Expedition Leather LLC v. FC Organizational Products LLC

2013 DNH 005

• Court: District Court, D. New Hampshire
• Decided: January 15, 2013
• Docket: CV-11-588-JL
• Status: Published

Opinion

Expedition Leather LLC v. FC Organizational Products LLC CV-11-588-JL 1/15/13

UNITED STATES DISTRICT COURT DISTRICT OF NEW HAMPSHIRE

Expedition Leather LLC

v. Civil No. ll-cv-588-JL Opinion No. 2013 DNH 005 FC Organizational Products LLC

MEMORANDUM ORDER

Like an examination in a law school Contracts class, this

case involves a classic dispute under the Uniform Commercial Code

over the sale of goods. Plaintiff Expedition Leather LLC filed

this action against defendant FC Organizational Products LLC

("FCOP") in this court, alleging that FCOP had refused to pay for

goods it had ordered and received from Expedition. FCOP moved to

dismiss, see Fed. R. Civ. P. 12(b)(6), arguing that Expedition

had agreed, by way of a forum selection clause, to litigate any

disputes related to FCOP's orders in a Utah state or federal

court. This court, perceiving factual disputes as to whether the

parties had agreed to the forum selection clause, denied FCOP's

motion. See Order of June 21, 2012; Order of July 3, 2012.

Because, however, applicability of the forum selection clause is

a threshold issue affecting whether this action belongs in this

district, the parties agreed to a process by which this court

would resolve those disputes expeditiously. After conducting limited discovery pursuant to that

agreement, the parties independently resolved most of their

factual disputes. They continue to disagree, however, whether

the forum selection clause applies to Expedition's claims in this

action. That disagreement largely concerns what inferences may

be drawn from the undisputed facts--specifically, whether the

court can infer Expedition's agreement to be bound by the forum

selection clause from those facts. The parties have each

submitted memoranda of law, and have jointly submitted a

statement of undisputed facts and a timeline of events. They

have also reguested that the court resolve the remaining legal

and factual issues in this case without holding an evidentiary

hearing or oral argument.

The court has jurisdiction under 28 U.S.C. § 1332(a) (1)

(diversity). After careful consideration of the materials before

it, the court finds that Expedition did not agree to the forum

selection clause until August 20, 2010. As a result, the court

will not dismiss this action insofar as Expedition's claims arise

from purchase orders FCOP issued prior to that date. One of

FCOP's orders was issued after that date, however, and FCOP has

demonstrated that the forum selection clause applies to claims

arising from that order. Such claims must be litigated in Utah,

and accordingly are dismissed.

2 I. Applicable legal standard

Where the applicability of a forum selection clause turns on

disputed factual issues, "the district court may weigh evidence,

assess credibility, and make findings of fact that are

dispositive." Murphy v. Schneider Nat'l, Inc., 362 F.3d 1133,

1139-40 (9th Cir. 2004); see also New Moon Shipping Co., Ltd. v.

MAN B&W Diesel A G , 121 F.3d 24, 29 (2d Cir. 1997) (similar).

"Before a court considers whether to enforce a forum selection

clause, it must decide a few threshold matters, such as whether

(1) the parties entered into a valid contract of which the forum

selection clause was an agreed-to provision, (2) the clause is

mandatory and (3) the clause governs the claims asserted in the

lawsuit." Provanzano v. Parker View Farm, Inc., 827 F. Supp. 2d

53, 58 (D . Mass. 2011); see also Altvater Gessler-J.A. Baczewski

Int'l (USA) Inc. v. Sobieski Destylarnia S.A., 572 F.3d 86, 89

(2d Cir. 2009) (similar). The party seeking enforcement of the

clause bears the burden of establishing these elements by a

preponderance of the evidence. Altvater, 572 F.3d at 89; AIG

Mexico Seguros Interamericana, S.A. de C.V. v. M/V Zapoteca, 844

F. Supp. 2d 440, 442 (S.D.N.Y. 2012).

3 II. Background1

FCOP sells consumer goods, including the Franklin Planner

and other organizational tools. During the time period at issue

in this case. Expedition supplied various custom leather

products, such as planner covers and binders, to FCOP.

Before serving as a supplier to FCOP, Expedition had

supplied similar leather products to the Consumer Solutions

Business Unit of Franklin Covey Co. At the time, Franklin itself

sold consumer goods similar to those now sold by FCOP, including

the Franklin Planner. To order products from Expedition,

Franklin would submit individual written purchase orders to

Expedition.

