CALANCA v. D S MANUFACTURING CO

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Docket Number

No. 86-0505

Attorney(S)

Lane Munday, of Chicago (Fred Lane and Thomas J. Nathan, of counsel), for appellant. William C. Peterman, of Chicago, for appellee.

Judges

JUSTICE O'CONNOR delivered the opinion of the court:

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Smart Summary

Factual and Procedural Background

Plaintiff Ottone A. Calanca, an Illinois resident, entered into a three-month employment contract on February 1, 1983, with defendant D S Manufacturing Company, a Wisconsin corporation. Under the contract, plaintiff was to act as a sales representative primarily procuring orders from Illinois corporations Hycor and Rotec and was paid mostly by commissions. Paragraph 10 of the contract specified that disputes would be governed by Wisconsin law and litigated exclusively in the Circuit Court for Jackson County, Wisconsin. Plaintiff’s employment was terminated early on November 15, 1983, after which he filed a breach of contract complaint in Cook County, Illinois, seeking owed commissions. Defendant moved to dismiss based on the forum selection clause and the doctrine of forum non conveniens. The circuit court granted the motion to dismiss, and plaintiff appealed.

Legal Issues Presented

Whether the forum selection clause in the employment contract mandating litigation in Wisconsin is exclusive and enforceable.
Whether enforcement of the forum selection clause would be unreasonable or unjust under the circumstances, including consideration of the doctrine of forum non conveniens.

Arguments of the Parties

Appellant's Arguments

Paragraph 10 of the contract suggests Wisconsin is a permissible, but not exclusive, forum for litigation.
Enforcement of the forum selection clause would be so inconvenient as to deprive plaintiff of a fair trial because plaintiff’s key witnesses (employees of Hycor and Rotec) cannot be compelled to testify in Wisconsin, whereas defendant’s witnesses can be compelled in Illinois.
Most relevant documents and authenticating individuals are located in Illinois, further disadvantaging plaintiff if forced to litigate in Wisconsin.

Appellee's Arguments

The clause’s use of the word “shall” indicates the Wisconsin forum is exclusive and mandatory.
The forum selection clause is prima facie valid and should be enforced absent a showing that enforcement is unreasonable or unjust.
Plaintiff can mitigate inconvenience by taking depositions in Illinois and presenting them in Wisconsin, so he is not deprived of his day in court.
There was equal bargaining power between the parties, and the clause was not hidden or part of a boilerplate indicating inequality.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
The Bremen v. Zapata Off-Shore Co. (1972), 407 U.S. 1	Forum selection clauses using “shall” or “must” are mandatory and exclusive; such clauses are prima facie valid and enforceable unless unreasonable.	Interpreted the contract clause as exclusive and mandatory; enforced it absent a showing of unreasonableness or injustice.
Coastal Steel Corp. v. Tilghman Wheelabrator, Ltd. (3d Cir. 1983), 709 F.2d 190	Supports interpretation of mandatory forum selection clauses.	Used to support the exclusivity of the forum clause in the contract.
Hoes of America, Inc. v. Hoes (C.D. Ill. 1979), 493 F. Supp. 1205	Forum selection clauses should be enforced unless enforcement is unreasonable; addresses inconvenience and public policy considerations.	Supported enforcement of the clause and analysis of inconvenience claims.
Walter E. Heller Co. v. James Godbe Co. (N.D. Ill. 1984), 601 F. Supp. 319	Distinguished between consent to jurisdiction clauses and exclusive forum selection clauses.	Distinguished from the instant case; held not to apply because the contract clause here was a forum selection clause, not mere consent to jurisdiction.
G.H. Miller Co. v. Hanes (N.D. Ill. 1983), 566 F. Supp. 305	Consent to jurisdiction clauses do not mandate exclusive forum.	Distinguished from the instant case; used to clarify the nature of the clause at issue.
Friedman v. World Transportation, Inc. (N.D. Ill. 1986), 636 F. Supp. 685	Forum selection clauses are enforceable absent compelling reasons; addresses remedies for inconvenience.	Supported enforcement of the clause and remedies available to plaintiff for witness testimony.
Clinton v. Janger (N.D. Ill. 1984), 583 F. Supp. 284	Factors to consider when determining unreasonableness of forum selection clauses.	Applied the six factors to conclude the clause was reasonable and enforceable.
Schoenauer v. Wendinger (Wis. 1971), 49 Wis.2d 415, 182 N.W.2d 441	Allows depositions taken outside the forum to be read into evidence at trial.	Used to explain plaintiff’s ability to present testimony despite inconvenience.
Brantner v. Jenson (1985), 121 Wis.2d 658, 360 N.W.2d 529	Supports the use of depositions in lieu of live testimony under Wisconsin law.	Reinforced plaintiff’s ability to overcome witness unavailability at trial.

