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Simpson v. Thor Motor Coach

United States District Court, N.D. Indiana, South Bend Division

May 22, 2019

KRISTINE SIMPSON, et al., Plaintiffs,
THOR MOTOR COACH, et al., Defendants.


          Michael G. Gotsch, Sr. United States Magistrate Judge

         On February 13, 2019, Defendant, Mercedes-Benz USA, LLC (“MBUSA”), filed its Motion to Transfer Pursuant to 28 U.S.C. § 1404(a). On February 26, 2019, both Plaintiffs and Defendant, Thor Motor Coach (“TMC”), filed their response briefs in opposition to MBUSA's motion. MBUSA filed a reply brief on March 13, 2019, eight days after the reply was due. See N.D. Ind. L.R. 7-1(d)(2)(B). The Court would typically be inclined to ignore an untimely reply brief. However, in this case, neither Plaintiffs nor TMC challenge the untimely brief. More importantly, MBUSA's reply brief does not change the Court's final decision on the motion to transfer. Therefore, the Court considered MBUSA's reply brief in its decision to deny the motion to transfer, as discussed below.

         I. Relevant Background

         This case involves a defective RV manufactured as a complete vehicle in Indiana by TMC, a corporation with its principal place of business in Indiana, using a chassis and related parts manufactured by MBUSA, a corporation with its principal place of business in Georgia[1]. The RV was warranted in whole or party by TMC while the underlying chassis and related parts were warranted in whole or party by MBUSA. Plaintiffs, citizens of Colorado, purchased the defective RV in Utah. Repairs to Plaintiffs' RV were performed before the sale in Utah and after the sale in Colorado under both TMC's and MBUSA's warranties. The RV's defects, however, were never completely repaired or were not repaired within a reasonable amount of time or repair attempts. Thus, Plaintiffs filed their complaint alleging TMC's and MBUSA's breaches of warranty or contract and violations of the Magnuson Moss Warranty Act.

         Notably however, Plaintiffs did not attach a copy of either TMC's or MBUSA's warranty to their complaint or otherwise allege the full terms of the separate warranties. Not being a party to the TMC warranty and without any knowledge of its terms, MBUSA filed the instant motion to transfer under 28 U.S.C. § 1404(a). Through its motion, MBUSA applied the typical Section 1404(a) transfer analysis arguing that the convenience of the witnesses and the interests of justice favor transfer of this action to the District of Utah.

         Plaintiffs and TMC then reported in their response briefs that the TMC warranty contains a forum-selection clause requiring that any dispute between TMC and Plaintiffs be brought in courts within the State of Indiana. [SeeDE 10-2 at 6]. Thus, Plaintiffs and TMC contend that the transfer analysis must be adjusted to account for the policy outlined in Atl. Marine Const. Co., Inc. v. U.S. Dist. Court for W. Dist. of Tex., 571 U.S. 49 (2013) favoring enforcement of valid forum-selection clauses. Furthermore, Plaintiffs and TMC argue that an additional analysis is required in considering transfer of this case because MBUSA is not a party to the TMC Warranty's forum-selection agreement citing In re: Howmedica Osteonics Corp, 867 F.3d 390, 404-05 (3d Cir. 2017), cert. denied sub nom. Nordyke v. Howmedica Osteonics Corp., 138 S.Ct. 1288 (2018) and In re Rolls Royce Corp., 775 F.3d 671, 679 (5th Cir. 2014).

         Reacting to this revelation of a forum-selection clause, MBUSA noted that it would have filed a motion to sever and transfer instead of a Rule 1404(a) transfer motion had it been aware of the clause. In so doing, MBUSA implied its acceptance of the validity of the newly reported clause as between Plaintiffs and TMC. MBUSA then cited Moore v. AT&T Latin Am. Corp., 177 F.Supp.2d 785 (N.D. Ill. 2001) in support of its position that Plaintiffs' failure to allege the existence of a valid forum-selection clause in their complaint dictates application of the typical Section 1404(a) analysis here, rather than the Atlantic Marine/Howmedica forum-selection clause analysis. MBUSA concluded by reiterating its position that the Section 1404(a) convenience and interest of justice factors justify transfer to either the District of Colorado or the District of Utah.

         Before turning to the merits of MBUSA's transfer motion, the Court must first determine whether the typical Section 1404(a) transfer analysis can be applied as MBUSA requests considering the forum-selection clause in the TMC Warranty.

