Connex Railroad LLC et al v. Axa Corporate Solutions Assurance

Filing 47

ORDER DENYING DEFENDANTS MOTION TO DISMISS FOR FORUM NON CONVENIENS 14 by Judge Otis D. Wright, II (lc)

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United States District Court
Central District of California

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CONNEX RAILROAD LLC;
TRANSDEV NORTH AMERICA, INC.,

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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.

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I.

INTRODUCTION

Presently before the Court is Defendant AXA Corporate Solutions Assurance’s

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(“AXA”) Motion to Dismiss for forum non conveniens.

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underlying dispute concerns allegations of bad faith by AXA in its capacity as

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Plaintiffs’ insurance provider. (Compl. ¶¶ 1, 24.)

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points, most pivotally whether French law or federal common law governs the

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interpretation of the Policy at issue, and whether a United States district court or a

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French court has a stronger interest in adjudicating the matter. Though this Court

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concludes that Defendant is correct regarding the choice of law for interpreting the

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Policy’s forum selection clauses, the Court also determines that the public interest

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factors and the overall circumstances of the case strongly favor litigation in this

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(ECF No. 14.)

The

The parties disagree on several

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district rather than in France. For this reason, discussed in more detail below, the

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Court DENIES Defendant’s Motion to Dismiss for forum non conveniens.1

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II.

BACKGROUND

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This case stems from the 2008 Metrolink commuter train accident in

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Chatsworth, California. (Compl. ¶ 15.) Plaintiffs were the operators of the Metrolink

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train involved in the accident, and AXA was an insurer of excess coverage insurance

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for Plaintiffs and their parent company. (Compl. at ¶¶ 13, 24-27.) Plaintiffs faced

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numerous personal injury claims following the accident. (Compl. at ¶ 19.) Plaintiffs’

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present claims against AXA are based on allegations regarding AXA’s conduct in

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resolving those personal injury claims. (Compl. at ¶¶ 41-55.) In short, Plaintiffs now

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allege that AXA fraudulently induced them to settle the personal injury claims by

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making representations that later turned out to be false, including representations that

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AXA would negotiate with Plaintiffs’ other insurers in good faith to resolve the issue

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of contributions toward Plaintiffs’ settlement amount and would arbitrate the issue if

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necessary. (Compl. at ¶¶ 41-55.)

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Defendant now moves to dismiss the action for forum non conveniens, arguing

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that France is the proper forum to handle this dispute. (Def. Mot. 1.) The existence of

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a forum selection clause in the Policy, requiring certain disputes arising therefrom to

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be litigated in France, is not in contention. (See Def. Mot. 2; Pl. Opp’n 5-6.) There is

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also a choice-of-law provision requiring the application of French law to any such

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dispute.

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provisions apply to the dispute at issue here, and regardless of the outcome to that

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question, whether there are other valid reasons to dismiss the action for forum non

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conveniens. (See Def. Mot. 2-3; Pl. Opp’n 1-2.)

(Def. Mot. 2.)

Nonetheless, the parties disagree about whether these

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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.

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III.

LEGAL STANDARD

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A forum selection clause is interpreted under the federal common law. See,

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e.g., TAAG Linhas Aereas de Angloa v. Transamerica Airlines, Inc., 915 F.2d 1351,

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1353 (9th Cir. 1990). Though the issue most often arises in disputes over whether to

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apply state versus federal law, at least one district court has interpreted Ninth Circuit

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precedent to mean that district courts sitting in diversity “must interpret forum-

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selection clauses under federal common law, without regard to any choice-of-law

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provisions in the subject agreement.” Kiland v. Boston Sci. Corp., No. C10-4105

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SBA, 2011 WL 1261130, at *4 (N.D. Cal. Mar. 31, 2011) (emphasis added). This

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Court agrees.

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Where a valid forum selection clause exists, and a plaintiff has elected to file

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suit in a different forum, the court in most cases should give the clause controlling

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weight. Atlantic Marine Const. Co., Inc. v. U.S. Dist. Ct. for the W. Dist. of Tex., 134

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S. Ct. 568, 581 (2013). However, it is “conceivable in a particular case” that a court

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would refuse to transfer or dismiss the case despite the existence of a valid forum-

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selection clause. Id. at 582 (internal citations omitted). Atlantic Marine notes the

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overarching policy consideration in these cases: “[w]hen parties have contracted in

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advance to litigate in a particular forum, courts should not unnecessarily disrupt the

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parties’ settled expectations.” Id. at 583. But where public-interest factors outweigh

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those expectations, a district court may nevertheless refuse to transfer or dismiss the

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case. Id.; see also Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 30–31 (1988).

