Henry v. Central Freight Lines, Inc.

Filing 45

ORDER signed by District Judge John A. Mendez on 10/6/17 DENYING 22 Motion to Transfer Venue. (Kaminski, H) Modified on 10/10/2017 (Donati, J).

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1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 EASTERN DISTRICT OF CALIFORNIA 8 9 RICKEY HENRY, 10 11 12 13 No. 2:16-cv-00280-JAM-EFB Plaintiff, v. ORDER DENYING DEFENDANT’S MOTION TO TRANSFER VENUE CENTRAL FREIGHT LINES, INC., Defendant. 14 15 The Ninth Circuit recently forewarned district courts of 16 contractual schemes to circumvent statutes conferring special 17 benefits on workers, statutes such as the California Labor Code. 18 Narayan v. EGL, Inc., 616 F.3d 895 (9th Cir. 2010). 19 contested forum-selection clause here raises this very concern. 20 Plaintiff and Defendant entered into a contract whereby Plaintiff 21 agreed to work for defendant as a truck driver. 22 relationship soured, however, resulting in this litigation. 23 Citing the forum-selection clause, Defendant moves to transfer 24 this case to the United States District Court for the Western 25 District of Texas. 26 For reasons explained below, the Court DENIES Defendant’s motion. 27 28 ECF No. 22. I. The Their Plaintiff opposes. ECF No. 27. BACKGROUND Plaintiff Rickey Henry signed an Independent Contractor 1 1 Agreement (“Agreement”) with Defendant Central Freight Lines, 2 Inc. to work for Defendant as a truck driver. 3 Agreement, ECF No. 12. 4 clause, which provides: 5 See generally The Agreement contains a forum-selection GOVERNING LAW AND CHOICE OF FORUM. This Agreement is to be governed by the laws of the United States and of the State of Texas, including the choice-of-law rules of Texas, and [Defendant] and [Plaintiff] hereby consent to the jurisdiction of the state and federal courts nearest to Waco, Texas. 6 7 8 9 Id. ¶ 25. The Agreement also classifies Plaintiff as an 10 independent contractor, not an employee. 11 expressly understood and agreed that [Plaintiff] is an 12 independent contractor for the Equipment and driver services 13 provided pursuant to this Agreement.”). 14 Id. ¶ 14 (“It is In this putative class action, Plaintiff sues Defendant for 15 violating several California statutes, alleging Defendant 16 illegally misclassified him, and other truck drivers like him, as 17 independent contractors. 18 ECF No. 1-6, attached to Def.’s Notice of Removal as Ex. 2. 19 Plaintiff brings different claims on behalf of himself, a 20 California Class, 1 and a California Labor Sub-Class. 2 See generally First Am. Compl. (“FAC”), On behalf 21 1 22 23 24 25 26 27 28 “[D]efined as all individuals who worked for Defendant in California as Truck Drivers and who were classified by Defendant as independent contractors . . . at any time during the period beginning four (4) years prior to the filing of this Complaint and ending on the date as determined by the Court . . . .” FAC ¶ 23. 2 “[D]efined as all members of the California Class who are or previously were employed by Defendant in California as Truck Drivers and who were classified by Defendant as Independent Contractors . . . at any time during the period three (3) years prior to the filing of this Complaint and ending on the date as determined by the Court . . . .” FAC ¶ 33. 2 1 of himself and the California Class, Plaintiff sues Defendant for 2 unlawful, unfair, and deceptive business practices. 3 ¶¶ 44-61 (citing Cal. Bus. & Prof. Code §§ 17200 et seq.). 4 behalf of himself and the California Labor Sub-Class, Plaintiff 5 brings five California wage-and-hour claims against Defendant. 6 See id. ¶¶ 62-67 (failure to pay minimum wages under Cal. Lab. 7 Code §§ 1194, 1197, 1197.1); ¶¶ 68-71 (failure to provide 8 accurate itemized wage statements under Cal. Lab. Code § 226); 9 ¶¶ 72-79 (failure to pay wages when due under Cal. Lab. Code See FAC On 10 §§ 201, 202, 203); ¶¶ 80-84 (failure to reimburse employees for 11 required expenses under Cal. Lab. Code § 2802); ¶¶ 85-94 (illegal 12 deductions from wages under Cal. Lab. Code § 221). 13 only Plaintiff sues Defendant under the Private Attorney General 14 Act. 15 And, finally, See FAC ¶¶ 95-99 (citing Cal. Lab. Code §§ 2698 et seq.). Plaintiff filed the operative complaint in Sacramento County 16 Superior Court. See generally FAC. Defendant removed the case 17 to this Court, ECF No. 1, and now moves to transfer venue, citing 18 the forum-selection clause, see generally Mot. 19 Mem., ECF No. 22-1. 