District Court Finds German Choice-of-Law Contract Provision Enforceable and Dismisses Claim Forum non Conveniens Grounds

The World in U.S. Courts: Summer 2017 - Personal Jurisdiction/Forum Non Conveniens | May.08.2017

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Laspata Decaro Studio Corp. v. Rimowa GMBH, U.S. District Court for the Southern District of New York, May 8, 2017

Rimowa, the German luggage manufacturer, had a contracted with Meiré, a German advertising agency, for the production of certain advertising images. After a third party sued both Rimowa (and two of its subsidiaries) and Meiré in federal court in the US for copyright infringement, the Rimowa entities filed a cross-claim against Meiré, claiming that Meiré misrepresented ownership of the copyrighted images used in the advertisements. Meiré moved to dismiss the Rimowa claim, in relevant part based on a provision in the parties’ contract that established Germany as the forum for disputes.

The Court began its analysis by noting that contractual choice-of-forum provisions were to be analyzed under the forum non conveniens doctrine, and that the questions for decision were whether the forum selection clause existed, whether it was valid, and whether it was enforceable in US Courts.

The Court concluded that these questions should be answered under German law, and to this end evaluated affidavits on German law submitted by the parties. Rimowa and Meiré were both sophisticated entities that had a long-standing business relationship and previously entered into numerous contracts with one another. Those contracts all expressly referred to a “general terms of service” agreement that was also entered into by both parties. The agreement unambiguously stated that “the law” and “the place of jurisdiction” (indicating no alternatives) was Germany, making Germany the proper forum for disputes. Rimowa knowingly accepted these terms, without objection, in every contract, and the Court found that, under German law, the provision was valid and would be applicable to the present dispute.

The Court then turned to the enforceability of the provision, to which it found US law would apply. Dismissal would be presumptively appropriate where (i) the clause was “reasonably communicated to the party resisting enforcement,” (ii) the clause was mandatory rather than permissive, and (iii) the claims and the parties involved in the suit are subject to the clause. Where those conditions are satisfied, a plaintiff could only defeat the effort to dismiss the case by making a “sufficiently strong showing” that enforcement of the provision would otherwise be “unreasonable or unjust, or that the clause was invalid for such reasons as “fraud or overreaching.” The Court found these conditions to be satisfied, notably holding Rimowa’s subsidiaries were third-party beneficiaries of the contract containing the choice-of-forum provision, and thus were bound by the provision even though they were not parties to the contract. The Rimowa entities argued that the case nevertheless should not be permitted to proceed in Germany because litigation there would be “unpredictable and unsatisfactory” as a result of the local court’s unfamiliarity with US copyright law. The Court rejected this argument, finding that a forum non conveniens dismissal based on a claim of inadequacy of remedy in a non-US court required that the plaintiff show that it have no remedy at all outside the US, or would be treated unfairly. As no such showing had been made, the case was dismissed.

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