Rivera v. Kress Stores P.R., Inc.

United States Court of Appeals
For the First Circuit

No. 21-1331

ZULEYKA RIVERA,

Plaintiff, Appellant,

v.

KRESS STORES OF PUERTO RICO, INC. ET AL,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO

[Hon. Aida M. Delgado-Colón, U.S. District Judge]

Before

Lynch, Selya, and Kayatta,
Circuit Judges.

Edwin Prado-Galarza, with whom Prado, Núñez & Asociados,
P.S.C. was on brief, for appellant.
Luis Martínez Lloréns, with whom Luis Martínez Lloréns Law
Offices, P.S.C. was on brief, for appellee Kress Stores of Puerto
Rico, Inc.
Nelson N. Córdova Morales for appellee Mark Berezdivin.

March 29, 2022
 SELYA, Circuit Judge. A forum-selection clause may be

either permissive or mandatory, and this appeal requires us to

explore the parameters of that important distinction. Concluding,

as we do, that the district court erred in characterizing the

forum-selection clause at issue here as mandatory, we vacate its

order dismissing the action and remand for further proceedings

consistent with this opinion.

I

Because this appeal flows from the district court's

order granting a motion to dismiss under Federal Rule of Civil

Procedure 12(b)(6), we draw the relevant facts from the complaint,

the documents annexed to it, and other materials fairly

incorporated in it. See Rodi v. S. New Eng. Sch. of L., 389 F.3d

5, 12 (1st Cir. 2004).

In 2009 — a few years after winning the Miss Universe

title in 2006 — plaintiff-appellant Zuleyka Rivera entered into a

business arrangement with defendant-appellee Kress Stores of

Puerto Rico, Inc. (Kress Stores), an established purveyor of

women's apparel, fragrances, and accessories in Puerto Rico. The

plaintiff granted the retailer exclusive rights to use her name,

pageant title, image, and likeness for the development and

promotion of, among other things, branded items of apparel and

fragrances. In exchange, the plaintiff was to be paid $125,000

per year.

- 2 -
 The parties memorialized this arrangement by executing

a professional services agreement (the Agreement) on August 5,

2009. The Agreement was signed both by the plaintiff and by

defendant-appellee Mark Berezdivin (on behalf of Kress Stores).

It included a choice-of-law and forum-selection provision,

stating: "This [A]greement shall be interpreted in accordance

with the laws of the Commonwealth of Puerto Rico and, in case of

any controversies or conflicts in relation with this [A]greement,

the parties agree to voluntarily submit to the jurisdiction of the

Court of First Instance, Superior Court of San Juan."1

The original term of the Agreement was two years. When

the Agreement was set to expire, Kress Stores exercised the

contractual option to extend it for an additional year (until

August of 2012) at a rate of $112,500 per year. Thereafter (the

complaint alleges), annual payments in the previously agreed

amount continued for each "contract year" through August of 2018.

Withal, the parties did not execute any writing extending the

contract: according to the complaint, they never "edit[ed]" the

"contract via writing, but rather via verbal communication and

through the continuous yearly payments."

1 The Agreement was written in the Spanish language. We rely
on a Spanish-to-English translation of the Agreement contained in
the record.

- 3 -
 The plaintiff's sworn statement, annexed to the

complaint, clarifies that on September 1, 2012, the parties decided

to further "extend [their] agreements and [they] verbally agreed

to continue the relationship with yearly compensation." This

"verbal agreement allowed Kress [Stores'] commercial exploitation

of [the plaintiff's] name, image and likeness for a period of one

year and it was renewed every year upon payment of the agreed

compensation."

In 2018, Kress Stores failed to pay the plaintiff the

stipulated annual stipend. Instead, it attempted to renegotiate

the compensation figure. This attempt fell flat and, in March of

2020, the plaintiff sent Kress Stores an accounting of payments

due and a cease-and-desist letter. At that point (the complaint

alleges), Kress Stores and Berezdivin acknowledged Kress Stores'

debt to the plaintiff, made a partial payment, and announced that

they intended to pay the debt according to a revised payment plan.

They also represented that they no longer had any of the

plaintiff's branded merchandise on hand — but the plaintiff alleges

that Kress Stores continued to maintain and market products labeled

"Zuleyka Rivera" at its brick-and-mortar and online stores.

