Opinion
Civ. No. JFM-98-1745.
August 31, 1998.
MEMORANDUM
Plaintiff Polk Audio, Inc. ("Polk") has sued defendants Roger Kahn d/b/a The Sound Seller ("Sound Seller") and Chance, Inc. d/b/a The Happy Medium ("Happy Medium") seeking a declaratory judgment that it did not violate the Wisconsin Fair Dealership Law in terminating its dealer relationship with defendants. Defendants have filed a motion to transfer venue to the United States District Court for the Western District of Wisconsin under 28 U.S.C. § 1404(a). Defendants' motion will be granted.
I.
Polk is a manufacturer of stereo speakers. Defendant Kahn is the owner and operator of a retail electronic store called "The Sound Seller," and the owner and president of Chance, Inc., a corporation that operates a retail electronic store called "The Happy Medium." Both of the stores are located in Wisconsin. Sound Seller has been an authorized distributor of Polk speakers for approximately twenty years, and Happy Medium has sold Polk speakers under Chance, Inc.'s ownership for approximately nine years.
In 1994, Polk and defendants signed written "dealer agreements" under which Sound Seller and Happy Medium would be authorized Polk retailers entitled to purchase and resell Polk speakers. Both agreements contained a provision under which Sound Seller and Happy Medium waived any objection to venue in any state or federal court in Maryland.
On May 11, 1998, without prior notice, Polk sent a letter to Sound Seller informing it that Polk was exercising its contractual right to terminate the dealer agreement. The basis for the termination was the fact that Sound Seller had sold Polk speakers through mail order and telephone order sales, and Polk claimed that those sales violated the dealer agreements. Sound Seller responded to the termination in a May 28, 1998 letter from its counsel alleging that Polk was in violation of the Wisconsin Fair Dealership Law, and advising that Sound Seller would pursue "all available legal remedies" unless Polk withdrew the termination notice.
On June 1, 1998, counsel for Polk and counsel for Sound Seller discussed the termination letter. Polk's counsel stated that he would convey the substance of the conversation to Polk, and would contact Sound Seller's counsel to discuss the issues further. On the next day, June 2, 1998, Happy Medium received a termination letter similar to that received by Sound Seller. On that same date, Polk filed its action in this Court.
II.
Defendants, as the moving party, have the burden to show that transfer is warranted. See Penn-Plax, Inc. v. L. Schultz, Inc., 988 F. Supp. 906, 907 (D. Md. 1997). The standards for transfer under § 1404(a) are (1) the transferee court must be a court in which the action could have been brought initially; (2) the transfer must be convenient to the parties and witnesses; and (3) the transfer must be in the interest of justice. See 28 U.S.C. § 1404(a);see also Lanier Bus. Prods. v. Graymar Co., 355 F. Supp. 524, 527-28 (D. Md. 1973). It seems clear from the facts of the case that the action could have been brought initially in the Western District of Wisconsin, the district in which both stores at issue are located. In addition, the parties agree that the convenience of parties and witnesses is equally split between this Court and the Western District of Wisconsin. Therefore, the determinative factor will be "the interest of justice."
One factor that is often considered in determining the interest of justice is the courts' relative familiarity with the applicable law. See, e.g., Heller Financial, Inc. v. Midwhey Powder Co., 883 F.2d 1286, 1293 (7th Cir. 1989). The most significant issue in this case involves interpretation of the Wisconsin Fair Dealership Law. The federal judges in the Western District of Wisconsin are far more familiar with that law than the judges in this Court are, and have relatively extensive experience with its interpretation. Polk argues that the "familiarity with applicable law" factor favors neither Wisconsin nor Maryland because two of the four Counts of Polk's complaint relate to Maryland contract law. However, Maryland contract law does not differ dramatically from the contract law of other states including Wisconsin, and the judges in Wisconsin are more than familiar with the basic contractual principles that will need to be applied. The same cannot be said for this Court's familiarity with Wisconsin's unique Fair Dealership Law. As a result, judicial resources would be more effectively and efficiently allocated if this case were tried in the Western District of Wisconsin.
Polk offers two factors that, it argues, weigh in favor of retaining the case in this district in the interest of justice. The first is the plaintiff's choice of forum, which is "ordinarily accorded considerable weight." Dicken v. United States, 862 F. Supp. 91, 92 (D. Md. 1994). However, the timing and the content of the present action indicate that the plaintiff's choice of forum should only be accorded minimal weight. The crux of the action is Polk's request for a declaratory judgment that it did not violate the Wisconsin Fair Dealership Law. This inherently defensive request suggests that Polk may have filed the action in Maryland to win a "race to the courthouse" and to seize the opportunity to choose the forum for the dispute. However, even more telling is the timing of Polk's filing. Defendants sent Polk a letter on May 28, 1998 stating their position, suggesting that they were prepared to pursue legal remedies and asking that Polk advise them within five days of its intentions with respect to the termination. Polk's counsel responded by telephone on June 1, 1998, and, during that conversation, he represented to defendants that he would discuss the matter with his client and would contact the defendants for further discussion. Instead, on the next day, June 2, 1998, Polk filed this action in federal court in Maryland, including two breach of contract claims that had not been suggested by Polk previously. This quick action, in light of the explicit suggestion in defendants' May 28 letter that they would pursue legal remedies and Polk's resulting awareness that litigation was likely imminent, further evidences a "race to the courthouse" mindset. For these reasons, the "plaintiff's choice of forum" factor does not outweigh the substantial "familiarity with applicable law" factor in this case.
The second factor Polk cites in support of its position is that "forum selection clauses" can be found in its dealer agreements with Sound Seller and Happy Medium. These clauses are not traditional mandatory "forum-selection clauses" because, rather than explicitly naming a forum in which all disputes shall be tried, they merely require that the dealers "waive any objection to venue in Maryland court." This language is best construed as permissive because it does not prevent a dealer from bringing an action against Polk in another venue, such as Wisconsin. Cf. SD Coffee Inc. v. GEI Autowrappers, 995 F. Supp. 607, 609-10 (M.D.N.C. 1997) (distinguishing between permissive and mandatory forum selection clauses); Guy F. Atkinson Const., A Div. of Guy F. Atkinson Co. v. Ohio Mun. Elec. Generation Agency Joint Venture 5, 943 F. Supp. 626, 628-29 (S.D.W. Va. 1996) (determining that clause dealing only with jurisdiction is not mandatory forum selection clause). Further, while in deciding motions to transfer venue a forum selection clause "will be a significant factor that figures centrally in the district court's calculus", Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988), forum selection clauses "should receive neither dispositive consideration . . . nor no consideration . . . but rather the consideration for which Congress provided in § 1404(a)." Id. at 31. Under § 1404(a), the forum selection clause should be balanced with the other factors, including "the convenience of the witnesses and those public-interest factors of systemic integrity and fairness that, in addition to private concerns, come under the heading of `the interest of justice.'" Id. at 30. Because the forum selection clause in these agreements is not mandatory and because the other considerations enumerated above suggest that transfer is in the interest of justice, I will exercise my discretion to transfer this case pursuant to § 1404(a).
For the foregoing reasons, defendants' motion to transfer venue will be granted. A separate order to that effect is being entered herewith.
ORDER
For the reasons stated in the memorandum entered herewith, it is, this 31st day of August, 1998
ORDERED
1. Defendants' motion to transfer venue is granted; and
2. This action is transferred to the United States District Court for the Western District of Wisconsin.