Black v. Sprouts Farmers Market, Inc.
ORDER Granting 21 Defendant's Notice of Motion and Motion To Transfer Venue Pursuant to 28 U.S.C. § 1404(a) and Memorandum of Points and Authorities in Support Thereof. That all pending pretrial deadlines in this case are vacated; That th e combined Final Pretrial Conference and Trial Preparation Conference scheduled for October 6, 2016, at 9:30 a.m., and the trial scheduled to commence on October 24, 2016, are vacated; and That on or before December 14, 2015, the parties shall either (a) jointly file a stipulation specifying an agreed venue within New York to which this case should be transferred (supported by apposite legal authority); or (b) separately submit briefs of no more than five (5) pages in support of their respective choice of venue within the state of New York. Joint Stipulation due by 12/14/2015, by by Judge Robert E. Blackburn on 11/19/2015.(evana, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Robert E. Blackburn
Civil Case No. 15-cv-01297-REB-MJW
STEPHEN D. BLACK,
SPROUTS FARMERS MARKET, INC., fka SPROUTS FARMERS MARKET, LLC,
ORDER GRANTING DEFENDANT'S MOTION TO TRANSFER VENUE
The matter before me is Defendant's Notice of Motion and Motion To
Transfer Venue Pursuant to 28 U.S.C. § 1404(a) and Memorandum of Points and
Authorities in Support Thereof [#21],1 filed July 15, 2015. I grant the motion.
I have jurisdiction over this matter under 28 U.S.C. § 1331 (federal question).
II. STANDARD OF REVIEW
Defendant's motion implicates 28 U.S.C. § 1404(a), which provides that "[f]or the
convenience of the parties and witnesses, in the interest of justice, a district court may
transfer any civil action to any other district or division where it might have been
brought." Typically, the movant bears a heavy burden to establish that the existing
forum is sufficiently inconvenient to warrant transfer, id.; see also Texas Gulf Sulphur
“[#21]” is an example of the convention I use to identify the docket number assigned to a
specific paper by the court’s case management and electronic case filing system (CM/ECF). I use this
convention throughout this order.
Co. v. Ritter, 371 F.2d 145, 148 (10th Cir. 1967), "and unless the balance is strongly in
favor of the movant the plaintiff's choice of forum should rarely be disturbed," Scheidt v.
Klein, 956 F.2d 963, 965 (10th Cir. 1992) (internal citation and quotation marks omitted).
See also Cargill Inc. v. Prudential Insurance Co. of America, 920 F.Supp. 144, 146
(D. Colo. 1996).
“The calculus changes, however, when the parties’ contract contains a valid
The enforcement of valid forum-selection clauses, bargained
for by the parties, protects their legitimate expectations and
furthers vital interests of the justice system. For that reason,
and because the overarching consideration under § 1404(a)
is whether a transfer would promote “the interest of justice,”
a valid forum-selection clause [should be] given controlling
weight in all but the most exceptional cases.
Atlantic Marine Construction Co. v. United States District Court for the Western
District of Texas, – U.S. –, 134 S.Ct. 568, 581, 187 L.Ed.2d 487 (2013) (internal
citations and quotation marks omitted). Thus, although the district court generally is
vested with considerable discretion in determining whether transfer is appropriate, see
Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d 1509, 1515 (10th Cir. 1991),
the scope of discretion is narrowed significantly where a forum selection clause is in
The Supreme Court has identified three distinct ways in which review of a motion
to transfer where a valid forum selection clause is present is circumscribed. First, the
so-called “plaintiff’s venue privilege” is removed from the case. Atlantic Marine
Construction Co., 134 S.Ct. at 581. Thus “the plaintiff’s choice of forum merits no
weight” in the analysis.“
[W]hen a plaintiff agrees by contract to bring suit only in a
specified forum – presumably in exchange for other binding
promises by the defendant – the plaintiff has effectively
exercised its ‘venue privilege’ before a dispute arises. Only
that initial choice deserves deference, and the plaintiff must
bear the burden of showing why the court should not transfer
the case to the forum to which the parties agreed.
Id. at 581-82.
Second, the parties’ private interests become irrelevant. By selecting a forum for
resolution of their disputes in advance, the parties
waive the right to challenge the preselected forum as
inconvenient or less convenient for themselves or their
witnesses, or for their pursuit of the litigation. A court
accordingly must deem the private-interest factors to weigh
entirely in favor of the preselected forum.
Id. at 582. Moreover, consideration of the public interest factors “will rarely defeat a
transfer motion.” Id.
