Opinion

CajunLand Pizza, LLC v. Marco's Franchising, LLC

Court: District Court, E.D. Louisiana
Filed: Mar 10, 2020
Cited by: 0 cases
Authority: More cited than 22.2%

“A “choice-of-law analysis to determine what substantive law should guide this court’s interpretation of the [forum selection clause] is proper under ordinary principles governing diversity litigation.”

How later courts described this case

“A “choice-of-law analysis to determine what substantive law should guide this court’s interpretation of the [forum selection clause] is proper under ordinary principles governing diversity litigation.”
“When the ‘interpretation’ of a forum-selection clause is at issue in a diversity case, however, we apply the forum state’s choice-of-law rules to determine what substantive law governs.”

Written by the judges who cited it.

The opinion

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

CAJUNLAND PIZZA, LLC, et al. CIVIL ACTION

VERSUS CASE NO. 19-10366

MARCO’S FRANCHISING, LLC, et al. SECTION: “G”(3)

ORDER AND REASONS

Before the Court is Defendants Marco’s Franchising, LLC (“Marco’s Franchising”),

Marco’s Pizza Holdings, LLC (“Marco’s Pizza Holdings”), and Tony Libardi’s (“Libardi”)

(collectively, “Defendants”) “Motion to Transfer Actions Under U.S.C. § 1404 or to Dismiss for

Lack of Subject Matter Jurisdiction and Failure to State a Claim Upon Which Relief May be

Granted.”1 In the Motion, Defendants request that this Court transfer this action to the United

States District Court for the Northern District of Ohio, in accord with the forum selection clauses

agreed to by the parties.2 Having considered the motion, the memoranda in support and in

opposition, the record, and the applicable law, the Court grants Defendant’s motion in part and

transfers this case to the Northern District of Ohio.

I. Background

On May 14, 2019, Plaintiffs, CajunLand Pizza, LLC (“CajunLand Pizza”), Ole Tyme

Pizza, LLC (“Ole Tyme Pizza”), Crescent City Pizza, LLC (“Crescent City Pizza”), Partners

Pizza, LLC (“Partners Pizza”), SELA PIZZA No 1 LLC (“SELA No. 1”), and SELA PIZZA No

1 Rec. Doc. 13.

2 Id. at 1. In the alternative, Defendants argue this action should be dismissed for lack of subject matter

jurisdiction because the Complaint fails to plead “complete diversity.” Id. Lastly, and in the alternative, Defendants

argue that Counts I and II of the Complaint should be dismissed for failure to state a claim upon which relief may be

granted. Id.

2, LLC (“SELA No. 2”) (collectively, “Plaintiffs”) filed a Complaint in this Court naming as

Defendants Marco’s Franchising, LLC (“Marco’s Franchising”), Marco’s Pizza Holdings, LLC

(“Marco’s Pizza Holdings”), and Tony Libardi (“Libardi”) (collectively, “Defendants”).3

Plaintiffs bring claims against Defendants for compensatory damages, restitution, costs of suit,

attorney’s fees, and declaratory judgment.4

According to the Complaint, Marco’s Franchising is a pizza franchising operation that

sells Marco’s Pizza franchises.5 Plaintiffs allege that on December 10, 2009, CajunLand Pizza

and Defendant Marco’s Franchising entered into an “Area Representative Agreement,” which

obligates purchasers to develop and service multiple franchise stores within a designated area.6

By the end of 2010, CajunLand Pizza opened two stores, both of which it owned (SELA No. 1

and SELA No. 2), and eventually opened and developed a total of six stores.7 Plaintiffs allege

that in January of 2016 Marco’s Franchising terminated the Area Representative Agreement with

CajunLand Pizza.8

Plaintiffs allege that after several years of operations, Plaintiffs expressed their desire to

sell their stores to a franchisee in Florida named Ketan Desai (“Desai”).9 Plaintiffs allege that on

November 3, 2017, Marco’s Franchising issued its written approval of the purchase to both the

3 Rec. Doc. 1.

4 Id. at 1.

5 Id. at 4.

6 Id. at 5, 8.

7 Id. at 8, 12.

8 Id. at 13.

9 Id. at 14.

buyer and the sellers.10 However, Plaintiffs allege that Marco’s Franchising later requested that

Plaintiffs transact with different buyers, Dan Cook (“Cook”) and Travis Worley (“Worley”).11

Plaintiffs allege that Cook’s offer to purchase the same stores was 40% lower than the sale price

offered by Desai, and thus unacceptable to Plaintiffs.12 According to the Complaint, less than a

week before the scheduled closing, on May 16, 2018, Marco’s Franchising advised Plaintiffs that

they were withdrawing their earlier written consent and stopping the transaction.13

Plaintiffs allege that this reversal left them in a difficult position.14 Plaintiffs allege that

on June 1, 2018, Marco’s Franchising closed the location owned by Plaintiff Partner’s Pizza,

citing health and safety concerns.15 Plaintiffs allege that Ole Tyme Pizza similarly closed and sold

its equipment.16 Plaintiffs allege that SELA No. 2 closed its doors on July 15, 2018.17 According

to Plaintiffs, in November 2018, Crescent City Pizza sold its franchise for one quarter of the price

it would have received if the sale to Desai had been permitted to close.18 Plaintiffs allege that on

December 26, 2018, SELA No. 2 was informed that its franchise was terminated.19 Accordingly,

Plaintiffs bring claims against Defendants under the Louisiana Unfair Trade Practices Act

10 Id.

11 Id. at 15.

12 Id.

13 Id. at 16.

14 Id.

15 Id.

16 Id. at 18.

17 Id. at 19.

18 Id.

19 Id. at 20.

(“LUTPA”) and for tortious interference of a contract.20

Defendants filed the instant motion on July 24, 2019.21 On August 7, 2019, the Court

granted Plaintiff’s “Exparte Unopposed Motion to Change the Submission Date from August 28,

2019 to September 11, 2019.”22 Plaintiffs filed an opposition on September 3, 2019.23 Defendants,

with leave of Court, filed a reply in further support of the motion on September 16, 2019.24

