State ex rel. Cordray v. Makedonija Tabak 2000
| Decision Date | 24 June 2010 |
| Docket Number | No. 09AP-402.,09AP-402. |
| Parties | The STATE ex rel. CORDRAY, Atty. Gen., Appellee, v. MAKEDONIJA TABAK 2000 et al., Appellees; Leader Tobacco Company, Inc., Appellant. |
| Court | Ohio Court of Appeals |
Richard Cordray, Attorney General, and Gregory T. Hartke and Angela M. Sullivan, Assistant Attorneys General, for appellee.
Law Office of Barry Boren and Barry Boren, Miami, FL; Patmon L.L.C., Attorneys at Law, and William W. Patmon III, Columbus, OH; and Gerson M. Joseph, Miami, FL, for appellant.
*77 {¶ 1} This is an appeal by defendant-appellant, Leader Tobacco Company, Inc., from a judgment of the Franklin County Court of Common Pleas, granting summary judgment in favor of plaintiff-appellee, the state of Ohio ex rel. the attorney general of Ohio, and denying appellant's cross-motion for summary judgment.
{¶ 2} This case arises out of appellee's complaint for injunctive relief, requesting enforcement of Ohio's law requiring certain tobacco-product manufacturers to file an annual certification and to make payments into an escrow account based on the number of units of cigarettes sold by a manufacturer in the state. By way of background, in 1998, various major tobacco companies entered into a Master *78 Settlement Agreement ("MSA") with representatives of 46 states, including Ohio, the District of Columbia, and fiveterritories. See Carolina Tobacco Co. v. Petro, 10th Dist. No. 04AP-1125, 2006-Ohio-1205, 2006 WL 648851, ¶ 2. Under the MSA, "the states agreed to dismiss their pending suits against the settling tobacco companies; in return, these companies, designated as 'original participating manufacturers,' agreed to make yearly payments to the states to defray health costs from smoking-related illnesses and to fund smoking prevention programs." Id.
{¶ 3} Not all tobacco-product manufacturers are required to participate in the MSA, and tobacco-product manufacturers who choose not to participate are referred to as "non-participating manufacturers" ("NPMs"). Id. at ¶ 3. Under the MSA, however, "states are required to enact certain legislation known as 'qualifying statutes,' requiring NPMs to make annual payments, based on their annual sales, into an interest earning escrow account; those funds are to be available to pay any future judgments or settlement of claims brought against NPMs." Id.
{¶ 4} Ohio's qualifying statute (effective June 30, 1999) is codified in R.C. Chapter 1346. R.C. 1346.02(B)(3) states: "Each tobacco product manufacturer that elects to place funds into escrow pursuant to division (B) of this section shall annually certify to the attorney general that it is in compliance with division (B) of this section." The failure on the part of a tobacco-product manufacturer to place funds into escrow subjects it to potential fines (R.C. 1346.02(B)(3)(a) and (b)) and the prohibition against selling cigarettes in the state for up to two years (R.C. 1346.02(B)(3)(c)).
{¶ 5} On November 9, 2004, appellee filed a complaint for injunctive relief against Makedonija Tabak 2000 ("MT-2000") and appellant, asserting noncompliance with Ohio's qualifying statute. The complaint alleged that MT-2000 is a "tobacco product manufacturer," as defined under R.C. 1346.01; further, that MT-2000 manufactured cigarettes to be sold in the United States under the brand name "Infinity" and sold those cigarettes to consumers in Ohio during the calendar year 2003. The complaint alleged that MT-2000 had not become a "participating manufacturer" under the terms of the MSA and that it had not fulfilled its obligations as an NPM under Ohio law. Specifically, it was alleged that MT-2000 (1) failed to certify to appellee that it had established a qualified escrow fund and (2) failed to make proper escrow deposits with respect to the units of cigarettes it sold in Ohio during the calendar year 2003.
{¶ 6} The complaint further alleged that appellant is a tobacco-product importer, as well as MT-2000's agent and attorney-in-fact, for purposes of establishing, funding, and maintaining bank and escrow accounts to fund MT-2000's escrow obligations under R.C. 1346.02. Appellee alleged that appellant had failed to *79 place amounts into escrow as required under an irrevocable limited power of attorney ("power of attorney") executed between appellant and MT-2000 on December 27, 2002.