Third, where the plaintiff has “flout[ed] its contractual obligation” by filing suit in
other than the preselected forum, the court follows the choice-of-law rules of that forum,
rather than its own, “a factor that in some circumstances may affect public-interest
considerations.” Id. Thus, the well-recognized exception to section 1404(a) which
requires the transferee court to apply the law of the transferor court, see Van Dusen v.
Barrack, 376 U.S. 612, 638-39, 84 S.Ct. 805, 820-21,11 L.Ed.2d 945 (1964), becomes
inoperative, Atlantic Marine Construction Co., 134 S.Ct. at 582-83.
In sum, the presence of a valid forum selection clause is well-nigh determinative
of a motion to transfer venue in all but rarest of cases:
When parties have contracted in advance to litigate disputes
in a particular forum, courts should not unnecessarily disrupt
the parties' settled expectations. A forum-selection clause,
after all, may have figured centrally in the parties'
negotiations and may have affected how they set monetary
and other contractual terms; it may, in fact, have been a
critical factor in their agreement to do business together in
the first place.
Id. at 583. “In all but the most unusual cases, therefore, ‘the interest of justice’ is served
by holding parties to their bargain.” Id.
Plaintiff was employed by Sprouts Farmers Market, Inc. (“Sprouts”) as its Chief
Information and Marketing Officer from November 9, 2009, to December 29, 2014. In
connection with his employment, plaintiff was granted stock options under two separate
option plans. Both the 2011 Option Plan (the “2011 Plan”) and the 2013 Incentive Plan
(the “2013 Plan”) (collectively the “Plans”) provide that they are to be governed by
Delaware law. The 2011 Plan, however, contains a forum selection clause providing
that all claims relating to the 2011 Plan will be litigated in “any state or federal court
located within the State of New York.” (Plf. Resp. App., Exh. A § 10(e) at 9 of 9.) The
2013 Plan contains no forum selection clause.
On December 29, 2014, plaintiff resigned his employment with Sprouts to take a
position with Lucky's Market Parent Company, LLC (“Lucky’s”). Both Plans include
provisions attending negative consequences in terms of plaintiff’s right to the full benefit
of his stock options on the occurrence of various types of “Specific Conduct,” including
most relevantly, accepting employment with a competitor of Sprouts. Based on these
provisions, defendant removed plaintiff’s vested options from his E*Trade account in
March 2015. This lawsuit followed.
The parties here do not dispute that the 2011 Plan contains a valid forum
selection clause. Instead, they disagree as to whether the 2011 Plan has any continued
vitality in light of adoption of the 2013 Plan. Thus, the determinative issue is whether
the 2013 Plan supplanted or merely supplemented the 2011 Plan. I find and conclude
that the 2013 Plan in fact was intended to supersede the 2011 Plan, but included a
carve-out for options granted under the 2011 Plan. Accordingly, insofar as plaintiff’s
claims relate to options granted under the 2011 Plan, those claims must be tried in a
New York court. Moreover, although no similar provision dictates the forum for plaintiff’s
claims as they implicate options granted under the 2013 Plan, to avoid the dangers of
potentially inconsistent judgments and inefficient and wasteful expenditure of judicial
resources, I find that the interest of justice dictate transferring the entirety of this lawsuit
to New York.
I begin by noting that the language and format of the Plans are very similar,
which is perhaps unsurprising given their shared purpose – to incentivize current
employees and attract new ones. Under Delaware law, which applies to the resolution
of issues under both Plans, “[w]hen a later-in-time contract addresses the same issues .
. . it will prevail in the absence of evidence to the contrary.” Country Life Homes, Inc.
v. Shaffer, 2007 WL 333075 at * 5 (Del. Ch. Jan. 31, 2007). Plaintiff points out that in
publicly filed documents, defendant made statements in which it expressly
characterized the 2013 Plan as replacing the 2011 Plan (see Plf. Resp. App., Exh. C at
3 of 7 & 7 of 7) and represented the 2013 Plan as Sprouts’s “umbrella plan for our
stock-based and cash-based incentive compensation programs for our directors,
officers and other team members” (id., Exh. C at 6 of 7).
Plaintiff conveniently ignores, however, that within these same documents,
defendant also expressly exempted options already granted under the 2011 Plan from
the scope of the 2013 Plan. (See id., Exh. D at 3 of 7 (“The 2013 Incentive Plan
became effective on July 31, 2013 and replaced the 2011 Option Plan (except with
respect to outstanding options under the 2011 Option Plan).”) (emphasis added); Exh. D
at 4 of 7 (“Upon the completion of our IPO, the 2011 Option Plan was replaced (except
with respect to outstanding options) by the 2013 Incentive Plan.”) (emphasis added).
