Opinion
No. C 14-01372 LB
08-25-2014
DIANNE MARCOTTE, Plaintiff, v. MICROS SYSTEMS, INC., a corporation; and DOES 1-50, inclusive, Defendants.
San Francisco Division
ORDER GRANTING DEFENDANT'S MOTION TO TRANSFER
[Re: ECF No. 14]
INTRODUCTION
On February 26, 2014, Plaintiff Dianne Marcotte filed suit in San Francisco County Superior Court against Defendant Micros Systems, Inc, and Micros subsequently removed the case to this court. See Notice of Removal, ECF No. 1 at 1, Ex. A. Micros has moved to dismiss for improper venue under Federal Rule of Civil Procedure 12(b)(3) and 28 U.S.C. § 1406(a), or in the alternative, to transfer this action to the United States District Court for the District of Maryland. Motion to Dismiss or Transfer, ECF No. 8 ("Motion"). All parties have consented to the undersigned's jurisdiction. Micros's Consent, ECF No. 8; Marcotte's Consent, ECF No. 9. Upon consideration of the moving papers and the applicable authority, the court DENIES Micros's motion to dismiss, GRANTS Micros's motion to transfer, and TRANSFERS this action to the United States District Court for the District of Maryland.
Citations are to the Electronic Case File ("ECF") with pin cites to the electronically-generated page numbers at the top of the document.
STATEMENT
I. BACKGROUND
Defendant Micros Systems, Inc. is a publicly-traded company that sells "point of sale" terminals and systems for restaurants, hotels, and retail businesses. Complaint, Notice of Removal Ex. A, ECF No. 1, ¶ 5. Micros claims that it is a Maryland corporation with its principal place of business and headquarters in the State of Maryland. See Notice of Removal, ECF No. 1 at 1.
Plaintiff Dianne Marcotte was employed by Micros as a sales representative from about July 2000 to May 31, 2012. See Complaint ¶¶ 5,9. At all relevant times, she was over 40 years old and resided in Contra Costa County, California. Id. ¶¶ 1, 18. During her employment for Micros, she lived in Danville, San Ramon, and Brentwood. Marcotte Decl. Supp. Opp'n to Motion to Transfer ("Marcotte Decl."), ECF No. 16, ¶ 3. Ms. Marcotte worked from Micros offices in the Bay Area, including in Alameda, California and from her homes. Id. She never worked in any Micros offices outside California and only visited Micros's head office a few times for very brief period. Id.
Ms. Marcotte performed well throughout her employment, as measured by her sales and account development and performance reviews. Complaint ¶¶ 6-7. Ms. Marcotte's managers assured her that based on her performance, "she could count on having a secure position and continued employment at MICROS as long as she continued to provide satisfactory performance and ongoing commitment to her job duties." Id. ¶ 7. She alleges that these assurances constituted an implied-infact contract not to terminate her without cause. See id. ¶ 34.
A. Ms. Marcotte's Contracts with Micros
Each year while employed by Micros, Ms. Marcotte signed a "Compensation Plan" agreement ("Plan Agreements"). Tow Decl. Supp. Def.'s Mot. to Dismiss ("Tow Decl."), ECF No. 14-2, ¶ 3. Each Plan Agreement contained a forum selection clause. On August The Plan Agreements that Ms. Marcotte signed in 2000 and 2001 contained choice of law and forum selection provisions that stated:
This Agreement shall be construed in accordance with and be governed by the laws of the State of Maryland, United States, excepting the conflict of law rules of the State of Maryland, as if this contract were made and to be performed entirely within the State of Maryland. Final and binding arbitration shall be the [employee's] sole and exclusive remedyId. ¶ 6 (alteration and omissions in original).
for any claim that MICROS breached this Agreement... All arbitration proceedings shall be held in Columbia, Maryland...
The 2012 Plan Agreement stated was comprised of two documents, the Sales Compensation Plan and the Terms and Conditions. See Sales Compensation Plan, Tow Decl. Ex. B (incorporating Terms and Conditions); Terms and Conditions, Tow Decl. Ex. A. The first paragraph of the Terms and Conditions provided generally applicable terms, as follows:
1. General. The Compensation Plan (the "Plan") consists of these Plan Terms and Conditions and the Employee's individual plan document. Together, these documents describe the compensation that the Employee is eligible to earn. MICROS reserves the right to modify the Plan from time to time, including without limitation, changing salary, bonus (if applicable), commission, or the total compensation cap (if applicable). Notwithstanding anything to the contrary herein, this Plan shall expire at the end of the applicable fiscal year and does not automatically renew.Tow Dec. Ex. A, ECF No. 14-2 at 5. The 2012 Plan Agreement also included a paragraph with a forum selection clause, a choice of law clause, and a jury trial waiver, that stated as follows:
8. Legal Matters. This Plan shall be construed in accordance with and be governed by the laws of the State of Maryland, United States, excepting the conflict of law rules of the State of Maryland, as if this contract were made and to be performed entirely within the State of Maryland. The parties consent to the exclusive jurisdiction and venue of the federal courts sitting in the state of Maryland for all claims or actions arising under or relating in any way to the Plan or the relationship between the parties, whether sounding in contract, tort, or otherwise, and regardless of whether persons or entities who are not party to this Plan are parties to such action; provided, however, that for any claims or actions for which the federal courts sitting in the state of Maryland would not have subject matter jurisdiction, the parties shall bring such claims or actions in the state courts of the State of Maryland, and consent to the exclusive jurisdiction and venue of the state courts of Maryland for all such claims or actions whether sounding in contract, tort, or otherwise, and regardless of whether persons or entities who are not party to this Plan are parties to such action. MICROS AND THE EMPLOYEE EACH UNCONDITIONALLY AND IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS PLAN, ANY DEALINGS BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER OF THIS PLAN, AND/OR THE RELATIONSHIP BETWEEN THE PARTIES, WHICH WAIVER IS INTENDED TO INCLUDE, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. Each party shall be solely responsible for its own costs, expenses and attorneys' fees.Id. ¶ 7, Ex. A. Each Plan Agreement since 2002 contained a forum selection clause with language identical or substantially identical to the language in the 2012 Plan Agreement. Id. ¶ 4.
