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Healthcare Services Group, Inc. v. New Orleans Home for Incurables, Inc.

United States District Court, E.D. Pennsylvania

June 14, 2018



          KEARNEY, J.

         Businesses cannot agree to a venue for their disputes which violates Congress' long-established definition of proper venue. Unlike private arbitration clauses, they cannot agree to create venue where it does not exist. While they can agree to a particular venue if permitted under federal law and then argue as to the effect of their forum selection agreement for purposes of transfer to a certain district for convenience reasons, they cannot contract around Congress' mandate. When, as today, we review venue in a case where a Pennsylvanian seeks to collect for its services provided entirely in Louisiana and the Louisiana citizen then decides not to pay for the services provided there, we lack proper venue in this District over this breach claim regardless of their agreement to litigate in this District.

         I. Plead facts relating to venue

         Pennsylvania citizen Healthcare Services Group, Inc. provides "necessary personnel and supervision to perform housekeeping services."[1] On October 5, 2015, Healthcare Services agreed to provide housekeeping and laundry services to Louisiana citizen New Orleans Home for the Incurables, Inc. d/b/a John J. Hainkel Jr. Home and Rehabilitation Center.[2] New Orleans Home would pay $34, 650 per month for the services.[3] The parties agreed to "exclusive" venue in the Pennsylvania Court of Common Pleas of Bucks County or the United States District Court for the Eastern District of Pennsylvania.[4]

         New Orleans Home refused to pay Healthcare Services for "all" housekeeping services it provided under their agreement.[5] Healthcare Services alleges New Orleans Home breached their contract, or in the alternative was unjustly enriched, when it failed to pay Healthcare Services for the housekeeping services provided under their agreement.

         II. Analysis

         Healthcare Services sued New Orleans Home invoking our diversity jurisdiction because the parties are citizens of different states and the amount in controversy exceeds $75, 000. After service on New Orleans Home, we issued a rule to show cause for both parties to explain the propriety of venue in this district for services provided in the District of Louisiana.[6]

         Healthcare Services argues venue is proper here because the parties selected our district as their forum in their agreement and we must enforce their forum selection clause. New Orleans Home seeks dismissal under 28 U.S.C. § 1406(a) arguing venue is not proper under 28 U.S.C. § 1391 because a substantial part of the action or events giving rise to Healthcare Services claims did not arise in Pennsylvania. While New Orleans Home seeks dismissal, it concedes venue is proper in Louisiana.[7]

         A. Venue must be proper under 28 U.S.C. § 1391 regardless of the forum selection clause.

         Congress requires proper venue under § 1391 which supersedes an agreement among private litigants as to their preferred forum. Congress alone governs what is proper venue for a civil action brought in federal district courts. Congress made this clear in stating § 1391(a) "shall govern the venue of all civil actions brought in the district courts of the United States." The Supreme Court instructed this "structure of the federal venue provisions confirms that they alone define whether venue exists in given forum."[8]

         The Supreme Court directly addressed the primacy of proper venue under§ 1391 over litigants' forum selection in Atlantic Marine.[9]The court notes some confusion exists because of the sometimes interchangeable use of the "special statutory term 'venue'" and "the word 'forum'" and sometimes they can correctly be used "synonymously."[10] The Supreme Court cuts through this confusion to clarify venue is a "special statutory" term created by Congress and we must determine venue only in accordance with the criteria in § 1391.[11] We cannot look outside Congress's criteria because § 1391 "cannot reasonably be read to allow judicial consideration of other, extrastatutory limitations on the forum in which a case may be brought."[12]

         B. Venue is not proper in the Eastern District of Pennsylvania.

         Mindful of Atlantic Marine, we turn to New Orleans Home's argument venue is improper in this District. While New Orleans Home seeks dismissal, they concede venue is proper in the District of Louisiana so we analyze whether to transfer for improper venue under 28 U.S.C. § 1406.[13] When deciding whether to transfer for improper venue, we "must generally accept as true the allegations in the complaint, although the parties may submit affidavits in support of their positions."[14] We construe all factual disputes and make all reasonable inferences in favor of Healthcare Services, the non-moving party.[15] New Orleans Home, the moving party, "bears the burden of proving that venue in [this District] is improper."[16]

         Congress provides, except as provided by another federal law, "a civil action may be brought in (1) a judicial district in which any defendant resides ...; (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred ...; or (3) if there is not district in which an action may otherwise be brought as provided in this section, any judicial district in ...

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