The plaintiff never agreed to a revised payment plan.

Instead, she invoked diversity jurisdiction, see 28 U.S.C.

§ 1332(a), and sued Kress Stores and Berezdivin in Puerto Rico's

- 4 -
federal district court.2 She alleged an amalgam of breach of

contract and tort claims against both Kress Stores and Berezdivin.

Kress Stores moved to dismiss, arguing that the suit was brought

in contravention of the Agreement's forum-selection clause.

Berezdivin also moved to dismiss, arguing that he could not be

held individually liable. The plaintiff opposed both motions.

She argued, as relevant here, that even if the forum-selection

clause was in effect (which she disputed), that clause did not

prohibit the prosecution of her action in the federal district

court.

The district court granted Kress Stores' motion to

dismiss. See Rivera v. Kress Stores, P.R., Inc., No. 20-1350,

2021 WL 952385, at *10 (D.P.R. Mar. 12, 2021). Based on the

allegations of the complaint, the plaintiff's sworn statement, and

the Agreement, it concluded that the parties had committed orally

to extend the Agreement and that the Agreement (including the

forum-selection provision) had continued in effect year-to-year.

See id. at *9. With that foundation in place, the court concluded

that the forum-selection provision required the action to be

prosecuted in the Puerto Rico Court of First Instance. See id. at

2In her suit — brought in July of 2020 — the plaintiff also
purported to sue two unnamed insurance companies. Service of
process upon those anonymous entities was never perfected, and we
make no further reference to them.

- 5 -
*10. Finally, the court denied Berezdivin's separate motion to

dismiss as moot. See id. This timely appeal followed.

II

On appeal, the plaintiff advances two main contentions.

First, she challenges the district court's conclusion that the

parties had extended the terms of the Agreement (and, specifically,

the forum-selection clause) past the first three years of their

relationship. Second, she challenges the district court's

conclusion that the forum-selection clause required the

prosecution of her action in the Puerto Rico court. As we explain

below, the second of these challenges is meritorious and, thus, we

need not address the first.

A

The dispositive issue is whether the district court

erred in dismissing the action based on the forum-selection clause.

Our standards of review are familiar.

Where, as here, a forum-selection clause is alleged to

require reference to a state or foreign forum, the appropriate way

for a federal court to enforce it is through a motion to dismiss

for forum non conveniens. See Atl. Marine Constr. Co. v. U.S.

Dist. Ct. for the W. Dist. of Tex., 571 U.S. 49, 60 (2013). Even

so, "we will not decline to review or enforce a valid forum

selection clause simply because a defendant brought a motion under

[Rule] 12(b)(6)." Claudio-de León v. Sistema Universitario Ana G.

- 6 -
Méndez, 775 F.3d 41, 46 & n.3 (1st Cir. 2014). In other words, it

is permissible to "treat a motion to dismiss based on a forum

selection clause as a motion alleging the failure to state a claim

for which relief can be granted under Rule 12(b)(6)." Id. (quoting

Rivera v. Centro Médico de Turabo, Inc., 575 F.3d 10, 15 (1st Cir.

2009)). So it is here: although Kress Stores' motion mentioned

Rule 12(b)(1) in passing, the parties' briefing below focused on

Rule 12(b)(6); the district court granted Kress Stores' motion on

the authority of that rule; and no party has mounted a procedural

challenge to the district court's invocation of Rule 12(b)(6).

Thus, we treat Rule 12(b)(6) as the procedural modality

underpinning the district court's ruling.

We review de novo a district court's allowance of a

motion to dismiss for failure to state a claim under Rule 12(b)(6).

See Alston v. Spiegel, 988 F.3d 564, 571 (1st Cir. 2021); SEC v.

Tambone, 597 F.3d 436, 441 (1st Cir. 2010) (en banc). In

adjudicating a Rule 12(b)(6) motion, a district court may consider

not only the complaint but also any documents annexed to it (the

authenticity of which are unchallenged) and other such documents

that are sufficiently referenced and/or relied upon in the

complaint. See Rodi, 389 F.3d at 12; Beddall v. State St. Bank &

Tr. Co., 137 F.3d 12, 17 (1st Cir. 1998). For purposes of this

appeal, then, we — like the district court — may consider the

complaint, the plaintiff's sworn statement, and the Agreement.