Micros also required Ms. Marcotte to "acknowledge and be subject to" a non-compete agreement. Complaint ¶ 45. In pertinent part, the non-compete provision prohibited as follows:
9. Covenants.. The following prohibitions apply for a period of one (1) year following the termination of the Employee's employment with MICROS for any reason (other than job elimination by MICROS).Tow Decl. Ex. A, ECF No. 14-2 at 7.
. . .
b) Competing Products & Services. The Employee shall not, whether as an individual or as a proprietor, stockholder, partner, officer, director, employer, employee, agent or otherwise, engage in any business that offers services or products that are similar to or competitive with services performed or products sold by MICROS on the date of the termination of the Employee's employment with MICROS; this prohibition applies only within a 200-mile radius of the site where the Employee's employment with MICROS was principally located on the date of the termination of employment (or the principal location of employment during the twelve (12) months period preceding the date of termination if different).
B. Ms. Marcotte's Dispute with Micros
Beginning in mid-to-late 2011, Micros, through Ms. Marcotte's managers, reduced and removed her sales accounts and territories, excluded her from important events and business opportunities, and denied and reduced her commissions on business she generated. Complaint ¶ 8. Ms. Marcotte alleges that her age and gender were principal motivating factors for Micros's conduct. Id. ¶¶ 13, 19. This continued even after Ms. Marcotte objected to her treatment, "and to other actions by defendant MICROS with respect to its customers, that plaintiff believed were unfair and/or misleading." Id.
In August 2011, Jeff Pinc, Ms. Marcotte's direct manager, gave her the 2012 Plan Agreement. See Marcotte Decl. ¶ 4; Complaint, ¶ 24. He told her that it already was overdue and that she had to sign and return it right away. Marcotte Decl. ¶ 4. According to Ms. Marcotte, Mr. Pinc also said "that it didn't matter whether [she] read it or had a lawyer review it, because there wasn't time and [Ms. Marcotte] couldn't change any of the terms in it anyway, but had to accept them all as a company requirement to keep [her] job. Id. Ms. Marcotte's prior managers has told her that "the entire Sales Plan expired at the end of each fiscal year (except for the covenants that specifically stated they continued for an additional period after termination of [her] employment)." Id. On August 11, 2011, Ms. Marcotte signed the Compensation Plan agreement for fiscal year 2012. Id. Ex. B, ECF No. 14-2 at 2.
In May 2012, Mr. Pinc told Ms. Marcotte that Micros was planning to terminate her employment, ostensibly for performance reasons. Marcotte Decl. ¶ 4. Ms. Marcotte told him that the allegations had no merit. Id. She also asked about the termination decision and her ability to find a new job after she was terminated. Id. She told Mr. Pinc that she was concerned about the non-compete clause in the 2012 Plan Agreement. See id. Micros terminated Ms. Marcotte's employment on or about May 31, 2012. Id. ¶ 9.
Shortly after Micros notified Ms. Marcotte that it was terminating her employment, she sought a job at NCR, one of Micros's competitors in the point-of-sale industry. Id. ¶ 44. NCR expressed its desire to hire Ms. Marcotte as a sales representative and told her that its compensation was relatively comparable to what Ms. Marcotte received at Micros. Id. ¶ 44.
In June 2012, Ms. Marcotte spoke with Ted Giannopoulos, who was then the CEO of Micros. Marcotte Decl. ¶ 5. She told Mr. Giannopoulos about the prospective job at NCR. Id. ¶ 5; Complaint, ¶¶ 45-46. She asked Mr. Giannopoulos to waive the non-compete provision or confirm that Micros would deem it ineffective and not enforce it against her. Id. ¶ 46; Marcotte Decl. ¶ 5. She told him that she needed Micros to waive that provision because she was unemployed at age 54 and needed the NCR opportunity so that she could pay her bills and support herself and her children. Marcotte Decl. ¶ 5. She also told him that she thought that paragraph 8 of the 2012 Plan Agreement Terms and Conditions was "intimidating to me and potential employers because it said any legal action involving the non-compete clause would be brought in Maryland, which seemed unfair and to have no valid purpose. Id.
Ms. Marcotte states that Mr. Giannopoulos told her he thought the terms were neither fair nor necessary, that she did not need to worry about the forum selection clause, and that it would be waived. Id. ¶ 6. When Ms. Marcotte asked about the non-compete clause and requested severance compensation, Mr. Giannopoulos told her that issue was more complicated and he would get back to her after discussing it with the company lawyers. Id.