20 The Court held a hearing on this motion on September 20, 2016. 21 Hr’g Mins., ECF No. 32. 3 22 Defendant’s motion to transfer venue. Plaintiff opposes. See also Def.’s See generally Opp’n. As explained below, the Court DENIES 23 3 24 25 26 27 28 The Court also heard Plaintiff’s motion to remand. ECF No. 25. The Court issued a written order granting the motion on jurisdictional grounds, rendering the present motion to transfer moot. ECF No. 34. But Defendant appealed and the Ninth Circuit reversed, concluding this Court had jurisdiction and remanded the case. ECF No. 38. The parties submitted a joint status report, asking this Court to rule on Defendant’s transfer motion. ECF No. 43. The Court took the matter under submission on August 18, 2017. Min. Order, ECF No. 44. 3 1 II. OPINION 2 A. Standard 3 The threshold issue is whether the forum-selection clause 4 applies to Plaintiff’s claims. A court assessing a forum- 5 selection clause’s scope applies federal law, see Manetti-Farrow, 6 Inc. v. Gucci Am., Inc., 858 F.2d 509, 512-13 (9th Cir. 1988), 7 and should start with the text, see Ronlake v. US-Reports, Inc., 8 No. 1:11-CV-02009 LJO MJS, 2012 WL 393614, at *4 (E.D. Cal. Feb. 9 6, 2012). The Ninth Circuit has held courts should construe 10 certain phrases differently. 11 as “arising under,” “arising hereunder,” and “arising out of” 12 narrowly, meaning the forum-selection clause encompasses only 13 those disputes concerning “the interpretation and performance of 14 the contract itself.” 15 647 F.3d 914, 922 (9th Cir. 2011). 16 phrases such as “relating to,” however, more broadly. 17 Additionally, statutory claims fall within a forum-selection 18 clause’s scope when “the claims are ‘inextricably intertwined 19 with the construction and enforcement’ of the parties’ 20 agreement.” 21 06026 MHP, 2008 WL 4104340, at *4 (N.D. Cal. Sept. 2, 2008) 22 (internal citation omitted). Courts should construe terms such See Cape Flattery Ltd. v. Titan Mar., LLC, Courts should construe Id. Arreguin v. Glob. Equity Lending, Inc., No. C 07- 23 B. Analysis 24 The parties dispute whether Plaintiff’s claims fall within 25 the forum-selection clause. Defendant argues they do, contending 26 (1) the forum-selection clause contains no limiting language, so 27 the Court should broadly construe it; and (2) the claims 28 inextricably intertwine with interpreting the Agreement because 4 1 it is impossible to separate the misclassification issue from the 2 contract. 3 See Mem. at 3-4; Def.’s Reply, ECF No. 30, at 2-4. Plaintiff disagrees, contending the forum-selection clause 4 is inapplicable because his non-waivable, statutory claims 5 neither arise from the contract, nor involve interpreting the 6 contract’s terms, nor require there to be a contract. 7 at 13 (citing Narayan, 616 F.3d at 899). 8 Court can decide the misclassification issue without having to 9 interpret the Agreement, so his claims do not inextricably 10 intertwine with the contract. 11 12 See Opp’n Plaintiff adds the See Opp’n at 14-15. As discussed below, the Court finds the forum-selection clause does not apply to Plaintiff’s statutory claims. 13 1. 14 The Forum-Selection Clause’s Plain Language The forum-selection clause states “This Agreement is to be 15 governed by the laws of the United States and of the State of 16 Texas, including the choice-of-law rules of Texas, and 17 [Defendant] and [Plaintiff] hereby consent to the jurisdiction of 18 the state and federal courts nearest to Waco, Texas.” 19 ¶ 25. 20 Agreement The parties dispute how broadly or narrowly the Court should 21 construe the provision. 22 broadly construe it because the clause contains no limiting 23 language, but rather simply points to Waco, Texas as the choice 24 of forum. 25 to treat such an omission as synonymous with the “relating to” 26 language the Ninth Circuit held warrants a broad construction. 27 Cape Flattery, 647 F.3d at 922. 28 narrower construction, arguing his statutory claims are non- See Mem. at 3. Defendant contends the Court should Defendant essentially urges the Court Plaintiff, however, asks for a 5 1 2 waivable rights not arising from the Agreement. See Opp’n at 15. A plain reading of the forum-selection clause highlights two 3 points: (1) federal law and Texas law, including Texas’s choice- 4 of-law rules, govern the Agreement; and (2) the parties consent 5 to the jurisdiction of state and federal courts closest to Waco, 6 Texas. 