Filed: Jun. 24, 2015
Latest Update: Mar. 02, 2020
Summary: exhibits, so the district court struck the pre-amendment invoices. When opposing a Rule 12(b)(6) motion, a, plaintiff cannot expect a trial court to do his homework for him.5, Massachusetts has upheld forum selection clauses which include, individual Chapter 93A claims.
United States Court of Appeals
For the First Circuit
No. 14-1463
CARTER'S OF NEW BEDFORD, INC.,
d/b/a CARTER'S CLOTHING AND FOOTWEAR,
Plaintiff, Appellant,
v.
NIKE, INC., and NIKE USA, INC.,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Douglas P. Woodlock, U.S. District Judge]
Before
Lynch, Torruella, and Kayatta,
Circuit Judges.
Philip N. Beauregard, with whom Law Offices of Beauregard,
Burke & Franco, was on brief, for appellant.
Nicholas D. Stellakis, with whom Martin F. Gaynor III and
Manion Gaynor & Manning LLP, were on brief, for appellees.
June 24, 2015
TORRUELLA, Circuit Judge. This case arises out of a
contract dispute between Plaintiff-Appellant Carter's of New
Bedford, Inc. ("Carter's"), a family-owned retail clothing and
footwear business with two stores in Massachusetts, and Defendant-
Appellee Nike, Inc. ("Nike"). In an attempt to stop Nike from
terminating the parties' business relationship, Carter's filed suit
in Massachusetts state court, bringing a host of contractual claims
as well as a claim under Mass. Gen. Laws ch. 93A, §§ 2 and 11
("Chapter 93A"). Nike removed the suit to federal court and then
moved to dismiss under Federal Rule of Civil Procedure 12(b)(6).
According to Nike, its invoices (the "Agreement") included a forum
selection clause that regulated the relationship between it and
Carter's and required the latter to bring any claim in Oregon, not
Massachusetts. The district court agreed with Nike and dismissed
Carter's claims. We now affirm that decision.
I. Background
Carter's has sold Nike footwear for approximately twenty-
eight years. Over that period, Nike products have accounted for a
substantial portion of Carter's revenue. In March 2013, Nike
notified Carter's that it was terminating the parties' business
relationship. Carter's theorizes that Nike did so as part of a new
marketing strategy that favors large national retailers over small
locally-owned businesses. In an attempt to forestall Nike's
termination, Carter's sued Nike in Bristol Superior Court alleging
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that Nike: (1) breached its Agreement with Carter's; (2) breached
the implied covenant of good faith and fair dealing; (3) violated
Mass. Gen. Laws ch. 106, § 2-309 (enacting the Uniform Commercial
Code ("U.C.C.") in Massachusetts), which provides a default
"reasonable time" requirement for terminating agreements of
successive performance with indefinite duration; and (4) violated
Chapter 93A, which broadly prohibits "unfair methods of competition
and unfair or deceptive acts or practices in the conduct of any
trade."
Carter's recognized in its Complaint that the parties'
business relationship was at least "partially defined" by Nike's
invoices and appended a copy of one of these invoices, entitled
"Terms and Conditions of Sale," to said Complaint. The document
defines itself as "the Agreement" and establishes that "[e]ach
Order, together with these Terms and Conditions and, if applicable
Customer's credit application and account agreement, may be
referred to collectively as the 'Agreement.'" Carter's pleaded
"always hav[ing] performed its obligations under such Agreement."
While the Agreement includes a clause that states that it "contains
the entire agreement and understanding between the parties . . .
and supersedes prior and contemporaneous oral and written
agreements, commitments and understandings," Carter's Complaint did
not explain whether there are any unwritten portions (prior,
contemporaneous, or post-Agreement) of the parties' understandings
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or how exactly Nike breached those. Carter's did claim, however,
that the business relationship was governed by various
instructional materials and guidelines on product advertising, as
well as "other customs and procedures . . . that reflect the
expectations and arrangements between Nike and Carter's in
conducting their business together." In addition to that, Carter's
asserted that it had become a "de facto franchise" of Nike.
Therefore, Carter's argued that terminating the relationship was a
breach of the implied covenant of good faith and fair dealing and
that such conduct was in violation of Massachusetts law.
