NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
__________
No. 16-4140
__________
OLDE HOMESTEAD GOLF CLUB, INDIVIDUALLY
AND AS CLASS REPRESENTATIVE,
Appellant
v.
ELECTRONIC TRANSACTION SYSTEMS CORPORATION
__________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(District Court Civil No. 5-16-cv-03914)
District Judge: Honorable Edward G. Smith
__________
Submitted Under Third Circuit LAR 34.1(a)
July 13, 2017
Before: SMITH, Chief Judge, NYGAARD, and FUENTES, Circuit Judges
(Opinion Filed: November 29, 2017)
__________
OPINION*
__________
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
NYGAARD, Circuit Judge.
The Olde Homestead Golf Club challenges the dismissal of its complaint on the
basis of a forum selection clause. The Club sued the Electronic Transaction Systems
Corporation, alleging that ETS over-billed the Club for its services. An agreement
between the Club and ETS contained a forum selection clause identifying state court in
Loudon County, Virginia as the forum for any and all disputes. The Club filed their
lawsuit in the United States District Court for the Eastern District of Pennsylvania and,
pursuant to the aforementioned forum selection clause, that Court dismissed the
complaint. We will affirm.
I.
We begin with a brief synopsis.1 ETS processes electronic payments and provides
other services to a wide array of merchants, including retail stores, restaurants, and golf
courses around the country. The company is headquartered in Loudoun County,
Virginia, and is incorporated within that Commonwealth. ETS clients are required to
sign a Merchant Application and Agreement (MAA), a seven-page contract that governs
the relationship between ETS and its clients. ETS and the Club executed a new MAA in
March of 2007. The MAA contains a forum selection clause, stating that any litigation
that arises between the parties will be brought in the state court in Loudoun County.
Then, in December of 2007, ETS asked the Club to execute another MAA, which the
1
Because we write primarily for the parties, we provide background only as relevant to
the issues on appeal. Given the parties’ fluency with their case, we will omit citations to
the record, except where needed to provide particular emphasis.
2
Club did. This newly executed contact contained the same forum selection clause as the
one agreed-to in March, 2007. The signed agreement was faxed to ETS, but that
transmission only included the first three pages of the document. The final four pages of
the MAA, which included the forum selection clause, were not sent.2
In July of 2016, the Club filed a complaint in the District Court alleging that ETS
breached the MAA by overbilling. The Club also alleged that ETS violated federal law
by charging fees in excess of the mandated maximum for certain transactions. The Club
also attempted to certify a class to include other merchants who executed MAAs with
ETS. The Club averred that ETS failed to provide it (and other putative class members)
with a copy of the forum selection clause, and that the clause was both unenforceable and
unconscionable in any event. ETS filed a motion to dismiss, arguing forum non
conveniens given the existence of the forum selection clause.
The District Court held a hearing and ruled from the bench. It identified three
issues: the Club’s contention that it never saw the forum selection clause, the validity of
that clause, and whether the clause was enforceable. After dismissing the Club’s
argument that it never saw the forum selection clause, the District Court ruled that the
clause was valid and should be enforced. It then dismissed the Club’s complaint without
prejudice to it being re-filed in the appropriate state court.
2
ETS explains that the first three pages of their MAA contain information about the client
(merchant), its name, address, bank account numbers, and annual sales volume. The last
four pages contain terms and conditions that the merchant agrees to when contracting for
ETS’ services. ETS uses a computer system they call a Merchant Application
Management Interface (MAMI) to create and store these agreements. Each ETS client
has its own account in the MAMI that includes the signed copies of the MAA as well as
other pertinent information.
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II.
The Club timely appealed, raising three issues. First, it argues that the District
Court erred by ruling the forum selection clause binding. Next, the Club claims the
District Court erred as to the validity of the clause. The enforceability—or lack thereof—
of the clause is the focus of the Club’s last argument. We exercise plenary review over a
district court’s interpretation and enforcement of a forum selection clause. Salovaara v.
Jackson Nat. Life Ins. Co., 246 F.3d 289, 295 (3d Cir. 2001).
A. The Forum Selection Clause is Binding.
Where the parties to a contract “have specified the forum in which they will
litigate disputes arising from their contract, federal courts must honor the forum-selection
clause ‘[i]n all but the most unusual cases.’” In re: Howmedica Osteonics Corp., 867
F.3d 390, 397 (3d Cir. 2017) (quoting Atlantic Marine Construction Co. v. U.S. District
Court, 134 S. Ct. 568, 583 (2013)). The Club first argues that they never received nor
saw the MAA’s forum selection clause, making this a “most unusual case.” See id. We
reject this argument for the simple reason that the record is void of any evidence to
support their claim.
The Club claims it did not receive the entire MAA before signing it in December
of 2007. The implication is that somehow the Club only received the first three pages of
the document, not the last four where the forum selection clause is located. The record
belies this argument. First, and as noted by the District Court, the Club’s president
acknowledged that he received the complete seven-page version of the MAA and
understood its terms and conditions prior to signing it. Second, ETS introduced evidence
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regarding its MAMI system which is used to create the underlying MAA. This system
generates a single document, and there is no evidence on this record that the final four
pages were not sent to the Club at the time the MAA was created. And third, the pages of
the MAA that were signed by the Club expressly reference the terms and conditions of
the agreement, one of which is the forum selection clause. The Club offered nothing to
challenge this evidence. Therefore, given this lack of evidence that the Club never
received the forum selection clause, the District Court did not err by holding the Club to
the terms and conditions of the MAA.3
B. Validity of the Forum Selection Clause
The Club next maintains that if the forum selection clause is to be considered, the
District Court erred by enforcing it because it was invalid. This is a difficult argument to
make, given that we presume the validity of such clauses. See M/S Bremen v. Zapata
Off-Shore Co., 407 U.S. 1, 10 (1972). In invalidating a forum selection clause, we
typically look for evidence of fraud or over-reaching. See Foster v. Chesapeake Ins. Co.,
Ltd., 933 F.3d 1207, 1218 (3d Cir. 1991). We agree with the District Court that the
Club—which has the burden here—presented no evidence to establish that the clause was
included in the MAA based on any fraud, or was the result of ETS’ over-reaching.
