Black Hills Truck & Trailer, Inc. v. MAC Trailer Manufacturing, Inc.
ORDER denying 13 Motion for Reconsideration and granting certification for interlocutory appeal. Signed by U.S. District Judge Karen E. Schreier on 11/6/2014. (KC)
UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
BLACK HILLS TRUCK & TRAILER, INC.,
MAC TRAILER MANUFACTURING,
ORDER DENYING MOTION TO
RECONSIDER AND GRANTING
Defendant, MAC Trailer Manufacturing, Inc., moved the court to dismiss
the complaint in this matter for improper venue or alternatively to transfer this
case to the Northern District of Ohio. Plaintiff, Black Hills Truck & Trailer, Inc.,
opposed that motion. On April 14, 2014, the court entered an order denying
the alternative motions. MAC now moves the court to reconsider its ruling, or
alternatively to certify an interlocutory appeal. MAC bases its argument on the
Supreme Court’s decision in Atlantic Marine Constr. Co. v. U.S. Dist. Ct. for the
W. Dist. of Tex., 134 S. Ct. 568 (2013). For the following reasons, MAC’s motion
to reconsider is denied, and MAC’s motion for certification for interlocutory
appeal is granted.
Black Hills, a South Dakota corporation and a wholly owned subsidiary
of North American Truck & Trailer, Inc., is headquartered in Sioux Falls, South
Dakota. MAC, an Ohio corporation, manufactures commercial trucks and
vehicles. In late 2012, Black Hills and MAC entered into a distributor selling
agreement that granted Black Hills franchisee and dealer rights for the sale of
certain MAC vehicles within an area of responsibility, which included seven
counties in South Dakota and twelve counties in Nebraska. The agreement
included a choice of law provision and a forum-selection clause, which read as
17. [Black Hills] acknowledges and agrees that the parties entered
into this Agreement in Alliance, Ohio. This Agreement and
performance hereunder shall be governed by, and construed in
accordance with, as to all matters, including, without limitation,
validity, construction, applicability, and effect, the laws of the State
of Ohio, U.S.A. Any and all proceedings relating to the subject
matter hereof shall be maintained in the local courts of Stark
County, Ohio, or the federal district court sitting in the Northern
District of Ohio, Akron, Ohio, which court shall have exclusive
jurisdiction for such purpose. [Black Hills] waives any defense of
lack of personal jurisdiction in these courts.
Docket 1-1 at 16. The agreement also included notice periods for modification
and termination of the agreement. Id. at 15.
In the summer of 2013, a dispute arose regarding the territories in which
Black Hills was allowed to sell MAC products. Black Hills filed this suit in state
court in South Dakota, alleging state-law claims and a violation of the
Robinson-Patman Act, 15 U.S.C. § 13 et seq. Docket 1-1 at 11. After removing
the action to federal court, MAC sought to enforce the forum-selection clause
by moving to dismiss the complaint for improper venue under Rule 12(b)(3) or,
alternatively, to transfer the case pursuant to 28 U.S.C. § 1404(a).
Following the submission of the briefs on the motion, the Supreme Court
handed down its decision in Atlantic Marine. That decision clarified the proper
procedural mechanism for enforcing a forum-selection clause. Atlantic Marine,
134 S. Ct. at 577-80. Atlantic Marine also emphasized that a valid forumselection clause should be given controlling weight in most situations, and the
Supreme Court provided an altered test to apply in those circumstances. Id. at
This court found that the forum-selection clause between MAC and Black
Hills was not enforceable. Docket 9. The court applied federal law, relying in
particular on Union Electric Co. v. Energy Insurance Mutual Ltd., 689 F.3d 968
(8th Cir. 2012), and M/S Bremen v. Zapata Off-Shore Co., 407 U.S.1 (1972).