On January 17, 2020, the Court found that Plaintiffs did not properly plead complete

diversity in the Complaint.25 In particular, Plaintiffs failed to adequately plead the citizenship of

the Plaintiff limited liability companies.26 Rather than grant the motion to dismiss, the Court

allowed Plaintiffs the opportunity to proffer additional evidence as to the citizenship of the

parties.27 On January 27, 2020, Plaintiffs filed a “Factual Support for Diversity Jurisdiction.”28 In

the filing, Plaintiffs stated that there is complete diversity because the members of each Plaintiff

limited liability company is a citizen of Louisiana.29 In support, Plaintiff attached an affidavit

executed by Scott Escarra (“Escarra”), Chairman of the Board of CajunLand Pizza, who states

that each of the individual members of each Plaintiff LLC are citizens of Louisiana.30

20 Id. at 23-28.

21 Rec. Doc. 13.

22 Rec. Doc. 20.

23 Rec. Doc. 22.

24 Rec. Doc. 28.

25 Rec. Doc. 35.

26 Id.

27 Id.

28 Rec. Doc. 36.

29 Id. at 1.

30 Rec. Doc. 36-1.

Defendants had previously provided a declaration of Ashley Weis (“Weis”), the Director

of Legal Services for Defendants to show their citizenship.31 Weis states that Marco’s

Franchising, LLC’s only member is Marco’s Pizza Holdings, LLC.32 Weis attests that there are

62 members of Marco’s Pizza Holdings, including 25 individuals, six corporations, six limited

liability companies, one limited partnership, and 24 trusts.33 Weis states that Marco’s Pizza

Holdings is a citizen of at least 14 different states, namely: Alabama; California; Florida; Illinois;

Indiana; Kentucky; Michigan; New Jersey; Ohio; Rhode Island; South Carolina; South Dakota;

Texas; and Utah.34 Finally, Defendants assert that Defendant Libardi is a citizen of Florida for

diversity purposes.35

Based on the submissions of the parties, the Court is satisfied that it has subject matter

jurisdiction over the case. Every member of each Plaintiff LLC is a citizen of Louisiana.36

Marco’s Pizza Holdings is a citizen of at least 14 different states, namely: Alabama; California;

Florida; Illinois; Indiana; Kentucky; Michigan; New Jersey; Ohio; Rhode Island; South Carolina;

South Dakota; Texas; and Utah.37 Accordingly, the Court is satisfied that complete diversity

exists between the parties.

31 Rec. Doc. 13-1 at 16-17.

32 Rec. Doc. 13-9 at 1.

33 Id. at 2.

34 Id. at 3.

35 Rec. Doc. 13-1 at 17, n.75.

36 Rec. Doc. 36.

37 Rec. Doc. 13-9 at 3.

II. Parties’ Arguments

A. Defendants’ Arguments in Support of the Motion

In the instant motion, Defendants contend that pursuant to the mandatory forum selection

clauses Plaintiffs signed, this action should be transferred under 28 U.S.C. § 1404 to the Northern

District of Ohio.38 Defendants contend that all Plaintiffs agreed to mandatory forum selection

clauses.39 Defendants argue that the five “Franchisee-Plaintiffs” signed franchise agreements

which state “[a]ll litigation, court proceedings, lawsuits, arbitration proceedings and other

hearings must and will be venued exclusively in Toledo, Ohio.”40 Additionally, Defendants

contend that CajunLand Pizza signed an “Area Representative Agreement” (“ARA”) which states

“any action brought by [CajunLand Pizza] against Franchisor [Marco’s Franchising] ‘shall be

brought within such state and in the judicial district in which Franchisor has its principal place of

business.’”41 Defendants argue that these forum selection clauses are mandatory.42

Defendants contend that a defendant may enforce a forum selection clause through the

doctrine of forum non conveniens, when “the transferee forum is within the federal court

system.”43 Defendants argue that while a typical forum non conveniens analysis requires the

district court to balance factors to determine whether a transfer would promote the interests of

38 Rec. Doc. 13-1 at 6. In the alternative, Defendants argue this matter should be dismissed for lack of

subject matter jurisdiction. Rec. Doc. 13 at 1. As discussed above, this Court previously addressed the subject matter

jurisdiction arguments in its prior Order and Reasons and is satisfied that complete diversity exists between the

parties. Also in the alternative, Defendants argue that this matter should be dismissed because Plaintiffs fail to state

a claim for which relief may be granted. Id. For the reasons that follow, the Court finds it appropriate to transfer the

case and will not reach the arguments regarding failure to state a claim.

39 Id.

40 Id. at 6-7 (citing Rec. Docs. 13-4, 13-5, 13-6, 13-7, 13-8).

41 Id. at 7 (citing Rec. Doc. 13-3 at 39).

42 Id.

43 Id. (citing Atl. Marine Constr. Co. v. U.S. Dist. Court for W. Dist. Of Tex., 571 U.S. 49, 60 (2013)).

justice, the existence of a mandatory, enforceable forum selection clause ordinarily requires a

district court to transfer the matter to the forum specified in the clause, unless there are

extraordinary circumstances.44 Defendants contend that a party suing in contravention of a valid

forum selection clause bears the burden of showing why the forum selection clause should not be

followed and that the parties’ private interests are irrelevant to the analysis.45

Defendants next argue that the language of the forum selection clauses signed by Plaintiffs

make the clauses mandatory and enforceable.46 Defendants contend that the forum selection

clause is mandatory when it “contains clear language specifying that litigation must occur in the

specified forum.”47 Defendants argue that here, the parties used obligatory language and focus on

an exclusive venue.48 Defendants contend that the forum selection clauses at issue do not merely

identify Toledo as a proper forum, but rather require that any action be brought there.49

Defendants argue that the use of obligatory terms such as “any” and “all” and “must” and “shall”

make a forum selection mandatory and enforceable.50

Defendants further argue that none of the public-interest factors considered under 28 U.S.C.