- 7 -
 In an action brought in diversity jurisdiction, a

federal court must pay heed to whether, under the Erie doctrine,

see Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938), federal or

state law supplies the rules of decision. Here, however, we need

not pursue any choice-of-law analysis. The parties agree that

there is no discernable conflict between federal common law and

Puerto Rico law with respect to forum-selection clauses, and they

have acquiesced to the application of federal common law with

respect to the question of contract interpretation. Cf. Borden v.

Paul Revere Life Ins. Co., 935 F.2d 370, 375 (1st Cir. 1991)

(noting that when "the parties have agreed about what law governs,

a federal court sitting in diversity is free, if it chooses, to

forgo independent analysis and accept the parties' agreement").

Despite the Agreement's choice-of-law provision directing the

application of Puerto Rico law to the interpretation of its

provisions, the parties rely on federal precedents applying law

from a variety of jurisdictions, along with general contract-law

principles. Consequently, we — like the district court — will

apply federal precedents and general principles of contract law.

Cf. Lloyd's of London v. Pagán-Sánchez, 539 F.3d 19, 26 (1st Cir.

2008) (concluding that when all counsel had "argued that New York

law and Puerto Rico law were essentially equivalent," court could

apply Puerto Rico law, notwithstanding contractual provision

directing application of New York law); John Wyeth & Brother Ltd.

- 8 -
v. CIGNA Int'l Corp., 119 F.3d 1070, 1074 (3d Cir. 1997) (Alito,

J.) (applying general contract law to interpret forum-selection

clause in agreement governed by English law because parties "ma[de]

little reference to English contract law"). In any event, the

exclusive application of Puerto Rico law would not alter the

outcome of the case at hand. See Centro Médico, 575 F.3d at 16-

17; see also Autoridad de Energía Eléctrica de P.R. v. Ericsson

Inc., 201 F.3d 15, 18 (1st Cir. 2000) (applying Puerto Rico law);

Constructora Andrade Gutiérrez, S.A. v. Am. Int'l Ins. Co. of P.R.,

467 F.3d 38, 45 (1st Cir. 2006) ("Under Puerto Rico law, we accord

the terms of a contract their plain meaning, reading the contract

as a whole.").

B

The plaintiff argues that the Agreement's forum-

selection clause was not enforceable in the manner prescribed by

the district court because it did not require the prosecution of

her action in a particular forum.3 Federal common law regarding

3 The plaintiff also claims that the oral extension of the
parties' business arrangement (from August of 2012 forward) did
not incorporate the forum-selection provision. We need not address
this additional claim but, rather, assume — favorably to the
defendants — that the oral extension encompassed the forum-
selection clause. We vacate that portion of the district court's
order regarding the terms of the parties' oral extension of the
Agreement, and we take no view on the underlying question of
whether and to what extent the terms of the Agreement were
incorporated into the oral agreement that followed. That question
is best resolved, after discovery, in the district court.

- 9 -
the enforceability of forum-selection clauses ordinarily entails

several steps. See Claudio-de León, 775 F.3d at 46-47. Here,

however, we need not trace those steps: this appeal rises or falls

on the outcome of a threshold inquiry into whether the Agreement's

forum-selection clause is permissive or mandatory. See id. at 46.

The distinction is easily stated. "A forum selection

clause may make the designated forum merely available for

resolution of disputes or it may make it 'exclusive,' at least in

the sense that either side can insist upon it as the venue."

Huffington v. T.C. Group, LLC, 637 F.3d 18, 21 (1st Cir. 2011)

(citing Centro Médico, 575 F.3d at 17). The former type of forum-

selection clause is deemed "permissive" and is "often described as

[a] 'consent to jurisdiction' clause[]." Centro Médico, 575 F.3d

at 17 (quoting 14D Charles Alan Wright, Arthur R. Miller & Edward

H. Cooper, Federal Practice and Procedure § 3803.1 (3d ed. 1998)).

Such clauses "authorize[] personal jurisdiction in a designated

forum but do[] not prohibit litigation [of covered claims]

elsewhere." 17 James W. Moore, Moore's Federal Practice § 111.04

(3d ed. 2021); see Claudio-de León, 775 F.3d at 46. Put another

way, if one party brings a covered claim in the designated forum,

the opposing party has waived its right to object to personal

jurisdiction in that forum. See Ericsson, 201 F.3d at 18-19.

