138 F. Supp. 3d 1183
W.D. Wash.2015Background
- Ershigs contracted to supply five FRP tanks to Vale; at receipt in Newfoundland on Feb 20, 2012 at least two tanks were damaged and Vale paid >$75,000 to repair them; Allianz, Vale’s insurer, sued as subrogee.
- Allianz originally sued Ershigs in this district in Nov 2013; that action was voluntarily dismissed without prejudice and the parties executed a tolling agreement covering six months ending Oct 4, 2014.
- Allianz refiled in this district on Aug 14, 2014; Ershigs answered on Sept 9, 2014 but waited ~11 months to move to dismiss on forum non conveniens grounds based on a Purchase Order (PO) and General Terms & Conditions (GTCs) containing an Ontario-exclusive forum-selection clause and an arbitration clause.
- The GTCs: GTC §25.1 selects exclusive jurisdiction of Ontario courts and Ontario law; GTC §21.5 (incorporated) provides arbitration in Toronto under Ontario law.
- Allianz does not dispute the PO/GTCs apply to it as subrogee; Allianz argues Ershigs waived the forum defense and/or that the forum-selection/arbitration clauses are unenforceable or would prejudice Allianz (statute-of-limitations concerns).
- The court granted Ershigs’ motion to dismiss on forum non conveniens grounds but conditioned dismissal on Ershigs treating the statute of limitations as tolled from April 4, 2014 until 30 days after the filing of the order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Ershigs waived forum non conveniens defense by not pleading it in the answer | Allianz: Ershigs waived the defense by failing to assert it earlier | Ershigs: forum clause enforcement is by dismissal; delay does not waive defense | Court: No waiver despite delay; delay considered when imposing conditions |
| Enforceability of forum-selection clause | Allianz: enforcement would be unreasonable or prejudicial (statute-of-limitations, practical deprivation of day in court) | Ershigs: clause is valid and presumptively enforceable | Court: Clause valid; Allianz failed to meet heavy burden to show unreasonableness |
| Whether dismissal should be conditioned to protect plaintiff from prejudice | Allianz: dismissal could expose it to statute-of-limitations bar; seeks protection | Ershigs: no prejudice if clause enforced; delay was not prejudicial | Court: Dismissal conditioned on tolling SOL from April 4, 2014 to 30 days after order to mitigate prejudice |
| Whether the court should compel arbitration instead of dismissal | Allianz: Ershigs waived arbitration | Ershigs: alternatively seeks arbitration under GTC §21.5 | Court: Declines to compel arbitration because dismissal enforcing forum clause is appropriate; arbitration motion not addressed further |
Key Cases Cited
- Atlantic Marine Constr. Co. v. U.S. Dist. Court, 134 S. Ct. 568 (2013) (forum-selection clauses should be given controlling weight in nearly all cases)
- Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) (forum-selection clauses are presumptively valid)
- Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509 (9th Cir. 1988) (federal law governs enforcement of forum-selection clauses in diversity cases)
- Argueta v. Banco Mexicano, S.A., 87 F.3d 320 (9th Cir. 1996) (standards for declaring a forum-selection clause unreasonable)
- Murphy v. Schneider Natl., Inc., 362 F.3d 1133 (9th Cir. 2004) (challenger bears heavy burden to show enforcement is unreasonable)
- Leetsch v. Freedman, 260 F.3d 1100 (9th Cir. 2001) (district courts may impose conditions on forum non conveniens dismissal to prevent prejudice)
- In re Air Crash Disaster New Orleans, La. on July 9, 1982, 821 F.2d 1147 (5th Cir. 1987) (reasonableness/timeliness considerations for forum non conveniens motions)
- Sparling v. Hoffman Constr. Co., 864 F.2d 635 (9th Cir. 1988) (broad arbitration clauses can justify dismissal when they bar plaintiffs’ claims)