§ 1404(a) and forum non conveniens weigh against enforcement of the forum selection clauses.51

44 Id. at 7-8.

45 Id. at 8.

46 Id.

47 Id. (citing Al Copeland Inv., LLC v. First Specialty Ins. Corp., No. CV 16-16346, 2017 WL 2831689, at

*6 (E.D. La. June 29, 2017), aff’d, 884 F.3d 540 (5th Cir. 2018)).

48 Id. at 8-9.

49 Id. at 9.

50 Id. at 9-10 (citing Summit Packaging Sys., Inc. v. Kenyon & Kenyon, 273 F.3d 9, 12 (1st Cir. 2001); Crewe

v. Rich Dad Educ., LLC, 884 F. Supp. 2d 60, 87 (S.D.N.Y. 2012)).

51 Id. at 12.

Defendants contend that the public-interest factors to be considered include “administrative

difficulties flowing from court congestion; the local interest in having localized controversies

decided at home; the interest in having the trial of a diversity case in a forum that is at home with

the law that must govern the action; the avoidance of unnecessary problems in conflict of laws,

or in the application of foreign law; and the unfairness of burdening citizens in an unrelated forum

with jury duty.”52 However, Defendants argue that these public-interest factors would only

outweigh a valid forum clause in extraordinary cases.53 Defendants contend that Plaintiffs cannot

meet the high burden needed to overcome the enforcement of a valid forum selection clause.54

Defendants argue that the Eastern District of Louisiana is statistically more congested than the

Northern District of Ohio.55 Defendants further contend that this dispute is just as local to Ohio,

where Marco’s Franchising is located, as it is to Louisiana.56 Accordingly, Defendants move the

Court to transfer this matter to the Northern District of Ohio.57

B. Plaintiff’s Arguments in Opposition to the Motion

In opposition to the motion, Plaintiffs argue that the forum selection clauses are not valid

and enforceable as to Plaintiffs’ claims.58 Plaintiffs contend that for a forum selection clause to

be enforceable, its terms must apply to the claims and parties at issue in the case.59 Plaintiffs argue

52 Id. (citing Weber v. PACT XPP Techs., AG, 811 F.3d 758, 776 (5th Cir. 2016) (quoting Piper Aircraft v.

Reyno, 454 U.S. 235, 260 n.6 (1981)).

53 Id. at 12 (citing Weber, 811 F.3d at 776 (citing Atl. Marine, 571 U.S. at 64)).

54 Id. at 12-13.

55 Id.

56 Id.

57 Id.

58 Rec. Doc. 22 at 3.

59 Id. at 3 (citing Altvater Gessler-J.A. Baczewski Int’l (USA) Inc. v. Sobieski Destylarnia S.A., 572 F.3d 86,

that the phrase “arise in connection with” cannot include every claim with some connection to a

contract.60 Plaintiffs contend that if a right is asserted outside the contract, that claims should not

be governed by the forum selection clause.61 Plaintiffs argue that in Alvater Gessler-J.A.

Baczewski Int’l (USA), Inc. v. Sobieski Destylarnia, S. A.,62 the Second Circuit held that a forum

selection clause in a contact did not apply because the plaintiff’s claims were not based on rights

originating in the contract.63 Plaintiffs contend that here, their claims are not tied to the franchise

agreements and that therefore, the claims should not be governed by the forum selection clauses.64

Plaintiffs argue that the basis of their claims is Marco’s Franchising’s actions after their initial

approval of the sale.65 Plaintiffs contend that the Complaint concerns a contract to which Marco’s

Franchising is not a party and that this lawsuit is not about franchise terms.66 Plaintiffs further

argue that they do not rely on the rights and duties of the contract to assert their claims.67 Rather,

Plaintiffs contend that this lawsuit is about Marco’s Franchising’s interference in a contract

between Plaintiffs and a third party.68

Plaintiffs next argue that even if the Court finds that the forum selection clause is valid, the

Court should still deny the motion to transfer because there are exceptional public-interest factors

90-91 (2d Cir. 2009)).

60 Id. at 4 (citing Phillips v. Audio Acitve, Ltd., 494 F.3d 378, 387 (2nd Cir. 2007)).

61 Id.

62 572 F.3d 86 (2nd Cir. 2009).

63 Rec. Doc. 22 at 4.

64 Id.

65 Id.

66 Id.

67 Id. at 5-6.

68 Id. at 7.

at stake.69 Plaintiffs contend that the public interest factors include “administrative difficulties

flowing from court congestion; the local interest in having localized controversies decided at

home; the interest in having the trial of a diversity case in a forum that is at home with the law

that must govern the action; the avoidance of unnecessary problems in conflict of laws, or in the

application of foreign law; and the unfairness of burdening citizens in an unrelated forum with

jury duty.”70 Plaintiffs argue that in analyzing the local interest factor, courts consider the factual

connection between facts and the two proposed venues.71 Here, Plaintiffs contend that New

Orleans is renowned as a preeminent food destination because the economy and culture is based

on food, unlike the proposed forum.72 Furthermore, Plaintiffs argue that the areas, franchises and

stores at issue are located in New Orleans.73 Lastly, Plaintiffs contend that the Eastern District of

Louisiana has familiarity with the law that will apply in this case.74

C. Defendant’s Arguments in Further Support of the Motion

In reply, Defendants argue that Plaintiffs’ claims are about the sale of their franchises, sales

which required Marco’s Franchising’s approval pursuant to the franchise agreements; therefore,

those claims are within the scope of the forum selection clauses.75 Defendants also argue that

“Plaintiffs apparently concede that the broad forum selection clauses here are ‘mandatory.’”76

69 Id.

70 Id. (citing Piper Aircraft v. Reyno, 454 U.S. 235, 260 n.6 (1981)).

71 Id. at 8 (citing In re Volkswagen of Am., Inc., 545 F.3d 304, 317-18 (5th Cir. 2008)).

72 Id. at 8-9.

73 Id. at 9.

74 Id.

75 Rec. Doc. 28 at 1.

76 Id.

Next, Defendants contend that Plaintiffs’ arguments about the scope of the forum selection

clauses is incorrect and contrary to Fifth Circuit precedent.77 For example, Defendants argue that

the language in the forum selection clause in Phillips is narrower than the forum selection clause

here and that the Fifth Circuit has never adopted the reasoning of Phillips.78 Conversely,

