UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
RT Consulting LLC
v. Civil No. 15-cv-132-PB Opinion No. 2016 DNH 036
Kentucky Bankers Association
MEMORANDUM AND ORDER
RT Consulting LLC (“RTC”), a New Hampshire consulting firm,
sued the Kentucky Bankers Association (“KBA”), a trade group
based in Louisville, Kentucky, on a variety of legal theories
that all stem from a claim that KBA breached a Management
Services Agreement (“Agreement”) between the two entities. KBA
has responded with a motion to dismiss (Doc. No. 10) contending
that the court lacks personal jurisdiction and that the
complaint fails to state a viable claim for relief. In the
event that its motion to dismiss is denied, KBA alternatively
claims that the court should transfer the case to the Western
District of Kentucky (Doc. No. 11).
The Agreement includes a forum selection clause that
seemingly precludes both motions, but KBA argues that it is not
subject to the forum selection clause because it was never made
a party to the Agreement. Instead, it contends that RTC contracted with a separate entity that KBA identifies as the
“Kentucky Bankers Association Health and Wealth Benefit Trust.”
For the reasons described below, RTC has alleged sufficient
facts to support its contention that KBA was made a party to the
Agreement. Accordingly, I deny KBA’s motions.
I. BACKGROUND
KBA is a Kentucky corporation that provides employee
benefit plans to banks. See Doc. No. 1 at 1-2. In October
2013, KBA’s president, Ballard W. Cassady, and a representative
of RTC signed the Agreement. In its preamble, the Agreement
states that it is a contract between RTC and an entity named the
“Kentucky Bankers Association (‘KBA’) Health and Welfare Benefit
Program.” Doc. No. 1-1 at 1. Throughout the document, the
Agreement repeatedly refers to this entity as “the Company,”
although an addendum titled “Schedule A” also references “KBA”
and “KBA’s Plan,” specifically noting that “KBA is responsible
for all legal requirements and administrative obligations.” Id.
at 1-7. The Agreement requires that all notices to “the
Company” be sent to Debra Stamper of the “Kentucky Bankers
Association.” Id. at 4. Stamper is KBA’s General Counsel and
Executive Vice President. Doc. No. 1-2.
The Agreement includes a forum selection clause providing 2 that “[a]ny litigation, court action, arbitration, or similar
proceeding shall be brought and litigated in the State of New
Hampshire.” Doc. No. 1-1 at 4. It also includes a termination
provision allowing either party to terminate the Agreement upon
written notice to the other party. Id. at 2. The termination
provision gives the “breaching party” ten business days after
receipt of notice of termination to “cure such default.” Id.
Pursuant to its understanding of the Agreement, RTC
developed an online enrollment and communication service for KBA
in the spring of 2014. Doc. No. 1 at 3. RTC incurred
substantial costs to develop the enrollment and communication
service, but KBA refused to implement it. Id. In response, RTC
notified KBA that its refusal to implement the service was a
breach of the Agreement. Id.
Over the course of 2014, RTC continued to provide services
to KBA pursuant to the Agreement. Id. at 4. In the fall of
2014, RTC expended significant resources to develop a “Wellness
Program” to provide health benefits to KBA’s plan participants.
Id. The parties discussed a proposal to amend the Agreement to
address the Wellness Program, but KBA ignored RTC’s requests to
amend the Agreement and the proposed amendment was never
adopted. Id. at 4-5. Novertheless, RTC implemented the
Wellness Program, getting it “up and running” by January 2015. 3 Id. at 5.
In March 2015, Stamper sent RTC a letter stating that “the
Participating Employer Committee of the KBA Health and Welfare
Benefit Program (‘KBA Program’) has determined that it is
necessary to terminate the relationship pursuant to paragraph
9.b of the Management Services Agreement. . . .” Doc. No. 1-2.
Stamper stated in her letter that she “consider[ed] the 10-day
cure period to have been satisfied” because of “the continued
and repeated requests by the Program for compliance with the
Agreement.” Id. The letter did not specify how RTC had
allegedly breached the Agreement. See id.
