Appendix — Terra International, Inc. v. Mississippi Chemical Corp.
Supreme Court brief1997
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IN THE UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT
No. 96-2140
TERRA INTERNATIONAL, INC.,*
A Delaware Corporation, .
Plaintiff - Appellant, ° Appeal from the
5 United States
v. . District Court for
i the Northern
MISSISSIPPI CHEMICAL . District of Iowa.
CORPORATION, A Mississippi *
Corporation, °
~
Defendant - Appellee.
Submitted: September 9, 1996
Decided: July 11, 1997
Before WOLLMAN, Circuit Judge, HENLEY, Senior
Circuit Judge, and HANSEN, Circuit Judge.
HANSEN, Circuit Judge.
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Terra International, Inc., (Terra) appeals the district court’s'
order granting Mississippi Chemical Corporation’s (MCC)
motion to transfer this lawsuit to the United States District
Court for the Southern District of Mississippi and denying
Terra’s motion to enjoin permanently MCC from proceeding in
its own lawsuit subsequently filed in the Mississippi court.
Terra Int’l, Inc. v. Mississippi Chem. Corp. , 922 F.Supp. 1334
(N.D. Iowa 1996). Terra filed its complaint in the Northern
District of Iowa, alleging that MCC’s design of its ammonium
nitrate neutralizer technology, which MCC licensed to Terra,
was defective and caused an explosion at Terra’s plant. Relying
primarily on the forum selection clause contained in the license
agreement, the district court granted MCC’s motion to transfer
under 28 U.S.C. § 1404(a) (1994). For the reasons outlined
below, we affirm.
I.
Terra International, Inc., manufactures and distributes a
variety of agricultural products including nitrogen-based
fertilizers. Terra’s principal place of business is in Sioux City,
Iowa. Mississippi Chemical Corporation also engages in the
production of fertilizers and is the largest manufacturer of
ammonium nitrate fertilizer in the United States. MCC’s
principal place of business is in Yazoo City, Mississippi.
In the late 1970s, MCC developed an improved ammonium
neutralization process and designed a new version of an
apparatus called a “neutralizer” which, working together,
reduced the ammonium nitrate emissions into the environment
and increased the efficiency of the ammonium nitrate
manufacturing process. MCC decided to make its neutralizer
technology available to the rest of the fertilizer industry by
' The Honorable Mark W. Bennett, United States District Judge for the
Northern District of lowa.
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licensing its technology to other fertilizer producers. On
April 28, 1980, MCC and Terra entered into a license
agreement under which Terra agreed to pay MCC $40,000 to
use MCC’s neutralizer technology at Terra’s manufacturing
facility in Port Neal, lowa.? The license agreement required
MCC to provide Terra with the blueprints to its neutralizer, to
review Terra’s proposed design of a neutralizer, and to provide
training and start-up engineering assistance to Terra.°
One section of the license agreement, entitled “Laws and
Suits,” contained a forum selection clause. The entire paragraph
reads as follows:
This agreement will be construed in accordance with
the laws of the State of Mississippi. Amy dispute or
disputes arising between the parties hereunder, insofar
as the same cannot be settled by friendly agreement, will
be determined in the District Court of the United States
for the Southern District of Mississippi and, for the
purpose of instituting such suit, [Terra] hereby consents
to service in connection therewith through the Secretary
of State for the State of Mississippi.
(Appellant’s App. at A261 (emphasis added).) The emphasized
portion of the above paragraph is the forum selection clause at
issue in this case, the meaning of which is highly contested.
On December 13, 1994, 14 years after Terra and MCC
entered into the license agreement, an explosion occurred at
Terra’s Port Neal factory. The explosion killed 4 people,
* MCC's technology is currently used at 22 other ammonium nitrate
manufacturing facilities.
* MCC does not actually manufacture neutralizers but merely licenses its
neutralizer design to its licensees.
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injured 18 others, and leveled the facility’s ammonium nitrate
plant.
On August 31, 1995, Terra filed a lawsuit against MCC in
the United States District Court for the Northern District of
Iowa, Western Division, located in Sioux City. In its
complaint, Terra limited its cause of action to two tort claims.
The first count alleged that MCC negligently designed its
neutralizer technology and failed to train and properly wam
Terra employees regarding the technology. The second count
asserted that MCC’s neutralizer technology was unreasonably
dangerous and defective and thus alleged that MCC should be
held strictly liable for the damages caused by the explosion.
Terra did not assert any parallel claims for breach of contract.
On the same day, a few hours later, MCC filed a lawsuit
against Terra in the United States District Court for the
Southern District of Mississippi, located in Jackson. In its
complaint, MCC sought a declaratory judgment that it was not
liable in any way for the explosion at Terra’s Port Neal facility
and asserted a defamation claim against Terra.‘
In December 1995, MCC filed a motion to transfer the Iowa
case to Mississippi pursuant to 28 U.S.C. § 1404(a), while
Terra filed a motion for a permanent injunction asking the
federal court in Iowa to prevent MCC from prosecuting MCC’s
lawsuit in Mississippi.’ After considering many of the relevant
* MCC based its defamation claim on several public statements made by
Terra officials in which they asserted that MCC's defectively designed
neutralizer caused the explosion.
* — Terra also filed its own motion to transfer in the federal district court in
Mississippi, asking the Mississippi court to transfer MCC's lawsuit to lowa.
In an unreported decision, the federal magistrate judge denied Terra’s motion
to transfer, finding that the forum selection clause unambiguously required
(continued...)
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factors under section 1404(a), the Iowa court determined that
neither the “convenience” factors nor the “interest of justice”
factors decidedly weighed in favor of either Iowa or
Mississippi. Terra Int’l Inc., 922 F.Supp. at 1356-64. The
court then analyzed the forum selection clause contained in the
1980 license agreement and concluded that the clause
unambiguously required Terra’s tort claims to be litigated in the
Mississippi federal court. Jd. at 1382. The court thus granted
MCC’s motion to transfer Terra’s lawsuit to Mississippi and
correspondingly denied Terra’s motion for a permanent
injunction. Terra challenges the conclusions of the Iowa federal
court.
Il.
Section 1404(a) governs the ability of a federal district court
to transfer a case to another district. This provision reads:
“For the convenience of the 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.” 28 U.S.C. § 1404(a) (1994). The statutory language
reveals three general categories of factors that courts must
consider when deciding a motion to transfer: (1) the
convenience of the parties, (2) the convenience of the witnesses,
and (3) the interests of justice. Jd. Courts have not, however,
limited a district court’s evaluation of a transfer motion to these
enumerated factors. Instead, courts have recognized that such
determinations require a case-by-case evaluation of the
particular circumstances at hand and a consideration of all
relevant factors. See Stewart Org., Inc. v. Ricoh Corp., 487
‘(...continued)
these disputes to be litigated in Mississippi. Mississippi Chem. Corp. v.
Terra Int'l Inc., 1996 WL 293764, at *7 (S.D. Miss. 1996). The magistrate
judge’s decision was affirmed by the district judge on appeal.
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U.S. 22, 29 (1988); Jumara v. State Farm Ins. Co., 55 F.3d
873, 879 (3d Cir. 1995); 15 Charles Alan Wright, Arthur R.
Miller & Edward H. Cooper, Federal Practice and Procedure
§ 3847, at 370 (2d ed.1986). As the Supreme Court explained,
“[a] motion to transfer under § 1404(a) thus calls on the district
court to weigh in the balance a number of case-specific
factors.” Stewart, 487 U.S. at 29. Although there is no
exhaustive list of specific factors to consider, courts have
determined that a valid and applicable forum selection clause in
a contract is “a significant factor that figures centrally in the
district court’s calculus.” Jd. On appeal, Terra argues that the
district court incorrectly found the forum selection clause
applicable to its tort claims and improperly weighed the other
section 1404(a) factors.
Although the parties agree that we review a district court’s
decision regarding a section 1404(a) transfer motion for an
abuse of discretion, see Stewart, 487 U.S. at 29; Everett v. St.
Ansgar Hosp., 974 F.2d 77, 79 (8th Cir. 1992), they disagree
over the appropriate standard of review regarding a district
court’s construction of a forum selection clause. Terra argues
that we should review the court’s interpretation of the forum
selection clause de novo, because such an interpretation is
equivalent to the construction of a contract which is a legal
issue. MCC, however, asserts that in weighing the relevant
section 1404(a) factors, the district court was not required to
interpret the specific meaning of the forum selection clause but
merely recognize its presence and factor it into the equation.
Consequently, MCC believes that the abuse of discretion
standard, which applies to the district court’s overall balancing
of various factors, also applies to the court’s specific treatment
of the forum selection clause.
In Sun World Lines v. March Shipping Corp., 801 F.2d
1066, 1068 n.3 (8th Cir. 1986), this court, following the Ninth
Circuit’s approach, reviewed for an abuse of discretion a
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district court’s “enforcement” of a forum selection clause. The
dispute in Sun World, however, concerned the validity of the
forum selection clause. Jd. at 1067. In the case at hand,
neither party challenges the validity of the forum selection
clause; rather, they contest the specific meaning of the language
used in the forum selection clause, which was not an issue in
Sun World. The Ninth Circuit itself has refined its approach
and has explained that it employs de novo review when a
district court is required to interpret the language of a forum
selection clause. Northern Cal. Dist. Council of Laborers v.
Pittsburg-Des Moines Steel Co., 69 F.3d 1034, 1036 n.3 (9th
Cir. 1995).
Here, interpreting the language of the forum selection clause
is necessary to the section 1404(a) transfer analysis. Before a
district court can even consider a forum selection clause in its
transfer analysis, it first must decide whether the clause applies
to the type of claims asserted in the lawsuit. Following the
Ninth Circuit’s approach, as well as our own standard of review
in cases of contract interpretation, see United States v. Brekke,
97 F.3d 1043, 1049 (8th Cir. 1996) (applying de novo review
to district court’s construction of a contract), we conclude that
de novo review is the appropriate standard for reviewing a
district court’s interpretation of the specific terms contained in
a forum selection clause. See Jumara, 55 F.3d at 880-81;
Hugel v. Corporation of Lloyd’s, 999 F.2d 206, 207 (7th Cir.
1993); Milk ‘n’ More, Inc. v. Beavert, 963 F.2d 1342, 1345
(10th Cir. 1992).
A.
Terra claims that the forum selection clause in the license
agreement does not apply to its tort claims and therefore should
not receive any consideration in the transfer analysis under
section 1404(a). To reiterate, the forum selection clause
provides, “Any dispute or disputes arising between the parties
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hereunder, insofar as the same cannot be settled by friendly
agreement, will be determined in the District Court of the
United States for the Southern District of Mississippi....”
(Appellant’s App. at A261.) Terra contends that the word
“hereunder” modifies the word “arising” instead of the word
“parties,” indicating that the clause applies only to claims
arising under the license agreement. Terra asserts that its tort
claims do not arise under the agreement but are independent of
it. The district court rejected Terra’s interpretation and
emphasized that the placement of “hereunder” directly after
“parties” unambiguously indicates that “hereunder” modifies
“parties.” Terra, 922 F. Supp. at 1376. Thus, the court
concluded that the forum selection clause unambiguously applies
to any disputes arising between the parties.° Jd. at 1375-76.
After analyzing the language of the clause and reviewing the
arguments of the parties, we conclude that the forum selection
clause is reasonably susceptible to both interpretations. The
placement of “hereunder” directly after the word “parties”
could reasonably suggest that it modifies “parties,” which
would give the clause a very broad scope covering any disputes
arising between the parties. We also find Terra’s interpretation
reasonable, because we are persuaded that, at least in this
contractual context, “hereunder” typically signifies “under the
agreement,” while “hereto” most often refers to the parties to
the agreement. Thus, we find that the clause is ambiguous.
See Wilson v. Prudential Ins. Co. Am., 97 F.3d 1010, 1013 (8th
* Recognizing that its interpretation of the forum selection clause was very
broad, the district court attempted to confine the breadth of the clause not by
its own terms, but by policy considerations that indicate that it would be
unreasonable to apply a broad forum selection clause contained in a contract
to a lawsuit that is completely unrelated to the subject of the contract.
Consequently, the district court imposed the requirement that the claims at
issue between the parties must be sufficiently related to the contract in order
for the forum selection clause to apply. See Terra, 922 F. Supp. at 1376.
eR RR ON hs
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Cir. 1996); Service Unlimited, Inc. v. Elder, 542 N.W.2d 855,
857 (lowa Ct. App. 1995); Texaco, Inc. v. Kennedy, 271 So.2d
450, 452 (Miss. 1973).
Terra urges us to construe the ambiguous clause against its
drafter--MCC. We decline to apply the doctrine of contra
proferentum to this case due to the relatively equal bargaining
strengths of both parties and the fact that Terra was represented
by sophisticated legal counsel during the formation of the
license agreement. See Data Gen. Corp. v. Grumman Sys.
Support Corp., 36 F.3d 1147, 1166 n.33 (ist Cir. 1994). We
are convinced, however, that Terra’s more narrow
interpretation of the forum selection clause (i.e., “hereunder”
modifies “arising” not “parties”) is more compelling. First,
construing the license agreement as a whole, See, e.g.,
Krupnick v. Ray, 61 F.3d 662, 664 (8th Cir. 1995); Lange v.
Lange, 520 N.W.2d 113, 119 (lowa 1994); Brown v. Hartford
Ins. Co., 606 So.2d 122, 126 (Miss. 1992), the parties
uniformly use the word “hereunder” in several other portions
of the license agreement to mean “under this Agreement,”
while they use the word “hereto” to refer to the parties to the
Agreement.’ Second, the forum selection clauses contained in
MCC’s license agreements with other parties indicate that MCC
knew how to draft an explicitly broad clause when it wanted to
+
See, e.g., License Agreement, { 10 (“[nJeither party hereto will assign
any of its rights or obligations hereunder to any person, firm, corporation or
organization not a party to this Agreement without the prior written consent
of the other party.”) (Appellant’s App. at A261 (emphasis added)); License
Agreement, q 12(b) (“The headings contained in this Agreement are used
solely for convenience and do not constitute a part of the Agreement between
the parties hereto.”) (lid. (emphasis added)).
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but did not do so here.* One such clause reads, “Should any
dispute or difference of any kind whatsoever arise between
MCC and [redacted party] in connection with or arising out of
this Agreement....” (Appellant’s App. at A264.) Moreover,
these other clauses were drafted many years before this
litigation arose which indicates that MCC was aware of the
significance of the particular wording of these clauses at the
time it drafted them. Consequently, we believe that the parties
intended the forum selection clause in this case to apply only to
disputes arising under the license agreement. This conclusion,
however, only leads us to our next question--whether Terra’s
tort claims actually arise under the license agreement.
“Whether tort claims are to be governed by forum selection
provisions depends upon the intention of the parties reflected in
the wording of particular clauses and the facts of each case.”
Berrett v. Life Ins. Co. of the Southwest, 623 F. Supp. 946,
948-49 (D.Utah 1985). An analysis of the specific language of
the forum selection clause in this case does not clearly indicate
whether the clause applies to Terra’s tort claims. As we have
construed it, the clause requires any disputes arising under the
license agreement to be determined in Mississippi. Terra
asserts that its negligence and strict liability claims do not arise
under the agreement because they are based on MCC’s breach
of common law tort duties that are independent of any duty
arising from the license agreement, and they do not require a
particular construction of the agreement’s terms. MCC, on the
other hand, contends that Terra’s tort claims target the specific
subject matter of the license agreement, the neutralizer
Having found the clause ambiguous, we appropriately consider extrinsic
evidence to interpret this contract provision. See Marren v. Mutual Life Ins.
Co. of New York, 84 F.3d 1068, 1070 (8th Cir. 1996); Uhl v. City of Sioux
City, 490 N.W.2d 69, 73 (lowa Ct. App. 1992); Farragut v. Massey, 612
So.2d 325, 329 (Miss. 1992).
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technology, and explains that without the license agreement,
Terra never would have received the technology.
Although the cases deciding whether very similarly-worded
forum selection clauses cover tort claims have reached different
conclusions, the majority of these cases suggests that such
clauses do apply to tort claims. In Banco Popular de Puerto
Rico v. Airborne Group PLC, 882 F. Supp. 1212 (D.P.R.1995),
the parties entered into a sales agreement for the sale of a
blimp. The agreement contained a forum selection clause
which provided that “disputes hereunder or as to the
construction of this Agreement shall be resolved in the Courts
of England.” Jd. at 1213. The court determined that, in
addition to his breach of contract claims, this clause
encompassed all of the plaintiff's tort claims which included
claims for negligent manufacture and maintenance of the blimp.
Id. at 1214, 1217. Additionally, another court determined that
a forum selection provision which read, “In the event of any
litigation commenced by either party hereunder, such action
shall be commenced in New York,” covered tort claims based
on fraud and deceit. Picken v. Minuteman Press Int’l, Inc. , 854
F. Supp. 909 (N.D. Ga. 1993). In discussing the clause, which
is remarkably similar to the one presently at issue, the court
explained that “Reading the word ‘hereunder’ to apply only to
a pure breach of contract claim between the parties would be
unduly crabbed and narrow. ‘Hereunder’ refers to the relations
that have arisen as a result of this contract.” Jd. at 911; see
also, Warnaco Inc. v. VF Corp., 844 F. Supp. 940, 947-49
(S.D.N.Y.1994) (finding tort claims covered by forum selection
clause reading, “Any dispute or issue arising hereunder....”);
Nat’l Micrographics Sys., Inc. v. Canon U.S.A., Inc., 825 F.
