United States District Court, S.D. Indiana
ORDER AND OPINION
J. MCGIVERIN UNITED STATES MAGISTRATE JUDGE
Casket Company, LLC (“Aurora”) sued Caribbean
Funeral Supply, Corp. (“Caribbean”), JR Quality,
Inc. (“JR”) and Rosa E.
for damages for breach of contract by Caribbean, JR, and
González, and for declaratory judgments that Caribbean
is not protected by the Puerto Rico Dealer's Act, 10 P.R.
Laws Ann. §§ 278 et seq. (“Law
75”). Docket No. 20. Based on a forum-selection clause
in the Product Supply Agreement (PSA) signed by both
Caribbean and Aurora, Caribbean now moves to either dismiss
Aurora's complaint for improper venue under Federal Rule
of Civil Procedure 12(b)(3) or to transfer venue under 28 USC
§ 1404(a). Docket Nos. 26, 31. Aurora opposes. Docket
No. 27. Pursuant to Local Rule 72(b)(1), Caribbean's
motion was referred to me for disposition. Docket No. 29.
following facts are limited to those relevant to the matter
before the court. Aurora is a company based in Indiana that
manufactures caskets, cremation urns, keepsakes, and other
products for funeral homes and families. Docket No. 20 at 2.
Caribbean is a Puerto Rico-based company as is JQ.
Id. González is a citizen of Puerto Rico.
Id. at 2-3. In 2015, Caribbean and Aurora entered
into the PSA, agreeing that Aurora would deliver its products
to Caribbean who would then purchase and distribute them in
Puerto Rico as well as surrounding Caribbean islands.
Id. at 5-6. The PSA included a forum-selection
clause stating that the parties agreed that “[a]ny
litigation” between them would be brought
“exclusively in an appropriate court of competent
jurisdiction (state or federal) located in Dearborn County,
Indiana.” Docket No. 20-1 at 9. Aurora now alleges that
although it has delivered all the products that Caribbean has
ordered, Caribbean has failed to perform its obligations
under the PSA, including failing to pay Aurora for its
products. Docket No. 20 at 9-10.
2014, JQ and Aurora allegedly entered into a contract that
Aurora would provide JQ with a particular machine and in
exchange JQ would buy certain products from Aurora.
Id. at 7. JQ also agreed to pay Aurora in annual
installments for the machine. Id. Aurora alleges
that JQ has breached their contract by both failing to
purchase products from Aurora and for failing to pay the
installments due for the machine. Id. at 8.
2015, González allegedly agreed to pay Aurora $350,
000 for inventory that she had received from Aurora.
Id. The alleged promissory note is secured by a
mortgage deed over real estate property in Puerto Rico.
Aurora brought suit against Caribbean in this court,
Caribbean filed this motion to dismiss or transfer based on
the forum-selection clause in the PSA. Docket Nos. 20; 26.
when a case is based on diversity jurisdiction, federal
courts must apply state substantive law and federal
procedural law. See MARPOR Corp. v. DFO, LLC, No.
CV. 10-1312, 2010 WL 4922693, at *5 n.3 (D.P.R. Dec. 2, 2010)
(citing Erie R.R. Co. v. Tompkins, 304 U.S. 64
(1938)). Therefore, the question is whether the
enforceability of a forum-selection clause is procedural or
substantive. However, because “there is no conflict
between federal common law and Puerto Rico law regarding the
enforceability of forum selection clauses, ” the First
Circuit “has declined to perform an Erie
analysis when dealing with such clauses.” MARPOR
Corp. v. DFO, LLC, No. CV. 10-1312, 2010 WL 4922693, at
*5 (D.P.R. Dec. 2, 2010) (citing D.I.P.R. Mfg., Inc. v.
Perry Ellis Int'l, Inc., 472 F.Supp.2d 151, 155
(D.P.R. 2007)); see Lambert v. Kysar, 983 F.2d 1110,
1116-17 (1st Cir. 1993) (“In cases where federal law
and state law coincide on the issue in question, it is
unnecessary for the court to make a full Erie
analysis.”). Instead, given the similarity between
federal and Puerto Rico law, “the First Circuit has
applied federal common law when interpreting [forum-selection
clauses] in a diversity context. D.I.P.R. Mfg.,
Inc., 472 F.Supp.2d at 154 (citing Silva v.
Encyclopedia Britannica Inc., 239 F.3d 385 (1st Cir.