Additionally, the court examined SDCL 32-6B-49.1, which prohibits forumselection clauses in vehicle franchise agreements.1 Ultimately, the court found
that the forum-selection clause contravened a strong public policy of the state
of South Dakota and was therefore unenforceable under Eighth Circuit
precedent. Because the forum-selection clause was unenforceable, the court
engaged in a standard § 1404(a) analysis and determined that transfer was not
appropriate under the facts of this case.
STANDARD OF REVIEW
The Federal Rules of Civil Procedure generally do not recognize uniform
standards for a court to analyze a motion to reconsider. In this case, MAC did
SDCL 32-6B-49.1 reads in relevant part: “No franchise agreement may
include any term or condition in a franchise that . . . (2) [s]pecifies the
jurisdictions, venues or tribunals in which disputes arising with respect to the
franchise, lease or agreement shall or may not be submitted for resolution or
otherwise prevents a franchisee from bringing an action in a particular forum
otherwise available under the law . . . .”
not bring its motion pursuant to a particular rule. Federal Rule of Civil
Procedure 54(b) provides that “any order or other decision . . . that adjudicates
fewer than all the claims or the rights and liabilities of fewer than all the
parties . . . may be revised at any time before the entry of a judgment
adjudicating all the claims and all the parties’ rights and liabilities.” Under
Rule 54(b),2 district courts have “the inherent power to reconsider and modify
an interlocutory order any time prior to the entry of judgment.” K.C. 1986 Ltd.
P’ship v. Reade Mfg., 472 F.3d 1009, 1117 (8th Cir. 2007) (quotation and
citation omitted). While the specific standard for a motion made under Rule
54(b) is unclear, generally courts have found the standard “to be less exacting
than would be a motion under Federal Rule of Procedure 59(e), which in turn is
less exacting than the standards enunciated in Federal Rule of Procedure
60(b).” Colombe v. Rosebud Sioux Tribe, 835 F. Supp. 2d 736, 750 (D.S.D.
2011) (quotation and citation omitted); see also Doctor John’s, Inc. v. City of
Sioux City, Ia., 438 F. Supp. 2d 1005, 1027 (N.D. Iowa 2006).
Although the court’s reconsideration of interlocutory orders might be less
rigorous than that of final orders for Rule 59(e) or 60(b), courts “should look to
the kinds of consideration under those rules for guidance.” Doctor John’s, 438
F. Supp. 2d at 1027 (quotation and citation omitted). Like other motions to
reconsider, “[i]t is generally held that a court may amend or reconsider any
The court assumes without deciding that this motion should be
construed under Rule 54(b) because the court’s order on the motion to transfer
is not a final order. The court’s result would be the same regardless of whether
it applied Rule 54(b), Rule 59(e), or Rule 60(b).
ruling under Rule 54(b) to correct any clearly or manifestly erroneous findings
of facts or conclusions of law.” Jones v. Casey’s Gen. Stores, 551 F. Supp. 2d
848, 854 (S.D. Iowa 2008) (quotations and citation omitted).
Transfer Under 28 U.S.C. § 1404(a)
MAC contends that Union Electric is no longer good law following the
Atlantic Marine decision. Therefore, MAC argues, the court is bound to apply
the procedure under § 1404(a). MAC couples that procedure with the holding in
Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22 (1988), which applied
federal rather than state rules to venue and stated that the correct focus is
whether § 1404(a) controls the transfer, rather than whether Bremen would
enforce the forum-selection clause. According to MAC, the combination of
Atlantic Marine and Stewart precludes the court from applying SDCL 32-6B49.1.
Procedure for Enforcing Forum-Selection Clause
In Atlantic Marine, the Supreme Court held that a forum-selection clause
has no bearing on whether venue in a particular federal district is “wrong” or
“improper” because Congress has directly spoken on the issue of venue.
Atlantic Marine, 134 S. Ct. at 577 (“Whether the parties entered into a contract
containing a forum-selection clause has no bearing on whether a case falls into
one of the categories of cases listed in [28 U.S.C.] § 1391(b).”). Therefore, a
forum-selection clause may not be enforced under Rule 12(b)(3) or 28 U.S.C.
