Furness v. Wright Medical Technology, Inc.

United States Court of Appeals
For the First Circuit

No. 04-1832

IN RE: GREGORY ANTHONY MERCURIO, JR.,
Debtor

PETER J. FURNESS, in his capacity as Trustee of
the Distribution Trust for the Bankruptcy Estate
of GREGORY A. MERCURIO, JR.,

Plaintiff, Appellee,

v.

WRIGHT MEDICAL TECHNOLOGY, INC.,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Ronald R. Lagueux, U.S. District Judge]

Before

Torruella, Circuit Judge,
Coffin, Senior Circuit Judge,
and Stahl, Senior Circuit Judge.

James L. Beausoleil, Jr., with whom Matthew A. Taylor, Duane
Morris LLP, George E. Lieberman, and Tillinghast Licht Perkin Smith
& Cohen, LLP were on brief, for appellant.
Barbara H. Kramer, with whom Mitchell A. Kramer and Kramer &
Kramer were on brief, for appellee.

March 23, 2005
 TORRUELLA, Circuit Judge. Appellant Wright Medical

Technology, Inc. ("Wright Medical"), a Tennessee corporation,

appeals from the district court's refusal to enforce the forum

selection clause in an arbitration provision that was part of a

distribution agreement (the "Agreement") between Wright Medical and

Ocean State Orthopedics, Inc. ("OSO"), a Rhode Island corporation.

The district court affirmed a bankruptcy court's order that the

arbitration of an underlying dispute regarding the Agreement take

place in Rhode Island, contrary to the Agreement's plain language

that the arbitration take place in Tennessee.

Because appellees have failed to show that the

enforcement of the forum selection clause is unreasonable under the

circumstances, we reverse the district court's decision. See The

Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972) (a "forum

[selection] clause should control absent a strong showing that it

should be set aside"); Silva v. Encyclopedia Britannica Inc., 239

F.3d 385, 386 (1st Cir. 2001) ("The prevailing view towards

contractual forum-selection clauses is that 'such clauses are prima

facie valid and should be enforced unless enforcement is shown by

the resisting party to be "unreasonable" under the

circumstances.'") (quoting The Bremen, 407 U.S. at 10).1

1
Although we acknowledge the precedential validity of the
principle last presented in Young v. Levanthal, 389 F.3d 1 (1st
Cir. 2004) (the applicability of a forum selection clause in an
arbitration agreement is a matter of procedure to be decided by the
arbitrator), and its probable applicability to the present

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 I

Wright Medical manufactures and distributes medical

supplies from its principal place of business in Tennessee. In

September 1995, Wright Medical entered into the Agreement with OSO,

whereby OSO became the exclusive distributor for Wright Medical

products in Rhode Island.2 Appellee Gregory A. Mercurio, Jr.,

("Mercurio"), was the president of OSO and signed the Agreement on

its behalf.

Article 14 of the Agreement, entitled "Tennessee

Contract," provides that it "shall be governed by and interpreted

in accordance with the laws of the State of Tennessee." Article 16

of the Agreement, entitled "Arbitration of Disputes," is central to

this appeal. It provides, in relevant part:

All disputes arising in connection with this
Agreement, including the interpretation,
performance or non-performance of this
Agreement, shall be settled in Memphis,
Tennessee, USA, by arbitration in front of one

circumstances, this issue was not argued by the parties before
either the bankruptcy or district courts, nor briefed or argued
before us, and is thus deemed waived. See, e.g., García-Ayala v.
Lederle Parenterals, Inc., 212 F.3d 638, 645 (1st Cir. 2000)
(holding that failure to brief an argument constitutes waiver)
(internal citations omitted); Sprague v. Dir., Office of Workers'
Comp. Programs, U.S. Dept. of Labor, 688 F.2d 862, 869 (1st Cir.
1982) (declining to reach and decide an issue that was not briefed
or developed in oral argument by either party). See also Playboy
Enters. v. Public Serv. Comm'n, 906 F.2d 25, 40 (1st Cir.), cert.
denied, 498 U.S. 959 (1990) ("An appellant waives any issue which
it does not adequately raise in its initial brief.").
2
The Agreement excepted sales made to certain specified medical
entities.

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 Arbitrator. Such arbitrator shall be
appointed by agreement of each of the parties.
The arbitration procedures shall be held in
accordance with the rules and procedures of
The American Arbitration Association.

Any such arbitration shall be conducted in the
English language and shall be governed by laws
of the State of Tennessee. Judgment upon the
award may be entered in any court of competent
jurisdiction of the State of Tennessee.

(emphasis supplied).

In 1996, for reasons that are in dispute,3 Wright Medical

terminated the Agreement. Thereafter, Wright Medical proceeded to

appoint another distributor for its products in Rhode Island.

At some point not relevant to this appeal, Mercurio filed

a voluntary petition in bankruptcy under Chapter 11 of the

Bankruptcy Act, 11 U.S.C. §§ 1101 et seq., and Peter J. Furness

("Trustee") became the trustee in bankruptcy.

Five years after termination of the Agreement, the

Trustee, on behalf of Mercurio, commenced the present suit as an

adversary proceeding against Wright Medical in the U.S. Bankruptcy

Court for the District of Rhode Island. The substance of this

action concerns an alleged breach of contract by Wright Medical in

terminating the Agreement. Wright Medical moved the bankruptcy

3
Wright Medical claims that, because Mercurio suffered from
chronic immunodeficiency illness, he was impeded from being present
during surgical procedures, a situation which allegedly adversely
affected Wright Medical's performance of the contract. In turn,
Mercurio contended that his presence in the operating room was not
a requirement under the Agreement.

