United States District Court, N.D. Oklahoma
TERI FLANAGAN, on behalf of herself and all others similarly situated, Plaintiffs,
ACCESS MIDSTREAM PARTNERS, L.P. n/k/a WILLIAMS PARTNERS L.P.; CHESAPEAKE ENERGY CORPORATION; CHESAPEAKE OPERATING, L.L.C.; CHESAPEAKE ENERGY MARKETING, INC.; and CHESAPEAKE MIDSTREAM PARTNERS, LP, Defendants.
OPINION AND ORDER
GREGORY K. FRIZZELL, CFTTEF JUDGE UNITED STATES DISTRICT
the court are defendants' Motions to Dismiss or Transfer
[Doc. Nos. 57, 59]. For the reasons set forth below, the
motions are denied as to dismissal, but granted as to
transfer to the Fort Worth Division of the United States
District Court for the Northern District of Texas.
dispute in this case is whether Chesapeake and its affiliates
violated the Racketeer Influenced and Corrupt Organizations
Act (“RICO”), 18 U.S.C. §§ 1961-1968,
by artificially inflating cost-of-service deductions from
royalty payments owed to Texas royalty owners.
2, 2017, Teri Flanagan filed this suit against defendants,
alleging claims under RICO, as well as for unjust enrichment,
civil conspiracy, tortious interference with contract, and
breach of lease. [Doc. No. 2]. Flanagan alleged that
defendants devised a scheme to artificially inflate
cost-of-service deductions from royalty payments owed to
Texas royalty owners. These royalty payments were owed under
a lease between Flanagan and Chesapeake Exploration, L.L.C.
The lease contained a forum selection clause stating
“[v]enue for any dispute arising under this Lease shall
lie in Tarrant County, Texas, where all obligations under
this Lease are performable.” [Doc. No. 35-1, p. 4,
¶ 18]. Chesapeake Exploration was originally a named
defendant in this action. [Doc. No. 2]. However, when
Chesapeake Exploration filed a motion to dismiss or transfer
based on the forum selection clause, Flanagan dismissed it
from the case and filed an Amended Complaint dispensing with
her contract-based claims and preserving only her RICO claim.
[Doc. Nos. 52, 53].
non-parties to the lease, the remaining defendants seek to
invoke the forum selection clause in order to dismiss or
transfer this case. On August 18, 2017, defendants filed
motions to dismiss or transfer under Fed.R.Civ.P. 12(b)(6)
and the doctrine of forum non conveniens,
respectively. [Doc. Nos. 57, 59].
selection clauses “are prima facie valid and should be
enforced unless enforcement is shown by the resisting party
to be unreasonable under the circumstances.” Milk
‘N' More, Inc. v. Beavert, 963 F.2d 1342, 1346
(10th Cir. 1992). There are two types of forum selection
clauses-permissive and mandatory. Excell, Inc. v.
Sterling Boiler & Mech., Inc., 106 F.3d 318, 321
(10th Cir. 1997). The appropriate vehicle for enforcing a
forum selection clause is either 28 U.S.C. § 1404(a) or
forum non conveniens, depending on whether the
destination forum is federal or nonfederal. Atl. Marine
Constr. Co. v. Dist. Court for the W. Dist. of Tex., 134
S.Ct. 568, 579-80 (2013). A valid forum selection clause
alters the typical interest-balancing analysis by shifting
the burden to the plaintiff and requiring the court to
consider only the public-interest factors. Id. at
success of defendants' motions to dismiss or transfer
hinges on three central issues: (1) whether defendants as
non-parties to the lease may benefit from the forum selection
clause; (2) whether the forum selection clause applies to
Flanagan's RICO claim; and (3) whether the language of
the clause is mandatory or permissive. Defendants prevail on
all three issues.
a threshold matter, although defendants have requested
either dismissal or transfer, the appropriate vehicle here is
transfer under 28 U.S.C. § 1404(a). The forum selection
clause in this case refers to a specific county-Tarrant
County. Under Texas law, reference to a specific county
encompasses both federal and state courts. See Alliance
Health Grp., LLC v. Bridging Health Options, LLC, 553
F.3d 397, 400 (5th Cir. 2008) (determining that “the
clause at hand, providing for venue in a specific county,
permit[ted] venue in either federal or state court, because a
federal courthouse is located in that county”);
Collin County v. Siemens Business Services, Inc.,
250 Fed.Appx. 45, 50-54 (5th Cir. 2007) (indicating that
clause granting exclusive venue “in Collin County,
Texas” would have permitted transfer to federal court,
had there been a federal courthouse located in Collin
County). Here, the Fort Worth Division of the United States
District Court for the Northern District of Texas sits in
Tarrant County, Texas. As a result, transfer to that court
under 28 U.S.C. § 1404(a) is the appropriate vehicle for
enforcing the forum selection clause. See Atl.
Marine, 134 S.Ct. at 579 (“Section 1404(a) . . .
provides a mechanism for enforcement of forum-selection
clauses that point to a particular federal district.”).
defendants are not deprived of the benefit of the
forum-selection clause simply because they are non-parties to
the lease. “When the alleged conduct of non-parties to
a contract is closely related to a contractual relationship,
all the participants, parties and non-parties, should benefit
from . . . any forum selection clause.” Keenan v.
