Yeomans v. World Fin. Grp. Ins. Agency
| Decision Date | 06 November 2019 |
| Docket Number | Case No. 19-cv-00792-EMC |
| Court | U.S. District Court — Northern District of California |
| Parties | TRICIA YEOMANS, et al., Plaintiffs, v. WORLD FINANCIAL GROUP INSURANCE AGENCY, INC., et al., Defendants. |
Plaintiffs bring a putative class action against Defendants World Financial Group Insurance Agency Inc. (a California corporation), World Financial Group Inc. (a Florida corporation), and Does 1 to 100 (collectively "Defendants"), alleging violations of the California Labor Code, the California Business and Professional Code, and California Wage Orders (and asserting a claim of unjust enrichment) based on Defendants' purported misclassification of Plaintiffs as independent contractors, as opposed to employees. Defendants move the Court to transfer the case to the U.S. District Court for the Northern District of Georgia based on forum selection clauses in the parties' various contracts.
Plaintiffs allege the following. Defendants represent themselves as a financial- and insurance-products marketing company; they recruit individuals as "Associates" and purport to give people the tools "to build and operate their own financial services business." Class Action Complaint ("Complaint") ¶ 1, Docket No. 1-1. However, Plaintiffs assert that "Defendants conduct their business by way of a massive pyramid scheme," wherein recruiting new Associates is one of the "main factors involved in achieving promotions." Id. ¶ 2. Once someone is an Associate, Defendants pressure that person to "purchase Defendants' financial and insurance products" and to "sell financial and insurance products to the new Associates." Id. ¶ 3.
Plaintiffs also allege that "Defendants have unlawfully misclassified Associates as 'independent contractors' rather than as employees" in order to further increase profits. Id. ¶ 4. Specifically, each Associate is "required to sign identical, non-negotiable Associate Membership Agreements ('AMAs')," which Id. ¶ 5. Plaintiffs also contend that "Defendants completely control the overall operation of the business" and "retain the exclusive authority to hire and fire every Associate." Id. ¶ 6, 7. Furthermore, because of this classification, Associates earn only commissions, not minimum wage, and they bear the burden of business costs, which Defendants might otherwise bear. Id. ¶ 8, 9. In addition, Associates are improperly deprived of the protection of workers' compensation, the benefits of overtime pay, and meal and rest breaks. Id. ¶ 9, 10. Plaintiffs contend that, through this conduct, Defendants have violated various provisions of the California Labor Code, the California Business and Professional Code, and California Wage Orders; they also assert a claim of unjust enrichment. Id. at 1.
Defendants seek to have this case transferred to the U.S. District Court for the Northern District of Georgia because of forum selection clauses in the parties' various agreements. See Defendants' Notice of Motion to Transfer Venue ("Notice") at 1, Docket No. 24. In relevant part, the clause in the Associate Membership Agreement states:
The parties agree that, without waiver of their rights and obligations under Section V., unless expressly provided to the contrary in this Agreement, the state and federal courts of Georgia shall have exclusive jurisdiction of any litigation between the parties and the Associate expressly submits to the jurisdiction and venue of the federal and state courts sitting in Gwinnett County, Georgia or Cobb County, Georgia with respect to any such litigation.
Id. (citing Associate Membership Agreement at 12, Docket No. 24-2). Defendants also allege that many of the Plaintiffs signed Marketing Director Agreements ("MDAs"), which "do not displacethe AMAs, but contain a similar forum-selection clause, under which [those] Plaintiffs reaffirmed their commitment to conduct 'all litigation' in Georgia." Id. (citing Marketing Director Agreement, Section VI., Docket No. 24-3). The forum selection clause in the Marketing Director Agreement states:
The parties agree that the state and federal courts of Georgia shall have exclusive jurisdiction of any litigation between the parties and the Marketing Director expressly submits to the jurisdiction and venue of the federal and state courts sitting in Fulton County, Georgia, with respect to such litigation.
Marketing Director Agreement, Section VI., Docket No. 24-3.
