Interamerican Trade Corp. v. Companhia Fabricadora De Pecas

• Decision Date: 19 August 1992
• Docket Number: No. 91-3908,91-3908
• Citation: 973 F.2d 487
• Parties: INTERAMERICAN TRADE CORPORATION, Plaintiff-Appellant, v. COMPANHIA FABRICADORA DE PECAS; Cofap of America, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 487

973 F.2d 487

INTERAMERICAN TRADE CORPORATION, Plaintiff-Appellant, v. COMPANHIA FABRICADORA DE PECAS; Cofap of America, Inc. Defendants-Appellees.

No. 91-3908.

United States Court of Appeals Sixth Circuit.

Argued May 8, 1992.

Decided Aug. 19, 1992.

Charles J. Faruki, David A. Shough, Donald E. Burton (briefed), D. Jeffrey Ireland (argued and briefed), Faruki, Gilliam & Ireland, Dayton, Ohio, for plaintiff-appellant.

Howard P. Krisher, Charles Donald Shook (argued and briefed), Bieser, Greer & Landis, Dayton, Ohio, for defendants-appellees.

Before: GUY and BOGGS, Circuit Judges; and RONEY, Senior Circuit Judge. ^*

RONEY, Senior Circuit Judge.

The question presented in this case is whether the district court erred in dismissing the plaintiff's lawsuit because of a forum selection clause in the written agreements between the two parties. We affirm.

Plaintiff Interamerican Trade Corporation (ITC) is a Delaware corporation with its principal place of business in Dayton, Ohio. Defendant Companhia Fabricadora de Pecas (Cofap) is a Brazilian manufacturer of automotive parts and supplies with a subsidiary in Ohio. ITC and Cofap entered into a written agreement where ITC agreed to act as exclusive sales representative for Cofap in the United States in exchange for sales commissions. After the first agreement expired, they entered into a second written agreement. The two written agreements contain the following Brazilian forum selection clause:

In relation to the interpretation and compliance with this Agreement, the parties elect the jurisdiction of the competent Courts of Sao Paulo, Brazil, waiving any other jurisdiction that may correspond to them by reason of their present or future domicile.

They also entered into an oral agreement involving the sale of Cofap products.

ITC filed an action in Ohio state court against Cofap and its subsidiary, alleging that Cofap breached their agreements. Cofap removed the case to federal court. The district court dismissed, holding that because of the forum selection clause the lawsuit could only be brought in Sao Paulo, Brazil.

There is an apparent conflict among the circuits as to whether federal or state law applies regarding the enforceability of forum selection clauses where a federal court is sitting in diversity jurisdiction. The parties agree that the issue need not be decided in this case because Ohio courts treat forum selection clauses in a similar manner as the federal courts. See United Standard Management Corp. v. Mahoning Valley Solar Resources Inc., 16 Ohio App.3d 476, 16 OBR 559, 476 N.E.2d 724, 725-26 (1984). We, therefore, analyze the case under federal law for the purposes of this appeal.

Plaintiff-appellant ITC asserts that the district court misapplied the standard for determining the validity of a forum selection clause as articulated in Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972). According to Bremen, the forum clause should control absent a strong showing that it should be set aside. "The correct approach [is] to enforce the forum clause specifically unless" ITC can "clearly show that enforcement would be unreasonable and unjust, or that the clause [is] invalid for such reason as fraud or overreaching." 407 U.S. at 15, 92 S.Ct. at 1916.

ITC does not allege fraud or overreaching. The contract is typewritten. The provision is not buried deep in finely printed matter. Rather, it is in the same type as the other clauses and is clear. ITC does not argue that it did not know that it was agreeing to the forum for litigation over the contract. ITC does argue that the clause was a non-negotiable provision of the agreement as to which it had no choice. ITC could have, however, walked away from the contract, being under no compulsion to deal in Cofap products. Where there is no contract of adhesion and a party is not somehow compelled to enter into a contract, the fact that the forum selection clause is so important to the defendant to be non-negotiable works against the plaintiff's position, rather than for it. Cf. Carnival Cruise Lines v. Shute, --- U.S. ----, ----, 111 S.Ct. 1522, 1528, 113 L.Ed.2d 622, 633 (1991); Mercury Coal & Coke, Inc. v. Mannesmann Pipe & Steel Corp., 696 F.2d 315, 318 (4th Cir.1982).

ITC contends that enforcement of the forum selection clause would be unjust and unreasonable, urging that: Brazil has no substantial relationship to the dispute; negotiations occurred primarily in Ohio; ITC acted as sales agent for Cofap inside the United States; documents related to the dealings are in Ohio; Cofap and ITC are located in Ohio; critical witnesses are in Ohio; third party witnesses are in the United States; and, one of the subjects of the disputed agreements, shock absorbers, is warehoused in Ohio. The problem with this argument is that it focuses on facts which were either present or reasonably could have been foreseen at the time ITC entered into the contract.

Cofap responds with other facts, fully known to the parties at the time of the contract: Brazil has a logical connection to the agreements; Brazil is the principal place of business of one of the parties; the clause appears in a freely-negotiated private international agreement; and, the contract requires that Brazilian law be applied.

ITC points to a holding of...