First Circuit, a motion to dismiss based on a forum-selection
clause is treated “as a motion alleging the failure to
state a claim for which relief can be granted under Rule
12(b)(6).” Claudio-De Leon v. Sistema Universitario
Ana G. Mendez, 775 F.3d 41, 46 (1st Cir. 2014) (quoting
Rivera v. Centro Médico de Turabo, Inc., 575
F.3d 10, 15 (1st Cir. 2009)). Caribbean filed such a motion
here, albeit under 12(b)(3), but alternatively requested a
transfer under § 1404(a). Although the Supreme Court
“explicitly declined to express a view as to whether a
Rule 12(b)(6) motion is a proper alternative” to
enforce a forum-selection clause, its holding in Atlantic
Marine Co., Inc. v. U.S. District Court, 134 S.Ct. 568
(2013) is “emphatic that a motion to transfer under
Section 1404(a) was the appropriate mechanism” when the
chosen forum is within the federal system. Caribbean
Rests., LLC v. Burger King Corp., 23 F.Supp.3d 70, 75
(D.P.R. 2014). Accordingly, “the court will now treat .
. . [Caribbean]'s motion as a motion to transfer under
Section 1404(a) and analyze its request under the standard
set forth in Atlantic Marine.” Id.;
see also Antilles Cement Corp. v. Aalborg Portland
A/S, 526 F.Supp.2d 205, 207 (D.P.R. 2007)
(“[W]here transfer to another federal jurisdiction is
viable, the proper remedy is not dismissal of the complaint
but rather a determination of whether transfer is proper by
focusing instead on the requirements established in §
1404(a).” (citing Stewart Org., Inc. v. Ricoh
Corp., 487 U.S. 22 (1988))); Diaz Morales v. Royal
Caribbean Cruises, Ltd., 419 F.Supp.2d 97, 101 (D.P.R.
2006) (defendant's motion to dismiss denied and case
transferred to a district court in Florida, the appropriate
motion to transfer is a non-dispositive matter, it is
appropriate for me to resolve the motion through an order as
opposed to a report and recommendation to the presiding
district judge. See 28 U.S.C. § 636(b)(1)(A);
Caguas Lumber Yard Inc. v. Ace Hardware Corp., 827
F.Supp.2d 76, 78 (D.P.R. 2011), aff'd, No. CIV.
11-1684 GAG, 2011 WL 5837808 (D.P.R. Nov. 21, 2011) (change
of venue or transfer to another district is a non-dispositive
matter); BMJ Foods Puerto Rico, Inc. v.
Metromedia Steakhouses Co., L.P., 562 F.Supp.2d 229, 231
(D.P.R. 2008) (motion to transfer is non-dispositive).
Severance of claims is also a non-dispositive matter and as
such is appropriate for decision by a magistrate judge.
See U.S. v. Schneider, 2007 WL 2407060, *1 (E.D.Wis.
Aug. 20, 2007) (“A magistrate judge has authority to
decide nondispositive motions such as motions to
sever.”); Wat Bey v. City of New York, No. CV
99-3873, 2007 WL 2012421, at *1 (S.D.N.Y. July 11, 2007);
Cruzan Terraces, Inc. v. Antilles Ins., Inc., 138
F.R.D. 64, 65 (D.V.I. 1991) (“Granting severance . . .
is not dispositive of any of the claims).
§ 1404(a) provides that “[f]or the convenience of
parties and witnesses, in the interest of justice, a district
court may transfer any civil action to any other district or
division where it might have been brought or to any district
or division to which all parties have consented.” 28
U.S.C. § 1404(a). This transfer statute “is merely
a codification of the doctrine of forum non
conveniens for the subset of cases in which the
transferee forum is within the federal court system; in such
cases, Congress has replaced the traditional remedy of
outright dismissal with transfer.” Atlantic
Marine, 134 S.Ct. at 580. “The decision to
transfer should be made on a case-by-case basis. In its
analysis, a court must balance the convenience of the
parties, the convenience of the witnesses, and public
interest factors which are generally subsumed under the
category ‘the interest of justice.'”
Outek Caribbean Distributors, Inc. v. Echo, Inc.,
206 F.Supp.2d 263, 266 (D.P.R. 2002) (quoting
Stewart, 487 U.S. at 29-31). Public-interest factors
include “familiarity with the governing law, the local
interest in deciding local controversies at home, and the
relative congestion of the courts.” Johnson v. VCG
Holding Corp., 767 F.Supp.2d 208, 217 (D. Me. 2011).
this framework is different when there is a valid
forum-selection clause representing the parties' prior
agreement of forum. In such cases, “the Supreme Court
held . . . that clause should be given controlling weight in
all but the most exceptional cases, and a district court
should ordinarily transfer the case to the forum specified in
that clause.” Caribbean Rests., LLC, 23
F.Supp.3d at 75. Specifically, when the court is considering
enforcing a forum-selection clause, “the
plaintiff's choice of forum merits no weight. Rather, 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 is unwarranted. . . . Second,
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.” Caribbean Rests., 23 F.Supp.3d at
76 (quoting Atlantic Marine, 134 S.Ct. at 582). In
addition, “a district court should transfer the case
unless extraordinary circumstances unrelated to the
convenience of the parties clearly disfavor a
transfer.” Atlantic Marine, 134 S.Ct. at 575.
Consequently, “the party acting in violation of the
forum-selection clause . . . must bear the burden of showing
that public-interest factors ...