Opinion
NO. 03-1254, SECTION "T", MAGISTRATE "5"
September 12, 2003
ORDER AND REASONS
This cause came for hearing on September 11, 2003, upon the motion of defendant, Milton Hall Surgical Associates, L.L.C. ("Milton Hall") to transfer venue to the United States District Court for the Northern District of Georgia. Oral argument was not entertained by the Court; therefore, the matter was taken under submission on the briefs only. The Court, having studied the record, the legal memoranda submitted by the parties, as well as the applicable law and jurisprudence, is now fully advised in the premises and ready to rule.
I. BACKGROUND:
This case arises out of an attempt by Defendant to collect a penalty fee from Plaintiff arising out of a breach of contract. Plaintiff, Mark Peters, M.D. ("Peters"), is a sole practitioner in Houma, Louisiana. The defendant, Milton Hall, is a limited liability company organized under the Georgia Limited Liability Company Act for the purpose of engaging in the practice of medicine and surgery. On June 24, 2000, Peters entered into an agreement, which was contained in the First Amendment and Restatement of Operating Agreement of Milton Hall Surgical Associates, LLC ("Operating Agreement"), with three other physicians to operate Milton Hall.
Under the Operating Agreement, a member who resigns from the company is liable to the company for certain amounts. The Operating Agreement contained a forum selection clause and choice of law provision providing that any disputes arising under the Operating Agreement shall be brought in a court located in the State of Georgia, and any such dispute shall be governed by Georgia law. The principal office of Milton Hall was at the time the Operating Agreement was signed, and still is, in Alpharetta, Georgia, which is within the U.S. District Court for the Northern District of Georgia.
Peters resigned as a member of Milton Hall effective June 6, 2001, and on February 10, 2003, filed a declaratory action in Louisiana state court barring Milton Hall from collecting any amounts due to Milton Hall pursuant to their agreement.
II. ARGUMENTS OF THE RESPECTIVE PARTIES:
A. Defendant's Arguments in Support of the Transfer:
The Defendant contends that the Milton Hall Operating Agreement contains a valid forum selection clause designating a court in the state of Georgia as the proper venue for the actions arising under the Operating Agreement. Section 11.8 of the Operating agreement provides:
Jurisdiction and Venue. Any suit involving any dispute or matter arising under this Agreement may only be brought in the United States District Court for the District of Georgia or any Georgia State or Superior Court having jurisdiction over the subject matter of the dispute or matter. All Members hereby consent to the exercise of personal jurisdiction by any such court with respect to any such proceeding.
Because this lawsuit involves interpretation of Operating Agreement and the rights of the parties under that agreement, the forum selection clause applies. Contrary to Peters' assertion that the forum selection clause should not be considered because his suit involves the validity and enforceability of the Operating Agreement, the forum selection clause applies to "[a]ny suit involving any dispute or matter arising under this Agreement." Milton Hall Opearting Agreement, Paragraph 11.8, p. 33. Moreover, Peters can show no exceptional facts or circumstances to invalidate the forum selection clause. The Agreement was signed in Georgia, Milton Hall has always operated in Georgia, and Peters, a physician who was clearly able to understand the Agreement, joined with the other members in inserting the forum selection clause into the Operating Agreement. The "enforcement of valid forum selection clauses bargained for by the parties, protects their legitimate expectations and further vital interests of the justice system." Columbia Energy Serv. Corp. v. TDC Energy Corp., 2002 WL 272382, *2 (E.D. La. 2002) (Porteous, J.), at *4, quoting Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22, 30 (1998).
In addition to the parties' choice of venue in the Operating Agreement, the defendant believes the balance of other private and public interest factors weigh heavily in favor of transfer to the Northern District of Georgia. In Columbia Energy, this Court stated that the private interest factors to take into account include
(1) plaintiffs choice of forum; (2) convenience of parties and witnesses; (3) place of the alleged wrong; (4) location of counsel; (5) cost of obtaining the attendance of witnesses; (6) accessibility and location of the sources of proof; and (7) possibility of delay and prejudice if transfer is granted.Id. (quoting Hanby v. Shell Oil Co., 144 F. Supp.2d 673, 676-677 (E.D. Tex. March 5, 2001) (quoting Robertson v. Kiamichi R.R. Co., L.L.C. 42 F. Supp.2d 651, 655 (E.D. Tex. 1999)).
