Barnett v. Dyncorp Int'l, L.L.C.

• Decision Date: 26 July 2016
• Docket Number: No. 15-10757,15-10757
• Citation: 831 F.3d 296
• Parties: Jonathan Barnett, Plaintiff-Appellant, v. DynCorp International, L.L.C., Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

831 F.3d 296

Jonathan Barnett, Plaintiff-Appellant,

v.DynCorp International, L.L.C., Defendant-Appellee.

No. 15-10757

United States Court of Appeals, Fifth Circuit.

July 26, 2016

F. Jerome Tapley, Esq., Hirlye R. Lutz, III, Esq., William Ryan Myers, Esq., Adam Wade Pittman, Cory Watson, P.C., Birmingham, AL, David William Crowe, Bailey, Crowe & Kugler, Dallas, TX, Sean Fletcher Rommel, James Clark Wyly, Wyly Rommel, P.L.L.C., Texarkana, TX, for Plaintiff-Appellant.

Michael A. Pollard, Esq., Chicago, IL, Kimberly F. Rich, Jonathan P. Rosamond, Mark D. Taylor, Dallas, TX, Baker & McKenzie, L.L.P., for Defendant-Appellee.

Before JONES, WIENER, and HIGGINSON, Circuit Judges.

STEPHEN A. HIGGINSON

, Circuit Judge:

Plaintiff Jonathan Barnett alleges that his former employer, DynCorp International LLC, failed to give him all of the pay and benefits he was owed for work he did in Kuwait. To resolve this appeal, we must decide whether the district court properly dismissed Barnett's putative class action complaint on the basis of a forum-selection clause in his employment contract. That decision presents a series of choice-of-law issues. Ultimately, we affirm.

I.

DynCorp, a private contractor that provides logistics support services to the U.S. Army, is an American company with its principal place of business in Texas. Barnett is a resident of the state of Georgia. In February 2011, DynCorp extended Barnett an offer to work for DynCorp in Kuwait. Barnett traveled to Texas and signed a one-year “Foreign Service Employment Agreement” drafted by DynCorp in Texas. He signed a similar one-year contract in February 2012 and extensions of the second contract in March 2013. We refer collectively to these contracts, which are essentially identical for our purposes, as the “Agreement.”

The Agreement designated Barnett's “geographical location of employment” as Kuwait. Barnett's base wages were set in American dollars, but his overtime and working holiday compensation were to “be paid at premium rates in accordance with Kuwait Labour Law, No. 6 of 2010.” The Agreement also incorporated the Kuwait Labour Law to determine Barnett's work schedule, holidays, medical leave benefits, circumstances under which he could be terminated, and compensation due upon termination. Other benefits such as paid leave were set with reference to U.S. Army contracting policies. Importantly, the Agreement stated: “This Contract shall be governed by and interpreted exclusively under the laws of Kuwait and all disputes between the Parties shall be resolved exclusively in Kuwait.”

Barnett completed a paid one-week training program in Texas, then flew to Kuwait in early March 2011. In his two-plus years working in Kuwait, Barnett alleges, he worked seventy-two hours per week, and worked on at least some “off days” and public holidays. He was paid in U.S. dollars, and only U.S. taxes were withheld from his wages.

In a March 2013 letter, DynCorp informed Barnett that his employment would soon be terminated because DynCorp would no longer be providing services at Barnett's location. That letter promised that Barnett would receive an end-of-service indemnity, accrued and unused leave credit, and other benefits. And it stated that “[a]ny balance of wages due [would] be distributed on the next scheduled pay date after [Barnett's] departure” from Kuwait. Barnett left Kuwait, concluding his work for DynCorp, on June 10, 2013.

Barnett filed this action on March 27, 2015, in a federal court in Texas. He alleges that he never received all of the wages and benefits DynCorp owes him, and that DynCorp breached the Agreement by failing to provide him—“in accordance with the [Kuwait] Labour Law”—overtime pay, paid leave, end-of-service payment, and premature contract termination damages. He also contends that DynCorp failed to pay him hardship compensation and meal per diems, and did not provide all of the free housing and transportation required by the Agreement.

DynCorp moved to dismiss on the basis of forum non conveniens , arguing that the Agreement's forum-selection clause mandates that the action be litigated in Kuwait. Barnett opposed the motion, responding that the forum-selection clause is void under Texas law and unenforceable under federal law. Specifically, Barnett argued that under Texas Civil Practice & Remedies Code section 16.070

,¹ the forum-selection clause is void because it directs litigation to a forum in which the limitations period for breach of an employment contract is less than two years. The district court granted the motion, concluding that the forum-selection clause is valid, enforceable, and requires dismissal under Atlantic Marine Construction Co. v. United States District Court , ––– U.S. ––––, 134 S.Ct. 568, 187 L.Ed.2d 487 (2013). Barnett timely appealed.

II.