Defendants contend that in the Fifth Circuit, a forum selection clause covering all claims “arising

in connection with” a contract applies to tort and statutory claims.79 Defendants argue that “any

alleged LUTPA violation or tortious interference rests on Marco’s [Franchising’s] decision not

to approve (or to withdraw approval) of Plaintiffs’ planned sale of their franchise rights.”80

Defendants contend that because approval of the sale is required under the franchise agreements,

Plaintiffs’ alleged damages are rooted in the franchise agreement.81 Defendants argue that the

Fifth Circuit has held that there is no reason for a distinction between contract and tort claims in

considering the scope of a forum selection clause because a contrary holding would allow litigants

to avoid a forum selection clause with artful pleading.82 In sum, Defendants contend that “[t]o

establish their claims, Plaintiffs will have to show they had rights under the franchise agreements

that Marco’s infringed by disapproving the proposed sale, a decision expressly reserved to

Marco’s discretion in the agreements . . . It is impossible to separate Plaintiffs’ rights under the

77 Id. at 1-2.

78 Id. at 2-3.

79 Id. at 3.

80 Id. at 4.

81 Id.

82 Id. at 5 (citing Ginter ex rel. Ballard v. Belcher, Prendergast & Laporte, 536 F.3d 439, 444-45 (5th Cir.

2008)).

franchise agreements from the rights they purport to assert in this action.”83

Next, Defendants argue that there are no public policy concerns that would override the

forum selection clauses.84 In response to Plaintiffs’ argument that the local interest factors weighs

in favor of this forum because New Orleans is renowned as a preeminent food destination,

“Defendants stipulate that New Orleans deservedly is recognized as a culinary mecca;

respectfully, however, pizza is not what sets the Crescent City apart as a foodie paradise.”85

Defendants argue that a dispute involving pizza franchises does not make this an extraordinary

case such that the Court should refuse enforcement of the forum selection clause.86

III. Legal Standard

Pursuant to 28 U.S.C. § 1404(a), “[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 or to any district or division to which all parties have

consented.”87 Section 1004(a) is “a codification of the doctrine of forum non conveniens for the

subset of cases in which the transferee forum is within the federal court system; in such cases,

Congress has replaced the traditional remedy of outright dismissal with transfer.”88

Usually, a court applying the doctrine of forum non conveniens must determine whether

there is an adequate alternative forum and, if so, determine which forum is best-suited to the

83 Id. at 6.

84 Id.

85 Id.

86 Id. at 7.

87 28 U.S.C. § 1404(a).

88 Atl. Marine Constr. Co. v. U.S. Dist. Court for W. Dist. Of Tex., 571 U.S. 49, 60 (2013) (internal citations

omitted).

litigation by considering “a variety of private- and public-interest factors and giving deference to

the plaintiff’s choice of forum.”89 “The private-interest factors 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.’”90 “The public-interest factors include ‘the administrative

difficulties flowing from court congestion; the local interest in having localized controversies

decided at home; [and] the interest in having the trial of a diversity case in a forum that is at home

with the law.’”91 A plaintiff’s choice of forum is typically given some significant, but not

determinative, weight.92

However, the existence of a mandatory, valid forum selection clause simplifies the

analysis in two ways: (1) the “‘the plaintiff’s choice of forum merits no weight’ because, by

contracting for a specific forum, ‘the plaintiff has effectively exercised its ‘venue privilege’

before a dispute arises;’”93 and (2) the “private-interest factors ‘weigh entirely in favor of the

preselected forum,’ so that the ‘district court may consider arguments about public-interest factors

only.’”94 Thus, “a valid forum-selection clause controls the forum non conveniens inquiry ‘[i]n

89 Barnett v. DynCorp Int'l, L.L.C., 831 F.3d 296, 300 (5th Cir. 2016) (citing DTEX, LLC v. BBVA

Bancomer, S.A., 508 F.3d 785, 794–95 (5th Cir. 2007)).

90 Weber v. PACT XPP Techs., AG, 811 F.3d 758, 766-67 (5th Cir. 2016) (quoting Piper Aircraft Co. v.

Reyno, 454 U.S. 235, 241 n.6 (1981)).

91 Id. at 767 (quoting Piper Aircraft, 454 U.S. at 241 n.6).

92 Id. (citing Atl. Marine, 571 U.S. at 62 n.6).

93Barnett, 831 F.3d at 300 (quoting Atl. Marine, 571 U.S. at 63).

94 Id. (quoting Atl. Marine, 571 U.S. at 63).

all but the most unusual cases.’”95 The Fifth Circuit has held that this “harmonizes” with the

Supreme Court’s “guidance that contractually selected forums often ‘figure[] centrally in the

parties' negotiations’ and become part of those parties’ ‘settled expectations’—so if a plaintiff

disregards such a contractual commitment, ‘dismissal . . . work[s] no injustice.’”96

In analyzing a forum selection clause, a court must first determine whether the forum

selection clause is mandatory or permissive.97 Once a court makes this determination, it must

decide whether the forum selection clause at issue applies to this specific case, which involves

two separate inquiries: (1) whether the forum selection clause is valid and enforceable and (2)

whether the present case falls within the scope of the forum selection clause.98

IV. Analysis

A. What Substantive Law to Apply

The Court must first determine what substantive law to apply to each element of the forum

selection clause analysis. Defendants argue that Ohio law should govern the interpretation of the

ARA and the franchise agreements.99 Plaintiffs do not respond to this argument or dispute that

Ohio law should govern the interpretation of the contracts at issue.100 Both the ARA and the

franchise agreements expressly provide that they should be interpreted and governed using Ohio

95 Id. (quoting Atl. Marine, 571 U.S. at 63).

96 Id.

97 Weber, 811 F.3d at 770-71 (citing Phillips v. Audio Active Ltd., 494 F.3d 378, 384–86 (2d Cir. 2007)).

98 Id. at 770.

99 See Rec. Doc. 13-1 at 10–11 (“The Sixth Circuit, applying Ohio law, which governs the franchise

agreements and the ARA here, held mandatory and enforceable a forum selection clause stating: ‘Place of jurisdiction

for all disputes arising in connection with the contract shall be at the principal place of business of the supplier.’”).