On March 11, 2008, Franklin sent Expedition an e-mail titled

"Update to [Purchase Order] Terms & Conditions." The e-mail

informed Expedition that "the attached [Purchase Order] Terms &

Conditions has [sic] been changed effective immediately."2 The

attachment, titled "Standard Terms and Conditions," stated that

1This section briefly recounts the key facts. The court otherwise incorporates the parties' amended joint statement of undisputed facts (document no. 25) by reference.

2Based upon the evidence before this court, it appears that Franklin had mentioned its terms and conditions to Expedition only once before, in a January 2008 e-mail. Although that e-mail purported to attach Franklin's "[Purchase Order] Terms & Conditions, Receiving Standards, & Routing Guide," the parties have not submitted any attachment to this court, so the court can draw no conclusion as to its contents.

4 "[a]11 deliveries of goods and/or the rendering of services by

Seller to Purchaser shall be delivered, rendered, and accepted

solely upon price, terms, conditions, and shall conform to

specifications, set forth in this document." And, as is relevant

here, it provided that "[t]his purchase order shall be governed

by and construed in accordance with the laws and decisions of the

jurisdiction in the State of Utah, and Seller consents,

exclusively, to the adjudication of any dispute arising out of

this Agreement by any federal or state court of competent

jurisdiction sitting in said jurisdiction." There is no evidence

before the court that Expedition responded in any way to this e-

mail, or otherwise discussed the attached terms and conditions

with Franklin.

A little over two months after sending the March 2008 e-

mail, Franklin entered into a Master Asset Purchase Agreement

with FCOP, wherein Franklin agreed to sell its Consumer Solutions

Business Unit to FCOP. Although the purchase agreement included

a schedule of contracts FCOP would acguire in the transaction,

neither the Standard Terms & Conditions nor any contract with

Expedition was listed on that schedule.

The day after Franklin and FCOP entered the purchase

agreement, Franklin sent Expedition an e-mail informing it of the

sale. Franklin's e-mail did not state that the terms and

5 conditions previously sent would also govern purchase orders

issued by FCOP, and at no point afterward did Franklin

communicate this to Expedition. Two months later, FCOP sent

Expedition an e-mail informing it that the transition of the

Consumer Solutions Business Unit had formally occurred "and a new

[Purchase Order] system was implemented." That e-mail also

informed Expedition that FCOP would take over the open purchase

orders placed by Franklin, which would be "re-entered into this

new system" and given new purchase order numbers.

Expedition and FCOP did not have an independent written

contract for the supply of Expedition's leather products.

Rather, FCOP--like Franklin before it--would submit individual

written purchase orders to Expedition, and Expedition would

accept each of the purchase orders verbally or in writing within

a few days of receipt. In April 2009, FCOP informed Expedition

that it had decided to consolidate the number of its current

suppliers and that Expedition "was one of two suppliers selected

to continue to support [FCOP's] business." FCOP's letter

sketched broad terms of what it expected to be a three-year

relationship between the parties, but made no reference to any

terms and conditions.

Over the next fifteen months, FCOP submitted no less than

twelve purchase orders, all of which are at issue in this case.

6 to Expedition. None of the purchase orders expressly referred to

the "Standard Terms and Conditions" Franklin had sent to

Expedition in March 2008, nor did they refer to any other terms

extraneous to the orders themselves.

During an August 2010 telephone conference between the

parties, FCOP's CEO stated that Expedition's sales to FCOP were

subject to FCOP's standard purchase order terms and conditions.

Expedition replied that it was not aware of the existence of such

terms and conditions. Neither party has any evidence that, prior

to this telephone conference, FCOP and Expedition had any

correspondence or communication regarding the terms and

conditions applicable to FCOP's purchase orders.

The day after the telephone conference, FCOP sent Expedition

an e-mail attaching its "Standard Terms and Conditions." The

attached terms and conditions were not identical in all respects

to those that Franklin sent to Expedition in March 2008, though

the forum selection and choice-of-law clauses in both sets of

terms and conditions were. Not long thereafter, on August 20,

2010, FCOP sent Expedition another e-mail attaching a new set of

"Standard Terms and Conditions" that differed substantially from

both those that Franklin sent to Expedition in 2008 and those

that FCOP had sent to Expedition earlier that month. Again,

however, the forum selection and choice-of-law clauses in the new

7 terms and conditions were identical to those in the earlier terms

and conditions. The parties agree that this final set of terms

and conditions applied to the purchase orders FCOP issued after

August 20, 2010--inciuding one purchase order, dated September

22, 2010, that is at issue in this case.

