Stewart v. Dean-Michaels Corp.

• Decision Date: 10 July 1989
• Docket Number: Civ. A. No. 89-AR-0871-S,88-AR-1745-S.
• Citation: 716 F. Supp. 1400
• Parties: Walter H. STEWART, et al., etc., Plaintiffs, v. DEAN-MICHAELS CORPORATION, etc., Defendant. Johnny W. MOSES, et al., Plaintiffs, v. BUSINESS CARD EXPRESS, INC., et al., Defendants.
• Court: U.S. District Court — Northern District of Alabama

716 F. Supp. 1400

Walter H. STEWART, et al., etc., Plaintiffs, v. DEAN-MICHAELS CORPORATION, etc., Defendant.

Johnny W. MOSES, et al., Plaintiffs, v. BUSINESS CARD EXPRESS, INC., et al., Defendants.

Civ. A. Nos. 89-AR-0871-S, 88-AR-1745-S.

United States District Court, N.D. Alabama, S.D.

July 10, 1989.

Daniel B. Feldman, Jonathan H. Waller, Haskell Slaughter & Young, Birmingham, Ala., for Walter H. Stewart, James S. Snow, Jr., and Lou Anne Strickland.

Theodore Lyons Araujo, Barnard & Araujo, Ithaca, N.Y., and Scott Phelps, Bradley, Arandt, Rose & White, Birmingham, Ala., for Dean-Michaels Corp., etc.

Carlos A. Williams, Chestnut, Sanders, Sanders, Turner, Williams & Pettaway, Birmingham, Ala., for Johnny W. Moses, et al.

William S. Dodson, Jr., Jayna J. Partain, Maynard, Cooper, Frierson & Gale, P.C., Birmingham, Ala., David A. Ettinger, Honigman Miller Schwartz & Cohn, Detroit, Mich., for Business Card Exp., Inc., et al.

MEMORANDUM OPINION

ACKER, District Judge.

Although the above-two entitled cases have not been consolidated, the issue to be decided is virtually identical in both cases, and the rationale in one case is so outcome-determinative in the other that the court has chosen to write one opinion for both. Because of the fast-growing use of forum selection clauses, the only surprising thing is that there are only two such cases before this court. In both cases, the court has for consideration a defendant's motion to dismiss or to transfer to another forum pursuant to 28 U.S.C. §§ 1404(a) and/or 1406(a). The parties in both cases have sought and obtained extensions of the periods of time for discovering evidence bearing on the forum non conveniens issues. There also have been heated disputes in both cases over various aspects of this discovery. These disputes do not seem to be subsiding. Because the court is satisfied that all of the discovery in the world will not change the lesson taught by the Eleventh Circuit in In re Ricoh Corporation, 870 F.2d 570 (11th Cir.1989), and that the expense being incurred by plaintiffs is a waste of money they will need to travel to the proper forums, the court will vacate all discovery extensions previously granted, and will order discontinued the ongoing discovery on the venue question, that is, unless a transferee court should reopen such discovery for reasons of its own.

Both cases were filed in this court by Alabama plaintiffs against non-resident defendants. In somewhat of an irony, Walter H. Stewart, the lead plaintiff in CV 89-AR-0871-S, is the president of The Stewart Organization, Inc., famous as the plaintiff in what has become the leading case, Stewart Organization, Inc. v. Ricoh Corp., 779 F.2d 643 (11th Cir.1986); Stewart Organization, Inc. v. Ricoh Corp., 810 F.2d 1066 (11th Cir.1987) (en banc); Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988); Stewart Organization, Inc. v. Ricoh Corp., 696 F.Supp. 583 (N.D.Ala.1988); In re Ricoh Corporation, 870 F.2d 570 (11th Cir.1989); and Stewart Organization, Inc. v. Ricoh Corp., 713 F.Supp. 1419 (N.D.Ala. 1989).

As he was in In re Ricoh Corporation, Mr. Stewart is here confronted by a forum selection clause contained in a contract which he and his fellow plaintiffs signed. This clause in the contract between plaintiffs in CV 89-AR-0871-S and defendant, Dean-Michaels Corporation, which is located in Ithaca, New York, says:

This agreement shall in all respects be governed by the laws of the State of New York (U.S.A.). The parties hereby agree that any dispute relating to the services sold hereunder shall be subject to the jurisdiction of the courts within the State of New York.

Dean-Michaels first contends that this court lacks in personam or "long arm" jurisdiction. With this contention the court disagrees, but the dispute over personal jurisdiction becomes academic in view of the transfer option presented by 28 U.S.C. §§ 1404(a) and 1406(a), and Bentz v. Recile, 778 F.2d 1026 (5th Cir.1985).

In CV 88-AR-1745-S, Johnny W. Moses and his fellow plaintiffs, as do Mr. Stewart and his fellow plaintiffs in CV 89-AR-0871-S, seek to sue on their home ground, Alabama, but they run into the following forum selection clause in the contract out of which a franchise relationship between them and defendant, Business Card Express, Inc., was born:

Both parties acknowledge all litigation must be commenced in the federal district court for the Eastern District of Michigan or the Michigan Circuit Court for the County of Oakland.

