Free Answering Brief in Opposition - District Court of Delaware - Delaware

Case 1 :05-cv—00535-SLR Document 36-5 Filed 09/15/2005 Page1 014
EXHIBIT D

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Not Reported in I—`.Supp.2d
Not Reported in .F.Supp.2d, 2003 WL 21982145 (N.I).Ill.)
(Cite as: Not Reported in F.Supp.2d)
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Not Reported in F.Supp.2d, 2003 WL 21982145 (N.D.Ill.)
Briefs and Other Related Documents
Only the Westlaw citation is currently available.
United States District Court,N,D. Illinois, Eastern Division.
In re HA-LO INDUSTRIES, INC, et al., Dcbtors and Debtors-in—Posscssion,
HA-LO INDUSTRIES, INC., Plaintiff,
v.
CREDIT SUISSE FIRST BOSTON CORP., Defendant.
No. 02 B 12059, 03 C 2441.
Aug. 19, 2003.
I MEIVIORANDUIVI OPINION AND ORDER
QELLEl§’l£§» J—
*1 Defendant Credit Suisse First Boston Corp. has appealed from an interlocutory order of the bankruptcy court,
denying defendants motion to dismiss for improper venue or, in the alternative for transfer to the United States District
Court for the Southern District ot`New York pursuant to 28 USC. Q I404g'ag. FNI For the reasons set forth below, the
decision ofthe bankruptcy court is affirmed. ·
. FNI. This court granted defendants motion for leave to appeal the interlocutory order pursuant to 28 USC.
§ 158ga`l§i3`1.
BACKGROUND
In 1999 plaintiff IIA-LO Industries, Inc., a Delaware corporation with its principal place of business in Sterling, I
Illinois, entered into a contract with defendant, an investment bank headquartered in New York, to advise plaintiff
regarding plaintiffs potential purchase of Starbellycom, Inc. Plaintiffs engagement letter with defendant contains a ·
forum selection clause under which the parties consented “to the exclusive jurisdiction of the Supreme Court of the
, State of New York sitting in New York County or the United States District Court for the Southern District of New
York and the respective appellate courts thereof."
On July 30, 2001, plaintiff and two of its subsidiaries tiled for Chapter ll relief under the Bankruptcy Code. In
November 2002, plaintiff, despite the forum selection clause, liled the instant action against defendant in the Northern
District of Illinois, asserting gross negligence and negligent misrepresentation, breach of contract and breach of
liduciary duty. On plaintiffs motion, the case was referred to the bankruptcy court where plaintiffs Chapter Il
proceeding was pending, and it was then converted into an adversary proceeding. .
DISCUSSION
In this appeal, defendant hrst asserts that the bankruptcy court applied an incorrect legal standard in deciding the
motion to dismiss. This court's standard of review on that issue is de novo. Meri//me.4gZ_;e,$r;ggmQ,j]_r;Qntz11ts v. .4//ison,
2_,]__4_MI§_,_R,__1j9. 181 gN.D.Ill.1997). Defendant argues that the Supreme Court‘s opinion in M/S Bremen v. Zrzpttm
O[ii.S'!zore Comprzntn 407 U.S. I {1972; , and its progeny, particularly the Seventh Circuits decision in I
Finrzncirzl Inc. v. Midwhey Powder Co. Im;,m883 I€,2,d,,l2§_Q,[,7t1LQig_9g§@, requires that its motion. to dismiss for
improper venue be granted. Defendant is wrong. .
Contrary to defendant's argument, the Bremen standard does not govern motions to dismiss based on forum selection
clauses. Rather, the standard set forth in Bremen is used, as the bankruptcy court correctly noted, to determine whether
a forum selection clause in a contract is valid and enforceable. Bremen, 407 U.S. at 10. Such a clause is enforceable
unless: ‘“(1) [its] incorporation into the contract was the result of fraud, undue influence, or overweening bargaining
1 oi`3 I A. . 9/15/2005 10:48 AM

