Grossman v. National Truck Protection Co Inc
Filing
18
MEMORANDUM OPINION AND ORDER granting 8 Motion to Transfer Case Out of District filed by National Truck Protection Co Inc. (Ordered by Judge Sidney A Fitzwater on 8/5/2015) (Judge Sidney A Fitzwater)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
TAL GROSSMAN,
Plaintiff,
VS.
NATIONAL TRUCK PROTECTION
CO., INC.,
Defendant.
§
§
§
§ Civil Action No. 3:15-CV-1340-D
§
§
§
§
§
§
MEMORANDUM OPINION
AND ORDER
Plaintiff Tal Grossman (“Grossman”) sued defendant National Truck Protection Co.,
Inc. (“NTP”) in Texas state court, alleging that NTP is liable for violating the Texas
Deceptive Trade Practices-Consumer Protection Act, Tex. Bus. & Com. Code Ann. §§ 17.4117.63 (West 2011), and for breach of contract due to its failure to pay the costs to repair a
catastrophic failure of his vehicle, a 2010 Freightliner Cascadia Limited (the “Vehicle”), in
accordance with a warranty service contract (“Contract”) that he purchased from NTP at the
time he bought the Vehicle. NTP removed the case to this court based on diversity of
citizenship and now moves under 28 U.S.C. § 1404(a) to transfer the case to the District of
New Jersey under the terms of a contractual forum-selection clause. For the reasons that
follow, the court grants the motion.
I
The facts pertinent to the court’s reasoning for granting the motion are essentially
undisputed. Grossman purchased the Vehicle from Arrow Truck Sales (“Arrow”) in Dallas.
At the time of the Vehicle purchase, he also purchased the NTP warranty (“Warranty”),
entering into the Contract with NTP that covered the Vehicle’s engine and related
components. The Contract contains in ¶ XIV the following forum-selection clause (“Forum
Selection Clause”) under the heading “CONSENT TO JURISDICTION AND VENUE”:
You and NTP agree that any legal or equitable action for claims,
debts or obligations arising out of or to enforce the terms of this
Service Contract shall be brought in the United States District
Court for the District of NJ or in the Superior Court of NJ,
Bergen County, NJ; and that either court shall have in personam
jurisdiction over You and Us and the venue of the action shall
be appropriate in each court.
D. Am. App. 7. The Contract also contains in ¶ XIII the following choice of law provision:
“Acceptance of this agreement shall be a contract made in the State of NJ and governed by
the laws thereof.” Id. NTP moves to transfer the lawsuit to the District of New Jersey under
§ 1404(a), contending that the Forum Selection Clause is mandatory and enforceable.
Grossman opposes the motion. He maintains that the Forum Selection Clause is
unenforceable because it is the result of overreaching, and that public policy favors litigating
the case in this court.1 Citing Texas law, he posits that Texas law recognizes that a forumselection clause will not be enforced where there is a showing that the clause was the result
of fraud or overreaching, enforcement would be unreasonable or unjust, enforcement would
contravene a strong public policy of the forum where the suit was filed, or the selected forum
1
Grossman also contends that NTP is relying on a contract that does not pertain to the
Vehicle and that this failure of proof should alone result in denying NTP’s motion. This
contention has been mooted by the filing of the correct contract in NTP’s amended appendix,
which NTP filed with leave of court.
-2-
would be inconvenient for trial.
In support of his first ground, Grossman posits that when he purchased the Vehicle,
the sales representative recommended the Warranty and told him that if he purchased the
Warranty, it would cover the Vehicle’s engine and related components; he was never
informed during the purchase process that the Warranty included a forum-selection clause
and was never shown a copy of the Warranty before he purchased it; he was never given the
opportunity to speak with an NTP representative or negotiate any of the Warranty’s terms;
had he been given an opportunity to negotiate the terms, he would, as an unsophisticated
buyer, have had a disproportionate lack of bargaining power; the Warranty, including the
forum-selection clause, was written by NTP and benefited only NTP; the Warranty was only
presented to him after he had purchased it, the Forum Selection Clause is included in the
Warranty in an inconspicuous manner and would appear as “boilerplate” to him as an
unsophisticated party; and because the Forum Selection Clause is the result of NTP’s
overreaching, it should not be enforced.
In support of his second argument, Grossman asserts that enforcement of the Forum
Selection Clause would contravene strong Texas public policy, depriving him of his day in
court; that he purchased the Vehicle and the Warranty from Arrow in Dallas; the catastrophic
failure and subsequent breach of the Warranty occurred in Texas; all relevant witnesses to
the purchase process and subsequent claims are located in Dallas; because the majority of
the fact witnesses are Texas residents, obtaining their testimony would unfairly prejudice
him; if the lawsuit remains in Texas, his witnesses will be able to give testimony with little
-3-
or no trouble, whereas if the suit is transferred to New Jersey, many fact witnesses will be
unavailable due to distance; and that transferring the lawsuit to New Jersey would place a
heavy financial burden on him because, as a small business owner, he is not financially able
to make repeated trips to New Jersey that would be required to pursue this litigation in that
forum.
