Subsequently, EGG brought this action against Entre claiming fraud
(count I) and seeking actual damages of $130,000 and punitive damages of
$750,000, scheme to defraud (count II), negligent misrepresentation
(count III), mutual mistake of fact (count IV), breach of contract (count
V), and violation of the Illinois Franchise Disclosure Act,
Ill.Rev.Stat, ch. 121 1/2, § 701, et seq., (the Act) (count VI).
The Agreement contained a venue selection clause, as well as a
statement of applicable law, which provided that (1) the Agreement took
effect upon the acceptance and execution by Entre in Virginia; (2) the
Agreement would be construed under Virginia law which would prevail in
the event of any conflict of law; (3) the parties agreed that any action
brought either in state or federal court; "shall be brought within the
Commonwealth of Virginia and [the parties] do hereby waive all questions
of personal jurisdiction or venue for the purposes of carrying out this
provision." Pl. Ex. A (Agreement, ! XXII).
The Illinois Franchise Disclosure Act provides that "[a]ny provision in
a franchise agreement which designates jurisdiction or venue in a forum
outside of Illinois is void with respect to any cause of action which
otherwise is enforceable in Illinois." Ill. Rev.Stat. ch. 121 1/2, §
703.1. EGG claims that the effect of this requirement is to render void
and unenforceable the venue selection clause of the Agreement. At issue
then is whether venue is properly in this Court for purposes of count VI
(alleging violation of the Act). If it is, then we must also consider
whether the venue selection provision should be enforced so that the
causes of action alleged in the other five counts need be transferred to
Virginia, with Virginia law to be applied.
In urging the enforcement of the contractual venue limitation, Entre
claims that federal law; rather than state law, governs enforceability of
the provision as it is a procedural matter. Erie R.R. v. Tompkins,
304 U.S. 64, 92, 58 S.Ct. 817, 828, 82 L.Ed. 1188 (1938). Alternatively,
it argues that even if enforcement of the provision is considered a
substantive issue, requiring the application of Illinois law, including
Illinois conflict of laws decisions, Klaxon v. Stentor Electric Mfg.
Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941), that law would
lead to application of Virginia substantive law which would recognize the
validity of the Agreement's venue selection provision.
We need not, however, reach the issue of which should apply: The state
law applicable under Erie, the Illinois Franchise Disclosure Act,
produces the same result as the leading United States Supreme Court
decision, The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907,
32 L.Ed.2d 513 (1972). Although it is not patently clear whether a court
sitting in diversity should follow the Bremen approach towards forum
selection or whether Erie mandates application of state law*fn1,
"[s]ince there is no significant difference between the federal and state
rule, it is not necessary to choose between them." Wellmore Coal Corp.
v. Gates Learjet Corp., 475 F. Supp. 1140, 1143 (W.D.Va. 1979); Central
Contracting Co. v. Maryland Casualty Co., 367 F.2d 341, 344-45 (3d Cir.
Except in certain circumstances, courts must give effect to freely
negotiated forum selection clauses, Snyder v. Smith, 736 F.2d 409, 419
(7th Cir. 1984), given the realities of commercial dealings and the
reasonable expectations of the parties. Nevertheless, "[a] contractual
choice-of-forum should be held unenforceable if enforcement would
contravene a strong public policy of the forum in which suit is brought,
whether declared by statute or by judicial decision." Bremen, supra, 407
U.S. at 15, 92 S.Ct. at 1916 (emphasis added). Illinois public policy may
be found in its judicial decisions, legislation, and construction.
Resorts International, Inc. v. Zonis, 577 F. Supp. 876, 877 (N.D.Ill.
1984), citing Marchlik v. Coronet Insurance Co., 40 Ill.2d 327, 332,
239 N.E.2d 799, 802 (1968).
The parties have cited no cases interpreting the venue prohibitions of
the Illinois Franchise Disclosure Act, nor have we discovered any. We,
therefore, look only to the language of the Act to determine Illinois'
public policy with respect to the forum selection clause at issue here,
bearing in mind that the party resisting enforcement of the clause bears
the burden of proving its unreasonableness. Clinton v. Janger,
583 F. Supp. 284, 288 (N.D.Ill. 1984), citing Bremen, supra; Cruise v.
Castleton, Inc., 449 F. Supp. 564 (S.D.N Y 1978).
The intent of the Act is clearly indicated as follows:
602. Findings and purpose
§ 2. Findings and purpose. (1) the
General Assembly finds and declares
that the widespread sale of franchises is
a relatively new business phenomenon
which has created numerous problems in
Illinois. Illinois residents have suffered
substantial losses where the franchisor
or his representative has not provided
full and complete information regarding
the franchisor-franchisee relationship,
the details of the contract between the
franchiser and franchisee, the prior business
experience of the franchisor and
other factors relevant to the franchise
offered for sale.
(2) It is the intent of this Act: (a) to
provide each prospective franchisee with
the information necessary to make an
intelligent decision regarding franchises
being offered for sale; and (b) to protect
the franchisee and the franchisor by providing
a better understanding of the
business and the legal relationship between
the franchisor and the franchisee.
Ill.Rev.Stat. ch. 121 1/2, § 702. Presumably then, the ban on the
enforcement of venue and jurisdiction provisions designating fora outside
of Illinois, id. at section 703.1, is intended to solve some of the
"numerous problems" caused by the sale of franchises in Illinois and to
ensure that controversies stemming from such actions will be resolved in