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BTC-USA Corp. v. Novacare et al.: US District Court : CONTRACT | CIVIL PROCEDURE - dismissed due to forum selection per Convention on Contracts for International Sale of Goods (CISG)

BTC-USA Corporation,
v. Civil No. 07-3998 ADM/JSM
Novacare (a French entity), Mougeot-Copy
(a.k.a. Papeteries Mougeot SA) (a French
entity), Koehler (a.k.a. Papierfabrik
August Koehler AG) (a German entity),
Richard Greene (an individual), Marc
Defosse (an individual), and Sebastien
Courtois (an individual),
Jason A. Lien, Esq., Maslon Edelman Borman & Brand, LLP, Minneapolis, MN, on behalf of the
Michael A. Ponto, Esq., Peter C. Hennigan, Esq., and Catherine G. Davis, Esq., Faegre &
Benson LLP, Minneapolis, MN, on behalf of Defendants Novacare and Mougeot-Copy.
David L. Sasseville, Esq., Lindquist & Vennum PLLP, Minneapolis, MN, on behalf of
Defendants Koehler, Richard Greene, and Marc Defosse.
On April 10, 2008, the undersigned United States District Judge heard oral argument on
Defendants Novacare and Mougeot-Copys (collectively Novacare) Motion to Dismiss the
Amended Complaint [Docket No. 10] and Defendants Koehler, Richard Greene (Greene), and
Marc Defosses (Defosse) Motion to Dismiss the Amended Complaint [Docket Nos. 20, 30].
Plaintiff BTC-USA Corporation (BTC) asserts claims of breach of contract, promissory
estoppel, tortious interference with business expectancy, tortious interference with contract,
fraud, and conspiracy. For the reasons stated herein, Defendants Motions to Dismiss are
BTC is a Minnesota corporation with its principal place of business in Minneapolis,
Minnesota. Am. Compl. 1. Novacare and its subsidiary Mougeot-Copy are French entities
with their principal places of business in France. Id. 2. Koehler is a German entity with its
principal place of business in Germany. Id. 4. Greene resides in New York and is the
Secretary, Executive Vice President, and Chief Executive Officer of Koehler America, a
subsidiary of Koehler. Id. 5, Greene Decl. [Docket No. 24] 2. Defosse resides in France and
previously worked for Mougeot-Copy and currently works for Koehler. Id. 6.
BTC is a paper broker that sold carbonless paper during the time periods relevant to the
current litigation. Id. 11. To sell carbonless paper, BTC needed a relationship with a paper
mill that produces and supplies carbonless paper. Id. 13. In March 2003, a Mougeot-Copy
representative approached BTC and proposed that BTC cancel its relationship with its current
supplier and represent Mougeot-Copys carbonless paper line instead. Id. 15. Defosse and
Sebastien Courtois (Courtois) conducted discussions with BTC regarding Mougeot-Copys
interest in forming an exclusive relationship with BTC. Id. 18. On three instances, Defosse
traveled to Minnesota to meet with BTC and its customers, on two of those occasions Courtois
joined Defosse. Id. 32, 35; Defosse Decl. [Docket No. 25] 6. Throughout the negotiations
Mougeot-Copy, through Defosse and Courtois, represented that it was interested in a long-term
relationship with BTC and was committed to working with BTC in the United States. Id. 15-
24. Finally, on or about March 2004, the parties orally agreed that Mougeot-Copy would be
BTCs sole supplier and BTC would be Mougeot-Copys sole distributor in the United States.
Id. 25. Accordingly, BTC terminated its relationship with its previous supplier and began
taking the necessary steps to sell Mougeot-Copys paper. Id. 28. From July through
September 28, 2004, BTC placed orders with Mougeot-Copy and received shipments of
customer orders and inventory from Mougeot-Copy. Id. 34. During that time, Mougeot-Copy
operated under an agreement with Koehler whereby Koehler would sell paper to Novacare,
which would then market and distribute the paper under its proprietary trade mark Mougeot-
Copy. Koehler and Novacare agreed to terminate their relationship in May 2004 when Koehler
decided to stop manufacturing carbonless paper for Novacare.
