Shore Slurry Seal, Inc. v. CMI Corporation

964 F. Supp. 152 (D. N.J., 1997)
  • Opinion Date: May 12, 1997

CONTRACTS; DRAFTING; VENUE—In this federal forum selection case, the Court gives effect to a freely negotiated clause and, although it grants venue in a different state under the Federal Rules of Civil Procedure, it then transfers venue to the contractually chosen state (and tells why it did so).

Buyer signed a contract with seller to purchase a pavement profiler. The sales agreement contained a forum selection clause which provided that the exclusive forum would be the western district of Oklahoma. Buyer filed a breach of contract suit in New Jersey, claiming the machinery was defective. Seller claimed New Jersey was not the proper venue for this case and sought either dismissal of the case or transfer to Oklahoma.

The District Court stated that, pursuant to the Federal Rules of Civil Procedure, venue is proper either where a substantial part of the events giving rise to the claim occurred, or where the property that is the subject of the dispute is situated. Accordingly, even though a district court may transfer a civil action to any other district where the claim might have been brought, New Jersey is a proper venue in this case since that is where the property is located. The Third Circuit has held, in Jumara v. State Farm Insurance Co., 55 F.3d 873 (3d. Cir. 1995), that a forum selection clause is entitled to substantial consideration, alters general presumptions about venue, and shifts the burden of proof. Normally, the burden is on the moving party to show not only that the alternative forum is adequate, but also that the balance of convenience of the parties weights strongly in its favor. Where there is a forum selection clause in a contract and the plaintiff has freely chosen an appropriate venue, the burden is on the plaintiff to demonstrate why he should not be bound by the contractual choice of forum. The Court in this case stated that the existence of a forum selection clause in a contract does not automatically require transfer, but first requires analysis to determine if transfer is proper. Factors include the ability of the parties and any relevant witnesses to appear in a different district, the ability of any document to be produced there, and the public interest in transferring a dispute.

The District Court found that the clause was freely negotiated and that there was no inequity of bargaining power or fraud. The Court determined that seller’s choice of forum is given more weight than buyer’s because of the forum selection clause, because buyer is able, physically and financially, to proceed in Oklahoma, and because there is no indication that any of the relevant documents or any relevant witnesses would be unable to be produced in Oklahoma. As to the public interest, both Oklahoma and New Jersey have an interest in local enforcement because one party was from each state.