The Club also maintains that the forum selection clause is both procedurally and
substantively unconscionable. According to the Club, the clause is procedurally
3
The Club’s argument that the terms and conditions section of the agreement is a separate
and distinct from the MAA is meritless. The MAA defines “Agreement” as the “terms
and conditions and any supplementary documents indicated herein.” The Club’s
argument fails given this language.
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unconscionable because it was not included in the MAA they executed. Like the District
Court, we reject this position because it is not supported by the record.
Nor is the provision substantively unconscionable. The Club argues that since
Virginia does not have a procedure or mechanism to bring class action lawsuits akin to
Fed. R. Civ. P. 23, the forum selection clause is substantively unreasonable. This
argument misses the mark for a couple of reasons. First, it is not necessarily the case that
because an agreed-to forum does not have the same procedures or policies as other fora,
such a selection clause is substantively unconscionable. See, e.g., Wong v. PartyGaming
Ltd., 589 F.3d 821, 829 (6th Cir. 2009) (“[t]he fact that parties will have to structure their
case differently than if they were litigating in federal court is not a sufficient reason to
defeat a forum selection clause.”). Second, the Commonwealth of Virginia, as the
Appellee points out, has practices and procedures available that parallel those related to
federal class actions. For example, courts in Virginia have acknowledged the
“representation of the parties” doctrine, by which one person is permitted to bring suit on
behalf of herself and others. See, e.g., Miller v. Nat’l Wildlife Fed., 1987 WL 4887171 at
*1 (Va. Cir. Ct., 1987); Indian Creek Sales v. Adkins, 301 F. Supp. 2d 555, 563 (W. D.
Va. 2004). The clause is not, therefore, substantively unreasonable.
C. The Forum Selection Clause Does Not Violate Public Policy
We likewise reject the Club’s argument that the forum selection clause violates
public policy. “A forum-selection clause is presumptively valid and will be enforced
unless the party objecting to its enforcement demonstrates that enforcement of the clause
would violate a strong public policy of the forum.” In re: Exide Technologies, 544 F.3d
6
196, 218 n.15 (3d Cir. 2008) (citations omitted). We again note that such clauses are to
be given “controlling weight in all but the most exceptional cases.” Stewart Org. Inc. v.
Ricoh Corp., 487 U.S. 22, 33 (1988) (Kennedy, J., concurring). The Club bears the
burden here, and has not met it. It seems to us, and as noted by the District Court, the
only public policy implicated by these proceedings is the one favoring the enforcement of
forum selection clauses in these type of contracts between these sophisticated parties.
D. The forum selection clause should be enforced.
Having concluded that the forum selection clause is valid, we are left with the
question of whether it should be enforced. We have little difficulty concluding that it
should. We enforce a valid forum selection clause pointing to a state forum through the
doctrine of forum non conveniens. Atl. Marine Construction Co. v. U.S. District Court,
134 S.Ct. 568, 580 (2013). We review a dismissal based on that doctrine for an abuse of
discretion. Lony v. E.I. Du Pont de Nemours & Co., 886 F.2d 628, 631-32 (3d Cir.
1989). “[W]here the court has considered all relevant public and private interest factors,
and where its balancing of these factors is reasonable, its decision deserves substantial
deference.” Piper Aircraft Co. v. Reyno, 454 U.S. 235, 257 (1981). Four factors guide a
district court’s exercise of discretion in its forum non conveniens analysis: “(1) the
amount of deference to be afforded to plaintiffs' choice of forum; (2) the availability of an
adequate alternative forum ... ; (3) relevant private interest factors affecting the
convenience of the litigants; and (4) relevant public interest factors affecting the
convenience of the forum.” Kisano Trade & Invest Ltd. v. Lemster, 737 F.3d 869, 873
(3d Cir. 2013) (internal quotation marks and footnotes omitted).
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Typically, a court must review these points in making a determination as to the
most convenient forum. But, analysis changes when a forum non conveniens motion is
premised on a valid forum-selection clause, as it is here. Atl. Marine, 134 S. Ct. at 581.
In other words, where the parties have agreed to a valid forum selection clause, they
have, in effect, waived their right to challenge the convenience of the selected forum. Id.
“Only under extraordinary circumstances unrelated to the convenience of the parties”
should a forum selection clause be overturned. Id. No such circumstance is present in
this case. “In all but the most unusual cases, therefore, ‘the interest of justice’ is served
by holding parties to their bargain.” Id. at 583. Here, the District Court correctly noted
that the Club did not meet its heavy burden. Not only will Virginia law apply in this
case, but ETS’ headquarters, records, and witnesses are located in that jurisdiction. The
only connection the Club has to Pennsylvania is that its headquarters is located there. It
was not an abuse of discretion for the District Court to enforce the forum selection clause.
III.
For the foregoing reasons, we will affirm the District Court’s ruling dismissing the
cause.
8