787 F.3d 903 (8th Cir. 2015), 14-3276, In re Union Elec. Co.

Docket Nº:14-3276
Citation:787 F.3d 903
Opinion Judge:MELLOY, Circuit Judge.
Party Name:In re: Union Electric Company, doing business as Ameren UE, Petitioner; Energy Insurance Mutual Limited, Respondent
Attorney:For In re: Union Electric Company, doing business as: Ameren UE, Petitioner: Susan E. Bindler, Robert T. Haar, Lisa Ann Pake, Haar & Woods, Saint Louis, MO. For Energy Insurance Mutual Limited, Respondent: Lisa S. Brogan, Michael A. Pollard, Baker & Mckenzie, Chicago, IL; Alan K. Goldstein, Golds...
Judge Panel:Before SMITH, MELLOY, and BENTON, Circuit Judges.
Case Date:May 29, 2015
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit

Page 903

787 F.3d 903 (8th Cir. 2015)

In re: Union Electric Company, doing business as Ameren UE, Petitioner;

Energy Insurance Mutual Limited, Respondent

No. 14-3276

United States Court of Appeals, Eighth Circuit

May 29, 2015

Submitted January 12, 2015.

Appeal from United States District Court for the Eastern District of Missouri - St. Louis .

For In re: Union Electric Company, doing business as: Ameren UE, Petitioner: Susan E. Bindler, Robert T. Haar, Lisa Ann Pake, Haar & Woods, Saint Louis, MO.

For Energy Insurance Mutual Limited, Respondent: Lisa S. Brogan, Michael A. Pollard, Baker & Mckenzie, Chicago, IL; Alan K. Goldstein, Goldstein & Price, Saint Louis, MO; David Zaslowsky, Baker & Mckenie, New York, NY.

Before SMITH, MELLOY, and BENTON, Circuit Judges.

OPINION

Page 904

MELLOY, Circuit Judge.

Energy Insurance Mutual Limited (" EIM" ) moved to transfer the present dispute over insurance coverage to the United States District Court for the Southern District of New York, citing a contractual forum-selection clause and 28 U.S.C. § 1404(a). The district court1 granted the motion. Union Electric then filed a petition with our Court seeking a writ of prohibition or mandamus to prevent the transfer. Because Union Electric has not satisfied the burden of showing an entitlement to this extraordinary form of relief, we deny the petition.

I.

We set forth the early history of this case and the underlying facts in a prior opinion. Union Elec. Co. v. Energy Ins. Mut. Ltd., 689 F.3d 968, 969-70 (8th Cir. 2012). We recap those facts here and describe additional developments.

Union Electric is a power company, and EIM is a trade-association-owned excess carrier for power companies. Union Electric, as a member of the trade association, is a partial owner of EIM. Union Electric is also the named insured in a $100 million excess liability policy issued by EIM.

It is undisputed that Union Electric and other similarly situated power companies drafted the general form policy upon which the present policy is based. It also is undisputed that Union Electric negotiated the specific terms of the present policy with EIM. Suffice it to say, we view Union Electric and EIM as sophisticated parties regarding the acts of drafting, negotiating,

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and entering into the present insurance policy.

Union Electric's policy included a requirement that, in the event of a coverage dispute, the parties must progress sequentially through several steps of dispute resolution. The steps required a mini-trial, followed by arbitration, and finally, for any remaining dispute to be handled by suit filed in the United States District Court for the Southern District of New York. The forum-selection clause naming New York was exclusive in its designation of a forum court and not merely permissive. A choice-of-law provision in the policy specified that New York law was to apply.

The present dispute arose after a catastrophic failure of a Union Electric reservoir in Missouri caused extensive damage to surrounding properties. Union Electric paid substantial sums to settle damage claims, and EIM paid out $68 million of the policy's $100 million limit. Union Electric then filed this suit in the United States District Court for the Eastern District of Missouri seeking the remaining $32 million. Union Election also seeks damages for breach of contract and vexatious refusal to pay.

EIM moved for dismissal under Rule 12(b)(6), arguing that Union Electric failed to state a claim due to a failure to pursue the mini-trial. EIM also moved for dismissal under Rules 12(b)(3) and 12(b)(6) seeking to enforce the forum-selection clause. The district court granted the motion to dismiss based on the forum-selection clause, applying M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972).

