Valspar Corp. v. Sherman

• Citation: 211 F.Supp.3d 1209
• Decision Date: 28 September 2016
• Docket Number: Case No. 16-cv-03114-SRN-HB
• Parties: The VALSPAR CORPORATION, Plaintiff, v. John F. SHERMAN, and TCI, Inc., Defendants.
• Court: U.S. District Court — District of Minnesota

211 F.Supp.3d 1209

The VALSPAR CORPORATION, Plaintiff,

v.John F. SHERMAN, and TCI, Inc., Defendants.

Case No. 16-cv-03114-SRN-HB

United States District Court, D. Minnesota.

Signed September 28, 2016

William Z. Pentelovitch, Keiko L. Sugisaka, and Melissa R. Muro LaMere, Maslon LLP, 90 South Seventh Street, Suite 3300, Minneapolis, Minnesota 55402, for Plaintiff.

David M. Wilk, Caryn A. Boisen, Larson King, LLP, 30 East Seventh Street, Suite 2800, St. Paul, Minnesota 55101, John R. Cernelich, Calfee Halter & Griswold LLP, 1405 East Sixth Street, Cleveland, Ohio 44114, and Laurel J. Pugh, Bassford Remele, PA, 33 South Sixth Street, Suite 3800, Minneapolis, Minnesota 55402, for Defendants.

MEMORANDUM OPINION AND ORDER

SUSAN RICHARD NELSON, United States District Judge

I. INTRODUCTION

This matter is before the Court on Plaintiff Valspar Corporation's Motion to Remand [Doc. No. 4], brought pursuant to 28 U.S.C. § 1447(c). For the reasons stated below, the Court grants the motion and remands this case to Hennepin County District Court.

II. BACKGROUND

The facts relevant to the Court's disposition of this motion may be briefly stated. Plaintiff Valspar Corporation ("Valspar") brought suit in Minnesota state court, specifically Hennepin County District Court, against its former employee, John Sherman, and his new employer, TCI, Inc. ("TCI"). Valspar alleges that after leaving Valspar for TCI, Sherman has engaged in activities that violate the non-compete and non-solicitation provisions of his employment agreement. (Sugisaka Decl. [Doc. No. 6], Ex. A, at 2.)¹ Valspar further alleges that TCI has tortiously interfered with Sherman's employment agreement with Valspar ("the Agreement") by, among other things, knowingly placing him in a position that violated the terms of that Agreement. (Id. at 20.)

Valspar served its Complaint on both Defendants on September 14, 2016, along with an accompanying motion for a temporary restraining order. (See Sugisaka Decl., Exs. B and C.) Before the Minnesota state court could address that motion, however, TCI filed a Notice of Removal with this Court on September 16, 2016. (See Notice of Removal [Doc. No. 1].) TCI's filing indicated that Sherman had consented to the removal, as required by 28 U.S.C. § 1446(b)(2)(A), although formal notification of that consent was not given to this Court until September 23, 2016. (See Notice by John F. Sherman of Consent to Removal [Doc. No. 15].).

Upon receipt of the Notice of Removal, Valspar promptly moved to remand, arguing that a forum selection clause found in the Agreement prohibits removal of the underlying action, making Sherman's purported consent to removal ineffective for purposes of 28 U.S.C. § 1446. (See Mem. in Supp. of Expedited Mot. to Remand [Doc. No. 5] ("Pl.'s Mem.") at 2.) The pertinent language of the Agreement is found at Section 8, and is reproduced in full here:

Venue and Personal Jurisdiction . Any dispute between the parties arising out of or in any way related to this Agreement shall be adjudicated only in the state court located in Hennepin County, Minnesota, and I consent to the state court located in Hennepin County, Minnesota, as the exclusive venue for resolving such disputes. Further, by signing this Agreement, I agree and consent that the Minnesota state courts may exercise personal jurisdiction over me in any enforcement action brought by Valspar and agree to waive any rights I may otherwise have to challenge such court's exercise of personal jurisdiction.

(Sugisaka Decl., Ex. A at 26.)

TCI's response to Valspar's Motion encompasses two main arguments, both discussed in detail below. First, TCI contends that the Agreement's forum selection clause is insufficient to constitute a "clear and unequivocal" waiver of the right to remove as required by controlling case law, and thus is ineffective to prevent Sherman's consent to removal. (See Def.'s Mem. in Opp. to Pl.'s Expedited Motion to Remand [Doc. No. 18] ("Def.'s Mem. in Opp.") at 1-2.) Second, TCI argues that even if Sherman did waive his right to remove, that waiver should not prevent TCI—a non-party to the Agreement—from removing the entire action anyway. (Id. at 1, 8-9.)