Supp. 671, 677-78 (D.N.J.1993) (finding forum selection
provision reading “any and all causes of action hereunder by
and between the parties hereto” covered claims for tortious
interference); but see, Hoffman v. Minuteman Press Int’l. Inc.,
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747 F. Supp. 552, 559 (W.D. Mo. 1990) (holding that tort
claim for fraudulent inducement was not covered by forum
selection clause reading “any litigation commenced by either
party hereunder”); Berrett, 623 F. Supp. at 947, 949 (finding
that forum selection clause which read “parties agree that any
action at law or in equity hereunder” did not apply to several
business-related tort claims). These cases indicate that forum
selection clauses referring to claims “hereunder” or “under the
agreement” can be broad enough to cover contract-related tort
claims.
Although determining the scope of a forum selection clause
is a rather case-specific exercise, several courts have offered
further guidance on this issue and have articulated variously
phrased general rules regarding the circumstances in which a
forum selection clause will apply to tort claims. The Third
Circuit has indicated that where tort claims “ultimately depend
on the existence of a contractual relationship” between the
parties, such claims are covered by a contractually-based forum
selection clause. Coastal Steel Corp. v. Tilghman Wheelabrator
Lid., 709 F.2d 190, 203 (3d Cir.), cert. denied, 464 U.S. 938,
104 S.Ct. 349, 78 L.Ed.2d 315 (1983). In Manetti-Farrow,
Inc. v. Gucci America, Inc., 858 F.2d 509, 514 (9th Cir.
1988), the Ninth Circuit stated that “[w]hether a forum
selection clause applies to tort claims depends on whether
resolution of the claims relates to interpretation of the
contract.” The First Circuit has phrased its test slightly
differently, explaining that “contract-related tort claims
involving the same operative facts as a parallel claim for breach
of contract should be heard in the forum selected by the
contracting parties.” Lambert v. Kysar, 983 F.2d 1110,
1121-22 (ist Cir. 1993). The district court in the present case
referred to these cases, but relied chiefly on this court’s
decision in Farmiand Indus., Inc. v. Frazier-Parrott
Commodities, Inc., 806 F.2d 848, 852 (8th Cir. 1986),
————————————
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abrogated on other grounds by Lauro Lines v. Chasser et al.,
490 U.S. 495 (1989), for the general proposition that forum
selection clauses cover tort claims that are directly or indirectly
related to the parties’ contractual relationship. See Terra, 922
F.Supp. at 1379-80. While the three previous cases do speak in
general terms, our review of the Farmland decision leads us to
conclude that the case does not stand for such a general
proposition. Instead, the decision is limited to its facts, because
the “directly” or “indirectly” language was contained in the
specific forum selection clause at issue in that case. See
Farmland, 806 F.2d at 849, 852. Consequently, our
consideration is limited to the first three generally applicable
tests.
The first two guiding principles are not very instructive
when applied to the facts of this case. At first glance it appears
that Terra’s tort claims would not be covered by the forum
selection clause under the Ninth Circuit’s test because the
resolution of these products liability claims does not seem to
relate to or require the interpretation of the license agreement.
Nevertheless, while these tort claims do not center around a
disagreement over the specific terms of the license agreement,
one could argue that they “relate” to the agreement’s
interpretation because the tort claims directly involve the entire
subject matter of the license agreement. The Third Circuit’s
rule is also inconclusive in this case. MCC asserts that Terra’s
tort claims do ultimately depend on the existence of a
contractual relationship because without the license agreement,
MCC would not have provided Terra with its neutralizer
technology. Terra, however, argues forcefully that its tort
claims are based on MCC’s alleged breach of its common law
tort duties which are independent of the contract.
The First Circuit’s approach is more revealing in this case,
and we believe that it merits application to the circumstances
before us. We think it is clear that Terra’s tort claims involve
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the same operative facts as would a parallel claim for breach of
contract. Admittedly, Terra did not raise any claims for breach
of contract in its complaint. Strategic or artfully drawn
pleadings, however, will not work to circumvent an otherwise
applicable forum selection clause. See Lambert, 983 F.2d at
1121; Coastal Steel, 709 F.2d at 203. Although we recognize
that Terra’s claims are alleged as tort claims, Terra plainly
could have asserted a parallel claim for breach of contract in the
same complaint. The fact that MCC’s technology allegedly
caused an explosion that actively inflicted damage does not
transform Terra’s cause of action into one based exclusively in
tort. The same exact facts surrounding Terra’s tort claims
would also give rise to a breach of contract claim. Therefore,
according to the rationale of the First Circuit’s rule in Lambert,
we believe that the forum selection clause applies to Terra’s tort
claims.
Several other considerations also persuade us that the forum
selection clause covers Terra’s tort claims. After finalizing the
license agreement, we believe that both parties could have
anticipated that tort claims such as Terra now brings would be
litigated in Mississippi. Paragraph 2(b) of the license
agreement provides that MCC will reimburse Terra for costs or
damages resulting from “any defect in the design of [Terra’s]
neutralizer ... which can be shown to result from errors in the
information contained in the Design Manual.” (Appellant’s
App. at A255.) Although Terra contends that this provision is
very limited in scope, it expressly envisions that future claims
of defective design may arise between the parties. Moreover,
Terra’s own complaint repeatedly refers to the specific promises
that MCC made under the license agreement. (Jd. at Al8.)
These facts support our conclusion that Terra’s tort claims arise
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under the license agreement, and therefore, the forum selection
clause applies to Terra’s claims.”
B.
Our conclusion that the scope of the forum selection clause
covers Terra’s tort claims does not end our analysis, however.
As mentioned earlier, the significance of the forum selection
clause in this case arises in the context of a motion to transfer
under section 1404(a). The fact that we have found the clause
applicable merely allows us to consider it as one factor, albeit
a very important one, in the overall transfer analysis. Terra
posits the alternative argument that even if the forum selection
clause applies, the other relevant factors, especially the
convenience of the witnesses, weigh decidedly in favor of the
Iowa forum and sufficiently outweigh the significance of the
forum selection clause. Terra argues that the district court
abused its discretion in evaluating these additional factors and
in concluding that they do not weigh in favor of either lowa or
Mississippi, thus giving the forum selection clause dispositive
effect in this case.
Terra alleges that the district court abused its discretion in
conducting the general section 1404(a) transfer analysis.
Initially, Terra argues that the district court improperly shifted
the burden of persuasion from MCC to Terra. In general,
federal courts give considerable deference to a plaintiff's choice
of forum and thus the party seeking a transfer under section
1404(a) typically bears the burden of proving that a transfer is
% Our references to portions of the License Agreement that refer to
possible design defects merely bolster our belief that the forum selection
clause applies to Terra’s common law tort claims. We express no views
regarding the applicability of any other provision (including any provision
for the limitation of liability or damages) of the License Agreement to
Terra’s tort claims.
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warranted. See Jwnara, 55 F.3d at 879; Scheidt v. Klein, 956
F.2d 963, 965 (10th Cir. 1992). Some courts, however, have
held that the existence of a forum selection clause that dictates
that a lawsuit should be transferred to another court shifts the
burden to the party opposing the transfer motion. See Jumara,
55 F.3d at 880; In Re Ricoh Corp., 870 F.2d 570, 573 (11th
Cir. 1989).'° Terra disagrees with the holdings in these cases
and alleges that the district court abused its discretion by
shifting the burden to Terra. The district court did in fact
believe that the burden was on Terra to demonstrate why the
forum selection clause should not be enforced. Terra, 922 F.
Supp. at 1370. Nevertheless, the district court also stated that
“even if the burden remained with MCC, MCC met that
burden.” Id. at 1382 n. 33. We agree with the district court’s
conclusion that MCC fulfilled any potential burden it had to
prove that a transfer was warranted by establishing that the
other section 1404(a) factors (discussed below) did not
overcome the significance of the forum selection clause.
Because we agree with the district court’s alternative conclusion
that MCC fulfilled its potential burden, we decline to rule on
the issue of whether a forum selection clause shifts the burden
of proof to the party resisting the clause’s enforcement and
merely conclude that the district court did not abuse its
discretion on this issue.
Terra next contends that the district court improperly
analyzed the section 1404(a) factors by focusing on whether the
‘© In The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10, 92 S.Ct. 1907,
32 L.Ed.2d 513 (1971), the Supreme Court also suggests that the burden
shifts to the party resisting the application of a forum selection clause to
demonstrate that enforcement of the clause would be unreasonable. The
breadth of this holding, however, is unclear due to the fact that the Court
subsequently states that “this is the correct doctrine to be followed by federal
district courts sitting in admiralty.” Jd.
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inconvenience of litigating in Mississippi could be mitigated
instead of determining, on balance, which forum would be the
most convenient. Terra primarily challenges the district court's
conclusion that the other relevant factors did not weigh
decidedly in favor of the Iowa forum. After reviewing the
district court’s reasoning, we find that the district court did not
abuse its discretion in weighing the factors relevant to a motion
to transfer under section 1404(a).
As mentioned earlier, a transfer motion requires the court
to consider the convenience of the parties, the convenience of
the witnesses, the interests of justice, and any other relevant
factors when comparing alternative venues. See 28 U.S.C.
§ 1404(a); 15 Wright, Miller, and Cooper, supra, § 3847. A
review of the district court’s opinion reveals that the court
meticulously analyzed the numerous criteria that courts
traditionally consider when deciding a motion to transfer.
Under the general category titled “Balance of Convenience” the
district court considered (1) the convenience of the parties, (2)
the convenience of the witnesses--including the willingness of
witnesses to appear, the ability to subpoena witnesses, and the
adequacy of deposition testimony, (3) the accessibility to
records and documents, (4) the location where the conduct
complained of occurred, and (5) the applicability of each forum
state’s substantive law. Terra, 922 F. Supp. at 1357-61.
Under the category titled “Interest of Justice” the court also
considered (1) judicial economy, (2) the plaintiff's choice of
forum, (3) the comparative costs to the parties of litigating in
each forum, (4) each party’s ability to enforce a judgment, (5)
obstacles to a fair trial, (6) conflict of law issues, and (7) the
advantages of having a local court determine questions of local
law. Id. at 1361-63. These considerations parallel the factors
that courts typically analyze under section 1404(a). See, e.g.,
Jumara, 55 F.3d at 879-80; Chrysler Credit Corp. v. County
Chrysler, Inc., 928 F.2d 1509, 1516 (10th Cir. 1991) (quoting
18a
Texas Gulf Sulphur Co. v. Ritter, 371 F.2d 145, 147 (10th Cir.
1967)).
Although Terra concedes that the district court considered
the appropriate factors, Terra focuses its attack primarily on the
district court’s analysis regarding the convenience of the
witnesses. Terra argues that this factor is significant and
weighs heavily in favor of the Iowa forum. Terra explains that
a clear majority of nonparty witnesses resides in Iowa, that
Terra would not be able to compel these witnesses to testify in
Mississippi, and that videotaped depositions are a poor
substitute for live testimony. While these assertions may be
true, we agree with the district court’s conclusion that “sheer
numbers of witnesses will not decide which way the
convenience factor tips.” Terra, 922 F. Supp. at 1360.
Moreover, similar inconveniences would fall on MCC if it were
required to litigate in lowa. “Merely shifting the inconvenience
from one side to the other, however, obviously is not a
permissible justification for a change of venue.” Scheidt, 956
F.2d at 966.
To Terra’s credit, we admittedly are quite skeptical of the
district court’s conclusion that the balance of convenience was
flat. Even if we tend to believe that the convenience factors
weigh in favor of an Iowa forum, however, we cannot say that
they so overwhelmingly favor Iowa as to outweigh the
significance of the agreed-upon forum selection clause and
moreover, to such a degree that the district court abused its
discretion in concluding that a transfer was warranted.'' To
reiterate, a forum selection clause is “a significant factor that
'' The district court in Mississippi reached this very conclusion. Unlike
the Iowa district court, the Mississippi court believed that the convenience
factors favored Iowa but determined that the forum selection clause
outweighed these considerations. See Mississippi Chem. Corp., 1996 WL
293764, *3.
19a
figures centrally in the district court’s calculus” in a motion to
transfer, Stewart, 487 U.S. at 29, and section 1404(a) accords
the district court much discretion in deciding such motions. See
id.; Norwood vy. Kirkpatrick, 349 U.S. 29, 32, 75 S.Ct. 544, 99
L.Ed. 789 (1955). We have carefully reviewed the record, and
while we may have reached a different decision were we the
district court, we conclude that the district court did not abuse
its discretion in deciding to transfer this lawsuit to Mississippi.
Il.
Consequently, we affirm the judgment of the district court."
We deny as moot MCC’s motion to supplement the record on
appeal.
‘2 In the district court, Terra initially argued that because it filed its lawsuit
in lowa a few hours before MCC filed its lawsuit in Mississippi, the
first-filed rule dictates that this litigation should proceed in lowa. See United
States Fire Ins. Co. v. Goodyear Tire & Rubber Co., 920 F.2d 487, 488 (8th
Cir. 1990) (first-filed rule gives priority, for purposes of choosing among
possible venues when parallel litigation has been instituted in separate courts,
to the party who first established jurisdiction). The district court concluded
that the first- filed rule does not “trump” the transfer analysis and reasoned
that when a transfer analysis under section 1404(a) dictates that a case should
be transferred, this constitutes a “compelling circumstance” that warrants an
abrogation from the first-filed rule. Terra, 922 F.Supp. 1350; see also
Northwest Airlines v. American Airlines, 989 F.2d 1002, 1006 (8th Cir. 1993)
(explaining “compelling circumstances” exception to first-filed rule).
Because the parties did not challenge this conclusion on appeal, we limit our
review to the district court’s section 1404(a) transfer analysis and need not
further discuss the first-filed rule.
20a
IN THE UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT
No. 96-2140NI
Terra International, Inc.,
Plaintiff-Appellant,
The Insurance Company of
North America, et al. Appeal from the
United States Dis-
trict Court for the
Northern District
of Iowa
Movant Insurers-
Appellants,
VS.
Mississippi Chemical
Corporation, etc.
ee wee ee ee oe ea ae ee es Oe eS a a ee
Defendant-Appellee.
The motion of the Terra Property Insurers (the self-
Styled designation for the movant insurers) to appear as named
party appellants and to adopt Terra International’s petition for
rehearing with suggestion for rehearing en banc is granted.
The appellants’ suggestion for rehearing en banc has
been considered by the court and the suggestion is denied.
The petition for rehearing by the panel has been
considered by Circuit Judges Wollman and Hansen and Senior
Circuit Judge Henley, and that petition is denied.
2la
August 18, 1997
Order entered at the direction of the Court:
/s/ Michael E. Gans
Clerk, U.S. Court of Appeals, Eighth Circuit.
22a
IN THE UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT
No. 96-2140NI
Terra International, Inc.,
Appellant,
Appeal from the
United States District
Court for the Northern
District of Iowa
VS.
Mississippi Chemical
Corporation, etc.
2 oe RR aS oe ee
Appellee.
Appellant’s motion to stay the mandate of this court
is granted pending the filing of a petition for writ of certiorari
with the United States Supreme Court.
The issuance of the mandate in this case shall be stayed
to and including October 24, 1997. If within that time there is
filed with the Clerk of this court a certificate of notification by
the Clerk of the Supreme Court that a petition for writ of
certiorari has been filed, this stay shall continue until final
disposition of the case by that court.
September 24, 1997
Order entered at the direction of the Court:
/s/ Michael E. Gans
Clerk, U.S. Court of Appeals, Eighth Circuit.
23a
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
WESTERN DIVISION
No. C 95-4088
TERRA INTERNATIONAL, INC., a Delaware corporation,
Plaintiff,
VS.
MISSISSIPPI CHEMICAL CORPORATION, a Mississippi
corporation,
Defendant.
MEMORANDUM OPINION AND ORDER
REGARDING PLAINTIFF’S MOTION FOR
PERMANENT INJUNCTION AND
DEFENDANT’S MOTION TO TRANSFER OR STAY
[April 5, 1996]
24a
TABLE OF CONTENTS
I. INTRODUCTION AND BACKGROUND .... [27a]
A. Procedural Background ........... [27a]
A, SR sd oS ce es [27a]
2. The TRO and the venue motions .. [29a]
3. Further briefing and discovery
I aaa eax bw oe ee [31a]
D:: P n RUT A Eaas [34a]
1. ° “Bad faith” and “surprise”... ss. [35a]
2. The forum selection clause ...... [37a]
. :, Ses PAR: Se se ee Ea [38a]
A. Intertwining Of The “First-Filed” And
Seen, MOM ok a ess [39a]
fe eee ee” se eee [39a]
2. © Reciphons 0 he mle... sw see [42a]
a. The “compelling circum-
stances” excention ........ [42a]
b. “Balance of convenience”
On a SN. [46a]
c. The “dead heat” exception ... [Sla]
B.. The “Tralee” Aves i i ess [60a]
1. The “transfer” statute and its purpose [61a]
2. Factors in the “transfer” analysis .. [66a]
a. “Balance of convenience” ... [69a]
b. The “interest of justice” .... [78a]
c. Other “relevant factors” .... [82a]
3. Forum selection clauses ........ [84a]
a. The weight to be given the
clause in a _ “transfer”
Me os Fahne eee [85a]
i. Stewart and its progeny . [86a]
25a
ii. “Mandatory” and “per-
missive” forum selec-
ee CE hs es wee [96a]
iii. Is this clause entitled to
“significant” weight or
"ME Ts ects [101a}
Applicability of the forum
selection Clawse ....0....-> [107a]
i. The syntactical knot ... . [107a]
ii. General scope of forum
selection clauses ...... [112a}
iii. The forum selection
clause in this case ..... {120a]
C. Certification For Interlocutory Appeal. . [124a]
I. CONCLUSION
26a
Alexander the Great’s simple solution is unavailable to this
court as it confronts the Gordian knot' of tangled interests and
venue questions in litigation stemming from the catastrophic
explosion of a fertilizer plant in northwest Iowa on
December 13, 1994. The explosion which caused deaths,
injuries, and enormous damage. The plaintiff corporation is the
operator of the fertilizer plant. The defendant corporation is the
inventor, designer, and licensor of the ammonium nitrate
neutralizer technology that allegedly precipitated the explosion.
