Opinion
Case No. 3:22 CV 502
2023-03-24
WHIRLPOOL CORPORATION, Plaintiff, v. REGAL PLUMBING AND HEATING CO., Defendant.
Gerald R. Kowalski, Sarah K. Skow, Spengler Nathanson, Toledo, OH, Kevin M. Smith, Wiggin & Dana, New Haven, CT, Janet L. Ramsey, Warner, Norcross & Judd, Grand Rapids, MI, for Plaintiff. Adam S. Nightingale, Nicholas W. Bartlett, Eastman & Smith, Toledo, OH, Joshua A. Koltak, Faulkner, Garmhausen, Keister & Shenk, Sidney, OH, for Defendant.
Gerald R. Kowalski, Sarah K. Skow, Spengler Nathanson, Toledo, OH, Kevin M. Smith, Wiggin & Dana, New Haven, CT, Janet L. Ramsey, Warner, Norcross & Judd, Grand Rapids, MI, for Plaintiff. Adam S. Nightingale, Nicholas W. Bartlett, Eastman & Smith, Toledo, OH, Joshua A. Koltak, Faulkner, Garmhausen, Keister & Shenk, Sidney, OH, for Defendant.
ORDER GRANTING MOTION TO TRANSFER
JACK ZOUHARY, UNITED STATES DISTRICT JUDGE
INTRODUCTION
In May 2021, Gary McIntire, an employee of Defendant Regal Plumbing and Heating Co. (Regal), sued Plaintiff Whirlpool Corporation (Whirlpool) over an accident that occurred at Whirlpool's Ohio manufacturing facility. Three months later, Whirlpool filed suit in the Western District of Michigan seeking indemnification from Regal. That case was then transferred to this Court.
After the transfer, Whirlpool filed a mandamus petition with the Sixth Circuit seeking a transfer back to Michigan. The Circuit denied the Petition, suggesting that this Court has authority to consider Whirlpool's request. Whirlpool obliges by asking the same "retransfer" relief from this Court (Doc. 40).
BACKGROUND
In 2014, Regal and Whirlpool entered into a Services Agreement for a Whirlpool facility in Marion, Ohio (Doc. 1 at 2). As part of that deal, the parties agreed Regal would "defend, indemnify, and hold harmless Whirlpool . . . from any claim, demand, cause of action, judgment, damages, loss, expense, or the like, including, but not limited to, attorneys fees and any amount paid in settlement, resulting from, arising out of, or in any way connected with the [Agreement]" (Doc. 13-1 at 4). The Agreement also contained choice-of-law and forum-selection provisions (id. at 8):
This Agreement shall be governed in all respects by and construed in accordance with the laws of the State of Michigan without regard to any conflicts of law provisions. The parties agree that all disputes involving this Agreement shall be subject to the exclusive jurisdiction of the Western District Court for the State of Michigan or, if federal jurisdiction is not available, of the courts of Berrien County, Michigan.
After McIntire filed suit in Ohio in this Court, Whirlpool sued Regal in a Michigan federal court, seeking indemnification from Regal in the McIntire lawsuit (Doc. 1). Regal moved to either dismiss the case or transfer it to this Court (Doc. 13). The Michigan court opted to transfer the case, outlining the connection to the underlying Ohio case (Doc. 25 at 5):
[T]he contract in this matter is completely centered around the State of Ohio -- the Agreement was for services to be completed in Ohio, at the Ohio Plant, involving Regal (an Ohio company), and was signed by Whirlpool's Vice President of Marion [Ohio] Operations. The injured party (McIntire) is an Ohio resident who was injured in Ohio at the Ohio Plant, and the resulting lawsuit is currently pending in an Ohio federal court applying Ohio law.The Transfer Order further explains the potential importance of the forum in this case: "[A]ccording to Michigan law, the indemnification clause may be enforceable," but "whether such a judgment is enforceable in Ohio is unlikely" because "Ohio law and public policy appear to disfavor indemnification clauses." (id. at 6):
Whirlpool then filed a mandamus petition with the Sixth Circuit, arguing the Transfer Order failed to appropriately weigh the public-interest factors under the 28 U.S.C. § 1404(a) forum non conveniens analysis. The Sixth Circuit held that Whirlpool failed to demonstrate mandamus relief was appropriate "because [Whirlpool] has another adequate means to obtain relief: It can move the Northern District of Ohio to transfer the case back to the Western District of Michigan." In re: Whirlpool Corporation, No. 22-1370 (6th Cir. 2022). Whirlpool obliged, and now seeks a transfer order from this Court (Doc. 40). This Court held oral argument (Doc. 45), and the matter is fully briefed (Docs. 40, 42, 44, 46).
