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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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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RICKEY HENRY,

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No.

2:16-cv-00280-JAM-EFB

Plaintiff,
v.

ORDER DENYING DEFENDANT’S MOTION
TO TRANSFER VENUE

CENTRAL FREIGHT LINES, INC.,
Defendant.

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The Ninth Circuit recently forewarned district courts of

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contractual schemes to circumvent statutes conferring special

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benefits on workers, statutes such as the California Labor Code.

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Narayan v. EGL, Inc., 616 F.3d 895 (9th Cir. 2010).

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contested forum-selection clause here raises this very concern.

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Plaintiff and Defendant entered into a contract whereby Plaintiff

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agreed to work for defendant as a truck driver.

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relationship soured, however, resulting in this litigation.

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Citing the forum-selection clause, Defendant moves to transfer

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this case to the United States District Court for the Western

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District of Texas.

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For reasons explained below, the Court DENIES Defendant’s motion.

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ECF No. 22.

I.

The

Their

Plaintiff opposes.

ECF No. 27.

BACKGROUND

Plaintiff Rickey Henry signed an Independent Contractor
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Agreement (“Agreement”) with Defendant Central Freight Lines,

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Inc. to work for Defendant as a truck driver.

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Agreement, ECF No. 12.

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clause, which provides:

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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.

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Id. ¶ 25.

The Agreement also classifies Plaintiff as an

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independent contractor, not an employee.

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expressly understood and agreed that [Plaintiff] is an

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independent contractor for the Equipment and driver services

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provided pursuant to this Agreement.”).

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Id. ¶ 14 (“It is

In this putative class action, Plaintiff sues Defendant for

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violating several California statutes, alleging Defendant

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illegally misclassified him, and other truck drivers like him, as

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independent contractors.

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ECF No. 1-6, attached to Def.’s Notice of Removal as Ex. 2.

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Plaintiff brings different claims on behalf of himself, a

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California Class, 1 and a California Labor Sub-Class. 2

See generally First Am. Compl. (“FAC”),

On behalf

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“[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.
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“[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.
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of himself and the California Class, Plaintiff sues Defendant for

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unlawful, unfair, and deceptive business practices.

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¶¶ 44-61 (citing Cal. Bus. & Prof. Code §§ 17200 et seq.).

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behalf of himself and the California Labor Sub-Class, Plaintiff

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brings five California wage-and-hour claims against Defendant.

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See id. ¶¶ 62-67 (failure to pay minimum wages under Cal. Lab.

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Code §§ 1194, 1197, 1197.1); ¶¶ 68-71 (failure to provide

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accurate itemized wage statements under Cal. Lab. Code § 226);

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¶¶ 72-79 (failure to pay wages when due under Cal. Lab. Code

See FAC
On

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§§ 201, 202, 203); ¶¶ 80-84 (failure to reimburse employees for

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required expenses under Cal. Lab. Code § 2802); ¶¶ 85-94 (illegal

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deductions from wages under Cal. Lab. Code § 221).

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only Plaintiff sues Defendant under the Private Attorney General

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Act.

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And, finally,

See FAC ¶¶ 95-99 (citing Cal. Lab. Code §§ 2698 et seq.).
Plaintiff filed the operative complaint in Sacramento County

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Superior Court.

See generally FAC.

Defendant removed the case

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to this Court, ECF No. 1, and now moves to transfer venue, citing

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the forum-selection clause, see generally Mot.

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Mem., ECF No. 22-1.

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The Court held a hearing on this motion on September 20, 2016.

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Hr’g Mins., ECF No. 32. 3

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Defendant’s motion to transfer venue.

Plaintiff opposes.

See also Def.’s

See generally Opp’n.

As explained below, the Court DENIES

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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.
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II.

OPINION

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A.

Standard

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The threshold issue is whether the forum-selection clause

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applies to Plaintiff’s claims.

A court assessing a forum-

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selection clause’s scope applies federal law, see Manetti-Farrow,

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Inc. v. Gucci Am., Inc., 858 F.2d 509, 512-13 (9th Cir. 1988),

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and should start with the text, see Ronlake v. US-Reports, Inc.,

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No. 1:11-CV-02009 LJO MJS, 2012 WL 393614, at *4 (E.D. Cal. Feb.

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6, 2012).

The Ninth Circuit has held courts should construe

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certain phrases differently.

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as “arising under,” “arising hereunder,” and “arising out of”

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narrowly, meaning the forum-selection clause encompasses only

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those disputes concerning “the interpretation and performance of

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the contract itself.”