Court's Reasoning and Analysis

The court first examined the language of paragraph 10, emphasizing the mandatory nature of the word “shall” in designating the Circuit Court for Jackson County, Wisconsin as the exclusive forum for litigation. It rejected plaintiff’s interpretation that the clause merely suggested a permissible forum. The court distinguished prior cases cited by plaintiff, which dealt with consent to jurisdiction clauses rather than exclusive forum selection clauses, holding that paragraph 10 was a valid forum selection clause.

The court then applied the principles from The Bremen v. Zapata Off-Shore Co. and related cases, noting that forum selection clauses are prima facie valid and enforceable unless enforcement is shown to be unreasonable or unjust. To rebut enforcement, plaintiff had to demonstrate that litigating in Wisconsin would be so gravely difficult and inconvenient as to deprive him of his day in court.

Using the six factors from Clinton v. Janger, the court analyzed governing law, parties’ residencies, contract execution and performance locations, witness locations, inconvenience, and bargaining equality. It found that although inconvenience existed on both sides, plaintiff failed to prove that inconvenience would be so severe as to deny a fair trial. The court noted plaintiff could use depositions to mitigate witness unavailability in Wisconsin. Furthermore, the court emphasized the absence of any evidence of unequal bargaining power or that the forum clause was hidden or unfairly imposed.

Ultimately, the court held that the parties must be held to their bargain, enforcing the forum selection clause and upholding dismissal of the complaint in Illinois.

Holding and Implications

The appellate court affirmed the circuit court’s order granting defendant’s motion to dismiss based on the enforceable exclusive forum selection clause requiring litigation in Wisconsin.

The decision enforces the principle that mandatory forum selection clauses negotiated at arm’s length between parties of equal bargaining power are valid and binding, absent a compelling reason to set them aside. The ruling directly affects the parties by requiring plaintiff to litigate in Wisconsin as agreed, and does not establish new precedent beyond reinforcing existing federal and state case law on forum selection clauses.

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OTTONE A. CALANCA, Plaintiff-Appellant, v. D S MANUFACTURING COMPANY, Defendant-Appellee.

JUSTICE O'CONNOR delivered the opinion of the court:

Plaintiff, Ottone A. Calanca, appeals from the order of the circuit court of Cook County granting defendant's, D S Manufacturing Company's, motion to dismiss plaintiff's complaint. For the reasons that follow, we affirm.

The pleadings reveal the following facts: Plaintiff, an Illinois resident, and defendant, a Wisconsin corporation, entered into an employment contract on February 1, 1983. Plaintiff was to act as a sales representative on behalf of defendant and was to perform his services in Illinois, primarily by procuring orders from Hycor and Rotec, Illinois corporations. He was paid mostly by commissions. The contract, which was for a term of three months, provided that the parties could extend the agreement from time to time by a written agreement. In addition, paragraph 10 of the contract provided:

"10. LITIGATION: That the parties hereto agree that this agreement shall be interpreted in accordance with the laws of the State of Wisconsin and in the event of any litigation or claim by either party against the other, that proper forum for the resolution of such claim shall be the Circuit Court for Jackson County, Wisconsin."

On November 15, 1983, James Dougherty, the president of D S Manufacturing, terminated plaintiff's employment prior to the expiration of the employment contract, but after plaintiff had obtained orders from Hycor and Rotec. On November 20, 1984, plaintiff filed a complaint for breach of contract against defendant in the circuit court of Cook County, Illinois, to obtain the commissions defendant owed him.

On December 28, 1984, defendant moved to dismiss the complaint pursuant to section 2-619 of the Illinois Civil Practice Law (Ill. Rev. Stat. 1985, ch. 110, par. 2-619). Defendant's two bases for dismissal were that: (1) the forum selection clause in the employment contract required that any litigation between the parties be held in the circuit court for Jackson County, Wisconsin, and (2) the doctrine of forum non conveniens required dismissal.

On January 28, 1986, after hearing arguments, the circuit court found that the venue clause in paragraph 10 of the contract was enforceable and granted defendant's motion to dismiss.

Plaintiff contends that paragraph 10 of the contract merely suggests that Wisconsin is a permissible, but not the exclusive, forum for litigation. We disagree.