DISCUSSION
Burden
As a threshold issue, the parties dispute who shoulders the burden on this retransfer request. In its remand order, the Sixth Circuit provides this Court no guidance on how to evaluate the motion, only citing two multidistrict litigation (MDL) cases. See Kalama v. Matson Navigation Co., Inc., 875 F.3d 297, 304 (6th Cir. 2017) (stating that the district court "granted summary judgment to the defendants on several claims . . . [and then] transferred the case back"); Matthews v. Chas. Kurz & Co., 791 F. App'x 556, 559 (6th Cir. 2019) (noting that the district court "retransfer[red] . . . cases back to Ohio for continued litigation and trial"). The MDL context has its own rules for transfer and consolidation that do not apply here. See 28 U.S.C. § 1407. Multiple cases from multiple jurisdictions are sent to a single judge for pretrial handling, motion practice, and potential settlement. Some cases are then returned to their original court for further handling, including trial. The original court is well aware the case might return. Not so in our context -- one case of involuntary ping-pong between district courts with potential opposing orders. Moreover, this Court found no case where a "retransfer" to the original court followed a forum non conveniens transfer from a sister court.
The general rule is that "[t]he party who opposes the enforcement of the forum-selection clause has the burden of showing that the clause should not be enforced." See Boling v. Prospect Funding Holdings, LLC, 771 F. App'x 562, 568 (6th Cir. 2019). The Sixth Circuit has explicitly held that the party challenging the preselected forum "bears the burden of showing that the public factors weigh heavily against" that forum. Lakeside Surfaces, Inc. v. Cambria Co., 16 F.4th 209, 216 (6th Cir. 2021). Regal makes two arguments attempting to keep this case in Ohio.
First, it argues that this Court must find "clear error" in the Transfer Order "as is required to depart from the law of the case" (Doc. 42 at 11). But "the [law of the case] doctrine merely expresses the practice of courts generally to refuse to reopen what has been decided, not a limit on their power." Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 802, 108 S.Ct. 2166, 100 L.Ed.2d 811 (1988). In Christianson, the Supreme Court noted that "even if the [transferring court's] decision was law of the case, the [transferee] did not exceed its power in revisiting the jurisdictional issue." Id. at 802-03, 108 S.Ct. 2166. In addition, the Transfer Order, which Regal considers the binding "law of the case," states that the forum-selection clause is enforceable and venue is proper in the Western District of Michigan (see Doc. 25 at 3).
Second, Regal asserts the forum-selection clause is invalid. It points to M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972), which held that "[a] contractual choice-of-forum clause should be held unenforceable if enforcement would contravene a strong public policy of the forum in which suit is brought." From Regal's perspective, Ohio's "strong public policy against forum-selection clauses in these specific types of contracts, contracts for construction, maintenance or repair," renders the clause unenforceable (Hearing held January 20, 2023). But there's a problem. Michigan, not Ohio, is "the forum in which [the] suit [was] brought." Bremen, 407 U.S. at 15, 92 S.Ct. 1907. And "Michigan's public policy favors the enforcement of contractual forum-selection clauses and choice-of-law provisions." Magna Seating, Inc. v. Adient US LLC, 2021 WL 2026125, at *3 (Mich. App. 2021) (citation omitted). Even where another state's "public policy would most likely prevent indemnification," this Court must still give "weight to the effective choice of law made by the contracting parties" and consider "Michigan's interest in applying its own law to this dispute." See Chrysler Corp. v. Skyline Indus. Servs., Inc., 448 Mich. 113, 125-26, 528 N.W.2d 698 (1995).
What does Michigan law require to enforce a forum-selection clause? A "substantial connection" between the contract and the litigation. Am. Benefits Concepts, Inc. v. Willingham, 2009 WL 1674229, at *1 (W.D. Mich. 2009). Such clauses are clearly enforceable in a case such as this, where the contract was negotiated and executed in Michigan, and the parties agreed to apply Michigan law in Michigan courts. See id. at *2 (holding Michigan "plainly has 'substantial connection' " where plaintiff was a Michigan company and the parties agreed to arbitrate their contract dispute in Michigan under Michigan law). See also Integrated Mgmt. Sys., Inc. v. Maity, 2012 WL 162282, at *4 (E.D. Mich. 2012) (noting that courts "evaluate several factors to determine whether a substantial part of the events occurred in the forum . . . , including where the contract was negotiated and executed, where the contract was performed, and where the alleged breach occurred"). Because the forum-selection clause is valid and enforceable, Regal must demonstrate, by applying the public factors test, why this bargained-for clause should not be enforced.
