United States District Court, N.D. Illinois, Eastern Division
Jeffrey Alan Kiburtz, Carl W. Shapiro, Teresa Zintgraff Youhanaie, Shapiro, Rodarte & Forman LLP, Santa Monica, CA, Nader R. Boulos, Kirkland & Ellis LLP, Chicago, IL, for Plaintiff.
Joseph T. McCullough, IV, Eric Brent Powers, John M. O'Bryan, Robert M. Baratta, Jr., Freeborn & Peters LLP, Chicago, IL, for Defendant.
MEMORANDUM OPINION AND ORDER
ELAINE E. BUCKLO, District Judge.
Plaintiff Baxter International Inc. (" Baxter" ) has sued defendant AXA Versicherung AG (" AXA" ) for declaratory relief and breach of contract. This dispute arises from underlying claims against Baxter in what the parties refer to as the " Second Generation Litigation," a series of multi-district, international lawsuits against Baxter concerning allegedly contaminated blood products. Baxter seeks coverage under an insurance policy for defense and settlement expenses related to the underlying Second Generation Litigation. AXA moves to dismiss the complaint on the basis of a forum selection clause or, alternatively,
the forum non conveniens doctrine. For the following reasons, AXA's motion is denied.
Baxter is an Illinois-based company incorporated in Delaware. In 1996, Baxter acquired the Austria-based, Swiss company Immuno Group (" Immuno" ). At the time of the acquisition, Immuno was insured by the German insurer Colonia Versicherung AG (" Colonia" ) and Baxter's subsidiary, Baxter AG, Vienna, was named as an additional policy holder on Immuno's policy (" Immuno policy" ). The parties also added an endorsement stating that Baxter would be an additional insured on the Immuno policy with respect to claims arising out of products distributed by Immuno prior to the Baxter acquisition. In 1997, Colonia was acquired and changed its name to AXA Versicherung AG. At all times, the Immuno policy has contained a choice of law provision and a forum selection clause stating: " German law applies to any disputes arising from this insurance policy. The place of jurisdiction is Cologne."  Defendant argues that the complaint should be dismissed on account of this forum selection clause or, alternatively, based on the forum non conveniens doctrine.
In determining whether plaintiff is bound by the forum selection clause here, I must answer two questions: (1) is the forum selection clause valid and mandatory; and (2) if so, is it enforceable. Generally, in determining whether a forum selection clause in a contract is valid, the law of the jurisdiction specified in a choice of law provision will govern. Abbott Laboratories v. Takeda Pharm. Co., Ltd., 476 F.3d 421, 423 (7th Cir.2007) ( " Simplicity argues for determining the validity and meaning of a forum selection clause, in a case in which interests other than those of the parties will not be significantly affected by the choice of which law is to control, by reference to the law of the jurisdiction whose law governs the rest of the contract in which the clause appears." ); see also Rock Energy Coop. v. Village of Rockton, 614 F.3d 745, 750 (7th Cir.2010) (applying the law specified by the parties as governing their memorandum of understanding to a clear forum selection clause).
Plaintiff's argument that Abbott also requires consideration of federal procedural law in determining the meaning and enforceability of the forum selection clause is unpersuasive. In a later decision, the Seventh Circuit characterized Abbott as holding " that the validity of a forum-selection clause depends on the law of the jurisdiction whose rules will govern the rest of the dispute." IFC Credit Corp. v. United Bus. & Indus. Federal Cred. Union, 512 F.3d 989, 991 (7th Cir.2008). That the Seventh Circuit in Abbott discussed federal law as a point of comparison with the law of the jurisdiction specified in the contract's choice of law provision does not alter the ultimate holding of that case. Here, the determinative body of law for analyzing the forum selection clause is specified in a choice of law provision, the validity of which is not challenged. Therefore, under binding Seventh Circuit precedent, I must look to German law in analyzing the issues presented by defendant's motion.
According to defendant, even though the choice of law clause identifies " German
law" as the applicable body of law governing disputes arising from the insurance policy, for all practical purposes this means that I must apply the law of the European Union (" EU" ) governing jurisdictional matters. Specifically, defendant identifies Council Regulation 44/2001, 2000 O.J. (L 12) 6(EC) (hereinafter " Brussels I Regulation" ), as the relevant body of EU law. Plaintiff argues that it would be anathema for a district court in the U.S. to apply the Brussels I Regulation because it is a body of procedural law that does not apply outside of the EU. Even if I accept the proposition that the validity of a forum selection clause would be a procedural issue in EU and/or German courts, I have already determined that Seventh Circuit law requires that I look to the law of the jurisdiction identified in the choice of law provision to determine the validity and enforceability of the forum selection clause in this case. Whether the jurisdiction identified— here, Germany— considers the validity and enforceability of a forum selection clause to be a procedural or substantive issue does not change the fact that the Seventh Circuit has already sent us to Germany for purposes of determining whether the forum selection clause is valid and enforceable. Plaintiff concedes that the Brussels I Regulation is the body of law governing jurisdiction and forum selection clauses (or, jurisdiction clauses, as they are referred to in the EU) in Germany, and I will look to its rules in determining how EU/German law would interpret the forum selection clause in the insurance policy at issue here.
The parties' experts agree that under Article 23(1) of the Brussels I Regulation there is a rebuttable presumption of exclusivity for jurisdiction agreements. In other words, a forum selection clause is mandatory unless there is evidence of the parties' contrary intent. The parties' experts spend some energy on defending their competing translations of the relevant language in the insurance policy: Plaintiff has translated the forum selection clause as " The place of jurisdiction is Cologne," whereas defendant contends that the more accurate translation is " The place of judicial jurisdiction shall be Cologne." However, as Prof. Zekoll notes, the distinction is one without a difference, as plaintiff has not presented any evidence showing that its preferred translation would impact whether there is a rebuttable presumption of exclusivity under Article 23(1) of the Brussels I Regulation. Instead, the thrust of plaintiff's argument is that it has overcome the presumption of exclusivity because the jurisdiction clause did not conform to the requirements of the Brussels Convention, which was in force at the time the original insurance policy was issued in 1990 and also when plaintiff was added as an additional insured in 1996. Plaintiff argues that because the agreement would not have been valid at the time the parties executed the policy, it is not valid now. Plaintiff's expert, Prof. Ronald Brand, states that there is no case law interpreting Article 23 of the Brussels I Regulation and plaintiff has introduced no other evidence showing that any of the parties to the insurance policy agreed that the ...