Contract Servs. Grp. v. E&E Mfg. of Tenn.

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CONTRACT SERVICES GROUP, LLC, Plaintiff, v. E&E MANUFACTURING OF TENNESSEE, LLC, and ADIENT US, LLC, Defendants.

No. 2:22-CV-66-JPK

United States District Court, N.D. Indiana, Hammond Division

March 29, 2023

OPINION AND ORDER

JOSHUA P. KOLAR MAGISTRATE JUDGE

This matter is before the Court on a motion to dismiss filed by Defendant E&E Manufacturing of Tennessee, LLC (“E&E”) [DE 17]. The parties filed forms of consent to have this case assigned to a United States Magistrate Judge to conduct all further proceedings and to order the entry of a final judgment in this case. [DE 20]. Therefore, pursuant to 28 U.S.C. § 636(c), this Court has jurisdiction to decide E&E's motion. For the reasons discussed below, the motion is denied.

BACKGROUND^[1]

Plaintiff Contract Services Group, LLC (“CSG”) provides quality control inspections, containment, and re-work services for manufacturers in the auto industry. [DE 1 ¶ 1]. Non-party Lear Corporation (“Lear”) operates a facility in Hammond, Indiana where it produces seating components as a Tier 1 supplier to Ford Motor Company. [Id ¶¶ 1, 14]. Defendant Adient US, LLC (“Adient”) is a Tier 2 supplier, which provided Lear with certain parts for the seats being produced at Lear's Hammond facility. [Id. ¶¶ 10, 15]. Defendant E&E is a Tier 3 supplier which provided component parts to the particular product that Adient was providing to Lear. [Id. ¶¶ 11 16].

In September 2019, Lear notified Adient of a “failure condition at Ford” regarding a part that had been supplied by Adient for Lear's seats (“Missing Pivot Bolt on Adjuster”). Lear informed Adient that it had “issued a shock containment to protect [its] production process against any additional suspect material on-hand or in the pipeline from [Adient's] facility.” [Id. at 18-19]. Specifically, Lear stated that “[c]ontainment has been added ... to protect [Lear's] production line and [its] customer [Ford],” including “validating that both Pivot bolts are present and not loose on each adjuster.” [Id. at 19]. Lear requested, among other things that Adient “confirm [Lear's] authorization to CSG to begin sorting for this concern and issue the necessary PO to cover the cost[.]” [Id.].

CSG alleges that “[i]t was determined that the defective components were supplied by Defendant E&E.” [Id. ¶ 19; see also id. at 17 (email from Lear to Adient stating that Lear was “dealing with non-conforming material coming out of [Adient's] facility,” and that “one of the concerns may be the result of out of spec. conditions from [Adient's] Tier 3 supplier”)]. CSG alleges that “E&E agreed to take financial responsibility for the containment and inspection of parts by way of a formal Work Requisition that E&E executed and provided to [CSG] on or about November 5, 2019.” [Id. ¶ 20; see id. at 12-13 (Exhibit A-Work Requisition)]. CSG alleges that, “[a]t one point, E&E disputed with Adient whether additional containment and inspection was necessary,” and “Adient communicated to E&E that the containment and inspection was necessary to avoid line shutdowns.” [Id. ¶¶ 22, 23]. Specifically, “[d]ue to the extremely high rate of rejected parts being found during the inspection, which if not used in production would have shut down assembly and production lines, Ford permitted the rejected parts to be used in assembly under an ‘Alert,' yet still required containment and inspection to stay in place.” [Id. ¶ 21]. Email correspondence attached to the Complaint indicates that, on November 9, 2019, Lear explained to Adient that Lear had “an out of spec. hole condition impacting [its] build process and now a missing pivot bolt concern found by Ford,” and that Lear "need[ed] all of Adient's support regarding both issues.” [Id. at 17]. Lear noted that the issues with Adient's parts were “causing significant impact to [Lear's] build process,” and that Lear had been forced to “sort and supply good parts for production use . due to the high fallout,” which “still continues.” [Id.]. Lear warned Adient that if it had “to trigger a PO to protect [its] production process, there w[ould] be a substantial premium added to the cost and a customer satisfaction QN issued to Adient for failure to respond and protect Lear and Ford[,] and [it] will have to be escalated to Lear Corporate and possibly Ford for their input.” [Id.]. Lear stated that it “need[ed] ... someone from Adient's management team to reply to both of [the] emails . sent today, confirming the authorization to CSG to sort as [the] emails state[d].” [Id.]. Adient responded on November 10, 2019: “Regarding sort and containment, we will cover all expen[s]es and inspection regarding bad Quality from our process or from our supplier process.” [Id.]. After receiving this assurance, Lear sent a confirmation email, copying CSG on the email, which stated: “I am including the CSG Management team in this email thread . so they feel comfortable executing the current containment directives for 3rd party support given by Lear Quality to protect [Lear's] build process regarding both the Out Of Spec. hole Condition and the Missing Pivot Bolt[,] based on [Adient's] confirmation [email] below. Please make sure the PO is issued to them on Monday.” [Id. at 16].

