Sagittarius Sporting Goods Co. v. LG Sourcing, Inc.

Citations: 162 F. Supp. 3d 531; 2016 U.S. Dist. LEXIS 24259Docket: CIVIL ACTION NO. 3:15-00496-MGL

Court: District Court, D. South Carolina; February 22, 2016; Federal District Court

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Plaintiffs Sagittarius Sporting Goods Company, Ltd and The Grill Company, LLC have brought multiple claims against Defendant LG Sourcing, including breach of contract, fraud, violations of unfair trade practices laws, and conversion of inventory and payments. The Court has jurisdiction under 28 U.S.C. 1332. Defendant LGS filed a Motion to Transfer the case to North Carolina under 28 U.S.C. 1404(a) due to a mandatory forum selection clause in their contract, which stipulates that any disputes be resolved in North Carolina courts. The clause also specifies that North Carolina law governs the Agreement. The Court reviewed the motions, responses, and relevant legal standards, ultimately granting LGS's Motion to Transfer and deeming its alternative Motion to Dismiss as moot. The Agreement, established around May 30, 2005, included a one-year term with automatic renewals unless terminated with 60 days' notice. The dispute arose when LGS informed Sagittarius it would not purchase grills for the 2015 season. Under Section 1404(a), the presence of a valid forum-selection clause strongly supports the transfer unless significant countervailing factors exist.

Plaintiffs' choice of forum is given little weight, as they must demonstrate that a transfer to the agreed-upon forum is unwarranted due to a forum-selection clause. A court assessing a motion to transfer under § 1404(a) should disregard private interest arguments and will not apply the original venue's choice-of-law rules if a party violates a forum-selection clause. Only public-interest factors, which rarely prevent transfer, are considered. Public-interest factors may include court congestion, local interest in the controversy, and familiarity with relevant law. 

Defendant LGS argues for a transfer to the Western District of North Carolina based on the forum-selection clause and also requests transfer under standard factors if the clause is ignored. Alternatively, LGS seeks dismissal under the doctrine of forum non conveniens. Plaintiffs counter that extraordinary circumstances exist, claiming the clause is ambiguous, unenforceable, and does not cover their claims, and argue against both transfer and dismissal.

The court agrees with LGS that the case should be transferred, emphasizing that only extraordinary circumstances unrelated to convenience can prevent this, and that forum-selection clauses should generally prevail. Public interest factors do not oppose transfer, as court congestion is not an issue, and the local interest favors transfer due to LGS's principal place of business in North Carolina, which is also more familiar with relevant law. Thus, the court concludes that the public interest factors support the transfer.

The Agreement specifies that any legal action must be adjudicated in North Carolina, with exclusive jurisdiction granted to the courts in Wilkes County. The Western District of North Carolina is identified as the appropriate federal venue. Plaintiffs argue that Defendant LGS's previous claims in a similar case render the enforcement of the forum selection clause unreasonable, citing a lack of extraordinary circumstances. However, the Court finds no merit in this argument, noting that the previous case involved a failure to state a claim, which does not apply here.

The Court determines that the forum selection clause is clear and enforceable, rejecting Plaintiffs' assertion that it is ambiguous due to the absence of a federal courthouse in Wilkes County. The Court emphasizes that federal venue is not limited to counties with federal courthouses. Contract interpretation should favor the intent of the parties, and in this case, the clause indicates that disputes should be resolved in both state and federal courts in North Carolina. The Court concludes that the interpretation favoring Defendant LGS maintains the validity of the forum selection clause, while Plaintiffs’ interpretation would effectively nullify it, which is not favored by law.

Plaintiff Sagittarius has accepted the jurisdiction of both state and federal courts in North Carolina, but the Court finds that arguing improper venue due to the lack of a federal courthouse in Wilkes County contradicts this acceptance, making the forum selection clause enforceable. Plaintiff Grill Company is also bound by the Agreement despite arguments that its claims are not based on it. The Court asserts that non-signatories can be bound to a forum selection clause if they are "closely related" to the dispute, which applies here as all claims are interconnected. The Plaintiffs' claims, including breach of contract and various tort claims, stem from the Agreement, making them subject to the forum selection clause. The Court rejects the Plaintiffs' attempt to enforce the Agreement while simultaneously challenging the validity of the forum selection clause, stating they cannot selectively disregard parts of the Agreement. Thus, the Court upholds the enforceability of the forum selection clause.

Defendant LGS's Motion to Transfer is granted based on the application of the forum selection clause, rendering any alternative arguments regarding transfer without the clause unnecessary. The Court, having found sufficient grounds for transfer under 28 U.S.C. § 1404(a), chooses not to provide an advisory opinion on LGS's Motion to Dismiss based on forum non conveniens. The Court emphasizes that if the primary reason for transfer is sufficient, subsequent arguments are considered surplusage. Ultimately, the Court concludes that Plaintiffs failed to demonstrate that transfer is unwarranted, and thus, LGS's Motion to Dismiss is deemed moot. Additionally, the Court clarifies that it will use the term 'forum selection clause' consistently, despite different terminology used by the parties.