The roles of the parties are reversed in parallel litigation
brought by the present defendant in federal court in Mississippi.
Presently before the court is the question of where these
lawsuits should be litigated. The plaintiff seeks to enjoin
permanently the lawsuit brought by the defendant in
Mississippi, while the defendant seeks to transfer this lawsuit to
Mississippi federal court pursuant to 28 U.S.C. § 1404 or,
failing that, to stay the present litigation. Each of the parties at
first asserted its own “Alexandrian” solution to cut through the
tangle: the plaintiff asserted that the question of the proper
forum for this lawsuit could be resolved simply by application
of the “first-filed rule,” requiring the enjoining of the
defendant’s second-filed action in Mississippi, while the
defendant initially asserted, with equal certainty and vehemence,
that the venue question could be resolved simply by invoking
' Gordius, King of Phrygia, tied his chariot to a hitching post before the
temple of an oracle with an intricate knot, which, it was prophesied, none
but the future ruler of all Asia could untie. In the course of his conquests,
Alexander the Great came to Phrygia, and, frustrated with his inability to
untangle the knot, simply sliced through it with his sword. His subsequent
success in his Asian campaign has been taken to mean that his solution to the
“Gordian knot” fulfilled the prophesy. See, e.g., Funk and Wagnalls
Standard Dictionary of Folklore, Mythology, and Legend 460 (Maria Leach,
ed., Funk & Wagnalls, 1972); Thomas Bullfinch, Mythology 48 (Fuller
abridged ed. 1959).
27a
the forum selection clause in the licensing agreement between
the parties. Following filing of many briefs, an evidentiary
hearing, and oral arguments, the court still lacks a simple
“Alexandrian” solution, yet it must nevertheless unravel the
tangled web of complex venue issues assisted by the parties’
excellent briefs and spirited oral arguments.
I. INTRODUCTION AND BACKGROUND
The court has twice considered the factual and some of the
procedural background to this litigation in published rulings.
See Terra Int’l, Inc. v. Mississippi Chem. Corp., 913 F.Supp.
1306, 1308-13 (N.D.Iowa 1996) (ruling on motion for
discovery guidance as to ex parte contacts with current and
former employees after same hearing in which the present
motions were argued); Terra Int’l, Inc. v. Mississippi Chem.
Corp., 896 F.Supp. 1468, 1469-72 (N.D.Iowa 1995) (granting
TRO to enjoin MCC from seeking to enjoin or restrain Terra’s
lawsuit in Iowa). The court will therefore recite only the
portions of the procedural history and the facts necessary to
provide the background to its consideration of the present venue
questions.
A. Procedural Background
1. The lawsuits
This lawsuit, filed on August 31, 1995, at 12:35 p.m., arises
from the explosion of plaintiff Terra International’s fertilizer
plant in Port Neal, Iowa, on December 13, 1994, which caused
deaths, injuries, and devastation of the plant.? Later on the
2 Related lawsuits in this district, Griffin, et al. v. Mississippi Chem.
Corp., No. C95-4090 (N.D.lowa) (filed on August 31, 1995, at 3:22 p.m.,
against defendant Mississippi Chemical Corporation by seventy-two
individual plaintiffs allegedly damaged by the explosion of the Terra plant
(continued...)
28a
afternoon of August 31, 1995, MCC also filed suit against
Terra in the United States District Court for the Southern
District of Mississippi, Western Division, in a case captioned
Mississippi Chem. Corp. v. Terra Int’l, Inc., No. 5:95CV127
(S.D.Miss.). The lawsuits are not mirror images of each other,
but do involve overlapping claims as well as similar factual and
legal issues. Count I of the present lawsuit, filed by Terra
against MCC, states a negligence cause of action. It alleges
that MCC breached a duty of care and caution in designing the
MCC technology for use by Terra and in providing guidance
and services to ensure that the technology would be reasonably
safe.’ Count II alleges strict liability of MCC on the grounds
that the design of the MCC technology was unreasonably
dangerous and defective, that these conditions were unknown to
Terra, and that these conditions were the proximate cause of the
December 13, 1994, explosion. On both counts, Terra seeks
damages in an unspecified amount in excess of $50,000, an
award of all costs, prejudgment and post-judgment interest, and
such other and further relief as the court may deem just and
proper. Jurisdiction in this lawsuit is founded on diversity of
citizenship of the parties pursuant to 28 U.S.C. § 1332, and
venue is alleged under 28 U.S.C. § 1391(a) and (c) in that a
*(...continued)
on December 13, 1994, asserting causes of action against MCC based on
theories of negligence and strict liability, and breach of express and implied
warranties), and Sahlfeld, et al. v. Mississippi Chem. Corp., No. C95-4092
(N.D.lowa) (filed on September 1, 1995, at 4:35 p.m., and also alleging
negligence and strict liability causes of action and breach of express and
implied warranties, as well as a claim for loss of consortium, against MCC),
have been settled.
3
Terra’s causes of action in this lawsuit and MCC’s causes of action in
its Mississippi lawsuit are quoted in one of the court’s previous rulings, see
Terra int'l, 896 F.Supp. at 1470-72 & nn. 2-5, and therefore need not be
repeated here.
Oi le Agee a ti Ro oe OO > hdd Wah
29a
substantial part of the events or omissions giving rise to the
claims occurred in Woodbury County, Iowa, or a substantial
part of the property that is the subject of this action is situated
in this judicial district, and the defendant is subject to personal
jurisdiction and/or resides in this judicial district.
In MCC’s lawsuit against Terra, filed in Mississippi federal
court, Count I seeks declaratory relief that MCC “did not
defectively design the neutralizer [at the center of the Port Neal
explosion] ... and is not liable to Terra for damages arising
from the explosion under any theory of recovery.” In Count I,
MCC seeks damages for a tort, alleging that Terra’s incident
investigation committee report, a July 17, 1995, press release,
and an address given by Mark Rosenbury, a Terra vice
president, were defamatory of MCC. MCC alleges significant
loss of business as the result of Terra’s allegedly defamatory
communications.
2. The TRO and the venue motions
Once both lawsuits had been filed, Terra notified the court of
its intention to file a motion for an emergency temporary
restraining order (TRO) in this court to enjoin the prosecution
of the litigation between the parties brought by MCC in the
Mississippi federal court. A written copy of the motion for an
emergency TRO was ultimately filed on September 6, 1995,
although the court had previously received a written courtesy
copy. After preliminary telephone conferences on Labor Day,
September 4, 1995, and a hearing on September 5, 1995, the
court entered a TRO much more limited in scope than Terra
had originally requested. The TRO enjoined MCC from
seeking to enjoin or restrain Terra’s lawsuit in Iowa for a
period of up to 120 days. The court also directed that not later
than sixty days from the date of its order granting the TRO, the
parties should file motions to transfer or dismiss or for
permanent injunctions, that responses be filed within a further
30a
twenty-one days, and replies within a further seven days.
These deadlines for filing of motions and supporting briefs were
later extended by order of the court on October 31, 1995, to
allow the parties to file their motions after undertaking
depositions of Terra CEO Burton Joyce. In the October 31,
1995, order, the court also set a hearing on any pending
motions for January 15, 1996, and extended the TRO to and
including February 16, 1996, to give the court time to resolve
the pending motions.
Within the extended deadlines set by the court, Terra moved
for a permanent injunction against MCC’s prosecution of its
lawsuit in Mississippi on December 15, 1995. That same day,
MCC filed a timely motion to transfer this lawsuit to
Mississippi federal court or to stay this lawsuit pending
disposition of the Mississippi litigation. Terra submitted a brief
in support of its own motion on December 15, 1995, and a
brief in resistance to MCC’s motion to transfer or stay on
January 5, 1996. MCC submitted a brief in support of its
motion to transfer or stay on December 15, 1996, and a
resistance to Terra’s motion for permanent injunction on
January 5, 1996.° The parties both filed reply briefs on
January 12, 1996.
This matter, as well as another pending motion disposed of in
a prior order, dated January 25, 1996, came on for hearing on
January 15, 1996. At the hearing, plaintiff Terra International
was represented by counsel George Zelcs and Dean S.
* — Both briefs were overlength, and Terra’s motions to file such overlength
briefs were granted on December 19, 1995, as to its principal brief, and
January 10, 1996, as to its resistance brief.
* Both of MCC’s briefs were likewise overlength. Leave to file these
overiength briefs was granted on December 19, 1995, and January 5, 1996,
respectively.
~~ Ts
es ee eT
3la
Rauchwerger of Clausen Miller, P.C., in Chicago, Illinois, and
by Terrence C. McRea of Zelle & Larson, in Dallas, Texas, as
well as by local counsel Gregg Williams of Heidman,
Redmond, Fredregill, Patterson, Schatz & Plaza, L.L.P., in
Sioux City, lowa. Defendant MCC was represented by its local
counsel, Steve Eckley and Randy Duncan of Duncan, Green,
Brown, Langeness & Eckley, P.C., in Des Moines, Iowa, and
by its general counsel Jay Brumfield, of Jackson, Mississippi,
and by attorney William L. Smith, of Brunini, Grantham,
Grower & Hewes in Jackson, Mississippi.
3. Further briefing and discovery disputes
The arguments of counsel on the venue issues were spirited
and informative, but nonetheless required the court to enter an
order for supplemental briefing on the venue issues. Therefore,
supplemental briefs on venue issues were originally due on
January 25, 1996. A discovery dispute intervened, however,
causing the court to order an extension of the deadlines for
supplemental briefs until seven days after certain discovery
pertinent to the venue issues and the licensing agreement
involved here had been provided by MCC and found
satisfactory by Terra. Terra filed a status report on February 7,
1996, as required by court order, indicating that satisfactory
arrangements had been made between the parties for production
of the documents related to the licensing agreement, and that
Terra anticipated receiving those documents within the next few
days. Terra stated that it was prepared and able to file its
supplemental brief within seven days of actual receipt of the
withheld documents. On February 22, 1996, Terra filed a
further status report, stating that it had received and reviewed
the requested documents and found them satisfactory.
Therefore, Terra stated that both parties were prepared to file
their supplemental briefs on all pending motions on or before
February 28, 1996. The parties did in fact file their
supplemental briefs on February 28, 1996.
32a
That, however, was not the end of the impediments to final
disposition of the pending motions. Instead, just prior to
issuance of a ruling, on March 9, 1996, the court was notified
by counsel for MCC that MCC anticipated filing a motion to
compel and/or request for in camera inspection of certain
documents in Terra’s possession that MCC assumed were
relevant to the venue issue currently before the court and which
Terra asserted were privileged. The court advised counsel for
both parties by letter that the court considered it would be
appropriate to withhold its ruling on the venue questions until
any discovery dispute related to venue had been resolved.
Therefore, the court advised counsel that it would withhold the
filing of its ruling until after March 18, 1996, in order to give
MCC time to file whatever discovery motion it deemed
appropriate. The court advised counsel that if MCC filed a
discovery motion pertaining to the venue question on or before
March 18, 1996, the court would further withhold its venue
ruling until that discovery motion had been resolved. On
March 15, 1996, counsel for MCC advised the court by letter
that the parties had been unable to resolve the eleventh-hour
discovery dispute, and counsel for MCC therefore requested an
extension of one day to file its motion for in camera inspection
of documents owing to insufficient time after the last-minute
breakdown of negotiations to prepare the necessary motion.
On March 19, 1996, MCC filed a motion to compel
production, or, alternatively, for in camera inspection of
documents Terra asserted were privileged. Although the court
had at first advised the parties that it would forestall ruling on
the pending venue motions until the discovery dispute involving
venue-related materials was resolved, upon perusing MCC’s
motion to compel, which more fully explained what documents
were at issue, the court concluded, in an order dated March 19,
1996, that, even if discoverable, these documents would not be
necessary to the court in its disposition of the pending venue
motions. The court therefore stayed disposition of MCC’s
33a
March 19, 1996 discovery motion until after a determination
had been made on the venue motions. On March 21, 1996, the
court entered an order extending the TRO for another thirty
days or until such time as the court disposed of the pending
venue motions.°
Despite this long and tortuous procedural history, the motions
for permanent injunction and to transfer or stay are now fully
ubmitted.’
6 Terra had moved for such an extension prior to expiration of the TRO
on February 16, 1996. At that time, the court had anticipated that its ruling
on the venue motions would be handed down shortly, and that that ruling,
whatever it was, would moot any extension of the TRO. However, the
discovery disputes recounted above intervened, and, in light of the delays,
the lack of any resistance to the extension, and in the interest of maintaining
the status quo pending disposition of the venue motions, the court entered the
thirty-day extension of the TRO on March 20, 1996.
7 After this court heard arguments on the motions for permanent
injunction and to transfer or stay, the Mississippi federal court entertaining
MCC's lawsuit entered its ruling denying Terra’s motion to transfer the
Mississippi litigation to this district. That ruling considered “whether the ...
‘forum selection’ clause outweighs the other factors to be considered under
§ 1404(a), as the § 1404(a) factors favor the defendant Terra,” including the
“first-filed” rule. Mississippi Chemical Corp. v. Terra Int'l, Inc., Case No.
95-CV-127BrN, 1996 WL 293764 (S.D.Miss.), Order Denying Defendant's
Motion To Transfer Venue of January 31, 1996 (hereinafter “Mississippi
Order of January 31, 1996"), p. 3. The Mississippi court found that the
forum selection clause does cover the claims made in the Mississippi case,
is unambiguous and valid, and is entitled to substantial deference under the
law of the Fifth Circuit Court of Appeals. /d. at 3-4. The court found that
Terra therefore had to “prove that the enforcement of the clause would
effectively deprive it of its day in court,” and that Terra had not met that
burden. Jd. at 5. More specifically, in considering whether the § 1404(a)
factors demonstrated a deprivation of Terra’s day in court, the court
concluded that when parties have chosen a forum via a forum selection
clause, they have effectively admitted that the chosen forum is the most
(continued...)
34a
B. Findings Of Fact
The court finds that the proper analysis of the present venue
motions requires, first, identification of the factors relevant to
disposition of the motions, then an examination of those factors
in light of the facts and circumstances in this case. Thus, it
would be more efficient to set forth the pertinent facts and
circumstances as the court considers each factor in turn, rather
than to set forth a body of facts with little indication of their
ultimate significance. Therefore, the court will here set forth
only those findings of fact that have overarching significance in
”(...continued)
convenient one, and the convenience of the parties should therefore not even
be considered. jd. at 7. Turning, to the convenience of witnesses, the court
concluded that both parties would be able to procure experts, officers, and
employees as witnesses in either forum, but that a comparison of other
witnesses did weigh in favor of the lowa forum, although not sufficiently so
to override the forum selection clause. /d. at 7-10. The court also rejected
Terra’s argument that witnesses would need to view all of the evidence
collected in Terra’s lowa warehouse, and noted that substantially identical
neutralizer technology in working order could now be seen in Mississippi,
but not in lowa. /d. at 10. The court also observed that the “thousands”
of documents purportedly relevant to the dispute could be transported to
Mississippi. /d. Thus, although “access to proof” might slightly favor
Terra, again the edge was not sufficient to overcome the forum selection
clause. Jd. The Mississippi court recognized that litigating in Mississippi
might be more burdensome for Terra than for MCC, but that burden was not
sO oppressive as to deprive Terra of its day in court. Jd. at 11.
Furthermore, the court opined that the likelihood of a fair trial was higher
in Mississippi than in lowa, where the local effects of the explosion would
be a part of the general experience of any members of the jury panel. /d.
Finally, the court rejected any argument that the first-filed rule could defeat
a forum selection clause, because such a result would make the negotiation
of forum selection clauses meaningless. /d. at 12. Thus, the court denied
Terra’s motion to transfer venue of the Mississippi litigation to lowa. Id. at
13.
2 Detoe Maal ited ete Esl Risin 46 chante Asean ed
ie " on -
RO. r anda Nag:
nee eee
35a
this venue dispute. Other necessary findings will appear in the
legal analysis to follow.
1. “Bad faith” and “surprise”
The parties have each asserted that the filing of the other’s
complaint was either a “surprise” or an act in “bad faith.”
