Smith v. Kyphon, Inc.

Decision Date22 September 2008
Docket NumberCivil Action No. 3:08cv0329.
Citation578 F.Supp.2d 954
PartiesDana H. SMITH, Plaintiff, v. KYPHON, INC., Medtronic, Inc., and Andrew ("Drew") C. Hamric, an individual, Defendants.
CourtU.S. District Court — Middle District of Tennessee
578 F.Supp.2d 954
Dana H. SMITH, Plaintiff,
KYPHON, INC., Medtronic, Inc., and Andrew ("Drew") C. Hamric, an individual, Defendants.
Civil Action No. 3:08cv0329.
United States District Court, M.D. Tennessee, Nashville Division.
September 22, 2008.

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Samuel D. Payne, Rudy, Wood & Winstead, PLLC, Nashville, TN, for Plaintiff.

Mark C. Travis, Wimberly, Lawson, Seale, Wright & Daves, PLLC, Cookeville, TN, Philip J. Smith, Rhonda L. Nelson, Severson & Werson, San Francisco, CA, for Defendants.


THOMAS A. WISEMAN, JR., Senior District Judge.

Now before the Court is a Motion to Change Venue (Doc. No. 20) pursuant to 28 U.S.C. § 1404(a), brought by defendants Kyphon, Inc., Andrew "Drew" Hamric and Medtronic, Inc. Plaintiff Dana Smith opposes the motion. For the reasons set forth below, the motion will be denied.


Plaintiff Dana H. Smith brought this action in Tennessee state court in April 2008 asserting claims against all the defendants for violation of the Tennessee Handicap Act and Title VII of the Civil Rights Act of 1964, intentional and/or negligent infliction of emotional distress, and breach of employment contract. The defendants removed the case to federal court and successfully defended against an attempt by Smith to remand to state court.

Defendant Kyphon is a medical device company doing business in the medical field. It is a Delaware corporation whose principal place of business is in Sunnyvale, California but it maintains active sales operations in Tennessee. Medtronic recently acquired Kyphon. Defendant Drew Hamric is employed by Kyphon and plaintiff Smith was formerly employed by Kyphon as a sales representative. Throughout the term of her employment, Smith was assigned to the "Dixie Region," which included Tennessee, and she worked from her home in Franklin, Tennessee. Hamric was Smith's direct supervisor for most of the time she worked for Kyphon; he was based in Nashville for most of the time he was Smith's supervisor. Smith resigned or was constructively discharged on January 17, 2007. She alleges she suffered discrimination and harassment on the basis of her gender and pregnancy throughout the term of her employment.

At the time Smith accepted employment with Kyphon, she signed an Employment Agreement, dated February 17, 2005, which included a forum-selection clause, as follows:

In the event of any dispute or claim arising out of or relating to your employment relationship with the Company,

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the termination of that relationship, or this agreement (including but not limited to any claims of wrongful termination, breach of contract, fraud, infliction of emotional distress, or age, sex, race, national origin, disability, religious or other discrimination, harassment or retaliation), you and the Company agree that all such disputes or claims shall be resolved exclusively by means of a court trial conducted by the Santa Clara County (California) Superior Court or the federal district court for the Northern District of California and you and the Company agree that such courts will have personal and subject matter jurisdiction over all such disputes or claims.

(Decl. of Phillip J. Smith (Doc. No. 21), Ex. 1.)

Defendants have now filed their motion to transfer venue pursuant to 28 U.S.C. § 1404(a), "[f]or the convenience of parties and witnesses, in the interest of justice." In support of their motion, Defendants assert that (1) Smith could have brought her action originally in the United States District Court for the Northern District of California; (2) the Employment Agreement contains a binding forum-selection clause that governs all the claims asserted in this lawsuit, and that both federal and Tennessee law favor the enforcement of forum-selection clauses; (3) several important party and non-party witnesses live in California and are not subject to being subpoenaed to testify in Tennessee; (4) all three defendants reside in California; (5) all of Defendants' records and documents relating to Smith's employment with Kyphon are located in California; (6) some of the events giving rise to Smith's claims occurred in California; and (7) a related case involving common questions of fact and law is already pending in the Northern District of California.

Smith first raises a procedural objection to Defendants' motion. Specifically, she contends that the motion to change venue is too late and Defendants have waived any objection to venue in this district. In addition, Smith argues that the forum selection clause of her employment contract is not controlling, and that the factors the Court is to weigh in considering a motion to transfer venue favor denial of the motion. The parties also dispute which of them has the burden of establishing that transfer is or is not appropriate under the circumstances.