CSG alleges that it “performed its containment activities at Lear's facility at the direction of both Adient and E&E.” [Id. ¶ 2]. Further, it alleges that it continued its work until closure of the containment after about November 26, 2019 based on “Adient's promise to cover the expenses, in addition to the written contract in force between E&E and [CSG].” [Id. ¶ 25]. In addition, CSG alleges that “[a]t all times during containment, [CSG's] representatives participated in conference calls hosted by Lear, which were also attended by management representatives from Ford, Lear, Adient, and E&E,” and that “[e]ach of these parties understood that [CGS] was continuing its containment and inspection work for the benefit of [Adient and E&E].” [Id. ¶ 26].

CSG alleges that it sent invoices to Adient totaling about $14,466.51, which were due in October and November 2019, as well as invoices to E&E totaling $125,812.90, which were due in December 2019. [Id. ¶¶ 27, 28]. Both Adient and E&E, however, refused to pay any amount to CSG, each arguing that the other should pay the invoices. [Id. ¶¶ 30-31]. CSG alleges that the total amount owed to it is about $140,279.41, not including interest. [Id. ¶ 29]. After two years of trying to obtain payment from Adient and E&E, CSG brought this lawsuit to collect the amount owed to it. [Id. ¶ 30]. CSG seeks judgment against both Adient and E&E under alternative theories of breach of contract (Count I (E&E); Count II (Adient)), promissory estoppel (Count III (Adient only)), and unjust enrichment (Count IV (Adient and E&E)). Jurisdiction over CSG's suit is premised on diversity of citizenship. See [id. ¶ 12; DE 5, 6].

DISCUSSION

E&E seeks dismissal of CSG's claims against it based on a forum-selection clause in the Work Requisition attached to the Complaint as Exhibit B. The Work Requisition was issued by CSG and names E&E as the “Client.” It provides contact information, rates, and “Terms and Conditions,” including those set out in “Appendix 1.” [DE 1 at 12]. Among other things, Appendix 1 states as follows:

Choice of Law: This agreement shall be interpreted under the laws of the State of Indiana. Any litigation under this agreement shall be resolved in the trial courts of Lake County, Indiana.

[Id. at 13]. According to E&E, the quoted language is unambiguous and requires that CSG's claim for breach of the Work Requisition be filed in Indiana state, not federal, court, and that CSG's related claim against it to recover under a theory of unjust enrichment also must be litigated in that venue.

The Court begins by pointing out that most of the legal arguments briefed by E&E are not in dispute. For instance, CSG does not dispute E&E's contention that the forum-selection clause is mandatory.^[2] Nor does CSG argue about whether the clause requires suit to be filed in state as opposed to federal court in Lake County, Indiana.^[3] Finally, CSG does not disagree that if the forum-selection clause is valid and enforceable, it would apply to CSG's equitable claim for unjust enrichment, not just its breach of contract claim against E&E.^[4] The only argument CSG makes against application of the forum-selection clause in this case is that, because CSG also has filed suit against Adient, which is not a party to the Work Requisition, Indiana courts would not enforce the forum-selection clause based on judicial efficiency concerns of avoiding multiple suits over the same issues. The Court addresses E&E's motion and CSG's response in three parts. First, the Court must resolve the parties' disagreement over the appropriate legal framework for evaluating a contractual forum-selection clause. Second, after identifying the correct legal framework the Court must address a question only touched upon in the briefing-whether the Work Requisition constitutes an enforceable contract between CSG and E&E. Third, having considered these two preliminary issues, the Court lastly will discuss whether CSG may avoid the forum-selection clause based on its judicial efficiency policy argument.

A. Legal Framework For Evaluating A Motion To Enforce A Contractual Forum-Selection Clause

E&E styles its motion as a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). CSG, on the other hand, argues that Federal Rule of Civil Procedure 12(b)(3) applies to E&E's motion to dismiss. A third option not directly addressed by either party is a stand-alone motion to dismiss pursuant to the common law doctrine of forum non convenienes, as articulated by the United States Supreme...