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court to compel arbitration of that controversy pursuant to the

terms of the Agreement. The bankruptcy judge granted this request,

but ordered the arbitration to take place in Rhode Island rather

than in Tennessee as stipulated in the Agreement.

The record is fairly sparse as to the reasoning of the

bankruptcy court in bypassing the Agreement's unambiguous language

in this respect. The order itself merely states in conclusory

language that the "arbitration take place in Rhode Island." From

the transcript of the proceedings, however, it is apparent that the

bankruptcy judge felt that there was a need to resolve the case

with some celerity, and that sending the matter to Tennessee for

arbitration, where none of the witnesses or evidence was present,

would militate against this goal. Although we cannot fault the

judge's laudable purpose, arbitration is a contractual matter in

which, absent unusual circumstances not present in this case, the

parties are entitled to the measure that they bargained for.

The bankruptcy judge's order was appealed to the district

court, where the arguments followed suit to those made before the

bankruptcy court. Thus, the transcript of the proceedings shows

that the presence of witnesses in Rhode Island spurred the

Trustee's argument, and in turn, the district judge's oral

determination affirming the bankruptcy court's order. The district

judge found that the Trustee would be "serious[ly] inconvenienc[ed]

in litigating in Memphis, Tennessee," and "effectively deprived of

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his day in court," and thus designated Rhode Island as the place of

arbitration. Cf. Arrow Plumbing & Heating, Inc. v. N. Am. Mech.

Servs. Corp., 810 F. Supp. 369, 372-73 (D.R.I. 1993).

II

The "'heavy burden of proof' . . . required to set aside

[a forum selection] clause on grounds of inconvenience," Carnival

Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595 (1991), demands more

of a litigant, however, than simply showing that another location

would be more convenient. Were it otherwise, forum selection

clauses would almost never be enforceable, for inconvenience to at

least one of the parties is an almost forgone conclusion when

dealing with a provision that requires litigating away from one's

home turf. Yet these clauses are standard fare in today's multi-

jurisdictional and international contractual relationships. At the

time these contracts are entered into, the parties routinely,

voluntarily, and knowingly agree to litigate and/or be bound by the

decision of fora located in distant locations. Thus, something

considerably more than the mere inconvenience of traveling to

litigate in a different, even faraway foreign jurisdiction, is

required to overcome a contractual agreement to do so. Royal Bed

& Spring Co. v. Famossul Industria e Comercio de Moveis Ltda, 906

F.2d 45, 49 (1st Cir. 1990) ("[A] showing of inconvenience as to a

foreign forum would not be enough to hold a forum-selection clause

unenforceable, especially if that inconvenience was known or

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contemplated by the parties at the time of their agreement."). The

cost of such litigation alone cannot be enough to meet the "heavy

burden" imposed upon the reneging party, who may now have second

thoughts. Cent. Contracting Co. v. Maryland Cas. Co., 367 F.2d

341, 344 (3d Cir. 1966) ("Mere inconvenience or additional expense

is not the test of unreasonableness since it may be assumed that

the plaintiff received under the contract consideration for these

things.").

The record in this case is bare of specific evidence

regarding the extraordinary additional costs involved in litigating

in Tennessee that were not foreseen by the contracting parties when

they entered into the Agreement. OSO accepted some costs

beforehand as a normal consequence of arbitrating in Tennessee.

See The Bremen, 407 U.S. at 17-18; Moses v. Business Card Exp.

Inc., 929 F.2d 1131, 1139 (6th Cir. 1991) (increased expenses are

"inherent in a forum selection clause"). With a distributorship in

Rhode Island, the likelihood existed that witnesses and evidence

would be located there rather than in Tennessee. OSO, however,

chose to commit to Tennessee as the forum for dispute resolutions.

The Trustee stands in the debtor's shoes and is not entitled to

avoid the forum selected by OSO on mere allegations of

inconvenience. See In re Díaz Contracting, Inc., 817 F.2d 1047,

1052 (3d Cir. 1987) ("[N]either the bankruptcy court's intimate

knowledge of nor [defendant's] concessions concerning [plaintiff-

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debtor's] precarious financial condition operates to discharge its

burden of establishing grave inconvenience under The Bremen

[doctrine].").

The district judge's bare conclusion that the Trustee

would be "deprived of his day in court" is unsupported by any

evidence in the record. The Trustee was required to provide a

factual record establishing the basis for his challenge to the

forum selection clause. Fireman's Fund Am. Ins. Cos. v. Puerto

Rican Forwarding Co., 492 F.2d 1294, 1297 (1st Cir. 1974) (a party

must present evidence to establish that a forum selection clause is

unreasonable); Arrow Plumbing, 810 F. Supp. at 372-73 (enforcing a

forum selection clause where party failed to provide factual

support for the assertion that it would be unable to pursue the

matter in the selected forum). We find no evidence in the record

that would support the conclusion that requiring the parties to

arbitrate their dispute in Tennessee would deprive the Trustee of

his day in court.

We finish with language which should have a familiar ring

by now:

Courts must give effect to . . . freely
negotiated forum selection clauses . . . .
[The parties'] choice of arbitral forum should
have been honored by the district court.
Courts may not rewrite the parties' agreements
and compel arbitration of their dispute in a
forum which is not one of those enumerated in
an arbitration agreement's forum selection
clause.

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KKW Enters., Inc. v. Gloria Jean's Gourmet Coffees Franchising

Corp., 184 F.3d 42, 52 (1st Cir. 1999) (internal citations

omitted).

The district court must order appellants to file their

arbitration in Tennessee. The decision of the district court is

reversed in part and the case is remanded for action consistent

with this opinion.

Reversed in part and Remanded.

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