In re Ryze Claims Solutions, LLC

• Decision Date: 03 August 2020
• Docket Number: No. 19-2930,19-2930
• Citation: 968 F.3d 701
• Parties: IN RE: RYZE CLAIMS SOLUTIONS, LLC, Petitioner.
• Court: U.S. Court of Appeals — Seventh Circuit

968 F.3d 701

IN RE: RYZE CLAIMS SOLUTIONS, LLC, Petitioner.

No. 19-2930

United States Court of Appeals, Seventh Circuit.

Argued April 8, 2020

Decided August 3, 2020

Christopher C. Murray, Attorney, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Indianapolis, IN, for Petitioner.

Jason T. Hatcher, David P. Myers, Attorneys, Myers Law Group, LLC, Rancho Cucamonga, CA, for Party-in-Interest.

Before Ripple, Brennan, and Scudder, Circuit Judges.

Ripple, Circuit Judge.

Leslie Billings is a party to an employment agreement with his former employer, RYZE Claim Solutions, LLC ("RYZE"). The employment agreement contains a forum-selection clause providing that Mr. Billings must bring claims against RYZE in an Indiana court, either in Marion County or Hamilton County, or in a federal court in the Southern District of Indiana. Mr. Billings nevertheless filed this action in a California state court. RYZE removed the action to the United States District Court for the Eastern District of California. Relying on Atlantic Marine Construction Co., Inc. v. United States District Court for the Western District of Texas , 571 U.S. 49, 62–63, 134 S.Ct. 568, 187 L.Ed.2d 487 (2013), the Eastern District of California concluded that Mr. Billings had failed to show why the forum-selection clause should not control and granted RYZE's motion to transfer venue under 28 U.S.C. § 1404(a) to the Southern District of Indiana.

In due course, the district court in Indiana granted RYZE's motion for summary judgment on Mr. Billings's federal claims. The district court then transferred, sua sponte, the case back to the Eastern District of California. It explained that its own docket was congested and that the Eastern District of California had a greater familiarity with California labor law. When the case was docketed once again in the Eastern District of California, RYZE petitioned this court for a writ of mandamus directing the Southern District of Indiana to request that the Eastern District of California transfer the action back to the Southern District of Indiana.¹

We must give forum-selection clauses " ‘controlling weight in all but the most exceptional cases.’ " Atl. Marine , 571 U.S. at 63, 134 S.Ct. 568 (quoting Stewart Org., Inc. v. Ricoh Corp. , 487 U.S. 22, 33, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988) (Kennedy, J., concurring)). Because no such exceptional circumstances exist here, the district court departed from the settled approach for applying the federal transfer statute in cases governed by a forum-selection clause. Accordingly, we grant the petition and issue the writ of mandamus.

IBACKGROUND

A.

RYZE is an Indiana business. It employs remote workers across the Nation. One of these workers, Mr. Billings, filed this action against RYZE and ten unnamed defendants in a California state court. As amended, the complaint stated a claim alleging violations of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., on behalf of Mr. Billings and other current and former RYZE employees nationwide. He also alleged various violations of the California Labor Code and the California Business and Professions Code on behalf of a putative class of current and former RYZE employees who are or were employed within the state of California.

RYZE removed the action to the United States District Court for the Eastern District of California. Then, relying on a forum-selection clause in the employment agreement between RYZE and Mr. Billings, RYZE moved to transfer venue under 28 U.S.C. § 1404(a) to the Southern District of Indiana. Ruling that Mr. Billings had failed to show why the forum-selection clause should not be "given controlling weight," the district court in California granted RYZE's transfer motion.² The case was transferred to the Southern District of Indiana.

Once in the Southern District of Indiana, the parties engaged in discovery and the district court resolved numerous discovery-related disputes. The court also granted RYZE's motion to add counterclaims against Mr. Billings, alleging breach of the employment agreement,³ misappropriation of trade secrets in violation of the Indiana Uniform Trade Secrets Act, Ind. Code § 24-2-3-1 et seq., conversion in violation of Indiana Code § 34-24-3-1, and computer trespass in violation of Indiana Code § 35-43-2-3. The parties then filed multiple other motions, including Mr. Billings's motion to certify the action as a class action under Federal Rule of Civil Procedure 23(b)(3) and as a collective action under the FLSA, 29 U.S.C. § 216(b),⁴ RYZE's motion to strike an expert report submitted by Mr. Billings, and RYZE's motion for summary judgment regarding Mr. Billings's FLSA claims.

