SGIC Strategic Global Investment Capital, Inc. v. Burger King Europe GMBH
839 F.3d 422
| 5th Cir. | 2016Background
- Plaintiffs Groenke, SGIC, and GRIL (Texas/Delaware entities) operated Burger King franchises in Germany under individual franchise agreements with Defendant BKE (a Swiss corporation). Groenke also signed a separate Personal Guarantee for certain franchise fees.
- Each franchise agreement included a forum-selection clause designating Munich, Germany as the exclusive venue and German law as governing; the Personal Guarantee did not contain such a clause.
- Dispute arose after Plaintiffs tried to sell GRIL; Plaintiffs allege BKE communicated opposition and threatened termination, causing a buyer to withdraw and prompting Plaintiffs to file suit in Texas alleging tortious interference and seeking declaratory relief (Franchise Agreement Litigation, Sept. 2014).
- Five months earlier BKE filed suit in the Northern District of Texas against Groenke on the Personal Guarantee to recover franchise fees (Personal Guarantee Litigation); that suit referenced franchise agreements but involved different restaurants.
- District court dismissed the Franchise Agreement Litigation on forum non conveniens grounds (enforcing the Munich forum-selection clauses) and denied as moot Plaintiffs’ timely motion for leave to amend without explanation.
- On appeal the Fifth Circuit affirmed dismissal for forum non conveniens, finding BKE did not waive the clauses by filing the Texas suit, but vacated and remanded the denial of leave to amend as an abuse of discretion for lack of explained reasoning.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether BKE waived forum-selection clauses by filing the earlier Texas suit | BKE’s filing in Texas constituted waiver of the Munich forum clauses | BKE’s Texas suit involved different contracts/ franchises and did not waive clauses in the separate franchise agreements | No waiver; dismissal for forum non conveniens affirmed |
| Whether district court properly denied Plaintiffs’ motion for leave to amend as moot without explanation | Motion to amend was timely (within scheduling order), first amendment request, no obvious prejudice—court abused discretion by denying without reasons | Denial as moot (court did not explain) | Abuse of discretion; denial vacated and remanded for consideration of amendment factors |
Key Cases Cited
- Subway Equip. Leasing Corp. v. Forte, 169 F.3d 324 (5th Cir.) (standard for reviewing waiver of contractual rights)
- Weber v. PACT XPP Techs., AG, 811 F.3d 758 (5th Cir. 2016) (forum-selection clause enforceability reviewed de novo; choice-of-law rules govern interpretation)
- North Am. Specialty Ins. Co. v. Debis Fin. Servs., Inc., 513 F.3d 466 (5th Cir. 2008) (waiver can arise from conduct inconsistent with intent to enforce a right)
- Al Rushaid v. Nat’l Oilwell Varco, Inc., 757 F.3d 416 (5th Cir.) (test for waiver of arbitration/forum clauses: substantial invocation of judicial process plus resulting prejudice)
- Smith v. EMC Corp., 393 F.3d 590 (5th Cir.) (Rule 15(a) favors granting leave to amend; denial requires substantial reason)