United States District Court,

S.D. New York.

ZURICH INSURANCE COMPANY (f/k/a Alpina Insurance Company Ltd.) a/s/o Boehringer

Ingelheim International GmbH, Plaintiff,

v.

PRIME, INC., Defendant/Third-Party Plaintiff,

v.

1050758 ONTARIO, INC., d/b/a S.M. Freight, Third-Party Defendant.

No. 04 Civ. 4697(JFK).

Aug. 9, 2005.

MEMORANDUM OPINION and ORDER

 

KEENAN, J.

This matter is before the Court on the Motion of third-party defendant 1050758 Ontario, Inc., d/b/a/ S.M. Freight (“S.M.Freight”) to dismiss the Third-Party Complaint because of improper venue under a forum selection clause. For the reasons that follow, S .M. Freight’s motion to dismiss is granted.

Facts

Plaintiff Zurich Insurance Company (“Zurich”) is the cargo insurer for the consignment of a shipment of pharmaceuticals owned by plaintiff Boehringer Ingelheim (Canada), a subsidiary of plaintiff Boehringer Ingelheim International BmgH (collectively “Boehringer”). The pharmaceuticals were delivered to defendant Prime, Inc. (“Prime”) in Oklahoma and placed in a container for shipment by road to Boehringer’s premises in Burlington, Ontario, Canada. Prime was given instructions to maintain the temperature of the pharmaceuticals at + C.

When the shipment arrived at Burlington, the temperature graphs within the container showed that temperatures as low as–15 C and -28 C had been reached. Thus, the pharmaceuticals had to be declared a constructive total loss and were destroyed. Boehringer submitted its claim for damages to its insurer. Zurich paid the claim and sued Prime for damages in the amount of $140,000 plus interest and costs. Prime then brought a third-party action against S.M. Freight, alleging that S.M. Freight was the actual transporter of the pharmaceuticals pursuant to a “Contract Carrier Agreement” (“CCA”) between Prime and S.M. Freight, and seeking indemnification.

S.M. Freight now moves to dismiss, based on Fed.R.Civ.P. 12(b)(3) or, alternatively, 28 U.S.C. § 1406(a), for improper venue. The CCA contains a forum selection clause that states, “The Agreement shall be governed and construed under the laws of the State of Missouri, and all disputes arising hereunder shall be heard by a Court of competent jurisdiction in Greene County, Missouri.” CCA ¶ 14. S.M. Freight argues that this forum selection clause makes venue in New York improper for the third-party claim.

Prime argues that S.M. Freight should not prevail because, as a third-party defendant, S.M. Freight does not have standing to object to venue. Prime also contends that it would be a waste of judicial resources to litigate the third-party action in another court while the principal action proceeds in this court. Finally, Prime argues that, because the motion lacks merit, S.M. Freight should pay Prime’s costs in defending this motion.

Discussion

I. Proper Procedural Framework

The qusetion of the proper framework within which to examine a motion to dismiss a complaint based on the enforcement of a forum selection clause has not been definitively answered. See Mercury West A.G., Inc. v. R.J. Reynolds Tobacco Co., No. 03 Civ. 5262(JFK), 2004 WL 421793, 2004 U.S. Dist. LEXIS 3508 (S.D.N.Y. Mar. 5, 2004) (citing New Moon Shipping Co., Ltd. v.. MAN B & W Diesel AG, 121 F.3d 24, 28-29 (2d Cir.1997); Jockey Int’l, Inc. v. M/V “Leverkusen Express”, 217 F.Supp.2d 447, 450 (S.D.N.Y.2002) (“The Second Circuit has not decided what rule governs dismissals based on a forum selection clause.”)). Nonetheless, courts of this circuit have made clear that courts do possess the ability under either Rule 12(b)(3) or § 1406(a) to dismiss a case upon a motion that a forum selection clause renders venue in a particular court improper. Jockey Int’l, 217 F.Supp. at 450; Tech. Express, Inc. v. FTF Bus. Sys. Corp., No. 99 Civ. 11692(LAK), 2000 WL 222628, 2000 U.S. Dist. LEXIS 2006 (S.D.N.Y. Feb. 25, 2000).

S.M. Freight brings the instant motion under Rule 12(b)(3) and, alternatively, 28 U.S.C. § 1406(a). Neither party has offered materials outside the pleadings. [FN1] Although Prime contends that § 1406(a) does not apply, it does not object to treating the motion as one brought pursuant to Rule 12(b)(3). The Court will therefore treat the motion as one to dismiss under Rule 12(b)(3).

