Lewis & Clark Regional Water System, Inc. v. Carstensen Contracting, Inc.

Filing 42

OPINION AND ORDER denying 13 Motion to Transfer Venue. Signed by U.S. District Judge Roberto A. Lange on 9/11/2018. (JLS)

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA

SOUTHERN DIVISION

LEWIS & CLARK REGIONAL WATER

4:18-CV-04067-RAL

SYSTEM,INC.,
Plaintiff,
OPINION AND ORDER DENYING

vs.

MOTION TO TRANSFER VENUE

CARSTENSEN CONTRACTING,INC.,

Defendant/Third-Party Plaintiff,
vs.

AMERON WATER TRANSMISSION GROUP,
LLC,

Third-Party Defendant.

Plaintiff Lewis & Clark Regional Water System, Inc. (Lewis & Clark) sued
Defendant/Third-Party Plaintiff Carstensen Contracting, Inc. (Carstensen) in South Dakota state
court alleging breach ofcontract. Carstensen removed the case to this Court and filed a third-party
action against Third-Party Defendant Ameron Water Transmission Group, LLC (Ameron).
Ameron filed a Motion to Transfer Venue to the District of Minnesota under 28 U.S.C. § 1404(a),
Doc. 13, which Lewis & Clark opposed. Doc. 16. This Court held oral argument on the motion

on August 28, 2018,' at which time Carstensen joined with Lewis & Clark in opposing the motion.
Doc. 40. For the reasons stated below, Ameron's Motion to Transfer Venue is denied.

'Ameron filed a Rule 12(b)(2) Motion to Dismiss and supporting memorandum. Docs. 38-39, late on
August 27, 2018, arguing that there is no personal jurisdiction over Ameron in the District of South
Dakota. Briefing on that motion has not been completed, so this Opinion and Order does not address
that Motion to Dismiss.
1

I.

Facts Pertinent to Motion to Transfer^

Lewis & Clark's breach ofcontract action, commenced under South Dakota law by serving
a Summons on Carstensen on May 17, 2018, concerns part of a massive multistate treated water
pipeline system (the System) to bring potable water from the Missouri River to communities in
eastern South Dakota, southwest Minnesota, and northwest Iowa. Doc. 1 at 1; Doc. 10 at 7. The

System started in 2003, and, when complete, the System will span over 330 miles oftotal pipeline.
Doc. 17-1 at ^ 13. The System is funded by federal, state, and local monies. Doc. 17-1 at I 15.

The State of Minnesota has already funded $5.45 million to the System. Doc. 17-1 at ][ 15.
Lewis & Clark contracted with Carstensen to install approximately ten miles of pipeline

for the System, roughly between Magnolia and Adrian, Minnesota (the Project). Doc. 10 at Tf 6.
Specifically, the contract calls for Carstensen to install twenty-inch diameter steel pipe with a
polyurethane exterior coating exhibiting a minimum adhesion strength of 1,750 pounds per square
inch (psi) post-installation and 2,500 psi pre-installation. Doc. 1-1 at 5. The contract between
Lewis & Clark and Carstensen provides that the governing law will be "the state in which the
Project is located." Doc. 10-1 at^ 17.05.
To perform the contract with Lewis & Clark, Carstensen issued a Purchase Order to
Ameron to supply the pipes for the Project. Doc. 10-2. The Purchase Order contains detailed
specifications for the ordered pipes. Doc. 10-2. Additionally, the Purchase Order states that
"[Carstensen] and [Ameron] hereby submit to the nonexclusive jurisdiction of the United States

District Court for the Central District^ of Mirmesota." Doe. 10-2 at 117(emphasis omitted).

^ This Court makes no conclusive factual findings at this time and draws the facts from the complaint,
affidavits, and exhibits submitted to this point, as well as from admissions by counsel for the parties at
the August 28, 2018 hearing and uncontested information about travel and distance.

