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Latonya Sayles v. Directsat Usa

February 3, 2011


The opinion of the court was delivered by: Judge Rebecca R. Pallmeyer


Plaintiff LaTonya Sayles ("Sayles") injured her hand on March 2, 2009, in an accident at work and was fired two weeks later, after she announced her intention to file a workers' compensation claim. In this lawsuit, Sayles charges her former employer, Defendant DirectSat USA, LLC ("DirectSat"), with discharging her in retaliation for exercising her rights under the Illinois Worker's Compensation Act.

DirectSat moves to dismiss the case pursuant to FED. R. CIV. P. 12(b)(3) or to transfer it to the Eastern District of Pennsylvania pursuant to 28 U.S.C. § 1404(a). DirectSat contends dismissal or transfer is required by the terms of a November 14, 2008 letter (the "Offer Letter") that Sayles signed when she accepted her job. That letter includes the following language:

In the event a dispute does arise, this letter, including any validity interpretation, construction and performance of this letter, shall be governed by and construed in accordance with the substantive laws of the State of Delaware. Jurisdiction for resolution of any disputes shall be solely in Pennsylvania.

Sayles opposes the motion. She contends the forum selection clause is unenforceable and that the Eastern District of Pennsylvania is not the most convenient forum. For the reasons set forth here, the motion is denied.


A. Dismissal Pursuant to Rule 12(b)(3)

The Supreme Court has held broadly that forum selection clauses are "prima facie valid and should be enforced unless enforcement is shown by the resisting party to be 'unreasonable' under the circumstances." M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10, 92 S. Ct. 1907, 1913 (1972). A forum selection clause such as the one at issue here is, thus, presumptively valid, unless the party opposing its enforcement can show that the clause is unreasonable. Bonny v. Society of Lloyd's, 3 F.3d 156, 160 (7th Cir. 1993) (quoting M/S Bremen, 407 U.S. at 10, 92 S. Ct. at 1913). Forum selection clauses are unreasonable if any one of the following conditions is met:

(1) if their incorporation into the contract was the result of fraud, undue influence or overweening bargaining power[;] (2) if the selected forum is so "gravely difficult and inconvenient that [the complaining party] will for all practical purposes be deprived of its day in court[;]" or (3) if enforcement of the clauses would contravene a strong public policy of the forum in which the suit is brought, declared by statute or judicial decision.

Id. (internal citations omitted). Although the parties have made no mention of it, the court notes that Delaware law is similar; forum selection clauses in contracts "are enforceable under Delaware law unless enforcement would be 'unreasonable and unjust under the circumstances,' or if the forum selection clause was procured 'by fraudulent inducement.'" Accelecare Would Centers, Inc. v. Bank of New York, No. 08 Cir. 8351 (DLC), 2009 WL 2460987, *5 (S.D.N.Y. Aug. 11, 2009), quoting Prestancia Management Group, Inc. v. Virginia Heritage Foundation, II LLC, Civ. No. A. 1032-S (JWN), 2005 WL 1364616, at *7, *7 n.56 (Del. Ch. May 27, 2005).

DirectSat notes that Sayles expressly agreed to the forum selection provision and that "a person who signs a contract is presumed to know its terms and consents to be bound by them." Bonny, 3 F.3d at 160 n.10. As DirectSat observes, such clauses are routinely upheld. Notably, however, many of the cases cited by DirectSat involved sophisticated business parties who actually negotiated the provisions of the agreements that included the forum selection clause. M/S Bremen, for example, involved two corporations who negotiated a an international agreement for which the forum selection clause was "a vital part." 407 U.S. at 13-14, 92 S. Ct. at 1915. The Court specifically observed that the choice of forum "was made in an arm's-length negotiation by experienced and sophisticated businessmen." Id. at 12, 92 S. Ct. at 1914.

DirectSat does cite one case in which a more sophisticated contracting party successfully enforced such a clause against an individual consumer. See Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 587, 111 S. Ct. 1522, 1524 (1991). In enforcing the clause, the Shute Court observed that (1) as a cruise line, doing business with customers in a variety of locations, Carnival had a special interest in limiting the fora in which it could be sued; (2) the clause would dispel confusion about where suit could be brought; (3) by buying a ticket with a forum selection clause and limiting the fora in which the cruise line could be sued, the customer received a benefit by way of a reduced fare; and (4) there was no evidence that the plaintiffs were physically or financially unable to litigate in the agreed-upon forum. Shute, 499 U.S. at 593-94, 111 S. Ct. at 1527.

This case differs from those circumstances in important ways. First, the clause appears to be the product of "overweening" bargaining power. Sayles has submitted an affidavit in which she describes the circumstances in which she signed the Offer Letter: On December 21, 2008, a few months after she began work as a temporary employee for DirectSat, she was directed to go to the office of a manager, Evett Manley, who told her that I would now be a permanent employee of DirectSat USA, instead of temporary.

He told me I would be paid $11.50 per hour, have one (1) week paid vacation per year, and be eligible for medical insurance after 90 days. Several other employees were in Evett Manley's office at the same time I was and were told the same things. Sayles Aff., Exhibit B to Plaintiff's Response Memo [28-2] ¶ 4. Manley told Plaintiff that before returning to work, she needed to sign some paperwork, and then handed her the Offer Letter, which was dated November 14, 2008, but had the December 21 date handwritten on it. Plaintiff had no time to read the letter, assumed it addressed only her wages and benefits, and was not given a copy. Id. ¶¶ 5, 6, 8. She reports that she was in Mr. Manley's office for no more than three minutes. Id. ¶ 7. As Plaintiff contends, these circumstances demonstrate that DirectSat maintained all of the bargaining power; Sayles's only options were to sign the Offer Letter or lose the chance to become a permanent ...

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