FORD v. EF EXPLORE AMERICA, INC et al, No. 2:2018cv02800 - Document 49 (D.N.J. 2018)
Court Description: OPINION and ORDER denying Defendant's 5 Motion to Dismiss and Motion to Transfer WITHOUT PREJUDICE, etc. Signed by Judge Kevin McNulty on 11/19/2018. (gl, )
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NOT FOR PUBLICATION UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY NATASHA FORD, individually and on behalf of her minor child C.F. (Minor), Plaintiffs, OPINION & ORDER V. EF EXPLORE AMERICA, INC.; HOLIDAY CLARK, LLC; and U.S. SECURITY ASSOCIATES, INC., Defendants. KEVIN MCNULTY, U.S.D.J.: Natasha Ford, a citizen of Texas, brings this diversity action individually and on behalf of her child, C.F. (together, “Ford”). This matter comes before the court on the motion of defendant EF Explore America, Inc. (“EF”) under 28 U.S.C. 1404(a) to transfer venue to the U.S. District Court for the District of § Massachusetts, pursuant to a contractual forum-selection clause. I find that the forum-selection clause is valid and enforceable as between EF and the plaintiff. The parties have failed, however, to consider the effect of the presence of two defendants who are not parties to the contract or its forum selection clause. Their presence might stand in the way of a transfer of venue that would otherwise be appropriate. Under recent Third Circuit case law, a different and rather complex analysis is required. I will therefore deny this motion without prejudice to refiling within 21 days. All defendants shall state their legal and factual positions on the motion to transfer. The parties will also be directed to clarify the facts pertinent to diversity jurisdiction, including the state of 1 Dockets.Justia.com Civ. No. 18-2800 (1KM) incorporation and principal place of business of the defendant corporations, and the citizenship of all members of Holiday Clark, ftC. C.F. was 13 years old at the time of the events. This action arises from an educational tour to the New York area that took place in June 2017. Defendant EF, located in Massachusetts, is in the business of organizing and sponsoring tours. Defendant Holiday Clark, LLC (“Holiday Inn”), operates a lodging facility in Clark, New Jersey, where the children and parent chaperones stayed overnight during the tour. Defendant U.S. Security Associates, Inc. (“U.S. Security”), apparently a Georgia corporation with offices in New Jersey,’ provided a guard (the “Guard”; his precise name is unknown). The Guard’s job was to ensure the security of the children while they were staying at the Holiday Inn. The complaint alleges that the Guard roused some of the boys in the middle of the night, tried to show C.F. pornography, touched him sexually through his clothing, and tried to get in the shower with him. A. Validity of forum selection clause as between Ford and EF The issue here is whether venue of this case, or at least the portion of the case that is brought against EF, must be transferred to the U.S. District Court for the District of Massachusetts. EF moves to transfer the case pursuant to 28 U.S.C. § 1404(a), based on a forum-selection clause. That forum-selection clause was included in a Release and Agreement signed by Ford on behalf of herself and C.F. when they booked the tour on the website maintained by EF. The forum selection clause provides as follows: [T]his agreement shall be governed in all respects, and performance hereunder shall be judged, by the laws of the Commonwealth of Massachusetts. In the event of any claim, dispute or proceeding arising out of my relationship with EF, or any claim which in contract, tort, or otherwise at law or in equity EF states that it actually contracted for security services with a predecessor entity, McRoberts Protective Agency, Inc., which was acquired by U.S. Security in 2016, before the events in suit occurred. A copy of the contract between EF and McRoberts is at DE 5-5, p. 21. As it happens, this agreement, too, contains a Massachusetts forum selection clause for disputes arising between EF and McRoberts. This agreement states, by the way, that EF is a California corporation. 