Connex Railroad LLC et al v. Axa Corporate Solutions Assurance

Filing 47


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O 1 2 3 4 5 United States District Court Central District of California 6 7 8 9 CONNEX RAILROAD LLC; TRANSDEV NORTH AMERICA, INC., 10 11 12 13 14 Plaintiffs, Case № 2:16-cv-02368-ODW (RAOx) ORDER DENYING DEFENDANT’S MOTION TO DISMISS FOR FORUM NON CONVENIENS [14] v. AXA CORPORATE SOLUTIONS ASSURANCE; and DOES 1 – 10, Defendants. 15 16 17 I. INTRODUCTION Presently before the Court is Defendant AXA Corporate Solutions Assurance’s 18 (“AXA”) Motion to Dismiss for forum non conveniens. 19 underlying dispute concerns allegations of bad faith by AXA in its capacity as 20 Plaintiffs’ insurance provider. (Compl. ¶¶ 1, 24.) 21 points, most pivotally whether French law or federal common law governs the 22 interpretation of the Policy at issue, and whether a United States district court or a 23 French court has a stronger interest in adjudicating the matter. Though this Court 24 concludes that Defendant is correct regarding the choice of law for interpreting the 25 Policy’s forum selection clauses, the Court also determines that the public interest 26 factors and the overall circumstances of the case strongly favor litigation in this 27 28 (ECF No. 14.) The The parties disagree on several 1 district rather than in France. For this reason, discussed in more detail below, the 2 Court DENIES Defendant’s Motion to Dismiss for forum non conveniens.1 3 II. BACKGROUND 4 This case stems from the 2008 Metrolink commuter train accident in 5 Chatsworth, California. (Compl. ¶ 15.) Plaintiffs were the operators of the Metrolink 6 train involved in the accident, and AXA was an insurer of excess coverage insurance 7 for Plaintiffs and their parent company. (Compl. at ¶¶ 13, 24-27.) Plaintiffs faced 8 numerous personal injury claims following the accident. (Compl. at ¶ 19.) Plaintiffs’ 9 present claims against AXA are based on allegations regarding AXA’s conduct in 10 resolving those personal injury claims. (Compl. at ¶¶ 41-55.) In short, Plaintiffs now 11 allege that AXA fraudulently induced them to settle the personal injury claims by 12 making representations that later turned out to be false, including representations that 13 AXA would negotiate with Plaintiffs’ other insurers in good faith to resolve the issue 14 of contributions toward Plaintiffs’ settlement amount and would arbitrate the issue if 15 necessary. (Compl. at ¶¶ 41-55.) 16 Defendant now moves to dismiss the action for forum non conveniens, arguing 17 that France is the proper forum to handle this dispute. (Def. Mot. 1.) The existence of 18 a forum selection clause in the Policy, requiring certain disputes arising therefrom to 19 be litigated in France, is not in contention. (See Def. Mot. 2; Pl. Opp’n 5-6.) There is 20 also a choice-of-law provision requiring the application of French law to any such 21 dispute. 22 provisions apply to the dispute at issue here, and regardless of the outcome to that 23 question, whether there are other valid reasons to dismiss the action for forum non 24 conveniens. (See Def. Mot. 2-3; Pl. Opp’n 1-2.) (Def. Mot. 2.) Nonetheless, the parties disagree about whether these 25 26 27 28 1 After carefully considering the papers filed in support of the Motion, the Court deems the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; L.R. 7-15. 2 1 III. LEGAL STANDARD 2 A forum selection clause is interpreted under the federal common law. See, 3 e.g., TAAG Linhas Aereas de Angloa v. Transamerica Airlines, Inc., 915 F.2d 1351, 4 1353 (9th Cir. 1990). Though the issue most often arises in disputes over whether to 5 apply state versus federal law, at least one district court has interpreted Ninth Circuit 6 precedent to mean that district courts sitting in diversity “must interpret forum- 7 selection clauses under federal common law, without regard to any choice-of-law 8 provisions in the subject agreement.” Kiland v. Boston Sci. Corp., No. C10-4105 9 SBA, 2011 WL 1261130, at *4 (N.D. Cal. Mar. 31, 2011) (emphasis added). This 10 Court agrees. 11 Where a valid forum selection clause exists, and a plaintiff has elected to file 12 suit in a different forum, the court in most cases should give the clause controlling 13 weight. Atlantic Marine Const. Co., Inc. v. U.S. Dist. Ct. for the W. Dist. of Tex., 134 14 S. Ct. 568, 581 (2013). However, it is “conceivable in a particular case” that a court 15 would refuse to transfer or dismiss the case despite the existence of a valid forum- 16 selection clause. Id. at 582 (internal citations omitted). Atlantic Marine notes the 17 overarching policy consideration in these cases: “[w]hen parties have contracted in 18 advance to litigate in a particular forum, courts should not unnecessarily disrupt the 19 parties’ settled expectations.” Id. at 583. But where public-interest factors outweigh 20 those expectations, a district court may nevertheless refuse to transfer or dismiss the 21 case. Id.; see also Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 30–31 (1988). 22 Relevant public interest factors to be weighed include: (1) the local interest in the 23 case; (2) the court’s familiarity with the governing law; (3) the burden on local courts 24 and juries; (4) congestion of cases before the court; and (5) the costs of resolving 25 litigation unrelated to a particular forum. Boston Telecomms. Grp., Inc. v. Wood, 588 26 F.3d 1201, 1211 (9th Cir. 2009). 