Collins ex rel. All Other Similarly Situated Persons v. Mary Kay, Inc.

• Decision Date: 19 October 2017
• Docket Number: No. 16-3178.,16-3178.
• Citation: 874 F.3d 176
• Parties: Ina M. COLLINS, ON BEHALF OF HERSELF and all other similarly situated persons, Appellant v. MARY KAY, INC.; ABC Corp.; Jane and John Does, the latter parties' names being currently unknown and fictitious
• Court: U.S. Court of Appeals — Third Circuit

874 F.3d 176

Ina M. COLLINS, ON BEHALF OF HERSELF and all other similarly situated persons, Appellant

v.

MARY KAY, INC.; ABC Corp.; Jane and John Does, the latter parties' names being currently unknown and fictitious

No. 16-3178.

United States Court of Appeals, Third Circuit.

Filed: October 19, 2017

Argued: January 26, 2017

RAVI SATTIRAJU, ESQ. [ARGUED], The Sattiraju Law Firm, 116 Village Boulevard, Princeton, NJ 08540, Counsel for Appellant.

CHRISTINE A. AMALFE, ESQ. [ARGUED], STEVEN G. SANDERS, ESQ., RICHARD S. ZACKIN, ESQ., Gibbons P.C., One Gateway Center, Newark, NJ 07102, Counsel for Appellee Mary Kay, Inc.

Before: CHAGARES, RESTREPO, and ROTH, Circuit Judges.

OPINION OF THE COURT

RESTREPO, Circuit Judge.

Plaintiff-Appellant Ina M. Collins, who worked as a beauty consultant in New Jersey for Defendant-Appellee Mary Kay, Inc. brought this putative class action in the United States District Court for the District of New Jersey, claiming that certain Mary Kay policies and practices violated the New Jersey Wage Payment Law ("NJWPL"). Mary Kay moved to dismiss the suit on forum non conveniens grounds, relying on two written agreements that set forth terms and conditions of the parties' relationship. Both agreements contained forum selection clauses specifying that legal claims would be submitted to Texas state court. Both also contained choice-of-law clauses stating that Texas law would apply.

The District Court relied on federal common law in reaching its decision to grant Mary Kay's motion. On appeal, Collins argues that New Jersey law should govern the analysis. This case thus poses a layered choice-of-law question: what law governs the interpretation of a forum selection clause in a written agreement when that agreement also contains a choice-of-law clause? For the reasons that follow, we conclude that Texas law applies to the interpretation of the forum selection clause, and under Texas law, Collins' claim belongs in Texas state court. Therefore, we will affirm the District Court's dismissal of this action on forum non conveniens grounds.

I

Mary Kay is a Texas-based company that sells cosmetics to customers via beauty consultants. Collins is a New Jersey resident who worked as a Mary Kay beauty consultant in New Jersey in a few capacities, including "Independent Sales Consultant" and "Independent Sales Director." App. 27 ¶ 7. The putative class consists of individuals who are New Jersey residents and have worked as Mary Kay beauty consultants, in a variety of titles, from September 2009 to the present.

Collins and Mary Kay entered into two written agreements (collectively, "Agreements") that set forth the general terms and conditions of their relationship: an "Independent Beauty Consultant Agreement" and an "Independent Sales Director Agreement."¹ App. 15-25. The Agreements contained substantively identical forum selection clauses:

The parties further agree that if any dispute or controversy arises between them concerning any matter relating to this Agreement that any issues which either party may elect to submit for legal jurisdiction shall be submitted to the jurisdiction of the courts of the State of Texas and the parties agree that the proper venue shall be Dallas, Dallas County, Texas.

App. 16; see also App. 23.

In addition to the forum selection clauses included in the Agreements, each contained a choice-of-law clause that specified Texas law would apply to disputes. In the "Independent Beauty Consultant Agreement," the choice-of-law clause states, "This Agreement shall be governed by the laws of the State of Texas as to all matters." App. 16. The choice-of-law clause in the Independent Sales Director Agreement differs only slightly, stating the "Agreement ... shall be governed by the laws of the State of Texas as to all matters, including but not limited to matters of validity, construction, effect and performance." App. 23.

Collins filed her putative class action complaint in September 2015 in the United States District Court for the District of New Jersey, invoking the court's diversity jurisdiction pursuant to 28 U.S.C. § 1332. The complaint contained one count, a violation of the NJWPL, N.J. Stat. 34:11-4.1, et seq . Collins alleged in her complaint that Mary Kay misclassified her and the putative class members as independent contractors, rather than employees, under the standards of the NJWPL. Collins further alleged that Mary Kay unlawfully required consultants to divert wages by mandating that they purchase Mary Kay marketing materials, uniforms, and a minimum quota of products in order to maintain their titles as consultants. These practices, according to Collins, violated the NJWPL.

