Winery cannot avoid contractual forum selection provision in dispute with distributor – a good clause lets you choose where a suit or arbitration will take place
A little background on this dispute.
Westside Winery, Inc., contracted with Pasternak Wine Imports LLC (“Pasternak”), making Pasternak the sole distributor and marketing agent for Westside’s wines in the United States and its territories. You can read the original complaint filed by Westside here, which contains a copy of the wine sales and distribution agreement.
As the exclusive U.S. wine distributor for Westside, Pasternak agreed to:
market and promote the Westside products on a nationwide basis;
ensure that distributors within Pasternak’s national distribution network sold those products wine at FOB prices;
provide adequate sales force and distribution facilities throughout the country; and
A third-party bought Pasternak and assumed its obligations, but failed to meet the minimum buy requirements so Westside sued for the $1.5MM difference between what they bought and what they were supposed to buy under the wine sales and distribution agreement.
But Westside sued in California (convenient for a California winery, but not so for a New York based alcohol distributor).
It just so happened that the wine sales and distribution agreement contained a choice of law provision specifying that “[t]his Agreement will be construed and enforced in accordance with the laws of the State of New York….” Agt. § 21(f). In addition, the wine sales and distribution agreement contains a “Consent to Jurisdiction” clause, pursuant to which the parties “consent to the jurisdiction of the state and federal courts sitting in the County of New York, State of New York, in any action arising out of or connected in any way with this Agreement.” Agt. § 21(g). The clause further provides that each party “waives any claim or objection that it may have to such forum based on the principal of forum non conveniens, and each of them acknowledges that such forum is and would be a convenient forum.”
The defendant wine distributor brought a motion requesting transfer from California to New York based on the provision of the wine sales and distribution agreement, and the Court made short work of the matter.
The court enforced the parties original bargain for forum selection.
You see, forum selection clauses are very important and are almost always enforced.
As the court in this case noted (link to opinion): “[a]s a general matter, a motion to transfer venue typically requires the court to “evaluate both the convenience of the parties and various public-interest considerations.” Atl. Marine Constr. Co., 571 U.S. at 62. “The calculus changes, however, when the parties’ contract contains a valid forum-selection clause, which ‘represents the parties’ agreement as to the most proper forum.’ ” Id….(quoting Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 31 (1988) ). A valid forum selection clause is to be “given controlling weight in all but the most exceptional cases.” …. When the parties’ agreement includes a forum selection clause, the “plaintiff’s choice of forum merits no weight” and the district court “must deem the private-interest factors to weigh entirely in favor of the preselected forum.” … Rather, the court “may consider arguments about public-interest factors only.” … “[B]ecause [public interest] factors will rarely defeat a transfer motion, the practical result is that forum-selection clauses should control except in unusual cases.”
So, in bargaining for your contractual rights, don’t overlook the forum selection provision which (absent a statute or franchise law mandating some other jurisdiction) can save you much time money and effort by selecting a forum close to home.