Webb v. Settoon Towing, LLC

Filing 26

MEMORANDUM AND ORDER granting in part denying in part 15 MOTION to Dismiss 1 Complaint or in the alternative Motion to Transfer Venue. (Signed by Judge Gregg Costa) Parties notified.(arrivera, ) [Transferred from txsd on 11/30/2012.]

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
GALVESTON DIVISION
LESLIE WEBB,
Plaintiff,
VS.
SETTOON TOWING, LLC,
Defendant.

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CIVIL ACTION NO. 3-12-143

MEMORANDUM OPINION AND ORDER
Plaintiff Leslie Webb filed this case as a collective action under the Fair
Labor Standards Act (“FLSA”). The complaint alleges that Defendant Settoon
Towing, LLC deprived its tankermen employees of overtime pay by improperly
classifying them as “seamen” exempt from the FLSA. Settoon seeks dismissal
under Federal Rule of Civil Procedure 12(b)(3) on the ground that a “Choice of
Forum Agreement” requires Plaintiff and other Settoon employees to bring suit in
federal or state court in Louisiana “[i]n the event a dispute arises during [their]
employment.” Alternatively, Settoon requests that the case be transferred to the
United States District Court for the Eastern District of Louisiana for convenience
purposes pursuant to 28 U.S.C. § 1404(a).
The Court finds that venue transfer is the proper framework for analyzing
this issue, and that transfer to the Eastern District of Louisiana would serve the
convenience of parties and witnesses and the interest of justice. Accordingly, the
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Court GRANTS Settoon’s Motion to Transfer Venue.

Settoon’s Motion to

Dismiss is DENIED.
I.

BACKGROUND

Webb, a resident of Chambers County, Texas, filed this action on behalf of
himself and similarly situated individuals who were employed by Settoon as
tankermen within the past three years and paid a “day rate” with no overtime pay.
Docket Entry Nos. 1 ¶ 5; 21-2 ¶ 2.

Settoon is a Delaware company with

headquarters in Houma, Louisiana. It provides marine equipment and logistics
support to various industries. Docket Entry No. 15-2 ¶¶ 3–5. So far, two other
men have joined the suit. See Docket Entry Nos. 10; 22.
All current and potential Plaintiffs in this action signed a Choice of Forum
Agreement while employed at Settoon. That agreement states in pertinent part:
In the event a dispute arises during my employment or that I am
injured in the course and scope of my employment with SETTOON
TOWING, L.L.C. (hereinafter collectively called “COMPANY”),
then I specifically agree that I will only bring suit in one of the
following courts:
1.

In the United States District Court for the Eastern District of
Louisiana, or such other federal court located in Louisiana where
venue is otherwise proper:

Or
2.

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In the 23 Judicial District Court for the Parish of ASSUMPTION,
State of Louisiana, or such [other] judicial district court located in
the State of Louisiana where venue [is] otherwise proper under
the Louisiana Code of Civil Procedure.

Docket Entry No. 21-1.
Settoon filed its Answer on July 2, 2012. The Answer does not mention the
Choice of Forum Agreement, but states that “[v]enue is improper in this District
pursuant to Rule 12(b)(3).” Docket Entry No. 9 at 1. Settoon filed the instant
motion less than a month later, on July 31, 2012. Docket Entry No. 15.
II.

THE FORUM SELECTION CLAUSE
A. Dismissal vs. Transfer

As an initial matter, the Court must determine whether Settoon’s attempt to
enforce the forum selection clause should be analyzed in the dismissal context
under Rule 12(b)(3) or the transfer context under 28 U.S.C. § 1404(a), which
Plaintiffs argue would be the proper procedural mechanism. The type of forum
designated in the forum selection clause provides the answer. See In re Atl.
Marine Constr. Co., No. 12-50826, 2012 WL 5835832, at *2–3 (5th Cir. Nov. 19,
2012). When a forum selection clause designates a state court forum, an arbitral
forum, or a forum in a foreign country, the proper remedy is dismissal. See Int’l
Software Sys., Inc. v. Amplicon, Inc., 77 F.3d 112, 113–15 (5th Cir. 1996) (state
court forum); Lim v. Offshore Specialty Fabricators, Inc., 404 F.3d 898, 900 (5th
Cir. 2005) (arbitral forum); M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 4
(1972) (foreign forum). By contrast, when “a forum-selection clause allows suit to
be brought in either the state or the federal courts of a different forum, making