Plaintiffs filed this case in San Francisco Superior Court in December 2018. See Docket No. 1-1. It was removed by Defendants in February 2019. See Notice of Removal, Docket No. 1. In June 2019, Plaintiffs filed a First Amended Class Action Complaint. See Docket No. 23. Shortly thereafter, Defendants filed a Motion to Transfer Case; they move the Court for an order transferring the case to the U.S. District Court for the Northern District of Georgia. See Docket No. 24.
Defendants have moved the Court under 28 U.S.C. § 1404(a), which provides: "For 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 or division to which all parties have consented."
A motion to transfer under § 1404(a) thus calls on the district court to weigh and balance a number of case-specific factors. The presence of a forum-selection clause, such as the parties entered into in this case, will be a significant factor in the district court's calculus. Normally, a court assessing whether to grant a motion to transfer venue may consider factors such as:
(1) plaintiffs' choice of forum, (2) convenience of the parties, (3) convenience of the witnesses, (4) ease of access to the evidence, (5) familiarity of each forum with the applicable law, (6) feasibility of consolidation with other claims, (7) any local interest in the controversy, and (8) the relative court congestion and time of trial ineach forum.
Vu v. Ortho-Mcneil Pharm., Inc., 602 F. Supp. 2d 1151, 1156 (N.D. Cal. 2009) (Illston, J.).
However, the presence of a forum-selection clause changes that analysis. The "proper application of § 1404(a) requires that a forum-selection clause be given controlling weight in all but the most exceptional cases." Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Texas, 571 U.S. 49, 59-60 (2013) (internal quotation marks omitted). In addition, "[t]he presence of a valid forum-selection clause requires district courts to adjust their usual § 1404(a) analysis in three ways." Id. at 63. First, the plaintiff's choice of forum "merits no weight"; instead, "as the party defying the forum-selection clause, the plaintiff bears the burden of establishing that transfer to the forum for which the parties bargained is unwarranted." Id. Second, "[w]hen parties agree to a forum-selection clause, they waive the right to challenge the preselected forum as inconvenient or less convenient for themselves or their witnesses, or for their pursuit of the litigation." Id. Thus, the Court "should not consider arguments about the parties' private interests, and instead "may consider arguments about public-interest factors only." Id. However, such factors "will rarely defeat a transfer motion." Id. Finally, "when a party bound by a forum-selection clause . . . files suit in a different forum, a § 1404(a) transfer of venue will not carry with it the original venue's choice-of-law rules—a factor that in some circumstances may affect public-interest considerations." Id.
The parties dispute three issues regarding the forum selection clauses at issue in this case. First, Plaintiffs assert that "Defendants failed to properly authenticate Plaintiffs' AMAs and MDAs," which means that "the authenticity of the documents is disputed." Plaintiffs' Opposition to Defendants' Motion to Transfer Venue ("Opp.") at 4, Docket No. 41. Second, and relatedly, Plaintiffs contend that they "never saw or were provided with a full copy of the AMA" when they were recruited, and instead were only provided with the AMA's signature page. Id. Third, the parties disagree as to whether the forum selection clauses in the AMAs and MDAs violate California public policy and are therefore voidable. See Motion to Transfer Venue ("Mot.") at 7, Docket No. 24; Opp. at 5. Assuming, for the sake of argument, that the documents are properlyauthenticated and that Plaintiffs did see all of the documents' provisions in their entirety when signing them, the Court finds—for the reasons discussed below—that the third issue is the one upon which Defendants' Motion turns. The Court focuses its analysis accordingly.
Plaintiffs argue that enforcing the Agreements' forum-selection clauses "is against the strong public policy of California in favor of its workers' protections as expressed by Cal. Labor Code § 925." Opp. at 13. In relevant part, Section 925 of the California Labor Code provides: "An employer shall not require an employee who primarily resides and works in California, as a condition of employment, to agree to a provision that would . . . [r]equire the employee to adjudicate outside of California a claim arising in California, [or] [d]eprive the employee of the substantive protection of California law with respect to a controversy arising in California." Cal. Labor Code § 925(a). Any contractual provision "that violates subdivision (a) is voidable by the employee." Id. § 925(b). In addition, § 925 applies "to a contract entered into, modified, or extended on or after January 1, 2017." Id. § 925(f). Although the Supreme Court has held that public-policy factors "will rarely...
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