^ There is just one District of Minnesota, and no "Central District of Minnesota." The District of
Minnesota is organized into four divisions, but none ofthe divisions are known as the Central Division
2

The pipes supplied by Ameron and installed by Carstensen allegedly did not meet the

agreed to specifications, and Lewis & Clark believes that about nine ofthe ten miles of pipes must
be replaced. Doc. 16 at 2. On March 28, 2018, the Project engineer, Banner Associates, notified
Carstensen that the pipes were being rejected because ofdefective coating. Doc. 17-3. Carstensen

maintains that the alleged failure of the pipes to meet the coating specifications is due to
manufacturing problems in Mexico encountered by Ameron. Doc. 1-1 at 7.

On April 17, 2018, Carstensen received an email from Lewis & Clark that stated, in part:
Carstensen and AMERON have long said they will "make Lewis & Clark
whole ...." Be assured we will have no choice but to vigorously pursue every
legal avenue possible to ensure that happens .... At the end of the day, if this
must proceed to court, it will be a simple case from L&C's perspective: it is
undisputed L«feC did not get what it paid for and a local jury (including the
taxpayers who paid the original bill) will be eager to make sure L&C collects
every dime it is entitled to.
Doc. 10-3 at 3. Carstensen forwarded this email to Ameron, advising Ameron that "[Lewis &

Clark is] growing very impatient with us .... I[Ijook forward to Ameron[']s response ...." Doc.
10-3 at 2.

After receiving this email, Ameron, according to Lewis & Clark,"went dark for a month."

Doc. 16 at 7. On May 15, 2018, Carstensen received Ameron's draft Complaint for Declaratory
Relief against Carstensen, Lewis & Clark, Rustnot Corrosion Control Services, Inc.(Rustnot), and

William SpickelmLre (Spickelmire).'* Doc. 26 at 5; Doc. 11 at 1. Carstensen apparently advised
Lewis & Clark that Ameron was going to file suit.

of the District of Minnesota. Ameron at the hearing recognized that this provision of the contract
should be read as its consent to the nonexclusive jurisdiction ofthe District of Minnesota.
Rustnot, through its employee, Spickelmire, prepared portions ofthe contract and bidding documents
related to corrosion protection ofthe pipe for Lewis & Clark. Doc. 10 atf 12; Doc. 10-1 at 4. Rustnot
apparently is headquartered in Boise, Idaho.

On May 17, 2018, Lewis & Clark commenced this action in South Dakota state court by

serving Carstensen with a Summons.^ Doc. 1-1 at 1. On May 21, 2018, Lewis & Clark served
counsel for Carstensen with a copy of its Complaint alleging breach of contract. Doc. 1-1 at 2-4.
Lewis & Clark seeks to recover: (a) the expense to remove and replace the defective pipe; (h)

liquidated damages totaling $l,350/day from November 17, 2017, to the date the project is
substantially complete; and (c) consequential damages. Doc. 1-1 at

8-10. On May 22, 2018,

Ameron filed its declaratory judgment action in the United States District Court for the District of

Minnesota (Second Action).^ Doc. 17-1. Ameron moves to transfer this action to the District of
Minnesota where Ameron's declaratoryjudgment action is pending. Doc. 13 at 1; Doc. 17-1; Doc.
26 at 2.

Lewis & Clark is a South Dakota non-profit 501(c)(4) corporation with its principal place
of business in Tea, South Dakota. Doc. 17-1 at T| 3. Lewis & Clark's executive and administrative
staff work in South Dakota. Doc. 17 at f 5. Banner Associates, the Project engineer, is
headquartered in Sioux Falls, South Dakota. Doc. 17 at 16; Doc. 17-3. Carstensen is a Minnesota

corporation with its principal place of business in the southwest Minnesota town of Pipestone.
Doc. 1 at ^ 10. Carstensen's employees primarily reside in Minnesota. Doc. 10 at 3. Ameron
|

is a Delaware limited liability company with its principal place of business in Rancho Cucamonga,
Califomia. Doc. 40.
U.

Discussion

Ameron's motion to transfer argues that the factors analyzed under § 1404(a) justify
transfer to the District of Minnesota. Lewis & Clark responds that its choice of venue in South

^ Under South Dakota state procedure, a civil suit is deemed commenced upon service of a summons.
SDCL § 15-2-20.