Soon after, RTC filed this action, bringing five claims
against KBA: breach of contract; breach of the covenant of good
faith and fair dealing; unjust enrichment; promissory estoppel;
and unfair and deceptive trade practices under Section 358:2 of
the New Hampshire Revised Statutes. Doc. No. 1 at 6-10. KBA
countered with the present motions to dismiss and to change
venue.
II. ANALYSIS
KBA argues that RTC’s complaint must be dismissed because
the court lacks personal jurisdiction over it, and because the
complaint fails to state a viable claim for relief. In the 4 alternative, it argues that the action should be transferred to
the Western District of Kentucky if it is not dismissed.
Because the standards of review that govern these arguments
differ, I deal with each argument separately.
A. Personal Jurisdiction
KBA first moves to dismiss for lack of personal
jurisdiction. When a defendant contests personal jurisdiction,
the plaintiff bears the burden of demonstrating a basis for
jurisdiction. Astro-Med, Inc. v. Nihon Kohden Am., Inc., 591
F.3d 1, 8 (1st Cir. 2009). Because I have not held a hearing on
the motion, RTC must only make a prima facie showing that this
court has personal jurisdiction. See Cossaboon v. Me. Med.
Ctr., 600 F.3d 25, 31 (1st Cir. 2010). A prima facie showing
requires the plaintiff to “proffer[] evidence which, if
credited, is sufficient to support findings of all facts
essential to personal jurisdiction.” Lechoslaw v. Bank of Am.,
N.A., 618 F.3d 49, 54 (1st Cir. 2010) (internal quotation marks
omitted). I consider RTC’s allegations to the extent they are
supported by specific facts set forth in the record and consider
evidence offered by KBA “to the extent that [it is]
uncontradicted.” Cossaboon, 600 F.3d at 31 (internal quotation
marks omitted). I construe the evidence “in the light most
congenial to the plaintiff’s jurisdictional claim,” Hannon v. 5 Beard, 524 F.3d 275, 279 (1st Cir. 2008), but will not “credit
conclusory allegations or draw farfetched inferences.” Negron-
Torres v. Verizon Commc’ns, Inc., 478 F.3d 19, 23 (1st Cir.
2007).
A court’s personal jurisdiction over a defendant residing
outside the forum state ordinarily depends upon whether both the
requirements of the forum state’s long-arm statute and the
Fourteenth Amendment’s due process clause have been satisfied.
Cossaboon, 600 F.3d at 29 n.1. Where, however, the parties have
consented to a forum selection clause, they generally waive the
right to contest personal jurisdiction, and there is no need to
determine whether the defendant has sufficient contacts within
the forum state to satisfy the requirements of the due process
clause. See M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10
(1972) (“[Forum selection] clauses are prima facie valid and
should be enforced unless enforcement is shown by the resisting
party to be ‘unreasonable’ under the circumstances.”); Nat'l
Equip. Rental, Ltd. v. Szukhent, 375 U.S. 311, 315-16 (1964)
(“[I]t is settled . . . that parties to a contract may agree in
advance to submit to the jurisdiction of a given court . . .
.”); E. Bridge, LLC v. Bette & Cring, LLC., 2006 DNH 061, 9
(“[B]y agreeing that litigation arising out of the contract
would be conducted exclusively in a court of competent 6 jurisdiction under New Hampshire law, [the defendant]
voluntarily relinquished any objection that it might have had to
such a court's exercise of personal jurisdiction over it.”).