Before filing the present lawsuit, Terra provided a courtesy
copy of its complaint to MCC by sending it Federal Express on
August 30, 1995, for next morning delivery. As the court
noted above, this lawsuit was filed on August 31, 1995, at
12:35 p.m. Later that same afternoon, MCC’s suit against
Terra was filed in Mississippi federal court. MCC alleges that
Terra’s lawsuit came as a surprise, because Terra’s CEO,
Burton Joyce, had advised MCC CEO and President, Charles
Dunn, that Terra was not contemplating any lawsuit against
MCC as the result of the Port Neal explosion. Therefore,
MCC argues, the filing of Terra’s lawsuit was in “bad faith,”
while any “delay” in the filing of its own lawsuit until after
Terra’s suit was filed was the result of careful review of
information and preparation of a complaint. MCC asserts that
the filing of its declaratory judgment and defamation action was
not planned as a preemptive strike on which Terra beat MCC
to the punch.
For its part, Terra states that no assurances concerning its
ultimate plans to file or not file any lawsuits were ever given.
Rather, Terra characterizes Mr. Joyce as telling Mr. Dunn only
that at the time of Terra’s press release on July 17, 1995,
presenting Terra’s preliminary conclusions concerning the
explosion, he did not personally intend for Terra to take legal
action against MCC, although he did not know what legal
action Terra’s insurers might be planning. Terra states that the
present lawsuit, essentially the long foreseen suit of its insurers,
had to be brought in Terra’s name under Iowa law, because it
seeks judgment for damages in excess of insurance coverage.
36a
Terra, in turn, asserts that it had no notion that MCC was
planning to file suit against it in Mississippi until MCC’s
declaratory judgment and defamation complaint was filed.
The court doubts, from their nature, that either of the
complaints was conceived or drafted in a heated rush to win a
race to the courthouse, but the court is certain that the
complaints would not have been filed the same day by
coincidence. Rather, they were filed the same day only because
MCC received the courtesy copy of Terra’s complaint. The
court also does not find credible the rather disingenuous
assertions by each party of surprise that the other had filed suit.
As the court observed in its order granting a TRO in this
litigation, it has been or should have been apparent to the
parties since the explosion on December 13, 1994, or at least
since investigations early in 1995 as to the cause of the
explosion, that litigation of the sort brought by each party here
was likely to be brought, either by Terra or its insurers, or by
MCC against Terra, and the sole question was when.
Consequently, nothing should have suggested to MCC that the
issues raised in this litigation were or would be resolved
without litigation instituted by Terra or its insurers. Even
accepting that Burton Joyce may have indicated to Charles
Dunn that he did not intend to initiate a lawsuit by Terra against
MCC, Charles Dunn’s deposition testimony indicates that he
Clearly understood that Mr. Joyce was not guaranteeing that no
suit would ultimately be filed, either by Terra or by Terra’s
insurers. Similarly, Terra could hardly be surprised, in light of
the finger-pointing at MCC in Terra’s incident investigation
report, that MCC would seek to protect itself either from
liability or from negative fallout of other kinds by instituting a
lawsuit of its own. The court finds no “bad faith” by either
party in instituting its own lawsuit. Even so, this “race to the
courthouse” is, in realistic terms, a “dead heat,” and the court
will consider in the proper place how much difference a few
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37a
hours in the filing of the two complaints should make in the
determination of which of these lawsuits goes forward or where
these lawsuits are litigated.
2. The forum selection clause
MCC asserts that venue in both this case and its own lawsuit
in Mississippi should be governed by the choice of forum in the
licensing agreement whereby Terra acquired MCC’s technology
for use in the Port Neal plant. On April 28, 1980, the parties
entered into a licensing agreement under which MCC agreed to
furnish Terra with technical information and services necessary
for Terra’s use of MCC’s neutralizer technology at the Port
Neal facility. The licensing agreement contained a forum
selection clause, which MCC asserts is applicable to both its
claims and Terra’s claims, and therefore is either controlling or
persuasive on the venue questions before the court. That clause,
with emphasis added, reads as follows:
This Agreement will be construed in accordance with the laws
of the State of Mississippi. Amy dispute or disputes arising
between the parties hereunder, insofar as the same cannot be
settled by friendly agreement, will be determined in the
District Court of the United States for the Southern District of
Mississippi and, for the purposes of instituting such suit,
COMPANY hereby consents to service in connection
therewith through the Secretary of State for the State of
Mississippi.
The court’s findings concerning the asserted ambiguity and
applicability of this forum selection clause are stated in the
pertinent sections of the following legal analysis.
Of more general significance are the circumstances under
which the licensing agreement containing the forum selection
clause was negotiated. The licensing agreement was negotiated
at arms length between two sophisticated companies. The court
38a
finds that the parties negotiated the contract from positions of
equal bargaining strength. Furthermore, each was represented
by legal counsel. Indeed, Terra was represented by a
prominent Wall Street law firm. Although Terra sought over
thirty changes to the licensing agreement, it did not seek any
changes to the forum selection clause, thereby acquiescing to its
terms. The circumstances under which the licensing agreement
in general, and the forum selection clause in particular, was
negotiated give no hint that the agreement or its terms were the
products of fraud, influence, or overweening bargaining power.
Thus, the forum selection clause represents a negotiated
preference of the parties to litigate covered disputes in federal
court in Mississippi. Furthermore, the court finds nothing
unreasonable about its terms, requiring litigation in the forum
where MCC does business, and where Terra was content to
contract obligations, seek further business relationships, conduct
business of its own, and even to pursue litigation with other
parties. Terra has not argued that the forum selection clause is
invalid, as opposed to “inapplicable” or entitled to “no weight”
in the present controversy, nor does the court find that it could
do so. The court therefore finds the forum selection clause to
be fairly negotiated, valid, and reasonable.
With this brief procedural and factual background in mind the
court turns to its effort to succeed where Alexander failed,
unraveling rather than slicing through the tangle presented by
the pending motions.
II. LEGAL ANALYSIS
(including pertinent findings of fact)
The combination of motions here presents the court with often
convoluted and intertwined strands of legal analysis. However,
the court finds that the most sensible approach under the
circumstances is to identify the separate strands and, if possible,
ee Ep atin RE Cit MP EEE Net
39a
determine how they are knotted together. The court may then
resolve the issues in this case in a logical fashion.
A. Intertwining Of The “First-Filed” And “Transfer”
Analyses
Invocation of the “first-filed rule” is Terra’s principal
argument both for permanently enjoining MCC’s lawsuit in
Mississippi federal court and for denying MCC’s motion to
transfer this litigation to Mississippi. The court will therefore
begin its analysis with a discussion of the purpose of this rule
and its applicability in the present litigation. However, as we
shall see, the “first-filed” analysis involves factors relevant to
MCC’s motion to transfer under 28 U.S.C. § 1404(a).
Furthermore, MCC has argued that the “first-filed” and
“transfer” questions are entirely separable, because, even if the
court could properly invoke the first-filed rule to bring all of
the litigation to this forum, MCC could still move for a transfer
of this litigation to Mississippi pursuant to § 1404(a).
Therefore, MCC argues, it should not be prejudiced in the
consideration of its transfer motion by the fact that it has
already filed the second-filed action in Mississippi. Indeed,
MCC argues that the existence of its action in Mississippi, and
the efforts invested by the court there, indicate that there are
unusual benefits to transferring this case to Mississippi that
might not exist in a case in which the first forum is
inconvenient, but no second forum is already entertaining a
related case. The second forum, in the circumstances presented
here, is prepared to continue litigation of the transferred suit
without interruption.
1. The “first-filed rule”
The parties have both shown themselves to be aware of this
court’s examination of the “first-filed rule” in Brower v. Flint
Ink Corp., 865 F.Supp. 564 (N.D.Iowa 1994), and have both
framed their arguments, at least in part, in light of the
40a
principles stated in that decision. However, the present venue
problem requires further consideration of those principles and
examination of matters not relevant in the Brower case.
Therefore, although this discussion begins with Brower, it
certainly doesn’t end there.
As this court observed in Brower, 865 F.Supp. at 567, the
Eighth Circuit Court of Appeals has recognized the “first-filed
rule”:
The well-established rule is that in cases of concurrent
jurisdiction, “the first court in which jurisdiction attaches
has priority to consider the case.” Orthmann vy. Apple River
Campground Inc., 765 F.2d 119, 121 (8th Cir.1985). This
first-filed rule “is not intended to be rigid, mechanical, or
inflexible,” Orthmann, 765 F.2d at 121, but is to be applied
in a manner best serving the interests of justice. The
prevailing standard is that “in the absence of compelling
circumstances,” Merrill Lynch, Pierce, Fenner & Smith,
Inc. v. Haydu, 675 F.2d 1169, 1174 (11th Cir.1982), the
first-filed rule should apply.
Northwest Airlines v. American Airlines, 989 F.2d 1002, 1005
(8th Cir.1993) (quoting United States Fire Ins. Co. v. Goodyear
Tire & Rubber Co., 920 F.2d 487, 488-89 (8th Cir.1990));* see
also Midwest Motor Express, Inc. v. Central States Southeast
and Southwest Areas Pension Fund, 70 F.3d 1014, 1017 (8th
* The first difference between the present case and Brower is readily
apparent. In Brower, this court observed that Northwest Airlines was not
otherwise on point with that case, because it examined the power of the court
entertaining the first-filed action to enjoin the second-filed action, and that
issue was not relevant in the Brower case, because there the court was
entertaining the second-filed action. Brower, 865 F.Supp. at 567 n. 3.
However, in this case, Northwest Airlines is more relevant, because this
court is entertaining the first- filed action, Terra'’s action. Northwest
Airlines, 989 F.2d at 1005.
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4la
Cir.1995) (stating this rule and citing Northwest Airlines);
Boatmen’s First Nat’l Bank of Kansas City v. Kansas Pub.
Employees Retirement Sys., 57 F.3d 638, 641 (8th Cir.1995)
(same); and see generally E.E.0.C. v. University of
Pennsylvania, 850 F.2d 969 (3d Cir.1988), aff'd on other
grounds, 493 U.S. 182, 110 S.Ct. 577, 107 L.Ed.2d 571
(1990); Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Haydu,
675 F.2d 1169, 1174 (11th Cir.1982); West Gulf Maritime
Assoc. v. ILA Deep Sea Local 24, 751 F.2d 721, 730 (Sth
Cir.1985); Mann Mfg., Inc. v. Hortex, Inc., 439 F.2d 403,
407 (Sth Cir.1971); William Gluckin & Co. v. Int’l Playtex
Corp., 407 F.2d 177, 178 (2d Cir.1969); Brower, 865 F.Supp.
at 567. Thus, the “first-filed rule” “‘gives priority, for purposes
of choosing among possible venues when parallel litigation has
been instituted in separate courts, to the party who first
establishes jurisdiction.’ “ Midwest Motor Express, 70 F.3d at
1017 (quoting Northwest Airlines, 989 F.2d at 1006). The
“first-filed rule” has the benefit of being a
relatively firm rule that, while providing for the exceptional
case, avoids in the main the need for ad hoc balancing of
innumerable factors on a case-by- case basis [and therefore]
is both more predictable for litigants--yielding more speedy,
less expensive adjudication--and more easily applied by the
courts--preserving scarce judicial resources. These are proper
considerations that are consistent with the interests of justice.
Berisford Capital Corp. v. Central States, Southeast &
Southwest Areas Pension Fund, 677 F.Supp. 220
(S.D.N.Y.1988); see also Brower, 865 F.Supp. at 567 (quoting
Berisford Capital ). Application of the “first-filed rule” is
reviewed by the appellate court for abuse of discretion.
Northwest Airlines, 989 F.2d at 1005; Goodyear, 920 F.2d at
489; Minnesota Mining & Mfg. Co. v. Rynne, 661 F.2d 722,
724 (8th Cir.1981) (per curiam).
42a
2. Exceptions to the rule
The parties do not dispute that Terra’s lawsuit was filed first.
What they dispute strenuously is whether filing first should, as
Terra argues, suffice to enjoin MCC’s Mississippi lawsuit, or
whether, as MCC contends, there is an exception to application
of the first-filed rule in this case, which would require a denial
of Terra’s motion for a permanent injunction. The court will
therefore turn to consideration of what exceptions may or may
not arise in the circumstances of these two lawsuits to preclude
application of the first-filed rule.
a. The “compelling circumstances” exception
As the Eighth Circuit Court of Appeals has stated, the
first-filed rule is not to be “mechanically” applied, Boatmen’s
First Nat’l Bank, 57 F.3d at 641; Northwest Airlines, 989 F.2d
at 1005; Orthmann, 765 F.2d at 121, but should give way to
“compelling circumstances” requiring a result different from
that obtained by applying the rule. See, e.g., Midwest Motor
Express, 70 F.3d at 1017; Boatmen’s First Nat’l Bank, 57 F.3d
at 641; Northwest Airlines, 989 F.2d at 1005 (“The mule ...
yields to the interests of justice, and will not be applied where
a court finds ‘compelling circumstances’ supporting its
abrogation.”); Goodyear, 920 F.2d at 488-89; accord Trippe
Mfg. Co. v. American Power Conversion Corp., 46 F.3d 624,
629 (7th Cir.1995) (“This circuit does not rigidly adhere to a
‘first-to-file’ rule,” and finding the rule could be overcome by
the district court’s inherent power to control its docket and a
decision to defer to the court of second filing was therefore
proper). In Brower, this court attempted to categorize or
synthesize from prior decisions what constitutes “compelling
circumstances” for disregarding the first-filed rule. Brower,
865 F.Supp. at 568-73. This court found that
[t]he Eighth Circuit Court of Appeals has ... recognized two
specific factual circumstances in which it will find an
43a
exception to the “first-filed rule” and allow the second suit
to continue: (1) where the plaintiff in the first-filed action
was able to file first only because it had misled the filer of
the second-filed action as to its intentions regarding filing
suit in order to gain the advantages of filing first; and (2)
where the second-filed action is a continuation of a legal
process already begun in that court even though another
action concerning the same issues has been filed in between
in another court and is therefore ostensibly the first-filed
action.
Brower, 865 F.Supp. at 569 (citing Goodyear, 920 F.2d at
489); see also Midwest Motor Express, 70 F.3d at 1017 (finding
“insufficiently compelling” allegations where second filer
alleged prematurity of first filer’s claims and false statements of
fact in the first filer’s complaint, but failed to produce evidence
that the first filer had “promised or indicated in some manner
that it would not sue, that [the second filer] relied on this
representation, and that [the first filer] then filed a surprise
complaint,” also citing Goodyear, 920 F.2d at 489).
MCC specifically alleges that Terra’s “bad faith” in filing this
action, despite supposed assurances from Terra’s CEO that
Terra would not be filing such a suit, falls within the first kind
of “compelling circumstance.” The court, however, concludes
that the evidence of Terra’s supposed “bad faith” presented by
MCC, as is the “evidence” of Terra’s “surprise” at the filing
of MCC’s lawsuit, is at best equivocal, and that arguments by
both parties arising from this equivocal evidence are
disingenuous. Midwest Motor Express, 70 F.3d at 1017 (failure
of proof of filing of first-filed suit contrary to representations
of first filer, and contrary to reliance of second filer, means
case does not fall within first “compelling circumstances”
exception). Thus, the court finds that MCC cannot bring this
case within the first “compelling circumstance” exception to the
first-filed rule identified in Brower. See Brower, 865 F.Supp.
tu
at 569; accord Midwest Motor Express, 70 F.3d at 1017. The
court finds no showing of the second kind of “compelling
circumstance” in this case, continuation of a prior action in the
second-filed forum so that the intervening lawsuit is only
ostensibly the first one filed, id., and, indeed, finds that none
could be made in the circumstances of these lawsuits. MCC’s
lawsuit is not a continuation of a legal process already begun in
Mississippi federal court prior to the filing of Terra’s lawsuit in
this court. Jd.
In Brower, this court noted consideration by various courts of
a number of further circumstances proffered as sufficiently
compelling to overcome the first-filed rule. Brower, 865
F.Supp. at 569-73. Most of those circumstances fall generally
within the so-called “red flags” identified by the Eighth Circuit
Court of Appeals in Northwest Airlines. Northwest Airlines,
989 F.2d at 1007; see also Boatmen’s First Nat’l Bank, 57
F.3d at 641 (identifying the Northwest Airlines “red flags”).
Those “red flags” are:
first, that the “first” suit was filed after the other party gave
notice of its intention to sue; and, second, that the action
was for declaratory judgment rather than for damages or
equitable relief.
Boatmen’s First Nat’l Bank, 57 F.3d at 641 (citing Northwest
Airlines, 989 F.2d at 1007). Neither “red flag” appears here,
because MCC does not claim that Terra only filed suit after
receiving notice of MCC’s intention to file suit, nor is Terra’s
suit for declaratory judgment rather than for damages or
equitable relief. Jd. Indeed, it is MCC’s action, the second-filed
action, that is at least in part for declaratory relief on the very
issues on which Terra seeks damages in this lawsuit.