It is argued by the defendants that the above-listed private interest factors overwhelmingly favor granting Milton Hall's motion to transfer. The convenience of the parties and witnesses will be served by transferring the case to federal district court in Georgia because all the witnesses (other than Peters) are domiciled in Georgia. Milton Hall's current members arc Georgia residents, Peters was domiciled in Georgia at the time he entered into the Operating Agreement, his obligations under that agreement arose while he was in Georgia and the place of the alleged wrong was Georgia.
The only factor that seemingly favors Peters is his current interest in a Louisiana forum, which is contrary to the venue he chose as the proper one (Georgia) when he signed the Milton Hall Operating Agreement. Finally, because the action is still in the early stages of litigation, any delay resulting in the transfer to the proper forum should not prejudice either party.
This Court in Columbia Energy also listed public interest factors taken into account when considering a motion to transfer under 1404(a). The public interest factors include
(1) administrative difficulties caused by court congestion; (2) local interest in adjudicating local disputes; (3) unfairness of burdening citizens in an unrelated forum with jury duty; and (4) avoidance of unnecessary problems in conflict of laws.Id. (quoting Hanby v. Shell Oil Co., 144 F. Supp.2d 673, 676-677 (E.D. Tex. March 5, 2001) (quoting Robertson v. Kiamichi R.R. Co., L.L.C., 42 F. Supp.2d 651, 655 (E.D. Tex. 1999)). A district court should consider which party these factors favor and also weigh these factors against the private interest factors when deciding whether to grant a motion for transfer of venue under 1404(a). The public interest factors also favor granting Milton Hall's motion for transfer of venue. The local interest in adjudicating this action is much greater in Georgia because the contract was entered into in Georgia and because the dispute arose while all parties resided in Georgia. Likewise, because the case relates to activities in Georgia, the burden of resolving it should be placed on the citizens of Georgia. The Defendant is not aware of any administrative difficulties in litigating the matter in Georgia and any problems associated with conflict of laws would be reduced by the transfer because the Operating Agreement requires application of Georgia law. Thus, the private and public interest factors favor granting Milton Hall's motion to transfer venue to the Northern District of Georgia.
In response to the Plaintiffs claim that the forum selection clause is unenforceable under Louisiana law, the defendant states that La. R.S. 23:921(A)(2), prohibiting forum selection clauses in employment contracts, doesn't apply because a limited liability company's operating agreement is not an employment contract, for the same reasons a partnership agreement should not be considered an employment contract. See McCray v. Blackburn, 236 So.2d 859, 861 (La.App. 3 Cir. 1970); Winston v. Bourgeois, Bennett, Thokey and Mickey, 432 So.2d 936, 940-941 (La.App. 4 Cir. 1983); Neeb-Kearney Co. v. Rellstab, 593 So.2d 741, 749 (La.App. 4 Cir. 1992). Defendant also contends that Peters incorrectly argues that a forum selection clause is contrary to Georgia public policy, when in fact, Georgia courts and federal courts sitting in Georgia routinely enforce advance agreements to consent to the jurisdiction of Georgia courts. See. e.g., Lightsey v. Nalley Equipment Leasing, Ltd., 209 Ga. App. 73, 432 S.E.2d 673, 675 (1993); Apparel Resources International, Ltd. v. Amersig Southeast, Inc., 215 Ga. App. 483, 541 S.E. 113, 114-15 (1994); National Service Industries, Inc. v. Vafla Corp., 694 F.2d 246, 248-49 (11th Cir. 1982).
