Opinion
No. DBD CV05-4004701 S
May 10, 2007
MEMORANDUM OF DECISION RE MOTION TO DISMISS #101.00 FACTS
On November 23, 2005, the plaintiff, M.G.I. USA, Inc., filed a single-count complaint which appears to be a breach of contract action against the defendant, J.C. Penney Corp., Inc. The plaintiff alleges that the defendant purchased goods and materials from the plaintiff and that the defendant accepted those goods after the plaintiff shipped them. It alleges that the defendant owes a balance of $10,012 on the contract and has refused to pay.
On January 5, 2007, the defendant moved to dismiss the complaint based on a forum selection clause in the contract that exclusively restricted lawsuits to the state of Texas. Language regarding forum selection is printed in the contract twice, in capital letters, including once on the signature page which reads as follows:
The second occurrence of the clause is worded differently and is contained within an attachment to the agreement. It reads: "THIS CONTRACT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW THEREOF. THE PARTIES HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION AND VENUE IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION, OR THE DISTRICT COURTS OF COLLIN COUNTY, TEXAS." See, Exhibit B to the defendant's motion, J.C. Penney, Inc. Electronic Data Interchange Trading Partner Agreement, § 4.4.
THIS AGREEMENT IS TO BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS REGARDLESS OF THE DICTATES OF TEXAS CONFLICT OF LAWS PROVISIONS. THE PARTIES HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION AND VENUE IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION, OR THE DISTRICT COURTS OF COLLIN COUNTY, TEXAS.
The defendant accompanied the motion with a memorandum of law, an affidavit from Betsy Carter, senior managing counsel for the defendant, and a copy of the relevant portions of a contract entitled: "Electronic Data Interchange Trading Partner Agreement." The plaintiff filed a timely memorandum of objection to the motion to dismiss and submitted market data regarding the defendant's finances as a major retail corporation. The plaintiff does not dispute the authenticity of the contract provisions. The matter was heard at short calendar on February 26, 2007.
The title page of the July 25, 2003 agreement stated that the parties to the agreement were J.C. Penney Corporation, Inc. and Richfield Leather. In her affidavit, Betsy Carter stated that "the plaintiff, M.G.I. USA, Inc. doing business as Richfield Leather, supplied leather goods intended for JC Penney's stores in Puerto Rico." (Emphasis added.) The plaintiff did not dispute the authenticity of the agreement. See Ferreira v. Pringle, 255 Conn. 330, 346-47, 766 A.2d 400 (2001). Thus, the affidavit sufficiently demonstrates that the attached agreement was the relevant agreement between the parties.
The plaintiff, in its brief, objected to the defendants attachment of the agreement to its motion because the claim is based on open invoices and the agreement was not included as part of the complaint. Practice Book § 10-31 provides, however, that a motion to dismiss "shall always be filed. . . where appropriate, with supporting affidavits as to facts not apparent on the record." The defendant submitted an affidavit from Betsy Carter, its senior managing counsel, in which she attested to the authenticity of the agreement. As our Supreme Court has stated: "Where. . . the motion [to dismiss] is accompanied by supporting affidavits containing undisputed facts, the court may look to their content for determination of the jurisdictional issue and need not conclusively presume the validity of the allegations of the complaint." (Internal quotation marks omitted.) Ferreira v. Pringle, supra, 255 Conn. 346-47.
DISCUSSION
"A motion to dismiss. . . properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court. . . A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction." (Internal quotation marks omitted.) Cox v. Aiken, 278 Conn. 204, 210-11, 897 A.2d 71 (2006).
The defendant argues that the forum selection clause in the agreement prohibits this case from being brought in Connecticut in that the clause is the product of a negotiated agreement and that it would be unfair to allow the plaintiff to ignore a bargained for provision of the agreement. The plaintiff cites several reasons as to the why it would be unreasonable to enforce the forum selection clause. First, a substantial disparate bargaining power between the two entities renders such a clause unconscionable. Second, as the plaintiffs claimed damages are only $10,000, litigating in Texas would present a great inconvenience and unfairness to the plaintiff. Finally, the plaintiff argues that the defendant is only utilizing the clause in an attempt to avoid the claim altogether.