A. Defendants Did Not Waive the Ability to File Motion to Transfer Under § 1404(a).

As an initial matter, the Court notes that Smith is incorrect in asserting that, pursuant to Fed.R.Civ.P. 12(h), Defendants waived their ability to bring a motion challenging venue by failing to raise the issue of venue in a Rule 12(b) motion filed before pleading and by failing to preserve the issue in their answer. In fact, a motion to dismiss for improper venue pursuant to Rule 12(b) is not the same as a motion to transfer to a more convenient venue under 28 U.S.C. § 1404(a) and is therefore not subject to the waiver provisions of Rule 12(h). Cf. Blane v. Am. Inventors Corp., 934 F.Supp. 903, 905-06 (M.D.Tenn.1996) (reaching the same conclusion); 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1352, at 272 (1990) (noting that motions to transfer venue under § 1404(a) are not made pursuant to Fed. R.Civ.P. 12(b)). Smith's objection to Defendants' motion on that ground is therefore unavailing.

B. The Effect of a Forum-Selection Clause on the Burden of Proof in General

Generally speaking, a contractual forum-selection clause should, under both

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federal and Tennessee law, be upheld so long as it is fair and reasonable in light of all the surrounding circumstances. Dyersburg Mach. Works, Inc. v. Rentenbach Eng'g Co., 650 S.W.2d 378, 380 (Tenn.1983) (citing M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972); other citations omitted). The basic presumption in favor of enforcing forum-selection clauses has, however, been altered in the context of motions to transfer venue pursuant to 28 U.S.C. § 1404(a) by the Supreme Court's decision in Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988). In that case, the Court interpreted § 1404(a) as requiring the district courts to "adjudicate motions for transfer according to an individualized, case-by-case consideration of convenience and fairness," id. at 29, 108 S.Ct. 2239, and further held that such an individualized assessment of the motion "encompasses consideration of the parties' private expression of their venue preferences" as set forth in a forum-selection clause, as well as "the fairness of transfer in light of the forum-selection clause and the parties' relative bargaining power." Id. at 29-30, 108 S.Ct. 2239 (1988) (quotation and citation omitted).

In other words, a prior agreement between the parties concerning venue is not dispositive when § 1404(a) is at issue; instead courts must consider a valid and otherwise enforceable forum-selection clause as just one of the relevant factors among many when deciding whether transfer of venue is appropriate under the statute. See Stewart Org., 487 U.S. at 31, 108 S.Ct. 2239 ("The forum-selection clause, which represents the parties agreement as to the most proper forum, should receive neither dispositive consideration . . nor no consideration ..., but rather the consideration for which Congress provided in § 1404(a)."). Thus, while "[t]he presence of a forum-selection clause such as the parties entered into in this case will be a significant factor that figures centrally in the district court's calculus," id. at 29, 108 S.Ct. 2239, the Court must also "take account of factors other than those that bear solely on the parties' private ordering of their affairs," including "the convenience of the witnesses and those public-interest factors of systemic integrity and fairness that, in addition to private concerns, come under the heading of `the interest of justice.'" Id. at 30, 108 S.Ct. 2239.

Ordinarily speaking, the burden of proving that transfer is warranted under 28 U.S.C. § 1404(a) is on the moving party, and the burden is a substantial one. See Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508, 67 S.Ct. 839, 91 L.Ed. 1055 (1947) ("[U]nless the balance is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed."). Defendants in this case emphatically insist that, in the presence of a valid and enforceable forum-selection clause, the burden shifts to the non-movant to show why transfer is not warranted. Defendants, however, do not cite to any controlling authority that actually stands for that proposition, although a number of district courts within the Sixth Circuit have reached that conclusion. See, e.g., Viron Int'l Corp. v. David Boland, Inc., 237 F.Supp.2d 812, 815 (W.D.Mich.2002) (observing that the Sixth Circuit has not provided guidance on the issue but agreeing with "those courts that shift the burden of proof to the party opposing transfer based on a valid forum selection clause"). The absence of any Sixth Circuit decision on this issue may well be due to the fact that district courts have broad discretion in ruling on motions to transfer venue under § 1404(a) and their decisions are not frequently appealed. Regardless, this Court is not bound by other district court decisions, and this Court reads Stewart Organization v. Ricoh Corp....

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