100 See Rec. Doc. 22 at 9–10 (“Defendants incorrectly argue that the law of Ohio will govern in this matter.

However, Plaintiffs have not alleged contract law which would apply. Plaintiffs have alleged claims under LUTPA,

a Louisiana statutory scheme, and tortious interference of a contract.”).

Law. The ARA states:

“This Agreement takes effect upon its acceptance and execution by Franchisor,

and shall be interpreted and construed exclusively under the laws of the State of

Ohio which laws shall prevail in the event of any conflict of law (without regard

to, and without giving effect to, the application of Ohio choice-of-law rules);

provided, however, that if the covenants in Section 14 of this Agreement would

not be enforceable under the laws of Ohio and the Store is located outside of Ohio,

then such covenants shall be interpreted and construed under the laws of the state

in which the Store is located. Nothing in this Section 22.1 is intended by the parties

to subject this Agreement to any franchise or similar law, rule, or regulation of the

State of Ohio to which this Agreement would not otherwise be subject.”101

The franchise agreements state: “Except to the extent governed by the United States Trademark

Act of 1946 (Lanham Act; 15 U.S.C. § 1051 et seq.), this Agreement and the relationship between

Franchisor, you and any Franchisee Owner will be exclusively governed by the laws of the State

of Ohio (without regard to, and without giving effect to, the application of Ohio choice-of-law

rules).”102

In diversity cases, federal law applies when determining whether a forum selection clause

is enforceable.103 However, the Fifth Circuit has determined that to interpret the meaning and

scope of a forum selection clause, a court must use the forum’s choice-of-law rules to determine

what substantive law governs.104 The Fifth Circuit has recognized that it has not “hewn closely to

this principle [of conducting a choice-of-law analysis] in interpreting [the meaning and scope

101 Rec. Doc. 13-3 at 41.

102 See Rec. Docs. 13-4, 13-5, 13-6, 13-7, 13-8.

103 Barnett, 831 F.3d at 301 (citing Haynsworth v. The Corp., 121 F.3d 956, 962 (5th Cir. 1997)) (holding

that “even in diversity cases, federal law governs the ‘enforceability’ of forum-selection clauses in this circuit.”).

104 Weber, 811 F.3d at 770-71 (“A “choice-of-law analysis to determine what substantive law should guide

this court’s interpretation of the [forum selection clause] is proper under ordinary principles governing diversity

litigation.”); Barnett, 831 F.3d at 301 (“When the ‘interpretation’ of a forum-selection clause is at issue in a diversity

case, however, we apply the forum state’s choice-of-law rules to determine what substantive law governs.”).

forum selection clauses].”105 Instead, the majority of courts, including the Fifth Circuit, have

“interpreted [forum selection clauses] according to general common-law contract principles

without addressing the precise source of law.”106 The “use of this general-law approach may be

because, in this circuit and others, the enforceability of [a forum selection clause] is governed by

federal law.”107 However, this approach is incorrect because, as the Fifth Circuit has recognized,

“there is no federal common law of contracts.”108 Therefore, this Court will honor its “core

obligation . . . to ascertain which body of substantive law to apply by implementing the choice-

of-law rules of its home jurisdiction.”109

Here, Ohio law applies to the meaning and scope of the forum selection clauses. This being

the Eastern District of Louisiana, the Court applies Louisiana’s conflict-of-law provisions.

Louisiana law “generally gives contracting parties the freedom to choose which state’s law will

govern disputes arising out of the contract.”110 Pursuant to Article 3540 of the Louisiana Civil

Code, contractual choice-of-law provisions are presumed valid unless the “chosen” law

contravenes the public policy of the state whose law would apply absent the choice-of-law

provision.111 The Fifth Circuit has explained, “[o]ne state’s law does not violate another state’s

105 Id. at 770.

106 Id.

107 Id.

108 Barnett, 831 F.3d at 302 (quoting Ford v. Hamilton Invs., Inc., 29 F.3d 255, 258 (6th Cir.1994)).

109 Weber, 811 F.3d at 770-71; Barnett, 831 F.3d at 301 (“When the ‘interpretation’ of a forum-selection

clause is at issue in a diversity case, however, we apply the forum state’s choice-of-law rules to determine what

substantive law governs.”).

110 Cherokee Pump & Equip. Inc. v. Aurora Pump, 38 F.3d 246, 250 (5th Cir. 1994).

111 La. Civ. Code art. 3540 (“[A]ll other issues of conventional obligations are governed by the law expressly

chosen or clearly relied upon by the parties, except to the extent that law contravenes the public policy of the state

whose law would otherwise be applicable under Article 3537.”); see also Roberts v. Energy Dev. Corp., 235 F.3d

935, 938-43 (5th Cir. 2000).

public policy merely because the laws of the two states differ.”112 Furthermore, the Fifth Circuit

has specifically highlighted the official comments to Article 3540, which state “only strongly held

beliefs of a particular state qualify for the characterization of ‘public policy.’”113 As noted, both

the ARA and the franchise agreements expressly provide that they should be interpreted using

Ohio Law.114 In Louisiana, “[i]t is well established that where parties to a contract stipulate the

specific state law that will govern the contract, the choice-of-law provision must be given effect

unless there is statutory or jurisprudential law to the contrary.”115 Here, Louisiana’s choice-of-

law rules dictate that Ohio substantive law applies to interpret the meaning and scope of the

contracts and forum selection clauses in this case.