On September 28, 2004, Mougeot-Copy informed BTC that it was exiting the carbonless
paper industry and would only supply BTC with carbonless paper until the end of 2004. Id. 36.
Mougeot-Copy informed BTC that although it would no longer supply BTC with carbonless
paper, BTC could purchase carbonless paper with Koehler. Id. However, Koehler subsequently
informed BTC that, contrary to Mougeot-Copys representation, Koehler would not supply BTC
with carbonless paper. Id. 42.
BTC contends Mougeot-Copy deceived BTC to believe it intended to form a long-term
partnership and used BTC to gain access to clients and business information, which it then used
to its advantage when it began working with Koehler to sell carbonless paper in the United
States. Id. 30-31, 43. BTC contends that as a consequence, it suffered significant financial
losses and serious, permanent damage to its reputation. Id. 44.
In its Motion to Dismiss, Novacare asserts the Court should dismiss the Amended
Complaint for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3) or, in the
alternative, for failing to state a claim upon which relief can be granted pursuant to Federal Rule
of Civil Procedure 12(b)(6). Novacare contends that BTC agreed to a forum selection clause
included in its purchase order agreements requiring that any disputes arising between BTC and
Novacare be settled in France. Novacare also asserts that the Court should dismiss BTCs
Amended Complaint because the allegations set forth fail to state a claim for which relief can be
granted. Koehler, Greene, and Defosse submitted a motion to dismiss asserting that the Court
should dismiss Defosse if it dismisses Novacare for improper venue and that the Court should
dismiss Koehler and Greene because it lacks personal jurisdiction over them.
A. Forum Selection Clause--Novacare and Defosse
Rule 12 of the Federal Rules of Civil Procedure provides that a party may move to
dismiss a complaint on the basis of improper venue. Fed. R. Civ. P. 12(b)(3). There is
disagreement among the circuits regarding whether Rule 12(b)(3) or Rule 12(b)(6) is the proper
vehicle for bringing a motion to enforce a forum selection clause and the Eighth Circuit has not
ruled definitively on this issue. Rainforest Cafe, Inc. v. EklecCo, L.L.C., 340 F.3d 544, 546 n.5
(8th Cir. 2003). In the Ninth Circuit, Rule 12(b)(3) is the proper vehicle for bringing a motion to
dismiss for improper venue based on a forum selection clause. Argueta v. Banco Mexicano,
S.A., 87 F.3d 320, 324 (9th Cir. 1996). In evaluating a Rule 12(b)(3) motion to dismiss, the
court does not accept the pleadings as true and considers facts outside the pleadings. Id.
Because the parties do not dispute that the Court should evaluate Novacares Motion to Dismiss
for improper venue according to Rule 12(b)(3), and do not dispute that the Court may consider
facts outside the pleadings to determine the proper venue, the Court need not decide the issue
still unresolved by the Eighth Circuit.
When BTC needed paper supply from Mougeot-Copy it would place an order by fax or
email indicating the quantity and quality of the paper sought and the time and place for delivery.
Clavier Decl. [Docket No. 15] 5. After negotiating the details with BTC, Mougeot-Copy
would send BTC a pro forma invoice, which detailed the specifics of the order. Id. 6. The pro
forma invoice also included the general conditions of sales, which included the following
Registered office of the Seller (Laval/Vologne, France) is to be considered as
elected domicile.
All disputes arising between the Buyer and the Seller shall be exclusively settled
by the competent court of Epinal (Tribunal de Commerce dEpinal, Vosges).
Id. Attach. 3. Before filling BTCs order, Mougeot-Copy required that BTC confirm its
agreement to the terms on the pro forma invoice by writing, email, or some other method. Id.