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647 F.3d 914, 922 (9th Cir. 2011).

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phrases such as “relating to,” however, more broadly.

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Additionally, statutory claims fall within a forum-selection

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clause’s scope when “the claims are ‘inextricably intertwined

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with the construction and enforcement’ of the parties’

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agreement.”

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06026 MHP, 2008 WL 4104340, at *4 (N.D. Cal. Sept. 2, 2008)

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(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-

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B.

Analysis

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The parties dispute whether Plaintiff’s claims fall within

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the forum-selection clause.

Defendant argues they do, contending

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(1) the forum-selection clause contains no limiting language, so

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the Court should broadly construe it; and (2) the claims

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inextricably intertwine with interpreting the Agreement because
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it is impossible to separate the misclassification issue from the

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contract.

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See Mem. at 3-4; Def.’s Reply, ECF No. 30, at 2-4.

Plaintiff disagrees, contending the forum-selection clause

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is inapplicable because his non-waivable, statutory claims

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neither arise from the contract, nor involve interpreting the

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contract’s terms, nor require there to be a contract.

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at 13 (citing Narayan, 616 F.3d at 899).

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Court can decide the misclassification issue without having to

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interpret the Agreement, so his claims do not inextricably

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intertwine with the contract.

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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.

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The Forum-Selection Clause’s Plain Language

The forum-selection clause states “This Agreement is to be

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governed by the laws of the United States and of the State of

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Texas, including the choice-of-law rules of Texas, and

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[Defendant] and [Plaintiff] hereby consent to the jurisdiction of

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the state and federal courts nearest to Waco, Texas.”

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¶ 25.

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Agreement

The parties dispute how broadly or narrowly the Court should

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construe the provision.

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broadly construe it because the clause contains no limiting

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language, but rather simply points to Waco, Texas as the choice

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of forum.

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to treat such an omission as synonymous with the “relating to”

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language the Ninth Circuit held warrants a broad construction.

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Cape Flattery, 647 F.3d at 922.

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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

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waivable rights not arising from the Agreement.

See Opp’n at 15.

A plain reading of the forum-selection clause highlights two

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points: (1) federal law and Texas law, including Texas’s choice-

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of-law rules, govern the Agreement; and (2) the parties consent

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to the jurisdiction of state and federal courts closest to Waco,

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Texas.

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the Agreement arose, state and federal courts closest to Waco,

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Texas would have jurisdiction to hear those disputes.

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selection clause says nothing about these specified courts being

In other words, the parties agreed, if a dispute about

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the exclusive fora; they are merely proper venues for

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The forum-

adjudicating disputes about the Agreement.

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Although the forum-selection clause omits language the Ninth

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Circuit requires courts narrowly construe, see Cape Flattery, 647

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F.3d at 922 (“arising under,” “arising hereunder,” and “arising

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out of”), the forum-selection clause’s plain language is

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synonymous with these phrases and so warrants a narrow

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construction.

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governing law and then designates state and federal courts

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nearest to Waco, Texas as having jurisdiction, the inference

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being the parties may adjudicate disputes about their contract in

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state and federal courts closest to Waco, Texas.

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says nothing about these specified courts having exclusive

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jurisdiction.

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The forum-selection clause first states the

The language

The Ninth Circuit said as much in Hunt Wesson Foods, Inc. v.

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Supreme Oil Co., a case also discussing a § 1404(a) motion.

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F.2d 75 (9th Cir. 1987).

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stated “[t]he courts of California, County of Orange, shall have

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jurisdiction over the parties in any action at law relating to

The forum-selection clause, there,

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the subject matter of the interpretation of this contract.”

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at 76.

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“sa[id] nothing about the Orange County courts having exclusive

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jurisdiction[,]” that the language’s effect was “merely that the

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parties consent[ed] to the jurisdiction of the Orange County

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courts.”

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expressly provides the parties “consent to the jurisdiction” of

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the specified Texas courts.

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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

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there the Ninth Circuit discussed only whether the forum-

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selection clause was mandatory or permissive.

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Neither party cites a case analyzing the scope of a forum-

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selection clause with language identical to the one here.

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Nevertheless, as discussed above, the forum-selection clause’s

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plain language is synonymous with phrases such as “arising

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under,” “arising hereunder,” and “arising out of,” which warrants

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a narrow construction.

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forum-selection clause contains no limiting language, see Mem. at

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3, this omission does not alter the Court’s conclusion that it

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should narrowly construe the forum-selection clause.

