2:15-cv-05969
E.D.N.YSep 1, 2016Background
- Donnay U.S.A. (plaintiff) licensed rights in Donnay-branded apparel from Donnay International, with IBML as agent and BHL as guarantor; license (2009) and a First Supplemental Deed (2012) each contain forum-selection clauses designating courts of England and Wales.
- Disputes arose over website control and minimum royalties; defendants issued a notice in Jan. 2013 purporting to terminate the agreement(s).
- Plaintiff alleges termination only affected the 2012 amendment and that the original license remains a non-exclusive license; plaintiff asserts declaratory judgment and several tort claims (business disparagement; tortious interference with prospective and existing relations; destruction of goodwill).
- Defendants moved to dismiss based on the contracts’ forum-selection clauses (and alternatively argued res judicata, not reached). Defendants had removed an earlier state-court action in 2015.
- The district court treated the motion as a forum non conveniens motion enforcing the forum-selection clauses, applied the Second Circuit four-part test, and granted dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of forum-selection clauses | Clauses unenforceable due to fraud, economic duress, overreaching; prior conduct estops defendants | Clauses are valid, negotiated in contracts plaintiff signed; enforcement is routine and proper | Clauses presumptively enforceable; plaintiff failed to rebut presumption; dismissal granted |
| Scope: do clauses cover tort claims? | Original clause does not necessarily cover torts; amendment’s broader language shows torts excluded from original | Both clauses are broad; forum clauses apply to disputes "arising out of" the agreement, including torts connected to contractual relationship | Court held both clauses cover tort claims because they arise from the contractual relationship |
| Procedural vehicle to enforce clause | (implicit) plaintiff litigated here previously; defendants used Rule 12(b) to dismiss | Enforce clause via forum non conveniens (Atlantic Marine guidance); Rule 12(b) construed as forum non conveniens motion | Court applied forum non conveniens framework and Atlantic Marine principles; dismissal for forum non conveniens enforced the clause |
| Rebuttal defenses (estoppel, inability to litigate abroad) | Judicial estoppel: defendants previously litigated in this court; hardship and cost make England forum unfair | Judicial estoppel inapplicable; cost/ inconvenience insufficient to defeat clause | Estoppel fails because clause never litigated previously; hardship insufficient; enforcement not unjust |
Key Cases Cited
- Martinez v. Bloomberg LP, 740 F.3d 211 (2d Cir. 2014) (framework for enforcing forum-selection clauses and applying Atlantic Marine)
- Atlantic Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Texas, 134 S. Ct. 568 (2013) (Supreme Court clarified procedural mechanism and standards for enforcing forum-selection clauses)
- Magi XXI, Inc. v. Stato della Citta del Vaticano, 714 F.3d 714 (2d Cir. 2013) (presumption of enforceability and four-part analysis for forum-selection clauses)
- Phillips v. Audio Active Ltd., 494 F.3d 378 (2d Cir. 2007) (mandatory vs. permissive forum-clause inquiry and deference to parties’ choice)
- TradeComet.com LLC v. Google, Inc., 647 F.3d 472 (2d Cir. 2011) (procedural posture and enforcement of forum clauses prior to Atlantic Marine)
- Effron v. Sun Line Cruises, Inc., 67 F.3d 7 (2d Cir. 1995) (forum-selection clause enforcement despite foreign inconvenience)
- Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974) (fraud-in-the-inducement of whole agreement does not invalidate forum clause on its own)
- Ronar, Inc. v. Wallace, 649 F. Supp. 310 (S.D.N.Y. 1986) (forum clause applied to tort and contract claims)