Thus, it is appropriate to consider here whether MCC’s
second-filed action “was brought to vex the plaintiff in the first
45a
suit.” Brower, 865 F.Supp. at 570 (emphasis in the original)
(citing Berisford Capital, 677 F.Supp. at 225, as posing this
question). The circumstances in this case are similar to those
in Berisford Capital, in that MCC, the second filer, is critical
of the first filer, Terra, for failing to notify MCC of the filing
of its suit until just prior to the filing, especially when the filing
of Terra’s lawsuit was purportedly a “reneging” on a promise
from Terra’s CEO. Cf. Berisford Capital, 677 F.Supp. at 225
& n.2 (second filer was critical of first filer for not receiving
notice of filing of first suit at all until after delay in service by
process server, which led second filer to file its complaint in
ignorance of the first-filed suit). This court has rejected MCC’s
“bad faith” argument, and notes that MCC received some
notice of Terra’s filing, which was obviously sufficient for
MCC to be able to file its complaint the same day. Thus,
although the court considers that, at least in litigation of this
size and inevitability, it would perhaps have been more
courteous for Terra to give MCC more advance notice of the
filing of Terra’s suit, and that nothing would have been lost
thereby, because a preemptive strike by MCC in response to
notice of the suit would plainly have raised the “red flags” of
Northwest Airlines, and would have been little tolerated by this
court, MCC still has not shown “compelling circumstances” in
this case. The comments of the court in Berisford Capital are
as appropriate in these circumstances as they were in the case
before that court: “I can understand counsel’s bruised feelings,
but no equitable considerations arise. Counsel for both sides
were playing hardball; but neither threw bean balls.” Berisford
Capital, 677 F.Supp. at 225 n. 2. Furthermore, because of the
inevitability of the filing of all of the claims presented in the
two lawsuits, this court finds that MCC’s second-filed action
was not intended merely to vex Terra, although there was
undoubtedly some jockeying for a preferred forum on MCC’s
claims in MCC’s decision to file those claims in Mississippi
federal court. Finally, MCC’s motion to transfer is not so
46a
groundless as to suggest that filing of MCC’s suit in Mississippi
was intended only to be vexatious to Terra. Thus, although the
court has found little ground so far to deny Terra’s invocation
of the first- filed rule in support of its motion to enjoin MCC’s
Mississippi lawsuit, the court also has so far found nothing
about the filing of MCC’s suit, apart from mere time of filing,
that supports barring MCC’s suit by application of the first-filed
rule.
b. “Balance of convenience” exception
As this court observed in Brower, in some cases considering
whether or not to allow a second-filed action to proceed, courts
have considered an analogy to 28 U.S.C. § 1404(a) to identify
factors in a “balance of convenience” to the parties, either
before or in addition to considering other special or compelling
circumstances in the “first-filed” analysis. See Brower, 865
F.Supp. at 567-68; see also, e.g., United States v. Costello,
809 F.Supp. 56, 59 (E.D.Wis.1992) (listing “balance of
convenience” factors found in § 1404(a) without identifying that
Statute as the source, and determining that only the court of the
second-filed action could provide complete relief because only
it had jurisdiction over all of the parties); Igloo Prods. Corp.
v. The Mounties, Inc., 735 F.Supp. 214, 216 (S.D.Tex. 1990)
(formulating the § 1404(a) test as whether the first-filed
plaintiff's choice of venue creates “such oppressiveness and
vexation to a defendant as to be all out of proportion to
plaintiff's convenience” or “considerations affecting the court’s
own administrative and legal problems,” and citing as using the
§ 1404(a) analogy Superior Sav. Ass’n v. Bank of Dallas, 705
F.Supp. 326, 330-31 (N.D.Tex.1989), and Merle Norman
Cosmetics v. Martin, 705 F.Supp. 296, 298-301
(E.D.La.1988)); Berisford Capital, 677 F.Supp. at 222
(§ 1404(a) “balance of convenience” was flat, therefore court
considered other special circumstances, but found where, as in
that case, “the circumstances do not clearly call for departure
47a
from the first-filed rule, that rule should be applied without
apology”). Although the Eighth Circuit Court of Appeals does
not appear to have drawn upon this analogy, the inclusion of
these further factors is supported by the view of the Eighth
Circuit Court of Appeals that the first-filed rule “yields to the
interests of justice.” Northwest Airlines, 989 F.2d at 1006;
Goodyear, 920 F.2d at 488 (the first-filed rule “is to be applied
in a manner best serving the interests of justice”). Therefore,
this court cannot read the factors specifically considered by the
court in Northwest Airlines or other decisions from this circuit’s
court of appeals to be exhaustive of the circumstances that may
be found sufficiently “compelling” to overcome the first-filed
rule. After all, the purpose of 28 U.S.C. § 1404(a) is also to
prevent injustice to a party forced to litigate in an inconvenient
forum. 28 U.S.C. § 1404(a) (statute states that transfer may be
made “[f]or the convenience of the parties and witnesses, in the
interest of justice”). Plainly, it would be “unjust,” and
therefore a “compelling circumstance,” if, for example, the
“balance of convenience” under 28 U.S.C. § 1404(a) showed
an extraordinary burden upon the second filer as the result of
litigating in the forum of the first-filed action, or if the transfer
analysis under § 1404(a) otherwise dictated transfer. Therefore,
this court concludes that in circumstances where a § 1404(a)
analysis dictates transfer, the first-filed rule should be
abrogated. Northwest Airlines, 989 F.2d at 1006 (rule should be
abrogated where appropriate “in the interests of justice”).
Thus, a proper consideration of whether Terra may invoke the
“first-filed rule” to obtain an injunction against MCC’s
Mississippi lawsuit compels this court to consider the factors
relevant to MCC’s motion to transfer pursuant to 28 U.S.C.
§ 1404(a) to see if those § 1404(a) factors indicate “compelling
circumstances” precluding application of the first-filed rule.
Because of this overlapping of the “first-filed” and “transfer”
factors and inquiries, the court must now examine the precise
48a
impact of the “transfer” analysis upon application of the
first-filed rule. It should be remembered that 28 U.S.C. §
1404(a) is the statute under which MCC has brought its own
venue motion, its motion to transfer. Also, MCC’s motion to
transfer this litigation to Mississippi is essentially the “obverse”
of Terra’s motion, which is based on the first-filed rule, for an
injunction against MCC’s Mississippi litigation, because such an
injunction would likely result in the “transfer” of MCC’s
Mississippi claims to this district by forcing MCC to refile its
Mississippi claims as counterclaims in this litigation.* Because
the “first-filed” analysis necessarily involves consideration of
factors relevant to MCC’s transfer motion, the court concludes
that it is not the first-filed rule that is dispositive of both
motions before the court, as Terra would have it, but the
“transfer” analysis that is potentially dispositive of both
motions.
To clarify this conclusion, the possible resolutions must be
reviewed in turn. First, Terra’s motion for a permanent
injunction could be granted, but that is only possible if MCC’s
motion to transfer fails, because, as the court concluded above,
§ 1404(a) grounds for transfer present compelling circumstances
creating an exception to the first-filed rule. Second, Terra’s
motion for a permanent injunction could fail on an exception to
the first-filed rule not involving § 1404(a) grounds. In that
situation, unfavorable disposition of Terra’s motion for a
permanent injunction would not necessarily require the granting
of MCC’s motion to transfer. Each lawsuit could proceed
% The Mississippi federal court has already denied Terra’s own § 1404(a)
motion to transfer the Mississippi litigation to this district.
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49a
unimpeded by the other.'® Third, any favorable resolution of
MCC’s motion to transfer would require denial of Terra’s
motion for a permanent injunction, because, once again,
grounds for transfer create exceptions to the first-filed rule, and
would consequently require denial of Terra’s motion for a
permanent injunction. To reiterate, only denial of MCC’s
transfer motion would permit the granting of Terra’s motion for
a permanent injunction.
What is neither practically nor theoretically possible,
therefore, is a situation in which the first-filed rule could
“trump” an analysis pursuant to § 1404(a) that dictated transfer
of this action to Mississippi. Terra’s arguments
notwithstanding, this court has found no authority for the
proposition that the first-filed rule would preclude transfer of an
action from the forum of first filing where the forum of first
filing is found to be inconvenient under § 1404(a). Assuredly,
Terra argues that “this action should not be transferred because
Terra filed first in the Iowa federal court,” but Terra cites no
case standing for that proposition. Rather, Terra’s argument is
pieced together from the following chain of conclusions: (1)
absent compelling circumstances, the first-filed rule should
apply; (2) Terra’s choice of forum is entitled to great weight,
and a transfer shifting the inconvenience from one party to
another need not be granted; (3) the few “dead heat” or “no
winner” cases cited by MCC as establishing that the first-filed
rule does not apply when filings are close together do not find
© Such a result, while theoretically possible, is unlikely to be the final
disposition of the two lawsuits, owing to the closely-related nature of the
claims in the two lawsuits, which would render such bifurcation of the
litigation wasteful of resources of the parties and the courts. Such a waste
of resources is a ground for transfer under § 1404(a), so that this disposition
of the motion for a permanent injunction on non-1404(a) grounds would
likely ultimately lead to a transfer on § 1404(a) grounds.
50a
an exception unless the filings are “nearly instantaneous”
[sic],'' because in such circumstances application of the
first-filed rule “yields no proper resolution,” and only then may
recourse be had to an alternative means of resolution, such as
consideration of factors other than first filing; and, finally, (4)
because this is not a situation involving nearly simultaneous
filings, and no other circumstances here are sufficiently
compelling, there is no reason to depart from the first-filed
rule. Plaintiff [Terra’s}] Memorandum In Opposition To
[MCC’s] Motion To Transfer Or Stay (hereinafter, “Terra’s
Resistance To Transfer”), pp. 3-12.
The weak link in this chain of conclusions, however, is the
third one. It is apparent from the discussion above that courts
do not consider factors other than who filed first only in
circumstances in which the first-filed rule cannot be applied
because the race to the courthouse was too close to call. Rather,
regardless of how close or how distant the racers finished,
courts have consistently recognized that the “compelling
circumstances” exception to the first-filed rule could erase a
victory based solely on the finish results. Indeed, Terra
recognizes this proposition in both its first and last conclusions.
This court has concluded that among the “compelling
circumstances” that suffice to except a case from the first-filed
rule are factors under § 1404(a) that dictate transfer of the
action, none of which depend upon the time of filing of the suit
or suits involved. Thus, application of the first-filed rule
cannot “trump” a contrary result under the “transfer” analysis,
but is instead dependent upon the “transfer” analysis also
favoring retention of the litigation in the first-filed forum.
'' The court believes the situation Terra is describing is “nearly
simultaneous” filing of two lawsuits in different fora.
5la
However, before proceeding to the “transfer” analysis, which
is potentially dispositive of both motions before the court,
because it may provide a “compelling circumstances” exception
to the first-filed rule as well as grounds to transfer this litigation
to Mississippi, the court will consider yet another exception to
the first-filed rule. This exception was not relevant in Brower,
but was asserted by MCC in this litigation and has been alluded
to above.
c. The “dead heat” exception
The court must now consider what is perhaps, practically
speaking, the anterior question in analysis of Terra’s motion for
an injunction based upon the first-filed rule. That question is,
is Terra entitled to invoke the first-filed rule at all in the
circumstances of this case, or does the proximity of the filings
in this case create a third exception to application of the first-
filed rule? The court has thus far assumed that Terra is entitled
to invoke that rule, because it is undisputed that Terra’s lawsuit
was filed a few hours prior to MCC’s filing of its lawsuit in
Mississippi. However, MCC asserts that the closeness of the
filing times of these two lawsuits makes application of the
first-filed rule inappropriate. Terra counters that even if there
is a “dead heat” exception to the first-filed rule, it cannot be
invoked here. Terra asserts that only filings that are “nearly
simultaneous” fall within this exception, and then only because
the court is unable to resolve which action was filed first.
Courts have indeed recognized as another exception to the
first-filed rule what this court describes as a “dead heat” or “no
winner” exception. Furthermore, the time frame within which
courts will recognize such a “dead heat” is surprisingly large,
as the discussion below will demonstrate. However, the court
finds no case in which the “dead heat” exception has stood
alone as grounds for overcoming the first-filed rule, unless the
finish to the race was really just too close to call.
52a
MCC’s principal authority for a “dead heat” exception is
Mobil Oil Exploration Co. v. Federal Energy Reg. Comm'n,
814 F.2d 998 (Sth Cir.1987). MCC reads the case as
concluding that filings that are close in time do not require
application of the first-filed rule, while Terra reads the case as
requiring an exception to the first-filed rule only in very limited
circumstances involving “nearly simultaneous” filings, which
are so close that the court cannot determine which came first.
In Mobil Oil, the Fifth Circuit Court of Appeals was confronted
with a dispute between two parties seeking review of agency
action in circumstances where there was a statutory first-filed
rule for determining venue of such review actions. Mobil Oil,
814 F.2d at 1000 (finding the first-filed rule in 28 U.S.C.
§ 2112(a)). One petitioner claimed that it had filed its petition
for review in the Fifth Circuit Court of Appeals one second
prior to another party’s filing in the District of Columbia
Circuit Court of Appeals, while that other party asserted that its
filing in the Fifth Circuit Court of Appeals had preceded the
Commission’s filing in that circuit by four-tenths of a second
and had been “precisely concurrent” with the Commission’s
posting in the District of Columbia Circuit Court of Appeals.
Id. The frustration of the Fifth Circuit Court of Appeals in
attempting to determine which petition for review had been filed
first was evident:
It should be obvious to even the mechanically inept that if
courts let themselves get drug down this slippery slope of
splitting minutes on the digital watches worn by parties and
timed by calls to the Naval Observatory, the next generation
of races will be run by split-second electronic timing
devices and laser transmissions or some other esoteric
procedures which distort the statutory purpose still further.
Id. The court found that the review petitions had been filed
“simultaneously or substantially simultaneously,” and that in
such situations, the first-filed rule could not resolve in which
rt
a ee ee ee
ee a
53a
venue the review should be conducted. Jd. The court therefore
concluded that “[w]Jhere the first- filing rule yields no proper
resolution and the convenience of the parties in the interests of
justice appears evenly balanced, chance is a just determinant of
where the review should proceed.” Jd. at 1001.
Thus, Mobil Oil does not stand, as Terra contends, for the
proposition that “it is only where the first-filed rule yields no
proper resolution to the controversy involving infinitesimal time
differences in filing that resort may be had to an alternative
means of resolution.” Terra’s Brief In Opposition To Transfer,
p. 6 (emphasis in the original; citing Mobil Oil, 814 F.2d at
1001). Plainly, the Fifth Circuit Court of Appeals considered
“the convenience of the parties in the interests of justice” as an
alternative means to the first-filed rule before turning to a game
of chance to resolve the venue question. Mobil Oil, 814 F.2d
at 1001 (noting that both the Fifth Circuit Court of Appeals and
the District of Columbia Circuit Court of Appeals had resolved
cases of “substantially simultaneous filings” under 28 U.S.C.
§ 2112(a) by lot). This court, as well as the Eighth Circuit
Court of Appeals, also embraces the “interests of justice” as a
test for an exception or alternative to the first-filed rule.
However, the Mobil Oil case also does not stand for the
proposition asserted by MCC, which is that any filings that are
close in time preclude application of the first-filed rule. Rather,
the court in Mobil Oil concluded that it had no means to
determine which lawsuit had been filed first, and could not
make a dispositive determination on the basis of a balance of
convenience. Jd. In answer to both parties’ assertions, this
court notes, first, that it is able to tell which lawsuit was filed
first, Terra’s, but it is also able to make a determination of
whether the first-filed rule should be followed or disregarded
based on an “interests of justice” or “balance of convenience”
analysis under 28 U.S.C. § 1404(a). Thus, although Mobil Oil
54a
does identify a “dead heat” exception, it does not identify an
exception applicable in the circumstances presented here.
Mobil Oil is not the only “dead heat” case identified either by
the parties or the court, however. Two of the most recent
federal decisions, two district court decisions located by the
court, expand the scope of what can be construed to be a “dead
heat” obviating automatic application of the first- filed rule. In
Ontel Prods., Inc. v. Project Strategies Corp., 899 F.Supp.
1144 (S.D.N.Y.1995), the district court for the Southern
District of New York concluded that the fact that one party had
filed first, and that filing was not an “improper anticipatory
filing,” did not end the issue of application of the first-filed
rule. Ontel, 899 F.Supp. at 1153. The court wrote,
Even though the instant action was not improper, and
therefore can potentially benefit from the first-filed rule,
that rule is usually disregarded where the competing suits
were filed merely days apart. Factors Etc., Inc. v. Pro
Ants, Inc., 579 F.2d 215, 219 (2d Cir.1978), cert. denied,
440 U.S. 908, 99 S.Ct. 1215, 59 L.Ed.2d 455 (1979),
Here, because the lawsuits were both filed on the same day,
the first-filed rule is inapplicable.
Ontel, 899 F.Supp. at 1153 (emphasis added). This case does
indeed state a “dead heat” exception comparable to MCC’s
formulation of such an exception.
However, the court in Ontel went on to note that even where
“a significant difference” between the times of filing of two
lawsuits existed, “ ‘temporal precedence is but a factor to
consider and is not controlling.’ “ Jd. (quoting National Patent
Dev. Corp. v. American Hosp. Supply Corp., 616 F.Supp. 114,
118 (S.D.N.Y.1984)). The court therefore relied instead on “
‘{e]ssentially the same factors that ... come into play on a
motion to transfer under [28 U.S.C. § 1404(a) ]’ “ to make its
determination of the proper venue for the litigation befoce it.
ks in Seeeertce:
55a
Id. (again quoting National Patent Dev.). This theme begins to
sound familiar.