Once removed to federal court, Nike moved to dismiss
under Federal Rule of Civil Procedure 12(b)(6). According to Nike,
a forum selection clause in the Agreement required Carter's to file
its claims in Oregon.1 Carter's opposed the motion, arguing that
the Agreement was unconscionable and an unenforceable contract of
adhesion. In support of that assertion, Carter's claimed that it
did not have the opportunity to bargain, and that the Agreement
1
The relevant provision reads:
The Agreement, and all disputes arising out of the
Agreement or out of the relationship between NIKE and
Customer, will be governed by the laws of the state of
Oregon. . . . Customer irrevocably consents to the
jurisdiction of the state and federal courts located in
the state of Oregon in connection with any action arising
out of or in connection with the Agreement and waives any
objection that such venue is an inconvenient forum.
Customer will not initiate an action against NIKE in any
other jurisdiction. NIKE may bring an action in any
forum.
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unfairly constrained Carter's possibilities while allowing Nike to
litigate in the forum of its choosing. Carter's also argued that
Nike had changed the invoice to include the forum selection clause
only three years prior to termination, and without notifying
Carter's. As proof, Carter's attempted to introduce a pre-
amendment copy of the Nike invoice as an exhibit to its memorandum
in opposition to Nike's motion to dismiss. Nike moved to strike
that exhibit, arguing that district courts are required to confine
their 12(b)(6) inquiry to the complaint and the exhibits attached
thereto. Carter's never objected to Nike's motion to strike the
exhibits, so the district court struck the pre-amendment invoices.
The district court dismissed Carter's Complaint. It
noted that Carter's had never alleged that the invoice agreement
was unconscionable in its Complaint. In fact, Carter's admitted
that the parties' business relationship was partially governed by
the Agreement and attached the invoice in the first instance. The
district court further noted that while Carter's alleged that the
business relationship was also governed by the parties' course of
dealing, it never explained what terms such course of dealing
created. The district court determined that Carter's did not meet
its burden to show that the forum selection clause would deprive
Carter's of its day in court. Thus, it granted Nike's motion to
dismiss. Carter's appeal ensued.
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II. Discussion
This court reviews a district court's grant of a motion
to dismiss de novo. Cook v. Gates, 528 F.3d 42, 48 (1st Cir.
2008). We "assume the truth of all well-pleaded facts in the
complaint and indulge all reasonable inferences that fit the
plaintiff's stated theory of liability." Rivera v. Centro Médico
de Turabo, Inc.,
575 F.3d 10, 13 (1st Cir. 2009) (quoting Centro
Médico de Turabo, Inc. v. Feliciano de Melecio,
406 F.3d 1, 5 (1st
Cir. 2005)) (internal quotation marks and citation omitted).
A. Carter's Challenge to the Procedural Vehicle
Carter's extensively argues in its brief on appeal that
Nike cannot use a motion to dismiss under Rule 12(b)(6) to enforce
the forum selection clause. Carter's brief relies principally on
the Supreme Court's recent decision in Atlantic Marine Construction
Co. v. United States District Court for the Western District of
Texas, 134 S. Ct. 568 (2013). At oral argument, however, Carter's
counsel expressed that Carter's no longer objects to the use of
Rule 12(b)(6) by the district court. Thus, we focus on the merits
of the district court's dismissal.2
2
Carter's does maintain, however, a procedural argument that,
even if a Rule 12(b)(6) motion were appropriate, the district court
should have converted the motion sua sponte into one for partial
summary judgment to admit Carter's exhibits with evidence
concerning the change in Nike's invoice. Yet, Carter's never asked
the district court to convert the motion into one for summary
judgment or requested an evidentiary hearing. Instead, Carter's
argued that the Agreement was an unconscionable and unfair contract
of adhesion, and included the exhibits without more. Arguably,
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B. Enforcement of Forum Selection and Massachusetts Public Policy
This Court reviews the enforceability of forum selection
clauses employing the Bremen factors. Huffington v. T.C. Grp.,
LLC, 637 F.3d 18, 23 (1st Cir. 2011) (citing Bremen v. Zapata Off-
Shore Co.,
407 U.S. 1, 15-18 (1972)).3 The burden of proof is on
the party opposing the enforcement of the forum selection clause.