The latter type of forum-selection clause is deemed

"mandatory" because it "dictates the exclusive forum for

- 10 -
litigation." 17 Moore's Federal Practice, supra, § 111.04. Absent

a waiver, such clauses require parties to litigate covered claims

exclusively in the designated forum. See Atlas Glass & Mirror,

Inc. v. Tri-N. Builders, Inc., 997 F.3d 367, 374 (1st Cir. 2021).

The plaintiff contends that the forum-selection clause

at issue here is permissive: it reflects the parties' consent to

personal jurisdiction in a designated forum and does not require

litigation of covered claims in that forum. See, e.g., Bautista

Cayman Asset Co. v. Fountainebleu Plaza, S.E., 999 F.3d 33, 35

(1st Cir. 2021); Ericsson, 201 F.3d at 18-19. The district court

disagreed, see Kress Stores, 2021 WL 952385, at *5-6 — and that is

the crux of the dispute that we must resolve.

We approach this dispute mindful that the forum-

selection provision is a creature of contract, and its

interpretation depends on customary principles of contract

interpretation. See Ericsson, 201 F.3d at 18; see also 17 Moore's

Federal Practice, supra, § 111.04. Consequently, we look to the

"specific language of the contract at issue," Silva v. Encyc.

Britannica Inc., 239 F.3d 385, 388 (1st Cir. 2001), in order to

determine whether the provision's terms reflect "clear language

indicating that jurisdiction and venue are appropriate

exclusively" in a designated forum, Claudio-de León, 775 F.3d at

46 (quoting Centro Médico, 575 F.3d at 17).

- 11 -
 Here, our appraisal of the forum-selection language must

be guided by "common-sense canons of contract interpretation,"

Smart v. Gillette Co. Long-Term Disability Plan, 70 F.3d 173, 178

(1st Cir. 1995) (citation omitted), and general principles of

contract law. In conducting this appraisal, we adhere to the

convention that "contracts containing unambiguous language must be

construed according to their plain and natural meaning." Id.

We conclude that the Agreement's forum-selection clause

is permissive: it merely authorizes litigation of covered claims

in a designated forum, but does not compel resort to that forum.

One key indicator of its permissive nature is that it does not use

any terms that fairly suggest exclusivity of the specified forum.

The operative language is that "the parties agree to voluntarily

submit to the jurisdiction of the Court of First Instance, Superior

Court of San Juan." This language is most naturally read as a

mutual consent to jurisdiction, and the verb "agree" — on its own

— does not suggest the exclusivity of the forum. See Ericsson,

201 F.3d at 18-19 (concluding that forum-selection clause stating

that the "parties agree to submit to the jurisdiction of" certain

courts contains no language providing for exclusive jurisdiction).

Such a reading of the forum-selection clause comports

with our interpretation of a nearly identical forum-selection

clause in Bautista Cayman Asset. Refined to bare essence, the

forum-selection clause in that case, like the one here, reflects

- 12 -
an agreement by the parties to "submit to the jurisdiction" of a

designated court. Bautista Cayman Asset, 999 F.3d at 35. That

language, we explained, is strongly reminiscent of the permissive

forum-selection clause in Ericsson, and indicates only that the

parties agreed to "submit themselves to the jurisdiction of a

particular court." Id. (emphasis in original). In other words,

a forum-selection clause specifying that the parties agree to

submit to the jurisdiction of a particular court does no more than

signify the parties' "mutual assent to a particular court's

'jurisdictional authority.'" Id. (quoting Summit Packaging Sys.,

Inc. v. Kenyon & Kenyon, 273 F.3d 9, 13 (1st Cir. 2001)). By its

very nature, such a provision is "not a negative exclusion of

jurisdiction in other courts." Ericsson, 201 F.3d at 18-19 (citing

Redondo Constr. Corp. v. Banco Exterior de España, S.A., 11 F.3d

3, 6 (1st Cir. 1993)).