• 1 The clause at issue provides in part that the "proper forum * * * shall be the Circuit Court for Jackson County, Wisconsin." (Emphasis added.) Case law has construed the words "shall" and "must," in a forum selection clause, to mean that the stated forum is exclusive. (See, e.g., The Bremen v. Zapata Off-Shore Co. (1972), 407 U.S. 1, 32 L.Ed.2d 513, 92 S.Ct. 1907; Coastal Steel Corp. v. Tilghman Wheelabrator, Ltd. (3d Cir. 1983), 709 F.2d 190, cert. denied sub nom. Coastal Steel Corp v. Wheelabrator-Frye, Inc. (1983), 464 U.S. 938, 78 L.Ed.2d 315, 104 S.Ct. 349; Hoes of America v. Hoes (C.D. Ill. 1979), 493 F. Supp. 1205.) By looking at the plain meaning of the clause at issue, it is obvious that it is mandatory. Plaintiff attempts to read around the plain meaning by arguing that "proper" merely means "suitable" or "fitting," but not exclusive. However, in doing so, plaintiff ignores the word "shall."

• 2 Additionally, as support for his position, plaintiff cites Walter E. Heller Co. v. James Godbe Co. (N.D. Ill. 1984), 601 F. Supp. 319, and G.H. Miller Co. v. Hanes (N.D. Ill. 1983), 566 F. Supp. 305, where the district courts held that certain contract clauses were not enforceable as exclusive forum selection clauses. Those cases, however, are distinguishable. In them, the courts determined that certain clauses in a contract were consent to jurisdiction, not forum selection, clauses. Thus, when both parties to the contracts consented to jurisdiction in a particular forum, that forum was established as permissible for litigation, but not exclusive. In the instant case, however, the language in paragraph 10 was sufficiently different from the language in the clauses in Heller and Miller such that we find that paragraph 10 is a forum selection clause and not merely a consent to jurisdiction in Wisconsin.

• 3 A forum selection clause in a contract is prima facie valid and should be enforced unless the opposing party shows that enforcement would be unreasonable under the circumstances. ( The Bremen v. Zapata Off-Shore Co. (1972), 407 U.S. 1, 10, 32 L.Ed.2d 513, 520-521, 92 S.Ct. 1907, 1913; Friedman v. World Transportation, Inc. (N.D. Ill. 1986), 636 F. Supp. 685, 689.) The opposing party must show:

"that trial in the contractual forum will be so gravely difficult and inconvenient that he will for all practical purposes be deprived of his day in court. Absent that, there is no basis for concluding that it would be unfair, unjust, or unreasonable to hold that party to his bargain." The Bremen v. Zapata Off-Shore Co. (1972), 407 U.S. 1, 18, 32 L.Ed.2d 513, 525, 92 S.Ct. 1907, 1917-1918.

See also Hoes of America, Inc. v. Hoes (C.D. Ill. 1979), 493 F. Supp. 1205, 1209.

• 4 Thus, in order to hold a forum selection clause unenforceable, enforcement must contravene the strong public policy of the forum or the chosen forum must be " seriously inconvenient for the trial of the action." (Emphasis in original.) ( The Bremen v. Zapata Off-Shore Co. (1972), 407 U.S. 1, 15-16, 32 L.Ed.2d 513, 523-24, 92 S.Ct. 1907, 1916-17; See also Hoes of America, Inc. v. Hoes (C.D. Ill. 1979), 493 F. Supp. 1205, 1208-09.) However, even when one party claims inconvenience, if both parties freely entered the agreement contemplating such inconvenience should there be a dispute, one party cannot successfully argue inconvenience as a reason for rendering the forum clause unenforceable. ( The Bremen v. Zapata Off-Shore Co. (1972), 407 U.S. 1, 16, 17-18, 32 L.Ed.2d 513, 523, 524-525, 92 S.Ct. 1907, 1916-1917, 1918; Friedman v. World Transportation, Inc. (N.D. Ill. 1986), 636 F. Supp. 685, 690.) A choice of forum, which is made during an arm's-length negotiation between experienced and sophisticated businessmen, should be honored by the parties and enforced by the courts, absent some "compelling and countervailing reason" why it should not be enforced. The Bremen v. Zapata Off-Shore Co. (1972), 407 U.S. 1, 12, 32 L.Ed.2d 513, 521-522, 92 S.Ct. 1907, 1914.