Ill. Analysis

As already mentioned, in order for FCOP to obtain dismissal

of this action based upon a forum selection clause, it has the

burden of demonstrating that: "(1) the parties entered into a

valid contract of which the forum selection clause was an agreed-

to provision, (2) the clause is mandatory and (3) the clause

governs the claims asserted in the lawsuit." Provanzano, 827 F.

Supp. 2d at 58; see also Altvater, 572 F.3d at 89. Here, the

issue before this court concerns only the first element: whether

the terms and conditions that Franklin sent to Expedition in

March 2008 were "agreed-to provisions" of any contract between

Expedition and FCOP at any time before August 20, 2010, when the

parties agreed to a different set of terms and conditions. There

is no dispute that if the terms and conditions were agreed to,

the forum selection clause therein is enforceable and mandatory,

and reguires litigation of Expedition's claims in Utah.

FCOP argues that the course of dealing between the parties

establishes Expedition's agreement to the terms. For its part,

8 Expedition argues that no agreement can be reasonably inferred

from its receipt of a single communication from Franklin about

the terms, especially where the terms are not referenced in any

of the disputed purchase orders and FCOP never took any steps to

communicate an intent that the terms would apply to its purchase

orders following its acguisition of Franklin's business.

Expedition has the better argument, and the court therefore

declines to dismiss this action.

In support of its position, FCOP relies on § 2-202 of the

Uniform Commercial Code.3 That section provides that the terms

of a writing reflecting the agreement between parties "may be

explained or supplemented (a) by course of performance, course of

dealing, or usage of trade . . . ; and (b) by evidence of

consistent additional terms . . . ." U.C.C. § 2-202. FCOP

characterizes Expedition's prior dealings with Franklin as part

of the "course of dealing" between the parties that should be

3Both New Hampshire and Utah have adopted the Uniform Commercial Code. See N.H. Rev. Stat. Ann. ch. 382-A; Utah Code Ann. tit. 7 0A. FCOP and Expedition appear to agree that the provisions of the U.C.C. (and, more specifically. Article 2 of the U.C.C.) and state contract law govern this dispute, and that, given the identical or near-identical doctrines in both states, the result should be the same no matter which state's law is applied. The court therefore does not undertake an extensive choice-of-law analysis here. See Lambert v. Kysar, 983 F.2d 1110, 1114 (1st Cir. 1993) (declining to resolve choice of law issue "as the outcome is the same under the substantive law of either jurisdiction"). Thus, citations are to the U.C.C. itself, rather than to either state's version of it.

9 considered when determining the contours of the parties'

agreement. By fulfilling Franklin's purchase orders after

receiving the terms in March 2008, FCOP says. Expedition agreed

to the terms. And, by "continu[ing] to fulfill new purchase

orders issued by FCOP . . . without receiving a new set of

standard terms and conditions applicable to purchase orders, and

without otherwise inguiring about any standard terms and

conditions that would apply to purchase orders issued by FCOP,"

it continues. Expedition agreed that those terms would continue

to govern FCOP's purchase orders. Memo, in Supp. of Application

of Forum Selection Cl. ("Memo, in Supp.", document no. 2 6) at 7.

There are a host of difficulties with FCOP's argument. The

most basic, however, is that there is no evidence before the

court that Expedition, through its words or conduct, agreed that

the March 2008 terms and conditions would apply to its sales

contracts with Frankiln--let alone its contracts with FCOP.

Under the common law of both New Hampshire and Utah, for a party

to be bound by a contractual term, it must in some way manifest

an intention to be bound by that term. See Fleet Bank NH v.

Christy's Table, Inc., 141 N.H. 285, 287-88 (1996); Cal Wadsworth

Constr. v. City of St. George, 898 P.2d 1372, 1376 (Utah 1995).

To the extent it displaces the common law, the U.C.C. similarly

reguires "[a] definite and seasonable expression of acceptance"

10 for a contract to be formed, U.C.C. § 2-207(1), though that

expression "may be made in any manner sufficient to show

agreement," id. § 2-204(1), i.e., "in any manner and by any

medium reasonable in the circumstances," id. § 2-206(1)(a). All

that FCOP has shown, however, is that Franklin sent a single,

unilateral communication attaching the terms and conditions to

someone at Expedition. That communication, and its attachment,

were then unanswered, unacknowledged, and unmentioned for the

(brief) remainder of Franklin's and Expedition's relationship.

