b/a
ORANGE LEAF OF FARRAGUTT, d/b/a
ORANGE LEAF OF KNOXVILLE, d/b/a
ORANGE LEAF OF CEDAR BLUFF,
d/b/a ORANGE LEAF OF
COLLIERVILLE, d/b/a ORANGE LEAF
OF JOHNSON CITY, d/b/a
ORANGE LEAF OF OOLTEWAH;
YUMMY YOGURT TDATN LLC a/k/a
ORANGE LEAF TN LLC, d/b/a
TDATN;
YUMMY YOGURT TDAIL, LLC;
YUMMY YOGURT TDAGA, LLC, and
YUMMY YOGURT TDAFL LLC,
Plaintiffs,
vs.
ORANGE LEAF LICENSING, LLC,
ORANGE LEAF HOLDINGS, LLC,
OT HOLDINGS, LLC,
OT HOLDINGS NORMAN, LLC,
OT HOLDINGS LAWTON, LLC,
OT HOLDINGS WICHITA FALLS, LLC,
OT HOLDINGS TYLER, LLC,
OT HOLDINGS LITTLE ROCK, LLC,
OL SHREVEPORT HOLDINGS, LLC,
OL ADDISON HOLDINGS, LLC,
OL MINZER HOLDINGS, LLC,
OL AUSTIN, LLC,
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OL BOSSIER CITY HOLDINGS, LLC,
OL KENWOOD HOLDINGS, LLC, and
OL COLERAIN HOLDINGS, LLC,
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Defendants.
ENTRY ON DEFENDANTS’ MOTION TO TRANSFER
This lawsuit arises from numerous franchise agreements entered into by Plaintiffs
with Defendant, Orange Leaf Holdings, LLC, to open and operate Orange Leaf Frozen
Yogurt stores in various locations in Indiana, Florida, Illinois, Tennessee, and Georgia.
The Plaintiffs constitute several limited liability companies that were created to own the
subject Orange Leaf stores and an individual, Chintu Patel, who, individually and through
a central holding company, exercised exclusive control and authority over, and otherwise
generally acted as the managing member of all the LLC Plaintiffs. The LLC Plaintiffs
and Patel executed various agreements with Orange Leaf, including Franchise
Agreements, Multi-Unit Development Agreements (“MUDs”), and Territorial
Development Agreements (“TDAs”) (collectively “Agreements”), setting forth the terms
and conditions of their business relationship. In addition, Patel executed numerous
personal guarantees of the Franchise Agreements which made him individually obligated
to perform and comply with the terms and conditions of the Franchise Agreements.
All of the Agreements have forum selection, jurisdiction, and choice-of-law
clauses which, Defendants contend, require that any lawsuit arising out of or related to
the Agreements be filed in a court in Oklahoma County, Oklahoma. They therefore
move to transfer this case to the United States District Court for the Western District of
Oklahoma. For the reasons set forth below, the court GRANTS the motion.
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I.
The Forum Selection Clauses
The 43 Franchise Agreements executed by the various LLC Plaintiffs contain
identical forum selection language. They state in pertinent part:
You acknowledge that this Agreement was accepted in the State of
Oklahoma . . . . [T]his Agreement will be governed, to the extent
permissible, by the laws of the State of Oklahoma without regard to
principles of conflicts of law . . . . We may institute any action arising out
of or relating to this Agreement in any state or federal court in the state of
Oklahoma, and you and each guarantor of this agreement irrevocably
submits to the jurisdiction of these courts and waive any objection to the
application of Oklahoma law or to the jurisdiction or venue in these
Oklahoma Courts. If you institute any action arising out of or relating to
this Agreement, that action must be brought in a Court located in the
County of Oklahoma, Oklahoma, unless that Court will not accept
jurisdiction over the case.
(Filing No. 9-1, representative Franchise Agreement, Section XVII(F) at 24). In addition,
all 43 Franchise Agreements have an executed personal guarantee attached thereto. The
personal guarantees adopt and incorporate the venue and jurisdiction agreements set forth
in the Franchise Agreements and all state:
The undersigned Guarantors hereby consent to the applicability of the
venue and jurisdiction provision in the Agreement to this Guaranty and
Assumption of Obligations.
(Id. at 31). All 43 guarantees are signed by Mr. Patel.
