Scepter, Inc. v. Nolan Transp. Grp., LLC

• Decision Date: 29 November 2018
• Docket Number: No. 3:18-cv-00990,3:18-cv-00990
• Citation: 352 F.Supp.3d 825
• Court: U.S. District Court — Middle District of Tennessee
• Parties: SCEPTER, INC., Plaintiff, v. NOLAN TRANSPORTATION GROUP, LLC, Defendant.

352 F.Supp.3d 825

SCEPTER, INC., Plaintiff,

v.NOLAN TRANSPORTATION GROUP, LLC, Defendant.

No. 3:18-cv-00990

United States District Court, M.D. Tennessee, Nashville Division.

Filed November 29, 2018

D. Alexander Fardon, Riley, Warnock & Jacobson, Nashville, TN, for Plaintiff.

Britney Kennedy Pope, Claude Benton Patton, LeVan, Sprader, Patton, Plymire & Offutt, Nashville, TN, for Defendant.

MEMORANDUM OPINION

WAVERLY D. CRENSHAW, JR., CHIEF UNITED STATES DISTRICT JUDGE

After removing this case from the Davidson County Chancery Court, Nolan Transportation Group, LLC ("NTG") filed a Motion to Dismiss Under F. R. Civ. P. 12(b)(6) or Alternatively to Transfer Venue Under 28 U.S.C. § 1404(a). (Doc. No. 7). Scepter, Inc. ("Scepter") filed a response in opposition to the Motion (Doc. No. 11), and NTG has filed a reply (Doc. No. 12). For the following reasons, NTG's Motion will be denied.

I. Factual Background

According to the Complaint and its attachments¹ filed in the Chancery Court, these are the facts:

After repeated solicitations from NTG, Scepter completed a "Customer Profile Form." A cover sheet titled "Contract Provisions" was attached to the form, and immediately below the signature line on the form was the notation that "[t]he contract provisions on page one (1) are incorporated by reference and constitute a part of the agreement. Reference should be made to the terms of this agreement as stated on page one (1) and NTG's extended terms and conditions located at www.ntglfreight.com/services." (Doc. No. 1-2 at 7). Among other things, the attached Contract Provisions stated:

Nolan Transportation Group, LLC ("NTG") is a non-asset based Broker and will be referenced as a Broker when any determination of relationship is needed between NTG and Customer. I hereby apply to Nolan Transportation Group, LLC ("NTG") for credit and this form is my authorization to contact our credit references and banking institutions now, and at any future date, for full disclosure of current credit status and release of credit history. This form is not an agreement to extend credit, and that NTG, at its discretion, may extend or withdraw credit at any time. I will promptly notify NTG of any subsequent changes which would affect the accuracy of any information provided. I agree to pay all invoices within 30 days of the invoice date. Further, I agree to pay a service charge of 1 ½% per month on any and all past due balances. I shall be responsible for 15% attorney fees on the principal and accrued interest combined in the collection of the undersigned's account. By signing this form, I hereby submit to the jurisdiction and venue of the state courts located in Fulton County, Georgia, or a venue to be decided at the sole discretion of Nolan Transportation Group, with respect to any and all matters arising from this agreement. I do hereby waive all objections to venue and jurisdiction, including forum non conveniens. By doing business with NTG you are subject to NTG's continued terms and conditions located at www.ntgfreight.com/services.

(Id. at 6) (emphasis added). Nathan Tooley, the Chief Financial Officer of Specter, signed the Customer Profile Form and it was submitted to NTG on June 7, 2018.

The next day, Scepter asked NTG to pick up 44,487 pounds of aluminum ingot from its facility in Waverly, Tennessee, and deliver it to Scepter's customer in Shelbyville, Indiana. The customer agreed to pay $40,532.55 for the ingot.

NTG informed Scepter that a driver would pick-up the ingot on June 14, 2018 at 1:30 p.m. When the driver did not show as scheduled, both Scepter and NTG called his cell-phone number. The driver stated that he was nearing Scepter's facility.

A tractor, with the words "18 Wheeler" emblazoned on the sleeper, finally arrived at 4:30 p.m. The driver provided Scepter with the appropriate passcode, and then left with the ingot. The driver, tractor trailer, and ingot then vanished, never to be seen by the parties again.

On June 18, 2018, NTG informed Scepter that it had lost the tracking signal from the tractor trailer and that the cargo was presumed stolen. NTG also told Scepter that it did not believe the driver was actually employed by 18 Wheeler Transport. Specter then filed a police report. It also contacted 18 Wheeler Transport in Tucson, Arizona, but was informed that 18 Wheeler Transport did not transport goods that far east.

As a result of these events, Scepter filed suit in the Chancery Court alleging breach of contract, negligence, and violation of the Tennessee Consumer Protections Act. It seeks to recover damages (including the $40,532.55 that the Shelbyville customer promised Specter), plus prejudgment interest, attorney's fees, and costs.