B. Arguments of the Plaintiff in Opposition to the Transfer:
The Plaintiff contends that he does not rely on the contract entered into with Milton Hall or any of the language therein in support of his claim for relief. The suit doesn't fundamentally involve the interpretation of the Operating Agreement, but rather the validity and enforceability of that agreement. The basis for the Plaintiffs suit is the fact that Milton Hall is attempting to improperly collect the disqualifying interest owner deficiency. Thus, this Court should not consider the language of the contract or the clauses contained therein when deciding whether to transfer the instant case. If the contract is not considered, there is no justification for transferring the case to Georgia.
Should this Court find it necessary to look to the language of the contract, it should be noted that the general standard applicable to motions to transfer under 1404(a) does not give dispositive weight to forum selection clauses. The issue of venue on a motion to transfer turns on the weighing and balancing of "a number of case-specific factors." Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. at 28. Although the District Court is to weigh and evaluate the motion to transfer under federal law, the District Court is to "integrate the factor of the forum selection clause into its weighing of considerations prescribed by Congress." Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. at 30. Thus, the forum selection clause should be considered, but Milton Hall's almost exclusive reliance on that factor is misplaced. By insisting on enforcement of the forum selection provision, Milton Hall seeks to wrongly penalize Peters by forcing him, a sole practitioner, to prosecute his claim in a forum not of his choosing.
Plaintiff submits that the venue selection provisions of the agreement here are unenforceable under Louisiana and Georgia law. The physicians who signed the agreement in question were employees under the arrangement on which Milton Hall relies.
According to Louisiana law:
The provisions of every employment contract or agreement or provisions thereof, by which any foreign or domestic employer or any other person or entity includes a choice of forum clause or choice of law clause in the employee's contract of employment or collective bargaining agreement, or attempts to enforce either a choice of forum clause or choice of law clause in any civil or administrative action involving an employee, shall he null and void except where the choice of forum clause or choice of law clause is expressly, knowingly, and voluntarily agreed to and ratified by the employee after the incident which is the subject of the civil or administrative action.
La. R.S. 23:921(A)(2) (emphasis added.) Thus, under Louisiana law, which generally governs in diversity actions, the provision on which Milton Hall relies would be void and unenforceable against Peters. Some Georgia courts similarly may find pre-suit venue selection provisions to be unenforceable as contrary to public policy, although Georgia decisions conflict on the issue. See Cartridge Rental Network v. Video Entertainment, Inc., 132 Ga. App. 748, 209 S.E.2d 132 (finding that the public policy of the state was contrary to limiting venue by contract.) Accordingly, this Court should give minimal, if any, weight to such a forum selection provision in its analysis under 1404(a).
The Plaintiff submits that proper section 1404(a) analysis of the plaintiffs choice of forum and related issues of convenience and fairness weighs in favor of allowing Peters' suit to go forward in Louisiana, where it was filed. In addition to the plaintiffs' choice of forum, other factors to be weighed include the location of the witnesses and the relative burden on the parties of litigating in a different forum. Applying the private interest factors enumerated by this Court in Columbia Energy Serv. Corp. v. TDC Energy Corp., 2002 WL 272382, *2 (E.D. La. 2002) results in the following conclusions: (1) The plaintiff has chosen the forum; (2) the convenience of the parties is no greater in Atlanta than in this forum; (3) the place of the wrong, i.e., Milton Hall's improper attempt to collect an invalid and unenforceable debt, is in this forum; (4) counsel is located in this forum; (5) the costs of traveling to this forum are no greater for the out of stare witnesses, and Peters' cost to travel to Atlanta are the same as Gallup's cost to travel here; (6) accessibility to this forum is equally greater accessibility to the Northern District of Georgia; and (7) the possibility of delay if the matter is transferred is substantially greater in the Northern District of Georgia, given this Court's relatively speedy docket.
Applying the public interest factors enumerated by this Court in Columbia Energy Serv. Corp. v. TDC Energy Corp., 2002 WL 272382, *2 (E.D. La. 2002) results in the following conclusions: (1) Transfer to the Northern District of Georgia would transfer the case to a more congested docket; (2) transfer would deprive a Louisiana citizen with a local interest in this matter; (3) there is no jury requested; (4) conflicts of law issues are minimal, but would be greater for a Georgia federal court than for this Court, in light of the need to apply Louisiana law. as the choice of Georgia law provision in the employment contract probably is unenforceable against a Louisiana resident.