7 the Agreement arose, state and federal courts closest to Waco, 8 Texas would have jurisdiction to hear those disputes. 9 selection clause says nothing about these specified courts being In other words, the parties agreed, if a dispute about 10 the exclusive fora; they are merely proper venues for 11 The forum- adjudicating disputes about the Agreement. 12 Although the forum-selection clause omits language the Ninth 13 Circuit requires courts narrowly construe, see Cape Flattery, 647 14 F.3d at 922 (“arising under,” “arising hereunder,” and “arising 15 out of”), the forum-selection clause’s plain language is 16 synonymous with these phrases and so warrants a narrow 17 construction. 18 governing law and then designates state and federal courts 19 nearest to Waco, Texas as having jurisdiction, the inference 20 being the parties may adjudicate disputes about their contract in 21 state and federal courts closest to Waco, Texas. 22 says nothing about these specified courts having exclusive 23 jurisdiction. 24 The forum-selection clause first states the The language The Ninth Circuit said as much in Hunt Wesson Foods, Inc. v. 25 Supreme Oil Co., a case also discussing a § 1404(a) motion. 817 26 F.2d 75 (9th Cir. 1987). 27 stated “[t]he courts of California, County of Orange, shall have 28 jurisdiction over the parties in any action at law relating to The forum-selection clause, there, 6 1 the subject matter of the interpretation of this contract.” 2 at 76. 3 “sa[id] nothing about the Orange County courts having exclusive 4 jurisdiction[,]” that the language’s effect was “merely that the 5 parties consent[ed] to the jurisdiction of the Orange County 6 courts.” 7 expressly provides the parties “consent to the jurisdiction” of 8 the specified Texas courts. 9 Id. The Ninth Circuit reasoned the provision’s plain meaning Id. at 77. So too here: The forum-selection clause See Agreement ¶ 25. Hunt Wesson supports this Court’s textual analysis, but 10 there the Ninth Circuit discussed only whether the forum- 11 selection clause was mandatory or permissive. 12 Neither party cites a case analyzing the scope of a forum- 13 selection clause with language identical to the one here. 14 Nevertheless, as discussed above, the forum-selection clause’s 15 plain language is synonymous with phrases such as “arising 16 under,” “arising hereunder,” and “arising out of,” which warrants 17 a narrow construction. 18 forum-selection clause contains no limiting language, see Mem. at 19 3, this omission does not alter the Court’s conclusion that it 20 should narrowly construe the forum-selection clause. 21 Defendant cites not one case showing that “simply point[ing] to 22 Waco, Texas as the ‘choice of forum’” warrants “the Ninth 23 Circuit’s broader interpretation.” 24 authority). 25 “includes none of the narrowing language identified by the Ninth 26 Circuit,” but citing no supporting authority). 27 narrowly construe the forum-selection clause. 28 See id. at 77. So, despite Defendant’s argument that the Indeed, See Mem. at 3 (citing no such See also Reply at 2 (emphasizing the clause /// 7 The Court will 1 2 2. Misclassification The misclassification issue underlying this case further 3 supports this Court’s decision. The gravamen of Plaintiff’s 4 complaint is that Defendant “willfully misclassified,” him and 5 other truck drivers like him “to unlawfully avoid compliance with 6 all applicable federal and state laws . . . .” 7 Where, as here, a plaintiff claims the defendant illegally 8 classified him as an independent contractor to deny statutory 9 benefits, “the proper analytical exercise in resolving [the] See FAC ¶¶ 1, 11. 10 action does not turn on the [contract].” 11 Today, LLC, No. C 10-02049 WHA, 2010 WL 4569873, at *3 (N.D. Cal. 12 Nov. 4, 2010). 13 would not tolerate contractual schemes to avoid the California 14 Labor Code, as “statutes enacted to confer special benefits on 15 workers are ‘designed to defeat rather than implement contractual 16 arrangements.’” 17 omitted). 18 contract, gives rise to a plaintiff’s claims. 19 Quinonez v. Empire In such cases, the Ninth Circuit emphasized it Narayan, 616 F.3d at 897 (internal citation The appellate court made clear the statute, not the See id. District courts in this circuit have heeded the Ninth 20 Circuit’s guidance. In Quinonez, for instance, plaintiff alleged 21 defendant violated the California Labor Code by misclassifying 22 him and the putative class as independent contractors. 