Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—M.D.N.C.: Dispute over termination of a distribution agreement transferred to Ohio, (Jun 2, 2025)

By Donielle Tigay Stutland, J.D.

The parties’ forum selection clause in the parties’ rock crushing machinery distribution agreement was controlling.

The federal district court in Greensboro, North Carolina denied a motion to remand a dispute involving the termination of an industrial machinery distribution agreement between National Equipment Dealers, LLC (“NED”) and IROCK Crushers LLC (“IROCK”), a maker of rock crushing and quarry machinery. However, the court granted a motion to transfer the venue to the Northern District of Ohio. NED alleged that IROCK—through its failure to repurchase certain products and inventory from NED—violated its obligations under North Carolina law and breached the parties’ agreement. Specifically, the complaint alleged IROCK’s refusal to repurchase inventory violated two North Carolina statutes: the Farm Machinery Franchise Act and the Unfair Trade Practices Act. Following the removal of the case from state to federal court, NED filed a Motion to Remand, and IROCK filed a Motion to Transfer Venue to the Northern District of Ohio along with a Motion to Dismiss the case. The court denied NED’s request for remand, disagreeing with NED’s argument that IROCK’s removal was procedurally defective. The court granted IROCK’s motion to transfer after finding that no public interest factors disfavored transfer, and NED failed to show extraordinary circumstances that would warrant an override of the Agreement’s forum selection clause. Finally, the court declined to address IROCK’s motion to dismiss, indicating that the Northern District of Ohio can review it (National Equipment Dealers, LLC v. IROCK Crushers LLC, No. 1:24-cv-01015-GSA-JEP (M.D.N.C. May. 27, 2025)).

Background. In August 2023, NED and IROCK entered into an industrial machinery distribution agreement (the “Agreement”) under which, IROCK agreed to sell, and did in fact sell, equipment to NED for resale to its own customers. IROCK terminated the Agreement, effective August 2024. That termination was effectuated under Section 11.5, entitled “Termination for Convenience,” which grants either party the “right to terminate th[e] [A]greement, with or without cause and for any reason, upon ninety (90) days prior written notice.” The agreement does discuss termination and when an obligation to repurchase equipment would apply. A separate section of the Agreement—Section 12.2—provides that, upon termination of the Agreement, IROCK has an obligation to repurchase equipment inventory from NED. However, that obligation only applies if “the Agreement was terminated under Sections 11.1 or 11.2 by [NED] for breach by IROCK.”

Additionally, Section 22 of the Agreement includes a mandatory forum selection clause. That clause provides as follows: “Any legal proceedings relating to this agreement shall be conducted in any court of competent jurisdiction sitting in Cuyahoga County in the State of Ohio.” Section 22 also includes a choice of law clause, which reads: “This Agreement,... and all matters arising out of or relating to this Agreement, are governed by, and construed in accordance with, the laws of the State of Ohio[.]”

Following IROCK’s termination of the Agreement, NED filed suit in North Carolina state court. IROCK removed the lawsuit to federal court, and since removal, three motions have been filed: (1) NED’s Motion to Remand, (2) IROCK’s Motion to Transfer Venue to the United States District Court for the Northern District of Ohio, and (3) IROCK’s Motion to Dismiss.

Remand. The court began its analysis by reviewing NED’s motion to remand. NED argues that the case be remanded to state court on the grounds that IROCK’s removal “omitted necessary pleadings—specifically[,] the disclosure statement required by Fed. R. Civ. P. 7.1(a)(2)(A) and [M.D.N.C. Loc. R.] 7.7(a).” IROCK disagreed, and highlighted its compliance with the federal removal statute, 28 U.S.C. § 1446, and urged that the substance of its removal documents complies with the other rules cited by NED. The court indicated that removal is governed by 28 U.S.C. § 1446, which IROCK complied with by timely filing a notice of removal with all required documents. As to NED’s argument that Rule 7.1(a)(2)(A) governs removal, which the court noted was “a questionable proposition,” the court still found that IROCK still substantively complied with its requirements. While IROCK did not immediately file a separate corporate disclosure statement, its notice of removal included all the necessary information. The court stressed that IROCK complied with the substance of Rule 7.1(a)(2)(A) either when it removed this case, or just over a week later when IROCK separately filed a corporate disclosure statement containing the necessary information. The court noted that NED showed no prejudice from the delay, and minor technical errors do not warrant remand.

The Court agreed with IROCK and denied NED’s Motion to Remand.

Transfer. The court next reviewed IROCK’s motion to transfer. IROCK moved to transfer this case to the Northern District of Ohio under 28 U.S.C. § 1404(a), arguing that the forum selection clause in Section 22 of the Agreement, which provides that “[a]ny legal proceedings relating to this agreement shall be conducted in any court of competent jurisdiction sitting in Cuyahoga County in the State of Ohio,” is controlling. NED opposed the transfer, arguing that various “public-interest factors” render the Agreement’s forum selection clause unenforceable.

The court laid out that, “as the party defying the forum selection clause, the plaintiff bears the burden of establishing that transfer to the forum for which the parties bargained for is unwarranted.” Additionally, the court indicated that a court evaluating a defendant’s § 1404(a) motion to transfer based on a forum selection clause “should not consider arguments about the parties’ private interests.” Ultimately, “[w]hen parties have contracted in advance to litigate disputes in a particular forum, courts should not unnecessarily disrupt the parties’ settled expectations,” the court stressed. Wrote the court, “This principle is reflected in the Supreme Court’s admonition that a § 1404(a) motion to transfer based on a valid forum-selection clause should only be denied ‘under extraordinary circumstances.’”

Here, the court determined that based on a review of the record there are no such “extraordinary circumstances,” offered by NED, and as such, transfer to the parties’ agreed-upon forum—the Northern District of Ohio—is therefore warranted. The court concluded that NED fell short in proving that this is an “unusual” or “extraordinary” case where the “public interest factors overwhelmingly disfavor transfer.” The court granted the motion to transfer the case to the Northern District of Ohio.

Dismissal. With respect to IROCK’s motion to dismiss, the court declined to review this motion. Rather, the court offered that the Northern District of Ohio should consider that motion upon its receipt of this case as it deems appropriate.

The Case is No. 1:24-cv-01015-GSA-JEP.

Judge: Agee, G.

Attorneys: Clara Nieman (Robinson, Bradshaw & Hinson, P.A.) for National Equipment Dealers, LLC. Michael J. Matasich (McDonald Hopkins LLC) for IROCK Crushers, LLC.

Companies: National Equipment Dealers, LLC; IROCK Crushers, LLC

Cases: FranchisingDistribution NorthCarolinaNews