Pro Star Logistics v. AN Enterprise

Filing 18

MEMORANDUM DECISION denying 9 Motion to Dismiss for Improper Venue or, in the Alternative, for Change of Venue; granting 13 Motion for Leave to File Sur-Reply. Signed by Judge Ted Stewart on 11/28/17. (jlw)

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

PRO STAR LOGISTICS, INC.,

MEMORANDUM DECISION AND
ORDER DENYING DEFENDANT’S
MOTION TO DISMISS AND
GRANTING PLAINTIFF’S
MOTION FOR LEAVE TO FILE
SUR-REPLY

Plaintiff,
v.
AN ENTERPRISE, INC.,
Defendant.

Case No. 2:17-CV-491 TS

This matter is before the Court on Defendant AN Enterprise, Inc’s (“Enterprise”) Motion
to Dismiss for Improper Venue, or in the Alternative, for Transfer of Venue. Also before the
Court is Plaintiff Pro Star Logistic’s (“Pro Star”) Motion for Leave to File Sur-Reply. For the
reasons stated below, the Court will deny Defendant’s Motion to Dismiss and Defendant’s
alternative request to transfer venue, and grant Plaintiff’s Motion for Leave to File Sur-Reply.
I.

BACKGROUND

Pro Star is a property broker that arranges for the transportation of freight on behalf of its
clients by utilizing third party motor carriers such as Enterprise. On or about November 24,
2014, Plaintiff and Defendant executed the “Pro Star Logistics Broker-Carrier Agreement”
(“BCA”). Pursuant to that agreement, Enterprise agreed to act as a motor carrier with respect to
loads tendered by Plaintiff. The BCA is silent on the issue of venue or forum selection.
On September 2, 2016, Pro Star sent a Dispatch Agreement to Enterprise for a shipment
of yogurt to be transported from Melrose Park, Illinois to Montgomery, New York. Enterprise
accepted the Dispatch Agreement terms the same day. The Dispatch Agreement contains a forum
selection clause stating “[t]he venue and jurisdiction for any dispute arising from this agreement
1

and/or relationship between Pro Star Brokerage and other parties to this agreement, including but
not limited to disputes over individual shipments, shall be brought in the court in the local
district of Pro Star Brokerage.” 1
The Dispatch Agreement required Enterprise and its driver to pre-cool the refrigerated
truck (“Reefer”) to 35 degrees and maintain that temperature at all times during transport. On
September 4, 2016, Enterprise’s driver took possession of the yogurt and the temperature of the
Reefer was set to 53 rather than 35 degrees as required by the Dispatch Sheet. On September 6,
2016, Enterprise’s truck arrived at the destination loading dock. The consignee of the yogurt
shipment noted that the Reefer temperature was set at 53 degrees and that the temperature of the
yogurt ranged between 48.4 and 51.4 degrees. The consignee rejected the shipment and refused
to take delivery, as the yogurt had been exposed to unsanitary temperature conditions.
Pro Star’s client, WWF Operating Company (“White Wave”), contacted Pro Star to assert
a claim against Enterprise for the full amount of the loss. Pro Star made multiple demands for
payment from Enterprise. Enterprise failed to make any reimbursement. White Wave assigned its
rights in the shipment of yogurt to Pro Star. Pro Star then brought two causes of action against
Enterprise in the Third Judicial District Court in and for Salt Lake County: one breach of
contract claim and one Carmack Amendment claim. Enterprise then removed the action to this
Court and filed the Motion to Dismiss for Lack of Venue, or in the Alternative to Transfer for
Convenience of the Parties.

1

Docket No. 9-1 Ex. B, at 2 (Dispatch Agreement).
2

II.