The district court rejected the plaintiff's proffered

comparison of the Agreement's forum-selection clause to the forum-

selection clause in Ericsson. The court identified certain textual

differences that, in its view, "drastically changed the nature and

effect of the clause." Kress Stores, 2021 WL 952385, at *5. It

also reasoned that a permissive forum-selection clause would "make

no sense" in light of the parties' circumstances. These

justifications cannot bear the weight that the district court

loaded upon them.

- 13 -
 The Agreement's forum-selection clause deviates from the

Ericsson clause in two principal ways. First — unlike the clause

at issue in Ericsson — the Agreement's forum-selection clause

begins with language that articulates its application "in case of

any controversies or conflicts." The defendants stressed this

phrase at oral argument, and they — like the district court —

linked it with the infinitive phrase "to voluntarily submit." That

attempted linkage does not withstand scrutiny: reading the forum-

selection clause as a whole, the infinitive phrase plainly refers

to the parties, not to the submission of "controversies or

conflicts." See Bautista Cayman Asset, 999 F.3d at 35.

Recognizing the awkwardness of its reading, the district

court theorized that any other construction would "choose form

over substance" given the parties' "clear" intent that state court

jurisdiction would be "predicated" on the occurrence of "any

controversy or conflict in relation." Kress Stores, 2021 WL

952385, at *5-6 (quotations and alterations omitted). The decisive

consideration, however, is what the words employed by the parties

in the forum-selection clause tell us about the parties' intent.

See McCarthy v. Azure, 22 F.3d 351, 359 (1st Cir. 1994) (analyzing

text of agreement as "best indicator of the parties' intent").

There are no magic words, and a forum-selection clause may

designate an exclusive forum in a variety of ways. The common

denominator, though, is that the clause, fairly read, must state

- 14 -
in clear language that the parties agree to channel a particular

suit or class of suits exclusively to a designated court for

resolution. See, e.g., Claudio-de León, 775 F.3d at 45-47

(concluding that forum-selection clause providing that disputes

"shall be submitted" to designated court was mandatory); Summit

Packaging Sys., Inc., 273 F.3d at 13; Silva, 239 F.3d at 386, 388-

89 (concluding that forum-selection clause providing that "all

actions . . . must be brought" in designated court was mandatory).

Read in context, the language to which the district court alluded

signifies only that the parties consented to submit themselves to

the jurisdiction of the Puerto Rico court for controversies or

conflicts arising in connection with the Agreement. See Bautista

Cayman Asset, 999 F.3d at 35 (finding forum-selection clause

permissive even though clause began with phrase "[i]n the event of

any litigation that arises in connection with this contract").

The second main way in which the Agreement's forum-

selection clause deviates from the Ericsson model is no more

supportive of the district court's rationale. Unlike in Ericsson,

the Agreement's forum-selection clause mentions a single court,

not a group of courts. But this distinction makes no difference.

Consenting to the jurisdiction of a single court, without more,

does not imply a negative exclusion of jurisdiction elsewhere.

Any implication of that sort would be tenuous and, thus, at a far

remove from the requisite "clear language indicating that

- 15 -
jurisdiction and venue are appropriate exclusively" in a

designated court. See, e.g., Bautista Cayman Asset, 999 F.3d at

35 (holding that forum-selection clause specifically identifying

single court was permissive); Prestige Cap. Corp. v. Pipeliners of

P.R., Inc., 849 F. Supp. 2d 240, 246 (D.P.R. 2012) (similar).

Thus, the textual differences between the Agreement's forum-

selection clause and the Ericsson forum-selection clause provide

no basis for concluding that the clause is mandatory.4

Looking beyond the text, the district court reasoned

that the parties' circumstances show that there is no likelihood

of a personal-jurisdiction issue. See Kress Stores, 2021 WL

952385, at *6. Because a permissive forum-selection clause would

provide no "tangible benefit," the court suggested, the forum-

selection clause should be interpreted as mandatory. Id.

We do not believe that such a speculative thesis can

permit a court to turn the unambiguous language of a contractual

provision inside out. See Ericsson, 201 F.3d at 19 (rejecting

argument that because "there was no need for a consent to personal

jurisdiction," permissive forum-selection clause was "mere

surplusage"). A party mulling the possibility of future legal

action has "an obvious interest in cutting off any possible

4 By contrast, in Centro Médico, we found that a forum-
selection clause similar to the Ericsson clause was mandatory
because it, unlike the Ericsson clause, reflected an agreement by
putative plaintiffs to file their complaints in a particular court.