II
28 U.S.C. § 1404(a) codifies “the doctrine of forum non conveniens for the subset of
cases in which the transferee forum is within the federal court system.” Atl. Marine Constr.
Co. v. U.S. Dist. Court for W. Dist. of Tex., ___ U.S. ___, 134 S.Ct. 568, 580 (2013). 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 or to any district or division to which all parties have consented.”
In cases where there is no forum-selection clause, district courts “must evaluate both the
convenience of the parties and various public-interest considerations.” Atl. Marine, 134 S.
Ct. at 581. They analyze § 1404(a) motions under the familiar private- and public-interest
factors2 and “decide whether, on balance, a transfer would serve ‘the convenience of parties
and witnesses’ and otherwise promote ‘the interest of justice.’” Id. at 581 (quoting
§ 1404(a)).
But in cases where there is a valid forum-selection clause “[t]he calculus changes,”
2
In Atlantic Marine the Court identifies non-exclusive private- and public-interest
factors. Atl. Marine, 134 S. Ct. at 581 n.6.
-4-
because the clause “‘represents the parties’ agreement as to the most proper forum.’” Id.
(quoting Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 31 (1988)). In that circumstance,
district courts must “adjust their usual § 1404(a) analysis in three ways.” Id. “First, the
plaintiff’s choice of forum merits no weight. Rather, 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, a court evaluating a defendant’s § 1404(a)
motion to transfer . . . should not consider arguments about the parties’ private interests.”
Id. at 582. “Third, when a party bound by a forum-selection clause flouts its contractual
obligation and files suit in a different forum, a § 1404(a) transfer of venue will not carry with
it the original venue’s choice-of-law rules—a factor that in some circumstances may affect
public-interest considerations.” Id. Accordingly, in a case involving a forum-selection
clause, “a district court should transfer the case unless extraordinary circumstances unrelated
to the convenience of the parties clearly disfavor a transfer.” Id. at 575.
III
Although Grossman appears to challenge the entire Contract as overreaching, see P.
Resp. 3, ¶ 6 [first] (“Plaintiff further contends that a forum-selection clause used by
Defendant in its contracts is unenforceable because the contract is the result of
overreaching[.]” (emphasis added)), his challenge necessarily pertains only to the Forum
Selection Clause itself rather than to the Contract as a whole. This is because Grossman’s
lawsuit against NTP rests fundamentally on the assumption that he and NTP in fact entered
into the Contract. See, e.g., Pet. ¶ 7 (alleging that he purchased the Contract in question
-5-
when he purchased the Vehicle); id. ¶ 8 (alleging that NTP performed under the Contract
when Grossman requested reimbursement for a high pressure fuel pump failure); id. ¶ 9
(alleging that Grossman performed under the Contract by giving NTP notice of the
subsequent catastrophic failure of the Vehicle); and ¶ 19 (asserting breach of contract claim
based on the Contract).
IV
Because Grossman cannot demonstrate that the Contract itself is not binding, the
question becomes whether he can show that the Forum Selection Clause should not be
enforced. This question merges with whether he can establish that it would be unreasonable
to enforce the Forum Selection Clause.
A
Federal law governs whether the Forum Selection Clause is binding in this action. See
Haynsworth v. The Corp., 121 F.3d 956, 962 (5th Cir. 1997) (“The proper law to apply to
[enforceability of a forum-selection clause] is federal, whether jurisdiction be based on
diversity, a federal question, or some combination of the two.”). “Under federal law,
forum-selection clauses are presumed enforceable, and the party resisting enforcement bears
a ‘“heavy burden of proof.”’” Ginter ex rel. Ballard v. Belcher, Prendergast & Laporte, 536
F.3d 439, 441 (5th Cir. 2008) (quoting Haynsworth, 121 F.3d at 963). “Such clauses ‘are
prima facie valid and should be enforced unless enforcement is shown by the resisting party
to be “unreasonable” under the circumstances.’” Braspetro Oil Servs. Co. v. Modec (USA),
Inc., 240 Fed. Appx. 612, 615 (5th Cir. 2007) (per curiam) (quoting M/S Bremen v. Zapata
-6-
Off-Shore Co., 407 U.S. 1, 10 (1972)). A forum selection clause may be considered
unreasonable if:
(1) the incorporation of the forum selection clause into the
agreement was the product of fraud or overreaching; (2) the
party seeking to escape enforcement “will for all practical
purposes be deprived of his day in court” because of the grave
inconvenience or unfairness of the selected forum; (3) the
fundamental unfairness of the chosen law will deprive the
plaintiff of a remedy; or (4) enforcement of the forum selection
clause would contravene a strong public policy of the forum
state.
