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Ford v. Ef Explore America, Inc.

United States District Court, D. New Jersey

July 31, 2019

NATASHA FORD, individually and on behalf of her minor child C.F. Minor, Plaintiffs,
v.
EF EXPLORE AMERICA, INC.; HOLIDAY HOSPITALITY FRANCHISING, INC.; HOLIDAY CLARK, LLC; U.S. SECURITY ASSOCIATES, INC., Defendants.

          OPINION

          KEVIN McNULTY. U.S.D.J.

         Natasha Ford brings this diversity action individually and on behalf of her child, C.F. (together, "Ford"). The action arises from an educational tour to the New York area that took place in June 2017. Defendant EF Explore America, Inc. ("EF"), located in Massachusetts, is in the business of organizing and sponsoring tours. Defendant Holiday Hospitality Franchising, Inc., states that it is a franchising entity. Holiday Clark, LLC operates a lodging facility in Clark, New Jersey. (These two defendants are collectively referred to as "Holiday.") Defendant U.S. Security Associates, Inc. ("U.S. Security") provided a guard. The guard's job was to ensure the security of the children while they were staying at the Holiday Inn in Clark, New Jersey. The complaint alleges that the guard roused some of the boys in the middle of the night, tried to show pornography to C.F., who was 13 years old at the time, touched him sexually through his clothing, and tried to get in the shower with him, [1]

         This matter comes before the court on the renewed motion (DE 53) of defendant EF under 28 U.S.C. § 1404(a) to dismiss or transfer venue to the U.S. District Court for the District of Massachusetts, pursuant to a contractual forum-selection clause. For the reasons stated herein, the motion to transfer venue will be granted.

         In a prior Opinion & Order ("Op.", DE 49) I found that the forum-selection clause was valid and enforceable as between EF and Ford. I also found, however, that the papers had failed to discuss the effect of the presence of other defendants who are not parties to the contract or its forum selection clause. Under recent Third Circuit case law, a different and potentially complex analysis is required in that situation. See In re: Howmedica Osteonics Corp, 867 F.3d 390, 402 (3d Cir. 2017), cert, denied, 138 S.Ct. 1288 (2018). I therefore denied the motion without prejudice to refiling within 21 days. In doing so, I ordered all defendants to state their legal and factual positions on the motion to transfer under the Howmedia factors.

         EF refiled its motion (DE 53), this time with a discussion of the Howmedica factors. The plaintiffs have filed a response (DE 60), and EF has filed a Reply. (DE 61) I heard oral argument in open court on July 31, 2019.

         The remaining defendants did not, as ordered, make separate submissions stating their positions on the motion, impeding the Court's analysis of the relevant factors. In response to my questioning at oral argument, however, counsel for the Holiday defendants and U.S. Security stated that they do not oppose transfer. Both committed on behalf of their clients that, if the case were transferred, they would submit to die jurisdiction of the U.S. District Court for the District of Massachusetts and would not contest personal jurisdiction or service.

         Based on that concession and an analysis of the relevant factors, I will grant the motion to transfer venue of the entire case to the District of Massachusetts.[2]

         DISCUSSION

         Familiarity with my prior Opinion (DE 49) is assumed; this Opinion should be read as a supplement to it. I have already found the Massachusetts forum-selection clause in the contract between Ford and EF to be valid and enforceable as between those two parties.[3] (Op. pp. 2-5) The remaining issue is whether that clause should be overridden based on the presence of other defendants who were not parties to that contract. For the reasons stated herein, I answer that question in the negative and grant the motion to transfer venue to the District of Massachusetts.

         The issue is governed by the "four-step analysis" dictated by Howmedica, supra. In my prior Opinion I quoted the steps thus:

Step One: Forum-Selection Clauses. At the first step, the court assumes that Atlantic Marine applies to parties who agreed to forum-selection clauses and that, "[i]n all but the most unusual cases," claims concerning those parties should be litigated in the for a designated by the clauses. Atl. Marine, 134 S.Ct. at 583. . . .
Step Two: Private and Public Interests Relevant to Non-Contracting Parties. Second, the court performs an independent analysis of private and public interests relevant to non-contracting parties, just as when adjudicating a § 1404(a) transfer motion involving those parties in the absence of any forum-selection clauses. . . . [C]ourts at Step Two should consider the private and public interests "of the parties who have not signed a forum-selection agreement." ... If, at this juncture, the Step One and Step Two analyses point to the same forum, then the court should allow the case to proceed in that forum, whether by transfer or by retaining jurisdiction over the entire case, and the transfer inquiry ends there.
Step Three: Threshold Issues Related to Severance. Third, if the Step One and Step Two analyses point different ways, then the court considers severance. See Fed. R. Civ. P. 21. In some cases, severance clearly will be warranted to preserve federal diversity jurisdiction; to cure personal jurisdiction, venue, or joinder defects; or to allow for subsequent impleader under Federal Rule of Civil Procedure 14. In such cases, the court should sever and transfer claims as appropriate to remedy jurisdictional and procedural defects. If only one severance and transfer outcome satisfies the constraints identified at this step, then the court adopts that outcome and the transfer inquiry ends. But if more than one outcome satisfies the threshold severance constraints, then the court continues to Step Four.
In other cases, severance is clearly disallowed, such as when a party is indispensable under Federal Rule of Civil Procedure 19(b). ... In these cases, the court cannot sever, . . . and the case must continue with all parties present in a forum where jurisdiction and venue are proper as to the indispensable party, which could be either the originating district court or the court to which transfer is sought. If jurisdiction and venue are proper as to the indispensable party in only one of those courts, then the transfer inquiry ends there and the case must continue in that court. If, however, jurisdiction and venue are proper as to the indispensable partly in both the originating court and the proposed transferee court, then, in deciding where the whole case should proceed, the court proceeds to Step Four.
Likewise, in cases where severance is neither clearly warranted nor clearly disallowed and is therefore committed to the court's discretion (such as when there are no indispensable parties or defects in jurisdiction, venue, or joinder), the court goes on to select the appropriate for a based on a combination of interests addressed at the next step.
Step Four: Efficiency and Non-Contracting Parties' Private Interests. Fourth, a district court exercises its discretion (which we will review for abuse of discretion) in choosing the most appropriate course of action, . . . but it measures its decision against two key sets of interests. On the one hand, the court considers efficiency interests in avoiding duplicative litigation, . . . taking into account case management techniques that can reduce inefficiencies accompanying severance, ... as well as any other public interests that may weigh against enforcing a forum-selection clause .... On the other hand, the court also considers the non-contracting parties' private interests and any prejudice that a particular transfer decision would cause with respect to those interests.
In exercising its discretion to determine whether it should retain the case in its entirety, transfer the case in its entirety, or sever certain parties or claims in favor of another forum, the court considers the nature of any interests weighing against enforcement of any forum-selection clause; the relative number of non-contracting parties to contracting parties; and the non-contacting parties' relative resources, keeping in mind any jurisdiction, venue, or joinder defects that the court must resolve. Only if it determines that the strong public interest in upholding the contracting parties' settled expectations is "overwhelmingly" outweighed by the countervailing interests can the court, at this fourth step, decline to enforce a valid forum-selection clause.

Howmedica, 867 F.3d at 403-05 (citing Atlantic Marine Construction Co. v. U.S. District Court, 571 U.S. 49, 134 S.Ct 568 (2013)). Where, as here, the competing fora are both within the federal court system, Atlantic Marine prescribes a transfer of venue, rather than the alternative remedy of dismissal. 571 U.S. at 60.

         Based on the submissions, as supplemented by oral argument, I will undertake an ...


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