On June 21, 2012, Ms. Marcotte sent Mr. Giannopoulos an e-mail stating that she appreciated "the considerations you might possibly make since our last call. That would include eliminating the non-compete clause in my contract and potentially offering a severance package." Id. Ex. 1, ECF No. 16 at 6.
On June 22, 2012, Mr. Giannopoulos replied to Ms. Marcotte e-mail message. See Id. He said that Micros would not offer her severance compensation because Ms. Marcotte turned down a position in Micros's San Francisco office. Id. He agreed only to enforce the non-compete provision "with our two main competitors: NCR/Aloha and Agilysys/Infogenesis." Id.; see Complaint ¶ 46. Ms. Marcotte alleges that the non-compete provision was unlawful and unenforceable under California law and Mr. Giannopoulos either knew or should have known this. Complaint ¶ 45.
Mr. Giannopoulos knew from his prior conversation with Ms. Marcotte that she needed a waiver of the non-compete clause in order to get a job with NCR. Marcotte Decl. ¶ 7. Micros and its two main competitors made up a substantial majority of the total U.S. market share in the "point of sale" industry. Id. The only jobs that remained available were with much smaller companies that had limited sales opportunities and lower salaries. Id. Thus, Micros's refusal to waive the non-compete clause caused Ms. Marcotte to remain unemployed for about four months. Id. ¶ 8. The job she was eventually forced to accept offered a salary that was close to 50% less than what she made at Micros or would have made at NCR. Id.
II. PROCEDURAL HISTORY
Ms. Marcotte filed suit in San Francisco County Superior Court on February 26, 2014. See id. The Complaint asserts the following causes of action: (1) -(2) employment discrimination based on gender and age, (3) retaliation, (4) failure to prevent discrimination and/or retaliation, (5) breach of implied contract, (6) wrongful termination in violation of public policy, and (7) intentional interference with prospective economic advantage. Id. ¶¶ 10-47. She seeks general and compensatory damages of not less than $1,500,000, punitive damages, interest, fees, and costs. Id. at 18.
Micros answered the Complaint on March 24, 2014, see Answer, Notice of Removal Ex. B, ECF No. 1 at 21-25, and removed the action to this court the next day, see Notice of Removal ECF No. 1 at 1. On July 23, 2014, Micros filed the pending motion to dismiss or transfer venue. See Motion, ECF No. 14. Ms. Marcotte filed an opposition brief on August 6, 2014. Opp'n, ECF No. 16. Micros filed its reply on August 13, 2014. Reply, ECF No. 19.
ANALYSIS
A party may challenge venue in district court under two statutes: 28 U.S.C. § 1406(a) for improper venue, and 28 U.S.C. § 1404(a) for the convenience of parties and witnesses and in the interest of justice. Micros moves to dismiss under § 1406(a) and, alternatively, to transfer under § 1404(a). The court denies the motion to dismiss and grants the motion to transfer.
I. VENUE
Except as otherwise provided by law, 28 U.S.C. § 1391 governs federal court venue. 28 U.S.C. § 1391(a). In relevant part, the statute provides as follows:
(b) Venue in general. - A civil action may be brought in
(1) a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located;28 U.S.C.A. § 1391. For venue purposes, a corporate defendant resides "in any judicial district in which such defendant is subject to the court's personal jurisdiction with respect to the civil action in question." Id.
(2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated; or
(3) if there is no district in which an action may otherwise be brought as provided in this section, any judicial district in which any defendant is subject to the court's personal jurisdiction with respect to such action.
II. MOTION TO DISMISS UNDER 28 U.S.C. § 1406(A)
Micros first moves to dismiss for improper venue under Federal Rule of Civil Procedure 12(b)(3) and 28 U.S.C. § 1406 because the forum selection clause in the Plan Agreements specified the Maryland federal courts as the proper forum. See Motion at 4.
Under Federal Rule of Civil Procedure 12(b)(3), a defendant may move to dismiss a case for improper venue. If venue is improper, the court may either dismiss the case without prejudice, or, if it is in the "interest of justice," may transfer the case "to any district or division in which it could have been brought." 28 U.S.C. § 1406(a); In re Hall, Bayoutree Assoc., Ltd., 939 F.2d 802, 804 (9th Cir. 1991) (if a court decides to dismiss a case for improper venue, dismissal must be without prejudice). Ordinarily, the interest of justice requires transferring the case to the proper venue rather than dismissing the case. See Baeta v. Sonchik, 273 F.3d 1261, 1264-65 (9th Cir. 2001) (quotations and citations omitted).
After a defendant challenges venue, it is the plaintiff's burden to show that venue is proper. See Piedmont Label Co. v. Sun Garden Packing Co., 598 F.2d 491, 496 (9th Cir. 1979). In the context of a motion under Rule 12(b)(3), the court need not accept as true all allegations in the complaint, but may consider facts outside the pleadings. See Murphy v. Schneider Nat'l, Inc., 362 F.3d 1133, 1137 (9th Cir. 2004) (citations omitted). However, the court "is obligated to draw all reasonable inferences in favor of the non-moving party and resolve all factual conflicts in favor of the non-moving party." Id. at 1138.