Similar principles were intoned in another recent decision
from the Southern District of New York. In 800-Flowers, Inc.
v. Intercontinental Florist, Inc., 860 F.Supp. 128
(S.D.N.Y.1994), the district court again relied upon National
Patent Dev. when it concluded, “ ‘{T]he courts should be
concerned with what the interests of justice require and not with
who won the race [to the courthouse].’ “ 800-Flowers, 860
F.Supp. at 133 (quoting National Patent Dev., 616 F.Supp. at
118). The court found that it was “well-established that district
courts need not slavishly adhere to the first filed rule, and that
where circumstances dictate, ‘great significance should not be
placed upon the dates the actions were filed.’ “ Id. (quoting
Ivy-Mar Co. v. Weber-Stephen Prods. Co., 1993 WL 535166,
* 2 (S.D.N.Y. Dec. 21, 1993)). The court therefore did not
resort simply to the first-filed rule to determine which of two
lawsuits filed twenty days apart, the first for declaratory
judgment, filed in state circuit court, or the second for
trademark infringement and unfair competition, filed in the
federal court in New York, provided the proper venue for the
litigation between the parties. Jd. Instead, the court “assessed
the balancing of conveniences and practical considerations,” as
those factors are applicable to a motion to transfer under 28
U.S.C. § 1404(a), “and [found] that the interests of justice in
this case militate in favor of adhering to the first-filed rule.”
Id. (emphasis added). Thus, in 800-Flowers, although the
first-filed rule was applied, it was not because the first-filed suit
was filed twenty days before the second filed lawsuit, but
because adherence to the first-filed rule comported with the
results of a “transfer” analysis under § 1404(a).
The case upon which the Ontel court relied, Factors Etc.,
Inc., telescoped the “dead heat” exception into another form of
the “compelling circumstances” exception. See Factors Etc.,
56a
Inc. v. Pro Arts, Inc., 579 F.2d 215 (2d Cir.1978), cert.
denied, 440 U.S. 908, 99 S.Ct. 1215, 59 L.Ed.2d 455 (1979).
In Factors Etc., Inc., the Second Circuit Court of Appeals was
called upon to resolve which forum should entertain the lawsuits
of the parties which had been filed a matter of five days apart,
the first one in United States District Court for the Northern
District of Ohio, for declaratory judgment, and the second in
the United States District Court for the Southern District of
New York, seeking injunctive relief and damages for
misappropriation and unauthorized use of the name and likeness
of Elvis Presley. Jd. at 217. The plaintiff in the Ohio suit
moved to transfer the New York suit to Ohio, asserting the
first-filed rule as grounds for the transfer. Jd. The Second
Circuit Court of Appeals acknowledged the first-filed rule, but
noted that it was inapplicable if there are “special circumstances
which justify giving priority to the second [lawsuit].” Jd. at
218. The court then found such “special circumstances,” in the
declaratory and anticipatory nature of the first-filed action, and
the filing of two additional lawsuits by the New York plaintiff
‘n the Southern District of New York, upon which it founded
its conclusion that the district court had not abused its discretion
in allowing the second-filed action to continue in the forum in
which it was filed. Jd. at 219. |
Thus, under this line of cases, the timing of the lawsuits is no
more than a factor to be considered along with § 1404(a)
factors or other “interest of justice” factors, at least where the
two lawsuits in question were filed within several days of each
other. Certainly, these cases demonstrate that the timing of the
lawsuits does not “trump” those other factors, as Terra would
advocate. However, this court does not read these cases as
allowing a “dead heat” factor to stand alone in creating an
exception to the first-filed rule, as MCC would argue, except
where the filings were “nearly simultaneous” and it was
therefore impossible for the court to tell which lawsuit was filed
57a
first. See, e.g., Mobil Oil, 814 F.2d at 1001. Rather, in each
case, including Mobil Oil, in which the court disregarded the
timing of the filings, the court also carefully considered whether
there were “compelling” or “special” circumstances that made
application of the first-filed rule inappropriate, see, e.g.,
Factors Etc., Inc., 579 F.2d at 218-19, or circumstances that
dictated a result where the first-filed rule simply could not.
See, e.g., Mobil Oil, 814 F.2d at 1001.
Although the court concludes that there is no “dead heat”
exception which stands alone, except in the circumstances of
impossibility of determining who filed first, where the filing of
the two lawsuits is, practically speaking, a “dead heat,”’? as in
all other circumstances, the final determination of venue will
not depend upon the first-filed rule alone, but upon a balance of
the dictates of the rule against other factors.’ What a “dead
'2 The court has not been called upon here to determine exactly how large
the window for a “dead heat” would be before the first-filed rule would
preclude consideration of factors other than temporal priority. However, the
court reads all of the cases considered so far to answer that question as
presenting no point of temporal separation of the filings at which the
first-filed suit would always have priority: the determinative issue, which
involves consideration of many factors, including temporal priority, is
whether there are “compelling circumstances” that, in the “interests of
justice,” require departure from the first-filed rule. There may be a point,
however, where acquiescence in the forum of first filing, apparent from a
lengthy failure to pursue litigation in a second forum or failure to move to
transfer the first-filed litigation to another forum, would suggest that the
first-filed forum is not in fact so inconvenient or unjust as to be a
“compelling circumstance” favoring departure from the first-filed rule.
'3 This conclusion does not eviscerate the first-filed rule, because the rule
is still applicable unless other “compelling circumstances” can be presented
requiring a departure from the rule. Thus, the rule is more than a “starting
place” for the analysis, but instead states a rebuttable presumption that the
(continued...)
58a
heat” should do, the court concludes, is counsel the court to
avoid a “slavish adherence” to the first-filed rule, 800-Flowers,
860 F.Supp. at 133, or its “mechanical operation,” Boatmen’s
First Nat’! Bank, 57 F.3d at 641; Northwest Airlines, 989 F.2d
at 1005; Orthmann, 765 F.2d at 121, and remind the court to
examine other considerations besides temporal priority to see if
“compelling circumstances” dictate a departure from the rule.
Northwest Airlines, 989 F.2d at 1005.
Cases cited by Terra do not contradict this court’s conclusion
that a “dead heat” exception cannot stand on its Own, a
conclusion contrary to MCC’s assertions, except in the very
narrow circumstances identified in Mobil Oil in which it is
impossible for the court to determine which suit was filed first.
Nor do Terra’s cases contradict this court's conclusion that
mere temporal priority will not overcome other considerations
whenever a determination of temporal priority can be made, a
conclusion contrary to Terra’s arguments. The additional cases
Terra cites as showing that there is no “dead heat” exception,
except in the circumstances before the court in Mobil Oil, and
which Terra argues show that application of the first-filed rule
may be based on differences of seconds in the filing of separate
lawsuits in separate venues, do involve extremely close
'3(.. continued)
first-filed suit should have priority. The court recognizes that what may be
lost is some of the benefit of the rule, as stated in Berisford Capital, which
included the nule’s “predictability” and ease of application, precisely because
it avoided an ad hoc consideration of innumerable factors. Berisford Capital
Corp., 677 F.Supp. at 220. However, even the Berisford Capital court
recognized that the rule should give way in exceptional circumstances. /d.
Although every second filer may assert that its case involves “exceptional”
or “compelling” circumstances that make the rule inapplicable, courts can
be trusted to recognize the purely frivolous from the well-grounded assertion
of exceptional circumstances, and to invoke the rule when it does present
true economies and serves the interest of justice.
Le
59a
temporal proximity, and do apply the first-filed rule to
determine venue. Terra points out that the difference in time
of filing between the lawsuits in question here is on the order
of hours, not seconds. Although this court, too, rejects a “dead
heat” exception standing alone in any circumstance other than
impossibility of determination of temporal priority, these cases
cited by Terra do not stand for the corollary proposition, upon
which Terra also relies, that temporal priority on the order of
mere seconds or minutes is sufficient to determine venue in the
circumstances of this case.
In Formaldehyde Inst., Inc. v. United States Consumer Prod.
Safety Comm’n, 681 F.2d 255 (Sth Cir.1982), another case
involving the same statutory first- filed rule as was applied in
Mobil Oil, 28 U.S.C. § 2112(a), a statutory rule applicable to
review of agency determinations, one party w~" the race to the
courthouse by a mere ten seconds. Formalaehyde Inst., 681
F.2d at 261- 62. The court relied, in the first instance, on its
prior decision in Southland Mower Co. v. United States
Consumer Prod. Safety Comm’n, 600 F.2d 12 (Sth Cir.1979),
also cited by Terra here, as holding that the statute had
“enacted ‘a mechanical, first filing approach’ to determining
venue in cases such as this,” and had therein relied on a
one-minute difference. Formaldehyde Inst., 681 F.2d at 261.
The court noted prior holdings that “‘[w]here one party
“succeeds in obtaining an earlier time stamp from the Clerk of
one court the agency under review must file there,”’” and
applied that rule to priority among two or more parties seeking
review of the same agency action in different circuits. Jd. at
261-62 (again quoting Southland Mower, 600 F.2d at 12, in
turn quoting United Steelworkers of Am. v. Marshall, 592 F.2d
693, 696 (3d Cir.1979)). So far as these cases employing a
Statutory first-filed rule rely upon a “mechanical” approach,
however, they are plainly out of step with the common law
first-filed rule, which, as recognized in this circuit, is
60a
specifically nor to be “mechanically” applied. Boarmen’s First
Nat’! Bank, 57 F.3d at 641; Northwest Airlines, 989 F.2d at
1005: Orthmann, 765 F.2d at 121. Furthermore, in
Formaldehyde Inst., the Fifth Circuit Court of Appeals went on
to conclude that even if it were unable to determine which
petition was filed first, it would still determine that venue was
proper in that circuit, based on consideration of “transfer”
factors under the statute in question, which also provided for
transfer “for the convenience of the parties in the interest of
justice.” Formaldehyde Inst., 681 F.2d at 262 (looking to
factors favoring transfer listed in 28 U.S.C. § 2112). Thus,
even in the statutory cases, the presumption of venue based on
priority of filing could be overcome on grounds similar to those
applied by courts applying the common-law rule.
Although this court rejects a “dead heat” exception in any but
the narrowest circumstances in which temporal priority cannot
be determined, a circumstance not present here, in this case
involving application of the common-law first-filed rule, mere
priority simply is insufficient ground to retain jurisdiction in
this district if “compelling circumstances,” such as those
considered under § 1404(a), dictate otherwise. Thus, the court
returns to the question of whether this case involves a
“compelling circumstances” exception to the first-filed rule as
the only potentially viable exception presented here. As the
court has noted, analysis of the “compelling circumstances”
exception in the circumstances of this case encompasses the
factors relevant to an analysis of MCC’s motion to transfer
under 28 U.S.C. § 1404(a). The court therefore turns to
consideration of the § 1404(a) factors.
B. The “Transfer” Analysis
The court has so far unraveled the Gordian knot of this '
litigation as to conclude that the significance of the “transfer”
strand in the analysis is twofold. First, the “transfer” analysis,
6la
required pursuant to MCC’s motion to transfer under 28 U.S.C.
§ 1404(a), will determine whether there are grounds to transfer
this litigation to Mississippi federal court, as MCC has
requested. Second, in the process of determining whether
transfer is appropriate, the court will also determine the proper
disposition of Terra’s motion for a permanent injunction by
determining whether there are “compelling circumstances” for
departing from the first-filed rule, which Terra asserts as its
ground for enjoining MCC’s Mississippi lawsuit. Although
resolution of both pending motions now seems to hang by a
single thread, the court finds that thread very knotted.
1. The “transfer” statute and its purpose
The federal transfer statute pursuant to which MCC has
brought its venue motion provides as follows:
§ 1404. Change of venue
(a) For 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.
28 U.S.C. § 1404(a). The Tenth Circuit Court of Appeals has
observed that
[a]lthough drafted in accordance with the forum non
conveniens doctrine, the statute was intended to revise rather
than merely codify the common law. Courts therefore enjoy
greater discretion to transfer a cause pursuant to § 1404(a)
than to dismiss the action based upon forum non conveniens.
Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d
1509, 1515 (10th Cir.1991) (citing Piper Aircraft Co. v. Reyno,
454 U.S. 235, 253, 102 S.Ct. 252, 264-65, 70 L.Ed.2d 419
62a
(1981));'* Howe v. Goldcorp Inv., Lid., 946 F.2d 944, 947 (Ist
Cir.1991) (also elucidating the relationship between § 1404(a)
and the common-law doctrine of forum non conveniens), cert.
denied, 502 U.S. 1095, 112 S.Ct. 1172, 117 L.Ed.2d 418
'* In Chrysler Credit Corp., the Tenth Circuit Court of Appeals also
explained a number of procedural matters concerning transfers, which,
although certainly pertinent should this case be transferred, do not figure in
this court's determination of whether or not the case should be transferred:
An action may be transferred under § 1404(a) at any time during the
pendency of the case, even after judgment has been entered. Once
transferred, the action retains its procedural identity. The transferee
court’s powers are coextensive with those of the transferor court; it
may issue any order or render any judgment that could have been made
in the transferor court had the transfer never taken place. [Thus,]
{w]hen an action is transferred, it remains what it was; all further
proceedings in it are merely referred to another tribunal, leaving
untouched whatever has been already done.
Chrysler Credit Corp., 928 F.2d at 1516 (citations and internal quotation
marks omitted). Later in the opinion, the court also observed that “[s]ection
1404(a) only authorizes the transfer of an entire action, not individualized
claims. A court acting under § 1404(a) may not transfer part of a case for
one purpose while maintaining jurisdiction for another purpose; the section
contemplates a plenary transfer of an entire case.” Id. at 1518 (citations and
internal quotation marks omitted).
63a
(1992).'° The Eighth Circuit Court of Appeals recently made
these observations on the purpose and effect of the statute:
When section 1404(a) was enacted, it made transfer from an
inconvenient venue more available than dismissal had been
at common law, and therefore made forum shopping by
defendants a more common problem. Permitting the
defendant to change the choice of law rules by using section
'° In Howe, the First Circuit Court of Appeals explained the relationship
between the statutory transfer provision and the older, common-law doctrine
of forum non conveniens, as well as the continuing, but limited viability of
the common-law doctrine:
Before 1948, when Congress enacted 28 U.S.C. § 1404(a) (permitting
a “change of venue” between United States district courts for “the
convenience of the parties and witnesses”), federal courts invoked the
doctrine of forum non conveniens to force transfer of a case domestically
from one state or district to another. Since 1948, federal courts have
relied or, § 1404(a)’s statutory authority when transferring cases between
domestic courts[, for example, by dismissing a case brought in New
York where Virginia was more convenient]. They have had to use the
non- statutory forum non conveniens doctrine only to bring about an
international transfer of a case (from the United States to a foreign state)
where plaintiffs may bring approximately the same action in the foreign
forum, but without the unfaimess and inconvenience that trying the case
in this country would entail.
Howe, 946 F.2d at 947-48 (internal citations omitted: emphasis in the
original); see also Mercier v. Sheraton Int ‘1, Inc., 935 F.2d 419, 423 n. 4
(Ist Cir. 1991) (“28 U.S.C. § 1404(a) ... permits transfer of cases from one
federal district court to another more convenient federal court. While the
transfer statute was based on forum non conveniens doctrine, the statute gives
district courts greater discretion to transfer than they enjoyed to dismiss
under the common law forum non conveniens doctrine. Piper Aircraft, 454
U.S. at 253, 102 S.Ct. at 264. With the enactment of § 1404(a), the
common law doctrine of forum non conveniens has lost some of its scope;
its primary significance today is its application in cases where it is alleged
that another country is a more convenient forum. 15 C. Wright and A.
Miller, Federal Practice and Procedure § 3828 at 279- 80 (2d ed. 1986).”).
64a
1404(a) transfer was an unanticipated byproduct of a statute
that was meant as a “federal judicial housekeeping
measure,” Van Dusen [v. Barrack], 376 U.S. [612,] 636, 84
S.Ct. [805,] 819 [11 L.Ed.2d 945 (1964) ], and was aot
intended to change the balance of power between the
parties. Van Dusen addressed that problem by developing
the “look back” procedure whereby the transferee federal
court could simply apply the transferor forum’s law. Id. at
639, 84 S.Ct. at 820-21.
Kansas Pub. Emp. Retirement Sys. v. Reimer & Koger Assocs.,
Inc., 61 F.3d 608, 611 (8th Cir.1995), cert. denied, --- U.S.
----, 116 S.Ct. 915, 133 L.Ed.2d 845 (1996); accord Chrysler
Credit Corp., 928 F.2d at 1515 (“Congress enacted 28 U.S.C.
§ 1404(a) in 1948 ‘as a “federal housekeeping measure,”
allowing easy change of venue within a unified federal
system,’” quoting Piper Aircraft, 454 U.S. at 254, 102 S.Ct. at
265, in turn quoting Van Dusen v. Barrack, 376 U.S. 612, 613,
84 S.Ct. 805, 807-08, 11 L.Ed.2d 945 (1964)). The court will
be mindful of the potential for forum-shopping by the defendant
that this transfer statute may present, and will remember that
the statute was not intended to change the balance of power
between the parties, but was intended as a federal judicial
housekeeping measure. Jd. The court also reminds the parties
of the significance of the Van Dusen rule in litigation in which
the parties have professed themselves somewhat uncertain as to
what state’s law will ultimately apply to what claims."