Here, RTC argues that KBA waived any challenge to personal
jurisdiction by consenting to the Agreement’s forum selection
clause, which mandates that “[a]ny litigation . . . shall be
brought . . . in the State of New Hampshire.” Doc. No. 1-1 at
4. KBA counters that it was not a party to the Agreement, and
thus the forum selection clause does not bind KBA. Instead, it
argues that RTC contracted with the “Kentucky Bankers
Association Health and Welfare Benefit Program,” which KBA
claims is a shorthand reference to the “Kentucky Bankers
Association Health and Wealth Benefit Trust” (the “trust”), a
“stand-alone, non-profit organization separate and distinct from
KBA.” See Doc. No. 10-1 at 1-2. Thus, according to KBA, RTC
contracted with this separate trust, not KBA itself. And,
because the trust functions independently from KBA, the forum
selection clause does not apply.
This argument is unpersuasive. To begin, at this juncture,
I must credit the plaintiff’s factual assertions as true so long
as they assert more than “conclusory allegations” or “farfetched
inferences.” Mass. Sch. of Law at Andover, Inc. v. Am. Bar
Ass’n, 142 F.3d 26, 34 (1st Cir. 1998) (“In conducting the 7 requisite analysis under the prima facie standard, we take
specific facts affirmatively alleged by the plaintiff as true
(whether or not disputed) and construe them in the light most
congenial to the plaintiff’s jurisdictional claim”).
Here, RTC states in its complaint that it entered into the
Agreement with “KBA,” defined as the “Kentucky Bankers
Association.” Doc. No. 1 at 1-2. To support this assertion,
RTC points to the language of the Agreement and certain
extrinsic evidence. First, RTC argues, the Agreement was signed
by Ballard W. Cassady, who is the President and CEO of KBA.
Doc. No. 1-1 at 5. Second, the Agreement requires all notices
to be sent to Debra Stamper of the “Kentucky Bankers
Association.” Id. at 4. Third, Schedule A of the Agreement
notes that “KBA” – not a “Program” or “Trust” – is responsible
for “all legal requirements and administrative obligations with
regard to the Plan.” Id. at 6. Fourth, the word “trust” is
absent from the Agreement. See id. Finally, and perhaps most
fundamentally, RTC maintains that it simply does not make sense
that RTC would contract with a “Benefit Program,” which does not
appear to be a legal entity, rather than KBA itself, which is an
association that administers benefit programs. These arguments
are persuasive at least for purposes of the present motion, and
therefore I credit RTC’s assertion that KBA was a party to the 8 Agreement.1
With this understanding, I turn now to the Agreement’s
forum selection clause. “Under federal law, the threshold
question in interpreting a forum selection clause is whether the
clause at issue is permissive or mandatory.” Rivera v. Centro
Medico de Turabo, Inc., 575 F.3d 10, 17 (1st Cir. 2009).
Permissive forum selection clauses merely “authorize
jurisdiction in a designated forum;” mandatory clauses authorize
jurisdiction only in that forum, to the exclusion of others.
Id. To be mandatory, “a forum selection clause must contain
language that clearly designates a forum as the exclusive one.”
Arguss Commc'ns Grp., Inc. v. Teletron, Inc., 2000 WL 36936, at
*6 (D.N.H. Nov. 19, 1999) (internal quotations omitted).
The forum selection clause at issue in this case provides
that “[a]ny litigation, court action, arbitration, or similar
proceeding shall be brought and litigated in the State of New
Hampshire.” Doc. No. 1-1 at 4. This is mandatory language.
