WILLIAM H. STEELE, District Judge.
This matter comes before the Court on defendant Thyssenkrupp Materials NA, Inc.'s "Motion to Dismiss for Forum Non Conveniens or, in the Alternative, to Transfer Pursuant to 28 U.S.C.A. § 1404(a)" (doc. 36). The Motion has been briefed and is ripe for disposition.
Plaintiff, SSAB Alabama, Inc., brought an Amended Complaint (doc. 24) against defendants, Kem-Bond, Inc. and Thyssenkrupp Materials NA, Inc. In summary, that pleading alleges that SSAB purchased a product called EZ-POR (commonly known as "tap-hole sand") from defendant Kem-Bonds for use in its steel-making process. According to SSAB, this EZ-POR product "catastrophically failed," causing SSAB to suffer "significant property loss damages" and "other damages including significant production delays and disruption resulting in lost profits." (Doc. 24, ¶ 3.) The Amended Complaint further alleges that Kem-Bonds obtained the defective EZ-POR from defendant Thyssenkrupp, which manufactured and/or distributed the product. (Id., ¶ 2.)
Based on these allegations, SSAB advances state-law causes of action against defendants for breach of contract (Count One), breach of warranty (Count Two), and the Alabama Extended Manufacturer's Liability Doctrine (Count Three). In Count One, SSAB asserts that Kem-Bonds breached its direct contracts with SSAB as set forth in two enumerated purchase orders. SSAB's contract claim against Thyssenkrupp arises from a contract between Thyssenkrupp and Kem-Bonds, on the theory that "SSAB was . . . a third-party beneficiary of the contract whereby Kem-Bonds acquired the tap-hole sand from" Thyssenkrupp. (Doc. 24, ¶ 10.) The Amended Complaint alleges that Thyssenkrupp breached its contract with Kem-Bonds by (i) failing to provide industry standard tap-hole sand, (ii) failing to perform chemical analysis and testing of the product prior to its delivery to SSAB, and (iii) failing to notify SSAB that a different supplier was being used for the tap-hole sand. In Count Two, SSAB alleges that (i) Kem-Bonds breached express warranties to SSAB set forth in the purchase orders, as well as implied warranties of merchantability and fitness for a particular purpose; and (ii) Thyssenkrupp breached implied warranties to SSAB, including implied warranties of merchantability and fitness for a particular purpose. And Count Three is a claim of products liability under the AEMLD against both defendants for selling and/or manufacturing EZ-POR that was in a defective condition and unreasonably dangerous to SSAB as the ultimate user or consumer.
Of critical importance to the pending Motion to Dismiss or Transfer is a forum-selection clause found in the pre-printed form contract between Thyssenkrupp and Kem-Bonds (the "TK Contract") for the subject EZ-POR product.
(Doc. 36-2, § IX.1 (emphasis added).) In its Motion to Dismiss or Transfer, Thyssenkrupp seeks to enforce Section IX.1 against SSAB, based on SSAB's unequivocal stance that it is a third-party beneficiary of the TK Contract. SSAB opposes the Motion. For its part, defendant Kem-Bonds has elected not to be heard.
As noted, Section IX.1 of the TK Contract is a forum-selection clause requiring claims against Thyssenkrupp "arising from" that contract to be brought "exclusively in the state or federal courts located in Cook County, Illinois." Four years ago, the Supreme Court explained in some detail how such clauses are to be construed and enforced by federal courts. In particular, the Court explained that "Section 1404(a) . . . provides a mechanism for enforcement of forum-selection clauses that point to a particular federal district." Atlantic Marine Const. Co. v. U.S. Dist. Court for Western Dist. of Texas, 134 S.Ct. 568, 579, 187 L.Ed.2d 487 (2013). By contrast, "the appropriate way to enforce a forum-selection clause pointing to a state or foreign forum is through the doctrine of forum non conveniens." Atlantic Marine, 134 S.Ct. at 580.
Here, the forum-selection clause sought to be enforced designates the proper forum as being state or federal courts in Cook County, Illinois; therefore, Thyssenkrupp has properly framed its Motion in terms of both § 1404(a) and the doctrine of forum non conveniens. Fortunately, the legal standard and analysis are the same in each scenario. See Atlantic Marine, 134 S.Ct. at 580 ("because both § 1404(a) and the forum non conveniens doctrine from which it derives entail the same balancing-of-interests standard, courts should evaluate a forum-selection clause pointing to a nonfederal forum in the same way that they evaluate a forum-selection clause pointing to a federal forum"). Because "enforcement of valid forum-selection clauses, bargained for by the parties, protects their legitimate expectations and furthers vital interests of the justice system," the Atlantic Marine Court explained, "a valid forum-selection clause [should be] given controlling weight in all but the most exceptional cases." 134 S.Ct. at 581 (citations omitted); see also Stiles v. Bankers Healthcare Group, Inc., 637 Fed.Appx. 556, 562 (11
Thyssenkrupp's argument in support of its Motion is straightforward. The TK Contract contains a valid forum-selection clause specifying that any claim against Thyssenkrupp arising from that contract must be brought in Cook County, Illinois. SSAB purports to be a third-party beneficiary of the TK Contract. Third-party beneficiaries have routinely been deemed bound by forum-selection clauses contained in the contracts they are seeking to enforce. See, e.g., Stiles, 637 Fed.Appx. at 562 ("A third party is bound by a forum-selection clause where the party's rights are completely derivative of those of the [signing party]—and thus `directly related to, if not predicated upon' the interests of the [signing party].") (citations omitted).