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transfer to another federal court an option, the majority of the federal district courts
have held that a motion to transfer under § 1404(a) analyzed under the balancing
test set forth in Stewart . . . , not a motion to dismiss under Bremen, is the proper
approach. Tex. Cmty. Bank, N.A. v. Dunn, No. H-09-3514, 2010 WL 3220652, at
*2 (S.D. Tex. Aug. 13, 2010) (citations omitted); see also Atl. Marine, 2012 WL
5835832, at *3 (“A forum-selection clause is properly enforced via § 1404(a) as
long as venue is statutorily proper in the district where suit was originally filed and
as long as the forum-selection clause elects an alternative federal forum.”);
Ellington Credit Fund, Ltd. v. Select Portfolio Servicing, Inc., No. A-07-CA-421
LY, 2007 WL 3256210, at *4 (W.D. Tex. Nov. 2, 2007) (collecting cases). As
Wright & Miller summarizes:
A growing number of district courts have rejected dismissal under
either Rule 12(b)(3) or Rule 12(b)(6) based on a forum-selection
clause. Instead, these courts have determined that transfer pursuant to
Section 1404(a) is the preferred method for dealing with a forumselection clause as long as venue is appropriate in the chosen district.
Under this view, dismissal is only appropriate when transfer is
impossible, such as when the chosen forum is in a foreign country or
when the district is not a place in which the action could have been
brought. . . . Given Section 1404(a)’s emphasis on convenience and
justice, transfer, rather than the harsh remedy of dismissal, seems to
be the better approach whenever possible.
5B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure §
1352 (3d ed. Supp. 2011). The Atlantic Marine decision issued last week now
makes it Fifth Circuit law that a convenience analysis under section 1404(a) is

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appropriate when a party seeks to transfer a case based on a forum selection clause
that provides for suit in another federal court. See Atl. Marine, 2012 WL 5835832,
at *2–3.
B. Does the Forum Selection Clause Apply To An Ex-Employee?
If applicable and enforceable, a forum selection clause “will be a significant
factor that figures centrally in the district court’s [venue transfer] calculus,”
Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988), as it “provides some
indication that the convenience of the parties would presumably be better served
by transfer,” Choice Equip. Sales, Inc. v. Captain Lee Towing, L.L.C., 43 F. Supp.
2d 749, 754 (S.D. Tex. 1999). But Webb contends the forum selection clause does
not apply to his case because he was a former Settoon employee when he filed this
suit. The clause applies to a “dispute [that] arises during my employment” and
Webb interprets that to mean that “[a] ‘dispute arises’ when the fighting starts, not
when the underlying acts occur.” Docket Entry No. 21 at 3. Both parties parse the
language of the contract, arguing about the common meaning of “dispute” and
whether a particular meaning would render other provisions of the clause
meaningless. The Court need not decide this issue of contract interpretation,
however, because it concludes below that the Eastern District of Louisiana is

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clearly a more convenient forum for this case regardless of whether the forum
selection clause applies to a former employee such as Webb. 1
III.

MOTION TO TRANSFER VENUE

Section 1404(a) provides: “For the convenience of 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 or to any district or division
to which all parties have consented.” 28 U.S.C. § 1404(a). A district court should
grant transfer “[w]hen the movant demonstrates that the transferee venue is clearly
more convenient.” In re Volkswagen of Am., Inc., 545 F.3d 304, 314 (5th Cir.
2008). The statute is intended to save “time, energy, and money while at the same
time protecting litigants, witnesses, and the public against unnecessary
inconvenience[s].” Republic Capital Dev. Grp., L.L.C. v. A.G. Dev. Grp., Inc., No.
H-05-CV-1714, 2005 WL 3465728, at *8 (S.D. Tex. Dec. 19, 2005) (citing Van
Dusen v. Barrack, 376 U.S. 612 (1964)).
1

