P H I Inc v. Apical Industries Inc
6:13-cv-00015
W.D. La.Mar 7, 2014Background
- PHI, Inc. sues Rolls-Royce, Apical, and Offshore Helicopter Support Systems for damages from a helicopter crash in the Gulf of Mexico; Rolls-Royce allegedly supplied the engine bearing involved in the crash.
- The #2 bearing was a replacement part purchased from Rolls-Royce’s distributor; PHI installed it in November 2011, after the crash occurred in December 2011.
- Rolls-Royce’s limited warranty for spare parts contains an Indiana choice-of-law clause and a forum-selection clause directing litigation in Marion County, Indiana or the SD Indiana.
- The action originated in Louisiana state court and was removed to federal court on diversity grounds; Offshore contested its joinder and was later involved in a remand/venue posture.
- Rolls-Royce moved to sever PHI’s claims against Rolls-Royce and transfer that severed claim to the SD Indiana; the court considered Atlantic Marine’s framework but declined to sever and transfer.
- The court found venue proper in the Western District of Louisiana and held that the entire action could not be transferred to Indiana under 28 U.S.C. §§ 1404(a) or 1406(a); severance was not warranted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the forum-selection clause is enforceable. | PHI argues clause should be enforced but not to the extent it deprives Louisiana-related parties. | Rolls-Royce contends clause requires Indiana forum for PHI’s claim against Rolls-Royce. | Forum-selection clause not enforced as to severance/transfer in this exceptional case. |
| Whether PHI’s claim against Rolls-Royce should be severed under Rule 21 and transferred to Indiana. | Severance would advance judicial economy and separate forum. | Atlantic Marine requires transfer to Indiana; severance and transfer should occur. | Severance not warranted; keep case intact in Louisiana; no transfer of severed claim. |
| Whether Atlantic Marine controls the transfer analysis here. | Atlantic Marine supports transfer to Indiana when forum-selection clause exists. | Atlantic Marine mandates transfer absent extraordinary circumstances. | Atlantic Marine does not control; circumstances here are exceptional and denial of transfer appropriate. |
| Whether the entire action could be transferred under 1404(a) or 1406(a) if severed. | Clarity that transfer should be allowed for the severed claim. | No basis to transfer entire action; even under 1404/1406, transfer not warranted. | No transfer of the entire action; neither statute supports transfer in this posture. |
| Should the forum-selection clause violate Louisiana public policy if enforced. | Enforcement would honor the contract terms. | Enforcement would contravene public policy due to prejudice to non-signatory parties. | Enforcement would be unfair; however, overall result grounds denial of transfer under exceptional circumstances. |
Key Cases Cited
- Atlantic Marine Construction Co., Inc. v. United States District Court for the Western District of Texas, 134 S. Ct. 568 (2013) (forum-selection controls transfer except exceptional cases; 1404(a) evaluation without private-interest factors)
- The Bremen v. Zapata Off–Shore Co., 407 U.S. 1 (1972) (forum-selection clause enforcement; strict scrutiny against unfairness)
- Carnival Cruise Lines v. Shute, 499 U.S. 585 (1991) (enforcement of forum-selection clauses in form contracts)
- Calix-Chacon v. Global Intern. Marine, Inc., 493 F.3d 507 (5th Cir. 2007) (forum-selection clause enforceability in maritime/contract contexts)
- Haynsworth v. The Corporation, 121 F.3d 956 (5th Cir. 1997) (standards for forum-selection and venue considerations in Rule 21/42 contexts)
- Gibbs United Mine Workers of Am., v. Gibbs, 383 U.S. 715 (1966) (judicial economy and broad joinder principles (policy considerations))
- O'Neil United States v., 709 F.2d 361 (5th Cir. 1983) (foundational venue and transfer principles under 28 U.S.C. sections)