Fortunately or unfortunately, this court knows as much about Stewart Organization v. Ricoh Corporation in its various manifestations, and in the different courts which have dealt with it over the years, as any district court in the United States. This court has learned a hard but a thoroughly-learned lesson from the most recent manifestation and most important court, the Eleventh Circuit's In re Ricoh Corporation.

Plaintiffs in both of these cases understandably have spent their efforts desperately attempting to distinguish their cases from In re Ricoh Corporation, in which the Eleventh Circuit unequivocally ordered this court to transfer Stewart Organization's action from this court to a forum that it arguably had participated in selecting in advance by contract. Plaintiffs here strive to convince this court that they come within some exception recognized by the Eleventh Circuit in In re Ricoh Corporation. Not having been told by the Eleventh Circuit what, if any, exceptional circumstances would justify choosing a forum other than the forum provided in a forum selection clause, this court is unconvinced that either set of plaintiffs comes within any exception.

It does no good, but hopefully will do no harm, for this court to agree with plaintiffs in both cases that the Eleventh Circuit misread the Supreme Court's Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22, 108 S.Ct. 2239, 101 L.Ed.2d 22. Instead of recognizing a forum selection clause as only one factor, among others, to be weighed by the trial court, as the Supreme Court held, the Eleventh Circuit has, as a practical matter, made the clause the overriding consideration. It became the controlling criterion because there was nothing recognized which can outweigh it. The mere fact that the Eleventh Circuit has misread the Supreme Court, if it has, does not give any district court in Alabama, Florida or Georgia, much less this court, the right to deviate from the Eleventh Circuit's unmistakable interpretation of the Supreme Court. It is the Eleventh Circuit's understanding of the Supreme Court, and not this court's understanding of the Supreme Court, that guides this court. In In re Ricoh Corporation, the writ of mandamus issued to this court was based on a finding that all of this court's various specific findings of fact that this court thought were pertinent under 29 U.S.C. § 1404(a) were inconsequential in view of the insurmountable burden of proof placed on Stewart Organization by the forum selection clause it had executed as part of its contract. With the ink hardly dry on the Eleventh Circuit's writ directed to this court, this court would be both foolish and fool-hardy not to follow the unmistakable direction in which it was pointed. It follows that it can be only of academic interest that this court joins plaintiffs in acknowledging the logic of courts which have most recently spoken on this same subject, in the following cases:

Cheever v. Academy Chicago, Ltd., 690 F.Supp. 281 (S.D.N.Y.1988).

Red Bull Assoc. v. Best Western Int'l, Inc., 686 F.Supp. 447 (S.D.N.Y.1988).

Fibra-Steel, Inc. v. Astoria Indus., Inc., 708 F.Supp. 255 (E.D.Mo.1989).

Heller Financial, Inc. v. Riverdale Auto Parts, Inc., 713 F.Supp. 1125 (N.D.Ill. 1989).

Polsky v. Hall City Centre Assoc., 1989 WL 48109 (E.D.Pa. May 4, 1989).

Van's Supply & Equip. v. ECHO, Inc., 711 F.Supp. 497 (W.D.Wis.1989).

All of these district courts refused to be "ring-nosed" by a forum selection clause where, after considering all of the facts, they found a forum substantially more convenient and fairer to plaintiffs or to defendants than the one contained in the contract. However, none of these decisions can provide succor to the plaintiffs in these two cases. In re Ricoh Corporation is too overwhelming.

Mr. Moses, et al., in CV 88-AR-1745-S, challenge the validity vel non of the clause itself, and, on this basis, they attempt to distinguish their case from In re Ricoh Corporation. This court does not believe that the Eleventh Circuit could be persuaded by such a distinction when it was unpersuaded in In re Ricoh Corporation by the fact that the very last agreement between Stewart Organization and Ricoh Corporation may not even have contained a forum selection clause. Mr. Moses, et al., make a valid point, but one which is unavailing, when they refer to the Federal Trade Commission's pre-Stewart Organization expression of concern over the usual imbalance of bargaining power in the franchisor-franchisee relationship, such a concern that the FTC succeeded in requiring Firestone Photographs, Inc., to notify all of its franchisees that it will not attempt to enforce the contractual provisions which limits suits against it to the courts of Ohio. See Firestone Photographs, Inc., 1978 F.T.C. Complaints and Orders (CCH) ¶ 21,389 (Apr. 20, 1978).

In In re Ricoh Corporation, the Eleventh Circuit found that this court "clearly abused its discretion" in not deferring to the forum selection clause. In re Ricoh Corporation, 870 F.2d at 573 (emphasis supplied). In England v. ITT Thompson Indus., Inc., 856 F.2d 1518 (11th Cir.1988), the Eleventh Circuit recognized that "trial judges are permitted a broad discretion in weighing the conflicting arguments as to venue." Id. at 1520. In In re Fink, 876 F.2d 84 (11th Cir.1989), the Eleventh Circuit said:

Mandamus is not a substitute for appeal; it is available only in exceptional cases, where

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