Claudio-De
León, 775 F.3d at 48 (citing
Bremen, 407 U.S. at 17
Carter's could have also requested leave to amend its Complaint to
include the exhibits and establish an alternate theory on the
source of its contractual obligations, thereby allowing the
district court to consider Carter's arguments and exhibits even
under Rule 12(b)(6), or forcing the district court to treat the
motion as one for summary judgment under Rule 56. See
Rivera, 575
F.3d at 15 (quoting Trans–Spec Truck Serv., Inc. v. Caterpillar,
Inc.,
524 F.3d 315, 321 (1st Cir.2008)); see also Fed. R. Civ. P.
12(d).
Nike correctly contends that Carter's also could have objected
to Nike's motion to strike the exhibits, as it was required to do
under the local rules for motion practice. See D. Mass. R.
7.1(b)(2) (requiring that "[a] party opposing a motion, shall file
an opposition within 14 days after the motion is served").
Consequently, the district court did not err in failing to convert
the motion sua sponte. When "opposing a Rule 12(b)(6) motion, a
plaintiff cannot expect a trial court to do his homework for him.
Rather, the plaintiff has an affirmative responsibility to put his
best foot forward in an effort to present some legal theory that
will support his claim." McCoy v. Mass. Inst. of Tech.,
950 F.2d
13, 22-23 (1st Cir. 1991).
3
Though Carter's does not dispute the applicability of the Bremen
analysis, Nike argues for a heightened standard after Atlantic
Marine. For the purposes of this case, we will assume the
continued applicability of the Bremen analysis to forum selection
clauses evaluated under Rule 12(b)(6) since we conclude that the
forum selection clause must be enforced even under this analysis.
See Claudio-De León v. Sistema Universitario Ana G. Méndez,
775
F.3d 41, 48-49 (1st Cir. 2014); cf. In re Union Elec. Co., No.
14-3276,
2015 WL 3429462, at *3 n.3 (8th Cir. May 29, 2015).
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(explaining that "the party arguing that a forum selection clause
is inapplicable 'bear[s] a heavy burden of proof'"))(alteration in
original). Under Bremen, we enforce the forum selection clause
"absent a strong showing that it should be set aside." Bremen, 407
U.S. at 15. A strong showing can exist where: (1) the clause is
the product of fraud or overreaching; (2) enforcement is
unreasonable and unjust; (3) its enforcement would render the
proceedings gravely difficult and inconvenient to the point of
practical impossibility; or (4) enforcement contravenes "a strong
public policy of the forum in which suit is brought, whether
declared by statute or judicial decision."
Huffington, 637 F.3d at
23 (internal quotation marks omitted).
Only the second, third, and fourth factors are at issue
in this appeal. Related to the second factor, Carter's argues that
Nike inconspicuously inserted the forum selection clause in its
invoices without bargain. As to the third factor, Carter's argues
that it should not be required to "finance a cross country legal
battle against an international financial behemoth" and that it, as
well as other family-owned retailers, "would face extreme hardship
if forced to go to Oregon." Finally, with regards to the fourth
factor, Carter's asserts that the forum selection clause's
enforcement contravenes both federal and Massachusetts public
policy. We now consider Carter's arguments.
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1. The Scope of the Forum Selection Clause
As a preliminary matter, Carter's attempts to narrow the
scope of the forum selection clause in two respects. First,
Carter's states that Nike unilaterally included the forum selection
clause in later invoices, and suggests that the forum selection
clause should be limited to issues regarding the goods covered in
each of these invoices. Second, Carter's argues that its Chapter
93A claim falls outside the scope of the forum selection clause.
"[I]t is the language of the forum selection clause itself that
determines which claims fall within its scope." Rivera v. Centro
Médico de Turabo, Inc., 575 F.3d 10, 19 (1st Cir. 2009). In this
case, the language of the forum selection clause is unambiguously
broad. The clause, if enforceable, applies to "any action arising
out of or in connection with the Agreement." (Emphasis added).
The clause therefore applies to each of Carter's claims, including
the Chapter 93A claim, since each arises out of or in connection
with the Agreement and its termination.
As relates to the Chapter 93A claim specifically,
Carter's argument that the termination was an unfair business
practice is clearly "connect[ed] with" the Agreement. Carter's
citation to Jacobson v. Mailboxes Etc. U.S.A., Inc., 646 N.E.2d 741
(Mass. 1995) is inapposite since that case concerned a
pre-contractual Chapter 93A claim, which fell outside the scope of
a more narrowly worded forum selection clause. See
id. at 744-46.