23 2010 WL 4569873 at *1. 24 venue, arguing the “parties agree[d] jurisdiction and venue for 25 any actions hereunder shall reside with the State of Illinois.” 26 Id. at *2 (quoting forum-selection clause). 27 whether the forum-selection clause applied to plaintiff’s 28 California Labor Code claims. Quinonez, Defendant moved to dismiss or transfer The parties disputed See id. at *1-2. 8 The district 1 court concluded it did not, reasoning that plaintiff’s claims 2 arose not from the contract, but rather from the California 3 statute. 4 See id. at *3. The Quinonez court explained, because neither party 5 contested that the agreement classified plaintiff as an 6 independent contractor, “the interpretation of the contract [was] 7 not at issue[,]” leaving only a legal issue: “[W]hether in 8 classifying plaintiff, and others like him, as an independent 9 contractor defendant ha[d] violated the law.” Id. The district 10 court concluded, in such instances, “the proper analytical 11 exercise in resolving [the] action does not turn on the 12 [contract]” and therefore denied defendant’s motion. Id. 13 This district applied a similar analysis in Ronlake. 14 the plaintiffs sued defendant for misclassifying them as non- 15 employees. 16 moved to dismiss for improper venue, arguing the parties 17 “irrevocably submit[ted] to the exclusive jurisdiction of 18 [specified New York courts] for the purposes of any suit, action 19 or other proceeding arising out of [the] Agreement or any 20 transaction contemplated hereby.” 21 selection clause). 22 reasoned “neither party contest[ed] that Plaintiffs [we]re 23 classified as nonemployees/partners in the contract between the 24 parties[,]” so interpreting the contract was not at issue, 25 leaving only the question “whether in classifying Plaintiffs as 26 non-employees, Defendant ha[d] violated the law[,]” a question 27 falling outside the forum-selection clause’s scope because the 28 issue did not “aris[e] out of” the contract. See Ronlake, 2012 WL 393614 at *1, 4. There, The defendant Id. at *1 (quoting forum- Analogizing to Quinonez, the Ronlake court 9 Ronlake, 2012 WL 1 2 393614 at *4-5 (denying motion). The same logic applies here. The Agreement classifies 3 Plaintiff as a “contractor[,] not [an] employee of [Defendant].” 4 Agreement ¶ 14. 5 classifies Plaintiff as an independent contractor, so contract 6 interpretation is not the issue here. 7 whether Defendant illegally misclassified Plaintiff, and other 8 truck drivers like him, a question requiring an analytical 9 exercise that does not turn on the Agreement. Neither party disputes that the Agreement The only question is See Ronlake, 2012 10 WL 393614 at *4-5; Quinonez, 2010 WL 4569873 at *2-3. 11 the Agreement “will likely be used as evidence to prove or 12 disprove [Plaintiff’s] statutory claims, the claims do not arise 13 out of the contract, involve the interpretation of any contract 14 terms, or otherwise require there to be a contract.” 15 616 F.3d at 899 (citing S.G. Borello & Sons, Inc. v. Dep’t of 16 Indus. Relations, 48 Cal. 3d 341 (1989)). 17 for Plaintiff’s § 17200 claim, for it derives from his § 2802 18 claim. 19 Plaintiff’s statutory claims fall outside the forum-selection 20 clause’s scope. 21 Although Narayan, The same holds true Cf. Arreguin, 2008 WL 4104340 at *1, 4. Therefore, Defendant cites Robles v. Comtrak Logistics, Inc. and Perry 22 v. AT&T Mobility LLC for supporting authority, but these 23 factually distinguishable cases do not alter this Court’s 24 conclusion. 25 WL 1530510 (E.D. Cal. Apr. 3, 2015)); Reply at 3 (citing Perry, 26 No. C 11-01488 SI, 2011 WL 4080625, at *3-4 (N.D. Cal. Sept. 12, 27 2011)). 28 regarding a § 1404(a) motion in a different California wage-and- See Mem. at 3 (citing No. 2:13-cv-00161-JAM-AC, 2015 Defendant first cites Robles, this Court’s decision 10 1 hour putative class action. 2 misclassification. 3 employer moved to transfer venue, citing a forum-selection 4 clause, which stated “any action or suit relating to this 5 Agreement shall be brought in the state or federal courts sitting 6 in Memphis, Tennessee, and in no other court.” 7 This Court granted the employer’s motion. 