Perry v. AT&T Mobility LLC

• Decision Date: 12 September 2011
• Docket Number: No. C 11-01488 SI,C 11-01488 SI
• Court: U.S. District Court — Northern District of California
• Parties: SANDRA PERRY, Plaintiff, v. AT&T MOBILITY LLC, ARISE VIRTUAL SOLUTIONS INC., Defendants.

SANDRA PERRY, Plaintiff,

v.AT&T MOBILITY LLC, ARISE VIRTUAL SOLUTIONS INC., Defendants.

No. C 11-01488 SI

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA

Dated: September 12, 2011

ORDER DENYING MOTION TO DISMISS

On August 12, 2011, the Court heard argument on defendants' motion to dismiss for improper venue, or to transfer. Having considered the arguments of counsel and the papers submitted, the Court hereby DENIES defendants' motion.

BACKGROUND

Named plaintiff Sandra Perry has filed a putative class action against defendants AT&T Mobility ("AT&T") and Arise Virtual Solutions ("Arise"), alleging violations of the California Business & Professions Code and the California Labor Code. These include claims for failure to pay minimum wages, hourly wages, and overtime wages, in violation of California Labor Code sections 51, 1194, 1197, 1197, and 1198; and claims brought under the California Labor Code's Private Attorney General Act ("PAGA"), sections 2698 et seq.

Plaintiff alleges that Arise acts as a "hiring agenc[y] for AT&T." First Am. Compl ¶ 2. According to her complaint, defendants required her and other similarly situated individuals to form Virtual Services Corporations ("VSCs"). The VSCs then entered into contracts with defendants toprovide customer service and technical support for AT&T as home-based Virtual Call-Center Agents. Plaintiff alleges that defendants treat her and other home-based Virtual Call-Center Agents working in the State of California as independent contractors, when in fact they are employees under California law.

On October 5, 2010, defendant Arise and plaintiff, as President of the VSC Cultures International, signed a Master Services Agreement ("MSA"), in which Cultures International agreed to act as a customer service representative on behalf of Arise for Arise's clients. Decl. of Ria Mason in Supp. of Def. Mot. to Dismiss ("Mason Decl."), ¶ 8 & Ex. A. The MSA includes the following terms: (1) "This Agreement shall be governed by and interpreted according to the laws of the State of Florida, without giving effect to any conflicts of laws provisions that would cause the laws of any other state to be applied"; and (2) "ANY ACTION BROUGHT BY ANY OF THE PARTIES HERETO AGAINST ANY OF THE OTHER PARTIES HERETO RELATING TO THIS AGREEMENT SHALL ONLY BE BROUGHT IN BROWARD COUNTY, FLORIDA." Id. ¶ 9 & Ex. A ¶¶ 9.1, 9.8.¹

On December 23, 2010, January 28, 2011, and May 1, 2011, defendant Arise and plaintiff, as President of the VSC Cultures International, signed three additional documents, each entitled "Statement of Work to the Arise-Virtual Services Corporation Master Services Agreement" ("SOWs"), in which Cultures International agreed to provide services for defendant AT&T for certain periods of time. Id. ¶¶ 5, 11 & Exs. B, C, D. Each SOW contained a clause stating that the SOW was to "be incorporated by reference, and become a part of," the MSA. Id. ¶ 12, Exs. B at 1, C at 1, D at 1.

Currently before the Court is defendant Arise's motion to dismiss for improper venue, or, in the alternative, to transfer the case to the Southern District of Florida. Defendant AT&T has joined the motion and defendant Arise's briefing papers in full. See Docs. 26 & 56.

LEGAL STANDARD

I. Motion to dismiss for improper venue

The Ninth Circuit has held that, in the context of determining venue, Erie principles require that federal law apply to both the enforcement and interpretation of forum selection clauses.Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 512-13 (9th Cir. 1988). In a Rule 12(b)(3) motion to dismiss for improper venue based on a forum selection clause, the pleadings need not be accepted as true and the Court may consider facts outside of the pleadings. Murphy v. Schneider Nat'l, Inc., 362 F.3d 1133, 1137 (9th Cir. 2004). Contested facts bearing on the impact of a forum selection clause are to be treated by analogy to facts in a disputed summary judgment motion under Federal Rule of Civil Procedure 56: "the trial court must 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.

