Davis Media Group, Inc. v. Best Western Intern., No. RDB-03-2712.

• Decision Date: 12 February 2004
• Docket Number: No. RDB-03-2712.
• Parties: DAVIS MEDIA GROUP, INC., Plaintiff, v. BEST WESTERN INTERNATIONAL, INC., Defendant.
• Court: U.S. District Court — District of Maryland

302 F.Supp.2d 464

DAVIS MEDIA GROUP, INC., Plaintiff, v. BEST WESTERN INTERNATIONAL, INC., Defendant.

No. RDB-03-2712.

United States District Court, D. Maryland.

February 12, 2004.

James B. Astrachan, Julie Rebecca Rubin, Peter H. Gunst, Astrachan, Gunst and Thomas, PC, Baltimore, MD, for The Davis Media Group, Inc., Plaintiff.

John A. Burlingame, Kara Kathleen Mather, Squire, Sanders and Dempsey, LLP, Washington, DC, for Best Western International, Inc., Defendant.

MEMORANDUM OPINION

BENNETT, District Judge.

In this action alleging, inter alia, breach of contract, Defendant Best Western International, Inc. ("BWI") has moved pursuant to Rule 12(b)(3) of the Federal Rules of Civil Procedure to dismiss Plaintiff Davis Media Group, Inc.'s ("DMG") Complaint for improper venue, or in the alternative, to transfer this action to the United States District Court for the District of Arizona pursuant to 28 U.S.C. § 1404(a). The basis for the Defendant's motion is a forum-selection clause contained in the parties' contract. The issues have been fully briefed and no hearing is necessary. See Local Rule 105.6. For the reasons set forth below, this Court shall TRANSFER this action to the United States District Court for the District of Arizona.

BACKGROUND

DMG, a Maryland corporation with a principal office in Baltimore, is an advertising agency whose services include creative and production supervision and media planning and purchasing. (Complaint, ¶ 3). BWI, a California corporation with its principal place of business in Arizona, is the owner of the "BEST WESTERN" mark and nationally recognized hotel chain. (Complaint, ¶ 4). BWI is responsible for BEST WESTERN's advertising.

On June 18, 2001, Plaintiff DMG and Defendant BWI entered into a contract (the "Agreement") for the performance of advertising services. (Complaint, ¶ 11). The Agreement was an eight-page document, which contained a section entitled "Governing Law, Etc." providing that:

[t]his Agreement and the performance called for hereunder, and all suits and special proceedings brought hereunder, shall be construed in accordance with and pursuant to the laws of the State of Arizona, and shall be subject to the jurisdiction of the Courts of the State of Arizona. (Complaint Exhibit A; Agreement, ¶ 13(A)).

On September 23, 2003, DMG filed a one count Complaint in this Court alleging that BWI had breached the Agreement. On the basis of the forum-selection clause contained in the contract, BWI has moved to dismiss for improper venue or, in the alternative, for this Court to transfer this action to the United States District Court for the District of Arizona pursuant to 28 U.S.C. § 1404(a).

CHOICE OF LAW

As Judge Blake of this Court noted in Koch v. America Online, Inc., 139 F.Supp.2d 690, 692 (D.Md.2000), "[t]he initial step in analyzing the validity of a forum-selection clause is to determine whether state or federal law should be applied." As in the Koch case, this action is based on diversity jurisdiction pursuant to 28 U.S.C. § 1332. (Complaint, ¶ 1). In Eisaman v. Cinema Grill Systems, Inc., 87 F.Supp.2d 446, 448 (D.Md.1999), Judge Chasanow of this Court noted that "[i]n diversity cases ... the Fourth Circuit applies state law to determine enforceability" of forum-selection clauses. (citing an unpublished table decision, Nutter v. New Rents, Inc., 945 F.2d 398, 1991 WL 193490 (4th Cir. October 1, 1991)).

While the forum-selection clause references Arizona law, the Plaintiff, in opposing the subject Motion, does not concede the applicability of Arizona law in determining the enforceability of the forum-selection clause. However, it is clear that in evaluating the enforceability of forum-selection clauses, both Maryland and Arizona have adopted the federal standard as set forth by the Supreme Court in M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972). The Court of Appeals of Maryland, in Gilman v. Wheat, First Sec., 345 Md. 361, 692 A.2d 454 (1997), adopted the Bremen standard after a thorough analysis. In Societe Jean Nicolas et fils v. Mousseux, 123 Ariz. 59, 60-61, 597 P.2d 541, 542-43 (1979), the Supreme Court of Arizona upheld a forum-selection clause based on the Supreme Court's analysis in Bremen. Accordingly, this Court will apply federal law in determining the validity of the forum-selection clause.