In addition to the Franchise Agreement, the MUDs and TDAs also contain forum
selection clauses that are practically identical to the language of the Franchise
Agreements. The MUDs state in pertinent part:
If you institute any action arising out of or relating to this Agreement, such
suit must be brought in the Superior Court of the County of Oklahoma,
Oklahoma, unless said court will not accept jurisdiction over the case.
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(Filing No. 9-2, representative Orange Leaf Holdings Multi-Unit Development
Agreement, Section VIII G at 6). Similarly, the TDAs state:
If Territory Developer institutes any action arising out of or relating to this
Agreement, that action must be brought in the state or federal courts located
in the State of Oklahoma, County of Oklahoma, and Territory Developer
irrevocably submits to the jurisdiction of such courts and waives any
objection Territory Developer may have either to the jurisdiction or venue
of such court.
(See Filing No. 9-3, representative Orange Leaf Holdings Territory Development
Agreement, Section 13.02 at 15).
II.
Discussion
In Atlantic Marine Construction Company, Inc. v. United States District Court for
the Western District of Texas, the Supreme Court found that a valid forum selection
clause may be enforced through a motion to transfer under 28 U.S.C. § 1404(a). 134 S.
Ct. 568, 579 (2013). The Court further found that “[w]hen the parties have agreed to a
valid forum selection clause, a district court should ordinarily transfer the case to the
forum specified in that clause.” Id. at 581. “Only under extraordinary circumstances
unrelated to the convenience of the parties should a § 1404(a) motion be denied.” Id.
The Atlantic Marine Court noted that the presence of a valid forum selection
clause changes the district court’s § 1404(a) analysis in three ways, two of which are
relevant to this motion. First, “as the party defying the forum selection clause, the
plaintiff bears the burden of establishing that transfer to the forum for which the parties
bargained is unwarranted.” Id. Second, the court may not consider arguments about the
parties’ private interests – including whether the selected forum is inconvenient for them
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or their witnesses. Instead, the court “must deem the private-interest factors to weigh
entirely in favor of the preselected forum.” Id. at 582. Although a district court may
consider arguments about the public interest, the Court observed that those arguments
rarely defeat a motion for transfer. Id. Thus, “forum-selection clauses should control
except in unusual cases.” Id.
Plaintiffs argue that Atlantic Marine does not control because Atlantic Marine was
originally filed in federal court, whereas Plaintiff’s case was removed from state court to
federal court. According to Plaintiffs, “this distinction is crucial” because “Atlantic
Marine exclusively examines circumstances where a Plaintiff intentionally venues a case
in a particular Federal Court despite the existence of a valid forum selection clause
favoring a foreign jurisdiction.” Here, however, “Defendants (and not the Plaintiffs)
voluntarily venued this litigation before this Court by removing this case from Johnson
County State Court.” Plaintiffs conclude that “Atlantic Marine does not govern venue of
an action where transfer is sought after a case has been properly venued under § 1441.” 1
Plaintiffs therefore urge the court to analyze the present motion using the familiar factors
of § 1404 – the convenience of the parties and witnesses, the interests of justice, etc. – as
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Section 1441(a) of Title 28 governs where a case may be removed from state to federal court.
“[A]ny civil action brought in a State court of which the district courts have original jurisdiction,
may be removed by a defendant . . . to the district court of the United States for the district and
division embracing the place where such action is pending.” Thus, in this case, Defendants
could not remove this case to the Western District of Oklahoma; they had to remove the case to
this court. Although one does not normally think of the removal statute as a venue statute, it has
been interpreted as such. See Allied Van Lines, Inc. v. Aaron Transfer and Storage, Inc., 200
F.Supp.2d 941, 945 (N.D. Ill. 2002) (citing Polizzi v. Cowles Magazines, Inc., 345 U.S. 663, 665
(1953) (“But even on the question of venue, § 1391 has no application to this case because this is
a removed action. The venue of removed actions is governed by 28 U.S.C. § 1441(a)”).
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though the forum selection clause did not exist. Plaintiffs’ argument is misplaced. The
Atlantic Marine Court made no distinction between venue under § 1391 or § 1441. The
point of Atlantic Marine was that, notwithstanding an action’s proper venue, the forumselection clause should nevertheless be enforced pursuant to § 1404(a).
