Baker v. Adidas America, Incorporated , 335 F. App'x 356 ( 2009 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 08-1385
ALLY BAKER,
Plaintiff - Appellant,
v.
ADIDAS AMERICA, INCORPORATED,
Defendant - Appellee.
Appeal from the United States District Court for the Eastern
District of North Carolina, at New Bern. Louise W. Flanagan,
Chief District Judge. (5:07-cv-00168-FL)
Argued: May 14, 2009 Decided: June 30, 2009
Before NIEMEYER, MOTZ, and TRAXLER, Circuit Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: Allison S. H. Ficken, DOVIN MALKIN & FICKEN, LLC,
Atlanta, Georgia, for Appellant. Robert Meynardie, THE
MEYNARDIE LAW FIRM, PLLC, Raleigh, North Carolina, for Appellee.
ON BRIEF: Edward J. Dovin, DOVIN MALKIN & FICKEN, LLC, Atlanta,
Georgia, for Appellant.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Ally Baker appeals an order of the district court
dismissing her action on the basis of improper venue. See Fed.
R. Civ. P. 12(b)(3). Finding no error, we affirm.
I.
Baker, a resident of Raleigh, North Carolina, was an
outstanding junior tennis player who achieved national and
international success as an amateur. While she was a junior,
Adidas provided free merchandise for her to use during
tournaments.
In August 2002, at the age of 16, Baker turned
professional, and in March 2003, Baker hired an agent to handle
endorsement agreements. Still a minor, she entered into a
“Representation Agreement” with SFX Sports Group, who was to
serve as Baker’s exclusive representative for marketing
negotiations. The agreement guaranteed $150,000 to Baker to be
paid by SFX in installments over a two-year period. It also
provided that whatever money she made through agreements SFX
secured would be retained by SFX and applied to the guarantee
until it was repaid. Baker and her father both signed this
agreement.
Subsequently, on or about April 10, 2003, Baker—still a
minor—signed an endorsement agreement with Adidas International
2
Marketing BV (“Adidas International”), which is headquartered in
Amsterdam, the Netherlands, and which is the corporate
grandparent of defendant Adidas America, Inc (“Adidas America”).
The agreement was retroactively effective as of January 1, 2003.
Pursuant to this agreement (the “Adidas Agreement”), Baker
agreed to wear Adidas footwear and apparel for $20,000 in the
first year of the contract and for $25,000 per year for each of
the final two years, and Adidas agreed to pay certain
performance bonuses. Baker expressly appointed her agent SFX to
receive, on her behalf, payments from Adidas International that
came due under the Adidas Agreement. Baker agreed that any
payment from Adidas International to her agent completed Adidas
International’s duty to pay her, and Baker agreed that, for
purposes of the Adidas Agreement, any revocation of her
appointment of SFX as her agent would be in writing. Finally,
the Adidas Agreement provided that any claim of Baker’s arising
out of, or relating to the agreement would be governed by the
law of the Netherlands and settled by Amsterdam courts. 1
1
The agreement provided, however, that “[A]didas
International shall additionally be entitled, at its sole
option, to bring proceedings against [Baker] in the courts
competent for” Baker. J.A. 40.
3
In 2003, the first year of the Adidas Agreement, Adidas
International wired two $10,000 payments to SFX for Baker.
Adidas also shipped shoes and clothes to Baker, which she wore
while playing tennis.
In January 2004, Baker began experiencing problems with her
left foot and withdrew from her tournament schedule. In April,
Adidas International sent a representative from Portland, Oregon
to North Carolina to examine Baker’s foot and the shoes she was
using. During this timeframe, Adidas International also made
payment to SFX for Baker’s travel expenses for a training camp.
On April 10, 2004, Baker turned 18.
On April 19, 2004, Adidas International sent another
payment to SFX for Baker in the amount of $12,500. In May 2004,
the company flew Baker to Portland to try a redesigned shoe and
gave her additional merchandise while she was there. The
redesigned shoes did not help Baker. In October 2004, Adidas
International wired $12,500 to SFX for Baker, thus completing
its contractual obligation to pay Baker a $25,000 endorsement
fee for the 2004 contract year.
In November 2004, with Baker still injured, Adidas
International suspended further payments to her under Section 10
of the Adidas Agreement, which permitted suspension of payments
“[w]ithout prejudice to the right to terminate th[e] Agreement”
if Baker became unable to compete at world-class level for six
4
months or more. J.A. 39. After undergoing surgeries and
therapy, Baker was unable to recover and retired in 2005.
On August 4, 2005, Baker and SFX entered into an agreement
and release terminating the Representation Agreement and
“settl[ing] all issues between them.” J.A. 149. Simultaneous
with the termination of SFX’s representation of Baker, Baker
received a $24,716.50 payment from SFX, which she deposited in a
bank account that she held jointly with her father.