§ 1406(a). Id. at 579. Instead, a forum-selection clause pointing to a federal
forum should be enforced under § 1404(a), and a forum-selection clause
pointing to a nonfederal forum should be enforced through the doctrine of
forum non conveniens. Id. at 580 (characterizing § 1404(a) as “merely a
codification of the doctrine of forum non conveniens for the subset of cases in
which the transferee forum is within the federal court system”). The Supreme
Court emphasized that “ ‘a valid forum-selection clause [should be] given
controlling weight in all but the most exceptional cases.’ ” Id. (quoting Stewart,
487 U.S. at 33 (Kennedy, J., concurring)). Importantly, the Supreme Court’s
discussion on these points “presuppose[d] a contractually valid forum-selection
clause.” Id. at 581 n.5.
In Stewart, the Eleventh Circuit sitting en banc applied Bremen and
determined that a forum-selection clause was enforceable as a matter of federal
law even though the law of the forum state disfavored forum-selection clauses.
Stewart, 487 U.S. at 25. The Supreme Court reached the same conclusion
using slightly different reasoning. Id. Rather than focusing on whether the
forum-selection clause was valid, the Supreme Court framed the question as
“whether § 1404(a) itself controls respondent’s request to give effect to the
parties’ contractual choice of venue . . . .” Id. at 29. Because Congress had
provided clear instructions on considering a motion to transfer, “[t]he forumselection clause . . . should receive neither dispositive consideration (as
respondent might have it) nor no consideration (as Alabama law might have it),
but rather the consideration for which Congress provided in § 1404(a).” Id. at
As this court stated in its order on April 14, 2014, “ ‘[w]hether venue is
‘wrong’ or ‘improper’ depends exclusively on whether the court in which the
case was brought satisfies the requirements of federal venue laws, and those
provisions say nothing about a forum-selection clause.’ ” Docket 9 at 14
(quoting Atlantic Marine, 134 S. Ct. at 577). The court then held that venue was
appropriate in this court under 28 U.S.C. 1441(a), so dismissal under Rule
12(b)(3) was not appropriate. Id. Neither party disputes that venue is proper in
this court pursuant to the federal venue statutes. Accordingly, the court did
not err in refusing to dismiss based on improper venue and in analyzing this
motion under § 1404(a).
Validity of the Forum-Selection Clause
Before a court can determine whether to transfer a case under § 1404(a),
the court must resolve the threshold question of whether the forum-selection
clause is valid. See, e.g., Vulcan Cap. Corp. v. Miller Energy Resources, Inc., No.
13-cv-8751 (AJN), 2014 WL 4384159, at *2 (S.D.N.Y. Sept. 4, 2014) (“When
assessing a motion to transfer on the basis of a forum-selection clause, a court
must first determine whether the forum-selection clause is valid and
enforceable.”); Rolfe v. Network Funding LP, No. 14-cv-9-bbc, 2014 WL
2006756, at *1 (W.D. Wis. May 16, 2014) (“The threshold question is whether
the forum selection clause in the parties’ agreement is valid, which is a
separate question from the analysis under 28 U.S.C. § 1404 or the forum non
conveniens doctrine.”); see also Atlantic Marine, 134 S. Ct. at 581-82 & n.5
(applying a specific framework for situations involving a valid forum-selection
clause and presupposing the existence of a valid forum-selection clause). If a
valid forum-selection clause exists, a court considering a motion to transfer
must alter its usual § 1404(a) analysis in three ways: the plaintiff’s choice of
forum merits no weight, the court should not consider arguments about the
parties’ private interests, and the transfer will not carry the original venue’s
choice-of-law rules. Atlantic Marine, 134 S. Ct. at 581-82. “In the typical case
not involving a forum-selection clause, a district court considering a § 1404(a)
motion . . . must evaluate both the convenience of the parties and various
public interest considerations.” Id. at 581.
