Haskel v. FPR Registry, Inc.

• Decision Date: 19 September 1994
• Docket Number: No. CV-93-4719 (CPS).,CV-93-4719 (CPS).
• Citation: 862 F. Supp. 909
• Parties: Carol HASKEL, Plaintiff, v. The FPR REGISTRY, INC., Defendant.
• Court: U.S. District Court — Eastern District of New York

862 F. Supp. 909

Carol HASKEL, Plaintiff, v. The FPR REGISTRY, INC., Defendant.

No. CV-93-4719 (CPS).

United States District Court, E.D. New York.

September 19, 1994.

Haskel & Hand, Mineola, NY, for plaintiff.

Thomas Greenberger, by Robert Teitelbaum, Brooklyn, NY, for defendant.

MEMORANDUM AND ORDER

SIFTON, District Judge.

In this action for breach of an employment contract, defendant, The FPR Registry, Inc. ("The Registry"), moves to dismiss for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3) on the basis of a forum selection clause in the contract. Plaintiff opposes the motion, contending that the forum selection clause should not be enforced or, in the alternative, that defendant's motion should be considered as a motion to transfer venue rather than as a motion to dismiss and accordingly denied. Plaintiff also seeks the costs of opposing defendant's motion. For the reasons discussed below, defendant's motion for dismissal is denied, but the action will be transferred to the United States District Court for the District of Maryland.

BACKGROUND

Plaintiff Carol Haskel, a/k/a Carol Haskel Solomon ("Haskel") is a resident of New York State. The Registry is a Delaware corporation with offices in Maryland and Florida. Defendant states that it does not currently maintain an office in this state, but plaintiff disputes that assertion. Def.'s Brief at 5; Pl.'s Aff. in Opp. at ¶ 1.

The Registry is in the business of providing on-line computer services to landlords who seek credit and other information about prospective tenants. In 1989, defendant began efforts to solicit sales agents to sell its services to landlords in the New York area. In October 1989, plaintiff attended a recruiting meeting in New York City at which she was offered a position. Plaintiff then signed an employment contract provided by The Registry. Under the terms of the contract, plaintiff was to be paid a base salary of $21,500 per year in addition to commissions for sales made. According to plaintiff, the terms of the contract and the commission provisions were explained by Ilene Ingber, then a vice president of The Registry.

The subject of this action is the following provision which Haskel alleges is in her contract: "It is understood that if Haskel leaves under good terms the Registry will continue to pay his sic commissions on his sic accounts." The Registry contends that this "continuation clause" was added by Haskel in her own copy of the employment contract and was not accepted by The Registry.

The parties agree that the contract also contained the following choice of law and forum selection clause provision:

(a) This Agreement shall be governed by the laws of the State of Maryland.

(b) Any lawsuit arising in connection with this Agreement shall be brought only in either the United States District Court for the District of Maryland or the Circuit Court for Montgomery County in Maryland; except that suit ancillary to those brought in any court of competent jurisdiction.

Contract at ¶ 6.

Plaintiff worked for defendant for approximately four years during which time, she alleges, she fulfilled the requirements of her employment contract. According to plaintiff, on August 6, 1993, she orally informed defendant that she would be resigning her position. At the request of defendant she delayed her resignation for two weeks, until August 20, 1993. In a letter confirming her resignation and the new date on which she would leave defendant's employ, plaintiff informed defendant that she expected to receive payments for her continuing commissions under the provision quoted above. In response, defendant notified Haskel that she would be terminated a week earlier than agreed. She was also told that she would not be paid for the last week of work or for any commissions based on business generated after her departure by the accounts she had obtained for defendant. Haskel further alleges that The Registry failed to pay certain commissions due for business placed by her accounts prior to her departure.

As a result of the failure to pay commissions, Haskel commenced this action in the Supreme Court for Nassau County, New York. Her complaint asserts claims for breach of contract and for liquidated damages based on alleged violations of the New York State labor laws. The summons and complaint were served in New York upon an officer of defendant who was at a Manhattan trade show soliciting customers for the defendant.