8. On four occasions, Ron Michlitsch (Michlitsch), BTCs vice president, provided the
confirmation required by Mougeot-Copy by signing the pro forma invoice and initialing the
general conditions of sales. Id. Attachs. 4-7. In each instance, Michlitsch initialed the general
conditions of sales adjacent to the forum selection clause. Id.
Novacare contends that venue is improper because BTC agreed to the forum selection
clause included with the pro forma invoices and thus agreed to resolve all disputes in France.
BTC contends that because the forum selection clause was not included in the parties March
2004 oral agreement and is not an implied term to the parties contract, the forum selection
clause is unenforceable. BTC acknowledges that Michlitsch initialed the general conditions of
sales but argues that doing so does not mean that BTC expressly, freely, and consciously agreed
to the forum selection clause. Novacare contends that even if the forum selection clause was not
included in the March 2004 oral contract, BTC expressed assent to the clause (indicated by
Michlitschs initialing the general conditions of sales), and thus agreed to modify the contract.
Novacare contends that because BTC expressly agreed to the forum selection clause, the clause
is enforceable, and requires that the Court dismiss BTCs Amended Complaint for improper
The key question to determining whether venue is proper is whether the parties agreed to
the forum selection clause. Because this case involves a dispute regarding the international sale
of goods it is governed by the United Nations Convention on Contracts for the International Sale
of Goods (CISG). Chateau Des Charmes Wines LTD v. Sabate USA, Inc., 328 F.3d 528, 530
(9th Cir. 2003) (stating that because the President submitted the CISG to the United States
Senate, which ratified it, the CISG is valid and binding federal law). Pursuant to the CISG,
parties may execute oral contracts and may modify contracts by the mere agreement of the
parties. CISG arts. 11, 29(1).
The Ninth Circuit addressed similar issues in Chateau Des Charmes Wines, 328 F.3d
528. In that case, the defendant included a forum selection clause in the invoices it sent to the
plaintiff; however, unlike this case, there was no evidence that the plaintiff assented to the added
term. Id. at 531. Defendant argued that plaintiffs failure to object constituted an agreement to
the forum selection clause; however, the Ninth Circuit disagreed. Id. The court explained:
Nothing in the [CISG] suggests that the failure to object to a partys unilateral attempt to alter
materially the terms of an otherwise valid agreement is an agreement within the terms of
Article 29. Here, no circumstances exist to conclude that Chateau des Charmess conduct
evidenced an agreement. Id.
In the case at bar, when Michlitsch initialed the general conditions of sale BTC expressed
its assent to the forum selection clause. Pursuant to Article 29, parties are free to agree to
modify previously agreed upon contracts, even if the modification constitutes a material
alteration. BTC assented to a material alteration of the oral contract.
BTC contends that the Court should not enforce the forum selection clause because doing
so would result in hardship and surprise. Whether the clause would result in hardship and
surprise is relevant to determining whether the clause constitutes a material alteration not
expressly agreed upon by the parties under Uniform Commercial Code 2-207. See Marvin
Lumber and Cedar Co. v. PPG Indus., Inc., 401 F.3d 901, 911 (8th Cir. 2005); Revlon, Inc. v.
United Overseas Ltd., No. 93 Civ. 0863, 1994 WL 9657 (S.D.N.Y. Jan. 12, 1994). Not only
does this case not involve the application of 2-207, or the analogous article of the CISG, there
is no dispute that the forum selection clause materially altered the oral contract. Hardship and
surprise may prevent enforcement in a case where a forum selection clause is unilaterally
inserted into the contract without the express assent of the parties, it will not prevent
enforcement in this case where BTC expressly agreed to the clause by initialing the general
conditions of sales.
Next, BTC contends that Michlitsch did not assent to the forum selection clause when he
initialed the general conditions of sales because he may not have read them and thus did not
agree to them or he did not understand them to be an alteration because he did not negotiate the
original contract. This argument ignores the general principle of contract law that, in the
absence of fraud, misrepresentation or deceit, one who executes a contract cannot avoid it on the
ground that he did not read it or supposed it to be different in its terms. N&D Fashions, Inc. v.
