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Red Bull Associates v. Best Western International Inc.

decided: November 29, 1988.

RED BULL ASSOCIATES, GORDON WEISS AND MURRAY WEISS, PLAINTIFFS-APPELLEES,
v.
BEST WESTERN INTERNATIONAL, INC., DEFENDANT-APPELLANT



Appeal from an order of the United States District Court of the Southern District of New York (Knapp, J.) denying appellant Best Western's motion to transfer, in a suit alleging federal civil rights violations, pursuant to 28 U.S.C. § 1404(a), despite a forum selection clause in a contract between appellant and appellees designating the Arizona state and federal courts as having both jurisdiction and venue over any litigation. Affirmed.

Kaufman, Oakes, Newman, Circuit Judges.

Author: Kaufman

KAUFMAN, Circuit Judge:

This case presents the issue whether a contractual forum selection clause should prevail when the district court found that enforcing the clause would hamper more important imperatives of the forum in which suit was brought. Because we believe the decision to transfer a case where there is a contractual choice-of-forum provision and significant public policy concerns at issue is best left to the sound discretion of the trial judge, we affirm.

I.

Best Western International, Inc. ("Best Western") appeals from a judgment of the United States District Court for the Southern District of New York, denying its motion to transfer the action to the District of Arizona pursuant to a forum selection clause and 28 U.S.C. § 1404(a).*fn1

Appellee, Red Bull Associates ("Red Bull"), is a limited partnership which owns and operates the Red Bull Motor Inn, a motel in Poughkeepsie, New York. Appellees, Gordon and Murray Weiss, are general partners in Red Bull; they supervise the daily activities of the Inn.

Under an affiliation agreement between appellee's and Best Western, an Arizona non-profit corporation, Red Bull secured use of the Best Western name, logo, emblems, and registered marks, all of which command considerable "good will" in the motel industry. Since 1985, this annually renewed agreement has included a forum selection clause stipulating that any dispute arising out of the contract could be brought only in an Arizona court.*fn2 The contract also allowed the appellant to monitor maintenance and housekeeping standards in each member motel by biannual inspections. Failure to receive a passing score resulted in the property being placed on probation and reinspected in 90 days. A second failing score was a ground for termination of the affiliation.

After two unsatisfactory examinations in 1986, Best Western's Inspector Byrne placed the Inn on probation. Byrne scrutinized the Inn a third time giving it a passing score. Red Bull was then removed from probationary status.

Several months later, however, Inspector Hammond evaluated the Inn, and despite a refurbishing program during the intervening period, Red Bull received a failing score. While conducting his examination, Hammond allegedly stated that a group of black women and children on the grounds "looked terrible" and uttered other disparaging remarks. At a second inspection, Hammond again allegedly observed that the appearance created by certain minority families on the property and by their children playing in the parking lot was "terrible." He further commented that they lived like animals.

The subject of these remarks were homeless families living at the Inn under a contract between Red Bull and the Westchester, New York Department of Social Services. By the terms of that agreement, Red Bull provided 35 of its 145 rooms on a long-term basis as temporary shelter for the homeless. Approximately 80% of those housed by the program were black or Hispanic.*fn3

On November 24, 1987, Best Western terminated Red Bull's membership, purportedly due to the failure of the Inn to pass the required inspections. The appellee, however, asserted that the termination was due to racial bias and sought an injunction, alleging that the appellant violated the Civil Rights Acts of 1867, 1964, and 1968. 42 U.S.C. §§ 1981-1982 (Civil Rights); id. § 2000a-1, et seq. (Public Accommodations); id. § 3601, et seq. (Fair Housing). Despite the forum selection clause, Red Bull brought the action in the Southern District of New York. Best Western moved to transfer the litigation to the District of Arizona pursuant to the forum selection clause and 28 U.S.C. § 1404(a).

Judge Knapp denied the transfer motion, relying on The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 32 L. Ed. 2d 513, 92 S. Ct. 1907 (1972). After noting that Red Bull had "submitted evidence in the form of both documents and affidavits to support their charge of racial bias," he applied the public policy exception to the general rule enunciated in Bremen upholding forum selection clauses. Red Bull Assoc. v. Best Western Int'l. Inc., 88 Civ. 752, slip op. (S.D.N.Y. May 17, 1988). ...


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