DISCUSSION

Defendant’s Motion argues that venue is improper or, alternatively, that venue should be
transferred. The Court will discuss each issue in turn.
A. PROPER VENUE
Defendant moves for dismissal for improper venue under 28 U.S.C. § 1391(b). However,
that provision has no application because this case was removed from state court. “The venue of
removed actions is governed by 28 U.S.C. § 1441(a) . . . .” 2
Section 1441(a) states, “any civil action brought in a State court of which the district
courts of the United States have original jurisdiction, may be removed by the defendant . . . to the
district court of the United States for the district and division embracing the place where such
action is pending.” 3 This Court has original jurisdiction based on diversity. 4 The action was filed
in the Third Judicial District in and for Salt Lake County, in the State of Utah. The District
embracing that court is the United States District Court for the District of Utah. Therefore, venue
is proper and the Motion to Dismiss based on improper venue must be denied.
B. REQUEST TO TRANSFER
Alternatively, Defendant seeks to transfer the case for the convenience of the parties
pursuant to 28 U.S.C. § 1404(a). “For 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.” 5

2

Polizzi v. Cowles Magazines, Inc., 345 U.S. 663, 665 (1953); see also Lundahl v.
Pub. Storage Mgmt., 62 F. App’x. 217, 218 (10th Cir. 2003).
3

28 U.S.C. § 1441(a).

4

See Docket No. 2, at 2.

5

28 U.S.C. § 1404(a).
3

To determine this issue, the Court must first decide if the parties have consented to venue
in Utah. Then the Court must decide if, in light of the decision on consent, the interests of justice
weigh in favor of transfer.
1. Forum Selection Clause
As stated, the Dispatch Agreement contains a forum selection clause while the BCA does
not. Enterprise argues that the BCA preempts the Dispatch Agreement and, therefore, the forum
selection clause in the Dispatch Agreement does not apply.
The BCA specifies Federal and Illinois state law govern. 6 The Illinois rules governing
contract interpretation are explained by the Supreme Court of Illinois:
The primary objective in construing a contract is to give effect to the intent of the
parties. A court must initially look to the language of a contract alone, as the
language, given its plain and ordinary meaning, is the best indication of the
parties’ intent. Moreover, because words derive their meaning from the context in
which they are used, a contract must be construed as a whole, viewing each part
in light of the others. The intent of the parties is not to be gathered from detached
portions of a contract or from any clause or provision standing by itself. 7
Enterprise asserts that the BCA excludes subsequent documents or terms and conditions
from being incorporated into the BCA and from having effect. The single sentence that
Enterprise relies upon states, “[t]erms and conditions contained in bills of lading or in other
documents shall not apply except to the extent they establish the delivery of cargo.” 8 Enterprise
does not assert that the Dispatch Agreement is a bill of lading. Instead, Enterprise relies on the
“other documents” portion of the sentence to exclude the terms of the Dispatch Agreement.

6

Docket No. 9-1 Ex. A, ¶ 16 (Broker-Carrier Agreement).

7

Gallagher v. Lenart, 874 N.E.2d 43, 58 (Ill. 2007) (internal citations omitted).

8

Docket No. 9-1 Ex. A, ¶ 1 (Broker-Carrier Agreement).
4

The Court cannot read that phrase so broadly. Under Enterprise’s interpretation of “other
documents,” the subsequent rate sheets to be incorporated into the agreement, 9 and the clause
allowing future written modification of the agreement by the parties 10 would be invalid. As Pro
Star points out in its brief, bills of lading are “basic transportation agreements between carriers
(such as Defendant) and the shipper (such as Plaintiff’s customers). As a broker, Plaintiff is not
party to the bill of lading or invoice agreement between the carrier and shipper and thus cannot
be bound by its terms.” 11 In the context of the “bill of lading” sentence, and read in conjunction
with the agreement as a whole, viewing each part in light of the others, the meaning of “other
documents” is meant to exclude third party agreements from being incorporated into the BCA.
The Dispatch Agreement does not constitute such a third party agreement. Therefore, the BCA
does not preempt the validity of the Dispatch Agreement.
Moreover, the BCA’s plain language expressly incorporates the Dispatch Agreement.
The BCA lays out the process for the parties to agree regarding the compensation for each load.
“Carrier shall be compensated for its services in the amount identified in the Rate Confirmation
Sheet issued to Carrier by PRO STAR LOGISTICS following PRO STAR LOGISTICS
acceptance of Carrier’s response to each Bid Offer.” 12 Although the contract expresses the
process in reverse chronological order, the process of negotiating each load appears to be: 1) Pro
Star submits a bid offer to the Carrier; 2) Carrier responds to the bid offer (presumably with a

9

Id. ¶ 3 (Broker-Carrier Agreement).