Here, Micros argues that the court should dismiss this action because the forum selection clause in the Plan Agreement specifies the District of Maryland "as the proper forum for any suit between them." Motion at 4. But a private forum selection clause does not affect whether venue in this district is proper under the venue statute. As the Supreme Court recently explained,
When venue is challenged, the court must determine whether the case falls within one of the three categories set out in § 1391(b). If it does, venue is proper; if it does not, venue is improper, and the case must be dismissed or transferred under § 1406(a). Whether the parties entered into a contract containing a forum-selection clause has no bearing on whether a case falls into one of the categories of cases listed in § 1391(b). As a result, a case filed in a district that falls within § 1391 may not be dismissed under § 1406(a) or Rule 12(b)(3).Atlantic Marine Const. Co., Inc. v. U.S. Dist. Court for the Western Dist. of Tex., 134 S. Ct. 568, 577 (2013).
Venue is proper in this district because a substantial part of the events giving rise to the claim occurred in this district. See 28 U.S.C. § 1391(b)(2). Accordingly, the court denies Micros's motion to dismiss.
III. MOTION TO TRANSFER UNDER 28 U.S.C. § 1404(a)
In the alternative, Micros argues that the court should transfer this action to the U.S. District Court for the District of Maryland, under 28 U.S.C. § 1404(a). The court agree that this is appropriate.
A. Legal Standard
28 U.S.C. § 1404(a) states: "For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." Although Congress drafted § 1404(a) in accordance with the doctrine of forum non conveniens, it was intended to be a revision rather than a codification of the common law. Piper Aircraft v. Reyno, 454 U.S. 235, 253 (1981); Norwood v. Kirkpatrick, 349 U.S. 29, 32 (1955). Thus, a § 1404(a) transfer is available "upon a lesser showing of inconvenience" than that required for a forum non conveniens dismissal. Norwood, 349 U.S. at 32.
In the absence of a forum selection clause, the burden is upon the moving party to show that transfer is appropriate. Commodity Futures Trading Commission v. Savage, 611 F.2d 270, 279 (9th Cir. 1979); see also Los Angeles Memorial Coliseum Comm. v. National Football League, 89 F.R.D. 497, 499 (C.D. Cal. 1981) aff'd, 726 F.2d 1381, 1399 (9th Cir. 1984). Nonetheless, the district court has broad discretion "to adjudicate motions for transfer according to an 'individualized, case-by-case consideration of convenience and fairness.'" Jones v. GNC Franchising, Inc., 211 F.3d 495, 498 (9th Cir. 2000) (quoting Stewart Org. v. Ricoh Corp., 487 U.S. 22, 30 (1988)); see Westinghouse Elec. Corp. v. Weigel, 426 F.2d 1356, 1358 (9th Cir. 1970).
An action may be transferred to another court if: (1) that court is one where the action might have been brought; (2) the transfer serves the convenience of the parties; and (3) the transfer will promote the interests of justice. E & J Gallo Winery v. F. & P. S.p.A., 899 F. Supp. 465, 466 (E.D. Cal. 1994) (citing 28 U.S.C. § 1404(a)). The Ninth Circuit has identified numerous additional factors a court may consider in determining whether a change of venue should be granted under § 1404(a):
(1) the location where the relevant agreements were negotiated and executed, (2) the state that is most familiar with the governing law, (3) the plaintiff's choice of forum, (4) the respective parties' contacts with the forum, (5) the contacts relating to the plaintiff's cause of action in the chosen forum, (6) the differences in the costs of litigation in the two forums, (7) the availability of compulsory process to compel attendance of unwilling non-party witnesses, and (8) the ease of access to sources of proof.Jones, 211 F.3d at 498-99. Courts may also consider, "the administrative difficulties flowing from court congestion and [the] local interest in having localized controversies decided at home." Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986).
In most cases, the court affords the plaintiff's choice of forum great weight. Lou v. Belzberg, 834 F.2d 730, 739 (9th Cir. 1987) cert. denied, 485 U.S. 993 (1988). But when judging the weight to be given to plaintiff's choice of forum, consideration must be given to the respective parties' contact with the chosen forum. Id. "If the operative facts have not occurred within the forum and the forum has no interest in the parties or subject matter," the plaintiff's choice "is entitled only minimal consideration." Id. Moreover, when a plaintiff brings a derivative suit or represents a class, the named plaintiff's choice of forum is given less weight. Id.
Where there is a valid forum-selection clause, however, the § 1404(a) analysis is adjusted in three significant ways. See Atlantic Marine, 134 S. Ct. at 580. First, plaintiff's chosen forum is accorded no weight. "Rather, as the party defying the forum-selection clause, the plaintiff bears the burden of establishing that transfer to the forum for which the parties bargained is unwarranted." Id. at 581. "Second, a court evaluating a defendant's § 1404(a) motion to transfer based on a forum-selection clause should not consider arguments about the parties' private interests." Id. at 582. Rather, the court "must deem the private-interest factors to weigh entirely in favor of the preselected forum." Id. The remaining public interest factors may include "the administrative difficulties flowing from court congestion; the local interest in having localized controversies decided at home; [and] the interest in having the trial of a diversity case in a forum that is at home with the law." Id. n.6 (quoting Piper Aircraft, 454 U.S. at 241 n. 6) (alteration in original). Third, if venue is transferred, the original venue's choice-of-law rules will not apply, a factor that may affect public interest considerations. Id. "In all but the most unusual cases, therefore, 'the interest of justice' is served by holding parties to their bargain." Id. at 583.