III. DISCUSSION

28 U.S.C. § 1441 generally provides a defendant in a state civil case the right to remove that case to federal district court, assuming the case could have been brought there originally. See Martin v. Franklin Capital Corp. , 546 U.S. 132, 134, 126 S.Ct. 704, 163 L.Ed.2d 547 (2005). In turn, the plaintiff may move to have the case remanded if subject matter jurisdiction is lacking, or if some other defect makes removal improper. See 28 U.S.C. § 1447(c). Courts to have considered the issue, including the Eighth Circuit, have concluded that removal in the face of a valid forum selection clause fixing venue in the state courts is the sort of defect that qualifies a case for remand. See, e.g. , iNet Directories, LLC v. Developershed, Inc. , 394 F.3d 1081, 1082 (8th Cir. 2005) ; Waters v. Browning – Ferris Indus., Inc. , 252 F.3d 796, 797 (5th Cir. 2001) ; Karl Koch Erecting Co. v. N.Y. Convention Ctr. Dev. Corp. , 838 F.2d 656, 659 (2d Cir. 1988). These decisions reflect the strong presumption— repeatedly emphasized by the Supreme Court—in favor of finding forum selection clauses valid and enforceable. See Atl. Marine Constr. Co. v. U.S. Dist. Court , –––U.S. ––––, 134 S.Ct. 568, 583, 187 L.Ed.2d 487 (2013) ("When parties have contracted in advance to litigate disputes in a particular forum, courts should not unnecessarily disrupt the parties' settled expectations."); Carnival Cruise Lines, Inc. v. Shute , 499 U.S. 585, 589, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991) ; M/S Bremen v. Zapata Off – Shore Co. , 407 U.S. 1, 15, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972). Where, as here, there is no allegation of fraud or overreaching in procurement of the forum selection clause, the only issue the Court need consider is whether the language of the clause acts as a waiver of the right to remove the case to federal court. See Babe Winkelman Prods., Inc. v. Sports Design and Dev., Inc. , No. Civ. 05–2971 DWF/RLE, 2006 WL 980821, at *2 (D. Minn. Apr. 7, 2006).

Courts differ regarding the level of specificity that the forum selection clause must show before removal is foreclosed. See James Wm. Moore et al., Moore's Federal Practice ¶ 107.130[2] (3d ed. 2016). The Eighth Circuit has adopted the stricter of the two prevailing standards, requiring that any contractual waiver of the right to remove must be "clear and unequivocal." See Weltman v. Silna , 879 F.2d 425, 427 (8th Cir. 1989).

Unfortunately, to date, the Eighth Circuit has provided only two narrow guideposts to aid district courts in determining where the bounds of that standard lie. In Weltman , the court declared that an agreement that venue would be proper in state court did not constitute a waiver of the right to remove because it did not "address removal." 879 F.2d at 427. As several district courts have noted, however, because the Eighth Circuit did not provide the language of the clause it was interpreting, the Weltman opinion is of limited value. See, e.g. , Push Pedal Pull, Inc. v. Casperson , 971 F.Supp.2d 918, 927 (D.S.D. 2013) ; Babe Winkelman Prods. , 2006 WL 980821, at *2. The other relevant Eighth Circuit case is iNet Directories, LLC v. Developershed, Inc. , a brief, per curiam decision. There, the court determined that a forum selection clause providing that the parties "irrevocably waive[d] any and all objections ... to the laying of venue ... in any such federal or state court in the State of Missouri" constituted a waiver of the right to remove a case first filed in Missouri state court. 394 F.3d at 1081–82. In so holding, the court emphasized that the parties had "waived any objections to the laying of venue in any court in Missouri." Id. at 1082. Removing the case to federal court was, in the court's opinion, just the sort of "objection" to venue that the clause unambiguously prohibited. Id.

Comparing these two cases, several district courts have broadly concluded that they "stand for the proposition that a simple agreement that venue is proper in a particular court is not a ‘clear and unequivocal’ waiver of the right to remove, but a waiver of the right to object to venue does constitute a ‘clear and unequivocal’ waiver of the right to remove." Push Pedal Pull , 971 F.Supp.2d at 928 (citing Mihlfeld & Assocs., Inc. v. Glock, Inc. , No. 05–3085–CV–S, 2005 WL 1009579, at *2 (W.D. Mo. Apr. 27, 2005) ) (quotation omitted); see also OHM Hotel Group, LLC v. Dewberry Consultants, LLC , No. 4:15–CV–1705 CAS, 2016 WL 427959, at *5 (E.D. Mo. Feb. 4, 2016). This guidance is limited, however, and does not provide a full framework for analyzing the language of a forum selection clause. In recognition of this fact, courts in this circuit have looked to the decisions of other circuits that apply the "clear and unequivocal" test for further guidance. See, e.g. , OHM Hotel Group , 2016 WL 427959, at *7 ; Push Pedal Pull , 971 F.Supp.2d at 928. Of particular note, the Fifth Circuit has concluded that a forum selection clause satisfies the "clear and unequivocal" requirement if it (1) explicitly states that a party waives the right to remove; (2) grants the other party the right to choose the venue; or (3) establishes an exclusive venue within the contract. See City of New Orleans v. Mun. Admin. Servs., Inc. , 376 F.3d 501, 504 (5th Cir. 2004).

Applying these factors to the present case, it is clear that the forum selection clause contained in the Agreement meets the requirements of the third prong. Specifically, the Agreement's forum selection clause provides that "[a]ny dispute between the parties ... shall be adjudicated only in the state court located in Hennepin County, Minnesota," and that Hennepin County will be the "exclusive venue for resolving such disputes." (Sugisaka Decl., Ex. A at 26. (emphasis added)) This combination of mandatory language and...