Dace Intern., Inc. v. Apple Computer, Inc.

• Decision Date: 30 August 1995
• Docket Number: No. 1-94-1312,1-94-1312
• Citation: 655 N.E.2d 974,275 Ill.App.3d 234,211 Ill.Dec. 591
• Parties: , 211 Ill.Dec. 591 DACE INTERNATIONAL, INC., d/b/a Computer Care Centers, Plaintiff-Appellant, v. APPLE COMPUTER, INC., Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 974

655 N.E.2d 974

275 Ill.App.3d 234, 211 Ill.Dec. 591

DACE INTERNATIONAL, INC., d/b/a Computer Care Centers Plaintiff-Appellant, v. APPLE COMPUTER, INC., Defendant-Appellee.

No. 1-94-1312.

Appellate Court of Illinois First District, Third Division.

Aug. 30, 1995.

Anthony S. DiVincenzo of Campbell & DiVincenzo, Chicago, for appellant.

James K. Gardner, William W. Davis of Neal, Gerber & Eisenberg, Chicago, for appellee.

Presiding Justice GREIMAN delivered the opinion of the court:

Plaintiff Dace International, Inc. (Dace) brought a breach of contract action against defendant Apple Computer, Inc. (Apple) in the circuit court of Cook County. Apple filed a motion to dismiss under section 2-619 (735 ILCS 5/2-619 (West 1992)) based on a forum selection clause in the parties' contract which designated California as the forum for all litigation between the parties. The trial court granted this motion to dismiss.

On appeal, Dace alleges that: (1) the forum selection clause is, as a matter of law, void as against public policy; and (2) the clause is unenforceable under the facts of this case. We reject Dace's arguments, finding the clause at issue enforceable, and affirm the trial court.

In April 1991, Dace contracted with Apple to act as a computer sales consultant. The Authorized Apple Education Sales Consultant 1991 Agreement (the Agreement) allowed Dace to solicit and service professional education customers in Illinois.

In July 1991, Apple notified Dace that it was terminating the Agreement because of Dace's substandard performance. Dace alleges that its termination breached the parties' Agreement and that Dace had fully performed all of its duties under the Agreement.

Dace filed this breach of contract action in Illinois. Apple moved to dismiss claiming that the Agreement's forum selection clause established Santa Clara County, California as the site of any and all litigation between the parties.

The forum selection clause provides in part that:

"(1) This Agreement shall be governed by and construed in accordance with the laws of the State of California except that body of law known as Conflicts of Law. (2) All actions or proceedings arising directly or indirectly from this Agreement other than those for injunctive relief shall be litigated in courts located within the County of Santa Clara, California. Consultant consents to the jurisdiction thereof and agrees not to disturb such choice of forum. If Consultant is not a resident of California, Consultant waives the personal service of any and all process upon it, and consents that all such service or process may be made by certified or registered mail, return receipt requested, addressed to Consultant as set forth in this Agreement."

The trial court enforced this clause and entered an order granting Apple's section 2-619 motion to dismiss Dace's action. In reviewing orders on motions to dismiss, we apply a de novo standard of review. Federal Ins. Co. v. St. Paul Fire & Marine Ins. Co. (1995), 271 Ill.App.3d 1117, 208 Ill.Dec. 404, 649 N.E.2d 460; Toombs v. City of Champaign (1993), 245 Ill.App.3d 580, 185 Ill.Dec. 755, 615 N.E.2d 50.

Dace first alleges the trial court erred in failing to recognize and apply Illinois' public policy disfavoring forum selection. In support of this allegation, Dace cites the recent Illinois Supreme Court decision in Williams v. Illinois State Scholarship Com. (1990), 139 Ill.2d 24, 150 Ill.Dec. 578, 563 N.E.2d 465.

Williams was a class action suit brought by student borrowers against the Illinois State Scholarship Commission (ISSC) to enjoin defendant agency from filing collection actions in allegedly improper venue. In 1982, ISSC began to require student borrowers to execute loan agreements which contained venue waiver clauses requiring borrowers to consent to exclusive jurisdiction in Cook County, Illinois.

Also in effect at the time was an amendment to the Illinois School Code which provided that ISSC "shall file any and all lawsuits on delinquent and defaulted student loans in the County of Cook where venue shall be deemed to be proper." (Pub. Act 85-827, eff. Jan. 1, 1988 (amending Ill.Rev.Stat.1985, ch. 122, par. 30-15.12, now codified at 110 ILCS 947/105 (West 1993)).) The supreme court found that the statute and the policy implemented by ISSC violated defendants' due process rights. In reaching this determination, the court applied the balancing test enunciated in Mathews v. Eldridge (1976), 424 U.S. 319, 334-35, 96 S.Ct. 893, 902-03, 47 L.Ed.2d 18, which involves a weighing of the costs and benefits of the challenged state action. Although primarily concerned with the due process implications of state action, the court also found that the forum selection clause "in the case at bar results in the contravention of the policy underlying the general venue statute, ridiculous long-distance forum abuse, and the unfair burdening of a forum not connected to the litigation." Williams, 139 Ill.2d at 71-72, 150 Ill.Dec. 578, 563 N.E.2d 465. (Emphasis added.)