‘© In Myelle v. American Cyanamid Co., 57 F.3d 411 (4th Cir. 1995), the
Fourth Circuit Court of Appeals discussed in some detail the Van Dusen
rule, noting that the law of the transferor district, which must be applied,
includes the transferor district's choice-of-law rules. Myelle, 57 F.3d at 413.
The court also examined the difference in what law applies depending on
whether transfer is effected under 28 U.S.C. § 1404(a) or 28 U.S.C.
§ 1406(a). Id.
EE ee ae ee ee ee
65a
Another principle of transfers under 28 U.S.C. § 1404(a),
perhaps related to the principle that the transfer statute was not
intended to change the balance of power between the parties,
and upon which Terra specifically relies in this case, is one
identified in Brower: “‘In any determination of a motion to
transfer under § 1404(a), the plaintiff's choice of a proper
forum is entitled to great weight, and will not be lightly
disturbed, especially where the plaintiff is a resident of the
judicial district in which the suit is brought.’” Brower, 865
F.Supp. at 568 (quoting Houk v. Kimberly-Clark Corp., 613
F.Supp. 923, 927 (W.D.Mo.1985)); see also Reid-Walen vy.
Hansen, 933 F.2d 1390, 1396 (8th Cir.1991) (case involving
reversal of dismissal for forum non conveniens); accord
Robinson v. Giarmarco & Bill, P.C., 74 F.3d 253, 260 (11th
Cir.1996) (“‘The plaintiff's choice of forum should not be
disturbed unless it is clearly outweighed by other
considerations,’” quoting Howell v. Tanner, 650 F.2d 610, 616
(Sth Cir. Unit B 1981), cert. denied, 456 U.S. 918, 102 S.Ct.
1775, 72 L.Ed.2d 178 (1982)); Jwmnara v. State Farm Ins. Co..,
55 F.3d 873, 879 (3d Cir.1995) (“‘[I]n ruling on defendants’
motion [to transfer] the plaintiff's choice of venue should not be
lightly disturbed,’ “ quoting 1A PT. 2 JAMES W. MOORE &
BRETT A. RINGLE, FEDERAL PRACTICE 4 0.345[5] at
4360 (2d ed. 1995)),; Scheidt v. Klein, 956 F.2d 963, 965 (10th
Cir.1992) (“‘Unless the balance is strongly in favor of the
movant the plaintiff's choice of forum should rarely be
disturbed,’” quoting William A. Smith Contracting Co. v.
Travelers Indem. Co., 467 F.2d 662, 664 (10th Cir.1972)).
Again, the court has no intention of “lightly disturbing” Terra’s
choice of forum, but will not be bound by an inconvenient
forum, even if it was the first forum to obtain jurisdiction of a
suit between the parties in some sort of race to the courthouse,
if other proper considerations require transfer.
66a
2. Factors in the “transfer” analysis
The Supreme Court has stated that “[s]Jection 1404(a) is
intended to place discretion in the district court to adjudicate
motions for transfer according to an ‘individualized,
case-by-case consideration of convenience and fairness.’”
Stewart Organization, Inc. V. Ricoh Corp., 487 U.S. 22, 29,
108 S.Ct. 2239, 2244, 101 L.Ed.2d 22 (1988) (quoting Van
Dusen, 376 U.S. at 622, 84 S.Ct. at 812). This court must
therefore discover what factors are pertinent to this
“individualized, case-by-case consideration of convenience and
fairness.” Jd. It is plain that the first-filed rule is one factor
that can favor transfer pursuant to 28 U.S.C. § 1404(a), and
may suffice when no contrary “compelling circumstances” are
presented, see, ¢.8., Midwest Motor Express, 70 F.3d at 1017,
but this merely confirms that the “transfer” analysis involves
weighing a number of factors, including who filed suit first
when two lawsuits between the parties are proceeding in
different fora.
The statute itself states only generally the factors the court is
to consider in deciding whether to transfer a lawsuit to a forum
different from the one in which it was filed. 28 U.S.C.
§ 1404(a) (transfer is available “[flor the convenience of the
parties and witnesses, in the interest of justice”). The court
must look to case law to develop a better idea of what factors
weigh in the “transfer” analysis, and to understand the
significance of those factors. In so doing, the court is mindful
that “[b]jecause ‘{q]uestions of venue and the enforcement of
forum selection clauses are essentially procedural, rather than
substantive, in nature,’ Jones Vv. Weibrech:, 901 F.2d 17, 19 (2d
Cir.1990), federal law applies [to venue questions] in diversity
cases irrespective of Erie Railroad Co. v. Tompkins, 304 U.S.
64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938).” Jumara v. State
Farm Ins. Co., 55 F.3d 873, 877 (3d Cir. 1995).
67a
The statute states one factor explicitly concerning what other
venues may be considered to receive the transferred case: the
statute permits transfer of a civil action only to a district in
which the action “might have been brought.” 28 U.S.C.
§ 1404(a); United States v. Copley, 25 F.3d 660, 662 (8th
Cir.1994); accord In re Warrick, 70 F.3d 736, 739, (2nd
Cir.1995) (transferee district must be one in which litigation
“might have been brought,” citing the statute and Van Dusen,
376 U.S. at 619-20, 84 S.Ct. at 810-11); Sunbelt Corp. Vv.
Noble, Denton & Associates, Inc., 5 F.3d 28, 33 (3d Cir. 1993)
(transferee district was not one in which the action “might have
been brought,” and therefore the district court lacked authority
to transfer the case there under § 1404(a), and a writ of
mandamus was issued to correct the error); Landmark Land
Co., Inc. v. Office of Thrift Supervision, 948 F.2d 910, 913
(Sth Cir.1991) (transferee district was not one in which action
“might have been brought,” and district court therefore erred
as a matter of law in ordering transfer, because the bankruptcy
court of transferee district could not have entertained the action,
which did not directly involve the bankruptcy of the plaintiff
bank’s subsidiaries); Chrysler Credit Corp., 928 F.2d at 1515
(Ҥ 1404(a) does not allow a court to transfer a suit to a district
which lacks personal jurisdiction over the defendants, even if
they consent to suit there.”).'’ However, the parties do not
‘7 Thus, § 1404(a) involves two districts, either of which is one in which
the litigation “might have been brought,” while § 1406, another federal
venue statute, is applicable when the first forum is demonstrably improper:
In federal court, venue questions are governed either by 28 U.S.C. §
1404(a) or 28 U.S.C. § 1406. Section 1404(a) provides for the transfer
of a case where both the original and the requested venue are proper.
Section 1406, on the other hand, applies where the original venue is
improper and provides for either transfer or dismissal of the case.
Thus, while either statute could theoretically provide a basis for the
transfer of a case, only § 1406 can support a dismissal.
(continued...)
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appear to dispute that Terra’s lawsuit “might have been
brought” in the Mississippi district to which MCC requests that
this lawsuit be transferred. Thus, this requirement of the
transfer statute need not detain the court longer. However,
other factors are at issue here. The court will therefore turn
first to factors commonly addressed in a transfer analysis, then
turn to the unique factor at the center of MCC’s arguments for
transfer, the existence of a forum selection clause in the
licensing agreement between the parties, which, if applicable,
selects Mississippi federal court as the proper forum for this
litigation.
What are the factors commonly considered by courts in a
“transfer” analysis? Review of the decisions of the courts of
appeals demonstrates that consideration should be made of
factors both enumerated in the statute or otherwise determined
by courts to be “relevant” to the venue question. See, e.g.,
Jumara, 55 F.3d at 879 (noting that the “enumerated factors”
in the statute are “convenience of parties, convenience of
witnesses, or interests of justice,” but that courts have not
limited themselves to consideration of these factors alone,
instead considering “all relevant factors to determine whether
on balance the litigation would more conveniently proceed and
the interests of justice be better served by transfer to a different
forum,” citing 15 WRIGHT, MILLER & COOPER § 3847).
The court will consider these factors in tum here,”
'7(...continued)
Jumara v. State Farm Ins. Co., 55 F.3d 873, 878 (3d Cir.1995) (emphasis
in the original).
‘8 The court does not mean to suggest that the factors, whether
“enumerated” or the products of judicial interpretation, necessarily fall into
distinct groups. Indeed, the discussion to follow will likely demonstrate that
there is considerable overlap among the identified groups of factors, as
(continued...)
ee ee ae ee ee ee
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remembering that, at least in most circumstances, “[t]he burden
of establishing the need for transfer still rests with the movant,”
in this case, MCC. Id.; Scheidt, 956 F.2d at 965 (10th
Cir.1992) (“party moving to transfer a case pursuant to
§ 1404(a) bears the burden of establishing that the existing
forum is inconvenient”); Chrysler Credit Corp., 928 F.2d at
1515-16 (same).
a. “Balance of convenience”
The statute expressly, if not very specifically, identifies one
touchstone of the transfer analysis as the “convenience” of the
parties and witnesses. 28 U.S.C. § 1404(a); see also Stewart,
487 U.S. at 29, 108 S.Ct. at 2243-44 (statute requires
“individualized, case-by-case consideration of convenience”).
As this court observed in Brower, a transfer shifting the
inconvenience from one party to another need not be granted.
Brower, 865 F.Supp. at 568 (citing Houk, 613 F.Supp. at 927);
accord Robinson, 74 F.3d at 260 (district court did not err in
refusing to transfer case where it found transferring case
“would merely shift inconvenience from” one party to the
other). Terra contends that allowing MCC to transfer this
action to Mississippi would merely shift the burden of litigating
in a “foreign” forum from MCC to Terra; therefore, Terra
urges the court to reach the same conclusion it did in Brower,
that the “balance of convenience” is “flat” and presents no
'8(.. continued)
different courts perceive consideration of specific factors to derive from
different “enumerated” factors. However, because of the plethora of factors
courts have considered in making a “transfer” analysis, some “signposts” are
useful as the court steers through the analytical factors and the factual
circumstances of this case. The polestar of the inquiry, as the Supreme
Court indicated in Stewart is an “individualized, case-by-case consideration
of convenience and fairness,” and all of the factors considered below relate
to this inquiry. Stewart, 487 U.S. at 29, 108 S.Ct. at 2243-44.
70a
grounds either for transfer or to overcome the first-filed rule,
which would require denial of MCC’s transfer motion and an
injunction on the Mississippi litigation. Brower, 865 F.Supp.
at 568 (“balance of convenience” was “flat,” and first-filed rule
was therefore applied).
In Jn re Warrick, the Second Circuit Court of Appeals
affirmed that § 1404(a) requires the district court to consider
“the convenience of the parties and witnesses,” and the district
court’s failure to consider this “statutorily mandated
consideration,” in favor of consideration of other factors, such
as “judicial economy,” had led the district court to the wrong
result. In re Warrick, 70 F.3d at 740-41. The appellate court
concluded, first, that the plaintiff's choice of forum “was
entitled to substantial consideration,” although perhaps less so
in a class action lawsuit than in an individual action, and that
the district court’s decision to transfer to another forum was
improper where the present district “would facilitate the parties’
access to the testimony of [key witnesses], as well as to the
documents that comprise and illuminate the [ERISA] Plan [in
question] itself.” Jd. at 741; Enplanar, Inc. v. Marsh, 11 F.3d
1284, 1291 (Sth Cir.1994) (“Federal courts have long
recognized that two of the factors supporting a change in venue
are convenience of the witnesses and the location of records and
documents.”). Thus, part of the “balance of convenience” looks
at comparative accessibility to witnesses and documents or other
evidence.
A more complete picture of the factors involved in a “balance
of convenience” is provided by two decisions from the Tenth
Circuit Court of Appeals. See Scheidt, 956 F.2d at 965-66;
Chrysler Credit Corp., 928 F.2d at 1516. In Scheidt, the
appellate court concurred with the defendant’s assertion of the
following factors as relevant to determining whether transfer is
appropriate: (1) location of the majority of witnesses; (2)
location of pertinent documentary evidence; (3) place in which
LE eT eee
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conduct complained of occurred; (4) which forum’s substantive
law was applicable to the conduct complained of; and (5)
whether the balance of all of these factors meant that the
proposed transferee district was the less expensive and more
convenient forum for the litigation. Scheidt, 956 F.2d at 965
(citing Chrysler Credit Corp., 928 F.2d at 1516, as stating the
factors pertinent to a determination of a § 1404(a) transfer
motion); Chrysler Credit Corp., 928 F.2d at 1516 (listing some
of these among other factors). The Scheidt court then examined
particularly the “convenience of witnesses” factor, concluding
that “ ‘it is necessary that some factual information relative to
the materiality of witness testimony and [other] considerations
... be supplied to the [trial court].’” Scheidt, 956 F.2d at 966
(quoting ROC, Inc. v. Progress Drillers, Inc., 481 F.Supp. 147,
152. (W.D.Okla.1979)). The considerations of witness
convenience noted by the court included more than the number
of witnesses who might be inconvenienced by one forum or the
other; instead, it also involved the “quality and materiality of
the testimony of said witnesses,” whether such witnesses were
“unwilling” to appear in one forum or the other, whether
deposition testimony would be unsatisfactory, and whether the
use of compulsory process would be necessary or possible. /Jd.;
see also Moses v. Business Card Express, Inc., 929 F.2d 1131,
1138-39 (6th Cir.1991) (considering a transfer motion in which
a forum selection clause figured, and finding, “There is no
reason why the testimony of witnesses could not be presented
by deposition.”), cert. denied, 502 U.S. 821, 112 S.Ct. 81, 116
L.Ed.2d 54 (1991). The court in Scheidt held that where the
defendant’s showing on these matters was “meager,” it failed
to demonstrate the requisite inconvenience of defendant’s
witnesses. Jd. Applying similar requirements for showing
inconvenience, the court concluded that conclusory statements
concerning the volume and materiality of documentary evidence
were “clearly deficient,” at least in part because the defendant
failed to demonstrate why the evidence could not be sorted in
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one forum and only the probative evidence moved, at little cost,
to the forum entertaining the case. Jd. Furthermore, even
assuming that the law of the proposed transferee forum would
apply, the court held that this was not a significant concern in
light of the “relative simplicity” of the legal issues involved in
the common law fraud and breach of contract claims. Jd. The
court therefore concluded that there was at most “merely [a]
shifting [of] the inconvenience from one side to the other,”
which “obviously is not a permissible justification for a change
of venue.” Jd. The court therefore held that the district court
had not abused its discretion in denying the transfer motion.
Id.
Although it did not elaborate on the meaning of any particular
factors in the same way it had in Scheidt, in Chrysler Credit
Corp., the Tenth Circuit Court of Appeals identified a number
of factors that are relevant to the “balance of convenience” and
“interest of justice,” as well as to “other relevant factors.”
Chrysler Credit Corp., 928 F.2d at 1516. Those factors
identified by the Tenth Circuit Court of Appeals that this court
deems to relate most closely to the “balance of convenience”
factor enumerated in the statute include the following: “‘the
accessibility of witnesses and other sources of proof, including
the availability of compulsory process to insure attendance of
witnesses; ... difficulties that may arise from congested
dockets; ... [and] all other considerations of a practical nature
that make a trial easy, expeditious and economical.’ “ Id.
(quoting Texas Gulf Sulphur Co. v. Ritter, 371 F.2d 145, 147
(10th Cir. 1967)).
Weighing this “statutorily mandated consideration” first in
this case, In re Warrick, 70 F.3d at 740-41, this court, like the
Mississippi court, see Mississippi Order of January 31, 1996,
p. 7, concludes that there is little doubt that the parties will be
able to produce any witnesses who are employees or officers of
either company in any forum in which this case is litigated,
73a
even apart from any consideration of whether the forum
selection clause is indicative of the convenience of the parties.
While there is assuredly inconvenience to either party in
litigating in the other party's preferred forum, simply because
the party based outside of the forum will have to produce its
witnesses who are employees or officers in a distant forum, as
well as face the logistical problems of litigating “away from
home,” Chrysler Credit Corp., 928 F.2d at 1516 (such factors
may fall within “other considerations of a practical nature that
make a trial easy, expeditious and economical”), the court has
been presented with no compelling evidence that litigating in
Mississippi will be more inconvenient to Terra as a party than
litigating in Iowa will be to MCC. Indeed, Terra conducts
business operations at facilities in Mississippi and has availed
itself of the Mississippi courts on a nuinber of occasions, but
MCC does not routinely conduct operations in this state on a
comparable scale. Therefore, although Terra asserts that it has
a larger number of party witnesses who will be inconvenienced
by the Mississippi forum, the court finds that Mississippi is
neither an unfamiliar nor unduly burdensome forum for Terra,
and the court therefore cannot find that the balance of
convenience of the parties weighs decisively in favor of one
forum or the other.
Thus, the question of convenience devolves to consideration
only of convenience of non-party witnesses. Both parties have
made a concerted effort to provide “some factual information
relative to the materiality of witness testimony and [other]
considerations,” so that the court is not required to rule on the
convenience of witnesses and parties on the basis of merely
conclusory statements or similarly “meager” evidence. Scheidt,
956 F.2d at 966. However, the court is not convinced that all
of the witnesses purportedly required by the parties are of
74a
equivalent materiality.'* Thus, although Iowa may well be the
location of the majority of the witnesses, sheer numbers of
witnesses will not decide which way the convenience factor
tips. Id.
