Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—D.S.D.: Interlocutory appeal granted for denial of motion to transfer venue, (Nov 10, 2014)

By Edward L. Puzzo, J.D.

In a dispute as to the application and effect of a forum-selection clause in a distribution agreement, the lower court’s order denying transfer of the matter to an Ohio federal court should be affirmed, but immediate interlocutory appeal of the ruling should also be granted, the federal district court in Sioux Falls, South Dakota has ruled (Black Hills Truck & Trailer, Inc. v. MAC Trailer Manufacturing, Inc., November 6, 2014, Schreier, K.).

Dealer Black Hills Truck & Trailer, a South Dakota corporation, entered into a distribution agreement with manufacturer MAC Trailer Manufacturing, an Ohio corporation, for the sale of commercial trucks in certain counties of South Dakota and Nebraska. The agreement contained a choice of law and forum-selection clause, specifying that Ohio law would govern any disputes under the contract and that venue would lie in either an Ohio state court or a federal district court situated in Ohio.

Black Hills subsequently filed suit against MAC in South Dakota, alleging state law claims and violations of the Robinson-Patman Act. The matter was removed to federal court, where MAC moved to dismiss the matter on the basis of improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3) or, alternatively, to transfer the matter to federal court in Ohio, pursuant to 28 U.S.C. § 1404(a). MAC’s motions were denied and they moved for reconsideration and certification for interlocutory appeal.

During the pendency of this lawsuit, the U.S. Supreme Court issued Atlantic Marine Constr. Co. v. U.S. Dist. Ct. for the W. Dist. of Tex., 134 S. Ct. 568 (2013), which clarified the procedure for enforcing a forum-selection clause. Under Atlantic Marine, a forum-selection clause specifying a federal court should be enforced under § 1404(a), and a forum-selection clause specifying a state court should be enforced under the forum non conveniens doctrine.

Forum-selection clause. The threshold question was whether the forum-selection clause in the distribution agreement was valid, which was a separate question from the § 1404(a) or forum non conveniens analysis. Atlantic Marine does not alter the settled law that a forum-selection clause should be honored in most circumstances, the court stated. Under the Bremen standard (M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972)), the public policy of the forum state must be considered. The lower court applied Bremen and determined that the forum-selection clause here was unenforceable.

Motion to reconsider. The lower court then applied § 1404(a) standards to determine whether a transfer was appropriate, ruling that the transfer was inappropriate in this case. Since the lower court’s analysis was consistent with Atlantic Marine, it was valid and MAC’s motion to reconsider must be denied.

Interlocutory appeal. MAC sought an interlocutory order for immediate appeal of the transfer issue. The court explained that a district court may certify an interlocutory order for immediate appeal by stating “that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation.” The matter here meets all three requirements, the court stated. The order involves a controlling question of law as to which there is substantial ground for difference of opinion and an immediate appeal from the order would materially advance the ultimate termination of the litigation. Thus, the court granted MAC’s motion to certify an order of immediate interlocutory appeal.

The case is Civil Action No. 13-4113-KES.

Attorneys: David Edwards (Breit Law Office, PC) for Black Hills Truck & Trailer, Inc. Vincent M. Roche (Davenport, Evans, Hurwitz & Smith, LLP) for MAC Trailer Manufacturing, Inc.

Companies: Black Hills Truck & Trailer, Inc.; MAC Trailer Manufacturing, Inc.

Cases: Antitrust FranchisingDistribution SouthDakotaNews