® The Second Action is captioned as Ameron Water Transmission Group. LLC v. Carstensen
Contracting. Inc.. et al. ("D. Minn. 18-CV-1405). Doc. 17-1 at 1.
4

Dakota is proper under the "first-filed rule," but Ameron questions whether Lewis & Clark's action
deserves any deference as being first-filed. Whether a suit is first-filed or whether transfer is
justified under § 1404(a) are separate questions with separate analyses. Zimmer Enters.. Inc. v.
Atlandia Imps.. Inc.. 478 F. Supp. 2d 983, 989(S.D. Ohio 2007); see also Diamond Mowers. Inc.
V. S. Vegetation Memt LLC. No. 4:07-cv-04I09-KES, at *5-10 (D.S.D. Mar. 13, 2008)

(analyzing a motion to dismiss under the first-filed rule and a motion to transfer venue under §
1404(a)). The fu-st-filed rule does not "'trump' an analysis pursuant to § 1404(a)." Terra Int'l.
Inc. V. Miss. Chem.Corp.. 922 F. Supp. 1334,1349(N.D.Iowa 1996), affd on other grounds, 119

F.3d 688 (8th Cir. 1997). For example, "a determination that the [South Dakota] action [is] the
first-filed and that none ofthe exceptions to the first-to-file rule exist, does not preclude the Court

from determining that transfer of venue is proper under 28 U.S.C. § 1404(a)." Zimmer Enters.,
Inc.. 478 F. Supp. 2d at 989; see generallv Johnson Bros. Liquor Co. v. Bacardi U.S.A.. Inc.. 830

F. Supp. 2d 697, 711 (D. Minn. 2011)(reasoning that the analysis under § 1404(a) is "distinct"
fi-om the analysis under the first-filed rule). Accordingly, this Court considers both the first-filed
rule and § 1404(a) in considering whether to grant the motion to transfer.
A. First-Filed Rule

The "first-filed rule gives priority, for purposes of choosing among possible venues when

parallel litigation has been instituted in separate courts, to the party who fnst establishes
jurisdiction." Nw. Airlines. Inc. v. Am. Airlines. Inc.. 989 F.2d 1002, 1006(8th Cir. 1993)(citing
U.S. Fire Ins. Co. v. Goodvear Tire & Rubber Co.. 920 F.2d 487, 488 (8th Cir. 1990)); see also
Orthmann v. Apple River Campground. Inc.. 765 F.2d 119, 121 (8th Cir. 1985)(stating that "the

first court in which jurisdiction attaches has priority to consider the case"). The fnst-filed rule

"conserve[s]judicial resources and avoid[s] conflicting rulings." Nw. Airlines. Inc.. 989 F.2d at

1006 (citing Goodvear. 920 F.2d at 488). However, the rule "is not intended to be rigid,
mechanical, or inflexible." Id at 1005 (quoting Goodvear. 920 F.2d at 488). The rule "yields to
the interests ofjustice, and will not be applied where a court finds 'compelling circumstances'

supporting its abrogation." Id at 1006(quoting Goodvear. 920 F.2d at 488). The party opposing
the first-filed rule has the burden ofshowing compelling circumstances. D & L Distribution. LLC
V. Agxnlore Inf 1. LLC.959 F. Supp. 2d 757, 766(E.D. Pa. 2013).
In this case, the fact that Lewis & Clark started this action first is undisputed. Doc. 1 at

^1. On May 17, 2018, Lewis & Clark commenced this action in South Dakota state court by
service of a Summons on Carstensen. Doc. 1-1 at 1. On May 21, 2018, Lewis & Clark served
)

counsel for Carstensen with a copy ofits Complaint. Doc. 1-1 at 2-^. On May 22,2018, Ameron
started the Second Action by filing its declaratory judgment Complaint in the District of
Minnesota. Doc. 17-1. Therefore, the current action is first-filed. Ameron, however, argues that
"Lewis and Clark's choice of forum should be afforded little or no weight due to their forum

shopping" and race to the courthouse. Doc. 13 at 9-10. In other words, Ameron argues the firstfiled rule should not apply here.

