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Ramada Franchise Systems, Inc. v. Flint’s Largest Hotel, LLC, Inc.

00-4143 (U.S. Dist. Ct. D. N.J. 2001) (Unpublished)

FORUM SELECTION—An otherwise valid, non-exclusive forum selection clause weighs heavily in a motion to transfer venue.

A franchisor was a Delaware corporation headquartered in New Jersey. Its hotel franchisee was a Michigan limited liability company with a principal place of business in Michigan. The License Agreement contained a forum selection clause with New Jersey as the designated forum. It read, “You consent and waive your objection to the non-exclusive personal jurisdiction of and venue in the New Jersey state courts situated in Morris County, New Jersey and the United States District Court for the District of New Jersey for all cases and controversies under this Agreement or between we and you.” The franchisor alleged that the franchisee stopped paying license fees and sought to terminate the License Agreement and bar the franchisee from using the licensed trademarks. The franchisee sought to have the venue transferred to Michigan pursuant to a federal statute that provides that a district court transfer any civil action to any other district or division where it might have been brought if it were for the convenience of parties and witnesses and in the interest of justice. The Court found this forum selection clause to be valid and also found that the franchisee failed to establish a preponderance of the evidence that transfer of venue based upon inconvenience of the parties would be appropriate. Further, the Court found the forum selection clause operated as a waiver of the franchisee’s objection to venue. A court evaluates whether to transfer by using two groups of factors: “those relating to the private convenience of the litigants and those affecting the public interest in the fair and efficient administration of justice.” Private interests include the forum preferences of each of the parties, “whether the claim arose elsewhere,” the convenience of the parties, the convenience of the witnesses, and “the location of books and records.” The public interest includes “the enforceability of the judgment,” considerations of the ease and expense of trial, possible court congestion, “the local interest in deciding local controversies at home,” public policy of the fora, and “the familiarity of the trial judge with the applicable state law in diversity cases.” Case law has taught that “a valid forum selection clause weighs heavily in a motion to transfer venue.” Where a forum selection clause is valid, the party objecting to the application of the clause bears “the burden of demonstrating why [it] should not be bound by [its] contractual choice of forum.” Further, the fact that a forum selection clause is “perhaps ‘non-exclusive’ does not change” the analysis. Here, the documents were signed in New Jersey and decisions were made here regarding this transaction. On the other hand, the hotel was located in Michigan. Thus, because the “center of gravity” test employed by the Court pointed to both Michigan and New Jersey, the weight of that factor was lessened. The Court did not believe that the documentary evidence would be so voluminous as to constitute a serious inconvenience if litigation took place in New Jersey. The presence of witnesses in Michigan did not warrant transfer, especially because the franchisor was willing to depose witnesses in Michigan pursuant to Michigan deposition practice. Further, even though litigation in Michigan would have been more convenient for the franchisee, a transfer to that forum would have made it more inconvenient for the franchisor located in New Jersey. A similar analysis of other facts lead the Court to conclude that the forum selection clause was valid and would not be disturbed.


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