Thanks to a mandatory forum selection clause in an agreement, a fraud lawsuit against pizza franchise Marco’s was transferred to the Northern District of Ohio.
Chief Judge Nannette Jolivette Brown transferred the case from the U.S. District Court for the Eastern District of Louisiana on March 10.
Cajunland Pizza and a handful of other similar businesses sued Marco’s Franchising, LLC for damages, restitution, the cost of the lawsuit, attorney’s fees and a declaratory judgment, alleging Marco’s didn’t follow through with an Area Representative Agreement.
Ultimately, Judge Brown ruled that a mandatory forum selection clause applies to this case and can be enforced. The clause reads, “[a]ll litigation, court proceedings, lawsuits, arbitration proceedings and other hearings must and will be venue exclusively in Toledo, Ohio,” according to the lawsuit.
Taken into consideration with Ohio law, Judge Brown then determined that the clause isn’t just lax or lenient, it’s required.
“The language in the forum selection clause in the franchise agreements does not merely authorize jurisdiction in Toledo, Ohio, but provides that jurisdiction is only appropriate in Toledo, Ohio,” Judge Brown pointed out.
She also said the clause is enforceable since the plaintiffs failed to show that applying the agreement would be irrational; especially because they don’t actually state that the forum selection clauses were presented fraudulently. The plaintiffs also don’t suggest that they won’t get a fair fight in court by going to the Northern District of Ohio.
The plaintiffs’ claims also apply in this agreement because the clause is broad and includes a large diversity of claims.
“While the court recognizes that New Orleans has a unique and special culture around food, this is not the type of local interest sufficient to overcome a valid, mandatory forum selection clause,” wrote Judge Brown.
The agreement in question, entered between CajunLand and Marco’s in 2009, requires buyers to build several franchises in a specific area. Roughly a year later, CajunLand had opened two stores before going on to open four more ahead of Marco’s ended the agreement in January 2016. The plaintiffs later asked to sell their stores to a franchisee in Florida, which they say Marco’s approved in November 2017. Still, Marco’s later required the plaintiffs to work with another seller, that was selling the stores at 40% lower than the sale price. Things went left even further when Marco’s pulled their consent a week before a scheduled closing before it closed a partner location because of health issues. In December 2018, the plaintiffs were told the franchise had ended. They sued for alleged violations of the Louisiana Unfair Trade Practices Act and tortious interference of a contract.