B. Whether the Forum Selection Clauses are Mandatory or Permissive

Next, the Court must determine whether the forum selection clauses are mandatory or

permissive. As an initial matter, the Court notes that the parties do not appear to dispute that the

forum selection clauses in both the ARA and the franchise agreements are mandatory.116

Under Ohio law, “[a] permissive clause authorizes jurisdiction in a designated forum, but

does not prohibit litigation elsewhere, whereas a mandatory clause dictates an exclusive forum

for litigation under the agreement.”117 “A forum selection clause is mandatory when it specifies

112 Delhomme Indus., Inc. v. Houston Beechcraft, Inc., 669 F.2d 1049, 1058 (5th Cir. 1982).

113 Cherokee Pump & Equip. Inc., 38 F.3d at 252 (quoting La. Civ. Code art. 3540 cmt. f).

114 See Rec. Docs. 13-3 at 41, 13-4, 13-5, 13-6, 13-7, 13-8.

115 NorAm Drilling Co. v. E & PCo Intern., LLC, 131 So.3d 926, 929 (La. App. 2 Cir. 2013).

116 See Rec. Doc. 22. Plaintiffs do not brief the issue of whether the forum selection clauses are mandatory

or permissive. Defendants argue that “Plaintiffs apparently concede that the broad forum selection clauses here are

‘mandatory.’” Rec. Doc. 28 at 1.

117 State ex rel. Cordray v. Makedonija Tabak 2000, 189 Ohio App.3d 73, 2010-Ohio-2903, 937 N.E.2d

595, at ¶ 15 (citing Emerald Grande, Inc. v. Junkin, 334 Fed. Appx. 973, 975-76 (11th Cir. 2009)).

that litigation will be brought within a designated forum and reflects the parties’ intent that

jurisdiction in that forum is exclusive . . . For example, when a forum selection clause does not

refer specifically to venue and contains no language indicating that the referenced forum is

exclusive, it is permissive with respect to jurisdiction . . . A forum selection clause that authorizes

jurisdiction in one forum but does not prohibit jurisdiction elsewhere is not mandatory . . .

Similarly, when the words ‘may’ or ‘should’ are used, it signifies the parties’ intent that a forum

selection clause is permissive.”118 In determining whether a forum selection clause is mandatory

or permissive, Ohio courts have considered the following factors: “(1) reference to venue; (2)

language indicating the parties' intent to make jurisdiction exclusive; and (3) language indicating

a suit elsewhere is forbidden.”119 A court need not find each of the three factors is satisfied in

order to find that a forum selection clause is mandatory; in fact, language clearly indicating

exclusivity may be enough to support a finding of mandatory.120

For example, the Court of Appeals of Ohio for the Ninth Appellate District determined that

a forum selection clause, which provided that “[a]ny proceeding arising out of or relating to this

Agreement shall be brought in the courts of the State of Delaware, or, if it has or can acquire

jurisdiction, in the United States District Court in Delaware,” was mandatory.121 The court

reasoned that “[t]he language of this clause unambiguously reflects the parties’ intent that the

Courts of Delaware will be the exclusive forum for disputes arising from the agreement: it

118 Huber v. Inpatient Medical Services, Inc., 2018-Ohio-4686, 124 N.E.3d 382, at ¶ 14 (internal citations

omitted).

119 Keehan Tennessee Invest., L.L.C. v. Praetorium Secured Fund I, L.P., 2016-Ohio-8390, 71 N.E.3d 325,

332, at ¶ 25.

120 Id. at ¶ 26.

121 Huber v. Inpatient Medical Services, Inc., 2018-Ohio-4686, 124 N.E.3d 382, at ¶ 15.

addresses both choice of law and venue and provides that ‘[a]ny proceeding’ related to or arising

from the agreement ‘shall be brought’ in Delaware.”122 Additionally, the Court of Appeals of

Ohio for the Second Appellate District held that a forum selection clause which provided that

“any legal proceeding brought to enforce any provision of this Agreement must be filed in a court

of competent jurisdiction located in Escambia[ ] County, Florida,” was mandatory.123 Conversely,

the Court of Appeals of Ohio for the Ninth Appellate District determined that a forum selection

clause, which provided that “[e]ach of the Parties hereby irrevocably and unconditionally submits

to the non-exclusive jurisdiction of any New York State court or Federal court of the United States

of America sitting in New York City. . .” was permissive rather than mandatory.124

Here, there are two forum selection clauses at issue. The Court will analyze each forum

selection individually to determine whether it is mandatory or permissive.

The first forum selection clause is in the Area Representative Agreement (“ARA”), between

Marco’s Franchising and CajunLand Pizza.125 The ARA states that “[t]he parties agree that any

122 Id.

123 Dayton Outpatient Ctr., Inc. v. OMRI of Pensacola, Inc., 2014-Ohio-4105, 19 N.E.3d 608.

124 EI UK Holdings, Inc. v. Cinergy UK, Inc., 9th Dist. Summit No. 22326, 2005-Ohio-1271, 2005 WL

662921, ¶ 4. The complete forum selection clause reads:

(a) Each of the Parties hereby irrevocably and unconditionally submits to the non-exclusive jurisdiction of

any New York State court or Federal court of the United States of America sitting in New York City, and any

appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or for the

recognition or enforcement of any judgment, and hereby irrevocably and unconditionally agrees that all claims in

respect of any such action or proceeding may be heard and determined in such New York State or, to the extent

permitted by law, in such Federal court. Each Party agrees that a final judgment in any such action or proceeding

shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other matter provided

by law.

(b) Each of the Parties hereby irrevocably and unconditionally waives, to the fullest extent it may legally

and effectively do so, any objection which it may now or thereafter have to the laying of venue of any suit, action or

proceeding arising out of or relating to this Agreement in any New York State or Federal court. Each Party hereby

irrevocably waives, to the fullest extent permitted by law, the defense of any inconvenient forum to the maintenance

of such action or proceeding in any such court.