GAP Exploration, Ltd., No. 09-CV-240-JHP-FHM, 2010 WL
1330334, at *4 (N.D. Okla. Mar. 29, 2010);
Manetti-Farrow, Inc. v. Gucci America, Inc., 858
F.2d 509, 514 n.5 (9th Cir. 1988); Coastal Steel v.
Tilghman Wheelabrator LTD., 709 F.2d 190, 202-03 (3rd
Cir. 1983). Here, defendants are closely related: Chesapeake
Operating produced and sold gas from Texas leases as
Chesapeake Exploration's agent and operator; Chesapeake
Marketing purchased gas under the lease from Chesapeake
Operating; Access Midstream provided gas gathering services
for Chesapeake Marketing; and all of the Chesapeake entities
are wholly owned subsidiaries of Chesapeake Energy
Corporation. [Doc. No. 53, pp. 6-8, 10-11, ¶¶
19-25, 31-32]. Indeed, the gravamen of Flanagan's
complaint is that defendants-as affiliated entities-conspired
to artificially inflate cost-of-service deductions from
royalty payments owed to Texas royalty owners. “All
[defendants are] doing in invoking the forum selection clause
. . . is accepting one of the premises of [Flanagan's]
suit.” Frietsch v. Refco, Inc., 56 F.3d 825,
828 (7th Cir. 1995). In addition, the court will not permit
Flanagan to avoid her contractual choice of forum simply by
amending her complaint to only include non-parties and
non-contractual claims. See Mann v. Auto Protection
Corp., 777 F.Supp.2d 1234, 1243 (D.N.M. 2011) (stating
that “it would be unfair to allow Plaintiff to evade
his contractual choice of forum by asserting tort claims or
naming parties who are not part[ies]” to the
agreement). As a result, the court concludes that defendants
are “closely related” non-parties who benefit
from the forum selection clause.
the forum selection clause applies to Flanagan's RICO
claim. “[C]ourts have interpreted forum-selection
clauses broadly to govern freestanding, non-contract
claims.” Presbyterian Healthcare v. Goldman Sachs
& Co., 122 F.Supp.3d 1157, 1203 (D.N.M. 2015).
“[W]here . . . claims ultimately depend on the
existence of a contractual relationship . . . such claims are
covered by a contractually-based forum selection clause,
despite the pleading of alternative non-contractual theories
of liability.” See Mann, 777 F.Supp.2d at 1243
(internal quotation marks omitted); accord Presbyterian
Healthcare, 122 F.Supp.3d at 1192; Sun Specialized
Heavy Haul, LLC v. Ace Heavy Haul, LLC, No.
16-CV-491-GKF-PJC, 2016 WL 4942333, at *3 (N.D. Okla. Sept.
13, 2016). The forum selection clause in this case broadly
governs “any dispute arising under” the lease.
[Doc. No. 35-1, p. 4, ¶ 18]. Courts have concluded that
such language encompasses non-contract claims, including RICO
claims. See Goodwin v. Bruggeman-Hatch, No.
13-cv-02973-REB-MEH, 2014 WL 3057198, at *1 (D. Colo. Jul. 7,
2014) (concluding that plaintiff's RICO claim fell within
a forum-selection clause covering “litigation arising
in connection with” services); Blixseth v.
Disilvestri, No. 11-22459-CIV-SEITZ/SIMONTON, 2013 WL
12063940, at *14 (S.D. Fla. Jan. 31, 2013) (finding that a
mandatory forum selection clause applied to plaintiffs'
RICO claims); Presbyterian Healthcare, 122 F.Supp.3d
at 1198 (interpreting “arising out of” to mean
“originating from, and bearing causal connection with,
the contract, ” and concluding that non-contract claims
fell within such language). Here, the central issue in
Flanagan's RICO claim is whether defendants conspired to
artificially inflate cost-of-service deductions from royalty
payments owed to Texas royalty owners. Admittedly, this claim
is broader than a simple breach of contract claim. However,
it still involves the same operative facts and will require
the finder of fact to interpret the lease agreement to
determine whether the cost-of-service deductions were made in
accordance therewith. Flanagan argues that there are no
contract-based claims to anchor her RICO suit to the forum
selection clause. However her complaint did include exactly
these types of anchor claims-until she amended them away.
See [Doc. Nos. 2 (original complaint), 53 (amended
complaint)]. As noted above, “it would be unfair to
allow Plaintiff to evade . . . contractual choice of forum by
asserting [non-contract] claims.” Mann, 777
F.Supp.2d at 1243. Therefore, the court holds that the forum
selection clause applies to Flanagan's RICO claim.
the language of the forum selection clause is mandatory.
“[W]hen venue is specified, such as when the parties
designate a particular county or tribunal, and the
designation is accompanied by mandatory or obligatory
language, a forum selection clause [is] mandatory.”
Am. Soda, LLC v. U.S. Filter Wastewater Grp., 428
F.3d 921, 927 (10th Cir. 2005). The clause here does both: it
designates Tarrant County, Texas as the venue for suit, and
it includes mandatory language of exclusion-the term
“shall.” Courts have repeatedly held the phrase
“shall lie” to establish the creation of a
mandatory forum selection clause. See, e.g.,
Excell, 106 F.3d at 321 (construing as mandatory a
forum selection clause stating that “venue shall lie in