10

See id. ¶ 18. (Broker-Carrier Agreement) (“This agreement may only be altered,
amended or modified pursuant to a written document executed by authorized representatives of
both parties.”).
11

Docket No. 11, at 7 (citation omitted).

12

Docket No. 9-1 Ex. A, ¶ 3 (Broker-Carrier Agreement).
5

bid); 3) Pro Star accepts the Carrier’s response or bid; 4) Pro Star issues Carrier with a Rate
Confirmation Sheet; and 5) Carrier signs acceptance of Rate Confirmation Sheet.
Although the Dispatch Agreement is titled “Dispatch Information,” rather than Rate
Confirmation Sheet, it acts as the final document between the parties confirming the terms of the
shipment and requiring acceptance by the Carrier. In its briefing, Pro Star identified the Dispatch
Agreement as the rate confirmation sheet. 13 Defendant did not dispute this characterization. As
the rate confirmation sheet, the terms of the Dispatch Agreement are expressly incorporated into
the BCA rather than preempted by it. 14 Therefore, the Court finds that the Dispatch Agreement
governs this dispute.
2. The Forum Selection Clause is Mandatory
Having determined that the Dispatch Agreement governs this dispute, the Court must
now analyze the effect of the forum selection clause contained in that agreement. The forum
selection clause states, “[t]he venue and jurisdiction for any dispute arising from this agreement
and/or relationship between Pro Star brokerage and other parties to this agreement, including but
not limited to disputes over individual shipments, shall be brought in the court in the local
district of Pro Star Brokerage.” 15 Enterprise asserts the clause is merely permissive for three
reasons: a) The clause uses the word “local” instead of specifying Utah; b) The clause does not
use the words “only” or “sole” in reference to the forum; and c) the forum selection and choice
of law clauses are in conflict.

13

Docket No. 11, at 8.

14

See Docket No. 9-1 Ex. A, ¶ 3 (Broker-Carrier Agreement) (“Each such Rate
Confirmation Sheet . . . shall be deemed to be a part of this Agreement and incorporated by
reference herein.”).
15

Docket No. 9-1 Ex. B, at 2 (Dispatch Agreement).
6

a. Local District
Enterprise asserts that the use of the phrase, “local district of Pro Star Brokerage” does
not select Utah and introduces extrinsic evidence from Pro Star’s website indicating that Plaintiff
has warehouses in various locations, including Chicago. However, it is undisputed that Pro Star
is a Utah Corporation. Enterprise’s extrinsic evidence clearly indicates Salt Lake City is Pro
Star’s “Head Office.” 16 Furthermore, both the BCA 17 and the Dispatch Agreement show Salt
Lake City as Pro Star’s corporate address. 18 Finally, Enterprise conceded in its Motion that Utah
is the “local” referenced in the forum selection clause stating, “the Dispatch Sheet forum
provision states that disputes are to be brought in the Utah state courts . . . .” 19 Therefore, the use
of the phrase “local district of Pro Star” is not ambiguous and provides that Utah is the selected
forum.
b. Mandatory vs. Permissive
Enterprise next argues that the forum selection clause is not mandatory, but is merely
permissive. “Mandatory forum selection clauses contain clear language showing that jurisdiction
is appropriate only in the designated forum. In contrast, permissive forum selection clauses
authorize jurisdiction in a designated forum, but do not prohibit litigation elsewhere.” 20 Clauses
where venue is specified with mandatory language are enforced. 21 However, “where only

16

Docket No. 12, at 4.

17

Docket No. 9-1 Ex. A, ¶ 11 (Broker-Carrier Agreement) (address for notice).

18

Docket No. 9-1 Ex. B (Dispatch Agreement).

19

Docket No. 9, at 7.