Forum selection clauses are presumptively valid and "the party seeking to avoid a forum selection clause bears a 'heavy burden' to establish a ground upon which [the court] will conclude the clause is unenforceable." Doe 1 v. AOL LLC, 552 F.3d 1077, 1083 (9th Cir. 2009) (quoting M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 17 (1972)). A forum selection clause is unenforceable if "enforcement would be 'unreasonable' under the circumstances." Hendricks v. Bank of America, N.A., 408 F.3d 1127, 1137 (9th Cir. 2005). A forum selection clause is unreasonable if

(1) its incorporation into the contract was the 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.

Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 325 (9th Cir. 1996) (internal citations omitted).²

Because an arbitration clause is a "specialized forum selection clause," case law regarding the application and enforcement of arbitration clauses is relevant to the determination of whether to apply and enforce a more general forum selection clause. Manetti-Farrow, 858 F.2d at 514 n.4 (citing Scherkv. Alberto-Culver Co., 417 U.S. 506, 417 (1974)).³

II. Motion to transfer

Under 28 U.S.C. section 1404(a), the district court has discretion "to adjudicate motions for transfer according to an individualized, case-by-case consideration of convenience and fairness." Stewart Org. v. Ricoh Corp., 487 U.S. 22, 29 (1988) (internal quotation marks and citations omitted). A motion to transfer venue under § 1404(a) requires the court to weigh multiple factors in its determination whether transfer is appropriate in a particular case. Id. For example, the court may consider:

(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 v. GNC Franchising, Inc., 211 F.3d 495, 498-99 (9th Cir. 2000). "Additionally, the presence of a forum selection clause is a 'significant factor' in the Court's § 1404(a) analysis." Id. at 499 & n. 20 (quoting Stewart, 487 U.S. at 29). Finally, "the relevant public policy of the forum state, if any, is at least as significant a factor in the § 1404(a) balancing." Id. at 499. "The defendant must make a strong showing of inconvenience to warrant upsetting the plaintiff's choice of forum." Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986).

DISCUSSION

I. Motion to dismiss

Defendants argue that this is an "action . . . relating to" the MSA and SOWs, and therefore the forum selection clause in the MSA required plaintiff to bring the action in Broward County, Florida. Plaintiff argues that the forum selection clause does not apply to this dispute, and she argues that it is unenforceable.

A. Applicability of the forum selection clause

Plaintiff argues that the forum selection clause does not apply to her statutory claims, because "the claims do not arise out of the contract, involve the interpretation of any contract terms, or otherwise require there to be a contract." See Narayan v. EGL, Inc., 616 F.3d 895, 904 (9th Cir. 2010) (discussing the interpretation of a narrow choice of law clause under Texas law in a case raising California labor law claims). If the forum selection clause in this case applied to "any actions []under" or to the "enforcement of the contract, like the clauses in the cases plaintiff cites, her argument would be well taken. See Quinonez v. Empire Today, LLC, No. C 10-02049 WHA, 2010 WL 4569873 (N.D. Cal. Nov. 4, 2010) ("any actions hereunder"); Arreguin v. Global Equity Lending, Inc., No. C 07-06026 MHP, 2008 WL 4104340 (N.D. Cal. Sept. 2, 2008) ("enforcement of"). However, the forum selection clause in plaintiff's contract is significantly broader, encompassing "any action . . . relating to" the MSA and the incorporated SOWs.

A forum selection clause is not axiomatically limited in scope to contract claims. For example, forum selection clauses have frequently been held to apply to pure tort claims where the "resolution of the claims relates to interpretation of the contract." See, e.g., Manetti-Farrow, Inc., 858 F.2d at 511, 514 (claims of tortious interference with prospective economic advantage and tortious interference with contractual relations). Statutory claims can also be subject to forum selection clauses. See, e.g., Phillips v. Audio Active Ltd., 494 F.3d 378, 387 (2d Cir. 2007) (holding that a Copyright Act claim was not subject to a forum selection clause that governed claims "aris[ing] out of" a recording contract). And a forum selection clause can apply to litigants who were not parties to the contract provided that the alleged conduct of those parties is "closely related to the contractual relationship." Id. at 514 n. 5.

The scope of the claims governed by a forum selection clause depends the language used in the clause. Most recently, in Cape Flattery Ltd. v. Titan Maritime, LLC, --- F.3d ----, 2011 WL 3076859 (9th Cir. 2011), the Ninth Circuit explained that forum selection clauses using the phrases "arising under" "arising out of and "arising hereunder" should be "narrowly construed" to encompass disputes "relating to the interpretation and...