The parties dispute whether there are compelling circumstances that serve the interests of
justice to depart from the first-filed rule. S^ Nw. Airlines. Inc.. 989 F.2d at 1006 (citing
Goodvear. 920 F.2d at 488). Compelling circumstances that may justify departing from the firstfiled rule can be shown by"two red flags" according to Eighth Circuit precedent. Anheuser-Busch.
Inc. V. Supreme Int'l Corp.. 167 F.3d 417,419(8th Cir. 1999). "Even if both red flags are present,

however,[i]n the absence of bad faith, the mere presence of red flags does not necessarily warrant
setting aside the first-to-file rule." Hearth & Home Techs.. Inc. v. J & M Distrib.. Inc.. No. 12-

CV-00686 SRN/TNL,2012 WL 5995232, at *5(D. Minn. Nov. 30, 2012)(quotations and internal
quotation marks omitted).

The first red flag is notice on the part ofthe first-filed party that the other party was going
to file suit. 14. A court can choose not to apply the first-filed rule if, after a party receives notice

that the other party is going to file suit, the notified party "raced to the courthouse to usurp [the
other party's] forum choice." Anheuser-Busch. Inc.. 167 F.3d at 419; see also Nw. Airlines. Inc..
989 F.2d at 1007 (holding that a letter that "gave no indication that a lawsuit was imminent" was
insufficient to be a compelling circumstance to depart from the first-filed rule).
Here, red flags rise on both sides because both Lewis & Clark and Ameron were aware of

the other likely proceeding with a lawsuit. The timeline of events is as follows:
• March 28, 2018: The Project engineer notified Carstensen that the Ameronsupplied pipes were rejected due to defective coating. Doc. 17-3.

• April 17, 2018: Ameron learned that Lewis & Clark was threatening legal action.
Doc. 10-3.

• May 15, 2018: Carstensen received a draft Complaint of the Second Action fi
"om
Ameron and alerted Lewis & Clark. Doc. 26 at 5.

• May 17, 2018: This action by Lewis & Clark was commenced. Doc. 1 at ^ 1.
• May 22, 2018: The Second Action by Ameron was commenced. Doc. 17.
In all likelihood, Ameron would not have drafted a Complaint in May if it had not learned in April

that Lewis & Clark was threatening suit, and Lewis & Clark likely would not have served a
Summons alone on May 17 to start a South Dakota state law suit if it had not learned that a suit
from Ameron was impending.

Lewis & Clark's apparent knowledge of Ameron's impending suit does not necessarily

warrant departing from the first-filed rule under the facts ofthis case. See Hearth & Home Techs..
Inc.. 2012 WL 5995232, at *5 (reasoning that the presence of both red flags does not require

ignoring the first-filed rule). After all, Ameron was on notice fu-st of Lewis & Clark's intent to

sue. In an April 17, 2018 email sent from Lewis & Clark to Carstensen and forwarded on to

Ameron, Lewis & Clark stated, in part: "Carstensen and AMERON have long said they will'make
Lewis & Clark whole . . .

Be assured we will have no choiee but to vigorously pursue every

legal avenue possible to ensure that happens ...

Doc. 10-3 at 3. This email was sent one month

before Lewis & Clark heard of Ameron's intent to file. Doc. 10-3; Doc. 26 at 5;^Anheuser-

Busch. Inc.. 167 F.3d at 419 (reasoning that a less than two-week period "from when Supreme
sent its cease and desist letter to Anheuser to the time Supreme filed the Florida action ... suggests
that Anheuser raced to the courthouse to usurp Supreme's forum choice").

Under these

circumstances, this Court cannot conclude that Lewis & Clark somehow acted in bad faith in filing

its suit in South Dakota to justify departing from the first-filed rule.

