United States District Court, W.D. Arkansas, Fayetteville Division
MEMORANDUM OPINION AND ORDER
Timothy L. Brooks, Judge
before the Court is Defendant's Motion to Transfer (Doc.
11) and Brief in Support (Doc. 12), and Plaintiff's
Response in Opposition (Doc. 14) and Brief in Support (Doc.
15). On September 25, 2017, the Court conducted a hearing and
DENIED the Motion to Transfer from the
bench. The purpose of this Opinion and Order is to
memorialize the bases for the Court's ruling. To the
extent anything in this Order differs from what the Court
stated from the bench, this Opinion and Order shall control.
Advanced International Marketing, LLC ("AIM") is an
Illinois limited liability company with a principal place of
business in Algonquin, Illinois. Defendant LXR Biotech, LLC
("LXR") is a Michigan limited liability company
with a principal place of business in Auburn Hills, Michigan.
AIM is a sales representative company. LXR is a manufacturing
company that produces various products including liquid
energy shots that are sold in retail and convenience stores.
August 5, 2014, the parties entered into an agreement
("Agreement") where they contracted that AIM would
serve as LXR's sales representative for all LXR products
within AIM'S market territory. The Agreement
states that the parties' initial Term of Agreement is
five years and that AIM will be compensated based on a
Performance Fee. Specifically, LXR contracted to pay AIM five
percent of its net sales. Concerning the Walmart account, LXR
agreed to pay AIM on sales made to Walmart only for monthly
sales in excess of the lower of "net sales dollars
shipped to Walmart during the 30 days immediately prior to
the execution of this Agreement or the equivalent sales
dollars of 300, 000 2.0 oz. bottles of LXR products."
(Doc. 1-1, p. 6). Along with commissions, LXR agreed to send
AIM commission statements that displayed commission
calculations and a list of invoices covered by the commission
statement. Id. at 7.
alleges that it successfully sold LXR's products to both
Walmart and Walgreens. Eventually, AIM asserts, LXR stopped
paying AIM its due commissions for the Walmart and Walgreens
accounts and failed to provide AIM with any commission
statements. In February, 2016, LXR unilaterally terminated
the Agreement pertaining to the Walmart account. Following
the termination, AIM alleges that it sought to cure the
failure in performance and recover its earned commissions for
the Walmart account. However, LXR did not pay, provide
commission statements, or effectively communicate with AIM.
17, 2017, AIM filed suit in this Court. Principally, AIM
alleges that LXR breached its agreement with AIM, breached
the implied covenant of good faith and fair dealing, and
violated the Arkansas Sales Representative Commission Act
("ASRCA"). On July 28, 2017, LXR filed its answer
to AIM'S Complaint; it denied all of AIM'S
allegations and asserted a lack of jurisdiction, improper
venue, and various affirmative defenses. Along with its
answer, LXR also filed a Motion to Transfer (Doc. 11) the
case to the U.S. District Court for the Eastern District of
Michigan pursuant to 28 U.S.C. § 1404(a). This Motion
centers around the Agreement's forum-selection clause.
The clause states:
This Agreement shall be construed and governed in accordance
with the laws of the State of Michigan and the federal laws
of the United States applicable therein, without regard to
principles of conflict of law, and any action arising out of
this Agreement shall be bought in the courts of Michigan or
Federal Court located in the Eastern District of Michigan.
(Doc. 1-1, p. 8). Additionally, LXR argues that AIM
"flouted" the Agreement by ignoring the
forum-selection clause and filing suit in Arkansas. (Doc. 12,
August 11, 2017, AIM filed its response opposing LXR's
Motion to Transfer (Doc. 14) while admitting that the
Agreement contains a forum-selection clause. AIM contends
that the forum-selection clause is void due to the
application of the ASRCA, which is an Arkansas statute.
See Doc. 15, pp. 3-5.
Enforceability of the Forum Selection Clause
a forum-selection clause is valid is a procedural question
that is governed by federal law. Bright Harvest Sweet
Potato Co., Inc. v. H.J. Heinz Co., LP., 2013 WL
2458685, at *2 (W.D. Ark. June 6, 2013). "When the
parties have agreed to a valid forum-selection clause, "
the district court should transfer the case to the
pre-negotiated jurisdiction. Atl. Marine Const. Co., Inc.
v. U.S. Dist. Ct. for the W.D. of Tex., 134 S.Ct. 568,
581 (2013). Only in narrow, "extraordinary circumstances
unrelated to the convenience of the parties should a [motion
to transfer pursuant to] § 1404(a) be denied."
Id.; see also M/S Bremen v. Zapata Off-Shore Co.,
407 U.S. 1, 15 (1972) (forum-selection clauses are prima
facie valid, and "the forum clause should control absent
a strong showing that it should be set aside"). The
Eighth Circuit has reaffirmed this holding. See M.B.
Restaurants, Inc. v. CKE Restaurants, Inc., 183 F.3d
750, 752 (8th Cir. 1999) (citing Carnival Cruise Lines,
Inc. v. Shute, 499 U.S. 585, 590-95 (1991))
("[Forum-selection clauses] are enforceable unless they
would actually deprive the opposing party of [its] fair day
in court."). The party challenging a forum-selection
clause bears a "heavy burden of proof when trying to
avoid its enforcement. Servewell Plumbing, LLC v. Fed.
Ins. Co., 439 F.3d 786, 789 (8th Cir. 2006) (citing
Bremen, 407 U.S. at 17).
Appropriateness of ...