- 16 -
litigation on personal jurisdiction grounds, even if the issue

[i]s unlikely to be raised." Id. A permissive forum-selection

clause reflecting consent to personal jurisdiction in a designated

court may be useful not only where personal jurisdiction is likely

to become an issue (for example, where a putative defendant is out

of state) but also in less obvious cases (for example, where an

in-state defendant subsequently moves to another jurisdiction).

Securing advance consent to the jurisdiction of a designated court

is, in effect, a way for a party to manage risk. See Dunne v.

Libbra, 330 F.3d 1062, 1064 (8th Cir. 2003).

This case illustrates the point. One might expect the

plaintiff — as the recent and much-celebrated winner of an

international beauty pageant — to be peripatetic. The Agreement,

executed in 2009, recites that the plaintiff was then residing in

Puerto Rico. The record does not reveal where the plaintiff lived

at the time the parties orally extended their business arrangement.

Eventually, though, she apparently moved: the complaint, filed in

2020, predicates diversity jurisdiction, in relevant part, on her

Florida citizenship. Contrary to the district court's musings,

the raison d'être for the clause may very well have been to nail

down the plaintiff's consent to personal jurisdiction in the

designated court.

In the end, the Agreement's forum-selection clause

reflects only the parties' agreement to submit themselves to the

- 17 -
jurisdiction of a particular court. See, e.g., Bautista Cayman

Asset, 999 F.3d at 35; Ericsson, 201 F.3d at 16. That limited

type of consent "does not by its terms exclude jurisdiction in

another court." Bautista Cayman Asset, 999 F.3d at 35. We hold

that the district court erred in dismissing the action based on

the forum-selection clause.

III

We tie up one loose end. In granting Kress Stores'

motion to dismiss, the district court dismissed the case in its

entirety. That dismissal swept away the plaintiff's claims against

Kress Stores as well as her claims against Berezdivin, and, thus,

rendered Berezdivin's independent motion to dismiss moot. See

Cruz v. Farquharson, 252 F.3d 530, 533 (1st Cir. 2001). In

consequence of this appeal, the district court's order of dismissal

will be vacated. That vacation, in turn, undercuts the rationale

for the district court's determination that Berezdivin's motion to

dismiss had become moot. Accordingly, that ruling is also vacated.

See Costa-Urena v. Segarra, 590 F.3d 18, 30 (1st Cir. 2009)

(explaining that vacation of judgment on claim necessarily led to

vacation of order that relied on that judgment). On remand, the

district court may consider the merits of Berezdivin's motion in

the first instance.

We add a coda. The defendants rejoin that we lack

jurisdiction to review the district court's decision to deny

- 18 -
Berezdivin's motion to dismiss as moot. They point out that the

plaintiff's notice of appeal does not mention that ruling in haec

verba. The notice of appeal, however, designated the district

court's dispositive order that addressed each motion to dismiss

filed by the defendants. No more was exigible. Had the plaintiff

intended to designate only the part of that order addressing Kress

Stores' motion, she would have been required to state expressly

that the notice of appeal was limited to the ruling on Kress

Stores' motion. See Fed. R. App. P. 3(c)(6). What is more, even

were the rulings on each motion considered separate orders, the

notice of appeal encompassed the final judgment, and thus,

appellate jurisdiction existed over all orders that merged into

that judgment. See Fed. R. App. P. 3(c)(4)-(5). Consequently, we

reject the defendants' threadbare attempts to shield the district

court's decision to deny Berezdivin's motion as moot.

IV

We need go no further. We hold that the Agreement's

forum-selection clause is permissive and does not mandate

litigation of the plaintiff's claims in the Puerto Rico court. It

follows inexorably that the forum-selection clause does not

foreclose the prosecution of this action in the court below. We

therefore vacate the district court's dismissal of the action,

including its decision concerning the terms of the oral extension

of the Agreement and its denial of Berezdivin's motion to dismiss

- 19 -
as moot. We remand for further proceedings consistent with this

opinion. Costs shall be taxed in favor of the plaintiff.

Vacated and Remanded.

- 20 -