Terra Intern., Inc. v. Mississippi Chemical Corp.

• Decision Date: 18 August 1997
• Docket Number: No. 96-2140,96-2140
• Citation: 119 F.3d 688
• Parties: TERRA INTERNATIONAL, INC., A Delaware Corporation, Plaintiff-Appellant, v. MISSISSIPPI CHEMICAL CORPORATION, A Mississippi Corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 688

119 F.3d 688

TERRA INTERNATIONAL, INC., A Delaware Corporation, Plaintiff-Appellant, v. MISSISSIPPI CHEMICAL CORPORATION, A Mississippi Corporation,

Defendant-Appellee.

No. 96-2140.

United States Court of Appeals,

Eighth Circuit.

Submitted Sept. 9, 1996.

Decided July 11, 1997.

Rehearing and Suggestion for Rehearing En Banc Denied Aug. 18, 1997.

Michele Odorizzi, Chicago, IL, argued (Hugh R. McCombs, Javier H. Rubinstein, Gary S. Feinerman, James T. Ferrini, George A. Zelcs, Edward M. Kay, Chicago, IL, Gregg E. Williams, Sioux City, IA, H. Jerome Gette, James A. Vaught, Dallas, TX, on the brief), for plaintiff-appellant.

Stephen Eckley, Des Moines, IA, argued (Randy Duncan, Des Moines, IA, William L. Smith, R. David Kaufman, M. Patrick McDowell, Jackson, MS, Bruce J. Brumfield, Yazoo City, MS, on the brief), for defendant-appellee.

Before WOLLMAN, Circuit Judge, HENLEY, Senior Circuit Judge, and HANSEN, Circuit Judge.

HANSEN, Circuit Judge.

Terra International, Inc., (Terra) appeals the district court's ¹ order granting Mississippi Chemical Corporation's (MCC) motion to transfer this lawsuit to the United States District Court for the Southern District of Mississippi and denying Terra's motion to enjoin permanently MCC from proceeding in its own lawsuit subsequently filed in the Mississippi court. Terra Int'l, Inc. v. Mississippi Chem. Corp., 922 F.Supp. 1334 (N.D.Iowa 1996). Terra filed its complaint in the Northern District of Iowa, alleging that MCC's design of its ammonium nitrate neutralizer technology, which MCC licensed to Terra, was defective and caused an explosion at Terra's plant. Relying primarily on the forum selection clause contained in the license agreement, the district court granted MCC's motion to transfer under 28 U.S.C § 1404(a) (1994). For the reasons outlined below, we affirm.

I.

Terra International, Inc., manufactures and distributes a variety of agricultural products including nitrogen-based fertilizers. Terra's principal place of business is in Sioux City, Iowa. Mississippi Chemical Corporation also engages in the production of fertilizers and is the largest manufacturer of ammonium nitrate fertilizer in the United States. MCC's principal place of business is in Yazoo City, Mississippi.

In the late 1970s, MCC developed an improved ammonium neutralization process and designed a new version of an apparatus called a "neutralizer" which, working together, reduced the ammonium nitrate emissions into the environment and increased the efficiency of the ammonium nitrate manufacturing process. MCC decided to make its neutralizer technology available to the rest of the fertilizer industry by licensing its technology to other fertilizer producers. On April 28, 1980, MCC and Terra entered into a license agreement under which Terra agreed to pay MCC $40,000 to use MCC's neutralizer technology at Terra's manufacturing facility in Port Neal, Iowa. ² The license agreement required MCC to provide Terra with the blueprints to its neutralizer, to review Terra's proposed design of a neutralizer, and to provide training and start-up engineering assistance to Terra. ³

One section of the license agreement, entitled "Laws and Suits," contained a forum selection clause. The entire paragraph reads as follows:

This agreement will be construed in accordance with the laws of the State of Mississippi. Any dispute or disputes arising between the parties hereunder, insofar as the same cannot be settled by friendly agreement, will be determined in the District Court of the United States for the Southern District of Mississippi and, for the purpose of instituting such suit, [Terra] hereby consents to service in connection therewith through the Secretary of State for the State of Mississippi.

(Appellant's App. at A261 (emphasis added).) The emphasized portion of the above paragraph is the forum selection clause at issue in this case, the meaning of which is highly contested.

On December 13, 1994, 14 years after Terra and MCC entered into the license agreement, an explosion occurred at Terra's Port Neal factory. The explosion killed 4 people, injured 18 others, and leveled the facility's ammonium nitrate plant.

