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MERCURY WEST A.G., INC. v. R.J. REYNOLDS TOBACCO CO.

March 5, 2004.

MERCURY WEST A.G., INC., Plaintiff, -against- R.J. REYNOLDS TOBACCO COMPANY, Defendant


The opinion of the court was delivered by: JOHN KEENAN, Senior District Judge

ORDER & OPINION

Procedural Background

  Plaintiff Mercury West A. G., Inc. ("Mercury West") brought this action seeking compensatory and punitive damages from Defendant R.J. Reynolds Tobacco Company ("Reynolds"). Mercury West accuses Reynolds of breaching a series of contracts, being unjustly enriched at Mercury West's detriment, tortuously converting one of Mercury West's trademarks and willfully engaging in deceptive business practices. Mercury West initiated this action by filing a Summons and Complaint in New York State Supreme Court. Reynolds timely removed the action to this Court. Reynolds subsequently brought the present motion to dismiss the Complaint pursuant to Rule 12(b)(3) of the Federal Rules of Civil Procedure ("Rule 12(b) (3)") and 28 U.S.C. § 1406(a) (" § 1406(a)").

  Facts

  According to Mercury West, in October of 2001, Reynolds's Manager — Purchasing Operations Gregory Feron ("Feron") approached Mercury West executives about doing business with Mercury West. Reynolds, claims Mercury West, was interested in Mercury West's familiarity with overseas markets. In particular, Reynolds was interested in taking advantage of Mercury West's contacts in Russia, the Republic of Georgia and the Far East to market Reynolds's cigarettes in those regions. See Godelman Aff. ¶ 6. Reynolds disputes Mercury West's characterization of the initial Page 2 contacts between the two companies, both with regard to how they were initiated and their purpose. See Feron Decl. ¶ 4. In light of the fact that this is a motion to dismiss, however, Mercury West, as the party in opposition to the motion, is entitled to have all of the relevant facts viewed in the light most favorable to it. See New Moon Shipping Co., Ltd, v. Man B & W Diesel AG, 121 F.3d 24, 29 (2d Cir. 1997).

  Shortly after October, 2001, Mercury West and Reynolds began some type of business relationship. Representatives from each company attended meetings in Moscow, Vienna and Washington, B.C. in 2002 in order to discuss business possibilities. See Godelman Aff. ¶ 6. It appears as though the relationship centered on Reynolds's production and sale of cigarettes to Mercury West for Mercury West's distribution in targeted overseas markets under the trademark of "Senator". Exactly how it is claimed the business arrangement was structured is unclear from Mercury West's submissions.

  In April of 2002, Feron informed Mercury West that Reynolds wanted Mercury West to enter into a Master Purchasing Agreement ("MFA"). Mercury West Vice-President Alex Godelman claims that Feron told him the agreement was one that Reynolds required all of its business partners to sign and was little more than a mere "formality." See id. ¶ ll. On April 15, 2002, Godelman signed the MPA on Mercury West's behalf. According to Godelman, he signed Page 3 the agreement without seeking the assistance of counsel. See id. L. Joe Inman, Reynolds's Vice-President of Manufacturing, signed the MFA on his company's behalf.

  Among the provisions included in the MFA is what is commonly referred to as a forum selection clause. In pertinent part, Section 11.3, entitled "Jurisdiction," states:
The parties hereto hereby agree that all actions or proceedings initiated by any party hereto arising directly or indirectly out of this Agreement shall be litigated only in the Superior Court for Forsyth County, North Carolina with a request that the case be assigned to the Honorable Ben F. Tennille (or his successor), The Special Superior Court Judge For Complex Business Cases. Each party hereto hereby expressly submits and consents in advance to such jurisdiction and venue in any action or proceedings commenced by any party hereto in such Court; agrees that jurisdiction and venue is proper in such Court; . . . . Each party hereto waives any claim that said court is an inconvenient forum or an improper forum based on lack of venue.
Relying on this clause, Reynolds contends that this Court is not the appropriate forum for Mercury West's causes of action to be prosecuted. By this motion, Reynolds seeks to enforce the forum selection clause and have Mercury West's complaint dismissed.

  Discussion

 I. Proper Procedural Framework

  The initial issue that must be resolved is to determine what is the proper framework within which to examine this motion. A motion to dismiss a complaint based on the enforcement of a forum selection clause does not fit neatly within any of the mechanisms Page 4 prescribed by the Federal Rules of Civil Procedure or the United States Code. Although several courts have confronted this question, a clear and definitive answer has not emerged. See New Moon Shipping Co., Ltd., 121 F.3d at 28 (finding a lack of consensus on this issue among circuit courts); Jockey Int'l, Inc. v. M/V "Leverkusen Express", 217 F. Supp.2d 447, 450 (S.D.N.Y. 2002) ("The Second Circuit has not decided what rule governs dismissals based on a forum selection clause."). Motions to enforce forum selection clauses have been brought pursuant to each of Rules 12(b)(1), 12(b)(3), 12(b)(6) and § 1406(a). Each provides a logical basis for supporting such a motion, but none provide a perfect fit for a party seeking to enforce a forum selection clause. Importantly, the scope of materials a court may consider in reaching its decision differ depending upon which provision governs. Nonetheless, courts of this circuit have made clear that courts do possess the ability under either Rule 12(b)(3) or § 1406(a) to dismiss a case upon a motion that a forum selection clause renders venue in a particular court improper. Id.; Tech. Express, Inc. v. FTF Bus. Sys. Corp., 2000 WL 222628 (S.D.N.Y. Feb. 25, 2000).

  The instant motion is framed as both a Rule 12(b)(3) and § 1406(a) motion and each side has offered supporting materials that go beyond the original pleadings. Were the Court to deem the motion one governed by Rule 12(b)(6), consideration of materials Page 5 not included as part of the pleadings would be prohibited. Mercury West has not objected to the Court considering the additional materials or treating the motion as one brought pursuant to Rule 12(b)(3) or § 1406(a). The motion will, therefore, be treated as such and all of the supporting materials will be considered.

 II. The Forum Selection Clause is Valid and Enforceable

  At one time forum selection clauses were routinely greeted with hostility by courts that viewed them as attempts to "oust" courts of proper jurisdiction. Driven by the growth and development of international commerce, this is no longer the case. See Bense v. Interstate Battery Sys, of Am., Inc., 683 F.2d 718, 721 (2d Cir. 1982) (stating that "any such `general hostility' towards forum — selection clauses is today simply a vestigial remainder of an outmoded doctrine."). In fact, in what represents a 180 degree turn, now when confronted with forum selection clauses courts presume them to be valid. See Ferraro Foods. Inc. v. M/V Izzet Incekara, 2001 WL 940562, at *2 (S.D.N.Y. Aug. 20, 2001). The seminal case in terms of the current presumption in forum selection clauses/ favor is M/S Bremen v. Zapata Off — Shore Co., 407 U.S. l (1972). In Bremen, the Supreme Court held forum selection to be prima facie valid and enforceable unless the party opposing the clause can ...


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