Ruth's Chris Steak House Franchise, Inc. v. T-FAB, Inc.

• Decision Date: 05 October 2011
• Docket Number: Case No. 6:10-cv-456-Orl-28DAB
• Parties: RUTH'S CHRIS STEAK HOUSE FRANCHISE, INC., Plaintiff, v T-FAB, INC., AND MARCEL TAYLOR, Defendants.
• Court: U.S. District Court — Middle District of Florida

RUTH'S CHRIS STEAK HOUSEFRANCHISE, INC., Plaintiff,vT-FAB, INC., AND MARCEL TAYLOR, Defendants.

Case No. 6:10-cv-456-Orl-28DAB

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA ORLANDO DIVISION

Dated: October 5, 2011

ORDER

This case involves a franchise dispute between Ruth's Chris Steak House Franchise, Inc. ("Plaintiff") and franchisees T-Fab, Inc. ("T-Fab") and Marcel Taylor ("Taylor") (collectively "Defendants"). In the Complaint (Doc. 1), Plaintiff alleges, inter alia, breach of contract and violations of the Lanham Act, 15 U.S.C. § 1051 et seq.

The case is currently before the Court on Defendants' Motion to Dismiss Under Rule 12(b)(2) (Doc. 21), in which Defendants assert that this Court lacks personal jurisdiction over them. Having considered the motion, Plaintiff's Response (Doc. 23) thereto, and Defendants' Reply (Doc. 27), I conclude that the motion must be denied because Defendants are subject to personal jurisdiction under Florida law and such exercise does not offend the Due Process Clause of the U.S. Constitution.

Plaintiff is a Louisiana corporation with its principal place of business in Heathrow, Florida. Defendant T-Fab is a Nevada corporation with its principal place of business in LasVegas, Nevada, and Defendant Taylor is a citizen of the state of Nevada.¹ This Court has subject matter jurisdiction over this case based on both the presence of a federal question, 28 U.S.C. § 1331, and diversity of citizenship, 28 U.S.C. § 1332.

Where, as here, subject matter jurisdiction is based on a federal question arising under a statute that is silent regarding service of process² or on diversity of citizenship, a federal court may exercise personal jurisdiction over non-resident defendants only if such exercise is authorized by both the law of the forum state and the U.S. Constitution. See United Techs. Corp. v. Mazer, 556 F.3d 1260, 1274 (11th Cir. 2009) (diversity); Sculptchair, Inc. v. Century Arts, Ltd., 94 F.3d 623, 626-27 (11th Cir. 1996) (silent federal statute). Typically, this Court examines the issue of personal jurisdiction under Florida's general long-arm statute—section 48.193, Florida Statutes. However, this case presents an issue regarding contractual submission to personal jurisdiction; the basis of personal jurisdiction that is alleged in the Complaint is that "the defendants have consented to personal jurisdiction and venue in this district," (Compl. at 3).

"[I]f certain requirements are met, parties may, by contract alone, confer personal jurisdiction on the courts of Florida." Jetbroadband WV, LLC v. Mastec N. Am., Inc., 13 So. 3d 159, 162 (Fla. 3d DCA 2009). Such contractual conferring of personal jurisdiction is provided for by section 685.102, Florida Statutes, which provides in pertinent part:

[A]ny person may, to the extent permitted under the United States Constitution, maintain in this state an action or proceeding against any person or other entity residing or located outside this state, if the action or proceeding arises out of or relates to any contract, agreement, or undertaking for which a choice of the law of this state, in whole or in part, has been made pursuant to [section 685.101, Florida Statutes,] and which contains a provision by which such person or other entity arising or located outside this state agrees to submit to the jurisdiction of the courts of this state.

§ 685.102(1), Fla. Stat.³

When Defendants first became franchisees of Plaintiff in 1989, Plaintiff was based in Louisiana, and it is undisputed that the initial franchise agreements did not contain a provision in which Defendants submitted to the jurisdiction of courts located in Florida. However, shortly after Hurricane Katrina struck in 2005, Plaintiff relocated to Florida, and on June 12, 2009—after issues with Defendants' franchises had emerged and in the course of trying to resolve their disputes—Plaintiff and Defendants signed a Workout and Mutual Termination Agreement ("the Workout Agreement") that included the following provisions:

A. This Agreement and any claim or controversy arising out of, or relating to, the rights and obligations of the parties under this Agreement shall be governed by and construed in accordance with the laws of the State ofFlorida, without regard to conflicts of laws principles.

B. [Plaintiff] and [Defendants] agree that, to the extent any disputes cannot be resolved directly between them, [Defendants] shall file any suit against [Plaintiff] only in the federal or state court having jurisdiction where [Plaintiff's] principal offices are located at the time suit is filed. [Plaintiff] may file suit in the federal or state court located in the jurisdiction where its principal offices are located at the time suit is filed; where [Defendants] reside[] or do[] business; where the Restaurants are or were located; or where the claim arose. [Plaintiff] and [Defendants] consent to the personal jurisdiction and venue of those courts over them.

(Workout Agreement, Ex. 7 to Compl., at 4).

Defendants argue that these provisions do not satisfy the requirements for contractual consent to jurisdiction under section 685.102(1), but these portions of the Workout Agreement indeed meet the conditions of the statute. First, although Defendants assert that this case does not "arise out of or relate to" the Workout Agreement but instead arises from the franchise agreements themselves, this lawsuit clearly at least "relates to" the Workout Agreement. The Workout Agreement is mentioned several times in the Complaint, and I am satisfied that this suit is sufficiently "related to" the Workout Agreement to meet the requirements of section 685.102(1).

Defendants also assert that they have not specifically consented to the jurisdiction of courts in Florida as required by section 685.102 but instead have consented only vaguely to "the jurisdiction where [Plaintiff's] principal offices are located at the time suit is filed," which they aver is not sufficient to satisfy the statute. (See Doc. 27 at 2 (quoting the Workout Agreement)). This contention is without merit. In light of the fact that Plaintiff's principal offices are located in Florida, Defendants' consent to jurisdiction of federal and state courts where Plaintiff's principal offices are located is sufficient to establish consent tojurisdiction of courts in Florida as required by section 685.102. Cf Jackson Hewitt, Inc. v. Joiner's Tax Grp., Inc., No. 2:11-cv-00664 (DMC)(JAD), 2011 WL 2436673, at *2 & n.1 (D.N.J. June 13, 2011) (construing franchise agreement's provision stating that franchisee consented "to venue and personal jurisdiction . . . [in] the United States District Court nearest to [franchisor's] principal place of business" as meaning that "the District Court of New Jersey" was the selected forum for adjudication of disputes). Moreover, considering that the location of Plaintiff's offices was known by Defendants to be in Florida at the time the Workout Agreement was signed and that the location has not changed since then, it is no injustice or surprise to Defendants to require them to defend this suit in Florida.

Finally, Defendants contend that due process would not be satisfied if a court in Florida exercises jurisdiction over them, but this contention also is rejected. In a commercial setting such as this one, where a defendant gives express consent to personal jurisdiction in a freely negotiated agreement and the...