The second red flag that may justify departing from the first-filed rule is that the first-filed
action is for declaratory judgment rather than for damages or equitable relief. Nw. Airlines. Inc..
989 F.2d at 1007; Anheuser-Busch. Inc.. 167 F.3d at 419. "[Djeclaratory judgments are not to be

used defensively to deny a prospective plaintiffs choice of forums." Prudential Ins. Co. of Am.
V. Does, 140 F.3d 785, 790 (8th Cir. 1998). A suit for a declaratory judgment "may be more
indicative of a preemptive strike than a suit for damages or equitable relief." Nw. Airlines. Inc..
989 F.2d at 1007. Here, Lewis & Clark seeks to recover damages from Carstensen under a breach

of contract theory. Doe. 1-1 at Tn| 8-10. Therefore, the second red flag does not fly regarding
Lewis & Clark's complaint. Rather, it is Ameron's Second Action seeking declaratory judgment

relief only that bears the hallmark of a case filed "defensively to deny a prospective plaintiff s
choice of forum." Nw. Airlines. Inc.. 989 F.2d at 1007. Ameron has not shown compelling

circumstances under the "two red flags" noted in Eighth Circuit precedent to justify ignoring the
first-filed rule. See Anheuser-Busch. Inc.. 167 F.3d at 419. Thus, Lewis & Clark has the benefit

of a rebuttable presumption that its choice of venue in South Dakota is proper under the first-filed
rule.

B. Venue Analysis Under § 1404(a)

Ameron argues that this case should be transferred to Minnesota under 28 U.S.C. § 1404(a).

Doc. 13 at 6. Section 1404(a) allows a district court to transfer a case "[f]or the convenience of

parties and witnesses, in the interest ofjustice" to "any other district... where it might have been
brought." 28 U.S.C. § 1404(a). No party disputes that this action "might have been brought" in
the District of Minnesota. See 28 U.S.C. § 1391; Doe. 13 at 13; Doc. 16 at 12. Therefore, this

Court may transfer this case to Minnesota if it determines transfer is warranted under § 1404(a).
The language of § 1404(a) implies that there are just two factors to consider—"the
convenience ofthe parties and witnesses" and "the interest ofjustice." See 28 U.S.C. § 1404(a).
The Supreme Court ofthe United States, however, views § 1404(a) as calling for courts "to weigh
in the balance a number of case-specific factors." Stewart Org.. Inc. v. Ricoh Corp.. 487 U.S. 22,

29 (1988). In turn, rather than adopting "an exhaustive list of specific factors to consider" when
evaluating a motion to transfer, the Eighth Circuit has directed district courts to "weigh any case-

specific factors relevant to convenience and fairness to determine whether transfer is warranted."
In re Apple. Inc.,602 F.3d 909,912(8th Cir. 2010)(per curiam)(quotations and internal quotation

marks omitted); s^ Terra Infl. Inc.. 119 F.3d at 696 (approving of multi-factored analysis

employed by district courts). "In general,federal courts give considerable deference to a plaintiffs
choice of forum and thus the party seeking a transfer under § 1404(a) typically bears the burden
of proving that a transfer is warranted." Terra Infl. Inc.. 119 F.3d at 695.
1. Balance of Convenience

Section 1404(a) allows transfer "for the convenience of parties and witnesses." 28 U.S.C.

§ 1404(a). In Terra International. Inc., the Eighth Circuit described a district court decision as
having "meticulously analyzed" this part of § 1404(a) when evaluating "Balance of Convenience"
by considering the following five factors: "(1)the convenience ofthe parties,(2)the convenienee
of the witnesses—including the willingness of witnesses to appear, the ability to subpoena
I

witnesses, and the adequacy of deposition testimony, (3) the accessibility to records and
documents,(4) the location where the conduct complained of occurred, and (5) the applieability
of each forum state's substantive law." Terra Int'l. Ine.. 119 F.3d at 696. Although other Eighth

Circuit case law declines to adopt specific factors, see In re Apple. Inc.. 602 P.3d at 912, analysis
ofthese five factors helps to guide evaluating the balance ofthe convenienee.