Id. (quoting Haynsworth, 121 F.3d at 963). “To qualify as unreasonable, the fraud and
overreaching must be specific to the forum selection clause.” Id. (quoting Haynsworth, 121
F.3d at 963).
B
Grossman has not met his heavy burden of proving that enforcement of the Forum
Selection Clause would be unreasonable.
First, he has not demonstrated that the
incorporation of the Forum Selection Clause into the Contract was the product of fraud or
overreaching.3
In his affidavit, Grossman avers that the Arrow sales representative
recommended this particular warranty, said that it normally sold for $3,200, but offered to
reduce the price to $500 if Grossman would join a drivers association. He asserts that he
purchased the Warranty from Arrow for $500 as part of the purchase of the Vehicle; at no
3
Like federal law, Texas law likewise provides that fraudulent inducement to sign an
agreement containing a dispute resolution agreement such as a forum-selection clause will
not bar enforcement of the clause unless the specific clause was the product of fraud or
coercion. See In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 134-35 (Tex. 2004).
-7-
time during the purchase process was he afforded the opportunity to speak or negotiate with
a representative of NTP; he was not shown a copy of the Warranty until after he agreed to
purchase it; it was not disclosed to him that the Warranty contained a forum-selection clause;
he was never given the opportunity to read the Warranty before he purchased it, or even
asked to sign it; and had he known that the Warranty contained a forum-selection clause, he
would not have agreed to purchase the Warranty.4 The Forum Selection Clause is one clause
in a six-page contract. See D. Am. App. 3-8 (contract) & 7 (containing “CONSENT TO
JURISDICTION AND VENUE” provision). It is not buried in “fine print” or boilerplate.
It is the fourteenth of fourteen numbered clauses, and the type size is the same as the other
numbered provisions of the Contract. Grossman does not assert, for example, that the Arrow
sales representative told him that there was no forum-selection clause in the Contract, that
he was shown a version of the Contract that did not contain the Forum Selection Clause, or
that the representative made any representation about the Contract that was in any way
inconsistent with the inclusion of a forum-selection clause. Grossman asserts that he
purchased the Warranty during the purchase process for the Vehicle, without being able to
speak or negotiate with an NTP representative, that he was not shown a copy of the Warranty
or given the opportunity to read the Warranty until after he purchased it, and that it was not
4
Considering that shortly before Grossman made the Warranty claim at issue in this
lawsuit, he made a claim for several thousand dollars under the Warranty for the repair of a
high pressure fuel pump—a claim that NTP paid—it seems disingenuous for Grossman now
to assert that he would not have purchased the Contract. This questionable assertion is
immaterial, however, to the disposition of the motion to transfer.
-8-
disclosed to him that the Warranty contained a forum-selection clause. But he does not
allege that he requested to read the Contract before purchasing the Warranty and that his
request was denied, that he asked to speak to an NTP representative for purposes of
negotiating the Warranty and that his request was denied, or that the sales representative
misled him into believing that he would be able to read the Contract before agreeing to
purchase the Warranty. Essentially, Grossman—who avers that he is “a small business
owner,” Grossman Aff. 2, ¶ 5—purchased the Warranty in conjunction with his purchase of
the Vehicle, without first reading the Contract. This is not proof that the incorporation of the
Forum Selection Clause into the Contract was the product of fraud or overreaching. It is
evidence that Grossman purchased the Warranty without reading the Contract before he
made the purchase.
C
Nor has Grossman demonstrated that he will for all practical purposes be deprived of
his day in court because of the grave inconvenience or unfairness of the selected forum, or
that the fundamental unfairness of the chosen law will deprive him of a remedy. In his
affidavit, Grossman avers that litigating the lawsuit in New Jersey, which is 1,561 miles from
his home, will be a financial burden because he resides in Dallas, he purchased the Warranty
in Dallas, no repairs were performed or requested to be performed in New Jersey, the
majority of the fact witnesses to the damage to his Vehicle and the repairs needed are located
in Dallas, and, as a small business owner, he would not be able to afford to take time off from
work to travel to New Jersey. But Grossman must show that litigating the case in New
-9-
Jersey would be gravely inconvenient or unfair. This is because mere inconvenience in
litigating a case in the chosen forum may be foreseeable at the time of contracting, so “it
should be incumbent on the party seeking to escape his contract to show that trial in the
contractual forum will be so gravely difficult and inconvenient that he will for all practical
purposes be deprived of his day in court.” M/S Bremen, 407 U.S. at 18. Grossman’s
evidence does not establish that the forum is gravely inconvenient or unfair, or that he will
be deprived of a remedy.
