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Pro Star Logistics Inc. v. An Enterprise, Inc.

United States District Court, D. Utah, Central Division

November 28, 2017

PRO STAR LOGISTICS, INC., Plaintiff,
v.
AN ENTERPRISE, INC., Defendant.

          MEMORANDUM DECISION AND ORDER DENYING DEFENDANT'S MOTION TO DISMISS AND GRANTING PLAINTIFF'S MOTION FOR LEAVE TO FILE SUR-REPLY

          TED STEWART UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on Defendant AN Enterprise, Inc's (“Enterprise”) Motion to Dismiss for Improper Venue, or in the Alternative, for Transfer of Venue. Also before the Court is Plaintiff Pro Star Logistic's (“Pro Star”) Motion for Leave to File Sur-Reply. For the reasons stated below, the Court will deny Defendant's Motion to Dismiss and Defendant's alternative request to transfer venue, and grant Plaintiff's Motion for Leave to File Sur-Reply.

         I. BACKGROUND

         Pro Star is a property broker that arranges for the transportation of freight on behalf of its clients by utilizing third party motor carriers such as Enterprise. On or about November 24, 2014, Plaintiff and Defendant executed the “Pro Star Logistics Broker-Carrier Agreement” (“BCA”). Pursuant to that agreement, Enterprise agreed to act as a motor carrier with respect to loads tendered by Plaintiff. The BCA is silent on the issue of venue or forum selection.

         On September 2, 2016, Pro Star sent a Dispatch Agreement to Enterprise for a shipment of yogurt to be transported from Melrose Park, Illinois to Montgomery, New York. Enterprise accepted the Dispatch Agreement terms the same day. The Dispatch Agreement contains a forum selection clause stating “[t]he venue and jurisdiction for any dispute arising from this agreement and/or relationship between Pro Star Brokerage and other parties to this agreement, including but not limited to disputes over individual shipments, shall be brought in the court in the local district of Pro Star Brokerage.”[1]

         The Dispatch Agreement required Enterprise and its driver to pre-cool the refrigerated truck (“Reefer”) to 35 degrees and maintain that temperature at all times during transport. On September 4, 2016, Enterprise's driver took possession of the yogurt and the temperature of the Reefer was set to 53 rather than 35 degrees as required by the Dispatch Sheet. On September 6, 2016, Enterprise's truck arrived at the destination loading dock. The consignee of the yogurt shipment noted that the Reefer temperature was set at 53 degrees and that the temperature of the yogurt ranged between 48.4 and 51.4 degrees. The consignee rejected the shipment and refused to take delivery, as the yogurt had been exposed to unsanitary temperature conditions.

         Pro Star's client, WWF Operating Company (“White Wave”), contacted Pro Star to assert a claim against Enterprise for the full amount of the loss. Pro Star made multiple demands for payment from Enterprise. Enterprise failed to make any reimbursement. White Wave assigned its rights in the shipment of yogurt to Pro Star. Pro Star then brought two causes of action against Enterprise in the Third Judicial District Court in and for Salt Lake County: one breach of contract claim and one Carmack Amendment claim. Enterprise then removed the action to this Court and filed the Motion to Dismiss for Lack of Venue, or in the Alternative to Transfer for Convenience of the Parties.

         II. DISCUSSION

         Defendant's Motion argues that venue is improper or, alternatively, that venue should be transferred. The Court will discuss each issue in turn.

         A. PROPER VENUE

         Defendant moves for dismissal for improper venue under 28 U.S.C. § 1391(b). However, that provision has no application because this case was removed from state court. “The venue of removed actions is governed by 28 U.S.C. § 1441(a) . . . .”[2]

         Section 1441(a) states, “any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant . . . to the district court of the United States for the district and division embracing the place where such action is pending.”[3] This Court has original jurisdiction based on diversity.[4] The action was filed in the Third Judicial District in and for Salt Lake County, in the State of Utah. The District embracing that court is the United States District Court for the District of Utah. Therefore, venue is proper and the Motion to Dismiss based on improper venue must be denied.

         B. REQUEST TO TRANSFER

         Alternatively, Defendant seeks to transfer the case for the convenience of the parties pursuant to 28 U.S.C. § 1404(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 or to any district or division to which all parties have consented.”[5]

         To determine this issue, the Court must first decide if the parties have consented to venue in Utah. Then the Court must decide if, in light of the decision on consent, the interests of justice weigh in favor of transfer.