First, as to convenience of the parties, venue in the Southern Division of the District of
South Dakota with its courthouse in Sioux Falls is more convenient to Lewis & Clark and

Carstensen, though perhaps a bit less convenient to Ameron. Lewis & Clark is a South Dakota

eorporation with its principal place of business in Tea, South Dakota, which is very close to Sioux
Falls. Doc. 17-1 at ^ 3. Carstensen is a Minnesota corporation with its principal place of business

in Pipestone, Miimesota, which is in southwestern Minnesota. Doc. 1 at T[ 10. The Sioux Falls
federal courthouse is about a forty-five-minute drive from Pipestone, but the nearest District of
Minnesota courthouse in downtown Minneapolis is about a four-hour drive from Pipestone. Doc.

1 at ^ 10. Carstensen made known at the hearing that it opposes transfer ofvenue because litigation
in the District of Minnesota is less convenient to it. Doc. 40. Ameron is a Delaware limited

liability company with its principal place of business in Rancho Cucamonga,California. Doc. 40.
Neither the District of South Dakota nor the District of Minnesota is a particularly convenient

10

forum for Araeron, although there are substantially more flights into the Minneapolis-St. Paul
airport than into Sioux Falls.

Second, the convenience of the witnesses likewise seems to weigh in favor of retaining
venue in the District of South Dakota. "The party seeking the transfer must identify, typically by

affidavit, the key witnesses to be called, state their residence, and provide at least a general
summary of what their testimony will cover." Hvlland v. Flaum. No. 4:16-CV-04060-RAL, 2016
WL 6901267, at *7 (D.S.D. Nov. 22, 2016) (quoting 15 Charles Alan Wright et al., Federal
Practice and Procedure § 3851 (4th ed.)). Ameron has not done so, but has stated, "Carstensen's

employees who worked on the project... are in [Minnesota]." Doc. 13 at 7. However, Ameron
did not identify which Carstensen's employees would be witnesses at trial or what their testimony
would be. Doc. 13 at 7,and Carstensen itself views the District ofSouth Dakota as more convenient

to its employees. Doc. 40. Banner Associates, the Project engineer, is headquartered in Sioux
Falls, South Dakota, and many ofthe Lewis & Clark affiliated witnesses are in or near Sioux Falls.

Doc. 17 at ^ 6; Doc. 17-3. Other witnesses, such as those from Ameron and Rustnot, appear to be
located outside of either South Dakota or Minnesota.

Third, the accessibility to records and documents does not militate for transfer. Lewis &
Clark's records are in South Dakota, Banner Associates' records are in South Dakota, Carstensen's

records are in Pipestone within the state of Minnesota but geographically far closer to the Sioux
Falls federal courthouse than any Minnesota federal courthouse, and Ameron and other potential
witness records appear to be located outside of Minnesota or South Dakota.
Fourth, the location where the conduct complained of occurred—^here the location of the

Project—is in Minnesota, albeit in the southwest comer of Minnesota. The Project is located
between Magnolia and Adrian,Minnesota. Doc. 10 at 16. Magnolia is in Rock County and Adrian

11

is in Nobles County, Minnesota, which both are in the division ofthe District of Minnesota where
cases are heard in Minneapolis. However, Magnolia is within 40 miles of the courthouse for the
Southern Division of the District of South Dakota in Sioux Falls and is some 200 miles from the

federal courthouse in Minneapolis. Adrian, in turn, is about 50 miles from Sioux Falls and about
190 miles from the Minneapolis federal courthouse. Therefore, when considering convenience,
the location ofthe Project actually weighs against transfer.

Only the fifth convenience factor—the application of each state's forum law—^weighs in
favor of transfer. Minnesota law governs the contract dispute hetween Lewis & Clark and
Carstensen, as well as the Purchase Order hetween Carstensen and Ameron. Doc. 13 at 3; Doc.