On August 31, 1995, Terra filed a lawsuit against MCC in the United States District Court for the Northern District of Iowa, Western Division, located in Sioux City. In its complaint, Terra limited its cause of action to two tort claims. The first count alleged that MCC negligently designed its neutralizer technology and failed to train and properly warn Terra employees regarding the technology. The second count asserted that MCC's neutralizer technology was unreasonably dangerous and defective and thus alleged that MCC should be held strictly liable for the damages caused by the explosion. Terra did not assert any parallel claims for breach of contract. On the same day, a few hours later, MCC filed a lawsuit against Terra in the United States District Court for the Southern District of Mississippi, located in Jackson. In its complaint, MCC sought a declaratory judgment that it was not liable in any way for the explosion at Terra's Port Neal facility and asserted a defamation claim against Terra. ⁴

In December 1995, MCC filed a motion to transfer the Iowa case to Mississippi pursuant to 28 U.S.C. § 1404(a), while Terra filed a motion for a permanent injunction asking the federal court in Iowa to prevent MCC from prosecuting MCC's lawsuit in Mississippi. ^{5 5} After considering many of the relevant factors under section 1404(a), the Iowa court determined that neither the "convenience" factors nor the "interest of justice" factors decidedly weighed in favor of either Iowa or Mississippi. Terra Int'l Inc., 922 F.Supp. at 1356-64. The court then analyzed the forum selection clause contained in the 1980 license agreement and concluded that the clause unambiguously required Terra's tort claims to be litigated in the Mississippi federal court. Id. at 1382. The court thus granted MCC's motion to transfer Terra's lawsuit to Mississippi and correspondingly denied Terra's motion for a permanent injunction. Terra challenges the conclusions of the Iowa federal court.

II.

Section 1404(a) governs the ability of a federal district court to transfer a case to another district. This provision reads: "For the convenience of the 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." 28 U.S.C. § 1404(a) (1994). The statutory language reveals three general categories of factors that courts must consider when deciding a motion to transfer: (1) the convenience of the parties, (2) the convenience of the witnesses, and (3) the interests of justice. Id. Courts have not, however, limited a district court's evaluation of a transfer motion to these enumerated factors. Instead, courts have recognized that such determinations require a case-by-case evaluation of the particular circumstances at hand and a consideration of all relevant factors. See Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29, 108 S.Ct. 2239, 2243-44, 101 L.Ed.2d 22 (1988); Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir.1995); 15 Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 3847, at 370 (2d ed.1986). As the Supreme Court explained, "[a] motion to transfer under § 1404(a) thus calls on the district court to weigh in the balance a number of case-specific factors." Stewart, 487 U.S. at 29, 108 S.Ct. at 2244. Although there is no exhaustive list of specific factors to consider, courts have determined that a valid and applicable forum selection clause in a contract is "a significant factor that figures centrally in the district court's calculus." Id. On appeal, Terra argues that the district court incorrectly found the forum selection clause applicable to its tort claims and improperly weighed the other section 1404(a) factors.

Although the parties agree that we review a district court's decision regarding a section 1404(a) transfer motion for an abuse of discretion, see Stewart, 487 U.S. at 29, 108 S.Ct. at 2243-44; Everett v. St. Ansgar Hosp., 974 F.2d 77, 79 (8th Cir.1992), they disagree over the appropriate standard of review regarding a district court's construction of a forum selection clause. Terra argues that we should review the court's interpretation of the forum selection clause de novo, because such an interpretation is equivalent to the construction of a contract which is a legal issue. MCC, however, asserts that in weighing the relevant section 1404(a) factors, the district court was not required to interpret the specific meaning of the forum selection clause but merely recognize its presence and factor it into the equation. Consequently, MCC believes that the abuse of discretion standard, which applies to the district court's overall balancing of various factors, also applies to the court's specific treatment of the forum selection clause.

In Sun World Lines v. March Shipping Corp., 801 F.2d 1066, 1068 n. 3 (8th Cir.1986), this court, following the Ninth Circuit's approach, reviewed for an abuse of discretion a district court's "enforcement" of a forum selection clause. The dispute in Sun World, however, concerned the validity of the forum selection clause. Id. at 1067. In the case at hand, neither party challenges the validity of the forum selection clause; rather, they contest the specific meaning of the language used in the forum selection clause, which was not an issue in Sun World. The Ninth Circuit itself has refined its approach and has explained that it employs de novo review when a district court is required to interpret the language of a forum selection clause. Northern Cal. Dist. Council of Laborers v. Pittsburg-Des Moines Steel Co., 69 F.3d 1034, 1036 n. 3 (9th Cir.1995).

Here, interpreting the language of the forum selection clause is necessary to the ...