20

K & V Sci. Co. v. Bayerische Motoren Werke Aktiengesellschaft (“BMW"), 314
F.3d 494, 498 (10th Cir. 2002) (internal quotation marks and citation omitted).
21

Id. at 499.
7

jurisdiction is specified . . . the clause will generally not be enforced unless there is some further
language indicating the parties’ intent to make venue exclusive.” 22
Enterprise narrowly focuses on the word “shall,” and cites to cases where courts found a
clause containing “shall” to be permissive rather than mandatory. However, all of the cases cited
by Defendant found the use of the word “shall” in reference to jurisdiction was merely
permissive. 23 The clause at issue here is quite different, as it contains a mandatory reference to
venue.
The Tenth Circuit has found similar clauses to be mandatory. In Milk ‘N’ More v.
Beavert, 24 the forum selection clause stated, that “venue shall be proper under this agreement in
Johnson County, Kansas.” 25 The Tenth Circuit found that the use of the word “shall” was
mandatory and enforced the forum selection clause. 26 In doing so, the Tenth Circuit relied on a
case from the District of Colorado involving a similar clause. That clause stated: “It is agreed for
purposes of this agreement, venue shall be in Adams County, Colorado.” 27 The Tenth Circuit

22

Id. (citing Paper Express, Ltd. v. Pfankuch Maschinen GmbH, 972 F.2d 753, 757
(7th Cir. 1992)).
23

See King v. PA Consulting Group, Inc., 78 F. App’x 645, 646 (10th Cir. 2003)
(finding contract provision that stated the “agreement and all matters arising in connection with it
. . . shall be subject to the jurisdiction of the New Jersey Courts” to effectuate permissive venue
selection); Hunt Wesson Foods, Inc. v. Supreme Oil Co., 817 F.2d 75, 76 (9th Cir. 1987) (finding
provision stating California courts “shall have jurisdiction over the parties” to be permissive); K
& V Sci. Co., 314 F.3d at 496 (finding clause stating that“[j]urisdiction . . . is Munich”
established permissive venue selection).
24

963 F.2d 1342 (10th Cir. 1992).

25

Id. at 1343.

26

Id. at 1346.

27

Id. (quoting Intermountain Sys., Inc. v. Edsall Constr. Co., 575 F. Supp. 1195, 1198
(D. Colo. 1983)).
8

agreed with the Colorado court that this clause was mandatory. The Tenth Circuit has also found
“venue shall lie” 28 and “venue is proper” 29 to be examples of mandatory forum selection clauses.
Similar to the cases considered by the Tenth Circuit, the “shall be brought” language in
the Dispatch Agreement does not require additional language to exclude jurisdiction elsewhere
because it is a mandatory reference to venue rather than jurisdiction. The cases cited by Plaintiff
in its Sur-Reply reinforce this conclusion. Therefore, the Court finds that the forum selection
clause in the Dispatch Agreement is mandatory.
c. Forum Selection and Choice of Law
Finally, Defendant argues that the Agreements are ambiguous because the BCA has an
Illinois choice of law provision, while the Dispatch Agreement has a Utah forum selection
clause. Enterprise asserts that it is “nonsensical for ProStar to assert on one hand that all disputes
are to be filed in Utah, but that they are to be governed by Illinois Law.” 30 Defendant continues
by calling the choice of law and forum selection clauses an “obvious conflict.” 31 This assertion
leads Enterprise to conclude that the contract is ambiguous and therefore, “must be construed
against the drafter.” 32
Under Illinois law, “a choice-of-law clause and a forum-selection clause [are] two
separate and distinct things. If a choice-of-law clause were effectively a forum-selection clause,
there would be no such thing as a forum-selection clause as distinct from a choice-of-law

28

Excell, Inc. v. Sterling Boiler & Mech., 106 F.3d 318, 321 (10th Cir. 1997).

29

Dawson v. Fitzgerald, 189 F.3d 477, at *9 (10th Cir. 1999) (unpublished table

30

Docket No. 12, at 5.

31

Id.

32

Id. (citing to Caldas & Sons v. Willingham, 17 F.3d 123, 127 (5th Cir. 1994)).

decision).