This holding that venue transfer is appropriate even without considering the clause as a factor
favoring transfer also makes it unnecessary to resolve Webb’s argument that Settoon waived the
forum selection clause defense by not specifically citing it in the Answer, which just referred to
“improper venue.” In any event, a motion to transfer for convenience under section 1404(a)
“technically can be made at any time,” 1 Hon. David Hittner, Federal Civil Procedure Before
Trial 4:776 (5th Cir. Ed. 2011) (emphasis in original), and the weight of authority holds that the
Answer need not specifically reference the forum selection clause. See Rogen v. Memry Corp.,
886 F. Supp. 393, 396 (S.D.N.Y. 1995) (finding that the assertion in the answer that the district
was “not the proper venue for this action” precluded a finding of waiver, despite the absence of a
specific reference to the forum selection clause); Indem. Ins. Co. v. K-Line Am., Inc., No. 06 Civ.
0615(BSJ), 2008 WL 4922327, at *10 (S.D.N.Y. Feb. 27, 2008) (same); see also Sharpe v.
Jefferson Distrib. Co., 148 F.3d 676, 679–80 (7th Cir. 1998), overruled on other grounds (noting
that forum selection clauses and the statutory venue defense are “sufficiently close” to be
grouped together for purposes of Rule 12(h)(1) (citation omitted)).
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In applying the provisions of Section 1404(a), the first determination is
whether the judicial district to which transfer is sought is a district in which the
claim could have been filed. In re Volkwagen AG, 371 F.3d 201, 203 (5th Cir.
2004). It is undisputed that this suit could have been brought in the Eastern
District of Louisiana. Given that Settoon’s contacts in the Eastern District of
Louisiana would subject it to personal jurisdiction there if that district were a
separate state, Settoon is deemed a resident of that district under 28 U.S.C. §
1391(d), making venue proper under Section 1391(b)(1).
Having established that the case could have originally been brought in the
Eastern District of Louisiana, the Court now turns to weighing a number of private
and public interest factors. In re Volkswagen AG, 371 F.3d at 203 (citations
omitted). Specifically, the Fifth Circuit has articulated the factors as follows:
The private concerns include: (1) the relative ease of access to sources
of proof; (2) the availability of compulsory process to secure the
attendance of witnesses; (3) the cost of attendance for willing
witnesses; and (4) all other practical problems that make trial of a case
easy, expeditious and inexpensive. The public concerns include:
(1) the administrative difficulties flowing from court congestion;
(2) the local interest in having localized interests decided at home;
(3) the familiarity of the forum with the law that will govern the case;
and (4) the avoidance of unnecessary problems of conflict of laws of
the application of forum law.
Id. (citations omitted).
These factors demonstrate that the transfer is warranted. The first private
interest factor—the relative access to sources of proof—supports transfer to
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Louisiana. Settoon points out, and Plaintiffs do not contest, that the relevant
documents, contracts, payroll information, vessel logs, and employee schedules are
located in Settoon’s offices in Louisiana.
The second private interest factor—the availability of compulsory process to
secure witness attendance—is a wash. Neither Settoon nor Plaintiffs identify with
sufficient specificity any non-party witness located in either the Eastern District of
Louisiana or the Southern District of Texas.
Assessing the third private factor, the cost of attendance for willing
witnesses, requires the Court to decide whether to evaluate this case as it stands at
this early stage—as one with three plaintiffs—or as it was pled, as one in which
notice will issue inviting all similarly situated employees to join. Courts within
this district have followed both approaches. Guerrero v. Habla Communicaciones,
No. H-05-3620, 2006 WL 696646, at *3 (S.D. Tex. Mar. 16, 2006), found it
inappropriate to “speculat[e] on the potential inconvenience to unknown parties
and unknown witnesses” and thus did not consider the convenience of the
proposed plaintiff class.2 But other courts, without directly addressing the issue,
have considered the convenience of putative plaintiffs in FLSA actions.