Case 1 :05-cv—OO535-SLR Documen’l**3BU5Flm-*1E—l$li=.l:@i"€9*9t”llf5t'QtTQ)`i’>l¤f***P@?§é power; (2) the selected forum is so gravely difficult and inconvenient that the [complaining party] will for all practical J
purposes be deprived of its day in court; or (3)[its] enforcement would contravene a. strong public policy of the
forum in which the suit is brought, declared by statute or judicial decision? AAR [nt'!. [nc. ir. Nlrnelias E1·1terprtse.v,
250 `F.3d 5l0. 525 {7th Cir.200l t. Because plaintiff does not argue that any ofthe Bremen exceptions apply,
there is no question that the f`oru1n selection clause in the engagement letter is both valid and enforceable.
*2 The fact that the clause in question is valid and enforceable does not mean, however, that defendants motion to
dismiss pursuant to Fed.R.Civ.P. l2gb)g3 l for improper venue must be granted. To the contrary, the bankruptcy court 3
remains a "proper venue." Bremen, was simply the first time the Court had enforced a forum selection clause, rejecting
ancient notions that such clauses were improper attempts to divest a court ofjurisdiction. As Judge Posner has noted,
"in the had old days, invoking a forum selection clause as a ground for dismissal of a suit brought in violation of the
clause was considered an improper effort to ‘oust’ the court's jurisdiction? Northwestern gggtonal [ns, Co. tz
Donovan, 91.6 li? .2d 372, 375 57th Cir. l990) (citing Bremen, 407 Qéggtt 9—l.2), The use of such clauses not to defeat
the courts jurisdiction, but instead to defend jurisdiction was treated much more lcnicntly (despite the result of
divesting another court‘s jurisdiction), because of the analogy to a party’s ability to waive any objections to venue and
personal jurisdiction. Id at 376. According to Judge Posner, "fa]ll this nonsense was swept away by Bremen. [cl
Bremen, however, was an admiralty case, and the forum selected by the parties was London, England. Once the court
determined that the clause was enforceable, the only way to enforce it was by dismissal for forum non conveniens,
which was the basis of the original motion to dismiss. Bremen, 407 US. at 4. Transfer to London under §____l,§QQ(a) was
obviously not available. Nothing in Bremen indicates that venue was "improper”’ in the original forum. Indeed, as
Judge Posner stated, thc notion that the forum selection clause "ousted" jurisdiction or venue of the court was rejected.
Thus, as the bankruptcy court correctly held, the existence ofthe valid forum selection clause in the instant case does
not itself render venue improper and, because venue is otherwise proper under 28 U.S.C. § 1391 , the motion to
dismiss under f`ed.R.Civ.P. l2[ b)(3) was correctly denied. See Stewart Orei_,,_lt;q_j;_L‘€_t;cg;lt,@gjjg,,_§l_?i7 US. 22 29 n. 8
Q,§g_8§) (motion to dismiss under 2§__gL;§.L. § LQQQQ) based on valid forum selection clause was properly denied
because venue was proper under 28 USC. § l39lt c Q).
That leaves defendants alternative motion to transfer venue pursuant to § 1404ga; for the convenience of parties and V
witnesses, in the interest of justice. This court reviews the bankruptcy courts decision on a § l404(at transfer motion
under an abuse of discretion standard. @@7;,883 f’.2Q ln Stewart, the Supreme Court held that the existence
of a valid forum selection clause "which represents the parties' agreement as to the most proper forum, should receive
neither dispositive consideration (as respondent might have it) nor no consideration (as Alabama law might have it),
but rather the consideration for which Congress provided in §__,l,gl@l(g). §tewrtrt 487 US. at_@_. Because § l40¢l(a.)
directs a district court to take account of factors other than those that bear solely on the parties' private ordering of
affairs, "[ilt is conceivable in aparticular case that because of those factors a district court acting under _§,_gtQgl_(g) J
would refuse to transfer a case notwithstanding the counterweight of a forum—selection clause .... " {cl at 30-31.
*3 What this means, according to the Seventh Circuit, is that the "signing ofa valid forum selection clause is a waiver
of the right to move for a change of venue [from the selected forum] on the grounds of inconvenience to the moving
party.’° Nortltwestern National 9 l6 fi.2d at 378 (citing Heller 883 F.2d at l293 t. The corollary must also be true. The
signing of a valid forum selection clause is a waiver ofthe right to defend against a motion to transfer to the selected
forum on grounds of inconvenience to the defending party. It does not mean, however, that the suit cannot be brought
or heard in a forum other than the selected forum, if factors other than convenience of the parties so justihes. As the
Seventh Circuit stated, "if there is inconvenience to some third party of which that third patty might not even be aware,
or to the judicial system itself, then either party to the suit is free to move for a change ofvenuc." [cl.
For purposes of the instant ease, this means that under the traditional § l4fl4(a)_ analysis, the bankruptcy court was to V
consider the convenience of the parties factor to weigh in favor of transfer to the selected forum. That is precisely what
the bankruptcy court did, finding that despite the great weight given to t.he choice of venue of the forum selection
clause, almost all other factors weighed strongly in favor of the present venue. The court properly reviewed the
standards under §_j_@Qgl_(a), finding that the location ofnon-party witnesses (plaintiff no longer has any employees) and
the interest of justice (the bankruptcy court is hearing several other cases arising from the Starbclly transaction)
strongly favored the instant district. Nothing presented by defendant either to the bankruptcy court or on appeal
indicates that the court‘s analysis was an abuse of discretion. Accordingly, the decision of the ba.nkruptcy court is
affirmed. V J
N.D.lll.,2003.
ln re HALO Industries, lnc.
2 of3 9/f5/2005 lf):48 AM

case 1:05-cv-00535-SLR newm9nliseli/stmt—r1=ntée=*esr1”er%e0eh¤¤lt>¤ag,<¤édzt*E>Q<>»5t58‘>0<>0<><>2686---
Not Reported in F.Supp.2d, 2003 WL 21982145 (N.D.Ill.) ,
Briefs and Other Related Documents (Back to top) (
· 2003 W1, 23 801 872 (Trial Motion, 1\/Iemorandum and Affidavit) Credit Suisse First Boston Corp.'s Memorandum of
Law in Further Support of Its Motion lor Certification o1` Issues for Appeal (Nov. 24, 2003)
· 200,3 WI, 23_8_0_1_§_j7 (Trial Motion, Memorandum and Affidavit) Response to CSFB’s Motion for Certification of
Issues for Appeal (Oct. 24, 2003)
· 2003 WI., 23801848 (Trial Motion, Memorandum and Affidavit) Defendant—Appellant Credit Suisse First Boston
Llc's Reply Brief (Aug. 1 1, 2003)
· ,2003 WI., 23801833 (Trial Motion, Memorandum and Affidavit) Response Brief of P1aintiff—AppeIIee, HA-LO
Industries, Inc, (.Iu1. 22, 2003)
· 2003 WI,. 23 801818 (Trial Motion, Memorandum and Aflidavit) Credit Suisse First Boston LLC’s Appellate Brief
(Jul. 07, 2003)
· _,I___;03Q\/(12441 (Docket) (Apr. I0, 2003)
END OF DOCUMENT
© 2005 Thomson/West. No Claim to Orig. Govt. Works.
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