Next, Plaintiffs argue that “despite the existence of a forum selection clause and
despite the fact that Oklahoma may also be a proper place of venue, venue in Indiana was
automatically deemed proper as a matter of law, pursuant to § 1441(a), the moment the
matter was removed from State Court to Federal Court.” Again, Defendants do not
contend that venue in the Southern District of Indiana is improper; they simply seek to
enforce the forum selection clauses contained in the contract which give rise to the
present cause of action pursuant to § 1404(a).
Plaintiffs also attack the forum-selection clauses themselves, arguing that the
MUD and Franchise Agreements do not identify a federal court. The Franchise
Agreements provide that an action must be brought “in the County of Oklahoma,
Oklahoma”; the TDA Agreements provide that an action must be brought “in the state or
federal courts located in the State of Oklahoma, County of Oklahoma”; and the MUD
Agreements provide that “such suit must be brought in the Superior Court of the County
of Oklahoma, Oklahoma, unless said court will not accept jurisdiction over the case.”
Defendants represent that the MUD contains a scrivener’s error, as Oklahoma Courts are
divided into districts; there is no Superior Court of Oklahoma County. The court takes
judicial notice of that fact. See www.oscn.net/applications/oscn/start.asp?viewType=
COURTS.
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Reading the Agreements as a whole, the court finds the parties intended to select
the courts of Oklahoma County, Oklahoma, as the appropriate forums for any lawsuits
arising from the Agreements. This would include both state and federal courts housed in
Oklahoma County. But even if the court were to interpret the MUD Agreements as
limiting any action to a state district court in Oklahoma, the claims in the MUD
Agreements would necessarily arise from the Agreements at issue, allowing the Western
District of Oklahoma to have supplemental jurisdiction over those claims. In sum, the
court finds that the relief requested by Defendants’ transfer motion is not precluded by
terms of the forum-selection clauses set forth in the subject Agreements.
Plaintiffs further argue the subject forum selection clauses are unenforceable under
the Indiana Franchise Act because they “limit litigation to Oklahoma.” Ind. Code § 23-22.7-1(10) (“It is unlawful for any franchise agreement” to contain a provision “[l]imiting
litigation brought for breach of the agreement in any manner whatsoever”). Plaintiffs’
argument is misplaced. That provision is meant to prohibit contractual choice-of-law
provisions that limit a franchisee’s substantive rights. See Wright-Moore Corp. v. Ricoh
Corp., 908 F.2d 128, 132 (7th Cir. 1990) (Indiana franchisee could not waive statutory
rights through agreement to apply New York law); Hengel, Inc. v. Hot ‘N Now, Inc., 825
F.Supp. 1311, 1314-15 (N.D. Ill. 1993) (characterizing § 23-2-2.7-1(10) as “contracting
out of the protections of Indiana franchise law”). Enforcement of the forum selection
clause will not “limit litigation” or otherwise impinge Plaintiffs’ rights under the Act.
Plaintiffs will have the same opportunity to litigate the merits of their case in Oklahoma
as they currently have here.
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Finally, Plaintiffs argue that Defendants’ evidence in support of their motion is
inadmissible. Specifically, they argue that each of the referenced Agreements are
“unverified” and not attached to the motion to transfer, as required by Rule 47(d) of the
Federal Rules of Civil Procedure. Rule 47, entitled “Selecting Jurors,” does not contain a
subsection (d) and is otherwise inapplicable to the issues raised by Plaintiff. Rule 47(d)
of the Federal Rules of Criminal Procedure does address motions and affidavits;
however, this is not a criminal case. In any event, the Agreements are specifically
referenced in Plaintiffs’ Complaint. Thus, they are at issue and are admissible.
In conclusion, “as the party acting in violation of the forum-selection clause,
[Plaintiffs] b[ear] the burden of showing that the public-interest factors overwhelmingly
disfavor a transfer.” Atlantic Marine, 134 S.Ct. at 583. Plaintiffs failed to carry that
burden. Accordingly, this case must be transferred to the Western District of Oklahoma
in accordance with the parties’ Agreements.
III.
Conclusion
Plaintiffs are bound by the forum-selection clauses set forth in the Franchise,
MUD and TDA Agreements at issue. Therefore, Defendants’ Motion to Transfer (Filing
No. 8) must be GRANTED. The Clerk is ORDERED to transfer this case to the
Western District of Oklahoma.
SO ORDERED this 18th day of March 2015.
_________________________________
RICHARD L. YOUNG, CHIEF JUDGE
United States District Court
Southern District of Indiana
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Distributed Electronically to Registered Counsel of Record.
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