Neither Atlantic Marine nor Stewart identify the test a court should apply
to determine whether the forum-selection clause in a contract is valid. See
Martinez v. Bloomberg LP, 740 F.3d 211, 219, 227-28 (2d Cir. 2014) (stating
that “Atlantic Marine did not address the extent to which the ‘interest of justice’
test for invalidating a forum selection clause pointing to another federal district
court resembles the test developed under Bremen for invalidating a forum
selection clause pointing to a nonfederal forum” and then applying Bremen to
determine the validity of the forum-selection clause). MAC contends that after
Atlantic Marine and Stewart, the court may only apply § 1404(a) factors and
may not apply Bremen. See Docket 19 at 2 n.2. Bremen, however, has not been
overruled by the Supreme Court. And it is unclear what test MAC believes the
court should apply to determine the validity of the forum-selection clause.
Furthermore, the § 1404(a) factors, to which MAC contends the court is
limited, do not contain a test for determining the validity of a forum-selection
clause, although there is some overlap between the elements of the Bremen test
and the elements of the § 1404(a) test.
Following Atlantic Marine, the courts have taken different approaches
when examining the issue of the validity of a forum-selection clause. The
majority of courts have applied Bremen and its progeny to determine whether
to give controlling weight to a forum-selection clause and they have not
distinguished between validity and enforceability of the clause.3 Two courts
relied only on contract principles without applying the familiar Bremen
See Martinez, 740 F.3d at 227-28 (applying the Second Circuit’s version
of the Bremen test to determine the validity of a forum-selection clause); Red
Barn Motors, Inc. v. Nextgear Capital, Inc., No. 13-00778-BAJ-RLB, 2014 WL
4986674, at *2 (M.D. La. Sept. 29, 2014) (applying Bremen factors before
reaching Atlantic Marine’s modified analysis); Bayol v. Zipcar, Inc., No. 14-cv02483-TEH, 2014 WL 4793935, at *2, *4-5 (N.D. Cal. Sept. 25, 2014) (holding
that a court must apply Bremen to determine whether a forum-selection clause
is valid before engaging in Atlantic Marine’s calculus, and invalidating a forumselection clause based on California public policy); Vulcan, 2014 WL 4384159
at *2-3 (applying Bremen and finding that a forum-selection clause was
unenforceable); Tsai v. Karlik, No. 4:14-CV-244 (CEJ), 2014 WL 3687201, at *2
(E.D. Mo. July 24, 2014) (recognizing the applicability of the Union Electric
decision and Bremen’s public policy element to a determination of the validity
of a forum-selection clause post-Atlantic Marine); Loeffelholz v. Ascension
Health, Inc., No. 3:13-CV-1495-J-25JRK, 2014 WL 3817289, at *2 (M.D. Fla.
June 25, 2014) (recognizing the applicability of the Eleventh Circuit’s Bremen
test post-Atlantic Marine); Saladworks, LLC v. Sottosanto Salads, LLC, No. 133764, 2014 WL 2862241, at *2 (E.D. Pa. June 24, 2014) (examining public
policy of the forum state to determine whether a forum-selection clause was
valid for purposes of Atlantic Marine); Trevino v. Cooley Constructors, Inc., No.