FN1. Prime has submitted its letter to S.M. Freight relating to Prime’s intention to bring a request for attorneys’ fees related to the motion. Because of the disposition of this motion, the Court need not consider that document.

II. Third Party Standing to Object to Venue

Ordinarily, a third-party defendant does not have standing, absent specific statutory authorization, to object to venue. See First Fed. Sav. & Loan Ass’n v. Oppenheim, Appel, Dixon & Co., 634 F.Supp. 1341, 1349 (S.D.N.Y.1986) (citing cases and treatises). However, it is not clear that this doctrine applies in the face of a forum selection clause, as courts in this circuit and beyond have allowed third-party defendants to prevail on motions to dismiss pursuant to valid forum selection clauses. See generally Glyphics Media, Inc. v. M.V. “Conti Singapore”, No. 02 Civ. 4398(NRB), 2003 WL 1484145, 2003 U.S. Dist. LEXIS 4387 (S.D.N.Y. Mar. 21, 2003); Laserdynamics Inc. v. Acer America Corp., 209 F.R.D. 388 (S.D.Tex.2002); Lafargue v. Union Pacific R.R., 154 F.Supp.2d 1001 (S.D.Tex.2001). Therefore, S.M. Freight has standing to bring this motion and the Court now turns to the validity of the forum selection clause.

III. The Forum Selection Clause Is Valid and Enforceable

Forum selection clauses at one time were disfavored, but today are presumptively valid. See M/S Bremen v. Zapata Off-Shore Co ., 407 U.S. 1, 9- 10 (1972); Bense v. Interstate Battery Sys. of Am., Inc., 683 F.2d 718, 721 (2d Cir.1982) (stating that “any such ‘general hostility’ towards forum-selection clauses is today simply a vestigial remainder of an outmoded doctrine”); Mercury West, 2004 WL 421793, 2004 U.S. Dist. LEXIS 3508. In fact, the Court of Appeals for the Second Circuit has developed a policy of honoring forum selection clauses. See Strategic Mktg. & Communications, Inc. v. Kmart Corp., 41 F.Supp.2d 268, 270 (S .D.N.Y.1998). Underlying this policy is an understanding that forum selection clauses carry an economic benefit to at least one of the parties that is typically reflected in the overall economics of the contract. As such, these clauses are bargained-for terms of the contract that deserve to be honored by courts. See Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 594 (1991); Ins. Corp. of Hannover, Inc. v. Latino Americana de Reaseguros, S.A., 868 F.Supp. 520, 529 (S.D.N.Y.1994).

Parties seeking to avoid enforcement of a forum selection clause bear the heavy burden of making a “strong showing” in order to overcome the presumption of validity from which these clauses benefit. See New Moon Shipping, 121 F.3d at 29. More specifically, the party must convince the court that enforcement would be unreasonable and unjust, or that the clause is the result of fraud or overreaching. See Id.; Bense, 683 F.2d at 721-22; Jockey Int’l, 217 F.Supp.2d at 451. A forum selection clause may be found unreasonable or unjust if its enforcement will for all practical purposes deprive the complaining party of its day in court due to the grave inconvenience or unfairness of the selected forum, or if the clause contravenes a strong public policy of the forum state. Roby v. Corporation of Lloyd’s, 996 F.2d 1353, 1363 (2d Cir.1993); Ins. Corp. of Hannover, 868 F.Supp. at 529 (S.D.N.Y.1994).

Prime does not argue that the forum selection clause is unreasonable or unjust or will deny Prime its day in court. Prime does assert, however, that the enforcement of a forum selection clause violates Missouri public policy. (Neither party argues that New York public policy would be violated by the enforcement of the forum selection clause.) This assertion is in error, as the Supreme Court of Missouri has joined the majority of jurisdictions in the United States that recognize the validity of freely negotiated forum selection clauses, as long as a given forum selection clause is neither unfair nor unreasonable. High Life Sales Co. v. Brown-Forman Corp., 823 S.W.2d 493, 497 (Mo.1992).

Because no showing has been made that the forum selection clause at issue here is either unfair or unreasonable, the Court will enforce the forum selection clause and dismisses the third-party complaint for improper venue.

Conclusion

For the reasons set forth above, S.M. Freight’s motion to dismiss is granted without prejudice to the refiling of the claim in a court of appropriate jurisdiction of Greene County, Missouri, pursuant to the forum selection clause. Because of the disposition of S.M. Freight’s motion, Prime’s request for costs is denied as moot. [FN2] The remaining parties, Zurich and Prime, are ordered to appear before the Court for a conference on August 30, 2005, at ten o’clock in the forenoon.