125 Rec. Doc. 13-3.

action brought by Area Representative [CajunLand Pizza] against Franchisor [Marco’s

Franchising] in any court, whether federal or state, shall be brought within such state and in the

judicial district in which Franchisor has its principal place of business.”126

Having considered the forum selection clause in the ARA in the context of Ohio law, the

Court finds it is mandatory. The plain language of the forum selection clause reflects the

contracting parties’ intent to choose a particular forum, namely a court “within such state and in

the judicial district in which Franchisor has its principal place of business,” to the exclusion of

any other court by stating that any proceeding “shall be brought” there. By using the words, “shall

be brought,” the subject clause is mandatory. The Court of Appeals of Ohio for the Ninth

Appellate District previously determined that a nearly identical forum selection clause, providing

that “[a]ny proceeding arising out of or relating to this Agreement shall be brought in the courts

of the State of Delaware, or, if it has or can acquire jurisdiction, in the United States District Court

in Delaware,” is mandatory.127 Similarly, a forum selection clause providing that “[t]he parties

agree that any action brought by Area Representative [CajunLand Pizza] against Franchisor

[Marco’s Franchising] in any court, whether federal or state, shall be brought within such state

and in the judicial district in which Franchisor has its principal place of business” is also

mandatory under Ohio law.128

The second forum selection clause, was signed by the remaining five Plaintiffs—Ole Tyme

Pizza, Crescent City Pizza, Partners Pizza, SELA No. 1, and SELA No. 2 (collectively, the

126 Id. at 41.

127 Huber v. Inpatient Medical Services, Inc., 2018-Ohio-4686, 124 N.E.3d 382, at ¶ 15.

128 Rec. Doc. 13-3 at 41.

“Franchisee-Plaintiffs”) in separate franchise agreements.129 Each franchise agreement contains

the following forum selection clause under the header “Jurisdiction and Venue.”130

All litigation, court proceedings, lawsuits, arbitration proceedings and other

hearings must and will be venued exclusively in Toledo, Ohio. You and each

Franchisee Owner do hereby agree and submit to personal jurisdiction in Lucas

County, Ohio or the Federal District Court having jurisdiction therein for the

purposes of any suit, proceeding, arbitration or hearing permitted to be brought to

enforce or construe the terms of this Agreement or to resolve any dispute or

controversy arising in connection with this Agreement. You and each Franchisee

Owner waive any rights to contest such venue and jurisdiction and any claims that

such venue and jurisdiction are invalid.131

The Court has no trouble concluding that the forum selection clauses contained in the

franchise agreements are also mandatory. This clause clearly, “specifies that litigation will be

brought within a designated forum and reflects the parties’ intent that jurisdiction in that forum

is exclusive.”132 The phrase “must and will be venued exclusively” demonstrates the parties’

intent to bind themselves to the particular forum of Toledo, Ohio. That phrase is without question

a phrase of exclusivity. The language in the forum selection clause in the franchise agreements

does not merely authorize jurisdiction in Toledo, Ohio, but provides that jurisdiction is only

appropriate in Toledo, Ohio. The clause specifically references venue, contains words of

exclusivity, and prohibits suit in other courts; accordingly, this clause is unambiguously

mandatory.

C. Whether the Forum Selection Clause is Valid and Enforceable

Having determined that each forum selection clause is mandatory rather than permissive,

129 See Rec. Docs. 13-4, 13-5, 13-6, 13-7, 13-8.

130 See Rec. Docs. 13-4, 13-5, 13-6, 13-7, 13-8.

131 See Rec. Docs. 13-4, 13-5, 13-6, 13-7, 13-8.

132 Huber v. Inpatient Medical Services, Inc., 2018-Ohio-4686, 124 N.E.3d 382, at ¶ 14.

the Court must next determine whether the forum selection clauses in the franchise agreements

are valid and enforceable. In diversity cases, federal law applies when determining whether a

forum selection clause is valid and enforceable.133 Under federal law, a “forum selection

provision in a written contract is prima facie valid and enforceable unless the opposing party

shows that enforcement would be unreasonable.”134

The party resisting enforcement on “unreasonable” grounds bears a “heavy burden of

proof.”135 The Fifth Circuit has articulated a four-factor test, by which unreasonableness

“potentially exists where (1) the incorporation of the forum selection clause into the agreement

was the product of fraud or overreaching; (2) the party seeking to escape enforcement ‘will for

all practical purposes be deprived of his day in court’ because of the grave inconvenience or

unfairness of the selected forum; (3) the fundamental unfairness of the chosen law will deprive

the plaintiff of a remedy; or (4) enforcement of the forum selection clause would contravene a

strong public policy of the forum state.”136

Here, Plaintiffs do not satisfy the “heavy burden of proof” to show that enforcement of the

forum selection clause in the franchise agreements would be “unreasonable.” First, while

Plaintiffs argue that their “complaint is rife with allegations of fraud, deceit and

misrepresentation” they do not specifically contend that the forum selection clauses were

incorporated into the franchise agreements or the ARA via fraudulent conduct.137 “Fraud and

133 Haynsworth v. The Corp., 121 F.3d 956, 962 (5th Cir. 1997) (citation omitted).

134 Kevlin Servs., Inc. v. Lexington State Bank, 46 F.3d 13, 15 (5th Cir. 1995). The Fifth Circuit has not

drawn a “distinction between validity and enforceability.” Barnett, 831 F.3d at 302. Instead, the Fifth Circuit appears

“to treat those words as synonyms in the forum-selection clause context.” Id.

135 Haynsworth, 121 F.3d at 963 (citing The Bremen v. Zapata Off–Shore Co., 407 U.S. 1, 17 (1972)).

136 Id. (citing Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595 (1991)).

137 Rec. Doc. 22 at 13.

overreaching must be specific to a forum selection clause in order to invalidate it.”138 Second,

Plaintiffs do not contend that they will lose their day in court by litigating in the Northern District

of Ohio.139 Third, Plaintiffs do not contend that the chosen law will deprive them of a remedy.140

Fourth and finally, Plaintiffs do not argue that enforcement of the forum selection clause

contravenes a “strong public policy” of the forum state.141 Accordingly, because Plaintiffs do not

satisfy their “heavy” burden of showing that enforcement of the forum selection clause would be

unreasonable, the Court finds that the clause is valid and enforceable.

