258 So. 3d 1103
Ala.2018Background
- United Propane (KY corp.) and Cullman Security Services (CSS, an Alabama business) entered a pre-purchase propane contract containing an outbound forum-selection clause: exclusive jurisdiction and venue in McCracken County, Kentucky.
- CSS paid for 550 gallons; United Propane delivered only part and later demanded much higher prices for further deliveries; CSS bought elsewhere and later filed suit in Alabama (Cullman Circuit) as a nationwide class action for breach and related claims.
- United Propane moved to dismiss under Rule 12(b)(3) asserting the Kentucky forum-selection clause; CSS previously filed a similar class complaint in Kentucky which was dismissed for lack of individual claim amounts exceeding Kentucky’s $5,000 circuit-court jurisdictional threshold.
- CSS argued enforcement of the clause is unfair/unreasonable because Kentucky law bars class aggregation to meet jurisdictional thresholds, making class relief impracticable, and claimed the contract was an adhesion agreement reflecting overweening bargaining power.
- The Cullman trial court denied dismissal, finding the forum-selection clause unfair/unreasonable because it effectively deprived CSS of the ability to file a class action and labeling the contract an adhesion contract.
- The Alabama Supreme Court granted mandamus, concluding CSS failed to clearly show the clause was unfair or unreasonable and directing dismissal without prejudice under Rule 12(b)(3).
Issues
| Issue | Plaintiff's Argument (CSS) | Defendant's Argument (United Propane) | Held |
|---|---|---|---|
| Enforceability of outbound forum-selection clause | Clause is unfair/unreasonable because Kentucky forbids aggregation for class actions, making class relief impracticable and denying meaningful access to court; contract is adhesion | Clause is presumptively valid; parties are businesses; CSS could pursue individual claims in Kentucky small-claims/district court; no procedural unconscionability shown | Clause enforceable; CSS failed to clearly show enforcement would be unfair or unreasonable; dismissal ordered |
| Procedural unconscionability / adhesion contract | Contract was adhesion; CSS lacked meaningful choice and faced overweening bargaining power | CSS is a business that could have shopped elsewhere; record lacks proof CSS sought alternatives; no clear procedural unconscionability | Trial court erred to find adhesion; Alabama Supreme Court questions adhesion finding and holds CSS did not meet burden to show procedural unconscionability |
| Public-policy defense (class-action access) | Enforcing clause contravenes Alabama public policy (per Leonard) by making class relief economically infeasible | Leonard is distinguishable (involved consumer arbitration, fee barriers, and damages limits); outbound forum-selection clauses are not per se invalid on public-policy grounds | Public-policy argument rejected on these facts; outbound forum-selection clause not unconscionable as violating public policy |
| Convenience / deprivation of day in court | Litigating in Kentucky is gravely inconvenient and effectively deprives CSS of its day in court (distance, costs) | Parties are both businesses; CSS previously litigated in Kentucky; inconvenience alone insufficient to avoid clause absent grave difficulty | Inconvenience insufficient; factors weigh for enforcement; clause stands |
Key Cases Cited
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (establishes prima facie validity of forum-selection clauses and burden on resisting party to show unreasonableness)
- Professional Ins. Corp. v. Sutherland, 700 So.2d 347 (Ala. 1997) (Alabama adopts Bremen principles; outbound forum clauses enforceable unless unfair or unreasonable)
- Leonard v. Terminix Int'l Co., 854 So.2d 529 (Ala. 2002) (held arbitration clause barring class procedures and imposing prohibitive costs unconscionable; discussed class-action access as public-policy concern)
- Ex parte PT Sols. Holdings, LLC, 225 So.3d 37 (Ala. 2016) (emphasizes high burden on party challenging forum-selection clause; inconvenience alone ordinarily insufficient)
- Ex parte Leasecomm Corp., 879 So.2d 1156 (Ala. 2003) (forum-selection clauses raise procedural issues governed by forum law; applies Bremen framework)