Jenhanco, Inc. v. Hertz Global Holdings, Inc. et al

Filing 36

ORDER DENYING PLAINTIFF'S MOTION TO REMAND 16 by Judge Otis D. Wright, II. (lc). Modified on 9/16/2015 (lc).

O

1
2
3
4
5
6
7

United States District Court
Central District of California

8
9
10
11

Plaintiff,

12
13

Case No. 2:15-cv-04191-ODW (PJW)

JENHANCO, INC.,

ORDER DENYING MOTION TO

v.

14

HERTZ GLOBAL HOLDINGS, INC.,

15

HERTZ CORPORATION, DOLLAR

16

RENT A CAR, INC., DOLLAR

17

THRIFTY AUTOMOTIVE GROUP,

18

REMAND [16]

INC., and DOES 1–10,

19
20

Defendants.
I.

INTRODUCTION

21

Plaintiff Jenhanco Inc. (“Plaintiff”) moves to remand this action to Los Angeles

22

County Superior Court based upon the contractual language set forth in the forum

23

selection clause of a governing License Agreement.

24

“appropriate district court” can only be interpreted as “state courts” in Los Angeles

25

and, therefore, should be remanded to the Los Angeles Superior Court. Defendants

26

Hertz Global Holdings, Inc. and The Hertz Corporation (collectively, “Defendants”)

27

argue the clause is read to include both state and federal district courts rendering the

28

removal to this court proper. For the reasons discussed below, the Court finds the

Plaintiff argues the term

1

forum selection clause to include federal district courts.

2

DENIES Plaintiff’s Motion to Remand.1 (ECF No. 16.)
II.

3

Therefore, this Court

FACTUAL BACKGROUND

4

In 1982, Plaintiff entered into a licensing agreement with Dollar Rent a Car

5

(“Dollar Corporate”), which through a series of mergers and acquisitions would

6

become a wholly owned subsidiary of Defendants. (ECF No. 1, Compl. Ex. A. ¶¶ 1-

7

2.) Plaintiff paid a certain percentage of its gross revenue in exchange for, among

8

other things, first right over any other entity to expand its rental car operation within

9

Plaintiff’s operating locality.

(Id. ¶ 3.)

In or about August 2013, Defendants

10

allegedly denied Plaintiff the opportunity to expand its operations for the benefit of

11

Defendants’ other non-franchisee subsidiaries. (Id. ¶ 4.) Plaintiff filed this action on

12

April 23, 2015, in the Los Angeles Superior Court. (Compl.) Plaintiff’s Complaint

13

contains four causes of action against the Defendants: (1) breach of the License

14

Agreement; (2) breach of covenant of good faith and fair dealing; (3) promissory

15

fraud; and (4) tortious interference with prospective economic relations. (Id.) The

16

subject License Agreement contains the following relevant provisions:

17

5.9. All actions between the parties hereto shall be litigated in
the appropriate district court in the city or county of Los Angeles,
California and said courts within the city and county of Los Angeles shall
have exclusive jurisdiction over the subject matter of this agreement and
any dispute or disagreement arising out of said agreement. This
agreement shall be construed in accordance with the laws of the State of
Licensee’s Operating Locality.

18
19
20
21
22
23

5.10. Licensee irrevocably authorizes [Licensor] to designate and
appoint an agent in the city and county of Los Angeles, California as
agent of Licensee to receive and accept, on behalf of Licensee service of
summons, complaint and other court process and orders in the event suit
is filed by Licensor against Licensee in any state or federal court in the

24
25
26
27
28

1

After carefully considering the papers filed in support of and in opposition to the Motion, the Court
deems the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; L.R. 7-15.

2

1
2
3
4
5
6
7

State of California. In the event of any such suit, personal jurisdiction
over Licensee may be obtained by the court in which such action is
brought if a copy of the summons and complaint in such action is
personally served upon said agent; and a copy thereof is mailed to
Licensee by registered or certified mail addressed to Licensee at
Licensee’s address as shown herein or at such other address as may
hereinafter be designated by Licensee by notice given accordance with
the requirements of paragraph 5.3. Licensee hereby consents to such
California jurisdiction. Dollar shall promptly notify Licensee of the
appropriate agent appointed for service of process herein.

8
9

(ECF No. 16, Ex. A, “License Agreement.”)

10

Defendants removed the action on June 4, 2015. (ECF No. 1.) On July 2,

11

2015, Plaintiff moved to remand. (ECF No. 16.) Defendants timely opposed and

12

Plaintiff timely replied. (ECF Nos. 25, 30.) That Plaintiff’s Motion is now before the

13

Court for consideration.
III.

14

LEGAL STANDARD

15

Federal courts are courts of limited jurisdiction, having subject-matter

16

jurisdiction only over matters authorized by the Constitution and Congress. U.S.

17

Const. art. III, § 2, cl. 1; e.g., Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S.

18

375, 377 (1994). A suit filed in state court may be removed to federal court if the

19

federal court would have had original jurisdiction over the suit. 28 U.S.C. § 1441(a).

20

But courts strictly construe the removal statute against removal jurisdiction, and

21

“[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal

22

in the first instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). The

23

party seeking removal bears the burden of establishing federal jurisdiction. Durham v.

24

Lockheed Martin Corp., 445 F.3d 1247, 1252 (9th Cir. 2006) (citing Gaus, 980 F.2d

25

at 566).

26

Federal courts have original jurisdiction where an action presents a federal

27

question under 28 U.S.C. § 1331, or diversity of citizenship under 28 U.S.C. § 1332.

