United Natural Foods, Inc. v. Geiger's Long Valley Market LLC

Background

United Natural Foods, Inc. (UNFI) supplies groceries to customers throughout the United States. UNFI is incorporated in Delaware and has its principal place of business in Rhode Island. Michael Maciel is the chief executive officer and limited-liability-company manager of Geiger’s Long Valley Market LLC, and he is a California resident and citizen.

Geiger’s accumulated debt with three UNFI subsidiaries. UNFI and Geiger’s then entered into a payment agreement under which Geiger’s agreed to pay $362,089.35 over 53 weeks. Maciel signed that agreement in his business roles and personally guaranteed Geiger’s debt to UNFI. The guarantee provided that Minnesota law would govern and stated that the signers consented to jurisdiction in Minnesota state and federal courts, waived objections to venue there, and agreed that litigation initiated by them would be venued there.

Geiger’s made weekly payments from May through September 2023, but then stopped paying. The amended complaint alleged that Geiger’s still owed $258,654.01. UNFI originally sued both Geiger’s and Maciel for breach of contract, quantum meruit, unjust enrichment, and promissory estoppel. UNFI later voluntarily dismissed Geiger’s, leaving Maciel as the only defendant.

Motions and jurisdiction

Maciel moved to dismiss for lack of subject-matter jurisdiction and improper venue. He alternatively sought transfer to California. He initially also challenged personal jurisdiction over Geiger’s, but after Geiger’s was dismissed, Maciel conceded that the court had personal jurisdiction over him and stopped pursuing that defense.

The court explained that subject-matter jurisdiction existed under the diversity statute if the amount in controversy exceeded $75,000 and no plaintiff shared citizenship with any defendant. The amount requirement was undisputed. The court found complete diversity because UNFI was a citizen of Delaware and Rhode Island, while Maciel was a citizen of California.

Maciel argued that the court should examine the citizenship of UNFI’s subsidiaries because the debt was originally owed to them. He also invoked an attribution rule under which a corporation’s citizenship may sometimes be examined through a subsidiary. The court rejected those arguments. It found that UNFI had been directly involved in the payment and guarantee agreements and that there was no evidence that UNFI had improperly pursued the case for the purpose of creating diversity jurisdiction. The court also found that the attribution rule had not been adopted by the Eighth Circuit and would not fit this three-subsidiary arrangement. It therefore held that subject-matter jurisdiction existed.

Venue

The court first determined that Minnesota was not a proper venue under the federal venue statute considered by itself. Maciel lived in California, and the agreements were signed and negotiated there. The products and services concerned Geiger’s operations in California, and payments were made in California or possibly to UNFI in Rhode Island. The amended complaint did not identify activity occurring in Minnesota.

The court then considered whether the forum-selection clause could make Minnesota an available forum even though Minnesota did not satisfy the statute’s ordinary venue requirements. The court noted that federal courts have reached different conclusions on this issue. It concluded that the statutes allow parties to consent to venue in Minnesota and that venue, as a personal privilege, may be waived. Because Maciel had agreed to the Minnesota forum-selection clause, the court held that venue was proper in Minnesota and declined to dismiss the case for improper venue.

Transfer request

The court separately considered Maciel’s request to transfer the case to California for convenience. It stated that forum-selection clauses are generally enforced unless they are unjust, unreasonable, or invalid. Although the court acknowledged that California would be more convenient for the parties and witnesses, it found no basis to override the parties’ agreement. The guarantee also required application of Minnesota law to the underlying contract dispute. The court therefore declined to transfer the case to California.

Disposition

The court denied Defendants’ Motion to Dismiss or Transfer, Docket No. 15. The case remained in the District of Minnesota.