{¶ 7} Appellee sought preliminary and injunctive relief ordering MT-2000 and appellant to place funds into a qualified escrow fund. Appellee also sought the imposition of a civil penalty, pursuant to R.C. 1346.02, against both MT-2000 and appellant.
{¶ 8} On February 14, 2005, appellant filed a motion to dismiss for lack of subject-matter jurisdiction and for failure to state a claim upon which relief can be granted. In its motion, appellant asserted that R.C. Chapter 1346 does not authorize the assessment of liability against any entity other than a "tobacco product manufacturer" and that the state lacked standing to sue for an alleged breach of any provision of a limited power of attorney betweenMT-2000 and appellant when the state was not a third-party beneficiary of the power of attorney. Appellant also argued that the trial court lacked subject-matter jurisdiction based upon a forum-selection clause in the power of attorney requiring suits to be brought in Florida and that appellant, a Florida corporation, was not subject to personal jurisdiction under Ohio's long-arm statute. By decision and entry filed October 5, 2005, the trial court denied appellant's motion to dismiss.
{¶ 9} On January 11, 2006, appellee filed a motion for summary judgment. On February 6, 2006, appellant filed a memorandum contra appellee's motion for summary judgment, as well as a cross-motion for summary judgment.
{¶ 10} On March 25, 2009, the trial court issued a decision granting appellee's motion for summary judgment and denying appellant's cross-motion for summary judgment. In its decision, the trial court determined that appellee was a third-party beneficiary of the power of attorney between appellant and MT-2000. The court further found that MT-2000 and appellant were jointly and severally liable for MT-2000's sale of Infinity brand cigarettes in Ohio and, thus, jointly and severally liable to appellee for a monetary civil fine pursuant to R.C. 1346.02(B)(3)(c). The decision of the court was journalized by judgment entry filed April 24, 2009.
{¶ 11} On appeal, appellant sets forth the following seven assignments of error for this court's review:
(Emphasis sic.)
{¶ 12} We will first address jointly the jurisdictional arguments raised under appellant's third and fourth assignments of error. Under the third assignment of error, appellant argues that the trial court erred in failing to enforce a forum-selection clause contained in the power of attorney entered between appellant and MT-2000. Under the fourth assignment of error, appellant contends that the trial court erred in asserting personal jurisdiction over it (a nonresident defendant).
{¶ 13} With respect to the third assignment of error, appellant challenges the trial court's determination that a forum-selection clause did not preclude the court from exercising jurisdiction over the case. At issue is the language of the "Applicable Law" section, set forth in the power of attorney executed by appellant and MT-2000, stating: "[A]ny suit, action or proceeding arising out of or relating to this Agreement may be commenced andmaintained in any court of competent subject matter jurisdiction in Miami-Dade County, Florida and each party waives objection to such jurisdiction and venue."
{¶ 14} Appellant argues on appeal, as it did before the trial court, that the above provision mandates that venue for this action lies solely in Florida. The trial court held that "the use of the word 'may' merely suggests that Miami-Dade County, Florida is the preferred venue, and does not require that Miami-Dade County, Florida be the sole venue in which all disputes arising from the agreement be litigated."
{¶ 15} When a contract contains a valid forum-selection clause, courts typically classify that clause as permissive or mandatory. Emerald Grande, Inc. v. Junkin (C.A.11, 2009), 334 Fed.Appx. 973, 975. A permissive clause authorizes *81 jurisdiction in a designated forum, but does not prohibit litigation elsewhere, whereas a mandatory clause dictates an exclusive forum for litigation under the agreement. Id. at 975-976. Further, "a mandatory forum selection clause 'must clearly display the intent of the contracting parties to choose a particular forum to the exclusion of all other.' " Patel v. Patel, 10th Dist. No. 06AP-1260, 2007-Ohio-5963, 2007 WL 3293379, ¶ 14, quoting Arguss Communications Group, Inc. v. Teletron, Inc. (D.N.H.1999), No. CIV. 99-257-JD, 2000 WL 36936, *7.
{¶ 16} In the present case, we agree with the trial court that the "Applicable Law" provision employs permissive ("may"), rather than mandatory language. See, e.g., Blanco v. Banco...
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