The Supreme Court recently clarified that “the appropriate way to enforce a forum-selection clause pointing to a state or foreign forum is through the doctrine of forum non conveniens .” Atl. Marine , 134 S.Ct. at 580

. Usually, a court applying that doctrine must determine whether there is an adequate alternative forum and, if so, decide which forum is best-suited to the litigation by considering a variety of private- and public-interest factors and giving deference to the plaintiff's choice of forum. DTEX, LLC v. BBVA Bancomer, S.A. , 508 F.3d 785, 794–95 (5th Cir. 2007). The presence of a valid forum-selection clause simplifies this analysis in two ways. “First, the plaintiff's choice of forum merits no weight” because, by contracting for a specific forum, “the plaintiff has effectively exercised its ‘venue privilege’ before a dispute arises.” Atl. Marine , 134 S.Ct. at 581–82. Second, the private-interest factors “weigh entirely in favor of the preselected forum,” so that the “district court may consider arguments about public-interest factors only.” Id. at 582. Hence, a valid forum-selection clause controls the forum non conveniens inquiry “[i]n all but the most unusual cases.” Id. at 583. This harmonizes with the Court's guidance that contractually selected forums often “figure[ ] centrally in the parties' negotiations” and become part of those parties' “settled expectations”—so if a plaintiff disregards such a contractual commitment, “dismissal ... work[s] no injustice.” Id. at 583 & n. 8.

When a district court decides a forum non conveniens motion based on a forum-selection clause, we review de novo the “interpretation” and “assessment of that clause's enforceability,” then “review for abuse of discretion the court's balancing of the private- and public-interest factors.” Weber v. PACT XPP Techs., AG , 811 F.3d 758, 768 (5th Cir. 2016)

.

III.

Article 144 of the Kuwait Labour Law provides a one-year statute of repose, running from the termination of the relevant employment relationship, which the parties agree would apply if Barnett were to bring suit in Kuwait. See Lee v. ITT Corp. , 534 Fed.Appx. 626, 626 (9th Cir. 2013)

(unpublished) (referencing the statute of repose). Barnett contends that as a result, the Agreement's Kuwaiti choice-of-law and forum-selection clauses effectively create a limitations period of less than two years. Those clauses, he submits, are therefore ities because Texas Civil Practice & Remedies Code section 16.070

makes “void in [Texas]” any “stipulation, contract, or agreement that establishes a limitations period that is shorter than two years.” DynCorp disagrees, arguing that section 16.070 is irrelevant to this case. We must decide which jurisdiction's law governs, and to what effect.

A. Atlantic Marine

tells us that a “valid” forum-selection clause pointing to a foreign tribunal requires forum non conveniens dismissal absent unusual circumstances. 134 S.Ct. at 581–83 & n. 8. But in Atlantic Marine, “there was no dispute that the forum-selection clause was valid.” Id. at 576. And the Court noted, without elaboration, that its analysis “presuppose[d] a contractually valid forum-selection clause.” Id. at 581 n. 5. Atlantic Marine thus did not answer under what law forum-selection clauses should be deemed invalid, see

In re Union Elec. Co. , 787 F.3d 903, 906–07 (8th Cir. 2015) —an issue that has long divided courts, see, e.g. , Lambert v. Kysar , 983 F.2d 1110, 1116 & n. 10 (1st Cir. 1993) (noting a circuit split over whether to apply federal or state law). Consequently, courts and commentators have continued to express uncertainty about “whether a federal court in a diversity case should look to federal law, state law or both when deciding whether a forum selection clause is valid.” Rolfe v. Network Funding LP , No. 14–CV–9–BBC, 2014 WL 2006756, at *1 (W.D. Wis. May 16, 2014) ; see Linda S. Mullenix, Gaming the System: Protecting Consumers from Unconscionable Contractual Forum-Selection and Arbitration Clauses , 66 HASTINGS L.J. 719, 731 (2015) (noting that Atlantic Marine left open the question of “[w]hat body of law applies to evaluate the validity and enforceability of a forum-selection clause,” which is “further complicated if the contract also contains a choice-of-law provision”).

Neither the Supreme Court nor this court has said what source of law governs the “validity” of a forum-selection clause. But even in diversity cases, federal law governs the “enforceability” of forum-selection clauses in this circuit. Haynsworth v. The Corp. , 121 F.3d 956, 962 (5th Cir. 1997)

; see

Weber , 811 F.3d at 770. This federal law, derived from a pair of seminal admiralty cases, requires a party attacking a forum-selection clause to overcome a presumption of enforceability by showing that the clause is “ ‘unreasonable’ under the circumstances” because

(1) the incorporation of the forum selection clause into the agreement was the product of fraud or overreaching; (2) the party seeking to escape enforcement “will for all practical purposes be deprived of his day in court” because of the grave inconvenience or unfairness of the selected forum; (3) the fundamental

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