United States District Court, W.D. Arkansas, Fayetteville Division
4M DESIGN RESOURCES, INC. PLAINTIFF
YELL STEEL ENTERPRISE CO., INC. DEFENDANT
MEMORANDUM OPINION AND ORDER
Timothy L. Brooks Judge.
before the Court are Defendant and Counterclaimant Yell Steel
Enterprise Co., Inc.'s ("Yell Steel") Motion to
Transfer (Doc. 21) and Brief In Support (Doc. 22), Plaintiff
4M Design Resources, Inc.'s ("4M") Response in
Opposition (Doc. 25), and Yell Steel's Reply (Doc. 29).
The Court held a hearing on the Motion on March 26, 2018, and
the parties presented oral argument. Now having considered
the argument and briefing, the Court GRANTS
the Motion to Transfer (Doc. 21) for the reasons set forth in
the following Opinion.
an Arkansas corporation with a principal place of business in
Bentonville, Arkansas. Terri Miller is the sole shareholder
and employee of 4M. Yell Steel is a California corporation
that produces athletic apparel and related items and
maintains a principal place of business in Irvine,
California, and an office in Bentonville, Arkansas. In
September of 2008, Yell Steel entered into a contract with
Ms. Miller, through her company 4M, and engaged her to
solicit sales of Yell Steel's merchandise to Wal-Mart
Stores, Inc. ("Walmart") and Walmart's
subsidiaries and affiliates. The parties agree that Ms.
Miller was Yell Steel's sales representative and was paid
for her services through a commission-based payment schedule.
parties' 2008 Agreement (Doc. 13-2) was intended to last
for a period of two years, with a provision that the term
would be automatically renewed every two years for another
two-year term, provided that the parties did not otherwise
terminate the Agreement. Yell Steel agreed to advance 4M $5,
000 per month, which would serve as a draw against any
commission earned during that month. Yell Steel also agreed
to pay 4M a 1.25% commission on "all sales and
subsequent shipments made in any calendar year, "
provided that 4M procured over $13, 000, 000 in sales.
Id. at 2. This additional commission was conditioned
on 4M "securing a minimum of thirteen million dollars
($13, 000, 000US) for parent company, Taiwan based Yell Steel
Group (YSG)." Id. The parties immediately began
performing under the terms of the 2008 Agreement, even though
they never signed the Agreement.
January 1, 2011, the parties entered into a new contract that
was much the same as the old one, with the exception being
that the 2011 Agreement increased 4M's draw to $8, 000
per month and lowered 4M's commission rate to 0.85%
"on all sales and subsequent shipments made in any
calendar year." (Doc. 13-3, p. 2). In addition, the 2011
Agreement no longer provided for automatic renewal, but
instead contemplated that the contract would be
"re-negotiated" every two years. Id. at 1.
The 2011 Agreement was also unsigned, but the parties began
performing under its terms immediately.
August 6, 2013, the president of Yell Steel, Stuart Solkow,
sent an email to Ms. Miller at 4M, with the subject line:
"2014/15 Budgets and Compensation." (Doc. 13-4, pp.
1). The body of the email read: "Here you go. Please
call to discuss." The email attached a one-page
spreadsheet listing a revised compensation/commission plan
for 4M based on projected sales, and a projected budget for
expenses related to Yell Steel's Bentonville office and
staff, which Ms. Miller managed. See Id. at 2. The
parties continued performing under the terms of their 2011
Agreement, though the compensation structure had changed.
asserts that at some point Yell Steel stopped paying 4M its
due commissions. Then, in March of 2015, 4M unilaterally
terminated the parties' business relationship. On
November 9, 2017, 4M filed the instant lawsuit to recover
allegedly unpaid commissions from 2015 and 2016. On February
16, 2018, Yell Steel filed its Answer to 4M's Amended
Complaint, along with a Counterclaim for breach of contract,
fraud, and tortious interference, and a Motion to Transfer
the case to the Central District of California pursuant to a
forum-selection clause from the 2011 Agreement. The
forum-selection clause states the following:
The parties agree that in connection with any claims or
contests relating to this Agreement, such claims or contests
shall be brought in the Federal District Court of the United
States in the State of California, County of Los Angeles.
(Doc. 13-3, p. 3).
4M admits that the 2008 and 2011 Agreements contained the
same forum-selection clause, 4M believes that the 2011
Agreement technically expired in December of 2012, and that
Mr. Solkow's August 2013 email created a brand new
contract between the parties that failed to reference and
incorporate any of the terms from the 2011
Agreement-including the forum-selection clause. In the
alternative, 4M argues that if the Court determines that the
forum-selection clause is legally valid, the Arkansas Sales
Representative Commission Act ("ASRCA") applies to
the claims at issue in this case, and the strong public
policy supporting the ASRCA favors laying venue for all ASRCA
disputes in Arkansas and voiding forum-selection clauses that
purport to lay venue elsewhere.
part, Yell Steel believes that Mr. Solkow's email only
modified the compensation/commission plan for 4M in 2013 and
did not affect the other provisions of the 2011 Agreement,
including the forum-selection clause that remained in effect
by virtue of the parties' continued performance. As for
the ASRCA, Yell Steel points out that the statute only covers
sales-commission agreements between those defined as
"sales representatives" and those defined as
"principals." Yell Steel contends that it does not
qualify as a principal under the plain language of the ASRCA,
since a principal is defined as one who "[d]oes
not have a permanent or fixed place of
business" in Arkansas, Ark. Code Ann. § 4-70-301
(2)(A) (emphasis added), and the parties do not dispute the
fact that Yell Steel staffs a physical office space located
in Bentonville, Arkansas.
following discussion, the Court will first consider whether
the forum-selection clause is legally valid. Next, the Court
will consider whether the forum-selection clause is
enforceable here, in light of the ASRCA's strong public
policy in favor of litigating certain sales-commission
disputes in Arkansas.