D
In his response to NTP’s motion, Grossman asserts that enforcement of the Forum
Selection Clause would contravene strong Texas public policy. He identifies the strong
public policy as the policy against depriving a plaintiff of his day in court. In support, he
essentially cites the same evidence that the court discusses supra in § IV(C): he purchased
the Vehicle and the Warranty in Dallas; the catastrophic failure and subsequent breach of the
Warranty complained of occurred in Texas; all relevant witnesses to the purchase process and
subsequent claims are located in Dallas; because the majority of the fact witnesses are Texas
residents, obtaining their testimony would unfairly prejudice Grossman; if the lawsuit
remains in Texas, his witnesses will be able to give testimony with little or no trouble, but
if the suit is transferred to New Jersey, many fact witnesses will be unavailable; and
transferring the lawsuit to New Jersey would make pursuing his claims a heavy financial
burden because he is a small business owner who is not financially able to make repeated
trips to New Jersey that would be required to litigate the case there.
- 10 -
But Texas public policy does not support Grossman’s reasoning. Texas presumes that
forum-selection clauses are enforceable. In re AIU Ins. Co., 148 S.W.3d 109, 112 (Tex.
2004). Moreover, “[b]y entering into an agreement with a forum-selection clause, the parties
effectively represent to each other that the agreed forum is not so inconvenient that enforcing
the clause will deprive either party of its day in court, whether for cost or other reasons.” In
re Lyon Fin. Servs., Inc., 257 S.W.3d 228, 234 (Tex. 2008) (per curiam). To overcome this
assumed mutual representation, the party challenging the forum-selection clause must present
sufficient evidence of “special and unusual circumstances.” Id.
If merely stating that financial and logistical difficulties will
preclude litigation in another state suffices to avoid a forumselection clause, the clauses are practically useless. . . . Absent
proof of special and unusual circumstances, which are not
shown here, trial in another state is not “so gravely difficult and
inconvenient” as to avoid enforcement of an otherwise valid
forum-selection clause.
Id. (citation omitted). Grossman has not demonstrated that it would contravene strong Texas
public policy to enforce the Forum Selection Clause, because he has not offered sufficient
proof of special and unusual circumstances establishing that trial in New Jersey would be so
gravely difficult and inconvenient as to avoid enforcement of the clause.
V
“‘[A] valid forum-selection clause [should be] given controlling weight in all but the
most exceptional cases.’” Atl. Marine, 134 S.Ct. at 581 (second alteration in original)
(quoting Stewart, 487 U.S. at 33 (Kennedy, J. concurring)). “As the party acting in violation
of the forum-selection clause, [Grossman] must bear the burden of showing that
- 11 -
public-interest factors overwhelmingly disfavor a transfer.” Id. at 583.
Because [the public interest] factors will rarely defeat a transfer
motion, the practical result is that forum-selection clauses
should control except in unusual cases. Although it is
“conceivable in a particular case” that the district court “would
refuse to transfer a case notwithstanding the counterweight of a
forum-selection clause,” such cases will not be common.
Id. at 582 (citation omitted) (quoting Stewart, 487 U.S. at 30-31).
As the party defying the Forum Selection Clause, Grossman bears the burden of
establishing that transfer to the forum for which the parties bargained is unwarranted. See
id. at 581. Although Grossman’s response and affidavit touch at least indirectly on one of
the public interest factors,5 he has failed to explicitly address the public interest factors as
such, and to meet his burden of demonstrating that this is an unusual and uncommon case in
which the public interest factors overwhelmingly disfavor a transfer.
5
The second public interest factor evaluates the local interest in the dispute. “This
factor generally favors the venue where the acts giving rise to the lawsuit occurred.”
Metromedia Steakhouses Co. v. BMJ Foods P.R., Inc., 2008 WL 794533, at *3 (N.D. Tex.
Mar. 26, 2008) (Fitzwater, C.J.) (citing Spiegelberg v. Collegiate Licensing Co., 402
F.Supp.2d 786, 792 (S.D. Tex. 2005)). Grossman has introduced evidence concerning acts
in Dallas and the state of Texas that give rise to the lawsuit.
- 12 -
*
*
*
For the reasons explained, NTP’s motion to transfer venue is granted, and this case
is transferred to the District of New Jersey. The clerk of court shall effect the transfer
according to the usual procedure.
SO ORDERED.
August 5, 2015.
_________________________________
SIDNEY A. FITZWATER
UNITED STATES DISTRICT JUDGE
- 13 -
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?