See

Thompson v. John W. Stone Oil Distrib., LLC, No. 3:11-cv-00300, at 1 (S.D. Tex.

2

District courts in other circuits have also taken this approach. See, e.g., Luchini v. CarMax,
Inc., No. 1:12cv0417 LJO DLB, 2012 WL 2401530, at *4 (E.D. Cal. June 25, 2012); Blume v.
Int’l Servs., Inc., No. 4:12CV165 DDN, 2012 WL 1957419, at *4 (E.D. Mo. May 31, 2012).

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Feb. 28, 2012), ECF No. 28 (transferring tankermen’s FLSA action to the Eastern
District of Louisiana in part because 60% of potential plaintiffs were Louisiana
residents); Salinas v. O’Reilly Auto., Inc., 358 F. Supp. 2d 569, 571–72 (N.D. Tex.
2005) (considering residence of potential opt-in plaintiffs in the convenience
analysis).
The Court concludes that the latter approach of considering the convenience
of the putative class is appropriate. First, Webb elected to bring this case as a
collective action. The complaint lists as parties “[t]he class of similarly situated
employees” and contains numerous allegations—uncontroverted at this stage of the
litigation—that other tankermen are similarly subject to Settoon Towing’s policy
classifying them as exempt “seamen.” Docket Entry No. 1 ¶¶ 5, 7, 10–13. Second,
the standard for collective action notification “is a lenient one, usually resulting in
‘conditional certification’ of a representative class, to whom notice is sent and who
receive an opportunity to ‘opt in.’” Johnson v. TGF Precision Haircutters, Inc.,
319 F. Supp. 2d 753, 754–55 (S.D. Tex. 2004) (citing Mooney v. Aramco Servs.
Co., 54 F.3d 1207, 1214 (5th Cir. 1995)). The transfer analysis should take
account of this reality of FLSA litigation given that practical considerations of
judicial economy animate the transfer analysis. See Monroe v. Walmart Stores
Tex., LLC, No. 2-11-cv-329-TRG, 2012 WL 3887006, at *4 (E.D. Tex. Sept. 6,
2012) (“[J]udicial economy is a paramount consideration when determining

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whether a transfer is in the interest of justice.” (citing Cont’l Grain Co. v. The
FBL-585, 364 U.S. 19, 26 (1960) (internal quotation marks omitted)). That interest
in judicial economy also provides the third reason to consider the collective action
allegations as pleaded when analyzing venue transfer motions: the approach of
waiting until after the opt-in period would result in multiple venue transfer motions
and the potential for a game of venue ping-pong in which a case is transferred back
and forth between the forum convenient to the original plaintiff and the forum
convenient to most plaintiffs who opt in. The approach that would not consider the
convenience of the putative plaintiffs until after the opt-in period contemplates the
possibility of transfer motions at both the pre- and post-conditional certification
stage, as in Guerrero, but its logic would also seemingly allow for another transfer
motion back to the original court if the case is decertified at the more rigorous
second stage of the certification process that most courts in this circuit follow. It
makes more sense to treat the case as pleaded and determine the venue issue at the
outset. This approach also ensures that the court that would have to try a collective
suit is the one making the certification decisions, which turn in part on
manageability issues.3

3

The only downside of considering the case as pleaded is if the case is transferred based in part
on the convenience considerations of putative plaintiffs and yet remains a single plaintiff case,
because either the Court concludes the proposed additional plaintiffs are not similary situated or
those individuals delince to opt in. That scenario would not result in trial in an inconvenient
forum, however, because the “cost of attendance for willing witnesses” factor is just one of the
many factors that are considered in the venue analysis; other factors would have to support the

