Lakeside Surfaces, Inc. v. Cambria Co., LLC
16 F.4th 209
6th Cir.2021Background
- Lakeside Surfaces (MI) and Cambria (MN) executed a multi-part Business Partner Agreement (BPA) in 2011 that included extensive performance/loyalty requirements and a forum-selection clause requiring suits be brought in Le Sueur County, Minnesota, plus a Minnesota choice-of-law provision.
- Lakeside invested heavily to meet Cambria’s demands (training, advertising, new fabrication facility) and alleges Cambria effectively pushed exclusivity expectations.
- Cambria terminated the relationship in January 2018 for alleged breaches, stopped shipments, and notified customers; Lakeside sued in federal court in Michigan asserting breach of contract, MFIL violations, UCC claims, and promissory estoppel.
- Cambria moved to dismiss under the forum-selection clause; the district court granted dismissal (forum non conveniens), treating the clause as enforceable.
- On appeal, the sole contested legal issue was enforceability of the forum-selection clause—specifically whether Bremen’s public-policy exception applies and whether Michigan’s Franchise Investment Law (MFIL) voids the clause.
- The Sixth Circuit held the forum-selection clause unenforceable because enforcing it would contravene Michigan’s strong public policy embodied in the MFIL, and the BPA’s Minnesota choice-of-law clause did not immunize the forum clause from the MFIL.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Bremen’s public-policy exception is part of the enforceability analysis for forum-selection clauses in diversity cases | Bremen’s public-policy exception governs and can invalidate the clause | Wong omitted the public-policy factor; thus it should not apply | Bremen’s public-policy exception remains part of the enforceability inquiry (follow Shell and circuit consensus) |
| Whether enforcing the forum-selection clause would contravene Michigan public policy (MFIL) | MFIL voids out-of-state forum-selection clauses in franchise agreements; enforcing clause would violate a strong Michigan public policy | MFIL doesn’t apply because parties chose Minnesota law; clause is enforceable | MFIL embodies a strong Michigan public policy; enforcement would contravene it, so clause is unenforceable |
| Whether the BPA’s Minnesota choice-of-law clause renders the MFIL’s forum restriction inapplicable | Choice-of-law cannot be used to evade MFIL protections or notice requirements | Banek permits enforcing choice-of-law and does not invalidate choice provisions under MFIL | Choice-of-law does not nullify the MFIL’s prohibition on forum-selection clauses here; Banek is distinguishable because it did not involve a forum-selection clause |
| Proper relief after finding forum clause unenforceable | Keep suit in Michigan federal court (deny dismissal) | Dismiss under forum non conveniens for Minnesota | Clause unenforceable; district court’s dismissal reversed and case remanded for further proceedings |
Key Cases Cited
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) (forum-selection clauses presumptively enforceable but invalid if contravening strong public policy)
- Atlantic Marine Constr. Co. v. U.S. Dist. Ct. for the W. Dist. of Tex., 571 U.S. 49 (2013) (enforceable forum clauses alter forum non conveniens analysis and shift burden to plaintiff)
- Wong v. PartyGaming Ltd., 589 F.3d 821 (6th Cir. 2009) (adopted federal common-law approach to enforceability and listed traditional enforceability factors)
- Shell v. R.W. Sturge, Ltd., 55 F.3d 1227 (6th Cir. 1995) (applied Bremen public-policy exception in a diversity context)
- Banek Inc. v. Yogurt Ventures U.S.A., Inc., 6 F.3d 357 (6th Cir. 1993) (upheld choice-of-law provision in franchise case but distinguishable because it did not present a forum-selection clause issue)