         II. Analysis

         A. Proper Transfer Analysis

         Pursuant to 28 U.S.C. § 1404(a), a federal district court may transfer any civil action to any other district for the convenience of the parties and witnesses and in the name of justice, if venue is proper in both courts. Therefore, the typical Section 1404(a) transfer analysis involves a balancing of private and public interests through separate inquiries into (1) the proper venue in the transferor and transferee courts; (2) the convenience of parties and witnesses; and (3) the interest of justice. Research Automation Inc. v. Schrader-Bridgeport Int'l, Inc., 626 F.3d 973, 978 (7th Cir. 2010). The burden is on the movant to show that transfer is warranted. Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219-20 (7th Cir. 1986). However, the statute allows for a “flexible and individualized” analysis of the unique issues raised in a particular civil action, which therefore places considerable discretion in the transferor court when deciding whether transfer is appropriate. Research Automation, 626 F.3d at 977-78 (citing Stewart Org., Inc. v. Ricoh Corp., et al., 487 U.S. 22, 29 (1988)). Notably, “when the inconvenience of the alternative venues is comparable there is no basis for a change of venue[.]” Scottsdale Ins. Co. v. PMG Indus., LLC, No. 2:16-CV-373-RLM-PRC, 2016 WL 7228796, at *2 (N.D. Ind. Dec. 14, 2016) (citing In re Nat'l Presto Indus., 347 F.3d 662, 665 (7th Cir. 2003)).

         The transfer calculus changes, however, when the parties enter a contract that includes a forum-selection clause reflecting their pre-suit agreement as to the most proper forum for resolution of their disputes. Atlantic Marine, 571 U.S. at 63. “The enforcement of valid forum-selection clauses, bargained for by the parties, protects their legitimate expectations and furthers vital interests of the justice system.” Id. (internal quotations and citations omitted). Therefore, “a valid forum-selection clause should be given controlling weight in all but the most exceptional cases.” Id. The Court then outlined a modified Section 1404(a) analysis for cases where all parties to the case were also parties to a valid forum-selection clause.

         The Atlantic Marine analysis, however, did not address directly cases where some but not all the parties had contracted to a particular forum through a forum-selection clause. In 2014, the Fifth Circuit first applied the principles of Atlantic Marine to this problem in In re Rolls Royce Corp. In Rolls Royce, the court noted that (1) a valid-selection clause favored, as a matter of law, severance of claims or parties subject to the clause and transfer to enable litigation in the contracted-for forum; (2) the private factors of non-contracting parties had to be considered separately just as they would be in any Rule 21 severance or Section 1404(a) transfer analysis; and (3) the interests of judicial economy in having all claims determined in a single lawsuit could outweigh any interest of the non-contracting party in a different forum. 775 F.3d at 679.

         Faced with somewhat different facts in a similar case involving a forum-selection clause between only some parties, the Third Circuit modified the Rolls Royce framework into a four-step analysis. In re Howmedica, 867 F.3d at 403-05. Under Howmedica, a court must first

assume[] that Atlantic Marine applies to parties who agreed to forum-selection clauses and that, in all but the most unusual cases, claims concerning those parties should be litigated in the fora designated by the clauses. . . .
Second, the court performs an independent analysis of private and public interests relevant to non-contracting parties, just as when adjudicating a § 1404(a) transfer motion involving those parties in the absence of any forum-selection clauses. . . .
Third, if the Step One and Step Two analyses point different ways, then the court considers severance. SeeFed. R. Civ. P. 21. . . . [If] severance is neither clearly warranted nor clearly disallowed, . . . the court goes on to select the appropriate fora based on a combination of interests addressed at the next step. . . .
Fourth, . . .a district court exercises its discretion . . . in choosing the most appropriate course of action [by considering] efficiency interests in avoiding duplicative litigation, . . . taking into account case management techniques that can reduce inefficiencies accompanying severance . . . as well as any other public interests that may weigh against enforcing a forum-selection clause . . . . [and weighting them against] the non-contracting parties' private interests and any prejudice that a particular transfer decision would cause with respect to those interests.
[Depending upon the outcome of the Howmedica analysis, a district court could decide to] retain the case in its entirety, transfer the case in its entirety, or sever certain parties or claims in favor of another forum. [Important factors for the court to consider include] the nature of any interests weighing against enforcement of any forum-selection clause; the relative number of non-contracting parties to contracting parties; and the non-contacting parties' relative resources, keeping in mind any jurisdiction, venue, or joinder defects that the court must resolve. [To decline to enforce a valid forum-selection clause, a court must find that the countervailing interests overwhelmingly outweigh] the strong public interest in upholding the contracting parties' settled expectations.


         Here, however, MBUSA asks the Court to ignore the policy favoring enforcement of valid forum-section clauses espoused in Atlantic Marine and to apply the typical Section 1404(a) transfer analysis rather than the Howmedica framework in determining whether transfer of this case in its entirety is warranted. MBUSA's argument appears grounded in what can amount only to an implication that Plaintiffs waived the effects of the forum-selection ...

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