In a letter dated December 20, 2006, from Baker’s attorney
to Adidas International, counsel stated, “Now that Ms. Baker has
reached the age of majority, you are hereby notified that she
has elected to declare the Agreement void. Accordingly, the
jurisdictional provisions and limitations of liability set forth
in the Agreement are unenforceable.” J.A. 146.
In 2007, Baker brought this action against Adidas America
in North Carolina state court, alleging that the shoes selected
for her caused her injuries and ended her career. The complaint
asserts a negligence claim and claims alleging breaches of the
implied warranty of fitness for a particular purpose and the
implied warranty of merchantability.
Adidas America removed the action to federal court and
moved to dismiss under Rule 12(b)(3) for improper venue,
pointing to the forum-selection clause contained in the Adidas
Agreement. In her deposition, Baker stated that she did not
5
remember signing the Adidas Agreement although she acknowledged
that her signature is on it. She also stated that she was not
aware of the payments that were made to her under that
agreement. In his deposition, Baker’s father, who did not sign
the agreement, contended he did not even know the agreement
existed until about the time this suit was initiated.
The district court granted Adidas America’s motion to
dismiss. The court reasoned that since Baker entered into the
Adidas Agreement—which contained the forum-selection clause—when
she was a minor, it was voidable at her election under North
Carolina law within a reasonable time after she reached the age
of 18. 2 The court noted that Baker clearly authorized SFX under
the Adidas Agreement to accept payments from Adidas
International and that SFX in fact received $25,000 in such
payments after Baker turned 18. The court concluded that
regardless of whether Baker had actual knowledge of the
payments, knowledge of them was imputed to her because SFX was
her agent. The court also noted that, after Baker turned 18,
she allowed Adidas International to attempt to redesign shoes
for her and to fly her the next month to Portland, Oregon, for
the same purpose. The court concluded that Baker’s “failure to
2
The parties agree that North Carolina law controls
regarding this issue.
6
undertake the steps necessary to disaffirm the [Adidas]
Agreement within a reasonable time, combined with defendant’s
continued performance of the contract through payments to SFX,
requires this court to reject plaintiff’s arguments that the
contract is avoidable due to age or proper disaffirmation.”
J.A. 163.
Because the forum-selection clause was prima facie valid,
the district court concluded that the burden was on Baker to
demonstrate that it should not be enforced under federal law.
The court concluded that the mere fact that Amsterdam was a
foreign forum did not automatically allow Baker to avoid the
clause. The court also determined that application of the
clause would not contravene North Carolina public policy,
specifically N.C. Gen. Stat. § 22B-3 (2009), because that
statute applies only to contracts entered into in North
Carolina, and Baker had not demonstrated that the agreement was
finalized in North Carolina.
Baker now appeals the grant of Adidas America’s motion to
dismiss.
II.
The validity of a forum-selection clause is properly
analyzed under Federal Rule of Civil Procedure 12(b)(3), and we
review the district court’s disposition of such a motion de
7
novo. See Sucampo Pharms., Inc. v. Astellas Pharma, Inc., 471
F.3d 544, 550 (4th Cir. 2006).
A.
Baker first argues that she did not ratify the Adidas
Agreement after she turned 18 and that the district court
therefore erred in concluding that she was bound by it under
North Carolina law. We disagree.
Under North Carolina law, “agreements or contracts, except
for those dealing with necessities and those authorized by
statute, are voidable at the election of the infant and may be
disaffirmed by the infant during minority or within a reasonable
time of reaching majority.” Creech v. Melnik, 556 S.E.2d 587,
591 (N.C. Ct. App. 2001) (internal quotation marks omitted).
What constitutes a reasonable time in this context “depends upon
the circumstances of each case, no hard-and-fast rule regarding
precise time limits being capable of definition.” Nationwide
Mut. Ins. Co. v. Chantos, 214 S.E.2d 438, 444 (N.C. Ct. App.
1975). “The privilege of disaffirmance may be lost where the
infant affirms or otherwise ratifies the contract after reaching
majority.” Bobby Floars Toyota, Inc. v. Smith, 269 S.E.2d 320,
322 (N.C. Ct. App. 1980).
Here, after turning 18, Baker accepted two payments from
Adidas International totaling $25,000. The second payment was
8
received more than six months after her eighteenth birthday. 3
She also accepted Adidas International’s attempt to redesign her
shoes, as well as other merchandise at no charge to her one
month after her birthday. After receiving all of these
benefits, it was not until two years later—more than 32 months
after she achieved the age of majority—that Baker communicated
to Adidas International that she wished to void her contract.