Weighing the Factors
"In the typical case not involving a forum-selection clause . . . the district court would weigh the relevant factors and decide whether, on balance, a transfer would serve 'the convenience of parties and witnesses' and otherwise promote 'the interest of justice.' " Atl. Marine Const. Co. v. U.S. Dist. Ct. for W. Dist. of Texas, 571 U.S. 49, 62-63, 134 S.Ct. 568, 187 L.Ed.2d 487 (2013) (quoting 28 U.S.C. § 1404(a)). "The calculus changes, however, when the parties' contract contains a valid forum-selection clause, which 'represents the parties' agreement as to the most proper forum.' " Id. at 63, 134 S.Ct. 568 (quoting Stewart Org. v. Ricoh Corp., 487 U.S. 22, 31, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988)). In such cases, the analysis changes in three ways. First, the chosen forum of the party seeking to avoid the clause bears no weight. Id. at 63, 134 S.Ct. 568. Second, a "transfer of venue will not carry with it the original venue's choice-of-law rules." Id. at 64, 134 S.Ct. 568. Third, the private-interest factors are no longer a consideration, and therefore this Court considers only the public-interest factors. Id.
The public-interest factors include:
administrative difficulties flowing from court congestion; the local interest in having localized controversies decided at home; the interest in having the trial of a diversity case in a forum that is at home with the law that must govern the action; the avoidance of unnecessary
problems in conflict of laws, or in the application of foreign law; and the unfairness of burdening citizens in an unrelated forum with jury duty.Lakeside Surfaces, 16 F.4th at 214-15 n.2 (internal quotation marks and citations omitted). In evaluating these factors, the party seeking to avoid the clause "bears the burden of establishing that transfer to the forum for which the parties bargained for is unwarranted." Courtelis v. Rosenberg, 2022 WL 987941, at *7 (E.D. Ky. 2022) (quoting Boling, 771 F. App'x at 568). The public-interest factors will " 'rarely defeat a transfer motion,' making the 'practical result' that 'forum-selection clauses will almost always control.' " Id. (quoting Boling, 771 F. App'x at 568).
Regal notes that the work out-lined in the contract was completed in Ohio, the witnesses are in Ohio, and the underlying McIntire case is pending in Ohio (Doc. 42 at 9). But these are private-interest concerns -- not public ones. "When parties agree to a forum-selection clause, they waive the right to challenge the preselected forum as inconvenient or less convenient for themselves or their witnesses, or for their pursuit of the litigation." Atl. Marine, 571 U.S. at 64, 134 S.Ct. 568. In this case, the public-interest factors weigh in favor of enforcement. The case involves a single issue -- whether Regal breached a contractual duty to indemnify Whirlpool. The contract was negotiated and executed in Michigan, and Michigan law governs its interpretation. Michigan has an interest in deciding this localized controversy "at home." Lakeside Surfaces, 16 F.4th at 214-15 n.2. Regal notes if indemnification is upheld, a court may need to address the amount of Whirlpool's attorney fees incurred in defending the McIntire case. But this is insufficient to "heavily" tilt the public-interest balance. Id. at 216. Either a Michigan or Ohio court is equally able to address that issue.
CONCLUSION
The Supreme Court has held that forum-selection clauses should be "given controlling weight in all but the most exceptional cases." Stewart, 487 U.S. at 33, 108 S.Ct. 2239 (Kennedy, J., concurring). Thus, district courts must enforce such clauses "unless extraordinary circumstances unrelated to the convenience of the parties clearly disfavor" enforcement. Atl. Marine, 571 U.S. at 50-51, 134 S.Ct. 568. While judicial efficiency leans toward litigating both cases here in Ohio, that is not a proper consideration. This otherwise straightforward contract case presents no "extraordinary circumstances" under the test announced by the Supreme Court and followed by this Circuit.
Regal fails to demonstrate the public-interest factors weigh heavily in favor of avoiding the forum-selection clause. Jurisdiction is not appropriate in this Court. This case may be properly litigated in Michigan -- the parties' bargained-for forum. Plaintiff's Motion to Transfer (Doc. 40) is granted, and this case is returned to the Western District of Michigan.
IT IS SO ORDERED.