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S.K.I. Beer Corp. v. Brewery

July 20, 2010

S.K.I. BEER CORP., PLAINTIFF-APPELLANT,
v.
BALTIKA BREWERY, DEFENDANT-APPELLEE.



SYLLABUS BY THE COURT

Plaintiff-appellant S.K.I. Beer Corp. appeals from the July 19, 2006 judgment of the United States District Court for the Eastern District of New York (Glasser, J.), granting defendant-appellee Baltika Brewery's motion to dismiss the complaint based upon a forum selection clause in the parties' written agreement. We conclude that S.K.I. Beer Corp. failed to make a clear showing that enforcement of the parties' contractual forum selection clause is unreasonable, unjust, or invalid, and that the district court was correct in granting the motion.

AFFIRMED.

The opinion of the court was delivered by: Hall, Circuit Judge

Argued: October 18, 2007

BEFORE: KEARSE, SACK, HALL, Circuit Judges.

Plaintiff-appellant S.K.I. Beer Corp., a New York beer wholesaler, appeals from the judgment of the United States District Court for the Eastern District of New York (Glasser, J.), dismissing its action against defendant-appellee Baltika Brewery, a Russian brewer, based on a forum selection clause in the parties' agreement. See S.K.I. Beer Corp. v. Baltika Brewery, 443 F. Supp. 2d 313 (E.D.N.Y. 2006). On appeal, S.K.I. Beer Corp. argues that the forum selection clause is unenforceable because: (1) New York Alcoholic Beverage Control Law § 55-c (hereinafter "§ 55-c"), governing agreements between brewers and beer wholesalers, applies to the parties' relationship; (2) applying § 55-c to the parties' relationship would not violate the dormant Commerce Clause; and (3) the forum selection clause is unenforceable because it violates its right under § 55-c "to bring a judicial action in New York for violations of the act," and "contravenes a strong public policy of the forum state" of protecting beer wholesalers, which is embodied in the statute.*fn1

BACKGROUND

In 2000, defendant-appellee Baltika Brewery ("Baltika"), the owner of various beer brands, designated plaintiff-appellant S.K.I. Beer Corp. ("SKI") as its exclusive brand agent in New York State; it did so by a letter to the State of New York Division of Alcoholic Beverage Control Wholesale Bureau. In 2003, Baltika and SKI entered into a written agreement for the purchase and sale of $200,000 worth of Baltika beer and non-alcoholic beverages. According to the agreement, SKI purchased the beverages "on the terms FCA (3, 6-th Verkhniy Pereulok, St. Petersburg, Russia)."*fn2 The agreement provided: "All disputes or differences which may arise in the course of fulfillment of, or in connection with, the present Contract, shall be considered by the Arbitration Court of St. Petersburg and the Leningradskaya Oblast. Awards of the said Court shall be final and binding upon both Parties."*fn3 In December 2003, the parties supplemented their agreement, extending it until July 1, 2004.

SKI commenced an action in district court claiming that Baltika had stopped performing under the contract by refusing to fill SKI's order, in violation of both § 55-c and the parties' written agreement. Baltika moved to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(6), arguing, inter alia, that the forum selection clause in the parties' agreement mandated dismissal. SKI opposed the motion, claiming that dismissal was precluded by § 55-c because Baltika established a contractual relationship with a New York licensed wholesaler for purposes of having Baltika beer distributed in New York State. SKI also argued that the forum selection clause is unreasonable because it contravenes New York's public policy interest in protecting its licensed beer wholesalers and, if enforced, the clause would deprive SKI of its statutory rights under § 55-c.

The district court granted the motion to dismiss the complaint "based upon the mandatory forum selection clause." S.K.I. Beer Corp., 443 F. Supp. 2d at 325. The court concluded that § 55-c did not apply because "it regulates only those sales and deliveries which take place in the State of New York," none of the sales or deliveries under the contract occurred in New York, and Baltika was not a brewer subject to the statute. Id. at 322-23. The court determined that even if the contract fell within the scope of § 55-c, the forum selection clause is enforceable because SKI failed to show that the enforcement of the forum selection clause "would impair rights protected by the Statute" and that such rights are "substantial enough to constitute a 'strong public policy.'" Id. at 323.

On appeal, SKI argues three points. It contends that: (1) "Baltika's relationship with SKI is governed by New York's Alcoholic Beverage Control Law;" (2) "applying section 55-c to the relationship between Baltika and SKI would not violate the dormant Commerce Clause;" and (3) "the forum selection clause is unenforceable" because "Section 55-c precludes pre-dispute agreements containing a clause requiring a forum outside of New York," and "when a state legislative [sic] provides for and believes that an in-state forum is necessary to vindicate the rights afforded under a statute, the public policy is sufficiently elevated to overcome the presumed validity of the forum selection clause."

DISCUSSION

I. Standard of Review

"On an appeal of a district court's dismissal based on a forum selection clause, we review factual findings for clear error and legal conclusions de novo." Asoma Corp. v. SK ...


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