Union Electric appealed, arguing that the district court should not have applied Bremen and that, even if Bremen applied, the district court failed to consider whether the forum-selection clause was invalid or unenforceable as a matter of Missouri public policy. Union Electric argued specifically that Missouri had a public policy against the arbitration of insurance disputes and that this public policy invalidated forum-selection clauses that would send insurance disputes to forums where arbitration was likely to be enforced. We reversed and remanded. Union Elec., 689 F.3d at 974-75.

In doing so, we addressed at length the standard to apply when analyzing a forum-selection clause under a motion to dismiss, as contrasted with a motion to transfer under § 1404(a). Id. at 971-73. We held, " a district court sitting in diversity jurisdiction and applying federal law must apply the standard articulated in Bremen to the question of whether to enforce a forum selection clause through dismissal." Id. at 973.2 We also held, however, that the district court erred by failing to address the public policy argument as a relevant factor under Bremen. Id. at 974. We did not view the public policy argument as being sufficiently clear to allow us to address it in the first instance on appeal. Id. at 974 n.4. As such, we remanded for the district court to address the issue. Id. at 975. We did not address the mini-trial issue, holding instead that the district court should address the relationship between the mini-trial requirement, the arbitration provision, and the public policy argument.

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On remand, the district court denied the motion to dismiss. The court quoted Bremen for the proposition that, " A contractual choice-of-forum clause should be held unenforceable if enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by judicial decision." Bremen, 407 U.S. at 15. The district court noted that arbitration agreements in insurance contracts are unenforceable under Missouri law and that the Missouri Court of Appeals has held contractual choice-of-law provisions unenforceable if such provisions would allow enforcement of an insurance-policy arbitration agreement. See Mo. Rev. Stat. § 435.350 (" A written agreement to submit any existing controversy to arbitration or a provision in a written contract, except contracts of insurance and contracts of adhesion, to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable and irrevocable, save upon such grounds as exist at law or in equity for the revocation of any contract." ); Sturgeon v. Allied Prof'ls Ins. Co., 344 S.W.3d 205, 210 (Mo.Ct.App. 2011). The district court concluded that because the forum-selection clause at issue would result in enforcement of the arbitration agreement, the forum selection clause was invalid.

After the district court denied the motion to dismiss, however, the Supreme Court issued a unanimous opinion in a different case strongly supporting the enforcement of contractual forum-selection clauses " [i]n all but the most unusual cases." A. Marine Constr. Co. v. U.S. Dist. Ct. for the W. Dist. of Tex., 134 S.Ct. 568, 583, 187 L.Ed.2d 487 (2013). The Supreme Court carefully distinguished between forum-based challenges under 28 U.S.C. § 1404(a), on the one hand, and venue-based challenges under Rule 12(b)(3) and 28 U.S.C. § 1406, on the other. Id. at 577-79. The Court concluded that a forum-selection clause could not factor into an analysis under Rule 12(b)(3) or § 1406 because those two sources of authority applied where the venue itself, and not merely the forum, was improper. Id. at 577. According to the Court, the terms " forum" and " venue" must be treated as distinct in this context; forum is a more general term whereas venue is a technical term as defined in 28 U.S.C. § 1391(b). Id. at 577-78. Given this distinction, the propriety of venue in a given court is to be determined " exclusively" as a matter of statutory interpretation. Id. at 577 (" Whether venue is 'wrong' or 'improper' depends exclusively on whether the court in which the case was brought satisfies the requirements of federal venue laws, and those provisions say nothing about a forum-selection clause." ).

The Court also articulated a bifurcated system of analysis for forum-based motions to transfer under § 1404(a) depending upon whether a case involved a forum-selection clause. Id. at 581-83. In the absence of a valid forum-selection clause, a traditional, flexible, multi-factored analysis requires consideration of factors such as private and public interests, convenience to parties and witness, and respect for a plaintiff's choice of forum. Faced with a valid contractual forum-selection clause, however, many factors are to be treated as conclusively established by the contract. For example, the Court stated that the forum selection clause means the plaintiff's choice of a different forum is entitled to " no weight." Id. at 581. And, the " private-interest factors . . . weigh entirely in favor" of the contractual forum. Id. at 582.

Although the Court in Atlantic Marine resolved several questions, it left other questions unanswered....

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