Home Source Industries, LLC v. Freightquote.com, LLC
4:14-cv-01037
W.D. Mo.Nov 19, 2014Background
- Home Source (NJ-based) contracted with Freightquote (KC, MO) for freight brokerage services; shipment picked up in NJ on March 7, 2014 for delivery to a Las Vegas trade show required by March 13, 2014. Freightquote informed Home Source the shipment would not arrive by March 13.
- Home Source sued in the District of New Jersey asserting breach of contract, breach of implied duty of good faith, and negligent misrepresentation. Diversity jurisdiction exists.
- Freightquote moved under 28 U.S.C. § 1404(a) to transfer the case to the Western District of Missouri, relying principally on a forum-selection clause in its online Terms and Conditions that specified Missouri courts and Missouri law.
- Freightquote pointed to an August 9, 2012 enrollment email (with a hyperlinked “terms & conditions”) and subsequent order confirmations that included links to the Terms and Conditions or bills of lading referencing the terms.
- Home Source argued it never assented to or clicked through to the Terms and Conditions, alleged the link might have pointed to an inactive site, and thus the forum clause did not govern the March 6, 2014 shipment.
- The district court analyzed forum-clause enforceability under federal transfer principles and Jumara public/private interest factors and ultimately concluded the forum-selection clause was binding and ordered transfer to the Western District of Missouri.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity/enforceability of forum-selection clause | No assent: Home Source never clicked or signed; enrollment emails did not require acceptance | Clause was incorporated by reference via enrollment email and repeated links; customer conduct (opening account and placing orders) manifested assent | Enforceable: clause incorporated by reference; Home Source’s conduct manifested assent; failure to read or click link does not invalidate clause |
| Whether clause resulted from fraud/overreaching or is unreasonable | Clause is not binding because Home Source never had actual access; site may have been inactive later | No fraud or overreaching shown; clause prima facie valid; failure to read is not misconduct | No evidence of fraud/overreaching or unreasonableness; clause presumed valid and not defeated |
| Effect of valid forum clause on § 1404(a) balancing | Forum nonconveniens and Jumara factors should be considered | A valid clause means private-interest factors are deemed to favor the chosen forum per Atlantic Marine; only public interests considered | With valid clause, private factors weigh for Missouri; court limited to public-interest factors per Atlantic Marine |
| Public-interest Jumara factors and overall convenience | Home Source emphasized local events/contacts in NJ | Freightquote emphasized Missouri connection and choice-of-law to Missouri | Public-interest factors were neutral overall (judge familiarity favored Missouri); transfer to Western District of Missouri ordered |
Key Cases Cited
- Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22 (1988) (federal law governs enforcement of forum-selection clauses on transfer motions)
- Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Texas, 134 S. Ct. 568 (2013) (valid forum-selection clauses largely control § 1404(a) transfer analysis; private-interest factors deemed to favor contract forum)
- The Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) (forum-selection clauses prima facie valid and enforceable absent strong showing otherwise)
- Standard Bent Glass Corp. v. Glassrobots Oy, 333 F.3d 440 (3d Cir. 2003) (terms incorporated by reference enforceable when clearly identified)
- Jumara v. State Farm Ins. Co., 55 F.3d 873 (3d Cir. 1995) (framework of private and public interest factors for § 1404(a) transfers)
- Coastal Steel Corp. v. Tilghman Wheelabrator Ltd., 709 F.2d 190 (3d Cir. 1983) (criteria for defeating forum-selection clauses: fraud, public policy, or extreme inconvenience)
- Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991) (forum-selection clauses enforceable even in adhesion contract settings)