2 arises between the Released Parties, whether or not related to this agreement, the parties submit and consent to the exclusive jurisdiction and venue of the courts of the commonwealth of Massachusetts and of the United States District Court for the District of Massachusetts. (Release and Agreement ¶ 17).2 EF says that a straightforward application of the forum selection clause dictates that it may be sued only in Massachusetts. Under Atlantic Marine Construction Co. a U.S. District Court, — U.S. —, 134 S. Ct. 568 (2013), the on usual multifactor venue analysis is simplified when there is a forum-selecti clause: Specifically, district courts (1) must give no weight to the forum preferred by “the party defying the forum-selection clause”; (2) must deem the private interests to “weigh entirely in favor of the preselected forum” because the parties agreed to the preselected forum and thereby waived the right to challenge it as inconvenient; and (3) must proceed to analyze only public interests. [Atlantic Marine, 134 S. Ct.] at 58 1-82. The Supreme Court explained that, with these modifications to the typical [28 U.S.C.] § 1404(a) analysis, district courts should enforce valid forum-selection clauses “[i]n all but the most unusual cases.” Id. at 583. In re: Howmedica Osteonics Corp, 867 F.3d 390, 402 (3d Cir. 2017), cert. denied, 138 S. Ct. 1288 (2018). This is not that “most unusual case.” The forum-selection clause—as far as it goes, see infra—is valid and enforceable. Of course, a prerequisite to enforcement of any contractual provision is find that there be a valid contract. Contrary to plaintiffs’ argument, I do not When any procedural unfairness that would undermine the agreement itself. Ms. Ford booked the tour online, the transaction was blocked from going forward unless and until she affirmatively checked a box agreeing to two g contracts. Those contracts, available by clicking a link, were the Bookin selection Conditions and the Release and Agreement that contained the forum- 2 A copy of the Release and Agreement is at DE 5-5, p. 17. 3 clause. (DE 5-5) The consumer’s attention would have been focused; this was not, e.g., a routine consumer purchase, but the booking of a tour which cost $2000 or more. There are no indicia of coercion or unequal bargaining power.3 As noted in Howmedica, quoted supra, the forum preference of a plaintiff who agrees to a forum-selection clause is not entitled to weight. In addition, the private interests that usually figure in the venue analysis will not be considered. Only public interests remain relevant. These may include “‘the enforceability of the judgment’; ‘the relative administrative difficulty in the two bra resulting from court congestion’; ‘the local interest in deciding local of controversies at home’; ‘the public policies of the fora’; and ‘the familiarity the trial judge with the applicable state law in diversity cases.”’ Homedica, 867 F.3d at 402 (quoting Jumara u. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995)). As to those public interests, Ford offers little. I have nothing before me federal regarding the relative congestion of the Massachusetts and New Jersey courts. As to familiarity with state law, I note that the contract between Ford law, so and EF provides for the application of Massachusetts, not New Jersey local this factor tilts toward transfer. There is a general interest in deciding controversies at home, and the alleged tort occurred in New Jersey; that state interest is offset, however, by the fact that both Ford and EF are out-ofparties. Counsel for Ford cites Hoffman v. Supplements Toga Mgmt., LLC, 419 N.J. declined Super. 596, 607, 18 A.3d 210, 217 (App. Div. 2011), in which the state court nable to enforce a forum-selection clause because the plaintiff did not have “reaso website the of reader The nt. notice” of it. The circumstances, however, were far differe down d scrolle she in Hoffman would not have seen the forum-selection clause unless t, the and found it in a “submerged” location. By selecting an advertised produc the contain not did which cart,” ing consumer would skip immediately to the “shopp was ent Agreem and e Releas the forum selection clause. Not so here. As noted in text, had she unless tion not hidden, and the consumer could not proceed with the transac to affirmatively given her assent by checking a box. Indeed, these facts are similar 528 those in Caspi v. Microsoft Network, L.L.C., 323 N.J. Super. 118, 122, 732 A.2d ingly approv an Hoffm . (App.Div.), certif denied, 162 N.J. 199, 743 A.2d 851 (1999) on cites Caspi as a case in which reasonable notice was given and the forum-selecti clause was enforced. 