5:13-CV-00924-DAE, 2014 WL 2611823, at *1-2 (W.D. Tex. June 9, 2014)
(same); Turfworthy, LLC v. Dr. Karl Wetekam & Co., No 1:13CV390, 2014 WL
2739280, at *8-11 (M.D.N.C. June 17, 2014) (same); TempWorks Software, Inc.,
v. Careers USA, Inc., Civil No. 13-2750 (DSD/SER), 2014 WL 2117344, at *3-4
(D. Minn. May 21, 2014) (same); Brenner v. Nat’l Outdoor Leadership Sch., Civil
No. 13-02908(DSD/JJG), 2014 WL 2069364, at *4 (D. Minn. May 19, 2014)
(same); Rolfe, 2014 WL 2006756 at *2-3 (citing Bremen and examining the
public policy of Wisconsin to determine the validity of a forum-selection
analysis.4 One court acknowledged that Bremen still applied but concluded
that Atlantic Marine precluded reliance on private interests in determining
whether the forum-selection clause was enforceable.5
Bremen has been settled law for over forty years. Furthermore, Bremen
and Atlantic Marine stand for the same general principle: that a forum-selection
clause should be honored in most circumstances. Martinez, 740 F.3d at 219
(“Atlantic Marine, however, plainly reaffirms Bremen’s identification of a strong
federal public policy supporting the enforcement of forum selection clauses.”).
Atlantic Marine did not overrule Bremen, nor is the holding of Atlantic Marine
inconsistent with Bremen. If the court did not apply Bremen, it would be left
without a settled means of assessing the validity of the forum-selection clause.
Accordingly, the court agrees with the position taken by the majority of courts
and will apply Bremen, as interpreted by the Eighth Circuit, to determine
See Union Elec. Co. v. Energy Ins. Mut. Ltd., No 4:10-CV-1153 (CEJ),
2014 WL 4450467, at *4 (E.D. Mo. Sept. 10, 2014) (determining that the
forum-selection clause was valid based on contract law rather than Bremen
and therefore imposing the “extremely high bar of Atlantic Marine”); Guest
Assocs., Inc. v. Cyclone Aviation Prods., Ltd., No. 5:13-cv-01667-JHE, 2014 WL
2973152, at *2 (N.D. Ala. June 30, 2014) (distinguishing between validity of a
forum-selection clause, which is based on reasons such as fraud or
overreaching under contract law, and enforceability of a forum-selection clause
because it is unreasonable or unjust under Bremen).
See Monastiero v. appMobi, Inc., No. C 13-05711 SI, 2014 WL 1991564,
at *3 (N.D. Cal. May 15, 2014) (reconsidering whether a forum-selection clause
was enforceable without considering private interests because Atlantic Marine
prohibited such considerations).
- 10 -
whether a forum-selection clause is valid before deciding whether to transfer
under § 1404(a).6
In the Eighth Circuit, “Bremen provides the proper analysis for
determining the enforceability of a forum selection clause . . . .” Union Elec.,
689 F.3d at 974. Furthermore, “consideration of the public policy of the forum
state must be part of that analysis.” Id. After applying Bremen and analyzing
the public policy of South Dakota, this court previously found that the forumselection clause in this case was not enforceable. Docket 9 at 7-14. MAC does
not challenge this portion of the court’s determination, but rather contends
that Union Electric is no longer good law. Docket 19 at 2.
Union Electric emphasized that the motion before the Stewart court was a
motion to transfer under § 1404(a). Because there was no motion to dismiss
raised in Stewart, the Union Electric court declined to give Stewart an expansive
reading. Union Elec., 689 F.3d at 972. Apart from deciding procedural issues,
Union Electric addressed how courts should apply the Bremen standard, and it
specifically held that a district court applying Bremen must consider the public
policy of the forum state. Id. at 973-74. To the extent that Union Electric read
Stewart narrowly and allowed a forum-selection clause to be enforced by a
The court disagrees with MAC’s contention that Bremen does not apply
when determining the validity of a forum-selection clause for purposes of
Atlantic Marine. See Servewell Plumbing, LLC v. Federal Ins. Co., 439 F.3d 786,
791 (8th Cir. 2006) (“We are unconvinced that such a permissive venue statute
constitutes the kind of ‘strong public policy’ sufficient to invalidate a forum
selection clause under Bremen . . . .” (emphasis added)); 14D Charles Alan
Wright et al. Federal Practice and Procedure § 3803.1 (4th ed.) (“Assuming that
the [forum-selection] clause cannot be invalidated for any of the reasons
allowed for attack by M/S Bremen and Carnival Cruise . . . .” (emphasis added)).