The clause states that “any” litigation “shall” be brought in
1 Even if, as KBA contends, the contract was between RTC and the Trust, the proffered facts would support a claim that KBA, through the actions of its CEO, was acting as an undisclosed agent for the Trust when he signed the Agreement. If so, both KBA and the Trust would be deemed to be parties to the Agreement, who are bound by the Agreement’s forum selection clause under basic principles of agency law. See Restatement (Third) of Agency § 6.03. 9 New Hampshire. Id. According to First Circuit precedents, the
word “shall” carries a “mandatory sense.” Rivera, 575 F.3d at
17, n.5 (describing “shall” as a “typical mandatory term”);
Summit Packaging Sys., Inc. v. Kenyon & Kenyon, 273 F.3d 9, 12
(1st Cir. 2001) (describing the word “will” as “commonly having
the mandatory sense of ‘shall’ or ‘must’”); Barletta Heavy Div.,
Inc. v. Erie Interstate Contractors, Inc., 677 F. Supp. 2d 373,
376 (D. Mass. 2009) (“[T]he First Circuit has found words such
as ‘shall,’ which carry a ‘mandatory sense,’ to demonstrate
parties' exclusive commitment to the named fora.”). Moreover,
the Agreement does not say that only certain types of litigation
belong in New Hampshire; it states that “any litigation, court
action, arbitration, or similar proceeding” shall be brought in
New Hampshire. Doc. No. 1-1 at 4 (emphasis added). This broad
language reflects the parties’ intentions to make New Hampshire
the exclusive venue for any legal dispute. Cf. Paper Exp., Ltd.
v. Pfankuch Maschinen GmbH, 972 F.2d 753, 756 (7th Cir. 1992)
(“The phrase ‘shall be filed,’ coupled with the phrase ‘all
disputes,’ clearly manifests an intent to make venue compulsory
and exclusive.”). As such, the forum selection clause is
mandatory.
Mandatory forum selection clauses, like this one, carry a
“strong presumption of enforceability.” Rivera, 575 F.3d at 18. 10 This presumption may be overcome only by establishing one or
more of four factors: “(1) the clause was the product of fraud
or overreaching; (2) enforcement would be unreasonable and
unjust; (3) proceedings in the contractual forum will be so
gravely difficult and inconvenient that the party challenging
the clause will for all practical purposes be deprived of his
day in court; or (4) enforcement would contravene a strong
public policy of the forum in which suit is brought . . . .”
Rafael Rodriguez Barril, Inc. v. Conbraco Indus., Inc., 619 F.3d
90, 93 (1st Cir. 2010) (internal alterations, citations, and
quotations omitted). Thus, “the forum clause should control
absent a strong showing that it should be set aside.” M/S
Bremen, 407 U.S. at 15.
KBA makes no such showing here. It does not address the
four factors described above. Instead, it puts forward two
unrelated arguments: first, that several of RTC’s claims “do not
involve the Agreement;” and second, that the clause is “so vague
and ambiguous as to be incapable of enforcement.” Doc. No. 11-1
at 7-8. These arguments are unconvincing.
First, RTC’s claims do involve the Agreement. The
Agreement provides the entire basis for the two parties’
relationship; RTC furnished services to KBA’s plan participants
pursuant to the Agreement. RTC’s unjust enrichment, promissory 11 estoppel, and consumer protection claims all arise from its
understanding of its contractual relationship with KBA, which is
grounded in the Agreement.
Second, rather than being too vague, the forum selection
clause is actually quite clear: it states simply that any
litigation shall be brought in New Hampshire. KBA criticizes
the clause for not containing language limiting it to litigation
arising under the Agreement, but cites no cases requiring
inclusion of this type of language for a clause to be
enforceable. The clause therefore controls.
The remaining personal jurisdiction analysis is
straightforward. By agreeing that any litigation arising from
the contract would be conducted in New Hampshire, KBA
“voluntarily relinquished any objection that it might have had
to such a court's exercise of personal jurisdiction over it.”
E. Bridge, LLC, 2006 DNH at 9; see also Provanzano v. Parker
View Farm, Inc., 827 F. Supp. 2d 53, 58 (D. Mass. 2011) (“By
signing a forum selection clause, however, a party to a contract
waives its right to challenge personal jurisdiction.”); Inso
Corp. v. Dekotec Handelsges, mbH, 999 F. Supp. 165, 166 (D.
Mass. 1998) (“A party to a contract may waive its right to
challenge personal jurisdiction by consenting to personal
jurisdiction in a forum selection cause.”). As such, this court 12 may properly assert personal jurisdiction over KBA, and KBA’s
personal jurisdiction motion fails.