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Relevant public interest factors to be weighed include: (1) the local interest in the

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case; (2) the court’s familiarity with the governing law; (3) the burden on local courts

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and juries; (4) congestion of cases before the court; and (5) the costs of resolving

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litigation unrelated to a particular forum. Boston Telecomms. Grp., Inc. v. Wood, 588

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F.3d 1201, 1211 (9th Cir. 2009).

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IV.

DISCUSSION

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The issue of whether French or federal common law governs the interpretation

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of the forum selection clause in the Policy is determinative of whether the clause is

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valid in the present litigation. Plaintiffs argue that French law governs, which they

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maintain would disqualify the clause from applying to them as non-signatories to the

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Policy. (Pl. Opp’n 7-8.) Defendant’s position is that federal law governs, under

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which the clause would be binding on Plaintiffs despite their non-signatory status.

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(Def. Reply 1-3.) Because federal common law governs the interpretation of the forum

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selection clause in the Policy at issue, the clause applies to the Plaintiffs even as non-

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signatories. See TAAG Linhas Aereas de Angola, 915 F.2d at 1353. Plaintiffs cite to

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instances of Ninth Circuit cases that apply law other than federal to interpret forum

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selection clauses, but these cases do so incidentally, without stating a clear rule. See

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E.J. Gallo Winery v. Andina Licores S.A., 446 F.3d 984, 994 (9th Cir. 2006); cf. TAAG

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Linhas Aereas de Angola, 915 F.2d at 1353 (stating, as a rule, that “[f]ederal law

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governs the validity of a forum selection clause”).

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Further, Plaintiffs’ status as non-signatories to the Policy does not preclude

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them from being subject to the forum selection and choice of law clauses. Ninth

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Circuit precedent holds that similarly situated parties are bound to forum-selection

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clauses. See, e.g., Manetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 509, 514 n.5

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(9th Cir. 1988) (concluding that parties and non-parties/signatories to a contract

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should benefit from and be subject to forum selection clauses where the alleged

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conduct is closely related to the contractual relationship).

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applicable forum selection clause in the Policy at issue, meaning that the abridged

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Atlantic Marine forum non conveniens analysis should be used. 134 S. Ct. at 582.

There is a valid and

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Atlantic Marine still leaves room for the Court to refuse to dismiss the case. Id.

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Application of the public interest factors from Boston Telecommunications shows that

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there is a local interest in this case. See 588 F.3d at 1211. As to the first factor, a

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district court located in California has a local interest in the action where the case

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implicates causes of action or remedies that are important to California public policy.

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Where bad faith is alleged against an insurer, and the alternative forum provides no

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cause of action or remedies for such allegations, California has a “materially great[]”

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interest in litigating the dispute in its district courts instead of dismissing or

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transferring the case. See Tri-Union Seafoods, LLC v. Starr Surplus Lines Ins. Co., 88

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F. Supp. 3d 1156, 1170 (S.D. Cal. 2015). There is a strong local interest in the present

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case because litigating the case in France would not provide for remedies based on

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Plaintiffs’ claims of bad faith against AXA. (See ECF No. 17 ¶ 29; Mee Decl. ¶ 19.)

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An insured’s right to bring bad faith claims for tort and punitive damages against an

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insurer is fundamental to California’s public policy in this area. See Cal. Civ. Code §

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1668. The harm that Plaintiffs allegedly suffered due to AXA’s false representations

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occurred in California, and Plaintiffs also allege that AXA failed to fulfill its

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contractual obligations in California. (Pl. Opp’n at 17.) This demonstrates that the

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circumstances of this case are such that there is a strong local interest in adjudicating

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it here, rather than allowing the matter to be litigated in France.

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Moreover, the other public interest factors listed in Boston Telecommunications

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are either neutral or weigh in favor of keeping this case in a district court in

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California. See 588 F.3d at 1211. For example, the final factor, which is the costs of

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resolving litigation unrelated to a particular forum, is inapplicable because the

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litigation is not unrelated to this forum.

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summary of the locations, dispositions, and languages of documents and witnesses

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persuasively supports their argument that the case should remain in this Court. (Pl.

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Opp’n at 21-22.) Defendant’s conclusory language suggesting that documents and

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witnesses are inaccessible or will require interpretation and translation from French

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into English does not overcome Plaintiffs’ much more specific assertions that

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witnesses and documents would be accessible to this Court. (Def. Mot. at 13.)

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V.

The Court is satisfied that Plaintiffs’

CONCLUSION

For the reasons discussed above, the Court concludes that the balance of factors

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weighs in favor of litigating the case in this district. Notwithstanding the forum-

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selection and choice-of-law language in the underlying insurance policy, the Court

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determines that there is a strong local interest in the case and therefore DENIES

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Defendant’s Motion to Dismiss.

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IT IS SO ORDERED.

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September 16, 2016

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____________________________________
OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE

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