Antitrust Law Daily Wrap Up, ANTITRUST—D. Mass.: Jukebox manufacturers obtain transfer of venue in restraint of trade case, (Apr 3, 2015)

By Greg Hammond, J.D.

A suit alleging that jukebox manufacturers and a jukebox trade group unlawfully restrained trade in violation of the Sherman Act was transferred to the Western District of Michigan. The federal district court in Worcester, Massachusetts determined that the forum selection clause in the parties’ operation agreement was valid, mandatory, and enforceable (Lease America.org, Inc. v. Rowe International Corp., March 31, 2015, Hillman, T.).

Background. Lease America.org, Inc. sells electronic jukeboxes, while Rowe International Corp. and AMI Entertainment Network, Inc. manufacture jukeboxes. The parties allegedly entered into a secret agreement by which Lease America would purchase Rowe’s jukeboxes and sell them directly to end users, which was in contravention of long standing industry practice. Generally, manufacturers sell their jukeboxes to distributors who act as middlemen between the manufacturers and the operators. Amusement and Music Operators Association, Inc. (AMOA), a trade group that represents the interests of jukebox operators, strongly resisted this practice of selling directly to end users. AMOA allegedly threatened that its members would no longer use Rowe’s juke boxes if Rowe continued to allow Lease America to sell direct. Rowe terminated Lease America’s agreement and turned off all of the jukeboxes that had already been placed in venues so that the users could not access the contents.

In response, Lease America filed, in part, Sherman Act and consumer protection act claims against Rowe, AMI, and AMOA. AMI and Rowe subsequently moved to transfer venue to the Western District of Michigan, based on a forum selection clause contained in the Master Operator Agreement between the parties. Lease America opposed the motion, arguing that no valid, executed forum selection clause existed and, even if the court finds there was a valid forum selection clause, the motion should still be denied.

Enforceability. The forum selection clause states that, “This Agreement shall be construed in all respects with the laws of the State of Michigan without giving effect to the conflict of laws principles of such State. Each party hereby unconditionally and irrevocable consents to the jurisdiction and venue in the Courts of the State of Michigan and in the U.S. District Courts for the Northern District of Michigan, and irrevocably waives any objection that any party may now or hereafter have to the exclusive jurisdiction of said courts…in any matter relating to this Agreement…”

First, the court determined that the forum selection clause demonstrated the parties’ intent to make Michigan’s jurisdiction exclusive, and therefore concluded that the forum selection clause in the Master Agreement was mandatory.

Lease America, however, asserted that the Master Agreement was never a binding contract between the parties because its owner never received a signed signature page back from the defendant, he signed it “with conditions,” and he made a counterproposal concerning the forum selection clause. The court rejected these arguments, finding that it was clear from the record that both parties manifested an acceptance to the master agreement and AMI Operation Guide. The jukeboxes were hooked up to the AMI Network at the time of the agreement, invoices for royalties were sent out, and payments were made in accordance with the agreement and operation guide. Further, the parties manifested intent to be bound by the agreements based on future conduct, the court concluded. Consequently, the forum selection clause was deemed valid and binding on Lease America.

Lastly, the court concluded that the Sherman Act claims did not fall outside the scope of the forum selection clause. The clause applied to any matter “relating” to the agreement and operation guide. Because resolution of Lease America’s claims would necessarily rely on interpretation of the agreements, the Sherman Act claims fell within the broad scope of the clause. The motion to transfer venue to the Western District of Michigan was therefore allowed.

The case number is 13-40015-TSH.

Attorneys: Courtney A. Palko (Blecher & Collins, PC) for Lease America.org, Inc. David Viens (Bowditch & Dewey LLP) for Rowe International Corp., AMI Entertainment Network, Inc., and Amusement and Music Operators Association, Inc.

Companies: Lease America.org, Inc.; Rowe International Corp.; AMI Entertainment Network, Inc.; Amusement and Music Operators Association, Inc.

Cases: Antitrust MassachusettsNews