The question of witness convenience, properly viewed, is
whether the forum to which transfer is sought is so inconvenient
as to inhibit the access of one party or the other to necessary
witnesses. See, e.g., In re Warrick, 70 F.3d at 741 (question
is which forum “would facilitate the parties’ access to the
testimony of [key witnesses]”). Furthermore, this question of
the accessibility of witnesses depends upon whether those
witnesses will willingly appear, whether they can be compelled
to appear, and whether alternative means of producing their
testimony exist. Jd. (question of witness convenience included
whether witnesses would be “unwilling” to attend in the chosen
forum); Moses, 929 F.2d at 1138-39 (considering whether
witnesses made unavailable by the forum chosen “could not be
presented by deposition”); Chrysler Credit Corp., 928 F.2d at
1516 (the question of witness convenience is one of “‘the
accessibility of witnesses..., including the availability of
compulsory process to insure attendance of witnesses’”).
Admittedly, non-party Iowa witnesses may be unwilling to
travel to trial in Mississippi, and a forum in Mississippi may
not be able to compel the appearance of non-party Iowa
witnesses for trial, Chrysler Credit Corp., 928 F.2d at 1516
(one criterion is availability of compulsory process for
witnesses), but there is no showing that those witnesses, or any
other essential witnesses, cannot be compelled to appear for
discovery, in a proper place, pursuant to the wide reach of
discovery under the Federal Rules of Civil Procedure, nor is
'9 Specifically, the court is not at all convinced of the materiality of several
witnesses, whom Terra has belatedly asserted are so important, who operate
other MCC technology in the state of lowa.
75a
there any convincing showing that the testimony of any
necessary witness cannot be adequately presented by deposition,
either read into the record from a transcript, or in the form of
a videotaped deposition played for a jury. Scheidt, 956 F.2d at
966; Moses, 929 F.2d at 1138- 39.%° The court finds that the
balance of convenience of witnesses is therefore “flat.”
Terra also places great emphasis on the volume of
documentary and physical evidence in Iowa. The location of
pertinent documentary evidence was an element of the analysis
recognized by the courts in Jn re Warrick, 70 F.3d at 741
(which forum “would facilitate the parties’ access . . . to the
documents that comprise and illuminate” the dispute between
the parties), and Scheidt, 956 F.2d at 965 (which forum is the
location of documentary evidence), and the same relevancy
extends to the location of other physical evidence. Yet, the
court is not convinced that the balance produced by this factor
is as clearly in favor of the Iowa forum as Terra asserts. Terra
contends that a jury must view the recovered evidence in the
“grid” system laid out in its warehouse to understand the
arguments concerning the cause of the explosion. However, it
will certainly not be necessary for the jury to view each and
every piece of evidence recovered from the explosion site.
Rather, videotaping or graphic representation of this grid
system presents a ready alternative, coupled with transport of
only the key pieces of evidence in question. This procedure is
comparable to the procedure found adequate for documentary
20 The fact that a party may have to make choices about which witnesses
to present “live” at a trial in a distant forum, and which to present by
deposition, does not, in this court’s view, amount to undue inconvenience.
Indeed, there might be salutary benefits of such logistical difficulties in
paring an unwieldy list of witnesses, used to impress the court with the
potential inconvenience of a proposed forum, to those necessary to prove the
party’s case, once the forum is decided.
76a
evidence in Scheidt, and this procedure answers both Terra’s
arguments concerning documentary and physical evidence.
Scheidt, 956 F.2d at 966 (defendant failed to demonstrate why
the evidence could not be sorted in one forum and only the
probative evidence moved, at little cost, to the forum
entertaining the case). Furthermore, because the principal issue
in Terra’s claim is the adequacy of MCC’s design of the
neutralizer technology, and the majority of that documentary
evidence is in Mississippi, the court finds a balance of
convenience based on relative accessibility of documentary and
physical evidence, as well as other sources of proof, also is
“flat.”
The court recognizes that two of the convenience factors
consider in Scheidt, the place in which the conduct complained
of occurred, and which forum’s substantive law is applicable to
the conduct complained of, do point to Iowa as the proper
venue. Scheidt, 956 F.2d at 966. Indeed, the court recognizes
that a ruling transferring this litigation, arising from a
catastrophic explosion in Iowa, would come as a surprise to
persons not aware of the multitude of factors that go into a
proper analysis of a motion to transfer a case pursuant to 28
U.S.C. § 1404(a). However, the court finds that place of
occurrence alone has little to do with actual convenience of the
parties conducting litigation as the result of an event when there
is no especial evidentiary significance to the location of the
catastrophe and proof of liability.7 Furthermore, the place in
which the conduct complained of occurred is only partly Iowa.
The conduct on which Terra bases its claims actually took place
*| For example, merely because some forum is the place of an automobile
collision between parties from widely separated states does not, by any
stretch of the imagination, make it a forum convenient for any party, even
if it that is where any negligent conduct on the part of one driver or the
other occurred.
ESA OS oe ee Saal» tle ee cee
T7a
to a very large extent in Mississippi, because it is there that
MCC designed the neutralizer technology at issue here, and
from there that training, warnings, and instructions would have
come. Even conceding that Iowa law might apply to Terra’s
tort claims, an issue on which this court does not here need to
pass, the court has little doubt that a federal court in Mississippi
could apply Iowa law as competently as this court has from
time to time applied the law of other states. Thus, the balance
of all of these factors does mean that neither the proposed
transferee district nor this forum is necessarily the less
expensive and more convenient forum for the litigation.
Scheidt, 956 F.2d at 966.
Because it is MCC’s motion to transfer, and MCC therefore
has the burden in the consideration of these elements of proving
that transfer is appropriate, in viewing the balance of
convenience most favorably to Terra to see if MCC has met its
burden, the court can find no more than a marginal shift in the
balance of convenience towards the Iowa forum, but no decisive
shift towards Mississippi. Because disposition of a motion to
transfer should not merely shift the inconvenience from one
party to the other, the court cannot conclude that MCC has thus
far met its burden of proving that transfer is appropriate.
Brower, 865 F.Supp. at 568 (citing Houk, 613 F. SUPP. at
927); accord Robinson, 74 F.3d at 260 (district court did not
err in refusing to transfer case where it found transferring case
“would merely shift inconvenience from” one party to the
other); Scheidt, 956 F.2d at 966 (“merely shifting the
inconvenience from one side to the other . . . obviously is not
a permissible justification for a change of venue.”). The court
must therefore consider other factors in the § 1404(a) analysis
to see if they favor MCC’s motion.
78a
b. The “interest of justice”
The statute provides that transfer may be made “[flor the
convenience of the parties and witnesses, in the interest of
justice.” 28 U.S.C. § 1404(a). Courts have generally treated
the “interest of justice” as a separate factor they taust consider,
see, e.g., Stewart, 487 U.S. at 29-30 (transfer under the statute
requires “individualized, case-by-case consideration of
convenience and fairness,” and “[t]he district court . . . must
weigh in the balance the convenience of the witnesses and those
public-interest factors of systemic integrity and fairness that, in
addition to private concerns, come under the heading of ‘the
interest of justice.’”); In re Warrick, 70 F.3d at 740
(considering “interest of justice” as a factor separate from
“convenience”); Jumara, 55 F.3d at 879 (finding the
“enumerated factors” under § 1404(a) are “convenience of
parties, convenience of witnesses, or interests of justice”),” but
by what criteria the “interest of justice” is to be evaluated, if it
is separable from the balance of convenience, is less clear.
In Jn re Warrick, the Second Circuit Court of Appeals found
that the district judge had improperly transferred the case on the
basis of its citation of the “interest of justice” clause and a
conclusion that transfer would “serve ‘judicial economy.’” Jn
re Warrick, 70 F.3d at 740. The appellate court apparently
accepted that the “interest of justice,” in the form of “judicial
economy,” is a relevant factor in the transfer analysis, but
= This court would be inclined to read the “interest of justice” clause as
stating the reason “convenience” matters enough to supply a ground for
transfer. However, in the statute, there is neither a conjunctive “and”
between the two clauses, which might suggest their relatedness, nor a
disjunctive “or,” suggesting instead that the two clauses state separate
grounds for transfer. Thus, the court bows, in this case, to the extensive
body of precedent and commentary suggesting that the two clauses state
separate, sufficient grounds for transfer, although, clearly, they may also be
related.
‘ie it Nae a let as
79a
observed that “judicial economy” is not necessarily sufficient
alone to serve as the ground for a transfer. Jd. (citing, inter
alia, In re Scott, 709 F.2d 717, 721 (D.C. Cir. 1983) (per
curiam), which held that “inconvenience to the court is a
relevant factor but, standing alone, it should not carry the
day”). The court noted that, because a related action in the
transferee district had already come to judgment and appeals
had been exhausted, the transfer did not actually result in a
consolidation of multiple actions in one district. Jd. (citing
Factors Etc., Inc., 579 F.2d at 219, as an example of proper
consideration of the possibility of consolidation where several
actions arising from the same transaction were still pending in
the district asserted as the proper venue).
Looking again to the decision of the Tenth Circuit Court of
Appeals in Chrysler Credit Corp., this court finds a number of
factors identified there that this court believes relate most
closely to this “interest of justice” enumerated factor, and less
directly to the “convenience” of the parties and witnesses:
“*the plaintiff's choice of forum; . . . the cost of making the
necessary proof; questions as to the enforceability of a judgment
if one is obtained; relative advantages and obstacles to a fair
trial; . . . the possibility of the existence of questions arising in
the area of conflict of laws; [and] the advantage of having a
local court determine questions of local law. . . .’” Chrysler
Credit Corp., 928 F.2d at 1516 (quoting Texas Gulf Sulphur
Co., 371 F.2d at 147). At least to this court’s way of thinking,
each of these factors relates more to the question of whether the
process and results of a trial in one or the other forum will be
more “fair,” than each does to the question of whether the
parties are inconvenienced by one forum or the other.
Nonetheless, the point is that a proper case-by-case analysis
must be made, not how the court categorizes the factors in that
case-by-case analysis. Stewart, 487 U.S. at 29 (transfer
analysis involves case-by-case consideration of convenience and
80a
fairness). Thus, the court will here consider these factors in
addition to those considered above under the heading of
“convenience.”
Again, the court concludes that there is no decisive tip in the
balance towards either Iowa or Mississippi as the proper forum
for this litigation. The court does not find that “judicial
economy” will necessarily be served better by transferring this
litigation to Mississippi or by enjoining the Mississippi
litigation, Jn re Warrick, 70 F.3d at 740, nor is it persuaded
that either this court or the Mississippi court has already
invested so much effort into the respective cases that to deprive
one court or the other of its case would be a “waste” of judicial
resources. The court simply does not view the necessary
disposition of the venue and discovery motions in the two fora
so far undertaken as “wasted,” no matter where these cases are
ultimately litigated. Neither court has developed an
overwhelming familiarity or expertise in the issues presented
that the other court cannot benefit from by perusing the relevant
rulings.
What is abundantly clear, however, is that these two lawsuits
should properly be consolidated for the sake of both judicial
economy and consistency, and economies to the parties of
pursuing all litigation in a single forum. Jd. (proper
consideration of the benefits of consolidation arises when
litigation in both fora is “live”). In light of the ruling of the
Mississippi court denying Terra’s motion to transfer the
Mississippi litigation to Iowa, half of the litigation between the
parties is not going to occur here, unless this court enjoins the
Mississippi litigation and MCC brings all of its present claims
as counierclaims in this lawsuit. MCC points out that because
there is an existing lawsuit underway in its preferred forum,
this lawsuit could be transferred to Mississippi without
interruption, but the court does not find that there would be any
real interruption in the disposition of MCC’s claims if
8la
prosecution of the Mississippi litigation is enjoined, because of
the continuance of interrelated discovery in this forum and the
existence of this forum as a ready place for the refiling of
MCC’s claims as counterclaims. Thus, although the court finds
that judicial economy, and economy of the parties, both
interests of justice, would be served by consolidation of these
lawsuits in a single forum, the court cannot find on
consideration of these factors that MCC has met its burden to
show that transfer is the proper method to effect those
economies.
The court therefore turns to the factors suggested by the
decision in Chrysler Credit Corp.: “‘the plaintiff's choice of
forum; . . . the cost of making the necessary proof; questions
as to the enforceability of a judgment if one is obtained;
relative advantages and obstacles to a fair trial; . . . the
possibility of the existence of questions arising in the area of
conflict of laws; [and] the advantage of having a local court
determine questions of local law. . . .’” Chrysler Credit Corp.,
928 F.2d at 1516. Unfortunately, these factors are not
deisrminative of the proper forum either. Although Terra’s
current preference as to forum is apparent from the filing of its
lawsuit here, it has previously agreed to Mississippi as a proper
forum if the forum selection clause in the licensing agreement
between the parties is applicable to Terra’s claims. The court
will consider this issue more fully below. As to “‘the cost of
making the necessary proof,’” id., the court concluded above
that the balance of convenience for parties and witnesses was
essentially “flat,” and that conclusion necessarily encompassed
the comparative costs to the parties of litigating in one forum or
the other. The court sees no difficulty in either party enforcing
a favorable judgment on its claims in either federal forum, id.,
and thus does not find this factor decisive. Nor does the court
find any relative advantages or obstacles to a fair trial for either
82a
party in either forum.” Jd. Although the court has noted some
uncertainty on the part of the parties as to what law applies to
what claims, Terra steadfastly asserts that Iowa law applies to
its tort claims, and therefore this forum is the better one. Jd.
(recognizing as a interest of justice “the possibility of the
existence of questions arising in the area of conflict of laws;
[and] the advantage of having a local court determine questions
of local law. . . .’”). However, as the court observed above,
the court is not convinced that the Mississippi federal court
would less competently address claims founded on Iowa law
than this court would address claims or counterclaims founded
on Mississippi law. Therefore, the court finds none of these
factors decisive, and because none is decisive, must conclude
that MCC still has not met its burden to show that transfer is
appropriate.
c. Other “relevant factors”
Although not enumerated in the transfer statute in question
here, courts have also considered other “relevant factors” that
are “many variants of the private and public interests protected
by the language of § 1404(a).” Jumara, 55 F.3d at 879. Thus,
these factors are somewhat different from, but necessarily
Closely related to, the “balance of convenience” or “interest of
justice” factors.
* The court is equally unpersuaded by the argument that MCC can’t get
a fair trial in this forum, because of the awareness of residents, hence
potential jurors, of the explosion, because the district is sufficiently large that
not every potential juror will have a first-hand awareness of anything to do
with the explosion exceeding what Mississippi residents will know about the
explosion, which received national news coverage. By the same token,
Terra has facilities in Mississippi, so that it is no “stranger” in the forum,
and has chosen to litigate in the forum before with some frequency,
undercutting any suggestion that Terra would be prejudiced by a Mississippi
forum for its claims.
a
83a
In Jumara, the Third Circuit Court of Appeals elaborated on
these private and public interests:
The private interests have included: plaintiff's forum
preference as manifested in the original choice; the
defendant’s preference; whether the claim arose elsewhere;
the convenience of the parties as indicated by their relative
physical and financial condition; the convenience of the
witnesses—but only to the extent that the witnesses may
actually be unavailable for trial in one of the fora; and the
location of books and records (similarly limited to the extent
that the files could not be produced in the alternative
forum).
The public interests have included: the enforceability of
the judgment; practical considerations that could make the
trial easy, expeditious, or inexpensive; the relative
administrative difficulty in the two fora resulting from court
congestion; the local interest in deciding local controversies
et home; the public policies of the fora; and the familiarity
of the trial judge with the applicable state law in diversity
cases.
Jumara, 55 F.3d at 878-80 (citations omitted): and compare
Chrysler Credit Corp. (which appears to identify most of these
factors as relating to the Stewart Court’s emphasis on
“convenience and fairness”). Here, the overlap among the
enumerated and unenumerated factors is readily apparent,
because the court finds that it has considered each of these
private and public interests, even if not in so many words, in its
discussion of the “balance of convenience” and the “interest of
justice.” The court must therefore consider what unique “other
relevant factors” may be presented in this case.
Among the private and public interests it had listed, the court
in Jwmara singled out for further consideration the presence of
a forum selection clause in a contract between the parties:
84a
Within this framework, a forum selection clause is treated
as a manifestation of the parties’ preferences as to a
convenient forum. Hence, within the framework of § 1404,
Congress “encompasse[d] consideration of the parties’
private expression of their venue preferences.” Stewart
[Organization, Inc. v. Ricoh Corp.], 487 U.S. [22,] 29-30
(1988)].
Jumara, 55 F.3d at 880; Brock, 933 F.2d at 1257-58 (quoting
other portions of Stewart, 487 U.S. at 30-31, which suggest that
the importance of a venue selection clause is its relationship to
the balance of convenience). The proper consideration of the
forum selection clause in this case is a complex matter, which
is developed in the following sections of this ruling. Indeed,
because the court concludes that all of the factors considered so
far demonstrate that the balance of convenience is “flat” and
neither the interest of justice nor other relevant factors so far
considered provide a clear resolution of which forum is more
appropriate, unless the forum selection clause is dispositive of
MCC’s transfer motion, the court is confronted with a case in
which transfer would merely shift the inconvenience from one
party to another, and therefore, absent other considerations, this
litigation should probably remain in the forum in which it was
first filed. See, e.g., Brower, 865 F. Supp. at 568 (“balance of
convenience” was “flat,” and first-filed rule was therefore
applied); accord Robinson, 74 F.3d at
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