- 11 -
motion under § 1406 or a Rule 12(b)(3) motion, that reading is no longer
tenable following Atlantic Marine. See Atlantic Marine, 134 S. Ct. at 580 (stating
that a forum-selection clause may not be enforced via a motion under § 1406
or Rule 12(b)(3)). But Atlantic Marine does not alter Union Electric’s directive
that in the Eighth Circuit, the validity of a forum-selection clause is evaluated
using the Bremen standard, and a court commits reversible error if it does not
examine the public policy of the forum state.
Similarly, Stewart did not address how a district court should apply the
Bremen factors. Instead, Stewart makes clear that federal law, not state law,
applies to a motion to transfer under 1404(a). But in situations where the court
should apply Bremen, Stewart does not alter that approach. Therefore, Stewart
does not undermine the applicability of Bremen and Union Electric to the
determination of the enforceability of a forum-selection clause.
In its April 14, 2014, order, this court first had to decide whether the
forum-selection clause involved in this case was enforceable because that
would determine whether the court applied the ordinary § 1404(a) analysis or
the altered analysis set forth in Atlantic Marine. The court applied Bremen and
followed Union Electric’s directive to consider the public policy of the forum
state and determined that the forum-selection clause was unenforceable.
After making the determination that the forum-selection clause in this
case was unenforceable, the court applied § 1404(a). Docket 9 at 15-17. After
weighing the factors laid out by Congress, the court determined that transfer
was inappropriate in this case. Such an analysis comports with Stewart’s
- 12 -
directive that Congress’s instructions in § 1404(a) are supreme and is
consistent with Atlantic Marine because the court applied the normal § 1404(a)
standards in the absence of an enforceable forum selection clause.7 Therefore,
the authority provided by MAC does not compel a different result, and the
motion to reconsider is denied.
MAC asks this court to certify its interlocutory order for immediate
appeal contending that it would not have adequate remedy at law for an
improper failure to transfer if it was required to wait until the appeal was
completed. Black Hills opposes the motion.
A district court may certify an interlocutory order for immediate appeal
by stating “that such order involves a controlling question of law as to which
there is substantial ground for difference of opinion and that an immediate
appeal from the order may materially advance the ultimate termination of the
litigation.” 28 U.S.C. § 1292(b). Here, this matter meets all three requirements.
Because the question is one of venue, the case would be resolved in its entirety
at least to the extent this court is involved. The questions involved are purely
questions of law. And as discussed previously, the courts have not reached a
consensus on the interplay between Atlantic Marine, Stewart, and Union
The core of MAC’s argument is that the court should have enforced the
forum-selection clause because this is not one of the extraordinary
circumstances mentioned in Atlantic Marine. But MAC overlooks the fact that
an unenforceable forum-selection clause does not carry the overwhelming
weight that the Supreme Court discussed in Atlantic Marine because the
Atlantic Marine decision assumed a situation in which there was an enforceable
forum-selection clause. See Atlantic Marine, 134 S. Ct. at 581 n.5.
- 13 -
Electric. As a result, the court grants MAC’s motion to certify this order for
immediate appeal because the order involves a controlling question of law as to
which there is substantial ground for difference of opinion and an immediate
appeal from the order would materially advance the ultimate termination of the
litigation. It is
ORDERED that MAC’s motion to reconsider (Docket 13) is denied.
IT IS FURTHER ORDERED that MAC’s motion to amend the court’s prior
order to include certification for interlocutory appeal (Docket 13) is granted.
Dated November 6, 2014.
BY THE COURT:
/s/ Karen E. Schreier
KAREN E. SCHREIER
UNITED STATES DISTRICT JUDGE
- 14 -
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?