In response, SSAB advances a pair of arguments that the forum-selection clause in the TK Contract does not warrant transfer of its claims to Illinois.
Contrary to SSAB's conclusory assertion, all of plaintiff's claims against Thyssenkrupp occurred "as a fairly direct result of the performance of contractual duties." After all, the contractual duties that Thyssenkrupp performed were to supply EZ-POR to Kem-Bonds. All of SSAB's claims against Thyssenkrupp flow directly from that activity. In Count One, SSAB alleges that Thyssenkrupp breached the TK Contract by supplying defective tap-hole sand that it had failed to test before delivery. In Count Two, SSAB alleges that Thyssenkrupp breached certain implied warranties by supplying defective tap-hole sand under the TK Contract. And in Count Three, SSAB alleges Thyssenkrupp sold defective, unreasonable dangerous tap-hole sand under the TK Contract, giving rise to an AEMLD claim. Under any reasonable viewing of these claims, they all occur "as a fairly direct result of the performance of contractual duties," such that they fit comfortably within the scope of the forum-selection clause set forth in the TK Contract.
Second, SSAB insists that "[t]he granting of TK's Motion would be against the public interest." (Doc. 42, at 7.) The "public interest" factors catalogued by the Supreme Court as affecting the convenience of the forum consist of the following: "the administrative difficulties flowing from court congestion; the local interest in having localized controversies decided at home; the interest in having the trial of a diversity case in a forum that is at home with the law that must govern the action; the avoidance of unnecessary problems in conflict of laws, or in the application of foreign law; and the unfairness of burdening citizens in an unrelated forum with jury duty." Piper Aircraft Co. v. Reyno, 454 U.S. 235, 241 n.6, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981) (citation and internal quotation marks omitted); see also Atlantic Marine, 134 S.Ct. at 581 n.6 (similar). Plaintiff's argument implicates none of these recognized public-interest factors. More generally, the Supreme Court has emphasized that public-interest factors "will rarely defeat a transfer motion," such that "the practical result is that forum-selection clauses should control except in unusual cases." Atlantic Marine, 134 S.Ct. at 582. SSAB has failed to meet its heavy burden of showing exceptional or extraordinary circumstances, to-wit: that this is such an unusual case that the forum-selection clause in the TK Contract should not govern. See id. at 583 ("As the party acting in violation of the forum-selection clause, J-Crew must bear the burden of showing that
It appears that SSAB's "public interest" argument is, fundamentally, that this Court should not enforce the forum-selection clause in the TK Contract (which would otherwise mandate an Illinois forum for SSAB's claims against Thyssenkrupp) because there is a conflicting forum-selection clause in the contracts (actually purchase orders) between SSAB and Kem-Bonds (the "KB Contracts") pursuant to which Kem-Bonds supplied EZ-POR to SSAB. Specifically, Paragraph 20 of the KB Contracts reads as follows:
(Doc. 42, Exh. B, at 3, 6 (emphasis added).) The SSAB "plant site" listed on both purchase orders is located in Axis, Alabama. As the Court understands it, SSAB's position may be summarized as follows: (i) SSAB's claims against defendant Kem-Bonds are governed by the forum-selection clause set forth in the KB Contracts; (ii) that forum-selection clause confers exclusive jurisdiction on Alabama courts for SSAB's claims against Kem-Bonds; (iii) the KB Contracts' forum-selection clause must be enforced, meaning those claims must remain in Alabama courts; and (iv) therefore, the TK Contract's forum-selection clause should not be enforced because it would offend judicial economy to have part of this case litigated in Alabama and part of this case litigated in Illinois. (Doc. 42, at 7-9.)
Even assuming that Paragraph 20 means what SSAB says it means and reaches all of its claims asserted against Kem-Bonds,
SSAB has made no showing that this is one of "the most unusual cases." Certainly, SSAB may lament the possibility of litigating parallel suits in separate fora. But courts in analogous circumstances have routinely found that Atlantic Marine calls for enforcement of the forum-selection clause, notwithstanding objections grounded in fears of duplicative litigation or judicial economy. See, e.g., Valspar Corp. v. E.I. DuPont de Nemours and Co., 15 Supp.3d 928, 934-35 (D. Minn. 2014) ("[T]he Court does not believe the efficiency and economy achieved by trying interrelated claims in one forum should trump the forum-selection clauses agreed to by Valspar. . . . [A]llowing efficiency and economy to rule the day would effectively swallow Atlantic Marine's holding in every case with multiple defendants."); Crede CG III, Ltd. v. 22
In short, the Court concludes that SSAB has made no showing that the public-interest factors overwhelmingly disfavor enforcement of the forum-selection clause contained in the TK Contract. As such, SSAB has failed to meet its burden under Atlantic Marine. This is not an unusual or extraordinary case; therefore, the forum-selection clause is properly enforced. By enforcing the TK Contract's forum-selection clause as to SSAB's claims against Thyssenkrupp and transferring those claims to Illinois, the Court neither negates nor undermines the KB Contracts' forum-selection clause as to SSAB's claims against Kem-Bonds; rather, those claims will be retained here, thereby giving full effect to both forum-selection provisions, just as the district courts in the foregoing opinions did, in fulfillment of the teachings of Atlantic Marine. Pursuant to Atlantic Marine and using the rationale and approach adopted by many of the above-cited opinions, the Court in the exercise of its discretion finds that severance of SSAB's claims against defendant Thyssenkrupp pursuant to Rule 21, Fed.R.Civ.P., is appropriate. Accordingly, those claims are
For all of the foregoing reasons, it is
DONE and ORDERED.