10-1 at I 17.05. The presence of a choice-of-law clause is a relevant factor for the Court to
consider, but it is not dispositive. ComputerUser.com. Inc. v. Tech. Publ'ns. LLC. No. Civ. 02-

832(MJDJGL), 2002 WL 1634119, at *8(D. Minn. July 20, 2002). Here, although the contract
contains a Minnesota choice-of-law clause, there appear to be no particularly complicated or

unique issues of state law that must be resolved. Although the fifth convenience factor favors
venue in Minnesota, the other four convenience factors weigh in favor of venue remaining in the
District of South Dakota.
2. Interest of Justice

Section 1404(a) directs courts to consider the "interest ofjustice." 28 U.S.C. §1404(a).
Ameron contends that the interest of justice requires this case to be transferred to Minnesota

because "[t]he purchase order between Ameron and Carstensen contains a Minnesota forum
selection clause." Doc. 10-2 at T| 17. The Eighth Circuit has held that the application of a forum
selection clause differs depending on whether the clause is mandatory or permissive.

Dunne

V. Libhra. 330 F.3d 1062, 1063(8th Cir. 2003). Whether a forum selection clause is mandatory or

12

permissive is material for purposes ofthe § 1404(a) analysis. Perficient. Inc. v. Priore, No. 4:16
CV 249 CDP,2016 WL 866090, at *2-3 (E.D. Mo. Mar. 7, 2016). If a forum selection clause is

mandatory, suit under the contract is exclusive to the jurisdiction stated. Dunne,330 F.3d at 1063.
To be mandatory, a forum selection clause must contain terms that "suggest exclusivity." Id at
1064. "Permissive forum-selection clauses, on the other hand, constitute nothing more than a

consent to jurisdiction and venue in the named forum and do not exclude jurisdiction or venue in
any other forum." Libertv Mut. Ins. Co. v. Milender White Constr., No. Civ. 15-5004-JLV, 2017
WL 3736630, at *6 (D.S.D. Aug. 29, 2017) Cguoting Jet Co.. Inc. v. Thor Indus.. Inc., No. C163005-MWB,2016 WL 1642663, at *3(N.D.Iowa Apr. 25, 2016)). The forum selection clause in
the Purchase Order states, "[Carstensen] and [Ameron] hereby submit to the nonexclusive

jurisdiction of the United States District Court for the Central District of Minnesota." Doc. 10-2
at 117(emphasis omitted). The clause explicitly states thatjurisdiction is "nonexclusive" making
the clause permissive and thus does not excludejurisdiction or venue in South Dakota.^Libertv
Mut. Ins. Co.. 2017 WL 3736630, at *6.

Next, Ameron contends that this action should be transferred to the District of Minnesota

in the interest ofjudicial economy and in the interest ofthe parties as being the lowest cost forum.

The parties have not provided a great amount ofinformation about anticipated litigation eosts, but
shifting the forum to Minnesota would make the litigation costlier for Lewis & Clark, a South
Dakota corporation headquartered near Sioux Falls, and Carstensen, a Pipestone, Minnesota,
business located within an hour of Sioux Falls yet about four hours from the Minneapolis federal

courthouse. Ameron's other argument about judicial economy is addressed under the Terra
International. Inc. factors below.

13

Ameron claims that Lewis & Clark was "looking to South Dakota as a more favorable

forum[] and threatened Carstensen that [] they were intending to use their local advantage to

deprive Defendants of a fair trial." Doc. 13 at 11. Carstensen, however, does notjoin in seeking
transfer of venue and thus appears not to share Ameron's coneern about a parochial federal jury

pool in the Southem Division of the District of South Dakota. Lewis & Clark's email stated,"a
local jury(including taxpayers who paid the original bill) will be eager to make sure L&C collects
every dime it is entitled to," Doc. 10-3 at 3, leaving it ambiguous as to whether Lewis & Clark was
referring to taxpayers in South Dakota or Minnesota. After all, the State ofMinnesota already has
funded $5.45 million to the System. Doc. 17-1 at ^ 15. Therefore, the "advantage" Ameron fears
is present in both South Dakota and Minnesota.

