United States District Court, N.D. Texas, Dallas Division
MEMORANDUM OPINION AND ORDER
KINKEADE UNITED STATES DISTRICT JUDGE.
the Court is Defendant Kelchner, Inc.'s Motion to
Transfer Venue (Doc. No. 27). After carefully considering the
motion, response, reply, and applicable law, the Court
DENIES Defendant Kelchner, Inc.'s motion
to transfer venue because the forum-selection clause is
valid, enforceable, and public interest factors do not
outweigh the bargained-for forum.
Blue Racer Midstream, LLC (“Blue Racer”), a
citizen of Delaware, Virginia, Texas, Oklahoma with its
principal place of business in Texas, entered a contract with
Defendant Kelchner, Inc. (“Kelchner”) to perform
services on a pipeline in Ohio. The contract included a
forum-selection clause and a choice-of-law clause naming
Dallas County, Texas, as the forum and choosing Texas law. On
October 28, 2014, part of the pipeline exploded in Monroe
County, Ohio. As a result of this explosion, Blue Racer filed
suit against Kelchner alleging it caused the explosion by
improperly applying polyurethane foam to the pipeline. Blue
Racer filed this suit in Texas pursuant to a forum-selection
clause in the contract.
1391 dictates where a plaintiff may properly bring a civil
suit unless the parties negotiated a forum-selection clause.
28 U.S.C. § 1391. For venue purposes, a plaintiff
limited liability company resides where it has its principal
place of business. See § 1391(c); see
Penrod Drilling Co. v. Johnson, 414 F.2d 1217, 1221 (5th
Cir. 1969) (unincorporated entities are treated like
corporations for venue purposes); see Nayani v. Horseshoe
Entm't, No. 3:06-CV-01540-M, 2007 WL 1062561, *8
(N.D. Tex. Apr. 10, 2007) (Lynn, J.). The United States
Supreme Court has established that when contracting parties
enter a forum-selection clause, the “valid
forum-selection clause should be given controlling weight in
all but the most exceptional cases.” Atlantic
Marine Const. Co. v. U.S. Dist. Ct. for Western Dist. of
Tex., 134 S.Ct. 568, 581 (2013). The party seeking to
defy the forum-selection clause bears the burden of
establishing why the court should transfer the case to a
different venue than the bargained-for venue. See
forum-selection clause alters the usual venue transfer
analysis because the court deems the private interest factors
weigh in favor of the parties' preselected forum. See
id. at 582; see also 28 U.S.C. § 1404(a).
“A district court may consider arguments about
public-interest factors;” however, the public interest
factors “will rarely defeat” the forum-selection
clause. Id. The public interest factors are:
“(1) the administrative difficulties flowing from court
congestion; (2) the local interest in having localized
interests decided at home; (3) the familiarity of the forum
with the law that will govern the case; and (4) the avoidance
of unnecessary problems of conflict of laws [or in] the
application of foreign law.” In re Volkswagen of
Am., Inc., 545 F.3d 304, 315 (5th Cir. 2008).
Racer filed this suit for state law claims of breach of
contract, breach of warranty, negligence, and products
liability in Dallas County state court pursuant to the
forum-selection clause. Kelchner removed the case to this
Court and now moves to transfer venue to the Southern
District of Ohio. Kelchner argues the forum-selection clause
is invalid based on an Ohio statute and the venue transfer
analysis weighs in favor of transferring venue to Ohio. Blue
Racer responds by arguing the forum-selection clause is valid
and public interest factors do not outweigh the bargained-for
The Forum-Selection Clause is Valid.
the Supreme Court in Atlantic Marine assumed the
forum-selection clause was valid, Kelchner argues the
forum-selection clause here is invalid under Ohio state law
and both private and public interest factors apply to
determine if venue should be transferred to Ohio.
See Ohio Rev. Code 4113.62(D)(2) (West 2017).
Section 4113.62(D)(2) states forum-selection clauses are
unenforceable when the clause requires litigation of a
construction contract relating to Ohio real estate be brought
in another state. Id. Kelchner argues the court
should apply Texas choice-of-law rules to determine the
forum-selection clause is invalid under the Ohio statute,
making the Atlantic Marine analysis inapplicable.
However, Blue Racer argues the forum-selection clause is
valid and the Atlantic Marine analysis applies,
resulting in Texas being the proper forum.
the circuits are split on what law applies to determine the
validity of a forum-selection clause so as to apply
Atlantic Marine's analysis to venue transfer.
See Barnett v. DynCorp International, L.L.C., 831
F.3d 296, 301 (5th Cir. 2016); see In re Union Elec.
Co., 787 F.3d 903, 906-07 (8th Cir. 2015) (In
Atlantic Marine, “the Court assumed the
existence of a valid forum-selection clause for the purpose
of its analysis, thereby providing no direct holding as to
when such clauses should be deemed invalid.”);
Aviation One of Fla., Inc. v. Airborne Ins. Consultants
(PTY), Ltd., No. 16-16187, 2018 WL 359998, *10-11 (11th
Cir. Jan. 11, 2018) (The court assumes valid and enforceable
are synonymous and consider the factors for determining if a
forum selection clause is enforceable.). In diversity cases,
courts apply federal law to the enforceability of
forum-selection clauses. Haynsworth v. The Corp.,
121 F.3d 956, 962 (5th Cir. 1997). A party seeking to
overcome the presumption that the forum-selection clause is
enforceable must prove the clause is “unreasonable
under the circumstances.” Id. at 963. However,
when the court must interpret the forum-selection clause, the
court “applies the forum state's choice-of-law
rules to determine which substantive law will apply.”
Weber v. PACT XPP Techs., AG, 811 F.3d 758, 770 (5th
Cir. 2016). The Fifth Circuit has not stated if federal or
state law applies to determine whether a forum-selection
clause is valid. See Barnett, 831 F.3d at 301-03.
argues state law applies to determine the validity of the
forum-selection clause. Kelchner cites two Texas district
courts that have considered which law applies to determine a
forum-selection clause's validity. See TSI USA, LLC
v. Uber Technologies, Inc., Civ. Action No.
3:16-cv-2177-L, 2017 WL 106835, at *2 (N.D. Tex. Jan. 11,
2017) (Horan, MJ.); See Brown v. Federated Capital
Corp., 991 F.Supp.2d 857, 861-62 (S.D. Tex. Jan. 6,
2014). Both cases recognized the law is unsettled and decided
the motion to transfer not on validity but on contract
interpretation, which required state choice-of-law rules to
determine which state's substantive law applied. See
TSI USA, 2017 WL 106835, at *2; See Brown, 991
F.Supp.2d at 861-62.
the parties framed the issue before the court in TSI USA
v. Uber as one of forum-selection clause validity, the
court found the underlying issue was whether the
forum-selection clause survived the termination of the
contract, which “is a question of scope, not
validity.” TSI USA, 2017 WL 106835, at *2. In
an opinion preceding the Supreme Court's Atlantic
Marine decision, a district court loosely referred to
the forum-selection clause issue as one of validity, but the
true issue was whether the credit card user was bound to the
terms of the contract that contained the forum-selection
clause, which substantive law determined. Brown, 991
F.Supp.2d at 861-62. The courts in these two cases applied
substantive state law because ...