B. Failure to State a Claim
KBA next brings a motion to dismiss for failure to state a
claim, marshalling essentially the same argument it made to
contest personal jurisdiction: that KBA was never a party to the
Agreement. KBA mounts no specific challenges to any of RTC’s
individual claims. Accordingly, for the reasons discussed
above, RTC has alleged sufficient facts to establish that KBA
was a party to the Agreement. Because KBA presents no other
argument in support of its motion to dismiss for failure to
state a claim, this motion is denied as well.
C. Change of Venue
KBA argues in the alternative that I should transfer venue
to the Western District of Kentucky. 28 U.S.C. § 1404(a)
provides that “[f]or the convenience of 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 of proof rests with the
party seeking transfer; there is a strong presumption in favor
of the plaintiff’s choice of forum.” Jackson Nat’l Life Ins.
Co. v. Economou, 557 F. Supp. 2d 216, 219-20 (D.N.H. 2008)
(quoting Coady v. Ashcraft & Gerel, 223 F.3d 1, 11 (1st Cir. 13 2000)). The court has “wide latitude” in determining whether to
grant a motion to transfer venue. Id. at 220 (citing Auto
Europe, LLC v. Conn. Indem. Co., 321 F.3d 60, 64 (1st Cir.
2003)).
When the contract at issue contains a valid mandatory forum
selection clause, “a proper application of § 1404(a) requires
that a forum-selection clause be given controlling weight in all
but the most exceptional cases.” Atl. Marine Const. Co. v. U.S.
Dist. Court for W. Dist. of Tex., 134 S. Ct. 568, 579, 581
(2013) (internal quotations omitted) (“The enforcement of valid
forum-selection clauses, bargained for by the parties, protects
their legitimate expectations and furthers vital interests of
the justice system.”). Courts evaluating a § 1404(a) motion to
transfer in cases involving a forum selection clause “should not
consider arguments about the parties’ private interests,” such
as litigation costs or the convenience of witnesses. Id. at
582. Rather, they may consider only “public-interest factors,”
such as court congestion, but these factors will “rarely defeat
a transfer motion.” Id. at 581-82, 581 n.6.
As I have explained, KBA cannot avoid the effect of the
Agreement’s forum selection clause by claiming either that it
was not made a party to the Agreement or that the forum
selection clause was permissive rather than mandatory. 14 Accordingly, the only argument that is left to KBA to support
its change of venue motion is to cite what it refers to as
“1404(a) factors,” including the convenience of witnesses and
the fact that the events at issue largely transpired in
Kentucky. These factors, however, relate to “private
interests,” and are therefore inapplicable here since the
parties agreed to a mandatory forum selection clause. Id. at
581-82, 581 n.6 (“[P]rivate interests include relative ease of
access to sources of proof; availability of compulsory process
for attendance of unwilling, and the cost of obtaining
attendance of willing, witnesses; possibility of view of
premises, if view would be appropriate to the action; and all
other practical problems that make trial of a case easy,
expeditious and inexpensive.”) (punctuation omitted). As such,
KBA has not persuaded me that this is an “exceptional case[]”
where the mandatory forum selection clause should not control,
and I therefore decline to transfer the case. See id. at 582
(“Whatever inconvenience the parties would suffer by being
forced to litigate in the contractual forum as they agreed to do
was clearly foreseeable at the time of contracting.”) (internal
alterations and quotations omitted); E. Bridge, LLC, 2006 DNH at
12 (“[T]he contract's mandatory forum selection clause weighs
heavily against transfer.”). 15 III. CONCLUSION
For the reasons stated above, I deny KBA’s motion to
dismiss (Doc. No. 10) and its motion to change venue (Doc. No.
11).
SO ORDERED.
/s/Paul Barbadoro Paul Barbadoro United States District Judge
February 26, 2016
cc: K. Neil Austin, Esq. Stephen Bychowski, Esq. Jeffrey S. Follett, Esq. Eric M. Jensen, Esq. John T. McGarvey, Esq. Michele E. Kenney, Esq.