The Registry removed the action on the basis of diversity jurisdiction, 28 U.S.C. § 1332, and then made the instant motion to dismiss for improper venue on the grounds that the forum selection clause in the contract precluded suit here. Defendant contends that the forum selection clause of the contract should be enforced since The Registry is subject to service of process in Maryland and the plaintiff could have brought the suit in either the United States District Court for Maryland or in the Circuit Court for Montgomery County, Maryland. As further support for its motion, The Registry also alleges that it does not maintain an office in New York and that defendant's witnesses and most of the records necessary for the defense of the action are located in Maryland and Florida.

Haskel has filed papers opposing the motion to dismiss, arguing that her suit involves events which took place solely in New York and that the forum selection clause is unjust and unreasonable and should not be enforced. Haskel argues in the alternative that, if the forum selection clause is deemed enforceable, defendant's motion should be construed as a motion to transfer venue to the Federal District Court in Maryland, pursuant to 28 U.S.C. § 1404(a) and, under the standards applicable to such a motion, denied.

In response, defendant filed papers seeking Rule 11 sanctions, contending that Haskel's refusal to acknowledge the merits of defendant's position is unreasonable. Defendant's papers, however, did not comply with the Federal Rules of Civil Procedure in that they did not provide sufficient notice to the plaintiff. Plaintiff and defendant therefore agreed that defendant would withdraw the motion for sanctions and that defendant's papers would be considered merely as a reply to plaintiff's opposition. In those papers, defendant contends that this motion cannot be considered as a motion to transfer under section 1404(a) since defendant did not request transfer under that section but merely sought dismissal of the action pursuant to Federal Rule of Civil Procedure 12(b)(3).

In a sur-reply affidavit, Haskel contends that her employment contract was merely a "contract of adhesion" since it was presented to potential employees on a "take it or leave it" basis and that the forum selection clause "on its face is an egregious form of overreaching." Sur-reply Aff. at ¶ 4. Haskel also states that she and other employees worked in the New York apartments rented by defendant on a day-to-day basis over several years, making and receiving telephone calls and fax transmittals. She also alleges that defendant has established a new location in Queens, New York.

DISCUSSION

Although once looked upon with suspicion by courts, it is now well-settled law that parties may bargain in advance to select the forum in which their disputes will be adjudicated. See The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972); Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 590-96, 111 S.Ct. 1522, 1525-29, 113 L.Ed.2d 622 (1991). The effect to be given to such provisions and the procedural vehicle by which they should be enforced, however, is the subject of some confusion.

In The Bremen, the Supreme Court for the first time clearly held that forum selection clauses were to be enforced if they were the product of a fair bargain. The Court ruled that "a freely negotiated private international agreement, unaffected by fraud, undue influence, or overweening bargaining power ... should be given full effect," unless it was clearly shown that enforcement would be unreasonable and unjust. 407 U.S. at 12-13, 92 S.Ct. at 1914-15 (footnote omitted). The Court held that inconvenience alone is not sufficient grounds to avoid the application of a forum selection clause unless the party seeking to avoid the clause can show that "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." Id. at 18, 92 S.Ct. at 1917. The Court remanded so that the district court, which had jurisdiction over the action, could consider whether it "should ... exercise its jurisdiction to do more than give effect to the legitimate expectations of the parties, manifested in their freely negotiated agreement, by specifically enforcing the forum selection clause." Id. at 12, 92 S.Ct. at 1914.

Subsequently, in Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29, 108 S.Ct. 2239, 2243-44, 101 L.Ed.2d 22 (1988), the Court injected a fairness and convenience component into the enforcement analysis. The Court held that federal law controls a motion pursuant to 28 U.S.C. § 1404(a) to transfer an action to the venue provided in a contractual forum selection clause. Under 28 U.S.C. § 1404(a), a district court can transfer a civil action "for the convenience of the parties and witnesses, in the interest of justice to ... any other district ... where it might have been brought." Under federal law, the Court ruled, a forum selection clause should "be a significant factor that figures centrally" in a transfer analysis but that a forum selection clause should be considered "only one relevant factor." 487 U.S. at 32, 108 S.Ct. at 2245. The appropriateness of transfer is to be considered on an "individualized case-by-case consideration of convenience and...