B. The Forum Selection Clause Mandates Transfer
Here, the Plan Agreement contains a forum selection clause by which Micros and Ms. Marcotte agreed that the Maryland federal courts would have "exclusive jurisdiction and venue" over "all claims or actions arising under or relating in any way to this Plan or the relationship between the parties, whether sounding in contract, tort, or otherwise." Tow Decl. Ex. A. Accordingly, the court applies the Atlantic Marine transfer analysis and Ms. Marcotte bears the burden of showing why the court should not transfer the case to the District of Maryland. See 134 S. Ct. at 581.
First, Ms. Marcotte could have brought this action in the U.S. District Court for the District of Maryland. Micros is a Maryland corporation, with its principal place of business and headquarters in Maryland. See Notice of Removal, ECF No. 1. Thus, the District of Maryland would have general jurisdiction over Micros. See Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846, 2853 (2011). These facts also show that the District of Maryland is a proper venue. See 28 U.S.C. § 1391(a), (c) (venue is proper in a judicial district in which any defendant resides and an entity is a resident for venue purposes where it is subject to personal jurisdiction).
Second, the transfer serves the convenience of the parties. Because of the forum selection clause, the court deems "the private-interest factors to weigh entirely in favor of the preselected forum." Atlantic Marine, 134 S. Ct. at 582.
Finally, the public-interest factors are neutral. The administrative difficulties flowing from court congestion are neutral. Micros cites statistics showing that the Maryland federal courts resolve actions faster than the Northern District of California. See Boomer Decl., ECF No. 14-1, ¶ 3. The differences, however, are insubstantial. See id. (33.7 weeks from filing to trial and 7.6 months from filing to disposition versus 34.2 weeks and 8.1 months, respectively). Ms. Marcotte argues that Micros overlooks that this case is set for a trial date 16.5 months from filing, which is much faster than the median time in Maryland. Opp'n at 24. That argument is inapposite, however, because it addresses Ms. Marcotte's private interest in a speedy disposition, not the relevant public interest in reducing administrative difficulties.
Second, the local interest in having localized controversies decided at home is neutral. Both Maryland and California could consider this a localized controversy. Micros is a Maryland corporation and the Plan Agreement has a choice of law provision mandating Maryland law. Ms. Marcotte lives and worked in California and sought to work for Micros's competitors in California. But neither party provides authority for the proposition that this is the type of controversy that generates significant local interest.
Ms. Marcotte also argues that the local interest calculus is in flux and soon will favor a California forum. See Opp'n at 25-26. That is because Oracle, a California corporation, is in the process of acquiring Micros in a deal "that is expected to close in the second half of 2014." See Welch Decl. Ex. 2, ECF No. 17 at 7 (letter from Micros's current President and CEO announcing the acquisition). Ms. Marcotte argues that "[w]hen that occurs Oracle will then become the real party in interest / successor in interest in place of MICROS as a defendant in this case." Opp'n at 25. The court disagrees. The fact that a California corporation may acquire Micros does not vitiate Maryland's interest in this action. Ms. Marcotte's evidence suggests that the acquisition is not yet complete and still could fall through. Even if the deal closes, Ms. Marcotte provides no evidence suggesting Oracle will change Micros's corporate structure or move it to California. On this record, the acquisition does not affect the analysis.
Finally, Ms. Marcotte does not show that the interest in having the trial of a diversity case in a forum that is at home with the law favors California. Based on the parties' arguments, it appears likely that some claims would be analyzed under California law and others under Maryland law (though the court does not decide this). The 2012 Plan Agreement has a choice of law clause that states "[t]his Plan shall be construed in accordance with and be governed by the laws of the State of Maryland, United States, excepting the conflict of law rules of the State of Maryland, as if this contract were made and to be performed entirely within the State of Maryland." Tow Decl. Ex. A, ¶ 8. Ms. Marcotte argues that this clause is narrower than the forum selection clause and covers only the interpretation of the Plan Agreement. Opp'n at 26. Thus, she contends that her Fair Employment and Housing Act and California Business and Professions Code claims will be decided under California law. Id. Micros responds that Ms. Marcotte's claims for breach of implied contract and intentional interference with prospective economic advantage (based on enforcement of the noncompete provision) arise under the Plan and will be decided under Maryland law. Reply at 15. On this record, the court does not resolve the choice of law issue. Instead, the court finds that Ms. Marcotte has not met her burden of showing that this factor favors a California forum.
In sum, the § 1404(a) factors favor granting Micros's motion to transfer. This action could have been brought in the District of Maryland, the forum selection clause in the Plan Agreement establishes that the private-interest factors support transfer, and the public-interest factors are neutral.
C. The Forum Selection Clause is Enforceable
The next issue is whether the forum selection clause is enforceable. Ms. Marcotte argues that even if the clause is contractually valid, the court should not enforce it because it was a contract of adhesion, it contains an unlawful jury waiver, and it violates public policy.
In diversity cases, federal law determines whether a forum selection clause is enforceable. See Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F. 2d 509, 513 (9th Cir. 1988). Forum selection clauses are "prima facie valid and should be enforced unless enforcement is shown by the resisting party to be 'unreasonable' under the circumstances." M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972). A forum selection clause is unreasonable if (1) it was incorporated into the contract as a result of fraud, undue influence, or overweening bargaining power, (2) the selected forum is so gravely difficult and inconvenient that the complaining party will for all practical purposes be deprived of its day in court, or (3) enforcement of the clause would contravene a strong public policy of the forum in which the suit is brought. Richards v. Lloyd's of London, 135 F.3d 1289, 1294 (9th Cir. 1997). "The party seeking to avoid the forum selection clause bears 'a heavy burden of proof.'" Richards v. Lloyd's of London, 135 F.3d 1289, 1294 (9th Cir. 1989) (en banc) (quoting Bremen 407 U.S. at 17).