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When including putative plaintiffs among the witnesses whose convenience
is at issue in the third private interest factor, it is significant that 50.2% of the
putative class members reside in Louisiana, while only 16.47% reside in Texas.
Even apart from the potential plaintiffs, the vast majority of wheelhouse personnel,
who worked with both the putative class as a whole and with Webb specifically,
live in Louisiana rather than Texas. See Docket Entry No. 15-2 at 1–5. In
contrast, Plaintiffs fail to identify any individual witnesses residing in Texas other
than Webb and one of the plaintiffs who has already opted in, or any general
groups of witnesses residing in Texas.
The fourth private interest factor weighs in favor of transfer. Although
transferring venue may create slight delay, transferring the case to the Eastern
District of Louisiana would make trying the case more “easy, expeditious and
inexpensive,” Volkswagen AG, 371 F.3d at 203, because it would avoid the
prospect of having two trials in different venues on the same issue—one in Texas
for former employees like Webb and another in Louisiana for currently employed
tankermen to whom the forum selection clause undisputedly applies. “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

transfer to establish that the trasanferee venue is clearly more convenient. And any concerns
about judicial economy in that situation would be minimal because a single plaintiff FLSA case
is unlikely to require extensive resources.
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money that s 1404(a) was designed to prevent.” Cont’l Grain, 364 U.S. at 26.
Plaintiffs argue that the forum selection clause would not apply to current
employees because “joining” an FLSA suit in Texas does not amount to the
“filing” of a suit to which the clause refers. But whether an individual files a new
FLSA suit or joins an existing one, he or she is a “party plaintiff” to the action, see
29 U.S.C. § 216(b), and subject to an individualized statute of limitations, see 29
U.S.C. § 216(c). And putative class members are required to file written consents
in order to become FLSA plaintiffs. See 29 U.S.C. § 216(b). Without deciding
this apparently novel issue, the substantial likelihood that the clause applies to
current employees who opt in to this case renders the Eastern District of Louisiana
a more efficient forum for this case.
The public interest factors also weigh in favor of transfer. Even though
Plaintiffs Webb and Dixon reside in the Southern District of Texas, the issue of
whether Settoon is required to pay its tankermen overtime is more of a localized
interest of the Eastern District of Louisiana because 50.2% of the employees whom
Plaintiffs allege to be “victimized” reside in Louisiana versus 16.47% who reside
in Texas. Docket Entry No. 15-2 ¶ 12. The Court finds the other public interest
factors—administrative difficulties flowing from court congestion, familiarity of
the forum with the law governing the case, and the avoidance of unnecessary
problems of conflict of laws—to be neutral.

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Finally, the Court notes that although a plaintiff’s choice of forum is usually
entitled to some deference, that deference is not as great here because Webb
brought this case not only on behalf of himself, but on behalf of all individuals
who were employed by Settoon as tankermen within the past three years and paid a
day rate without compensation. Docket Entry No. 1 ¶ 5; see Young v. Dollar Tree
Stores, Inc., No. 11-cv-01840-REB-MJW, 2012 WL 3705010, at *2 (D. Colo.
Aug. 24, 2012) (giving choice of forum reduced weight in nationwide FLSA
collective action); Lafleur v. Dollar Tree Stores, Inc., No. 1-11CV8473, 2012 WL
2280090, at *3 (N.D. Ill. June 18, 2012) (same); Tate-Small v. Saks Inc., No.
12CV1008(HB), 2012 WL 1957709, at *4 (S.D.N.Y. May 31, 2012) (same).
When viewed as a whole, the location of evidence, convenience of
witnesses, and efficiency considerations outweigh any slight delay that transfer
may cause, which is the only factor lending any significant weight against transfer.
Therefore, the Court finds transfer to be appropriate under section 1404(a).
IV.

CONCLUSION

For the reasons above, Defendant Settoon, Towing, LLC’s Motion to
Dismiss, or in the Alternative, Motion to Transfer Venue (Docket Entry No. 15) is
GRANTED IN PART and DENIED IN PART. Specifically, Settoon’s motion to
dismiss is DENIED and its motion to transfer is GRANTED. This action is

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transferred to the United States District Court for the Eastern District of Louisiana.
The Court will enter a separate order of transfer.

SIGNED this 28th day of November, 2012.

___________________________________

Gregg Costa
United States District Judge

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