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Defendant cites not one case showing that “simply point[ing] to

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Waco, Texas as the ‘choice of forum’” warrants “the Ninth

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Circuit’s broader interpretation.”

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authority).

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“includes none of the narrowing language identified by the Ninth

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Circuit,” but citing no supporting authority).

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narrowly construe the forum-selection clause.

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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

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The Court will

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Misclassification

The misclassification issue underlying this case further

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supports this Court’s decision.

The gravamen of Plaintiff’s

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complaint is that Defendant “willfully misclassified,” him and

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other truck drivers like him “to unlawfully avoid compliance with

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all applicable federal and state laws . . . .”

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Where, as here, a plaintiff claims the defendant illegally

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classified him as an independent contractor to deny statutory

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benefits, “the proper analytical exercise in resolving [the]

See FAC ¶¶ 1, 11.

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action does not turn on the [contract].”

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Today, LLC, No. C 10-02049 WHA, 2010 WL 4569873, at *3 (N.D. Cal.

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Nov. 4, 2010).

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would not tolerate contractual schemes to avoid the California

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Labor Code, as “statutes enacted to confer special benefits on

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workers are ‘designed to defeat rather than implement contractual

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arrangements.’”

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omitted).

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contract, gives rise to a plaintiff’s claims.

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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

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Circuit’s guidance.

In Quinonez, for instance, plaintiff alleged

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defendant violated the California Labor Code by misclassifying

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him and the putative class as independent contractors.

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2010 WL 4569873 at *1.

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venue, arguing the “parties agree[d] jurisdiction and venue for

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any actions hereunder shall reside with the State of Illinois.”

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Id. at *2 (quoting forum-selection clause).

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whether the forum-selection clause applied to plaintiff’s

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California Labor Code claims.

Quinonez,

Defendant moved to dismiss or transfer

The parties disputed

See id. at *1-2.
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The district

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court concluded it did not, reasoning that plaintiff’s claims

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arose not from the contract, but rather from the California

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statute.

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See id. at *3.

The Quinonez court explained, because neither party

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contested that the agreement classified plaintiff as an

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independent contractor, “the interpretation of the contract [was]

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not at issue[,]” leaving only a legal issue: “[W]hether in

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classifying plaintiff, and others like him, as an independent

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contractor defendant ha[d] violated the law.”

Id.

The district

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court concluded, in such instances, “the proper analytical

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exercise in resolving [the] action does not turn on the

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[contract]” and therefore denied defendant’s motion.

Id.

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This district applied a similar analysis in Ronlake.

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the plaintiffs sued defendant for misclassifying them as non-

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employees.

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moved to dismiss for improper venue, arguing the parties

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“irrevocably submit[ted] to the exclusive jurisdiction of

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[specified New York courts] for the purposes of any suit, action

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or other proceeding arising out of [the] Agreement or any

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transaction contemplated hereby.”

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selection clause).

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reasoned “neither party contest[ed] that Plaintiffs [we]re

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classified as nonemployees/partners in the contract between the

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parties[,]” so interpreting the contract was not at issue,

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leaving only the question “whether in classifying Plaintiffs as

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non-employees, Defendant ha[d] violated the law[,]” a question

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falling outside the forum-selection clause’s scope because the

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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

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Ronlake, 2012 WL

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393614 at *4-5 (denying motion).
The same logic applies here.

The Agreement classifies

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Plaintiff as a “contractor[,] not [an] employee of [Defendant].”

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Agreement ¶ 14.

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classifies Plaintiff as an independent contractor, so contract

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interpretation is not the issue here.

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whether Defendant illegally misclassified Plaintiff, and other

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truck drivers like him, a question requiring an analytical

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exercise that does not turn on the Agreement.

Neither party disputes that the Agreement

The only question is

See Ronlake, 2012

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WL 393614 at *4-5; Quinonez, 2010 WL 4569873 at *2-3.

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the Agreement “will likely be used as evidence to prove or

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disprove [Plaintiff’s] statutory claims, the claims do not arise

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out of the contract, involve the interpretation of any contract

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terms, or otherwise require there to be a contract.”

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616 F.3d at 899 (citing S.G. Borello & Sons, Inc. v. Dep’t of

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Indus. Relations, 48 Cal. 3d 341 (1989)).

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for Plaintiff’s § 17200 claim, for it derives from his § 2802

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claim.

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Plaintiff’s statutory claims fall outside the forum-selection

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clause’s scope.

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Although

Narayan,

The same holds true

Cf. Arreguin, 2008 WL 4104340 at *1, 4.

