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Plum Tree Inc. v. Stockment


decided: November 30, 1973.


On Petition for Writ of Mandamus and Answer to Petition. D.C. Civil Action No. 73-170.

Staley, Van Dusen and Adams, Circuit Judges.

Author: Van Dusen


VAN DUSEN, Circuit Judge.

Petitioner Plum Tree, plaintiff in the district court, seeks a writ of mandamus or prohibition directing that the district court vacate its order dated June 28, 1973, transferring the action, pursuant to 28 U.S.C. § 1404(a), to the United States District Court for the Southern District of Texas, Houston Division. Answers to the petition have been filed by defendants and on behalf of the district judge (nominal respondent) entering the June 28, 1973, order.

Petitioner filed a complaint against respondents in the District Court for the Eastern District of Pennsylvania on January 2, 1973, seeking declaratory and monetary relief for an alleged breach of a franchise agreement. On February 16, 1973, defendants filed their answer, along with a motion for transfer to the Southern District of Texas, Houston Division. In their motion, defendants stated that their business operation was in Houston, that plaintiff's claims do not arise out of or have any connection with business activities in the Eastern District of Pennsylvania, and that any breach of any agreement alleged in plaintiff's complaint would have occurred in the Southern District of Texas. However, defendants did not file affidavits, depositions, a brief in support of these contentions, or any other document containing information showing that a transfer would be appropriate for the convenience of the parties or witnesses or in the interest of justice. See Solomon v. American Continental Life Insurance Company, 472 F.2d 1043 (3d Cir. 1972). Plaintiff, on the other hand, filed a lengthy memorandum in opposition to the motion to transfer in which it argued that the forum-selection clause in the franchise agreement was entitled to respect.

On June 28, 1973, without having heard oral argument, the district court granted the motion for transfer on the ground that the franchise agreement was a contract of adhesion and the forum-selection clause was, therefore, void as against public policy. On July 11, 1973, plaintiff filed a motion to amend the order of June 28, 1973, to state that "such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation . . . ." 28 U.S.C. § 1292(b). On July 19, 1973, the district court denied this motion. This resulted in plaintiff's filing a petition for writ of mandamus in this court, seeking to compel the district court to amend its June 28 order so that an appeal from that order might be perfected pursuant to 28 U.S.C. § 1292(b).*fn1 However, we shall adopt the procedure suggested at oral argument and accepted by counsel of abandoning any claim for relief under 28 U.S.C. § 1292(b) and treating the petition for writ of mandamus as one seeking this court to order the district court to vacate its transfer order, which is the more usual way to proceed in this circumstance. See, e.g., Solomon v. Continental American Life Insurance Company, supra ; Swindell-Dressler Corporation v. Dumbauld, 308 F.2d 267 (3d Cir. 1962).


Under 28 U.S.C. § 1404(a) a transfer may be ordered "for the convenience of parties and witnesses, in the interest of justice . . . ." In making a determination as to the presence of these factors, the district court is vested with a wide discretion, which is rarely disturbed on a petition for mandamus. See Solomon v. Continental American Life Insurance Company, supra ; All States Freight v. Modarelli, 196 F.2d 1010 (3d Cir. 1952). However, in Swindell-Dressler Corporation v. Dumbauld, supra, we held that the failure to provide notice and an opportunity to be heard to the party opposing transfer was a violation of due process and would be remedied by granting a writ of mandamus to secure vacation of a transfer order. The process of establishing the appropriate procedural steps to be followed in determining a transfer motion is a continuing one in this Circuit. While our opinion in Wood v. Zapata Corporation, 482 F.2d 350 (3d Cir. 1973), rejected the contention that any and all informal conferences and arguments relative to a change of venue motion must be reported and transcribed by a court stenographer, a majority of the panel agreed to the proposition that such proceedings should be transcribed. Id. at pp. 357-59 (Adams, J., concurring and Biggs, J., dissenting). Similarly, while we have not imposed a requirement that district courts make findings of fact and conclusions of law with respect to the three factors stated in 28 U.S.C. § 1404(a) on each transfer motion, we have suggested "that it would be helpful to us if each transfer order set forth the factors upon which the court relied in deciding the motion." Solomon v. Continental American Life Insurance Company, supra, at 1048. In the case before us, there was no hearing or conference of any sort and, while the transfer order did contain a conclusory finding that the franchise agreement was a contract of adhesion and invalid, it made no reference to supporting evidence and did not relate that conclusory finding to the three factors stated in 28 U.S.C. § 1404(a). We do not hold that a hearing is necessarily required on every transfer motion, but where, as here, the evidence and arguments supporting a transfer were in doubt, a hearing or conference would have been desirable before the district court decided the motion. Furthermore, in making findings of fact on a transfer order, it would be helpful if the district court specifically related the evidence upon which it relies to the factors stated in 28 U.S.C. § 1404(a).

The more significant difficulty here, however, is that there was no evidence before the district court upon which it could base a finding that a transfer order was justified. Defendants, having the burden of proof, did not support their motion to transfer with any affidavits, depositions, stipulations, or other documents containing facts that would tend to establish the necessary elements for a transfer under 28 U.S.C. § 1404(a).*fn2 Nor did they submit any briefs or make any oral argument demonstrating that facts existed which were sufficient to justify a transfer. Thus, the transfer order was based entirely on the facts and conclusions asserted in defendants' motion.*fn3 The finding that the franchise agreement was a contract of adhesion and that the forum-selection clause was, therefore, invalid as against public policy seems to have resulted solely from an examination of the face of the contract itself, since there was no evidence submitted on the relative bargaining power of the parties or the circumstances of the making of the contract, and no argument was made by defendants as to its invalidity.*fn4

For the foregoing reasons, we hold that the June 28, 1973, district court order should be vacated, without prejudice to the right of defendants on remand to renew in the district court their motion for transfer, with appropriate supporting documents. See AAMCO Automatic Transmissions, Inc. v. Hagenbarth, 296 F. Supp. 1142 (E.D. Pa. 1972).


Since a substantial part of the discussion on both the motion for transfer in the district court and the petition for mandamus in this court focused on the issue of the effect to be given to the forum-selection clause in deciding a motion for transfer under 28 U.S.C. § 1404(a), and since this case is being remanded to the district court for further proceedings, we note that the existence of a valid forum-selection clause whose enforcement is not unreasonable*fn5 does not necessarily prevent the selected forum from ordering a transfer of the case under § 1404(a).*fn6 Congress set down in § 1404(a) the factors it thought should be decisive on a motion for transfer. Only one of these -- the convenience of the parties -- is properly within the power of the parties themselves to affect by a forum-selection clause. The other factors -- the convenience of witnesses and the interest of justice -- are third party or public interests that must be weighed by the district court; they cannot be automatically outweighed by the existence of a purely private agreement between the parties.*fn7 Such an agreement does not obviate the need for an analysis of the factors set forth in § 1404(a) and does not necessarily preclude the granting of the motion to transfer.


In the event that the district court does not vacate its June 28 transfer order within 20 days, as described at slip op. page 6 above, plaintiff may apply for the entry of an order providing that a writ of mandamus shall issue, directing the nominal respondent judge to vacate and set aside the order of June 28, 1973, without prejudice to the right of defendants on remand to renew their motion for transfer supported by appropriate documents in accordance with the foregoing opinion.

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