Although Bremen addressed an international forum selection clause in an admiralty case, its "'reasoning applies with much force to federal courts sitting in diversity.'" Atlantic Marine, 134 S. Ct. at 582 (quoting Stewart Organization, Inc. v. Ricoh Corp., 482 U.S. 22, 33 (1988) (Kennedy, J., concurring)).
Here, the parties do not dispute that Ms. Marcotte signed the Plan Agreement and that it contained a forum selection clause. See generally Opp'n. Accordingly, the forum selection clause is prima facie valid and the court considers Ms. Marcotte's arguments to the contrary.
1. The Forum-Selection Clause Was Freely Negotiated
First, Ms. Marcotte argues that because Micros required her to sign the Plan Agreement, including the forum selection clause, it was neither "freely negotiated" not "mutually agreed" as those terms are used in Atlantic Marine and Bremen. See Opp'n at 7-10. She concedes, however, that "this factor is not determinative." Id. at 7. Regardless, the Ninth Circuit has rejected the same argument in nearly identical circumstances. See Murphy v. Schneider Nat'l, Inc., 362 F.3d 1133, 1141 (9th Cir. 2004) (enforcing forum selection clause in employment contract despite unequal bargaining power between employer and employee even though employer told employee "that the contract was not negotiable" because employee "had the opportunity to seek work with other employers if he opposed the forum selection clause"). Accordingly, this argument does not invalidate the forum-selection clause.
2. The Jury Waiver Provision Does not Invalidate the Forum-Selection Clause
The next issue is whether the jury trial waiver in paragraph 8 of the Plan Agreement invalidates the forum-selection clause, which is in the same paragraph. Ms. Marcotte argues that "jury trial waivers prior to actual litigation are unlawful and unenforceable," and the forum selection clause is "closely intertwined" with the jury trial waiver, the entire provision is invalid. Opp'n at 14 (citing Grafton Partners L.P. v. The Superior Court of Alameda County, 35 Cal. 4th 944 (2005); Cal. Civ. Code § 1670.5)). The court disagrees that this affects the forum selection clause.
First, Ms. Marcotte's argument is premised on the court applying California law. If the court were to follow the choice of law provision in the Plan Agreement, Maryland law would apply. See Plan Agreement, Tow Decl. Ex. A, ¶ 8. Ms. Marcotte does not show that Maryland forbids jury trial waivers or otherwise address the choice-of-law issue in this context. Even if California law applied, the statutory provision Ms. Marcotte cites allows a court to refuse to enforce all or part of an unconscionable contract, as follows:
(a) If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.Cal. Civ. Code § 1670.5. Accordingly, there is no reason why the court could enforce the forum selection clause but not the jury trial waiver. Nor does Ms. Marcotte provide any legal support for her argument that "closely intertwined" provisions must stand or fall together. See Opp'n at 14. In sum, the court sees no impediment to a court refusing to enforce just the jury trial waiver, should that be necessary.
3. The Forum Selection Clause Does Not Contravene California Public Policy
The next issue is whether the forum selection clause effectively contravenes California's public policy against covenants not to compete such that the court should decline to enforce it. The parties do not dispute that under California law, covenants not to compete are unenforceable as contrary to public policy. Opp'n at 15-23; see Reply at 11. The dispute is whether enforcement of the forum selection clause would contravene that policy because, as Ms. Marcotte argues, "the federal or state courts in Maryland would permit and enforce the non-compete agreements in the Sales Plan." Id. at 21.
The problem with Ms. Marcotte's argument is that she conflates the forum selection clause and the covenant not to compete. "A forum selection clause determines where the case will be heard, it is 'separate and distinct from choice of law provisions that are not before the court." Besag v. Custom Decorators, Inc., No. C 08-05463 JSW, 2009 WL 330934, at *3-4 (N.D. Cal. Feb. 10, 2009). "Thus, a party challenging enforcement of a forum selection clause may not base its challenge on choice of law analysis." Id. at *4 (enforcing forum selection clause in employment agreement and characterizing as speculative employee's argument that Oregon court would apply Oregon substantive law in a manner that would foreclose certain remedies). In other words, whether this court should transfer the case to the District of Maryland is a different inquiry from whether the District of Maryland should refuse to enforce the covenant not to compete based on California's public policy.
The primary case that Ms. Marcotte relies upon is readily distinguishable. In Doe I v. AOL LLC, 552 F.3d 1077 (9th Cir. 2009) (per curiam), the court held that a forum selection clause was unenforceable as contrary to California's public policy, as expressed in the anti-waiver provisions of the Consumer Legal Remedies Act (the "CLRA"). Id. at 1083-84. Doe I was a consumer class action alleging that AOL unlawfully disclosed private information about the putative class members. Id. at 1079-80. AOL's Terms of Service Agreement included a forum selection clause that designated Virginia's state courts as the only place where claims against AOL could be resolved. Virginia law, however, did not allow consumer lawsuits to be tried as class actions and it lacked substantive protections and remedies available under California law. Id. at 1083 n.12. Thus, the plaintiffs would not have been able to bring their lawsuit if the forum selection clause were enforced. That would contravene California's strong public policy, which favors consumer class actions and disfavors the waiver of statutory consumer remedies.