In November 2015, Mary Kay moved to dismiss Collins' complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) and on forum non conveniens grounds. In support of its forum non conveniens argument, Mary Kay pointed to the forum selection clauses included in the Agreements and contended that the only proper forum for Collins' claim was Texas state court. In June 2016, the District Court granted Mary Kay's motion and dismissed the complaint on forum non conveniens grounds, finding that Texas was the appropriate forum under the terms of the forum selection clause. This appeal followed.

II

The District Court had jurisdiction pursuant to 28 U.S.C. § 1332. We have appellate jurisdiction over the final order of the District Court pursuant to 28 U.S.C. § 1291.

The standard of review that we must apply to a district court's dismissal on forum non conveniens grounds is unsettled after the Supreme Court's 2013 decision in Atlantic Marine Construction Co. v. U.S. District Court for the Western Dist. of Texas , ––– U.S. ––––, 134 S.Ct. 568, 187 L.Ed.2d 487 (2013), as several circuit courts have recognized in recent opinions. See, e.g. , Weber v. PACT XPP Techs., AG , 811 F.3d 758, 766-68 (5th Cir. 2016) ; Martinez v. Bloomberg LP , 740 F.3d 211, 217 (2d Cir. 2014). Atlantic Marine clarified that forum non conveniens is the proper mechanism for enforcing a forum selection clause that points to a state or foreign forum. Atlantic Marine , 134 S.Ct. at 580. Atlantic Marine did not address, however, what standard of review an appellate court should use when considering a district court's forum non conveniens dismissal. Nevertheless, we need not resolve that issue here, because even under the least deferential de novo standard, the District Court's decision to dismiss this case on forum non conveniens grounds must be affirmed.

III

A

Collins centers her appeal on the proper interpretation of the Agreements' forum selection clauses. Specifically, she argued in her opening brief that we should reverse the District Court's dismissal because her claim is outside the scope of the forum selection clause included in the Agreements.² A court considering the interpretation of a forum selection clause applies principles of contract law to determine the scope of the clause. See John Wyeth & Bro. Ltd. v. CIGNA Int'l Corp ., 119 F.3d 1070, 1073 (3d Cir. 1997) (noting that "[t]he question of the scope of a forum selection clause is one of contract interpretation"). In other words, it decides "whether the claims and parties involved in the suit are subject" to the clause. Martinez , 740 F.3d at 217 (quoting Phillips v. Audio Active Ltd. , 494 F.3d 378, 383 (2d Cir. 2007) ).

The interpretation of a forum selection clause is an analytically distinct concept from the enforceability of that clause. Weber , 811 F.3d at 770 ; see also Martinez , 740 F.3d at 217. A court examining the enforceability of a clause considers whether compelling compliance with the clause is " ‘unreasonable’ under the circumstances." Foster v. Chesapeake Ins. Co. , 933 F.2d 1207, 1219 (3d Cir. 1991) (quoting M/S Bremen v. Zapata Off-Shore Co. , 407 U.S. 1, 10, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972) ); Weber , 811 F.3d at 773-75 ; see also Martinez , 740 F.3d at 217-19. Collins has not raised as an issue in this appeal the enforceability of the Agreements' forum selection clauses. Collins does not suggest, for instance, that Mary Kay "obtained [her] accession to the forum clause by fraud or overreaching." Carnival Cruise Lines, Inc. v. Shute , 499 U.S. 585, 595, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991) ; accord M/S Bremen , 407 U.S. at 15, 92 S.Ct. 1907 ; Foster , 933 F.2d at 1219. Nor does she argue that litigating her wage claim in Texas "will be so gravely difficult and inconvenient that [s]he will for all practical purposes be deprived of h[er] day in court." M/S Bremen , 407 U.S. at 18, 92 S.Ct. 1907. And she has not outlined how enforcement of the forum selection clauses would "contravene a strong public policy" of New Jersey. Id. at 15, 92 S.Ct. 1907.

Our review focuses accordingly on the clauses' scope.

B

Before we can determine the scope of the forum selection clauses in the Agreements, we must establish what body of law should govern our interpretation. Under the familiar doctrine of Erie Railroad v. Tompkins , 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), federal courts sitting in diversity jurisdiction apply state law to substantive issues and federal law to procedural issues. Here, the District Court applied federal law to its entire analysis, reasoning that questions of venue are procedural rather than substantive in nature. But in selecting this body of law, the District Court did not draw any distinction between questions of the clauses' enforceability and questions of interpretation.

Applying federal law to questions of enforceability of forum selection clauses comports with settled law in this Circuit.³ Jumara v. State Farm Ins. Co. , 55 F.3d 873, 877 (3d Cir. 1995). Doing so "ensure[s] that federal courts account for both the important interests served by forum selection clauses and the strong public policies that might require federal courts to override such clauses." Martinez , 740 F.3d at 220. Further, it "accords with the traditional...