The court did not, as Dace contends, recognize an independent public policy voiding forum selection clauses. Instead, the court's decision indicates that the policy implications of Illinois' general venue statute were the compelling factors. Moreover, the court did not find the concept or practice of forum selection objectionable. Contrary to Dace's assertion that Williams states a general disapproval of forum selection clauses, the court's analysis suggests that the validity of forum selection clauses is to be determined on a case by case basis. Proceeding on such a basis, the Williams court recognized the seeming conflict between Martin-Trigona v. Roderick (1975), 29 Ill.App.3d 553, 331 N.E.2d 100, and Calanca v. D & S Mfg. Co. (1987), 157 Ill.App.3d 85, 109 Ill.Dec. 400, 510 N.E.2d 21.

Martin-Trigona involved a residential lease agreement containing a venue waiver provision. The agreement provided that: "Lessee consents and waives venue or other objections to Lessor instituting any action under this lease in any circuit court of Illinois." Without enunciating a test or standard for determining the validity of forum selection or venue waiver clauses generally, the court held the provision "void as against public policy." Martin-Trigona, 29 Ill.App.3d at 554, 331 N.E.2d 100.

Calanca involved an employment contract between an Illinois resident and a Wisconsin corporation, wherein the parties agreed that "in the event of any litigation, the proper forum for the resolution of such litigation shall be the Circuit Court of Jackson County, Wisconsin. (Calanca, 157 Ill.App.3d at 87, 109 Ill.Dec. 400, 510 N.E.2d 21.) The Calanca court held that a forum selection clause in a contract is prima facie valid and should be enforced unless the opposing party shows that enforcement would be unreasonable under the circumstances. (Calanca, 157 Ill.App.3d at 88, 109 Ill.Dec. 400, 510 N.E.2d 21.) The opposing party must show: "that the trial in the contractual forum will be so gravely difficult and inconvenient that he will for all practical purposes be deprived of his day in court. Absent that, there is no basis for concluding that it would be unfair, unjust, or unreasonable to hold that party to his bargain." Calanca, 157 Ill.App.3d at 88, 109 Ill.Dec. 400, 510 N.E.2d 21.

The Calanca court considered the following factors relevant to the determination of whether a forum selection clause is reasonable:

"(1) which law governs the formation and construction of the contract; (2) the residency of the parties involved; (3) the place of execution and/or performance; (4) the location of the parties and witnesses participating in the litigation; (5) the inconvenience of the parties of any particular location; and (6) whether the clause was equally bargained for." Calanca, 157 Ill.App.3d at 89, 109 Ill.Dec. 400, 510 N.E.2d 21.

The Williams court applied the reasoning of both decisions, first citing Martin-Trigona in support of its finding that the venue waiver provision in the student loan agreement was contrary to the policy behind our general venue statute, the aim of such policy being: "to protect all defendants from being sued in a county arbitrarily selected by a plaintiff." Williams, 139 Ill.2d at 70, 150 Ill.Dec. 578, 563 N.E.2d 465.

The supreme court then applied the factors considered in Calanca, finding the balance of these factors supported the determination that plaintiffs were effectively deprived of their day in court. (Williams, 139 Ill.2d at 72-73, 150 Ill.Dec. 578, 563 N.E.2d 465.) The court paid particular attention to the sixth Calanca factor, finding that a venue waiver provision that is part of a "boilerplate" agreement has its significance greatly reduced because of the inequality in the parties' bargaining power. (Williams, 139 Ill.2d at 72-73, 150 Ill.Dec. 578, 563 N.E.2d 465.) The court further observed that the forum selection clause in Calanca was the result of arm's-length negotiation between experienced and sophisticated businessmen, suggesting that the Calanca court "would have given far less weight to a forum selection clause embedded in an adhesion contract." Williams, 139 Ill.2d at 73, 150 Ill.Dec. 578, 563 N.E.2d 465.

Both Martin-Trigona and Williams were concerned with protecting Illinois defendants against "being sued in a county arbitrarily selected by a plaintiff, wherein the defendant does not reside, or in which no part of the transaction occurred." (Martin-Trigona, 29 Ill.App.3d at 554, 331 N.E.2d 100.) However, Calanca and the instant appeal examine the validity of forum selection clauses, while Martin-Trigona involved a venue waiver clause. Venue waiver represents one party's consenting to be sued in a forum or forums of the other party's subsequent choosing. Accordingly, we reject Dace's contention that all forum selection clauses are void as against public policy, and direct our attention to Dace's second argument...