3 4 Public policies of the states are a neutral factor. Ford cites New Jersey’s it cites “extraordinary” public interest in the protection of minors. In support, 8. To statutory speed limits that apply in school zones. N.J. Stat. Ann. § 39:4-9 . It is true me, New Jersey’s interest seems not extraordinary, but fairly generic Jersey. Still, that the alleged abuse of this Texas plaintiff took place in New less there is no reason to think that a Massachusetts forum would be any likely to solicitous of an out-of-state minor’s safety. A transfer would not be n.4 impair any public policy against the infliction of harm on childre In short, there are no unusual factors at play that would justify the court’s setting aside this garden-variety forum selection clause. B. Effect of other defendants not subject to forum selection clause Release Neither Holiday Inn nor U.S. Security, however, is a party to the discusses and Agreement that contains the forum selection clause. No party the transferwhether the presence of those nonsignatory codefendants affects of-venue issue. It does. cited by plaintiff, Silvis v. Ambi Energy, LP., 90 F. Supp. 3d 393 (E.D. Pa. 2015), ties of unique the on is distinguishable. It overrode a forum-selection clause, based ongoing” and ical “histor the local forum to the issues, which implicated Pennsylvania’s part, Jersey, for its regulation of its electrical power markets. Id. at 399—400. New specific areas such JerseyNew ized, special seems to confine the public policy factor to v. Tektronix, Inc., Inc. s, as the Franchise Practices Act. See Cadapult Graphic System 98 F. Supp. 2d 560, 564 (D.N.J. 2000). on clause Ford cites pre-Atlantic Marine case law, stating that a forum-selecti (2) ; aching will not be enforced where (1) it is the product of fraud or overre enforcement enforcement would violate a strong public policy of the forum; or (3) as to be would result in litigation in a jurisdiction so seriously inconvenient 98 F. Supp. 2d Inc., nix, Tektro unreasonable. See Cadapult Graphic Systems, Inc. v. , 14 F. Supp. Spruce 560, 564 (D.N.J. 2000); United Steele America Co. u. M/VSanko with Atlantic Marine 2d 682, 686 (D.N.J. 1998). Although to some extent inconsistent would not change the (they seem, for example, to consider private factors), these cases the factor of that only result, for the reasons stated in text, above. I would add t transfer. The convenience (strictly as between Ford and EF) does not weigh agains ts. Presumably, if this plaintiffs are from Texas, and defendant EF is in Massachuset e to plaintiffs in were a two-party case, there would be no particular inconvenienc arising from (Issues Jersey. litigating the case in Massachusetts, as opposed to New infra.) the multiparty nature of the litigation will be addressed later. See 4 5 Last year, the U.S. Court of Appeals for the Third Circuit announced a complex “four-step framework” for deciding a change-of-venue motion when some, but not all, defendants are parties to a forum-selection clause. In re Howmedica Osteonics Corp., 867 F.3d 390, 403—05 (3d Cir. 2017), ced. denied, 138 S. Ct. 1288 (2018). Because Howmedica is fairly recent, I quote it at length, omitting footnotes and other material not essential to understanding; Step One: Forum-Selection Clauses. At the first step, the court assumes that Atlantic Marine applies to parties who agreed to forum-selection clauses and that, “[i]n all but the most unusual cases,” claims concerning those parties should be litigated in the fora designated by the clauses. AU. Marine, 134 S.Ct. at 583. Step Two: Private and Public Interests Relevant to NonContracting Parties. Second, the court performs an independent analysis of private and public interests relevant to non-contracting parties, just as when adjudicating a § 1404(a) transfer motion involving those parties in the absence of any forum-selection [C]ourts at Step Two should consider the private and clauses. public interests “of the parties who have not signed a forumIf, at this juncture, the Step One and selection agreement.” Step Two analyses point to the same forum, then the court should allow the case to proceed in that forum, whether by transfer or by retaining jurisdiction over the entire case, and the transfer inquiry ends there. . . . . . . Step Three: Threshold Issues Related to Severance. Third, if the the Step One and Step Two analyses point different ways, then court considers severance. See Fed. R. Civ. P. 21. In some cases, severance clearly will be warranted to preserve federal diversity ; jurisdiction; to cure personal jurisdiction, venue, or joinder defects or to allow for subsequent impleader under Federal Rule of Civil Procedure 14. In such cases, the court should sever and transfer claims as appropriate to remedy jurisdictional and procedural defects. If only one severance and transfer outcome satisfies the constraints identified at this step, then the court adopts that outcome and the transfer inquiry ends. But if more than one outcome satisfies the threshold severance constraints, then