Plaintiff has chosen this Court as his forum, and he resides within this Court's district. Therefore, "the defendant moving for change of venue pursuant to Section 1404(a) must show both that the original forum is inconvenient for itself and the plaintiff would not be substantially inconvenienced by a transfer. Id. (quoting Sorrels Steel Co., Inc. v. Great Southwest Corp., 651 F. Supp. 623 (S.D. Miss. 1986)). Given the fact that there is another matter being litigated in this jurisdiction in which the defendant is an entity in which Dr. Gallups is a principal, the Eastern District of Louisiana would not be inconvenient for the defendant. As a sole practitioner who is required to spend considerable time at his office, the plaintiff would be substantially inconvenienced by a transfer of this case to Georgia.
Plaintiff submits that there are numerous factors weighing in favor of holding the clause unenforceable, including that it is unreasonable given that Peters wasn't allowed to negotiate the language of the clause and enforcement would potentially deprive Peters of his day in court given, the hardship he would incur by having to participate in litigation in Georgia. Peters was at a distinct disadvantage when entering into the agreement because he was not knowledgeable about contracts and because Gallups made misrepresentations to him in order to persuade him to sign the agreement.
III. LAW AND ANALYSIS:
28 U.S.C § 1404(a) states:
For the convenience of the parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.
The burden is on the defendants to demonstrate why the case should be transferred to a different forum. Time, Inc. v. Manning, 366 F.2d 690, 698 (5th Cir. 1966). "Plaintiffs privilege to choose, or not to be ousted from, his chosen forum is highly esteemed." Id., quoting Rodriguez v. Pan American Life Ins. Co., 311 F.2d 429, 434 (5th Cir. 1962). However, the decision to transfer a pending case is committed to the sound discretion of the district court. Van Dusen v. Barrack, 376 U.S. 612, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964); Peteet v. Dow Chemical Co., 868 F.2d 1428 (5th Cir. 1989); Sonic Drive-In of Alexandria v. Dronet, 968 F. Supp. 303 (E.D.La. 1997). The trial court must consider "all relevant factors to determine whether or not on balance the litigation would more conveniently proceed and the interests of justice be better served by transfer to a different forum." Sonic, 968 F. Supp. at 304 (quoting Wright Miller, Federal Practice and Procedure, § 2847, at 340 (1986)).
The convenience of the parties and witnesses and the availability of documentary evidence are some of the other factors a district court must consider in resolving whether to grant a motion to transfer. Crosfield Hastech, 672 F. Supp. 580, 589 (D.N.H. 1987). A transfer is not appropriate if it would merely shift inconvenience from the defendant to the plaintiff. Id. Unless the balance of all the factors "is strongly in favor of the defendant, the plaintiffs choice of forum should rarely be disturbed." Id., quoting Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947).
The defendant relies heavily on the forum selection clause it contends was made a part of the contract between the parties. When the transfer motion seeks to enforce a valid and reasonable forum selection clause designating a forum other than that chosen by the plaintiff, the burden shifts to the plaintiff to "persuade the court that the contractual forum is sufficiently inconvenient to justify retention of the dispute." In re Ricoh Corp., 870 F.2d 570, 573 (11th Cir. 1989). The plaintiff must show exceptional facts or circumstances to invalidate the forum selection clause. Id. at 574.
Mark Peters has failed to show any exceptional facts or circumstances which would invalidate the forum selection clause. As such, it is the finding of this Court that the Northern District of Georgia is the most convenient forum for this proceeding. Therefore, Milton Hall's motion to transfer is GRANTED.
Accordingly,
IT IS ORDERED that the Motion to Transfer Venue to the Northern District of Georgia, filed on behalf of the defendant, Milton Hall Surgical Associates, L.L.C., is hereby GRANTED.