Thus, whatever defendant’s motivations for not carrying the forum selection clause
forward in the 2013 Plan, it is patent that it intended to carve out those options already
granted under the 2011 Plan from its ambit. Delaware law specifically contemplates
that “[a]t times it may be reasonable to hold that the rescission and the substitution [of a
more recent contract for an earlier one] are only partial, part of the old contract
remaining enforceable.” Country Life Homes, Inc., 2007 WL 333075 at * 5 (internal
footnotes and citation omitted). Such is the case here.
The result is that plaintiff’s claims are subject to suit in New York insofar as they
relate to options under the 2011 Plan. Plaintiff has offered nothing to substantiate his
heavy burden of showing that the public interest factors weigh so heavily in his favor
that the court must override the parties’ previous choice of forum as to those claims.
Defendant’s motion to transfer thus must be granted as to those claims relating to
options granted under the 2011 Plan.
This determination leaves the court to confront the further question whether to
transfer only those claims while retaining the claims that relate to options granted under
the 2013 Plan, or, alternatively, to transfer the entire case. I conclude that the latter
course best serves the interests of justice which animate section 1404(a). Undoubtedly,
the facts and evidence in support of plaintiff’s claims under both Plans are interrelated, if
not entirely identical. The very similarity of the two Plans strongly suggests the strong
possibility of a parallel resolution of the legal issues raised in both instances. Under
those circumstances, allowing this case to proceed in two separate courts would
complicate unnecessarily the trial of plaintiff’s claims in both fora and create a very real
prospect of inconsistent rulings and judgments. “To permit a situation in which two
cases involving precisely the same issues are simultaneously pending in different
District Courts leads to the wastefulness of time, energy and money that § 1404(a) was
designed to prevent.” Continental Grain Co. v. The Barge FBL-585, 364 U.S. 19, 26,
80 S.Ct. 1470, 1474, 4 L.Ed.2d 1540 (1960). I therefore find and conclude that transfer
of the entire case is warranted here.2
Although the parties did not address this issue in their briefs, my own research has found some
instances in which, "[t]o avoid piecemeal litigation, courts have . . . refused to enforce a forum selection
clause in cases where the forum selection clause covers only some, but not all of the claims in the
action." Jon Feingersh Photography, Inc. v. Pearson Education, Inc., 976 F.Supp.2d 463, 468 (E.D.
Pa. 2013) (citing cases). See also Farmland Industries, Inc. v. Frazier-Parrot Commodities, Inc., 806
F.2d 848, 852 (8th Cir. 1986), abrogated on other grounds by Lauro Lines s.r.l. v. Chasser, 109 S.Ct.
1976 (1989); Community Voice Line, L.L.C. v. Great Lakes Communication Corp., 2014 WL
3102124 at *3 (N.D. Iowa July 7, 2014); Carney v. Beracha, 996 F.Supp.2d 56, 71 (D. Conn. 2014); BP
Products North America, Inc. v. Super Stop 79, Inc., 464 F.Supp.2d 1253, 1257-58 (S.D. Fla. 2006).
In some instances, these cases are factually distinguishable. To the extent they are not, they
nevertheless appear to this court to take inadequate consideration of the Supreme Court’s latest, strongly
worded pronouncement on the effect of a valid forum selection clause on the court’s discretion to grant a
transfer pursuant to section 1404(a). See Atlantic Marine Construction Co., 134 S.Ct. at 581-83.
The only question remaining is to which New York court the case should be
transferred. Although defendant requests that transfer to the United States District
Court for the Southern District of New York, the 2011 Plan is non-specific, providing
only that claims relating thereto are to be tried in “any state or federal court located
within the State of New York.” (Plf. Resp. App., Exh. A § 10(e) at 9 of 9.) The parties
have not addressed this issue in their papers. I therefore will afford them an opportunity
to do so prior to directing transfer of this case.
THEREFORE IT IS ORDERED as follows:
1. That Defendant's Notice of Motion and Motion To Transfer Venue
Pursuant to 28 U.S.C. § 1404(a) and Memorandum of Points and Authorities in
Support Thereof [#21], filed July 15, 2015, is granted;
2. That all pending pretrial deadlines in this case are vacated;
3. That the combined Final Pretrial Conference and Trial Preparation
Conference scheduled for October 6, 2016, at 9:30 a.m., and the trial scheduled to
commence on October 24, 2016, are vacated; and
4. That on or before December 14, 2015, the parties shall either (a) jointly file a
stipulation specifying an agreed venue within New York to which this case should be
transferred (supported by apposite legal authority); or (b) separately submit briefs of no
more than five (5) pages in support of their respective choice of venue within the state
of New York.
Dated November 19, 2015, at Denver, Colorado.
BY THE COURT:
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?