DOUGLAS P. WOODLOCK, District Judge.
Plaintiff Carter's of New Bedford, d/b/a Carter's Clothing and Footwear, is a family owned business that operates two clothing and footwear retail stores in southeastern Massachusetts. Compl. ¶ 1. For nearly thirty years, Carter's has sold footwear and other apparel manufactured by Defendant Nike. Id. at ¶ 3. Over time, sales of Nike products have grown to account for more than one-third of Carter's annual retail sales. Id. at ¶ 4.
By letter dated March 15, 2013, Nike informed Carter's that it was terminating Carter's account effective June 30, 2013. Id. at ¶ 9; Ex. B. The notice informed Carter's that Nike would accept no new orders from Carter's, and that any outstanding orders would be cancelled unless Carter's both notified Nike that it wanted the orders filled and paid for the orders in advance.
To ensure that Nike would fill its outstanding orders, Carter's paid Nike a sum of $160,582. Compl. at ¶ 11. As of the filing of the complaint on June 7, 2013, Nike had failed to respond to repeated requests from Carter's seeking confirmation that the pre-paid orders would be filled.
Seeking to forestall the termination of its Nike account, Carter's filed suit in Bristol Superior Court alleging breach of contract (Count I), breach of the implied covenant of good faith and fair dealing (Count II), violation of the Uniform Commercial Code (Count III), and violation of Mass. Gen. Laws. ch. 93A, § 11 (Count IV). Nike removed to this court on the basis of diversity jurisdiction and subsequently filed a motion to dismiss, which I now address.
In order to survive a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation and internal quotation marks omitted). Dismissal for failure to state a claim is appropriate when the pleadings fail to set forth "factual allegations, either direct or inferential, respecting each material element necessary to sustain recovery under some actionable legal theory." Berner v. Delahanty, 129 F.3d 20, 25 (1st Cir. 1997) (quoting Gooley v. Mobil Oil Corp., 851 F.2d 513, 515 (1st Cir. 1988) (internal quotation marks omitted). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged — but it has not `show[n]' — `that the pleader is entitled to relief.'" Maldonado v. Fontanes, 568 F.3d 263, 268 (1st Cir. 2009) (quoting Iqbal, 556 U.S. at 678).
I "must accept all well-pleaded facts alleged in the Complaint as true and draw all reasonable inferences in favor of the plaintiff." Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993). While I am "generally limited to considering facts and documents that are part of or incorporated into the complaint," I "may also consider documents incorporated by reference in the [complaint], matters of public record, and other matters susceptible to judicial notice." Giragosian v. Ryan, 547 F.3d 59, 65 (1st Cir. 2008) (citation and internal quotation marks omitted; alteration in original).
Nike has moved to dismiss the complaint on the grounds that its contract with Carter's contains a forum selection clause requiring this dispute to be litigated in Oregon.
Carter's relationship with Nike is governed by the "TERMS AND CONDITIONS OF SALE" (hereinafter the "Agreement") printed on each invoice Carter's receives from Nike.
Because this case is a diversity action, I must determine as an initial matter what law to apply in evaluating the validity of the forum selection clause. Both the Supreme Court and the First Circuit have expressly left open the question whether, under the Erie doctrine, the issue of a forum selection clause's enforceability should be regarded as "procedural" — and thus governed by federal law — or "substantive" — and thus governed by state law. See Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 25-26, 32 & n. 11 (1988); Huffington v. T.C. Group, LLC, 637 F.3d 18, 23 (1st Cir. 2011). Nevertheless, in the absence of a conflict between state law and the federal common law standard set forth in The Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972), the First Circuit has generally applied the Bremen standard. See Huffington, 637 F.3d at 23; Rafael Rodriguez Barril, Inc. v. Conbraco Indus., Inc., 619 F.3d 90, 92 (1st Cir. 2010); Rivera v. Centro Medico de Turabo, Inc., 575 F.3d 10, 16-17 (1st Cir. 2009).
Here, if I were to apply state law, the source would be the law of Oregon. This is the law to which Massachusetts choice of law principles direct me. See Melia v. Zenhire, Inc., 967 N.E.2d 580, 586 (Mass. 2012) (validity of forum selection clause determined according to state law specified in choice of law provision); Jacobson v. Mailboxes Etc. USA, Inc., 646 N.E.2d 741, 744 (Mass. 1995) (same). Although Oregon case law discussing forum selection clauses appears limited, and I could find no case explicitly citing Bremen, the standards have been described as "similar." See Mittendorf v. Stone Lumber Co., 874 F.Supp. 292, 295 (D. Or. 1995). Given the absence of recent guidance from the Oregon Supreme Court, which last considered the issue over forty years ago, see Reeves v. Chem Industrial Co., 495 P.2d 729, 731-32 (Or. 1972), I follow the First Circuit's practice of applying the federal common law, relatively secure in my understanding that Oregon law does not conflict.
