Medicine Shoppe Intern., Inc. v. Browne, 87-2164C-(1).
| Decision Date | 25 April 1988 |
| Docket Number | No. 87-2164C-(1).,87-2164C-(1). |
| Citation | 683 F. Supp. 731 |
| Parties | MEDICINE SHOPPE INTERNATIONAL, INC., Plaintiff, v. Eugene J. BROWNE, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
Stephen H. Rovak, Peper, Martin, Jensen, Maichel & Hetlage, St. Louis, Mo., for plaintiff.
Alan R. Soberman, Rose & Soberman, Roslyn, N.Y., Leonard D. Vines, Vines, Jones, Ross, Kraner & Rubin, St. Louis, Mo., for defendants.
IT IS HEREBY ORDERED that defendants' motion for change of venue be and is denied.
Plaintiff Medicine Shoppe International, Inc., brought this two-count diversity jurisdiction breach of franchise agreement action against defendants Eugene L. Browne and Browne's Pharmacy, Inc., in this Court, the United States District Court for the Eastern District of Missouri. The franchise agreement at issue between plaintiff and defendant Browne contains a forum selection clause which provides:
Any cause of action between the parties hereto arising from this Agreement shall be brought only in the Federal District Court for the Eastern District of Missouri, unless said Court shall lack jurisdiction, in which case, such action shall be brought only in the state courts in St. Louis County, Missouri.
Defendants move for change of venue, pursuant to 28 U.S.C. § 1404, to the United States District Court for the Eastern District of New York, a district where defendants contend this action "might have been brought." 28 U.S.C. § 1404(a).
First, defendants argue that the forum selection clause is not enforceable. This is a diversity jurisdiction action. Missouri law binds this Court on substantive issues. Federal law controls on procedural issues. Sun World Lines, Ltd. v. March Shipping Corp., 801 F.2d 1066, 1068 (8th Cir.1986), citing Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). "The enforceability of a forum selection clause concerns both the substantive law of contracts and the procedural law of venue." 801 F.2d at 1069. "On the one hand the clause determines venue and can be considered procedural, but on the other, choice of forum is an important contractual right of the parties and can be considered substantive." Farmland Industries v. Frazier-Parrott Commodities, 806 F.2d 848, 852 (8th Cir.1986). Thus, "whether a contractual forum selection clause is substantive or procedural is a difficult question." Id. In Sun World, the Eighth Circuit appeared to decide that forum selection clauses are procedural and thus that federal law, namely the rule in The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972), controls. Sun World, 801 F.2d at 1069. However, in Farmland Industries, the Eighth Circuit explained that in Sun World federal common law (that is The Bremen) controlled because Sun World was an admiralty case. 806 F.2d at 852. Without deciding whether forum selection clauses are procedural or substantive, Farmland concluded that in diversity cases consideration should be given to the public policy of the forum state with respect to the enforceability of forum selection clauses. Id.*
Missouri law on the enforceability of forum selection clauses is clear: forum selection clauses which purport to prevent courts within the State of Missouri from exercising their jurisdiction to hear actions brought by Missouri citizens are void as against the Missouri public policy of providing Missouri citizens with access to courts within the State of Missouri. Reichard v. Manhattan Life Ins. Co., 31 Mo. 518 (1862); State ex rel. Gooseneck Trailer Mfg. Co. v. Barker, 619 S.W.2d 928, 930 (Mo.App. 1981); see State ex rel. Marlo v. Hess, 669 S.W.2d 291, 293-294 (Mo.App. 1984). In contrast, forum selection clauses which designate the State of Missouri or a particular court within the State of Missouri as the exclusive forum in which to bring actions are enforceable so long as the clauses are not unfair and are not unreasonable. Osage Homestead, Inc. v. City of New Florence, 713 S.W.2d 51, 52 (Mo.App. 1986); State ex rel. Marlo v. Hess, 669 S.W.2d 291, 293-294 (Mo.App. 1984); Gibson v. Gibson, 687 S.W.2d 274, 276 (Mo. App. 1985). The forum selection clause at issue herein designates a particular court within the State of Missouri as the exclusive forum in which to bring an action arising from the franchise agreement. Therefore, under Missouri law, this forum selection clause is enforceable so long as it is not unfair and is not unjust.
The federal rule on the enforceability of forum selection clauses is similar: the clause should control and be enforced unless the resisting party makes a strong showing that the clause is unreasonable and unjust, or that the clause is invalid because of fraud or overreaching, or that the suit is broader than the intended scope of the clause. The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15, 92 S.Ct. 1907, 1916, 32 L.Ed.2d 513 (1972); Farmland Industries, 806 F.2d at 852.
Defendants argue that the forum selection clause at issue herein is not enforceable because: the franchise agreement concerns a pharmacy business located in New York; defendants' witnesses are located in New York; defendants' present business is located in New York; plaintiff is authorized to do business in New York; and the parties did not negotiate over the forum selection clause. Even without considering the contacts which this action has to Missouri (plaintiff's witnesses and documents; the fact that plaintiff's principal and only place of business is in Missouri; the fact that the franchise agreement provides that it is governed by Missouri law; and the fact that the franchise agreement unambiguously and unequivocally provides that actions arising from the agreement must be brought in Missouri), defendants' numerous contacts with New York and the fact that the...
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...Industries to conclusively hold that forum selection clauses are a substantive state law issue. See Medicine Shoppe Int'l, Inc. v. Browne, 683 F.Supp. 731, 732 (E.D.Mo.1988); Giroir v. MBank Dallas, N.A., 676 F.Supp. 915, 921 (E.D.Ark.1987) ("the Eighth Circuit may have suggested in Farmlan......
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