Under the facts of this case, this delay constituted an
unreasonable length of time to elect disaffirmance. 4 Cf. Bobby
Floars Toyota, 269 S.E.2d at 322-23 (holding that minor waited
an unreasonable length of time to void purchase money security
agreement to finance automobile when he continued to drive the
vehicle and make payments on it for 10 months after reaching
majority). In any event, Baker’s acceptance of the two payments
3
Baker claims that it was her agent, SFX, that actually
received the payments, but under North Carolina law, a principal
is liable for the acts of her agent that are within the scope of
the agent’s authority. See Harris v. Ray Johnson Constr. Co.,
534 S.E.2d 653, 655 (N.C. Ct. App. 2000).
4
Baker argues that she stopped performing under the
contract when she became injured in that she did not engage in
competitive tennis after that and that Adidas International
stopped performing when it suspended payments to her because of
her injury. However, none of the conduct identified by Baker
even constitutes a breach of the agreement, let alone a
manifestation of an intention to void it.
9
and other benefits after turning 18 “constituted a ratification
of the contract, precluding subsequent disaffirmance.” Id. at
323; see McCormic v. Leggett, 53 N.C. (8 Jones) 425, at *2
(1862) (holding that when minor sold real property, he ratified
the sale by accepting payment after reaching age of majority). 5
B.
In The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15
(1972), the Supreme Court held that forum-selection provisions
are presumptively valid and should be enforced absent a clear
showing that enforcement would be “unreasonable or unjust, or
that the clause was invalid for such reasons as fraud or
overreaching,” or that enforcement “would contravene a strong
public policy of the forum in which suit is brought.” Baker
maintains that the district court erred in ruling that she could
not avoid the forum-selection clause here on that basis. We
disagree.
Baker contends that the forum-selection clause “was
obtained through overreaching” in that “[A]didas went around
5
Baker argues alternatively that the forum-selection clause
cannot be enforced because the injury for which she seeks
compensation in this lawsuit occurred before she turned 18.
Even assuming that the time of her injury had some relevance,
the agreement was certainly not void at that time. Her status
as an infant made the contract voidable, not void, during the
time that she was a minor, and she did not disavow the contract
during that time.
10
Baker’s father and her attorney and dealt directly with her when
she was only 16.” Brief of Appellant at 26. In this regard,
Baker argues that the forum-selection clause contravenes the
public policy “protecting minors from being taken advantage of
in unfair bargains at a time when the law recognizes they are
too young to adequately protect their own interests.” Id. at
30. Baker’s allegation notwithstanding, the “Agreement and
Release” entered into by SFX and Baker specifically recites that
the Adidas Agreement was “negotiated by SFX,” J.A. 150, which
was precisely the arrangement contemplated when Baker contracted
with SFX to negotiate such contracts on her behalf. The notion
that Adidas International was somehow taking advantage of an
uncounseled sixteen-year-old is simply without basis in the
record.
Baker additionally argues that the forum-selection clause’s
chosen forum, Amsterdam, is too inconvenient to her to be
enforced. We disagree.
“[W]here it can be said with reasonable assurance that at
the time [of the making of] the contract, the parties to a
freely negotiated private international commercial agreement
contemplated the claimed inconvenience,” such inconvenience will
not generally warrant setting aside the clause. The Bremen, 407
U.S. at 16. However, if the party challenging the clause
demonstrates “that trial in the contractual forum will be so
11
gravely difficult and inconvenient that he will for all
practical purposes be deprived of his day in court,” the clause
may be avoided. Id. at 18.
Baker contends that Amsterdam “has no connection to the
parties or events at issue.” Brief of Appellant at 27. Without
citation to the record, Baker claims that “all of the witnesses
are in the United States, most in North Carolina.” Id. at 29.
Defendant responds, however, that “Baker’s claims are based upon
the use of a tennis shoe that was designed and thoroughly tested
in Europe, where a number of potential witnesses are located.”
Brief of Appellee at 29. Additionally, Adidas International,
the party with whom Baker contracted, is headquartered in
Amsterdam. Thus, Baker has failed to show a lack of connection
between this case and the chosen forum.
Baker further maintains, though, that she is only “a
college student at [the University of North Carolina] with no
source of income” and that “Amsterdam does not permit
contingency fee arrangements.” Brief of Appellant at 29. She
therefore argues that she “cannot afford the extraordinary
expense of traveling to Amsterdam and paying for attorneys there
to prosecute these claims.” Id. On this basis, she contends
that the forum-selection clause should not be enforced.
However, especially because Baker has not demonstrated that
these burdens were unforeseeable to her when she ratified the
12
agreement, we do not believe Baker has shown that enforcement of
the forum-selection clause would be unjust. Cf. Paper Express,
Ltd. v. Pfankuch Maschinen GmbH, 972 F.2d 753, 758 (7th Cir.
1992) (holding that additional expense and inconvenience of
litigating in foreign forum did not justify avoidance of forum-
selection clause because plaintiff “was presumably compensated
for this burden by way of the consideration it received under
the contract”). We therefore conclude that the district court
properly enforced the clause.
III.
In sum, finding no error in the district court’s decision,
we affirm.
AFFIRMED
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