Olde Homestead Golf Club v. Electronic Transaction Systems Corp.
714 F. App'x 186
3rd Cir.2017Background
- Olde Homestead Golf Club (the Club) contracted with Electronic Transaction Systems Corp. (ETS) via a Merchant Application and Agreement (MAA) first executed March 2007 and again in December 2007.
- The MAA is a seven-page contract: the first three pages contain merchant info; last four pages contain terms, including a forum-selection clause designating Loudoun County, Virginia state court for disputes.
- The Club faxed signed pages to ETS in December 2007 but the fax transmission only included the first three pages; the Club later claimed it never received or saw the forum-selection clause.
- In July 2016 the Club sued in the Eastern District of Pennsylvania alleging breach (overbilling) and federal overcharge claims, and sought class certification.
- ETS moved to dismiss on forum non conveniens based on the MAA’s forum-selection clause; the District Court found the Club had received the full MAA, the clause was valid and not unconscionable or against public policy, and dismissed without prejudice to refiling in Virginia state court.
- The Third Circuit affirmed, holding the clause binding, valid, enforceable, and that dismissal under forum non conveniens was not an abuse of discretion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the forum-selection clause is binding | Club: it never received/seen the clause (fax omitted last 4 pages) | ETS: Club received the full MAA; signed pages reference terms; MAMI system created single 7-page doc | Binding — record lacked evidence Club did not receive clause; District Court did not err |
| Validity of the clause | Club: clause invalid due to fraud/overreaching and because not provided | ETS: clause presumptively valid; no evidence of fraud/overreach | Valid — Club failed to meet burden to show fraud or overreaching |
| Unconscionability (procedural/substantive) | Club: procedurally unconscionable because clause not included; substantively unconscionable because Virginia lacks federal-style class procedures | ETS: clause not procedurally omitted; Virginia provides mechanisms similar to class representation | Not unconscionable — record contradicts procedural claim; substantive difference in procedures insufficient to void clause |
| Enforceability / public policy; dismissal on forum non conveniens | Club: enforcement would be improper and impede class claims; public policy favors access to federal procedures | ETS: clause enforceable; parties waived challenge to forum convenience; Virginia is adequate forum with ETS witnesses/records | Enforceable — heavy burden to overcome clause unmet; dismissal affirmed under forum non conveniens doctrine |
Key Cases Cited
- Salovaara v. Jackson Nat. Life Ins. Co., 246 F.3d 289 (3d Cir.) (plenary review of interpretation/enforcement of forum-selection clauses)
- In re: Howmedica Osteonics Corp., 867 F.3d 390 (3d Cir.) (federal courts must honor forum-selection clauses except in unusual cases)
- Atlantic Marine Construction Co. v. U.S. District Court, 134 S. Ct. 568 (U.S.) (valid forum-selection clause alters forum non conveniens analysis and is given controlling weight)
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (U.S.) (forum-selection clauses are presumptively valid absent strong cause)
- Wong v. PartyGaming Ltd., 589 F.3d 821 (6th Cir.) (differences in procedural rules between fora do not alone defeat forum-selection clauses)
- In re: Exide Technologies, 544 F.3d 196 (3d Cir.) (forum-selection clause enforceable unless enforcement would violate strong public policy)
- Piper Aircraft Co. v. Reyno, 454 U.S. 235 (U.S.) (standard of review and deference in forum non conveniens determinations)
- Kisano Trade & Invest Ltd. v. Lemster, 737 F.3d 869 (3d Cir.) (factors guiding forum non conveniens analysis)
- Lony v. E.I. Du Pont de Nemours & Co., 886 F.2d 628 (3d Cir.) (abuse of discretion review of forum non conveniens dismissal)