II. Application of Law

Where a case is improperly filed in contravention of a forum selection clause, the Court has the discretion to either dismiss the action pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, or to transfer the case in accordance with Rule 1404(a). Smith v. Aegon Cos. Pension Plan, 769 F.3d 922, 934 (6th Cir. 2014) ; see Kelly v. Liberty Life Assurance Co. of Boston, No. CV 17-139-DLB, 2018 WL 558643, at *4 (E.D. Ky. Jan. 25, 2018) (stating that, pursuant to Smith, "this Court is permitted to dismiss the matter under Rule 12(b)(6), but not required to do so. Pursuant to 28 U.S.C. § 1404(a), it may also transfer the matter to the appropriate federal forum"); Kresser v. Advanced Tactical Armament Concepts, LLC, No. 3:16-CV-255, 2016 WL 4991596, at *3 (E.D. Tenn. Sept. 16, 2016) (noting discretion to dismiss or transfer based upon Smith ). It matters not which avenue the Court takes in this case because the end result is the same: the case will remain here instead of being transferred to the United States District Court for the Northern District of Georgia as requested by NTG.

NTG quotes May v. Ticketmaster Entm't, LLC, No. 3:10-cv-00760, 2010 WL 4024257, at *4 (M.D. Tenn. Oct. 13, 2010) for the proposition "[i]n addressing a Rule 12(b)(6) motion to enforce a forum-selection clause, ‘the court only needs to determine whether the forum selection clause is enforceable and applicable; if it is, then the suit should be dismissed.’ " (Doc. No. 8 at 4). NTG then notes that Specter "does not challenge the validity of the Contract Provisions" and that "[t]he Forum-Selection Clause broadly covers not only claims for breach of contract" but also tort claims to the extent that they arise out of the agreement between the parties. (Id. at 5). All of this may be true, but the argument hinges on there being a forum selection clause that required Specter to file suit in Fulton County, Georgia. The Contract Provisions contain no such requirement.

A forum selection clause (sometimes abbreviated as an FSC) can be either mandatory or permissive. As the Fifth Circuit has explained:

A mandatory FSC affirmatively requires that litigation arising from the contract be carried out in a given forum. By contrast, a permissive FSC is only a contractual waiver of personal-jurisdiction and venue objections if litigation is commenced in the specified forum. Only mandatory clauses justify transfer or dismissal. An FSC is mandatory only if it contains clear language specifying that litigation must occur in the specified forum-and language merely indicating that the courts of a particular place "shall have jurisdiction" (or similar) is insufficient to make an FSC mandatory.

Weber v. PACT XPP Techs., AG, 811 F.3d 758, 768 (5th Cir. 2016). In short, "[a] mandatory forum selection clause grants exclusive jurisdiction to a selected forum, while a permissive forum selection clause only reflects the contracting parties' consent to resolve disputes in a certain forum, but does not require that disputes be resolved in that forum." Macsteel Intl USA Corp. v. M/V Larch Arrow, 354 F. App'x 537, 539 (2d Cir. 2009) ; see also, Am. Soda, LLP v. U.S. Filter Wastewater Grp., Inc., 428 F.3d 921, 926–27 (10th Cir. 2005) (citation omitted) ("The difference between a mandatory and permissive forum selection clause is that ‘[m]andatory forum selection clauses contain clear language showing that jurisdiction is appropriate only in the designated forum, [while] permissive forum selection clauses authorize jurisdiction in a designated forum, but do not prohibit litigation elsewhere."); N. California Dist. Council of Laborers v. Pittsburgh-Des Moines Steel Co., 69 F.3d 1034, 1037 (9th Cir. 1995) ("To be mandatory, a clause must contain language that clearly designates a forum as the exclusive one.").

Assuming that the Contract Provisions contain what can be properly characterized as a forum selection clause, the clause is permissive, not mandatory. It states that (1) the parties submit to the jurisdiction and venue of the Fulton County, Georgia courts, and (2) Specter waives all objections to that jurisdiction and that venue. This is far different than stating that Specter must file suit in Georgia. See, 3rd Rock Logistics, LLC v. Occidental Petroleum Corp., 303 F.Supp.3d 1166, 1168 (D.N.M. 2018) (finding forum selection clause that stated in relevant part that the parties "voluntarily submit to the jurisdiction and venue of the federal or state courts of the state of Texas for the adjudication of their liabilities and responsibilities" is permissive because the "clause contains no mandatory or obligatory language indicating that the parties shall or must submit to the jurisdiction of Texas courts"); FDIC v. Paragon Mortg. Servs., Inc., No. 1:15 CV 2485, 2016 WL 2646740, at *1 (N.D. Ohio May 10, 2016) (holding that forum selection clause which provided the "parties hereby consent and submit themselves to the jurisdiction and venue in any State or Federal court located in the City of Cleveland, Ohio" and that "[t]his Agreement shall be construed and enforced in accordance with the laws of the State of Ohio" was permissive); Kendle v. Whig Enter., LLC, No. 2:15-CV-1295, 2016 WL 354876, at *1 (S.D. Ohio Jan. 29, 2016) (fi...