Fowler v. Cold Stone Creamery, Inc.
1:13-cv-00662
D.R.I.Nov 25, 2013Background
- Plaintiffs Gregory Fowler and Doubri Enterprises, LLC entered into a franchise agreement with Cold Stone on April 3, 2007, linked to a Rhode Island retail space lease with E&A from 2005 and a sublease to Plaintiffs.
- From 2007 to 2012 Cold Stone withdrew funds from Plaintiffs' account to pay rent to E&A; starting January 2012, withdrawals continued but rent payments to E&A did not occur, leading to eviction.
- Cold Stone removed the case from Rhode Island Superior Court to federal court based on diversity of citizenship and moved to dismiss for improper venue under Rule 12(b)(3), arguing the franchise agreement requires Arizona litigation.
- The franchise agreement contains a forum selection clause mandating litigation in Maricopa County, Arizona, with limited injunctive relief allowed elsewhere.
- Plaintiffs oppose dismissal and seek to keep the case in Rhode Island, arguing the clause is unconscionable or unreasonable, while Cold Stone urges transfer to Arizona rather than dismissal.
- The court denied dismissal but granted transfer, transferring the suit to the District of Arizona.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the forum clause enforceable against plaintiffs? | Clause is unreasonable/unconscionable due to Rhode Island nexus. | Clause clearly designates Arizona and should be enforced absent strong contrary showing. | Transfer warranted; clause enforceable; dismissal denied. |
| Was the franchise agreement an unconscionable contract of adhesion? | Agreement was drafted unilaterally with no meaningful choice. | Plaintiffs had option to decline; agreement not unconscionable. | Not unconscionable. |
| Is the choice-of-venue clause unreasonable under forum-selection doctrine? | Rhode Island location makes Arizona forum unreasonable. | Geographic convenience does not render clause unreasonable; costs contemplated. | Clause reasonable; transfer appropriate. |
Key Cases Cited
- Huffington v. T.C. Group, LLC, 637 F.3d 18 (1st Cir. 2011) (forum-selection clause generally enforcing absent strong contrary showing)
- Roby v. Corp. of Lloyd’s, 996 F.2d 1353 (2d Cir. 1993) (forum clauses should be enforced absent exceptional circumstances)
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (Supreme Court 1972) (strong public policy favoring enforcement of forum-selection clauses)
- E.H. Ashley & Co. v. Wells Fargo Alarm Servs., 907 F.2d 1274 (1st Cir. 1990) (conscious unfavorability must be proven to render contract unconscionable)
- In re Mercurio, 402 F.3d 62 (1st Cir. 2005) (relevant considerations in evaluating costs and feasibility of forum transfer)