Therefore,

Defendant cites Robles v. Comtrak Logistics, Inc. and Perry

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v. AT&T Mobility LLC for supporting authority, but these

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factually distinguishable cases do not alter this Court’s

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conclusion.

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WL 1530510 (E.D. Cal. Apr. 3, 2015)); Reply at 3 (citing Perry,

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No. C 11-01488 SI, 2011 WL 4080625, at *3-4 (N.D. Cal. Sept. 12,

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2011)).

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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

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hour putative class action.

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misclassification.

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employer moved to transfer venue, citing a forum-selection

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clause, which stated “any action or suit relating to this

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Agreement shall be brought in the state or federal courts sitting

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in Memphis, Tennessee, and in no other court.”

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This Court granted the employer’s motion.

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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

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supposition that the Tennessee courts couldn’t apply California

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law.”

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this Court’s reasoning: The discussion about whether Tennessee

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courts could apply California law concerned the forum-selection

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clause’s enforceability, not its scope.

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at *6.

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advance Defendant’s argument that Plaintiff’s claims fall within

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the forum-selection clause’s scope.

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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

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analysis that makes Robles distinguishable.

There, this Court

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concluded it should broadly construe the clause because the

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clause said “any action . . . relating to.”

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(emphasis added).

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Defendant here cites), reasoning that the phrase “any action . .

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. relating to” made the Robles forum-selection clause, just like

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the Perry forum-selection clause, “significantly broader” than

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clauses using “arising under” language.

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2011 WL 4080625 at *3-4).

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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,

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the respective forum-selection clauses.

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at *4; Perry, 2011 WL 4080625 at *4.

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that the forum-selection clause should be narrowly construed, as

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it contains no such “relating to” language, but rather, as

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discussed above, uses phrasing synonymous with “arising under”,

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making Robles and Perry distinguishable.

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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,

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renders the clause inapplicable to Plaintiff’s statutory claims,

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for the issue is not whether the Agreement classifies Plaintiff

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as an independent contractor, but whether Defendant illegally

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misclassified him as such, which does not require contract

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interpretation.

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not alter this Court’s conclusion, for those cases are

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distinguishable because the courts there broadly construed the

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forum-selection clauses.

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contravene the Ninth Circuit’s admonition in Narayan to beware of

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contractual schemes designed to avoid the California Labor Code.

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The forum-selection clause does not apply to Plaintiff’s

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statutory claims.

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Defendant’s reliance on Robles and Perry does

To rule otherwise, here, would

Consequently, the Court need not address the parties’

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arguments about the enforceability of the forum-selection clause

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under the framework prescribed by the U.S. Supreme Court in

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Atlantic Marine Construction Co. v. U.S. District Court for the

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Western District of Texas, 134 S. Ct. 568 (2013).

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Open Door Marketing, LLC, No. 15-cv-04080-KAW, 2016 WL 1427641,

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at *4 & n.7 (N.D. Cal. Apr. 12, 2016).
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See Conde v.

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Defendant relies on Atlantic Marine in support of its

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motion, making no attempt to address the § 1404(a) factors in the

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event this Court ruled, as it has, that Plaintiff’s claims fall

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outside the forum-selection clause’s scope.

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rule “presupposes a contractually valid forum-selection

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clause[,]” Atl. Marine, 134 S. Ct. at 581, n.5, and, “[b]y

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extension, . . . a dispute that unquestionably falls within the

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scope of that contract[,]” Indus. Print Techs., LLC, v. Canon

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U.S.A., Inc., No. 2:14-cv-00019, 2014 WL 7240050, at *2 (E.D.

The Atlantic Marine

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Tex. Dec. 19, 2014).

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(denying motion because it relied almost exclusively on Atlantic

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Marine, but claims fell outside scope); Telesocial Inc. v. Orange

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S.A., No. 14-cv-03985-JD, 2015 WL 1927697, at *3-4 (N.D. Cal.

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Apr. 28, 2015) (same).

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clause as grounds for transfer and by not also analyzing the

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§ 1404(a) factors, Defendant has failed to persuade this Court

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that this case should be transferred to the federal court nearest

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to Waco, Texas.

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Cf. Conde, 2016 WL 1427641 at *4 & n.7

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By relying solely on the forum-selection

III.

ORDER

For the reasons explained above, the Court DENIES

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Defendant’s motion to transfer venue.

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answer within 20 days from the date of this Order and the parties

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must file a joint status report within 20 days thereafter

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pursuant to this Court’s Order filed 2/11/16. ECF No. 2.

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IT IS SO ORDERED.

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Dated: October 6, 2017

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Defendant must file an