While the court can envision hypothetical scenarios in which

a party's silence in the face of such a communication might

conceivably indicate acceptance--!!, for example, the parties'

previous course of dealing had established that silence could be

so construed--there is simply no evidence in this case enabling

the court to interpret Expedition's silence as its implicit

acceptance of the terms and conditions. (Indeed, FCOP has not

identified to whom at Expedition Franklin's March 2008 e-mail was

sent, whether that person had the authority to bind Expedition to

a contract with Franklin, or what previous dealings that person--

or, for that matter. Expedition itself--had with Franklin up to

that point.) To the extent FCOP argues that Expedition signaled

its assent to the terms by fulfilling Franklin's post-March 2008

purchase orders, the court also cannot draw that conclusion from

11 the evidence. It is true that a party may sometimes signify

acceptance by commencing performance of the tasks indicated in

the offer. See Tsiatsios v. Tsiatsios, 140 N.H. 173, 178 (1995);

Commercial Union Assocs. v. Clayton, 863 P.2d 29, 34 (Utah Ap p .

1993); see generally U.C.C. § 2-206. But in shipping goods to

Franklin after March 2008, Expedition was not performing any task

indicated in the March 2008 e-mail or the attached terms and

conditions. It was responding to the separately-issued purchase

orders sent by Franklin--which did not themselves contain or

refer to the previously-transmitted terms. C f . Foss Mfg. C o .,

LLC v. S Grp. Auto., LLC, 2009 DNH 037, at 11-12 n.6 (expressing

skepticism about substantially similar argument).

The absence of evidence that the March 2008 terms and

conditions were agreed-to provisions of Expedition's and

Franklin's commercial relationship is a yawning chasm in the

basic premise of FCOP's argument that it essentially "inherited"

those provisions from Franklin. Based on this record, the court

concludes that forum selection clause does not apply to any

purchase orders FCOP issued to Expedition prior to August 20,

2010. Insofar as Expedition's claims are premised on those

purchase orders, they are not dismissed.4

4Even if the court were to find that Expedition agreed that the terms would govern its provision of goods to Franklin, it would have great difficulty concluding that Expedition agreed to

12 The parties agree, however, that the "Standard Terms and

Conditions" that FCOP sent to Expedition on August 20, 2010,

apply to purchase orders issued after that date. Those terms,

like Franklin's March 2008 terms, include a forum selection

clause providing that Expedition "consents, exclusively, to the

adjudication of any dispute . . . by any federal or state court

of competent jurisdiction sitting in [the State of U t a h ] A n d ,

as already noted, one of the purchase orders at issue in this

case was issued after August 20, 2010. FCOP has expressly argued

in its opening memorandum that the forum selection clause in the

August 2010 terms applies to that order. Expedition however, has

advanced no counter-argument, and the court perceives no reason

extend those terms to its relationship with FCOP. As discussed in Part II, supra, after the Consumer Solutions Business Unit formally transitioned from Franklin's ownership to FCOP's, FCOP informed Expedition via e-mail that it was instituting a new purchase order system. Contrary to FCOP's representation in its memorandum, that e-mail did not "inform Expedition that . . . none of the terms and conditions applicable to [the] purchase orders had changed." Memo, in Supp. at 6. Neither that e-mail, nor any other e-mail to Expedition regarding the sale to FCOP, made any reference whatsoever to any terms and conditions. Nor did any of the purchase orders at issue in this case refer to, or purport to incorporate, the terms and conditions. Given that the terms and conditions, on their face, expressly refer to Franklin at least twice, see Exh. F (document no. 25-6) at 2 55 3, 18, the court is at a loss to see how Expedition was even on reasonable notice of FCOP's position that the terms applied to its orders-- let alone accepted that position. Under these circumstances, the court cannot accept FCOP's argument that Expedition bore the onus of "inguiring about any standard terms and conditions that would apply to purchase orders issued by FCOP." Memo, in Supp. at 7.

13 that clause would not require dismissal of Expedition's claims

insofar as they arise from FCOP's alleged nonpayment for that

order. Accordingly, those claims are dismissed.

IV. Conclusion

Based on the foregoing, the court rules that the forum

selection clause only applies to purchase orders postdating

August 20, 2010. Because the majority of the purchase orders at

issue in this case predate that date, the court will not dismiss

this case in its entirety. Any claims related to post-August 20,

2010 purchase orders, however, are subject to the forum selection

clause and are dismissed for improper venue.

SO ORDERED.

Urrited States District Judge

Dated: January 15, 2013

cc: Philip H. Graeter, Esq. Jesse I. Redlener, Esq. Jennifer Turco Beaudet, Esq.