This case is different. First, unlike the Virginia state courts in Doe I, the District of Maryland is capable of resolving Ms. Marcotte's claims, whether under Maryland or California law and the forum would not strip Ms. Marcotte of any procedural protections. See Meras Eng'g, Inc. v. CH20, Inc., No. C-11-0389 EMC, 2013 WL 146341, at *12 (N.D. Cal. Jan. 14, 2013) (distinguishing Doe I on this basis and collecting cases doing the same).
She also relies on Application Group, Inc. v. Hunter Group, Inc., 61 Cal. App. 4th 881 (1988), in which a California state court refused to enforce a choice of law provision mandating Maryland law. See Opp'n at 20-21. As in this case, the contracts were employment agreements that included covenants not to compete. The court held that California's interest in the contracts was greater than Maryland's and, therefore, applied California law. Id. at 902. Application Group does not change the analysis here, which concerns whether transfer, not choice of law, violates California's public policy.
Ms. Marcotte's remaining arguments miss the point. She argues the undisputed proposition that California public policy disfavors non-compete agreements. See Opp'n at 16-17. She cites cases in which the District of Maryland has enforced non-compete clauses, while applying Maryland law. Id. at 19-20 (citing, e.g., TEKSYSTEMS, Inc. v. Bolton, No. C RDB-08-3099, 2010 WL 447782 (D.Md. Feb. 4, 2010). But the mere fact that a covenant not to compete may be enforceable under another state's laws does not mean that transferring this case to another forum contravenes public policy.
Teksystems appears to suggest that the District of Maryland would apply California law, as follows:
In a diversity action, a court applies the choice of law rules of the state in which it sits to determine the applicable substantive law. Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Under Maryland law, the doctrine of lex loci contractus applies to contractual claims, meaning that the law of the place where the contract is made applies. Allstate Insurance Co. v. Hart, 327 Md. 526, 529, 611 A.2d 100 (1992). The Employment Agreement at issue in this case was executed in Maryland and the contract specifically provides that Maryland law shall govern the merits of any dispute arising under the contract.
In sum, Ms. Marcotte's argument that application of Maryland law would violate an important California public policy does not alter the court's conclusion that transfer is appropriate. Accord Swenson v. T-Mobile USA, Inc., 415 F. Supp. 2d 1101, 1104 (S.D. Cal. 2006) (rejecting plaintiff's challenge to a forum selection clause on the basis that transfer would arguably lead to the application of Washington substantive law in violation of California's public policy against noncompete covenants in employment agreements).
D. Whether the Forum Selection Clause was Contractually Valid
The above analysis, however, does not end the inquiry because it "presupposes a contractually valid forum-selection clause." Atlantic Marine, 134 S. Ct. at 581 n.5. Ms. Marcotte also argues that the forum selection clause is invalid as a matter of contract. Specifically, she argues that the forum selection clause is expired with the Plan Agreement and that Micros's CEO waived it. See Opp'n at 11-14. The court addresses these arguments in turn.
1. The Forum Selection Clause Survives Expiration of the Plan Agreement
First, Ms. Marcotte argues that the forum selection clause is not valid because it expired with the rest of the Plan Agreement. See Opp'n at 11-13. She points to the "General" paragraph of the Plan Terms and Conditions, which provides: "[n]otwithstanding anything to the contrary herein, this Plan shall expire at the end of the applicable fiscal year and does not automatically renew." See Opp'n at 11 (quoting Tow Decl. Ex. A, ¶ 1). According to Ms. Marcotte, this provision means "that the forum-selection clause, along with all other terms of the Plan, automatically terminated and were no longer in effect as of June 30, 2012, the end of the 2011 fiscal year." Opp'n at 11. The court disagrees.
Dispute resolution provisions presumptively survive termination of a contract. See Saleemi and Sob, LLC v. Gosh Enterps., Inc., 467 Fed. App'x 744, 744 (9th Cir. Feb. 3, 2012) (Mem. Op.) (citing Litton Fin. Printing Div. v. NLRB, 501 U.S. 190, 204 (1991); and 13 Corbin on Contracts § 67.2 (rev. ed. 2003 & Supp. 2011)). Although the presumption is rebuttable, id., federal courts routinely hold that forum selection clauses survive, even where other provisions do not. For example, in TriState HVAC Equip., LLP v. Big Belly Solar, Inc., the court held that the forum selection clause applied to a dispute even after a party terminated the underlying agreement. 752 F. Supp. 2d 517, 536 (E.D. Pa. 2010) (granting motion to transfer venue) order amended on reconsideration, No. CIV.A. 10-1054, 2011 WL 204738 (E.D. Pa. Jan. 21, 2011) (reversing decision to transfer based on convenience factors). In TriState, the "agreement expressly provide[d] for the survival of certain other contractual provisions, but not the forum-selection clause." Id. The plaintiff argued that because the savings clause failed to mention the forum selection clause, it no longer applied. The court disagreed, finding that the savings clause "simply does not evidence a clear intent that, upon termination of the agreement, the forum-selection clause would cease to apply to claims arising under the agreement." Id. Similarly, in Advent Electronics, Inc. v. Samsung Semiconductor, Inc., the court granted a motion to transfer venue in accordance with the applicable forum selection clause even though the dispute arose after one party terminated the underlying agreement. 709 F. Supp. 843, 846 (N.D. Ill. 1989). The court reasoned that because "[t]ermination of a contract does not divest parties of rights and duties already accrued" a forum selection clause survives termination of the contract absent contractual language to the contrary. Id. See also AGR Fin., L.L.C. v. Ready Staffing, Inc., 99 F. Supp. 2d 399, 401 (S.D.N.Y. 2000) (concluding, based on the connection of plaintiff's claims to the underlying contract, that "even if the Agreement was terminated, its forum selection clause would still be effective").
