United States District Court, D. Maryland
XINIS UNITED STATES DISTRICT JUDGE
in this contractual dispute is a motion to transfer filed by
the Defendants ServiceMaster Residential/Commercial Services,
LP, d/b/a ServiceMaster; SM Clean L.L.C.; and David Carpenter
(ECF No. 6). The issues are fully briefed and the Court now
rules pursuant to Local Rule 105.6 because no hearing is
necessary. For the reasons stated below, the Defendants'
motion is granted.
August 24, 2013, Stephen Simmons (“Simmons”),
through his company, Plaintiff ServiceMaster of Fairfax, Inc.
(“Plaintiff”), entered into four separate
franchise agreements with ServiceMaster
Residential/Commercial Services, L.P.
(“ServiceMaster”), a company specializing in
cleaning and disaster restoration services. See
Complaint, ECF No. 2 at 6. The franchise agreements granted
Plaintiff a license to operate the ServiceMaster businesses
in territories covering the District of Columbia, Virginia,
and Maryland. Id. at 7. Each franchise agreement
includes an identical forum-selection clause mandating that
all litigation must be venued exclusively in Memphis,
Tennessee-the location of ServiceMaster's principal place
of business. See 1998 Franchise Agreement, ECF No.
6-3 at 20; 1977 Franchise Agreement, ECF No. 6-4 at 19; 1963
Franchise Agreement, ECF No. 6-5 at 19; 1957 Franchise
Agreement, ECF No. 6-6 at 19 (collectively, the
“Franchise Agreements”). The 1963 Franchise Agreement
also includes an addendum amending the Franchise
Agreement's “Applicable Law” section to read:
“The Maryland Franchise Registration and Disclosure Law
allows a franchisee to bring a lawsuit in Maryland for claims
arising under this Law.” ECF No. 6-5 at 26 (the
1, 2016, Plaintiff filed its Complaint in the Circuit Court
for Montgomery County, Maryland against ServiceMaster,
ServiceMaster's general partner “SM Clean
LLC”, and David Carpenter who supports ServiceMaster
franchises in the northeast region (collectively, the
“Defendants”). See ECF No. 2. The
seven-count complaint in part alleges violations of the
Maryland Franchise Registration and Disclosure Law, Md. Code
Ann., Bus. Reg. § 14-201 et seq.
(“Maryland Franchise Law”). See Id. at
20. Plaintiff specifically avers that beginning in 2013,
Simmons sought to sell certain portions of his franchise
territories because business was declining. After Simmons
found suitable buyers for some of his franchise territories,
he informed the Defendants. Defendants, in turn, approached
the same buyers and offered to sell the franchises at a
reduced cost, thereby undercutting Plaintiff. See
Id. at 7. When Simmons contested the Defendants'
ability to sell franchises directly to the prospective
buyers, ServiceMaster retaliated by sending Simmons four
default letters, one for each his franchises. Plaintiff also
complains that the Defendants failed to meet certain other
obligations included in the Franchise Agreements.
15, 2016, the Defendants removed the case from the Montgomery
County Circuit Court to this Court, asserting diversity of
citizenship pursuant to 28 U.S.C. § 1332. See
ECF No. 1. Defendants then filed a motion to transfer this to
the United States District Court for the Western District of
Tennessee pursuant to the Franchise Agreements'
forum-selection clauses under 28 U.S.C. § 1404(a).
See ECF No. 6.
federal transfer statute, 28 U.S.C. § 1404(a), provides
that “[f]or the convenience of parties and witnesses,
in the interest of justice, a district court may transfer any
civil action to any other district or division where it might
have been brought.” Section 1404 is procedural rather than
substantive and so federal law governs the analysis. See
Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22,
32 (1988); Jones v. Weibrecht, 901 F.2d 17, 19 (2d
Cir. 1990); Bank v. Advanced Sys. Servs., Corp., No.
1:09CV23 (GBL), 2009 WL 855730, at *4 (E.D. Va. Mar. 30,
2009) (“[S]ince forum clauses involve procedural issues
and choice of law clauses are substantive, federal law, not
choice of law provisions, should determine whether a forum
clause is mandatory or permissive.”).
§ 1404(a), the court evaluates the propriety of transfer
by considering such factors as the convenience of the parties
and the relevant public interests. Atl. Marine Constr.
Co. v. U.S. Dist. Ct. for W. Dist. Tex., 134 S.Ct. 568,
581 (2013). “The calculus changes, however, when the
parties' contract contains a valid forum-selection
clause, which ‘represents the parties' agreement as
to the most proper forum.'” Id. (quoting
Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 31
(1988)). Because forum-selection clauses are “bargained
for by the parties, ” “a valid forum-selection
clause [should be] given controlling weight in all but the
most exceptional cases.” Id. (alteration in
original) (quoting Stewart, 487 U.S. at 33)
(internal quotation marks omitted).
Atlantic Marine, the United States Supreme Court
explained that a valid forum-selection clause changes the
§ 1404 analysis in three ways. First, “the
plaintiff's choice of forum merits no weight. Rather, as
the party defying the forum-selection clause, the plaintiff
bears the burden of establishing that transfer to the forum
for which the parties bargained is unwarranted.”
Id. This is because, by executing a contract with a
specified forum, the plaintiff has effectively chosen her
forum before the dispute arises. Id. at 581-82.
arguments about the parties' interests are irrelevant.
“When parties agree to a forum-selection clause, they
waive the right to challenge the preselected forum as
inconvenient or less convenient for themselves or their
witnesses, or for their pursuit of the litigation. A court
accordingly must deem the private-interest factors to weigh
entirely in favor of the preselected forum.”
Id. at 582. This means that a district court may
only consider arguments about the public-interest factors.
when a party bound by a forum-selection clause flouts its
contractual obligation and files suit in a different forum, a
§ 1404(a) transfer of venue will not carry with it the
original venue's choice-of-law rules.” Id.
The Court's analysis should militate against enforcing
the forum-selection clause only in the most
“extraordinary circumstances”. Id. at
Court recognizes that Atlantic Marine involved a
mandatory forum selection clause and was silent on whether
the same analysis applies to permissive forum selection
clauses. A mandatory forum selection clause is
“‘one containing clear language showing that
jurisdiction is appropriate only in the designated
forum.'” Davis Media Grp., Inc. v. Best W.
Int'l, Inc., 302 F.Supp.2d 464, 467 (D. Md. 2004)
(quoting Koch v. Am. Online, Inc., 139 F.Supp.2d
690, 693 (D. Md. 2000)). A permissive forum selection clause,
on the other hand, “merely permits jurisdiction in the
selected forum without precluding it elsewhere.”
Id. (internal citation and quotation marks omitted).
The Fourth Circuit has not yet addressed whether Atlantic
Marine applies to a permissive forum-selection clause;
however, this Court notes that the majority of
post-Atlantic Marine courts have declined to extend
Atlantic Marine's holding to permissive
forum-selection clauses. See UEK Corp. v. Univ. of
Manitoba, No. GLR-13-3832, 2015 WL 11027769, at *2 (D.
Md. Mar. 26, 2015) (citing Networld Commc'ns, Corp.
v. Croatia Airlines, D.D., No. 13-4770 SDW, 2014 WL
4724625, at *2 (D.N.J. Sept. 23, 2014) (citing cases)). The
distinction stems from the language employed by the
Atlantic Marine Court. Its discussion of
forum-selection clauses describes those where “a
plaintiff agrees by contract to bring suit only in a
specified forum, ” suggesting that the Supreme
Court contemplated only mandatory forum-selection clauses
when assessing their ...