         1. Forum Selection Clause

         As stated, the Dispatch Agreement contains a forum selection clause while the BCA does not. Enterprise argues that the BCA preempts the Dispatch Agreement and, therefore, the forum selection clause in the Dispatch Agreement does not apply.

         The BCA specifies Federal and Illinois state law govern.[6] The Illinois rules governing contract interpretation are explained by the Supreme Court of Illinois:

The primary objective in construing a contract is to give effect to the intent of the parties. A court must initially look to the language of a contract alone, as the language, given its plain and ordinary meaning, is the best indication of the parties' intent. Moreover, because words derive their meaning from the context in which they are used, a contract must be construed as a whole, viewing each part in light of the others. The intent of the parties is not to be gathered from detached portions of a contract or from any clause or provision standing by itself.[7]

         Enterprise asserts that the BCA excludes subsequent documents or terms and conditions from being incorporated into the BCA and from having effect. The single sentence that Enterprise relies upon states, “[t]erms and conditions contained in bills of lading or in other documents shall not apply except to the extent they establish the delivery of cargo.”[8] Enterprise does not assert that the Dispatch Agreement is a bill of lading. Instead, Enterprise relies on the “other documents” portion of the sentence to exclude the terms of the Dispatch Agreement.

         The Court cannot read that phrase so broadly. Under Enterprise's interpretation of “other documents, ” the subsequent rate sheets to be incorporated into the agreement, [9] and the clause allowing future written modification of the agreement by the parties[10] would be invalid. As Pro Star points out in its brief, bills of lading are “basic transportation agreements between carriers (such as Defendant) and the shipper (such as Plaintiff's customers). As a broker, Plaintiff is not party to the bill of lading or invoice agreement between the carrier and shipper and thus cannot be bound by its terms.”[11] In the context of the “bill of lading” sentence, and read in conjunction with the agreement as a whole, viewing each part in light of the others, the meaning of “other documents” is meant to exclude third party agreements from being incorporated into the BCA. The Dispatch Agreement does not constitute such a third party agreement. Therefore, the BCA does not preempt the validity of the Dispatch Agreement.

         Moreover, the BCA's plain language expressly incorporates the Dispatch Agreement. The BCA lays out the process for the parties to agree regarding the compensation for each load. “Carrier shall be compensated for its services in the amount identified in the Rate Confirmation Sheet issued to Carrier by PRO STAR LOGISTICS following PRO STAR LOGISTICS acceptance of Carrier's response to each Bid Offer.”[12] Although the contract expresses the process in reverse chronological order, the process of negotiating each load appears to be: 1) Pro Star submits a bid offer to the Carrier; 2) Carrier responds to the bid offer (presumably with a bid); 3) Pro Star accepts the Carrier's response or bid; 4) Pro Star issues Carrier with a Rate Confirmation Sheet; and 5) Carrier signs acceptance of Rate Confirmation Sheet.

         Although the Dispatch Agreement is titled “Dispatch Information, ” rather than Rate Confirmation Sheet, it acts as the final document between the parties confirming the terms of the shipment and requiring acceptance by the Carrier. In its briefing, Pro Star identified the Dispatch Agreement as the rate confirmation sheet.[13] Defendant did not dispute this characterization. As the rate confirmation sheet, the terms of the Dispatch Agreement are expressly incorporated into the BCA rather than preempted by it.[14] Therefore, the Court finds that the Dispatch Agreement governs this dispute.

         2. The Forum Selection Clause is Mandatory

         Having determined that the Dispatch Agreement governs this dispute, the Court must now analyze the effect of the forum selection clause contained in that agreement. The forum selection clause states, “[t]he venue and jurisdiction for any dispute arising from this agreement and/or relationship between Pro Star brokerage and other parties to this agreement, including but not limited to disputes over individual shipments, shall be brought in the court in the local district of Pro Star Brokerage.”[15] Enterprise asserts the clause is merely permissive for three reasons: a) The clause uses the word “local” instead of specifying Utah; b) The clause does not use the words “only” or “sole” in reference to the forum; and c) the forum selection and choice of law clauses are in conflict.

         a. ...


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