Here, Ms. Marcotte relies on language that says the contract expires at the end of the fiscal year. She provides no authority for the proposition that once a contract expires, the forum selection clause no longer applies. Given the presumption that dispute resolution provisions survive termination of a contract and the cases interpreting similar provisions, the court finds that the forum selection clause applies to claims within its scope, even where the party filed suit after the agreement expired.
2. Ms. Marcotte Fails to Show that Micros Waived the Forum Selection Clause
The second issue is whether Micros's CEO waived the forum selection clause during a telephone call. In a declaration supporting her opposition brief, Ms. Marcotte states that Mr. Giannopoulos told her that Micros would not enforce the forum selection clause. Opp'n at 13-14; see Marcotte Decl., ECF No. 16, ¶ 6 ("[Mr. Giannopoulos] told me that I didn't need to worry about the clause requiring lawsuits to be in Maryland, and that clause would be waived."). She argues that this constitutes a contract modification, and that the 2012 Plan Agreement permits Micros to make such unilateral modifications. See Tow Decl. Ex. A, ¶ 1 (quoted above).
Laurel - this is the issue that I got stuck on.
Questions for counsel:
1. Who has the burden here? What is the standard the party with the burden must meet?
A. On a motion to transfer where there is no forum-selection clause, the moving party has the burden.
B. But Bremen says the party seeking to defeat applicability of the forum selection clause bears the burden of proof. Similarly, Argueta says that on a motion to enforce a FSC, the pleadings need not be accepted as true and facts outside the pleadings may be considered, 87 F.3d at 324. But that was in the context of a FRCP 12b3 motion to dismiss - Atlantic Marine changed that by saying you can't dismiss under 12b3 (improper venue) where the only reason venue is "improper" is b/c of an FSC. Here, b/c the motion to enforce the FSC is a motion to transfer, does the same 12b3 standard apply or is it something else?
Regardless, do either Bremen or Argueta apply here? I'm not sure they do because, e.g., Bremen may assume that the forum selection clause is valid. Here, Ms. Marcotte is saying that there is no FSC at all b/c it was waived by the Micros's CEO.
C. On the other hand, I also can see this as a situation where Micros met its burden by establishing that there is a prima facie valid forum-selection clause. The argument it is invalid could be considered a defense that Ms. Marcotte has the burden of establishing.
This is the most important question b/c Ms. Marcotte did a poor job of providing evidentiary support for the waiver (or whatever it is). She really just rests on her declaration that the CEO said they wouldn't enforce the provision.
2. What law applies in considering whether the CEO can modify the contract like this?
The parties cite to California contract law. Their analyses are scant and conclusory. They should say whether Maryland law, California law, or "general federal law" of contract interpretation applies [I've found cases that say that "general federal law" applies. Those cases, however, are more in the context of contract interpretation, not something as specific as this].
We apply federal law to the interpretation of the forum selection clause. Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 513 (9th Cir.1988). When we interpret a contract under federal law, we look for guidance "to general principles for interpreting contracts." Klamath Water Users Protective Ass'n v. Patterson, 204 F.3d 1206, 1210 (9th Cir.1999).
678 "Contract terms are to be given their ordinary meaning, and when the terms of a contract are clear, the intent
of the parties must be ascertained from the contract itself. Whenever possible, the plain language of the contract should be considered first." Id. (internal citation omitted). We apply the "primary rule of interpretation ... that the common or normal meaning of language will be given to the words of a contract unless circumstances show that in a particular case a special meaning should be attached to it." Hunt Wesson Foods, Inc., 817 F.2d at 77 (internal quotation marks and alteration omitted). We read a written contract as a whole, and interpret each part with reference to the whole. Klamath Water Users Protective Ass'n, 204 F.3d at 1210. That the parties dispute a contract's meaning does not render the contract ambiguous; a contract is ambiguous "if reasonable people could find its terms susceptible to more than one interpretation." Id.
Doe 1 v. AOL LLC, 552 F.3d 1077, 1081 (9th Cir. 2009)
3. What is the precise issue here
Is this a release of an obligation?
Is it oral modification of a written contract?
Is it satisfaction and accord? Maybe this is a situation where Micros met its burden of proof, then the oral modification is a defense.
Thus, the court finds that transfer of this action to the District of Maryland is appropriate under 28 U.S.C. § 1404(a).
CONCLUSION
For the foregoing reasons, the court DENIES Defendant's motion to dismiss, GRANTS Defendant's motion to transfer, and TRANSFERS this action to the United States District Court for the District of Maryland.
This disposes of ECF No. .
IT IS SO ORDERED. Dated: August 25, 2014
/s/_______
LAUREL BEELER
United States Magistrate Judge
Id. at *4.