The district court then granted RYZE's motion for summary judgment on Mr. Billings's FLSA claim and denied Mr. Billings's class certification motion to the extent he sought conditional certification of an FLSA collective action. Two matters remained briefed and outstanding: RYZE's motion to strike Mr. Billings's expert report and Mr. Billings's class certification motion under Federal Rule of Civil Procedure 23.

B.

Two days after it granted RYZE's motion for summary judgment on the FLSA claim, the Southern District of Indiana sua sponte ordered the parties to show cause "why this matter should not be transferred to [the] U.S. District Court for the Eastern District of California for further proceedings."⁵ The district court stated that "[t]he backdrop of this litigation has changed dramatically since the Eastern District of California evaluated the public-interest factors and transferred this matter to this District."⁶ It also emphasized its own docket congestion and noted that "the citizens of California have a strong interest in adjudicating claims based upon its labor laws."⁷

The court ordered RYZE to respond to the order first. RYZE contended in its response to the order to show cause that "[t]here is nothing exceptional about this case that would warrant disregarding that forum selection agreement now."⁸ RYZE submitted that transferring the case back to the Eastern District of California, after the Southern District of Indiana had "already invested its own substantial time and effort in deciding a summary judgment motion, would not serve the purposes of conserving judicial resources."⁹ RYZE, contended that, despite the district court's docket congestion, "[t]he median time from filing to trial in civil cases [was] substantially shorter in the Southern District of Indiana at 26.4 months compared to nearly a year longer in the Eastern District of California at 36.8 months."¹⁰

The Southern District of Indiana rejected RYZE's view of the proper measure of court congestion. In the court's view, an assessment of "court congestion" also takes into account "the extent to which this Court's unprecedented caseload strain impacts the ability of court and clerk staff to fulfill their duties."¹¹ Furthermore, the district court rejected the suggestion "that it might be able to more quickly resolve this matter than the Eastern District of California," stating that its own "background familiarity" with the case was "far outstripped by the Eastern District of California's familiarity with California's labor code."¹² The district court rejected RZYE's remaining arguments and ordered the case to be transferred back to the Eastern District of California.

On July 30, 2019, this action was docketed once again in the Eastern District of California. On October 3, 2019, the Eastern District of California ordered the parties to show cause why the action should not be remanded to state court for lack of subject matter jurisdiction. On the same day, RYZE sought a petition for writ of mandamus from this court. After Mr. Billings filed a response, we ordered the case to proceed to full briefing and oral argument.

IIDISCUSSION

A.

Section 1651 of Title 28 of the United States Code, which, among other things, codifies the common law writ of mandamus, provides that "[t]he Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law." We have held that "mandamus is the appropriate procedural method to obtain review of a district court's decision on a § 1404(a) transfer motion" because, "[w]ithout the availability of mandamus relief, the question of proper venue escapes meaningful appellate review." In re Mathias , 867 F.3d 727, 729 (7th Cir. 2017) ; see also Hicks v. Duckworth , 856 F.2d 934, 935 (7th Cir. 1988) (holding that mandamus is appropriate "to correct an erroneous transfer out of circuit"). We will issue a writ to reverse a transfer order if the order was a " ‘violation of a clear and indisputable legal right, or, at the very least, is patently erroneous.’ " In re Mathias , 867 F.3d at 729 (quoting In re Hudson , 710 F.3d 716, 719 (7th Cir. 2013) ). We review a district court's transfer decision for an abuse of discretion. Rsch. Automation, Inc. v. Schrader-Bridgeport Int'l, Inc. , 626 F.3d 973, 977 (7th Cir. 2010). "[W]here the court has considered all relevant public and private interest factors, and where its balancing of these factors is reasonable , its decision deserves substantial deference." Piper Aircraft Co. v. Reyno , 454 U.S. 235, 257, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981) (emphasis added); Rsch. Automation, 626 F.3d at 976 ("Where a district court gives thoughtful consideration to the factors applicable to a transfer analysis under section 1404(a), we give its decision substantial deference.").

B.

We begin with the language of the federal transfer statute that must guide a district court when considering a motion to transfer a case from one federal district to another. Section 1404(a) provides that "[f]or 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 or to any district...