Under Bremen, "the forum clause should control absent a strong showing that it should be set aside." 407 U.S. at 15; see also Nike USA, Inc. v. Pro Sports Wear, Inc., 145 P.3d 321, 324 (Or. App. 2006) ("Forum selection clauses contained in commercial contracts are prima facie enforceable; they will be disregarded only where the evidence shows that enforcement would be unfair and unreasonable."). The Supreme Court has identified four grounds for finding a forum selection clause unenforceable:
As the party challenging the enforcement of the forum selection clause, Carter's bears the "heavy burden" of demonstrating why it should not be enforced. Id. at 17; Huffington, 637 F.3d at 23. Carter's has failed to meet that burden.
The most fundamental problem with Carter's argument in its opposition to Nike's motion to dismiss is that it is unsupported by, and in many cases in direct tension with, the factual allegations contained in the complaint. In the complaint, Carter's expressly alleges that the Agreement at least partially governs its relationship with Nike. Compl. ¶ 5. While the complaint goes on vaguely to allege that the parties' relationship was further defined by a course of dealing, id. at ¶ 9, it contains no factual allegations suggesting that the Agreement is unenforceable in whole or in part as the product of fraud, duress or overreaching. In contrast, Carter's opposition takes the position that the Agreement is unconscionable and unenforceable.
Even putting aside the inherent conflict between Carter's argument and the allegations in its complaint, Carter's still fails to demonstrate that it should be relieved of its obligation under the Agreement to litigate this matter in Oregon. Carter's argues that the Agreement was drafted unilaterally by Nike; that it "is printed on the back on invoices, extends to multiple pages, and is printed in a small nine-point font size"; and that it is oppressive in that it forces Carter's to pursue any claim in Oregon but allows Nike to file suit in Massachusetts.
That the Agreement was unilaterally drafted by Nike does not render it, or its forum selection clause, unenforceable. As the First Circuit has observed, "[o]ne of the classic Supreme Court cases concerning forum selection clauses, Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991), enforced a non-negotiated forum selection provision contained in the passengers' cruise tickets in a personal injury action." Rivera, 575 F.3d at 19. "[A]dhesion does not imply nullity of a contract." Nieves v. Intercontinental Life Ins. Co. of P.R., 964 F.2d 60, 63 (1st Cir. 1992) (citation omitted). "If the wording of the contract is explicit and its language is clear, its terms and conditions are binding on the parties." Id.; see also Bull HN Info. Sys., Inc. v. Hutson, 229 F.3d 321, 331 (1st Cir. 2000) ("[O]f course, even a contract of adhesion is enforced unless unconscionable or unfair."). As a general proposition, if Carter's found the terms of Nike's Agreement unacceptably unfair, it was free to cease doing business with Nike. However, as the filing of this suit suggests, it had substantial incentive to keep purchasing product from Nike despite certain demanding terms in the Agreement.
That the Agreement was "printed on the back on invoices, extends to multiple pages, and is printed in a small nine-point font size," barely warrants discussion. The forum selection clause appears in the same font and is the same size as the remainder of text in the Agreement, under a heading containing the words "FORUM SELECTION" in bold capital letters. Carter's cites no authority suggesting a three page commercial contract printed in small, but legible font is rendered unenforceable on that basis.
Carter's broadest argument is that the forum selection clause is simply unfair; both in that it requires a small family-owned business from Massachusetts to litigate disputes with Nike across the country in Oregon, and in that Nike is not similarly restricted in its ability to select a forum. That said, the case law demonstrates that the "`heavy burden of proof . . . required to set aside [a forum selection] clause on grounds of inconvenience,' demands more of a litigant . . . than simply showing that another location would be more convenient." In re Mercurio, 402 F.3d 62, 66 (1st Cir. 2005) (citing Carnival Cruise Lines, 499 U.S. at 595). "Were it otherwise, forum selection clauses would almost never be enforceable, for inconvenience to at least one of the parties is an almost forgone conclusion when dealing with a provision that requires litigating away from one's home turf." Id. Here, there is no doubt that requiring Carter's to pursue its claims in Oregon would cause it to incur additional expense and suffer measurable inconvenience. But nothing about this case suggests that the realities of litigating in Oregon, should Carter's choose to press on, would rise to the level of "practical impossibility" that the applicable standard demands. See Huffington, 637 F.3d at 24.
For the reasons stated above, Nike's motion to dismiss is GRANTED.