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Electroplated Metal Solutions, Inc. v. American Services

June 18, 2007


The opinion of the court was delivered by: Hon. Harry D. Leinenweber


Plaintiff Electroplated Metal Solutions, Inc. (hereinafter, "Plaintiff"), brings this action under 49 U.S.C. § 14706 (the "Carmack Amendment") and related common law causes of action seeking recovery for damage allegedly sustained to industrial machinery that the defendants handled and shipped for Plaintiff. Defendant American Services, Inc., d/b/a American Riggers (hereinafter, "American"), has moved to dismiss the counts against it pursuant to Federal Rule of Civil Procedure 12(b)(3), or in the alternative, to transfer the action under 28 U.S.C. § 1404(a). For the reasons that follow, American's Motion is denied.


The Court derives the following factual summary from the pleadings, including all attached documents. The Court resolves all reasonable inferences and factual conflicts in Plaintiff's favor.

The parties to this case each played a role in a commercial arrangement to ship machinery owned by Plaintiff from Costa Mesa, California, to Elk Grove Village, Illinois. Plaintiff is a metal fabrication company based in Illinois. Defendant Two Brothers Trucking, Inc. (hereinafter, "Two Brothers"), is a California-based company that moves goods for hire. Defendant Mielec Express, Inc. (hereinafter, "Mielec"), also moves goods for hire but is based in Illinois. American is a Nevada rigging and machinery moving corporation with its principal place of business in California.

Two Brothers' and Mielec's roles in the transaction underlying this dispute exclusively involved transportation of the machinery in question; American's role was to load and secure, i.e., "rig" the machinery prior to transport. Plaintiff initially contracted only with Two Brothers, and they memorialized their agreement in an invoice. Plaintiff later hired American after Two Brothers recommended American as a rigger for the job, and American submitted a bid letter to Plaintiff. Finally, unbeknownst to Plaintiff, Two Brothers subcontracted out the actual carriage of the machinery to Mielec.

American prepared a work order for its portion of the job. The back side of the work order contained a detailed "Terms and Conditions" section, which included a forum selection clause requiring any suit relating to American's performance to be brought in California. When the machinery arrived in Illinois, Plaintiff reviewed the American work order but was apparently provided with a copy of that document that did not contain the back page with the "Terms and Conditions" section. The full work order was, however, signed by a representative from Mielec at the time the machinery was loaded.

Because the machinery had been damaged at some point while in the Defendants' care, Plaintiff refused acceptance of when it arrived in Illinois. This action ensued.


American believes that this action must be brought, if anywhere, in California. American primarily contends that under Federal Rule of Civil Procedure 12(b)(3) the forum selection clause on the back side of its work order requires dismissal of any action brought outside of California. Alternatively, American argues that even if venue is proper in the Northern District of Illinois, this Court should transfer this case to a federal district court in California pursuant to 28 U.S.C. § 1404(a).

A. Rule 12(b)(3)

On a motion to dismiss for improper venue under Rule 12(b)(3), the plaintiff bears the burden of establishing that the venue it has chosen is proper. M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 18 (1972). In resolving the issue, the Court must take all allegations in the complaint as true, and although the Court may examine facts outside the complaint, the Court must resolve all factual conflicts and draw all reasonable inferences in the plaintiff's favor. Turnock v. Cope, 816 F.2d 332, 333 (7th Cir. 1987).

A faithful application of these standards counsels denial of American's Rule 12(b)(3) motion because, based on the pleadings, Plaintiff did not receive reasonable notice of American's forum selection clause, and Plaintiff's chosen venue is proper on its own. Although a strong presumption of enforceability attaches to forum selection clauses, see M/S Bremen, 407 U.S. at 15, "[t]he legal effect of a forum-selection clause depends in the first instance upon whether its existence was reasonably communicated to the plaintiff," Effron v. Sun Line Cruises, Inc., 67 F.3d 7, 9 (2d Cir. 1995) (citation omitted). See also, Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 590 (1991) (upholding forum selection clause but noting absence of dispute over issue of notice). Taking Plaintiff's allegations as true and resolving factual conflicts in Plaintiff's favor, Plaintiff never had the opportunity to review -- indeed was never even aware of -- the terms on the back side of the work order. Plaintiff was only presented with the bid letter and the front side of the work order, neither of which addressed forum selection. Nor did the front side of the work order indicate that additional terms applied or where any such terms might be listed. In short, Plaintiff never received any notice, reasonable or otherwise, of the forum selection clause and thus cannot have its rights restricted by that clause.

American argues that, even if Plaintiff never received the reverse side of the work order, it is bound to the terms therein because the work order was signed by Mielec, which was acting as Plaintiff's agent. Again, resolving all factual disputes in Plaintiff's favor, the Court must reject this argument. The traditional indicia of agency, a fiduciary relationship and effective control by the principal, do not exist in Plaintiff's relationship with Mielec. Compare with Norfolk Southern Railway Co. v. Kirby, 543 U.S. 14, 34 (2004) (holding in common carrier context that "intermediaries, entrusted with goods, are 'agents' only in their ability to contract for liability limitations with carriers downstream"). Indeed, according to the pleadings, Plaintiff was not even aware of ...

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