FN2. Furthermore, Prime has failed to assert any statutory or procedural basis that would authorize the Court to award costs.

SO ORDERED.

United States District Court,

E.D. Tennessee, Northeastern Division.

THE MAPES PIANO STRING COMPANY

v.

USF DUGAN, INC.

No. 2:05-CV-68.

Aug. 10, 2005.

ORDER

 

GREER, J.

This civil action is before the Court on the defendant’s motion to dismiss the plaintiff’s claims of breach of contract, common law negligence and violation of the Tennessee Consumer Protection Act by reason that these causes of action are preempted by the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706. [Doc. 4]. The plaintiff (Mapes) sues the defendant (USF Dugan) as the result of damage to a shipment of musical strings USF Dugan undertook to transport for Mapes and which were picked up at Mapes’ Elizabethton, Tennessee facility. Because this Court finds that the claims of Mapes are preempted by the Carmack Amendment, the motion will be GRANTED.

In 1906, Congress enacted the Carmack Amendment so as to create a national policy regarding an interstate carrier’s liability for property loss. New York, New Haven & Hartford Railroad Co. v. Nothnagle, 346 U.S. 128, 131, 73 S.Ct. 986, 97 L.Ed. 1500(1953)

. The Sixth Circuit has held that the Carmack Amendment preempts state and common law claims and remedies for

cargo damaged in interstate transport. W.D. Lawson & Co. V. Penn Central Co., 456 F.2d 419, 421 (6th Cir.1972). Accordingly, the Carmack Amendment provides the exclusive remedy for an action for damages against a delivering carrier. See Jackson v. Brook Ledge, Inc., 991 F.Supp. 640(E.D.Ky.1997).

The Plaintiff makes a compelling argument that the Carmack Amendment does not preempt its causes of action, particularly those under the Tennessee Consumer Protection Act for actions arising prior to or after the time the parties entered into this contract, citing to a well reasoned Texas Court of Appeals opinion. The Defendant relies on a 1993 decision of this Court for the proposition that the Carmack Amendment does preempt the plaintiff’s state law causes of action, including its claim under the Tennessee Consumer Protection Act. Malone v. Mayflower Transit, Inc., 819 F.Supp. 724 (E.D.Tenn.1993). In that opinion, this Court dismissed the plaintiff’s claim under the Tennessee Consumer Protection Act, finding that it was preempted by the Carmack Amendment. Mapes argues that Malone is inapplicable because the facts regarding plaintiff’s claims were not disclosed in the opinion, submitting that the plaintiff’s Tennessee Consumer Protection Act claim must not have been independent of the claim covered by the Carmack Amendment as it argues is the case with its claim. Recently, however, this Court once again held that a Tennessee Consumer Protection Act claim is preempted by the Carmack Amendment despite a plaintiff’s similar argument that the cause of action was not preempted. Grehan v. American Holiday Van Lines, Inc., 2005 WL 1242061 (E.D.Tenn.2005). In Grehan, the Court found that “[i]t is well settled that the Carmack Amendment preempts state, common law and statutory causes of action relating to the shipment of goods by interstate carriers. The Court has found no controlling or persuasive authority to suggest that plaintiff’s claims under the TCPA should not also be preempted by the Carmack Amendment.” Id. (citations omitted).

Despite the plaintiff’s insistence that its Tennessee Consumer Protection Act claim is separate and apart from its claim under the Carmack Amendment, it is clear that the two are intertwined, as the alleged deceptive representations made by the defendant were made in the course of the parties contracting for the shipment of goods in interstate commerce. Further, to hold that the plaintiff’s Tennessee Consumer Act claims are not preempted would be contrary to the purpose of the Carmack Amendment, which was enacted to create uniformity of law with respect to damaged cargo and the rights and liabilities of the parties involved, as opposed to subjecting interstate carriers to unique causes of action permitted by each state’s laws. See New York, New Haven and Hartford Railroad Co. at 131.

Accordingly, the defendant’s motion to dismiss is GRANTED, and the plaintiff’s second, third, and forth claims set forth in its Complaint are DISMISSED. [Doc. 4]. It is further ORDERED that the plaintiff’s request that it be permitted to amend its complaint to set forth a cause of action for negligent misrepresentation is DENIED, by reason that the cause of action is likewise preempted by the Carmack Amendment.