C. Pappas Co., Inc. v. E. & J. GALLO WINERY

• Citation: 565 F. Supp. 1015
• Decision Date: 29 June 1983
• Docket Number: Civ. A. No. 82-3458-G.
• Parties: C. PAPPAS COMPANY, INC., Plaintiff, v. E. & J. GALLO WINERY, Defendant.
• Court: U.S. District Court — District of Massachusetts

565 F. Supp. 1015

C. PAPPAS COMPANY, INC., Plaintiff, v. E. & J. GALLO WINERY, Defendant.

Civ. A. No. 82-3458-G.

United States District Court, D. Massachusetts.

June 29, 1983.

Robert D. Paul, Goodwin, Procter & Hoar, Boston, Mass., for plaintiff.

Alan R. Miller, Robins, Zelle, Larson & Kaplan, Wellesley, Mass., Robins, Zelle, Larson & Kaplan, Minneapolis, Minn., for defendant.

MEMORANDUM AND ORDER GRANTING DEFENDANT'S MOTION TO TRANSFER

GARRITY, District Judge.

The plaintiff, C. Pappas Company, Inc. (hereinafter referred to as "Pappas"), is a Massachusetts corporation with its principal place of business in Boston, Massachusetts. Pappas is a wholesaler licensed under Massachusetts law to distribute alcoholic beverages and related products. In 1967, Pappas entered into an agreement with the defendant, the E. & J. Gallo Winery of Modesto, California (hereinafter referred to as "Gallo"), whereby Pappas was appointed a wholesale distributor of Gallo products within the Commonwealth of Massachusetts. On December 1, 1976 that agreement was renewed by the parties when they entered into a new "Agreement of Distributorship."

Term # 8 of the 1976 Agreement of Distributorship states:

This agreement is entered into under the laws of the State of California and shall be construed thereunder, and any cause of action arising between the parties, whether under this agreement or otherwise, shall be brought only in a court having jurisdiction and venue at the home office of Winery. Winery and Distributor each hereby designate CT Corporation System, 235 Montgomery Street, San Francisco, California 54104 as agent for service of process in any such cause of action.

Mr. K.C. Bertsch, a Gallo Vice President, signed the Agreement on behalf of Gallo and Mr. John C. Pappas, the President of Pappas, signed as Pappas's representative.

On November 15, 1982 Pappas commenced this action against defendant Gallo, alleging violations of the federal antitrust laws and state law claims for breach of contract, breach of fiduciary duties, tortious interference with prospective business relations, and violation of the Massachusetts Consumer Protection Act. According to Pappas's complaint and the proposed amended complaint filed by Pappas, the 1976 Agreement of Distributorship is valid and was in effect up to and including the dates of the filing of the complaint and the amended complaint. The gravamen of the complaint is that Gallo breached its contract with Pappas and entered into a conflicting contract and conspiracy with McKesson Wine & Spirits Co. in an effort to eliminate competition and restrain trade. Pappas seeks damages and injunctive relief, including, inter alia, an injunction requiring Gallo to honor and comply with the provisions of the 1976 Agreement of Distributorship.

On February 18, 1983 defendant Gallo filed a Motion to Dismiss or to Transfer, seeking to enforce Term # 8 of the Agreement of Distributorship and asking this court to dismiss this action pursuant to Fed. R.Civ.P. 12(b)(3) for improper venue or to transfer this action to the United States District Court for the Eastern District of California pursuant to 28 U.S.C. § 1406(a). See also 28 U.S.C. § 1404(a). Pappas filed opposition, Gallo filed a reply brief, and the Motion to Dismiss or, in the Alternative, to Transfer, is presently before the court. Oral argument would, in this instance, be superfluous.

The issue here is whether the forum selection clause in Term # 8 of the 1976 Agreement of Distributorship should be enforced. A preliminary question is whether the enforcement of the clause is to be decided under federal or state law. This question was recently decided by Judge McNaught in a similar case in this district. In Northeast Theatre Corporation v. Edie and Ely Landau, Inc., D.Mass.1983, 563 F.Supp. 833 at 834-835, Judge McNaught held that in the federal courts the question of the enforcement of forum selection clauses is to be decided under federal law. Therefore, we turn to examine the federal cases which have focused on forum selection clauses.

In the landmark case of The Bremen v. Zapata Off-Shore Co., 1972, 407 U.S. 1, 10, 92 S.Ct. 1907, 1913, 32 L.Ed.2d 513, the Supreme Court adopted the modern view that 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." That case was an admiralty dispute, but the same analysis applies to other contract actions. See, e.g., St. Paul Fire & Marine Ins. Co. v. Travelers Indem. Co., D.Mass.1975, 401 F.Supp. 927, 929-930. The standard in this Circuit for establishing that a forum selection clause is unreasonable requires that

a resisting party must present evidence of fraud, undue influence, overweening bargaining power or such serious inconvenience in litigating in the selected forum that it is effectively deprived of its day in court. See The Bremen v. Zapata Off-Shore Co., supra, 407 U.S. at 12-19 92 S.Ct. at 1914-1918.

Fireman's Fund Amer. Ins. Cos. v. Puerto Rican Forwarding Co., Inc., 1 Cir.1974, 492 F.2d 1294, 1297.

Pappas's main argument on this issue is that the forum selection provision should not be enforced because it was not the result of equal bargaining. No allegations of fraud or undue influence have been made by Pappas and there is no evidence to support such claims....