Restaurant Supply, LLC v. Pride Marketing and Procurement, Inc.
2:17-cv-08793
E.D. La.Aug 10, 2017Background
- Restaurant Supply (CT LLC) was a shareholder in PRIDE (a Louisiana consortium) and alleges PRIDE received vendor rebates attributable to Restaurant Supply’s purchases and was required to remit those rebates to Restaurant Supply subject to setoff rights.
- Plaintiff alleges PRIDE withheld more than $2,000,000 in rebates for 2015 through Q1 2016, refused payment after demand, and on May 20, 2016 PRIDE’s board terminated Restaurant Supply as a shareholder.
- PRIDE allegedly used shareholder rebates as collateral for guarantees to a related entity and made payments in connection with that related entity, which filed Chapter 11 in the Eastern District of Louisiana the same day as the termination.
- Restaurant Supply sued in Connecticut state court; PRIDE removed to federal court and moved to dismiss for lack of personal jurisdiction (Rule 12(b)(2)) and alternatively to transfer venue to the Eastern District of Louisiana under 28 U.S.C. § 1404(a).
- The Shareholder Agreement contains a forum clause consenting to Louisiana as “a forum where any cause of action arising under [the Agreement] may be instituted,” and a Louisiana choice-of-law clause.
- The district court found the forum clause permissive, weighed § 1404(a) factors (locus of operative facts, documents, governing law, judicial efficiency) and granted transfer to the Eastern District of Louisiana, denying the personal-jurisdiction motion as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability/force of forum-selection clause | Clause binds parties to litigate in Louisiana (Plaintiff contends clause is permissive) | Clause requires suits in Louisiana | Clause is permissive (language uses “may” and “a”); not mandatory |
| Transfer under 28 U.S.C. § 1404(a) | Connecticut forum is proper and plaintiff’s choice should be given weight | Transfer favored because operative facts, documents, law, and efficiency point to Louisiana | § 1404(a) transfer granted to Eastern District of Louisiana (totality favors transfer) |
| Personal jurisdiction in Connecticut (Rule 12(b)(2)) | Connecticut has jurisdiction based on repeated orders placed from CT and receipt of goods there | PRIDE’s relevant conduct (withholding rebates, board actions, pledging collateral) occurred in Louisiana; jurisdiction disputed | Court did not decide jurisdiction; denied dismissal as moot because transfer was granted |
| Transfer despite jurisdictional doubts (§ 1406 / venue) | Plaintiff argues forum appropriate; concerns about forum-shopping | Transfer appropriate even if Connecticut lacks personal jurisdiction; Louisiana clearly has jurisdiction | Transfer appropriate under § 1404(a) and, if needed, § 1406(a) because Eastern District of Louisiana is a district where case could have been brought |
Key Cases Cited
- Leroy v. Great W. United Corp., 443 U.S. 173 (discussing order of addressing venue vs. personal jurisdiction)
- Martinez v. Bloomberg LP, 740 F.3d 211 (four-part test for forum-selection clause enforceability)
- Phillips v. Audio Active Ltd., 494 F.3d 378 (forum-selection clause analysis and application of governing law)
- D.H. Blair & Co. v. Gottdiener, 462 F.3d 95 (enumeration of § 1404(a) transfer factors)
- Fort Knox Music, Inc. v. Baptiste, 257 F.3d 108 (transfer under § 1406(a) when personal jurisdiction lacking)
- Van Dusen v. Barrack, 376 U.S. 612 (transfer to prevent waste and protect litigants; transfer interests of justice)