DHJ Indus., Inc., 548 F.2d 722, 727 (8th Cir. 1976).
Finally, BTC argues that enforcement of the forum selection clause would be
unreasonable because it is inconvenient, was not bargained for or freely entered into, and
deprives BTC of a meaningful day in court. BTC contends that enforcement of the clause would
deprive it of its day in court because of the substantive and procedural differences between the
judicial systems in France and the United States. With regard to the procedural differences,
BTCs vague assertion that the substantive and procedural differences between the French and
US systems deprive it of its day in court, without any specific explanations as to why, is
insufficient to demonstrate that enforcement of the forum selection clause would be
unreasonable. Further, as other courts have pointed out, while the French system is different, it
is not deficient. See Ana Distrib., Inc. v. CMA-CGM (Am.) Inc., 329 F. Supp. 2d 565, 567-68
(S.D.N.Y. 2004).
BTC also argues litigating in France poses a financial hardship. However, BTC has not
alleged that it is incapable of litigating in France because of the economic expense and there is
no support for the proposition that financial hardship by itself warrants a finding that the forum
selection clause is unreasonable. See e.g., Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585,
594-95 (1991) (declining to set aside a forum selection clause even where it presented a financial
hardship to the plaintiffs); Vilmar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528,
535-36 (1995) (affirming the Courts earlier holding that a forum selection clause that presents a
financial hardship does not lessen liability and thus does not deprive the plaintiff of its day in
Because the Court has determined that the forum selection clause is enforceable, venue in
the United States District Court is improper and the Court must dismiss Novacare and Mougeot-
Although Defosse was not a party to the agreement containing the forum selection clause,
he is bound by the clause and thus the Court also dismisses the case against him. A non-party
will be bound to a forum selection clause where the non-party is so closely related to the dispute
that it becomes foreseeable that it will be bound. U.S., ex rel. Lighting and Power Servs., Inc.
v. Interface Constr. Corp., No. 4:07-CV-1144-DDN, 2007 WL 2710030, at *6 (E.D. Mo. Sept.
11, 2007) (citing Marano Enters. of Kan. v. Z-Teca Rests. L.P., 254 F.3d 753, 757 (8th Cir.
2001). The closely related test has been used to enforce forum selection clauses against parties
who are bound by a clearly common interest, such as a corporation and its subsidiary and
spouses. Id. Defosse, who worked for Mougeot-Copy at the time that BTC signed the forum
selection clause and is being sued for his conduct during that time, is sufficiently closely
related to be bound by the forum selection clause.
B. Personal Jurisdiction--Koehler and Greene
Rule 12 of the Federal Rules of Civil Procedure provides that a party may move to
dismiss a complaint for lack of personal jurisdiction. Fed. R. Civ. P. 12(b)(1). To defeat a
motion to dismiss for lack of personal jurisdiction, a party need only make a prima facie showing
of personal jurisdiction, which may be done through affidavits, exhibits, or other evidence.
Romak USA, Inc. v. Rich, 384 F.3d 979, 983-84 (8th Cir. 2004). While the Court must view the
evidence in the light most favorable to the nonmoving party, the nonmoving party still carries the
burden of proof to establish in personam jurisdiction. Id. Determining whether jurisdiction
exists is a two-prong inquiry. First, the requirements of the Minnesota long-arm statute must be
satisfied, and second, whether jurisdiction comports with the Due Process Clause of the
Fourteenth Amendment must be examined. Minn. Mining & Mfg. Co. v. Nippon Carbide Indus.
Co., 63 F.3d 694, 697 (8th Cir. 1995). Minnesotas long-arm statute is coextensive with the
limits of due process; therefore, the only question is whether due process requirements are met
in this instance. Id.