27 28 3 1 IV. DISCUSSION 2 The issue of whether French or federal common law governs the interpretation 3 of the forum selection clause in the Policy is determinative of whether the clause is 4 valid in the present litigation. Plaintiffs argue that French law governs, which they 5 maintain would disqualify the clause from applying to them as non-signatories to the 6 Policy. (Pl. Opp’n 7-8.) Defendant’s position is that federal law governs, under 7 which the clause would be binding on Plaintiffs despite their non-signatory status. 8 (Def. Reply 1-3.) Because federal common law governs the interpretation of the forum 9 selection clause in the Policy at issue, the clause applies to the Plaintiffs even as non- 10 signatories. See TAAG Linhas Aereas de Angola, 915 F.2d at 1353. Plaintiffs cite to 11 instances of Ninth Circuit cases that apply law other than federal to interpret forum 12 selection clauses, but these cases do so incidentally, without stating a clear rule. See 13 E.J. Gallo Winery v. Andina Licores S.A., 446 F.3d 984, 994 (9th Cir. 2006); cf. TAAG 14 Linhas Aereas de Angola, 915 F.2d at 1353 (stating, as a rule, that “[f]ederal law 15 governs the validity of a forum selection clause”). 16 Further, Plaintiffs’ status as non-signatories to the Policy does not preclude 17 them from being subject to the forum selection and choice of law clauses. Ninth 18 Circuit precedent holds that similarly situated parties are bound to forum-selection 19 clauses. See, e.g., Manetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 509, 514 n.5 20 (9th Cir. 1988) (concluding that parties and non-parties/signatories to a contract 21 should benefit from and be subject to forum selection clauses where the alleged 22 conduct is closely related to the contractual relationship). 23 applicable forum selection clause in the Policy at issue, meaning that the abridged 24 Atlantic Marine forum non conveniens analysis should be used. 134 S. Ct. at 582. There is a valid and 25 Atlantic Marine still leaves room for the Court to refuse to dismiss the case. Id. 26 Application of the public interest factors from Boston Telecommunications shows that 27 there is a local interest in this case. See 588 F.3d at 1211. As to the first factor, a 28 district court located in California has a local interest in the action where the case 4 1 implicates causes of action or remedies that are important to California public policy. 2 Where bad faith is alleged against an insurer, and the alternative forum provides no 3 cause of action or remedies for such allegations, California has a “materially great[]” 4 interest in litigating the dispute in its district courts instead of dismissing or 5 transferring the case. See Tri-Union Seafoods, LLC v. Starr Surplus Lines Ins. Co., 88 6 F. Supp. 3d 1156, 1170 (S.D. Cal. 2015). There is a strong local interest in the present 7 case because litigating the case in France would not provide for remedies based on 8 Plaintiffs’ claims of bad faith against AXA. (See ECF No. 17 ¶ 29; Mee Decl. ¶ 19.) 9 An insured’s right to bring bad faith claims for tort and punitive damages against an 10 insurer is fundamental to California’s public policy in this area. See Cal. Civ. Code § 11 1668. The harm that Plaintiffs allegedly suffered due to AXA’s false representations 12 occurred in California, and Plaintiffs also allege that AXA failed to fulfill its 13 contractual obligations in California. (Pl. Opp’n at 17.) This demonstrates that the 14 circumstances of this case are such that there is a strong local interest in adjudicating 15 it here, rather than allowing the matter to be litigated in France. 16 Moreover, the other public interest factors listed in Boston Telecommunications 17 are either neutral or weigh in favor of keeping this case in a district court in 18 California. See 588 F.3d at 1211. For example, the final factor, which is the costs of 19 resolving litigation unrelated to a particular forum, is inapplicable because the 20 litigation is not unrelated to this forum. 21 summary of the locations, dispositions, and languages of documents and witnesses 22 persuasively supports their argument that the case should remain in this Court. (Pl. 23 Opp’n at 21-22.) Defendant’s conclusory language suggesting that documents and 24 witnesses are inaccessible or will require interpretation and translation from French 25 into English does not overcome Plaintiffs’ much more specific assertions that 26 witnesses and documents would be accessible to this Court. (Def. Mot. at 13.) 27 28 V. The Court is satisfied that Plaintiffs’ CONCLUSION For the reasons discussed above, the Court concludes that the balance of factors 5 1 weighs in favor of litigating the case in this district. Notwithstanding the forum- 2 selection and choice-of-law language in the underlying insurance policy, the Court 3 determines that there is a strong local interest in the case and therefore DENIES 4 Defendant’s Motion to Dismiss. 5 6 IT IS SO ORDERED. 7 8 September 16, 2016 9 10 11 12 ____________________________________ OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6

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