As Coffey's standard indicates, the court must give the plaintiff's choice of forum great weight, unless the forum has no relation to the cause of action or the other interests clearly tilt in favor of transfer. National Hydro chose this forum, and the court must respect that choice: National Hydro's offices are located in this district; it is where the company was to perform part of its alleged contract, and some of the negotiations for that contract occurred over the phone with Chicago persons.
National Hydro thinks that it can do even better than this. The company argues that not only did it select this forum, but the defendants did too, by virtue of the forum-selection clause. The defendants understandably do not concede this, and the court must note their opposition. The Supreme Court noted last year in Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22, 108 S. Ct. 2239, 2245, 101 L. Ed. 2d 22 (1988), that a forum-selection clause "should receive neither dispositive consideration.. . nor no consideration" when a court is trying to decide whether to transfer a case under § 1404(a). Instead, the court must weigh the clause in the context of the facts of the case, as it would any other fact relevant to determining the motion to transfer. See Stewart, 108 S. Ct. at 2244.
Here, the validity of the forum-selection clause is entwined with the merits of this case: did the parties have a contract, and if so, what were its terms? The court is not prepared to give a forum-selection clause decisive weight on a motion to transfer where the validity of the clause is in dispute. Unlike a motion to dismiss under Rule 12(b), the court on a motion to transfer need not accept the plaintiff's allegations as true. See Charles Alan Wright, Arthur R. Miller, and Edward H. Cooper, 15 Federal Practice and Procedure § 3844 (West 1986). The court will recognize the parties' dispute over this fact, and give the fact some, but not great, weight.
Despite failing to convince the court that the defendants chose this forum, National Hydro still benefits from the presumption that this case should stay here by virtue of their choosing it. The second factor listed in Fossett by contrast tilts in Summit and TIC's favor. While most of National Hydro's records and witnesses are in Chicago, it did have an agent in Denver, MISCO, who will be a material witness in this case. As for the defendants, both companies have all of their operations and witnesses in Colorado. The parties' briefs are sketchy on the numbers, but it seems that more party witnesses live in Colorado than in Illinois.
The third factor, the convenience of witnesses who are not parties, is usually quite important. See Fossett, 694 F. Supp. at 1327. It has no importance in this case, as neither party has identified any such witnesses. The court thus turns to the interests of justice. As Coffey notes, the interests of justice largely center on the efficient determination of cases. See Coffey, 796 F.2d at 220-21. National Hydro has identified only one feature of this case which may weigh in its favor: the governing law. As noted earlier, the parties may have agreed to let Illinois law govern their contract. If this were so, it would be more efficient to have this court, one familiar with Illinois law, decide the case. See id. at 221. But this factor does not weigh decisively in National Hydro's favor, for the court would follow the choice-of-law clause only if this were part of the contract between them, and the existence and content of the alleged contract is very much in dispute. The only thing that is certain is that Illinois choice-of-law principles will govern this case, no matter whether this court or the district court for the District of Colorado decides this case. See Klaxon Co. v. Stentor Co., 313 U.S. 487, 85 L. Ed. 1477, 61 S. Ct. 1020 (1941) (choice-of-law principles of forum state govern federal suits brought under diversity jurisdiction); Van Dusen v. Barrack, 376 U.S. 612, 639, 11 L. Ed. 2d 945, 84 S. Ct. 805 (1964) (forum to which a case is transferred under § 1404(a) is "obligated to apply the state law that would have been applied if there had been no change of venue").
At a minimum, Illinois law will cover one substantive issue; at most, it will govern all substantive issues. All of this depends on whether the parties had a contract. The court must ponder, however, what this case would be like if the parties did not have a contract. Without a contract, this court could lack jurisdiction over Summit/TIC, and Illinois law might not apply to the dispute. National Hydro's contract claim would disappear, leaving its fraud claim. At that point it is conceivable that National Hydro would beg the court for a transfer to Colorado pursuant to 28 U.S.C. § 1406(a) in order to regain personal jurisdiction.
Because it is not certain that it will be efficient to try this case here, and in light of the possibility that this case would have to go to Colorado anyway were National Hydro's allegations about the contract not true, the court believes that it can serve the interest of justice best by transferring this case to the District of Colorado. Without intending any prejudice to the merits of National Hydro's case, the court believes that there is a legitimate possibility that the parties did not have a contract and that this court ultimately would find that it lacks personal jurisdiction over Summit and TIC. The court also believes that the federal district court for the District of Colorado would not have much difficulty applying Illinois' choice-of-law and contract principles to this case.*
National Hydro insists that only this court can compel arbitration in this case, and for this reason the interests of justice dictate keeping this case here. National Hydro's argument rests on § 4 of the Federal Arbitration Act, 9 U.S.C. § 4 (1982), which provides that a district court can compel arbitration only in the district where the court sits. See Snyder v. Smith, 736 F.2d 409, 419-20 (7th Cir. 1984). Interestingly, National Hydro's position actually undercuts its contract claim. As noted before, National Hydro asserts that its contract provided that Illinois law governed it. This would mean that the Illinois Arbitration Act, Ill.Rev.Stat. ch. 10, paras. 101 et seq. (1987), and not the Federal Arbitration Act, would control the question of which court can compel arbitration. See Volt Info. Sciences v. Bd. of Trustees, 489 U.S. 468, 109 S. Ct. 1248, 1254-56, 103 L. Ed. 2d 488 (1989) (Federal Arbitration Act does not preempt application of state arbitration acts where parties have consented to application of state law); Cindy's Candle Co. v. WNS, Inc., 714 F. Supp. 973, 975 (N.D.Ill. 1989) (agreements to arbitrate are simply agreements, amenable to usual principles of contract law). The Illinois Act, unlike its federal counterpart, does not limit the court's power to compel arbitration to the district in which the court sits. See Ill.Rev.Stat. ch. 10 at para. 102. The District of Colorado probably will have no problems applying the Illinois Act if need be, as Colorado's Arbitration Act is nearly identical to the Illinois Act, both having stemmed from the Uniform Arbitration Act. See Colo.Rev.Stat. 13-22-201 et seq. (1988).
From this the court believes that transfer to the District of Colorado is proper, at least until that court resolves the question of whether the parties had a binding agreement as of November 16, 1988. While National Hydro chose to bring its suit here, it had purposeful contacts with Summit and TIC in Colorado, and had an agent in Colorado to deal with the companies. More witnesses are there, and if it turns out that National Hydro did not have a contract with Summit/TIC as of November 16, the court there will be able to enter a judgment binding on all of the parties on all of National Hydro's claims--including those in Count 2--without having the parties maneuver to transfer the case to Colorado, the only court which would have jurisdiction over these defendants if the parties did not have a contract providing for jurisdiction here. If it turns out that the parties did have a contract, it will be an easy matter for the court in Colorado to order the parties to adhere to their contract and begin arbitration.
The court denies Summit and TIC's motion to dismiss National Hydro's complaint under Rules 12(b)(2)-(3). The court grants Summit and TIC's motion to transfer this matter to the District of Colorado pursuant to 28 U.S.C. § 1404(a).
Dated: December 14, 1989
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