8 9 The issue, there, also concerned See Robles, 2015 WL 1530510 at *1. The Id. at *1-2. Id. at *1. At hearing, Defendant again cited Robles, explaining this Court transferred Robles “because there was no proof or 10 supposition that the Tennessee courts couldn’t apply California 11 law.” 12 this Court’s reasoning: The discussion about whether Tennessee 13 courts could apply California law concerned the forum-selection 14 clause’s enforceability, not its scope. 15 at *6. 16 advance Defendant’s argument that Plaintiff’s claims fall within 17 the forum-selection clause’s scope. 18 See Hr’g Tr. at 26:20-21. But Defendant mischaracterizes Robles, 2015 WL 1530510 Citing the Court’s enforceability analysis does not This Court, however, also assessed scope in Robles, an 19 analysis that makes Robles distinguishable. There, this Court 20 concluded it should broadly construe the clause because the 21 clause said “any action . . . relating to.” 22 (emphasis added). 23 Defendant here cites), reasoning that the phrase “any action . . 24 . relating to” made the Robles forum-selection clause, just like 25 the Perry forum-selection clause, “significantly broader” than 26 clauses using “arising under” language. 27 2011 WL 4080625 at *3-4). 28 therefore concluded the asserted claims fell within the scopes of Id. at *2-4 This Court analogized to Perry (the other case Id. at *4 (citing Perry, This Court, and the Perry court, 11 1 the respective forum-selection clauses. 2 at *4; Perry, 2011 WL 4080625 at *4. 3 that the forum-selection clause should be narrowly construed, as 4 it contains no such “relating to” language, but rather, as 5 discussed above, uses phrasing synonymous with “arising under”, 6 making Robles and Perry distinguishable. 7 8 9 3. Robles, 2015 WL 1530510 But, here, the Court finds Conclusion The Court finds that the forum-selection clause’s plain language warrants a narrow construction, which, when applied, 10 renders the clause inapplicable to Plaintiff’s statutory claims, 11 for the issue is not whether the Agreement classifies Plaintiff 12 as an independent contractor, but whether Defendant illegally 13 misclassified him as such, which does not require contract 14 interpretation. 15 not alter this Court’s conclusion, for those cases are 16 distinguishable because the courts there broadly construed the 17 forum-selection clauses. 18 contravene the Ninth Circuit’s admonition in Narayan to beware of 19 contractual schemes designed to avoid the California Labor Code. 20 The forum-selection clause does not apply to Plaintiff’s 21 statutory claims. 22 Defendant’s reliance on Robles and Perry does To rule otherwise, here, would Consequently, the Court need not address the parties’ 23 arguments about the enforceability of the forum-selection clause 24 under the framework prescribed by the U.S. Supreme Court in 25 Atlantic Marine Construction Co. v. U.S. District Court for the 26 Western District of Texas, 134 S. Ct. 568 (2013). 27 Open Door Marketing, LLC, No. 15-cv-04080-KAW, 2016 WL 1427641, 28 at *4 & n.7 (N.D. Cal. Apr. 12, 2016). 12 See Conde v. 1 Defendant relies on Atlantic Marine in support of its 2 motion, making no attempt to address the § 1404(a) factors in the 3 event this Court ruled, as it has, that Plaintiff’s claims fall 4 outside the forum-selection clause’s scope. 5 rule “presupposes a contractually valid forum-selection 6 clause[,]” Atl. Marine, 134 S. Ct. at 581, n.5, and, “[b]y 7 extension, . . . a dispute that unquestionably falls within the 8 scope of that contract[,]” Indus. Print Techs., LLC, v. Canon 9 U.S.A., Inc., No. 2:14-cv-00019, 2014 WL 7240050, at *2 (E.D. The Atlantic Marine 10 Tex. Dec. 19, 2014). 11 (denying motion because it relied almost exclusively on Atlantic 12 Marine, but claims fell outside scope); Telesocial Inc. v. Orange 13 S.A., No. 14-cv-03985-JD, 2015 WL 1927697, at *3-4 (N.D. Cal. 14 Apr. 28, 2015) (same). 15 clause as grounds for transfer and by not also analyzing the 16 § 1404(a) factors, Defendant has failed to persuade this Court 17 that this case should be transferred to the federal court nearest 18 to Waco, Texas. 19 Cf. Conde, 2016 WL 1427641 at *4 & n.7 20 By relying solely on the forum-selection III. ORDER For the reasons explained above, the Court DENIES 21 Defendant’s motion to transfer venue. 22 answer within 20 days from the date of this Order and the parties 23 must file a joint status report within 20 days thereafter 24 pursuant to this Court’s Order filed 2/11/16. ECF No. 2. 25 IT IS SO ORDERED. 26 Dated: October 6, 2017 27 28 13 Defendant must file an

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