"Connecticut case law is clear that the courts will uphold an agreement of the parties to submit to the jurisdiction of a particular tribunal." Phoenix Leasing, Inc. v. Kosinski, 47 Conn.App. 650, 653, 707 A.2d 314 (1998). As our Supreme Court has explained "[t]he United States Supreme Court took the lead on this issue in Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972), in which the court rejected the traditional view that forum selection clauses are unenforceable as contrary to public policy." Reiner, Reiner Bendett, P.C. v. Cadle Co., 278 Conn. 92, 101-02, 897 A.2d 58 (2006). Instead, forum selection clauses are prima facie valid unless the party seeking to preclude enforcement can meet the heavy burden of showing that its enforcement would be unreasonable, unfair, or unjust. Bremen v. Zapata Off-Shore Co., supra, 407 U.S. 10; see also Total Telecommunications, Inc. v. Target Telecom, Inc., Superior Court, judicial district of Ansonia-Milford, Docket No. CV 96 053516 (March 11, 1997, Corradino, J.). "The [ Bremen] court then enumerated several factors that could result in a clause being held unenforceable, including fraud or overreaching in the contract negotiations, serious inconvenience from litigating in the selected forum, or the contravention of a strong public policy in the forum in which suit is brought if the clause is enforced." (Internal quotation marks omitted.) Reiner, Reiner Bendett, P.C. v. Cadle Co., supra, 278 Conn. 102 n. 8. Therefore, "a court addressing the enforceability of a forum selection clause is to consider whether it must, in its discretion, decline jurisdiction and defer to the selected forum." Id., 102.
As to the first factor, our courts have also decided that a forum selection clause may be unenforceable due to "fraud or overreaching." United States Trust Co. v. Bohart, 197 Conn. 34, 42, 495 A.2d 1034 (1985). One form of overreaching occurs when there is an "indication that the parties had such greatly disproportionate bargaining power that the agreement could be regarded as unconscionable. . ." (Internal quotation marks omitted.) Fairfield Lease Corp. v. Romano Auto Service, 4 Conn.App. 495, 498, 495 A.2d 286 (1985); see also United States Trust Co. v. Bohart, supra, 197 Conn. 42.
The plaintiff argues that the forum selection clause is unconscionable as the result of the disproportionate bargaining power between the plaintiff, a small, privately held company, and the defendant, a leading national retailer. In an effort to buttress its argument, the plaintiff submitted market data regarding the defendant establishing that the defendant is a corporation. Although the plaintiff did not present any evidence regarding its size, for purposes of deciding this motion the court will assume, arguendo, that the plaintiff is substantially smaller than the defendant.
The plaintiff attached computer printouts from an internet site that included the defendant's market status as of January 16, 2006. As the Appellate Court has explained in the context of a motion for summary judgment, "before a document may be considered by the court in support of a motion for summary judgment, there must be a preliminary showing of [the document's] genuineness, i.e., that the proffered item of evidence is what its proponent claims it to be. The requirement of authentication applies to all types of evidence, including writings. . ." (Internal quotation marks omitted.) New Haven v. Pantani, 89 Conn.App. 675, 679, 874 A.2d 849 (2005). Since the defendant did not object to the documents, the court will consider them in deciding the present motion. See Barlow v. Palmer, 96 Conn.App. 88, 92, 898 A.2d 835 (2006).
Even with such an assumption, simply demonstrating that one company is smaller than another company is not, by itself, sufficient to demonstrate that a forum selection clause is unconscionable. Essentially, the plaintiff argues for a per se rule that large companies, like the defendant, cannot enforce forum selection clauses with smaller companies in Connecticut. However, the law does not support the recognition of such a rule. "[S]uperior bargaining power in itself is not enough to strike down a resultant contact as unconscionable. Additional elements must be present, such as a lack of meaningful choice. . . or [exploitation] by a stronger party who has control of the negotiations due to the weaker party's ignorance, feebleness, unsophistication. . . or general naivete." (Citations omitted; internal quotation marks omitted.) Fairfield Lease Corp. v. Romano's Auto Service, supra, 4 Conn.App. 498-99. When "[t]he choice of [the selected] forum was made in an arm's length negotiation by experienced and sophisticated businessmen, and absent some compelling and countervailing reason it should be honored by the parties and enforced by the courts." Bremen v. Zapata Off-Shore Co., supra, 407 U.S. 12. The plaintiff has not demonstrated, or even alleged in its complaint, that there has been any fraud or overreaching on the part of the defendant, that there was disproportionate bargaining power between the parties, or, that the plaintiff was not experienced or sophisticated in the handling of its business affairs. "When the court selected is reasonably appropriate, and where there is no indication that `the parties had such greatly disproportionate bargaining power that the agreement could be regarded as unconscionable, the tendency is to give effect to such agreements.'" Fairfield Lease Corp., supra, 4 Conn.App. 498 (citing James Hazard, Civil Procedure (2d.Ed. 1977) 12.21).
Other jurisdictions have also considered similar situations with much more developed factual scenarios and still enforced the clauses despite an inequality in bargaining power. See Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991) (enforcing clause between cruise line passengers and cruise line); Burger King Corp. v. Rudzewicz, 471 U.S. 462, 484, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (enforcing clause between franchisee and major fast food corporation); Polar Mfg. Corp. v. Michael Weinig, Inc., 994 F.Sup. 1012, 1015 (E.D. Wisc. 1998) (enforcing clause between multi-national German corporation and closely held Wisconsin corporation).