The Eighth Circuit in Terra International. Inc. commented that a district court had
"meticulously analyzed" the interest ofjustice under § 1404(a) by considering seven factors: "(1)

judicial economy,(2) the plaintiffs choice of forum,(3) the comparative costs to the parties of
litigating in each forum,(4) each party's ability to enforce a judgment,(5) obstacles to a fair trial,
(6) conflict of law issues, and (7) the advantages of having a local court determine questions of
local law." Terra Int'l. Inc.. 119 F.3d at 696. Consideration of those seven factors ultimately

presents a mixed picture of whether the interest of justice favors venue in South Dakota or
Miimesota federal court.

First, judicial economy favors having the ease in a single court where Lewis & Clark can
litigate its claim that Carstensen breached the Project contract, where Carstensen can defend and

present its claim that any breach stemmed from substandard polyurethane eoating on pipe supplied
by Ameron, and where Ameron can present its claim that it performed or that specifications for
the piping done by Rustnot were improper or invalid. Carstensen is raising no issue of personal

14

jurisdiction over it in South Dakota. Ameron, by contrast, recently filed a motion to dismiss for
want of personal jurisdiction over it in South Dakota, Doc. 38, which Lewis & Clark believes
Ameron has waived. Doc. 40. Personal jurisdiction over Ameron in Minnesota is not an issue

because Ameron consented to jurisdiction in the Distriet of Minnesota under the Purehase Order.

Thus,judieial economy may militate in favor of transfer, unless Ameron has waived a personal
jurisdietion defense.

Second, the plaintiffs choice of forum is generally given eonsiderable deference. Terra
Int'l. Inc.. 119 F.3d at 695. This deference is "based on an assumption that the plaintiffs choice

will be a convenient one." In re Apple. Inc.. 602 F.3d at 913 (citing Piper Aircraft Co. v.
Revno. 454 U.S.235,255-56(1981)). This factor favors venue remaining in South Dakota. Third,

as discussed above, the comparative costs of litigation likely favor retention of the ease in the
District ofSouth Dakota. Fourth, each party's ability to enforce ajudgment is not much ofa factor

here, as any judgment against Ameron would have to be transferred to a different state anyway for
collection, and this case and the Second Action are both in federal distriet courts where the process

for transfer ofjudgment for collection would be the same. Fifth, there appear to be no obstacles
to a fair trial in either the District ofSouth Dakota or the Distriet of Minnesota. Sixth and seventh,

as discussed above, Minnesota law governs all aspects of this case. Thus, there are no particular
choice-of-law concerns, but there is some, albeit limited here, interest in having a court in

Minnesota decide disputed issues of Minnesota law. There is very little difference in general
contract law between Minnesota and South Dakota, so there likely will not be much by way of

disputed issues of local law, other than what might relate to Ameron's position that the pipe
specifications are invalid because Rustnot and Spickelmire did not have licensure in Minnesota.

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In short, the Terra International. Inc. interest ofjustice factors present a mixed picture of
whether venue is better in South Dakota or Minnesota federal court. Judicial economy may or
may not be served by transfer to Minnesota, and there is some small advantage to having a
Minnesota federal court adjudicating Minnesota law. However, Lewis & Clark is entitled to its
choice ofthe forum state of South Dakota, Carstensen(the defendant Lewis & Clark sued) prefers
federal court in South Dakota as a venue, and litigation in Sioux Falls on balance probably costs
the parties less than litigation in Minneapolis federal court.
III.

Conclusion

Considering all factors relating to the convenience of witnesses and parties in the interest
ofjustice, no combination ofthe factors in this case outweigh Lewis & Clark's interest in having
South Dakota as the forum for this dispute. Neither the convenience of the parties and witnesses
nor the interests ofjustice weigh in favor oftransfer. Ameron has not carried its burden ofshowing
that the balance ofthe § 1404(a) factors favor transferring this case or that the court should depart
from the first-filed rule. Therefore, it is hereby
ORDERED that Ameron's Motion to Transfer Venue Under 28 U.S.C 1404(a), Doc. 13,
is denied.

DATED this 11*^ day of September, 2018.
BY THE COURT:

ROBERTO A.LAN(

UNITED STATES DISTRICT JUDGE

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