28

A defendant may remove a case from a state court to a federal court pursuant to the

3

1

federal removal statute, 28 U.S.C. § 1441, on the basis of a federal question or

2

diversity jurisdiction. To exercise diversity jurisdiction, a federal court must find

3

complete diversity of citizenship among the adverse parties, and the amount in

4

controversy must exceed $75,000.00, usually exclusive of interest and costs. 28

5

U.S.C. § 1332(a).
IV.

6

DISCUSSION

7

Defendants argue the forum selection clause of the License Agreement includes

8

both state and federal courts because (1) the plain and normal meaning of the phrase

9

“appropriate district court” leads to the conclusion that it includes federal district

10

courts in the city or county of Los Angeles; and (2) interpretation of both Section 5.9

11

and 5.10 provide a consistent and harmonized interpretation of the provisions. (Opp’n

12

4–7.) Alternatively, Plaintiff argues the parties’ License Agreement expressly states

13

that the language in the forum selection clause limits all actions between parties to Los

14

Angeles state courts, and the federal court is not a permissible venue.2 (Mot. 2.)

15

interpret the forum selection clause, the Court will look at both the plain meaning and

16

the consistency between the agreement clauses.

17

A.

To

Plain Language of Forum Selection Clause

18

When interpreting a forum selection clause, the “‘plain language of the contract

19

should be considered first.’” Siminoff v. Expedia, Inc., 643 F.3d 1202, 1205 (9th Cir.

20

2011) (quoting Doe 1 v. AOL LLC, 552 F.3d 1077, 1081 (9th Cir. 2009). “[T]he

21

‘common or normal meaning of language will be given to the words of a contract

22

unless circumstances show that in a particular case a special meaning should be

23

attached to it.’” Id.

24

In Doe 1, the court concluded that the preposition “of” in the phrase “the courts

25

of Virginia” was determinative—“of” being a term “denoting that from which

26
27
28

2

Defendant removes based upon diversity jurisdiction. Plaintiff does not dispute that the parties are
citizens of different states or that the amount in controversy exceeds $75,000.00. (Mot. 5.) The only
dispute is regarding the interpretation of the forum selection clause in the License Agreement.

4

1

anything proceeds; indicating origin, source, descent, and the like.” Id. at 1082. In

2

other words, the phrase “the courts of” a state refers only to state courts. Id. at 1081-

3

82.

4

In contrast, the court observed that a forum selection clause referring to “courts

5

in” a state imposes a geographic limitation, not one of sovereignty. Id. at 1082.

6

(quoting Black’s Law Dictionary 1080 (6th ed. 1990)). The word “in” means to

7

“‘express[] relation of presence, existence, situation, inclusion . . .; in-closed or

8

surround by limits as in a room.’” Id. at 8 (quoting Black’s Law Dictionary 758 (6th

9

ed. 1990)). Therefore, the court held that the phrase “courts in” a state include any

10

court within the physical boundaries of the state, even if the court does not derive its

11

power and authority from the sovereignty of the state.

12

The Court applies this latter interpretation to the present License Agreement.

13

Section 5.9 of the Agreement states, “[a]ll actions between the parties hereto shall be

14

litigated in the appropriate district court in the city or county of Los Angeles,

15

California . . . .” (emphasis added.) Consistent with Doe 1, when a federal court sits

16

in a particular city or county, it is “in” that city or county. Therefore, the forum

17

selection clause here provides venue in both the state and federal courts located within

18

the city or county of Los Angeles, California.

19

Furthermore, it was unlikely that Plaintiff was confused on the meaning of

20

“district court” within the License Agreement. Plaintiff exists pursuant to the laws of

21

the state of Utah. (Compl. ¶ 7, Ex. A.) In Utah, the state’s District Court is a trial

22

court of general jurisdiction. U.C.A. 1953 § 78A-5-101(1). Therefore, Plaintiff may

23

have construed the phrase “appropriate district court” to mean “state court” based on

24

Utah law. However, the word “district” means “[a] territorial area into which a

25

country, state, county, municipality, or other political subdivision is divided for

26

judicial, political, electoral or administrative purposes.” Black’s Law Dictionary 509

27

(8th ed. 1999). The plain meaning of the word “district” does not point to venues

28

within a particular area, but instead to the larger territorial area within which the

5

1

federal system lies. Moreover, “district court” is not capitalized in the forum selection

2

clause here, which gives support of the broad definition.

3

B.

Consistency Between Agreement Clauses

4

The cardinal principle of contract interpretation is that a document should be

5

read to give effect to all of its provisions and to render them consistent with each

6

other.

7

Therefore, consistency between sections 5.9 and 5.10 of the License Agreement is

8

preferred over inconsistency. Section 5.10 unambiguously provides, in part:

Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 63 (1995).

9

Licensee irrevocably authorizes Dollar to designate and appoint an agent
in the city or county of Los Angeles, California as agent of Licensee to
receive and accept, on behalf of Licensee service of summons, complaint
and other court process and order in the event suit is filed by Licensor
against licensee in any state or federal court in the State of California.

10
11
12
13
14

(emphasis added.)

15

between the parties . . . [to] be litigated in the appropriate district court.” Because

16

section 5.10 is unambiguous and clearly includes both state and federal courts, section

17

5.9 must adhere to its same meaning. Therefore, in order for the two sections to be

18

consistent with each other, section 5.9 must also mean both state and federal court as

19

it refers to “all actions between the parties.”

20

///

21

///

22

///

23

///

24

///

25

///

26

///

27

///

Section 5.9 of the License Agreement requires “[a]ll actions

28

6

V.

1

CONCLUSION

2

For the reasons discussed above, the Court finds the forum selection clause to

3

include both state and federal courts. Accordingly, the Court DENIES Plaintiff’s

4

Motion to Remand. (ECF No. 16.)

5
6

IT IS SO ORDERED.

7
8

September 16, 2015

9
10
11

____________________________________
OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE

12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

7