D. Whether the Forum Selection Clauses Apply to Plaintiff’s Counts

The Court must now determine whether the forum selection clause applies to Plaintiffs’ two

claims against Defendants. As discussed above, Ohio substantive law applies to interpret the

meaning and scope of the contracts and forum selection clauses in this case.

Plaintiffs contend that their claims are not tied to the franchise agreement and that therefore,

the claims should not be governed by the forum selection clause.142 Plaintiffs argue that the basis

of their claims is Marco’s Franchising’s actions after its initial approval of the sale.143 Plaintiffs

contend that the Complaint concerns a contract to which Marco’s Franchising is not a party and

that this lawsuit is not about franchise terms.144 In response, Defendants contend that “[t]o

establish their claims, Plaintiffs will have to show they had rights under the franchise agreements

138 Haynsworth, 121 F.3d at 963.

139 See Rec. Doc. 22.

140 See id.

141 See id.

142 Id. at 5.

143 Id.

144 Id.

that Marco’s infringed by disapproving the proposed sale, a decision expressly reserved to

Marco’s discretion in the agreements . . . It is impossible to separate Plaintiffs’ rights under the

franchise agreements from the rights they purport to assert in this action.”145

Generally, Ohio courts have called for a broad reading of forum selection clauses. “‘If

forum selection clauses are to be enforced as a matter of public policy, that same public policy

requires that they not be defeated by artful pleading of claims.’ Therefore, ‘even where a forum

selection clause does not explicitly govern a given cause of action, courts will inquire into whether

the other claims are sufficiently related to the claim that is specifically covered by the clause.””146

Perhaps the most instructive analysis of scope of a forum selection clause from the Ohio

courts comes from Bohl v. Hauke.147 There, the plaintiffs contracted with Doug Hauke (“Hauke”),

who agreed to provide materials for and to construct a dairy barn on the Bohls’ property.148 Hauke

in turn purchased materials for the barn from ABC, a Texas corporation, which gave Hauke a 20–

year limited written warranty for the materials.149 The warranty contained a forum selection

clause providing that “[t]he laws of the State of Texas shall govern the rights and duties of the

parties under this agreement and jurisdiction and venue is fixed in Harris County, Texas.”150 After

the plaintiffs discovered problems with the barn, they filed suit against Hauke and ABC.151

145 Rec. Doc. 28 at 6.

146 Bohl v. Hauke, 180 Ohio App.3d 526, 2009-Ohio-150, 906 N.E.2d 450, ¶ 26 (quoting Travelers Prop.

Cas. Co. of America v. Centimark Corp., No. 2:04–cv–916, 2005 WL 1038842 at *2 (S.D. Ohio May 3, 2005)).

147 Id.

148 Id. at ¶ 2.

149 Id. at ¶ 3.

150 Id.

151 Id. at ¶ 6.

Specifically against ABC, the plaintiffs asserted three claims: (1) a tort claim based on ABC’s

alleged breach of a duty; (2) a claim that ABC breached express and implied warranties; and (3)

a claim that ABC breached an obligation of ‘good faith and fair dealing.’152 The court held that

“[t]he forum-selection clause in the warranty covers the performance of the” materials ABC sold

to Hauke.153 Specifically, the court determined that because enforcement of the warranty

provisions would eliminate the plaintiffs’ claims, those claims must be related to the written

warranty claim such that the forum selection clause applies to them.154

The Fifth Circuit has adopted a similar approach to determine the scope of forum selection

clauses. In the Fifth Circuit, to decide whether the forum selection clause in the franchise

agreements applies to each claim, the Court “must look to the language of the parties’ contracts

to determine which causes of action are governed by the forum selection clauses.”155 The scope

of a forum selection clause is not limited to claims for breach of the contract that contains the

forum selection clause.156 Indeed, forum selection clauses extending “to all disputes that ‘relate

to’ or ‘are connected with’ the contract are construed broadly.”157

In this case Plaintiffs assert a cause of action under the Louisiana Unfair Trade Practices

152 Id. at ¶ 27.

153 Id. at ¶ 28.

154 Id.

155 Marinechance Shipping, Ltd. v. Sebastian, 143 F.3d 216, 222 (5th Cir. 1998); see also

Claimserviceprovider, Inc. v. St. Paul Travelers Companies Inc., No. 06-2475, 2006 WL 2989240, at *4 (E.D. La.

Oct. 18, 2006).

156 Ginter ex rel. Ballard v. Belcher, Prendergast & Laporte, 536 F.3d 439, 445 (5th Cir. 2008).

157 Pinnacle Interior Elements, Ltd. v. Panalpina, No. 3:09–CV–0430–G, 2010 WL 445927, at *5 (N.D.

Tex. Feb. 9, 2010) (quoting Pennzoil Exploration and Production Company v. Ramco Energy Limited, 139 F.3d

1061, 1067 (5th Cir. 1998)).

Act (“LUTPA”) as well as a cause of action for tortious interference of a contract.158 With regard

to the first claim, Plaintiffs allege that Marco’s Franchising violated LUTPA by orally retracting

the initial written approval for the sale of the Plaintiff franchises, by interfering with Plaintiffs’

contract with a purchaser and by forcing stores to shut down.159 With regard to the second claim,

Plaintiffs allege that Libardi’s actions, namely interfering with the contract for the Plaintiff

franchises, constitute a tortious and intentional interference with Plaintiffs’ business.160

The Court must review the language of the forum selection clauses in the ARA and the

franchise agreements to determine whether Plaintiff’s claims fall within the clause’s scope. The

ARA states that “[t]he parties agree that any action brought by Area Representative [CajunLand]

against Franchisor [Marco’s Franchising] in any court, whether federal or state, shall be brought

within such state and in the judicial district in which Franchisor has its principal place of

business.”161 Each franchise agreement contains the following forum selection clause under the

header “Jurisdiction and Venue.”162