the court continues to Step Four. 6 In other cases, severance is clearly disallowed, such as when a party is indispensable under Federal Rule of Civil Procedure and the case In these cases, the court cannot sever, 19(b). must continue with all parties present in a forum where , jurisdiction and venue are proper as to the indispensable party t which could be either the originating district court or the cour to as to which transfer is sought. If jurisdiction and venue are proper the indispensable party in only one of those courts, then the transfer inquiry ends there and the case must continue in that court. If, however, jurisdiction and venue are proper as to the osed indispensable party in both the originating court and the prop ld transferee court, then, in deciding where the whole case shou proceed, the court proceeds to Step Four. Likewise, in cases where severance is neither clearly the warranted nor clearly disallowed and is therefore committed to parties court’s discretion (such as when there are no indispensable on to or defects in jurisdiction, venue, or joinder), the court goes ests select the appropriate fora based on a combination of inter addressed at the next step. Private Step Four: Efficiency and Non-Contracting Parties’ (which we Interests. Fourth, a district court exercises its discretion will review for abuse of discretion) in choosing the most but it measures its decision appropriate course of action, t against two key sets of interests. On the one hand, the cour tion, considers efficiency interests in avoiding duplicative litiga reduce taking into account case management techniques that can as well as any other inefficiencies accompanying severance, -selection public interests that may weigh against enforcing a forum On the other hand, the court also considers the nonclause a contracting parties’ private interests and any prejudice that those particular transfer decision would cause with respect to interests. ld In exercising its discretion to determine whether it shou ety, or retain the case in its entirety, transfer the case in its entir , the court sever certain parties or claims in favor of another forum rcement considers the nature of any interests weighing against enfo of any forum-selection clause; the relative number of non contacting contracting parties to contracting parties; and the nonon, venue, parties’ relative resources, keeping in mind any jurisdicti determines or joinder defects that the court must resolve. Only if it . . . . . . . . . . . . 7 . . that the strong public interest in upholding the contracting parties’ settled expectations is “overwhelmingly” outweighed by the countervailing interests can the court, at this fourth step, decline to enforce a valid forum-selection clause. cchi, Howmedica, 867 F.3d at 403—05. See also Piazza Family Trust v. Ciarro g 2017 WL 5146007 (E.D. Pa. Nov. 6, 2017) (applying Howmedica, severin selected claims subject to forum-selection clause, and transferring them to the forum) . of a No party has addressed the Howmedica issue, i.e., the application n, I forum-selection clause agreed to by some but not all parties. In this opinio is valid have in effect decided Howmedica step one: The forum-selection clause to it. But I and enforceable as between Ford and EF, the parties who agreed steps can go no farther. I will not attempt to extract findings on Howmedica t those two, three, and four from a presentation that was submitted withou factors in mind. Instead, I will order as follows: ORDER as 1. The forum selection clause is deemed valid and enforceable between Ford and EF. t 2. EF’s motion to transfer (DE 5) is nevertheless denied withou sing prejudice. EF may, if it wishes, refile its motion to transfer, addres the Howmedica factors, within 21 days. Security 3. If EF does refile, defendants Holiday Clark, LLC, and U.S. factual Associates, Inc., shall file a response stating their legal and positions on EF’s renewed motion. brief 4. In any event, within 21 days each defendant shall file a ty declaration or certification stating the facts relevant to diversi al jurisdiction. These include the state of incorporation and princip each place of business of each corporation, and the citizenship of member of the LLC, including corporate members. prescribes Where both fora are within the federal court system, Atlantic Marine sal. 571 U.S. at 60. a transfer of venue, rather than the alternative remedy of dismis 8 5. EF’s request for the alternative relief of dismissal is denied. KEVIN MCNULIY, U.S.D.J. Date: November 19, 2018 / 9
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