ANALYSIS

A. Forum-Selection Clause

Any analysis of the enforceability of a forum-selection clause must begin with two decisions of the United States Supreme Court. In M/S Bremen v. Zapata Off-Shore Co., supra, the Supreme Court held enforceable a forum-selection clause in an international contract. The Court held that such a clause "should be enforced unless enforcement is shown by the resisting party to be `unreasonable' under the circumstances." Bremen, 407 U.S. at 10, 92 S.Ct. 1907. In the aftermath of the Bremen decision, a series of cases upheld forum-selection clauses and placed the burden on the party opposing the enforcement of the clause to show that it is "unreasonable." See, e.g., Sterling Forest Associates, Ltd. v. Barnett-Range Corp., 840 F.2d 249 (4th Cir.1988), reversed on other grounds, 490 U.S. 495, 109 S.Ct. 1976, 104 L.Ed.2d 548 (1989). In upholding a forum-selection clause and remanding with instructions to the District Court to grant a motion for transfer to another federal district, the Fourth Circuit in Sterling reviewed a series of cases applying the Bremen standard. Sterling, 840 F.2d at 250-53. In Carnival Cruise Lines, Inc. v Shute, 499 U.S. 585, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991), modified by statute, 46 U.S.C.App. § 183c, the Supreme Court reinforced its support for forum-selection clauses. In that case, the Supreme Court reversed the Ninth Circuit Court of Appeals and dismissed the argument that the forum-selection clause at issue had not been "freely bargained for" but was merely contained in a form contract. Shute, 499 U.S. at 592-95, 111 S.Ct. 1522.

This Court previously has held that only mandatory forum-selection clauses will be enforced applying the Bremen standard. See Eisaman v. Cinema Grill Systems, Inc., 87 F.Supp.2d at 449 (citing Florida Polk County v. Prison Health Servs., Inc., 170 F.3d 1081, 1083 n. 8 (11th Cir.1999); Blanco v. Banco Indus. de Venezuela, S.A., 997 F.2d 974, 979 (2nd Cir.1993); Keaty v. Freeport Indonesia, Inc., 503 F.2d 955, 956-57 (5th Cir.1974) (per curiam)). This Court has further defined a mandatory provision as "one containing clear language showing that jurisdiction is appropriate only in the designated forum." Koch, 139 F.Supp. 2nd at 693 (citing Excell, Inc. v. Sterling Boiler and Mechanical, Inc., 106 F.3d 318, 321 (10th Cir.1997) (internal quotation omitted)). A permissive forum-selection clause merely permits jurisdiction in the selected forum without "precluding it elsewhere." Id.

The forum-selection clause in the instant case states, "[t]his Agreement and the performance called for hereunder, and all suits and special proceedings brought hereunder, shall be construed in accordance with and pursuant to the laws of the State of Arizona, and shall be subject to the jurisdiction of the Courts of the State of Arizona." (Complaint Exhibit A; Agreement, ¶ 13(A)). DMG argues that the language of the forum-selection clause is permissive and serves only to prevent either party from objection on jurisdiction or venue grounds to a suit brought in Arizona. However, courts have found similar forum-selection clause language to be mandatory. See, e.g., Sterling Forest Associates, Ltd. v. Barnett-Range Corp., supra; Gordonsville Indus. v. American Artos Corp., 549 F.Supp. 200, 204 (W.D.Va.1982) ("the place for litigation shall be the Civil Court in Bochum, Germany"); Hoes of America, Inc. v. Hoes, 493 F.Supp. 1205, 1207 (C.D.Ill.1979) ("any court procedures shall be held in Bremen"); Taylor v. Titan Midwest Constr. Corp., 474 F.Supp. 145, 146 (N.D.Tex.1979) ("venue shall be in the appropriate court having subject matter jurisdiction over the matter sitting within the county in which the principal offices of the contractor are located"); Public Water Supply Dist. No. 1 v. American Ins. Co., 471 F.Supp. 1071, 1071 (W.D.Mo.1979) ("any legal action filed upon the bond shall be maintained in Mercer County, Missouri"); Full-Sight Contact Lens Corp. v. Soft Lenses, Inc., 466 F.Supp. 71, 72 n. 3 (S.D.N.Y.1978) ("suit ... shall be brought in either San Diego or Los Angeles County"); General Electric Co. v. City of Tacoma, 250 F.Supp. 125 n. 1 (W.D.Wash.1966) ("venue ... shall be in the Superior Court of the State of Washington in and for the County of Pierce").

In Sterling, the Fourth Circuit Court of Appeals concluded that the following forum-selection clause was mandatory: "[t]his Agreement shall be construed and enforced in accordance with the laws of the State of California and the parties agree that in any dispute jurisdiction and venue shall be in California." Sterling, 840 F.2d at 250. The Court, in reaching its conclusion, reiterated established principles of contract construction, stating that clauses which "are knowingly incorporated into a contract should not be treated as meaningless." Id. at 251; accord Morgan Bank v Wilson, 164 Ariz. 535, 536-39, 794 P.2d 959, 960-63 (Ariz.Ct.App.1990) (concluding that a forum-selection clause with the language "this contract shall be construed ... and venue for any dispute arising under or in relation to this contract shall be" was enforceable and noting that "it is a well established principle of contract construction that clauses which are knowingly incorporated into a contract should not be treated as meaningless").

The Sterling Court went on to state that "use of the word shall generally indicates a mandatory intent unless a convincing argument to the contrary is made ... [t]his is equally true of the phrase shall be." Id. (internal quotation and citations omitted). The Court further opined:

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