The opinion of the court was delivered by: Thomas W. Phillips United States District Judge
This matter is before the court on defendant's motion for dismissal or, alternatively, for transfer of venue and brief in support [Doc. 9]. Specifically, defendant contends that a forum-selection clause in the contract underlying this dispute requires plaintiff to litigate in the Eastern District of Michigan. Accordingly, defendant requests that the court dismiss the case or, alternatively, transfer the case to the Eastern District of Michigan.
Plaintiff, however, contends that the forum-selection clause is permissive, not mandatory, and therefore does not require the parties to litigate in the forums denoted therein. This court agrees, and for the reasons that follow, defendant's motion to dismiss will be denied.
The facts as follows are taken from the complaint: Plaintiff English Mountain Spring Water Company, Inc. ("English Mountain") operates a water bottling facility in Dandridge, Tennessee. To improve its bottling process, plaintiff purchased under contract a piece of automated bottling equipment from defendant AIDCO International, Inc. ("AIDCO"), the AIDCO RoboticStar Six Axes KR 360 (the "RoboticStar"). The day after installation, the RoboticStar failed to perform. AIDCO made several attempts to repair the RoboticStar, but never repaired the RoboticStar to plaintiff's satisfaction. The failure of the RoboticStar has caused English Mountain to incur great expenses, both in its repair and in hiring additional laborers to replace the automated system. English Mountain has also lost customers and profits due to the RoboticStar's failure.
Plaintiff initially brought this suit in the Circuit Court for Jefferson County, Tennessee, alleging breach of contract and warranty and violations of the Tennessee Consumer Protection Act ("TCPA"). Defendant AIDCO subsequently removed to this court on the basis of diversity jurisdiction. Defendant AIDCO now seeks to have this action dismissed or, alternatively, transferred to the Eastern District of Michigan, based on the forum selection clause contained in the purchase contract for the RoboticStar.
First, the contract underlying this dispute contains a choice-of-law clause, which states, "Resolution of disputes shall be conducted in accordance with the laws of the State of Michigan." Ex. A, Def.'s Mot. for Dismissal or, Alternatively, for Transfer of Venue and Br. in Support. Without undertaking a rigorous choice-of-law analysis, the court will presume the validity of the choice-of-law clause, such that Michigan law governs. A rigorous analysis is unnecessary, as the analysis is the same regardless of whether Tennessee or Michigan law governs.
The court will address each of defendant's arguments in turn.
Defendant asserts that this case should be dismissed due to the forum-selection clause in the contract underlying the dispute. In support of this assertion, defendant cites case law indicating that "Michigan's public policy favors the enforcement of contractual forum-selection clauses and choice-of-law provisions." Turcheck v. Amerifund Fin., Inc., 725 N.W.2d 684, 688 (Mich. Ct. App. 2006). Defendant likewise cites Tennessee case law indicating the same general favor. Signal Capital Corp. v. Signal One, LLC, No. E2000-00140-COA-R3-CV, 2000 WL 1281322, at *3 (Tenn. Ct. App. Sept. 7, 2000) ("Forum selection clauses are generally enforced in Tennessee.").
While this is the general rule, under both Michigan and Tennessee law, if a forum-selection clause is merely permissive, rather than mandatory, the parties are not bound thereby. Typically a court will enforce a forum-selection clause as mandatory if it includes clear language indicating the exclusivity of the designated forum. E.g., TH Agric. & Nutrition, L.L.C. v. Ace European Group Ltd., 416 F. Supp. 2d 1054, 1074 (D. Kan. 2006) ("[A] forum selection clause is considered mandatory if it contains clear language showing that jurisdiction is appropriate only in the designated forum."); accord Fred Montesi's, Inc. v. Centimark Corp., No. 04-2957, 2006 U.S. Dist. LEXIS 26208, at *8 (W.D. Tenn. May 2, 2006); Warner v. Fuller Rehab. & Consulting Servs., Inc., No. 1:05-CV-105, 2005 U.S. Dist. LEXIS 41699, at *9 ("[T]he intent to make a particular forum exclusive should be clear."); see also Union Planters Bank, N.A. v. EMC Mortgage Corp., 67 F. Supp. 2d 915, 922 (W.D. Tenn. 1999) (citing cases in which various courts have construed a forum-selection clause as mandatory where particular language, such as "shall," was used). In contrast, permissive forum-selection clauses simply serve to authorize jurisdiction in a selected forum, such that the would-be defendant would have no objection to the forum were the plaintiff to choose it.
E.g., TH Agric., 416 F. Supp. 2d at 1074 ("In contrast, permissive forum selection clauses authorize jurisdiction in a designated forum but do not prohibit litigation elsewhere."); accord ...