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Carter's Chapter 93A claim, in contrast, arises from and is clearly
connected with the termination of the Agreement itself. See, e.g.,
Huffington, 637 F.3d at 22 (1st Cir. 2011) (finding a Chapter 93A
claim to be within the scope of a forum selection clause).
To the extent that Carter's is arguing that the
unilateral addition of the forum selection clause is not a valid
part of its contract, we reject this argument as waived. Carter's
has made no developed argument that the forum selection clause is
an unenforceable addition under the U.C.C. Rather, this challenge
is "presented in a perfunctory and undeveloped manner, and thus,
[is] considered waived." Matt v. HSBC Bank USA, N.A., 783 F.3d
368, 373 (1st Cir. 2015) (citing Rodríguez v. Municipality of San
Juan,
659 F.3d 168, 175 (1st Cir. 2011); United States v. Zannino,
895 F.2d 1, 17 (1st Cir. 1990)).4
2. It Is Not Impossible For Carter's to Litigate in
Oregon
Carter's cites several cases to argue that the forum
selection clause should not be enforced because of the hardship
caused to a litigant. Carter's first relies on Feeney v. Dell,
Inc., 908 N.E.2d 753 (Mass. 2009). In Feeney, the Massachusetts
Supreme Judicial Court found an arbitration clause unenforceable
4
To the extent that Carter's argues that the enforcement of the
forum selection clause is unreasonable or unjust because it never
bargained for it, we remain unpersuaded. If the unilateral
addition is a valid part of the contract, its enforcement in this
case is neither unreasonable nor unjust. As described above, we
find any argument against its validity to be waived.
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because it contravened Massachusetts public policy favoring class
action litigation of Chapter 93A claims. Id. at 761-62. We think
the case is inapposite since Carter's has not pursued this case as
a class action, and thus it does not implicate the policy.
Furthermore, the forum selection clause does not preclude class
litigation by its own terms and Carter's has not been impeded from
bringing a class action claim in Oregon.5
Carter's next turns to Karlis v. Tradex Swiss AG,
No. 073527BLS1, 2007 WL 2705572 (Mass. Super. Ct. Sept. 7, 2007).
In Karlis, the Massachusetts Superior Court ruled that a forum
selection clause which would have required plaintiffs to litigate
in Switzerland was unenforceable.
Id. at *4. The Karlis Court
further determined that an intervenor would not have had her day in
court if said clause was enforced because she was not a
sophisticated party and had allegedly lost her life savings in the
Tradex investment at issue.
Id. We find that Karlis is likewise
not on point. While Carter's may not have the resources of Nike,
it is still a multi-million dollar company.6 Thus, as to the third
5
Massachusetts has upheld forum selection clauses which include
individual Chapter 93A claims. See, e.g., Cambridge Biotech Corp.
v. Pasteur Sanofi Diagnostics,
740 N.E.2d 195, 201-03 & n.7 (Mass.
2000); see also, e.g.,
Huffington, 637 F.2d at 22. There is no
suggestion in this case that the claim would not be honored in
Oregon. See Jacobson v. Mailboxes Etc. U.S.A.,
Inc., 646 N.E.2d at
746 n.9.
6
This is not to discourage small businesses from raising Carter's
argument, but the difficulty for an American company of litigating
in Oregon is not the same as that of an individual litigating in
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Bremen factor, we find that instead of being similarly situated to
the plaintiff in Karlis, the enforcement of the clause is not
unreasonable or unjust to Carter's.
Finally, Carter's resorts to an unreported settlement
agreement reached in FTC v. Leasecomm Corp., et al., No. 03-11034,
ECF No. 2 (D. Mass. May 29, 2003) (stipulated final judgment and
order). In that case, the Federal Trade Commission and the
Massachusetts Attorney General brought suit against Leasecomm,
which used certain forum selection clauses in its agreements with
customers. As part of the settlement agreement, Leasecom agreed to
cease attempts to enforce those forum selection provisions. This
settlement agreement is, of course, neither a statute nor a
judicial decision. Thus, even to the extent that it articulates
Massachusetts public policy, Carter's does not explain why it does
so in a form that is cognizable under Bremen. Carter's thus fails
to persuade this court that enforcement of the forum selection
clause would make it practically impossible for it to litigate in
Oregon or contravene Massachusetts public policy.
III. Conclusion
The forum selection clause is valid and enforceable and
the present action was properly dismissed.
AFFIRMED.
Switzerland.
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