9

clause.” 33 There is no conflict between the provisions merely because Illinois law is to be applied
by a Utah court. Indeed, “federal judges routinely apply the law of a State other than the State in
which they sit.” 34 Enterprise’s analysis makes a forum selection clause superfluous where a
choice of law provision is present. This argument is not supported by the law. Therefore, the
choice of Illinois law does not undermine the validity of the forum selection clause.
3. Transfer of Venue
Having determined that the Dispatch Agreement contains a mandatory forum selection
clause, the Court considers Defendant’s request to transfer venue under 28 U.S.C. § 1404(a).
The Supreme Court has long recognized that when the parties consent to venue, valid forum
selection clauses are “prima facie valid and should be enforced unless enforcement is shown by
the resisting party to be ‘unreasonable’ under the circumstances.” 35 More recently, the Supreme
Court explained that “a valid forum-selection clause requires district courts to adjust their usual
§ 1404(a) analysis,” 36 in two ways relevant here. First, “the party defying the forum-selection
clause . . . bears the burden of establishing that . . . the forum for which the parties bargained is
unwarranted.” 37 And second, the court “should not consider arguments about the parties’ private
interests. When parties agree to a forum-selection clause, they waive the right to challenge the
preselected forum as inconvenient or less convenient for themselves or their witnesses . . . .” 38

33

Khan v. Gramercy Advisors, LLC., 61 N.E.3d 107 (Ill. 2016) (citation omitted).

34

Atl. Marine Constr. Co. v. United States Dist. Court, 134 S. Ct. 568, 584 (2013).

35

M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972) (citations omitted).

36

Atl. Marine Constr. Co. 134 S. Ct. at 581. The Court indicated three changes in the
§1404(a) transfer analysis. The first two are presented here, and the third suspends the rule
allowing the law from the plaintiff’s choice of venue to transfer with the case. Id.
37

Id. (analyzing a fact pattern where the plaintiff has filed the action in a forum other
than the preselected forum and is opposing transfer to the selected forum).
38

Id. at 582.
10

Therefore, “[a] court . . . must deem the private-interest factors to weigh entirely in favor of the
preselected forum” 39 and “may consider arguments about public-interest factors only.” 40
“Because those factors will rarely defeat a transfer motion, the practical result is that forumselection clauses should control except in unusual cases.” 41
Enterprise presents analysis of: 1) the Plaintiff’s choice of forum; 2) the accessibility and
convenience of witnesses; 3) the advantage of having a local court determine questions of local
law; and 4) all other considerations of a practical nature that make a trial easy, expeditious and
economical. The bulk of these factors are private interest factors, which are not considered
because of the presence of a valid forum selection clause. Therefore, the only factor considered
by the Court is the preference for a local court to determine questions of local law.
Certainly, “[w]hen the merits of an action are unique to a particular locale, courts favor
adjudication by a court sitting in that locale.” 42 Because the BCA is governed by Illinois law, the
public interest in the Northern District of Illinois adjudicating issues of Illinois law may weigh
slightly in favor of transfer. However, Defendant has not alleged that Illinois contract law differs
significantly from Utah contract law and, as stated, federal judges regularly apply law from other
jurisdictions. Additionally, Enterprise undermines its own argument by stating that it intends to
seek dismissal of the breach of contract claim, so that only federal law will remain. Thus, even
this factor does not support transfer. Because all private and public interest factors weigh in favor
of the selected forum, keeping the proceedings in Utah is appropriate. Therefore, the Court will
not transfer the case to the Northern District of Illinois.

39

Id.

40

Id.

41

Id.

42

Emplrs Mut. Cas. Co. v. Bartile Roofs, Inc., 618 F.3d 1153, 1170 (10th Cir. 2010).
11

III.

CONCLUSION

It is therefore
ORDERED that Defendant’s Motion to Dismiss for Improper Venue or, in the
Alternative, for Change of Venue (Docket No. 9) is DENIED. It is further
ORDERED that Plaintiff’s Motion for Leave to File Sur-Reply (Docket No. 13) is
GRANTED.
DATED November 28, 2017.
BY THE COURT:

________________________________________
TED STEWART
United States District Judge

12