Plaintiff Knights Collision Center, LLC (hereinafter "Knights") brings this action against AAA Mid-Atlantic ("AAA"), alleging state-law breach of contract claim (Count I) and a federal law racial discrimination claim in violation of the Civil Rights Act of 1866, 42 U.S.C. § 1981 (Count II). Knights filed a complaint on February 4, 2009 and filed an amended complaint on June 29, 2009. On August 5, 2009, AAA filed a motion to dismiss Count I pursuant to Fed. R. Civ. P. 12(b)(6) or 12(b)(3), styled in the alternative as a motion to transfer to the District of Delaware pursuant to 28 U.S.C. § 1404(a). Plaintiff filed its response to the motion to dismiss on September 10, 2009.*fn1 On October 14, 2009, defendant filed a response in support of its motion to dismiss. Now before this court is defendant's motion to dismiss or transfer.
Plaintiff Knights is a Pennsylvania corporation that provides automobile restoration, repair, and towing services. Knights is also a Minority Business Enterprise ("MBE) as defined by the National Minority Supplier Development Council--a definition adopted by the Minority Supplier Development Council of Pennsylvania, New Jersey, and Delaware. AAA is a non-profit organization with corporate offices in Philadelphia and Wilmington organized under the laws of Delaware. Knights has a contract with AAA to provide emergency roadside assistance to AAA members.
On December 1, 2006, Knights entered into a Roadside Assistance Service Provider Agreement ("RASPA") with AAA to provide a full range of emergency roadside assistance. That contract contained a clause selecting Delaware law that provided as follows: "APPLICABLE LAW. This Contract shall be construed under and in accordance with the laws of the State of Delaware without giving effect to conflict of laws provisions."
The RASPA was amended in March 2007, November 2007, and April 2008. The March 2007 contract contained a forum selection clause stating that:
[A]ny action brought to enforce any term(s) of this Agreement, or on account of any breach of this Agreement, or relating to or arising out of the subject matter of this Agreement . . . must be commenced in Delaware and be maintained in state or federal courts located in the County of New Castle, State of Delaware. The parties agree that jurisdiction and venue for such proceedings shall lie exclusively with such courts.
The March 2007 amendment was signed by representatives from AAA and Knights. The November 2007 amendment to the RASPA added an arbitration clause stating that arbitration must be conducted in Wilmington and administered by the National Arbitration Forum.
In May 2008, Knights became part of the Preferred Service Provider program managed by AAA; the program required Knights to become an exclusive AAA provider in exchange for receiving additional customer calls and higher rates. The current governing contract between the parties dates from June 1, 2008. That contract contains a forum selection clause granting exclusive jurisdiction to the "state and/or federal courts located in New Castle County, Delaware"*fn3 and an arbitration clause providing that arbitration shall be conducted in Wilmington and administered by the National Arbitration Forum. The RASPA also contains a termination clause which allows either party "for any reason or no reason" to terminate the contract with ten days' notice.
AAA has filed a motion to dismiss Count I pursuant to Fed. R. Civ. P. 12(b)(6) or 12(b)(3), on the ground that the Eastern District of Pennsylvania is not the appropriate venue for this action. AAA's motion is styled in the alternative as a motion to transfer the action to the District of Delaware under 28 U.S.C. § 1404(a).*fn4 Defendant contends that the forum selection clause contained in the June 1, 2008 contract is valid and must be enforced. Knights claims that the forum selection clause is unenforceable because it was procured through fraud or overreaching.
As a threshold matter this court must consider what procedural vehicle is most appropriate for addressing defendant's motion. Rule 12(b) allows defendant to ask for dismissal on the ground that, under subsection (3), venue is improper, and, that, under subsection (6), the plaintiff has failed to state "a claim upon which relief can be granted." A district court has discretion under 28 U.S.C. § 1404(a) to transfer venue. 28 U.S.C. § 1404(a) ("For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.").
In Salovaara v. Jackson Nat'l Life Ins. Co., the Third Circuit explained that Rule 12(b)(6) is "a permissible means of enforcing a forum selection clause that allows suit to be filed in another federal forum." 246 F.3d 289, 298-99 (3d Cir. 2001). However, the court explained that "as a general matter, it makes better sense, when venue is proper but the parties have agreed upon a not-unreasonable forum selection clause that points to another federal venue, to transfer rather than dismiss." Id. at 299. Subsequent to Salovaara, courts in this Circuit have preferred transfer rather than dismissal when a forum selection clause specifies another venue. See, e.g., Tessler & Weiss/Premesco, Inc. v. Sears Holding Management Corp., No. 09-1243, 2009 WL 3335570, *3 (D.N.J. Oct 15, 2009); Feldman v. Google, Inc., 513 F.Supp.2d 229, 244 (E.D. Pa. 2007) (noting that Third Circuit has "cautioned" that transfer is appropriate when forum selection clause is present); Barbuto v. Medicine Shoppe Intern., Inc., 166 F.Supp.2d 341, 348 (W.D. Pa. 2001) ("Our Court of Appeals has clearly stated that 'where venue would be proper in the initial forum court, provided no forum selection clause covered the subject matter of the lawsuit, it is inappropriate to dismiss pursuant to 28 U.S.C. § 1406.' ") (citing Salovaara, supra).
However, transfer, as distinct from dismissal, is permissible only when venue is proper in both the original and the requested forum. Jumara v. State Farm Ins. Co., 55 F.3d 873, 878 (3d Cir. 1995). Plaintiff submits that venue is proper in the Eastern District of Pennsylvania under 28 U.S.C. § 1391(b) "because a substantial number of the acts and omissions" giving rise to the complaint took place in this district. AAA does not argue that venue would not be proper in the District of Delaware. Thus, I conclude that as a threshold matter, because plaintiff has its principal place of business in this jurisdiction and the contract at issue governed the provision of emergency roadside assistance in Bucks County, venue in the Eastern District of Pennsylvania is proper. Venue is also proper in the United States District Court for the District of Delaware, the court specified ...