In determining whether a forum selection clause is unreasonable, certain factors should be considered:

"(1) which law governs the formation and construction of the contract; (2) the residency of the parties involved; (3) the place of execution and/or performance of the contract; * * * (4) the location of the parties and witnesses participating in the litigation. [Citation.] * * * (5) the inconvenience to the parties of any particular location; and (6) whether the clause was equally bargained for. [Citation.]" Clinton v. Janger (N.D. Ill. 1984), 583 F. Supp. 284, 289.

• 5 By applying the six Clinton factors to the case at bar, it is apparent that plaintiff has failed to meet his burden of proving the unreasonableness of the forum clause: (1) the governing law is that of Wisconsin, pursuant to paragraph 10 of the contract; (2) plaintiff resides in Illinois, and defendant resides in Wisconsin; (3) the contract was executed in Wisconsin and was performed in Illinois; (4) the parties and witnesses are located in both Wisconsin and Illinois; (5) plaintiff will be inconvenienced if the trial is held in Wisconsin, and defendant will be inconvenienced if it is held in Illinois; and (6) it appears from the record that there was equal bargaining power between the parties. In any event, plaintiff did not argue that there was unequal bargaining or that he was disadvantaged in any way during the negotiations.

Plaintiff essentially contends that enforcement of the forum selection clause will be so inconvenient as to deprive him of his right to a fair and effective trial as guaranteed by the constitution. He argues that if the trial is held in Wisconsin he will be denied the opportunity to present adequate evidence because none of the seven witnesses he plans on calling are amenable to process in Wisconsin because those witnesses are Hycor and Rotec employees. On the other hand, all of defendant's witnesses are defendant's employees; therefore, plaintiff asserts, they could be compelled by defendant to testify in Illinois. In addition, most of the documents, and the individuals who could authenticate them, are located in Illinois. Thus, plaintiff maintains, if the trial is held in Wisconsin, plaintiff would effectively be deprived of his day in court because the only witness who would testify on behalf of the plaintiff would be the plaintiff himself. We disagree.

While it is probably true that defendant can compel its witnesses to testify in Illinois should the parties litigate here, plaintiff is not without remedy should they litigate in Wisconsin. Plaintiff can take depositions of his witnesses in Illinois, and although live testimony is preferred, he may read those depositions into evidence at trial in Wisconsin in lieu of the witnesses' live testimony. (Wis. Stat. sec. 804.07 (Supp. 1981-82); Schoenauer v. Wendinger (1971), 49 Wis.2d 415, 420-423, 182 N.W.2d 441 (interpreting sec. 887.12, the predecessor to sec. 804.07. See also Brantner v. Jenson (1985), 121 Wis.2d 658, 661 n. 1, 360 N.W.2d 529, 531 n. 1.) Thus, although it will be inconvenient for plaintiff to litigate in Wisconsin, it will not be so inconvenient that plaintiff will be deprived of his day in court.

Moreover, plaintiff knowingly signed the contract which contained paragraph 10. The print in that paragraph was the same size as the print in the rest of the contract. Paragraph 10 was prominent; it was not hidden. Furthermore, it was not part of a "boilerplate" agreement indicating unequal bargaining power. (See G.H. Miller Co. v. Hanes (N.D. Ill. 1983), 566 F. Supp. 305, 309.) In any event, plaintiff does not allege that there was unequal bargaining power between defendant and him.

• 6 While we cannot determine whether Illinois or Wisconsin is clearly the better forum in which to litigate the present case because it appears that each party will be inconvenienced if the litigation takes place outside of their home forum, we do not find it necessary to do so. We realize that each party would prefer to litigate at home; however, when parties sign a contract which selects a mandatory forum for litigation, and no unequal bargaining power exists at the signing of the contract, then the parties must carry out their bargain as long as the inconvenience to one party is not so great as to deprive him of his day in court. The Bremen v. Zapata Off-Shore Co. (1972), 407 U.S. 1, 18, 32 L.Ed.2d 513, 525, 92 S.Ct. 1907, 1918.

Because plaintiff has failed to show how he will be seriously inconvenienced, to the point of being deprived of his day in court if the trial is held in Wisconsin, we find that the forum selection clause in the employment contract is enforceable, and plaintiff will be held to his bargain, in which he agreed to the inconvenience of litigating in Wisconsin. See Friedman v. World Transportation, Inc. (N.D. Ill. 1986), 636 F. Supp. 685, 690 n. 5.

Accordingly, the order of the circuit court dismissing the complaint is affirmed.

Affirmed.

QUINLAN, P.J., and BUCKLEY, J., concur.