Personal jurisdiction is established by a showing that the defendant maintains sufficient
minimum contacts with the forum state such that summoning the defendant would not offend
traditional notions of fair play and substantial justice. Pecoraro v. Sky Ranch for Boys, Inc.,
340 F.3d 558, 561 (8th Cir. 2003).
The central question is whether a defendant has purposefully availed itself of the
privilege of conducting activities in the forum state and should, therefore,
reasonably anticipate being haled into court there. . . . With these principles in
mind, we look at five distinct factors: (1) the nature and quality of the defendants
contacts with the forum state; (2) the quantity of contacts; (3) the relationship
between the cause of action and the contacts; (4) the forum states interest in
providing a forum for its residents; and (5) the convenience of the parties.
Id. at 562. Specific jurisdiction can only be found if the controversy is related to or arises out
of the defendant's contacts with the forum state. Johnson v. Woodcock, 444 F.3d 953, 956
(8th Cir.2006). General jurisdiction exists where the contacts between the defendant and the
forum state are continuous and systematic even if there is no relationship between the contacts
and the cause of action. Id. at 956.
Accepting the facts alleged in the Amended Complaint as true, the only contact Koehler
or Greene had with Minnesota was the phone call during which Koehler informed BTC that it
could not supply it with carbonless paper. Accordingly, BTC contends that the Court has
jurisdiction over Koehler and Greene because of their participation in a conspiracy with
Novacare. BTC asserts that as a participant in the conspiracy, the acts committed by Novacare
are attributable to Koehler and Greene.
To establish jurisdiction based on a conspiracy theory, BTC must show the existence of
a conspiracy; (2) the nonresidents participation in or agreement to join the conspiracy; and (3)
an overt act taken in furtherance of the conspiracy within the forums boundaries.
Personalized Brokerage Servs., LLC v. Lucius, No. 05-1663, 2006 WL 208781 (D. Minn. Jan.
26, 2006) (quoting Remmes v. Intl Flavors and Fragrances, Inc., 389 F. Supp. 2d 1080, 1095-96
(N.D. Iowa 2005) (quoting Jung v. Assn of Am. Med. Colls., 300 F. Supp. 2d 119, 141 (D.D.C.
2004))). In order to properly assert a claim of conspiracy, the plaintiff must allege specific facts
suggesting that there was a meeting of the minds between the conspiring parties. Rogers v.
Bruntrager, 841 F.2d 853, 856 (8th Cir. 1988).
BTCs theory is that Koehler, working with Novacare, stopped supplying Novacare with
carbonless paper so that Novacare would have to terminate its relationship with BTC, and in
doing so, would push BTC out of the market and create more business for Koehler. BTC has not
alleged any facts demonstrating a meeting of the minds between Koehler and Novacare during
which they directed themselves toward an unlawful purpose. There simply is no evidence that
Koehler terminated its relationship with Novacare for any other reason than its economic
concerns. With regard to Greene, BTC has not alleged that Greene ever met with BTC or any of
its representatives and the record demonstrates that Greene never met Defosse or Courtois and
did not have any dealings with them while they worked for Novacare. BTC has failed to
demonstrate a prima facie case of conspiracy and cannot attribute Novacares contacts in this
forum to Koehler and Greene. Accordingly, the Court lacks jurisdiction over Koehler and
C. Courtois
As of the date of this Order, BTC has not served Courtois. BTC shall advise the Court by
Wednesday, June 25, regarding whether it intends to proceed with its case in Minnesota with
Courtois as the sole defendant.
Based upon the foregoing, and all of the files, records and proceedings herein, IT IS
1. Defendants Novacare and Mougeot-Copys Motion to Dismiss [Docket No. 10] is
2. Defendants Koehler, Richard Greene, and Marc Defosses Motion to Dismiss
[Docket Nos. 20, 30] is GRANTED;
3. Plaintiff BTC-USA Corporations (BTC) Amended Complaint [Docket No. 27]
is DISMISSED for improper venue and lack of jurisdiction; and
4. BTC shall notify the Court by Wednesday, June 25, regarding whether it intends
to proceed with its case in Minnesota with Sebastien Courtois as the sole
s/Ann D. Montgomery
Dated: June 16, 2008.


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