The plaintiff next argues that the court should exercise its discretion and not enforce the clause because of the serious inconvenience to the plaintiff in litigating a $10,000 claim in Texas. The clause, the plaintiff continues, effectively prohibits it from bringing its cause of action due to the size of the claim relative to the costs associated with litigating in Texas. Thus, according to the plaintiff, enforcement of the clause will be so greatly inconvenient and unfair as to deprive it of its day in court. As noted above, in Bremen, the court decided that "[i]t should be incumbent on the party seeking to escape his contract to show that trial in the contractual forum will be so gravely difficult and inconvenient that he will for all practical purposes be deprived of his day in court. Absent that, there is no basis for concluding that it would be unfair, unjust, or unreasonable to hold that party to his bargain." Bremen v. Zapata Off-Shore Co., supra, 407 U.S. 18. Courts have concluded in several instances that costs associated with the additional time and expense that a party will incur in order to travel to a selected forum do not necessarily amount to an inconvenience so great as to require a court to decline to enforce a forum selection clause. See Sense v. Interstate Battery System of America, 683 F.2d 718, 722 (2nd Cir. 1982); Post Road Furniture Group, Inc. v. Landmark Merchant Solutions, Superior Court, judicial district of Ansonia-Milford, Docket No. CV 04 0085820 (November 18, 2004, Moran, J.); Total Telecommunications, Inc. v. Target Telecom, Inc., supra, Superior Court, Docket No. CV 96 053516. As one court noted, "[a] forum is not necessarily inconvenient because of its distance from pertinent parties or places if it is readily accessible in a few hours of air travel." Effron v. Sun Line Cruises, Inc., 67 F.3d 7, 10 (2d Cir. 1995).
In evaluating the hardship of litigating in a different forum, courts must also consider other factors such as the ability of the parties to present their witnesses and evidence in the chosen forum, the convenience of the witnesses, whether deposition testimony may be used in lieu of live testimony and the familiarity of the forum with the governing law. See Freedman v. American Online, Inc., United States District Court, Docket No. 03CV1018 (D.Conn. December 5, 2003); CT Page 11647 Total Telecommunications, Inc. v. Target Telecom, Inc., supra, Superior Court, Docket No. CV 96053516 (thoroughly discussing factors of availability of witnesses and evidence of their relation to forum convenience). The key determination is whether these factors demonstrate that enforcement of the clause will completely deprive the plaintiff of a remedy. See, Bremen v. Zapata Off-Shore Co., supra, 407 U.S. 18.
CONCLUSION
In the present case, the plaintiff has not shown that litigating in Texas would deprive it of its day in court. The plaintiff simply references the amount of the claim ($10,000) and the geographical distance involved (Connecticut to Texas), and asks the court to decline enforcement of a contract clause that was presumably acceptable to the plaintiff when the contract was created. The plaintiff has put forth no evidence regarding the size of its own company both in terms of finances and personnel, the ability to present witnesses, the (in)ability to use deposition testimony or the accessibility of critical evidence. While it surely will be more expensive for the plaintiff to litigate this claim in Texas, this inconvenience "was clearly foreseeable at the time of contracting." Bremen v. Zapata Off-Shore Co., supra, 407 U.S. 17-18. "It is not the function of the court to determine by hindsight the reasonableness of the expectation of the parties at the time the contract was made. . ." Norwalk Door Closer Co. v. Eagle Lock Screw Co., 153 Conn., 681, 689, 220 A.2d 263 (1966). The plaintiff has not set forth sufficient reason or evidence to rebut that put forth by the defendant in support of its motion so as to convince the court that the plaintiff should not be held to its bargain.
Recently, Alliance Food Management Corp. v. Rensselaer Hartford Graduate Center Inc., Superior Court, judicial district of Waterbury, Docket No. CV05 5002441 (April 10, 2007, Gallagher, J.), found a forum selection clause enforceable, yet declined jurisdiction because: "Based on [Alliance's president's] testimony, the court finds that inconvenience would be such that the plaintiff would be denied its day in court. Moreover, since the services rendered in Connecticut and most, if not all, of the witnesses are Connecticut residents, the inconvenience to the defendant is minimal." This ease is distinguishable from the present case for several reasons. First, unlike Alliance where the president of the company testified that the company had shrunk from seventeen to four or five employees between the time the contract was signed and the action was brought, the plaintiff in the present case submitted no evidence of its size or the actual hardship that would be endured. Furthermore, unlike Alliance, the plaintiff submitted no evidence regarding the availability of the evidence or witnesses in Connecticut. There is no tangible evidence before the court to justify declining jurisdiction.
Accordingly, the defendant's motion to dismiss is granted.