City of Albany v. CH2M Hill, Inc.

Filing 20

OPINION AND ORDER: Defendant's Motion to Stay 14 is GRANTED. The Clerk is ordered to withhold entering final judgment in this case until the Ninth Circuit has resolved the appeal in Case No. 18-35282 18 . Signed on 10/9/2018 by Judge Ann L. Aiken. (ck)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
EUGENE DIVISION

CITY OF ALBANY,

Case No. 6:18-cv-00073-AA
OPINION AND ORDER

Plaintiff,

v.
CH2M HILL, INC.,
Defendants.

AIKEN, Judge:
Plaintiff City of Albany ("the City") brought suit against defendant CH2M Hill, Inc.
("CH2M") in Linn County Circuit Court alleging claims for breach of contract, professional
negligence, attorney fees, and reckless misrepresentation.

Defendant removed this case to

federal court on the basis of diversity jurisdiction. (doc. 1) Plaintiff successfully moved to
remand the case back to state court based on the exclusive language of the venue selection clause
in the agreements between the parties. (doc. 11) Defendant now seeks to stay the remand for the
pendency of it's appeal in the Ninth Circuit. For the reasons set f01ih below, defendant's Motion
for Stay (doc. 14) is GRANTED.

II
Page 1 - OPINION AND ORDER

BACKGROUND
The background of this case has been covered extensively in the previous order. In
summary, the substance of the lawsuit concerns an engineering contract between plaintiff, City
of Albany ("the City"), and defendant, CH2M Hill, Inc. ("CH2M") to oversee the construction of
two infrastructure projects: a new wastewater treatment plant and a 30-acre wetland. The City
initially filed this lawsuit in Linn County, Oregon, pursuant to a forum selection clause in the
contracts at issue. Defendant removed the action to federal court in the District of Oregon,
Eugene Division, asse1ting diversity jurisdiction (doc I ). 1
The patties made two agreements, the first on May 15, 2005, and the second on October
12, 2006. Both agreements contained identical venue selection clauses, as follows: "The laws of
Oregon shall govern the validity of this agreement, its interpretation and performance, and other
claims related to it. Venue for litigation shall be in Linn County, Oregon."2 Plaintiff filed a
Motion to Remand (doc. 5) arguing the venue selection clause in the two agreements mandates
Oregon Circuit Court in Linn County as proper venue for their dispute.
I agreed, and granted the remand motion on March 30, 2018. (doc. 11) I also ordered a
temporary stay so that this formal motion could be brought and briefed. Defendant argues that
this Court should stay that remand until the defendant's appeal has proceeded in the Ninth
Circuit, because of the risk of duplicative litigation.

Plaintiff contends that the stay is

unnecessary, as success on the merits is unlikely and the City would prefer a speedy resolution of
the matter in light of its' mounting costs.

I! I
1

Plaintiff is an Oregon municipal corporation located within Linn County, Oregon.
Defendant is a Florida corporation, with its principal place of business in Colorado.
2
This language is found under "Aliicle XIV: COURT OF JURISDICTION" in the
2005 agreement and "Article XVIII. COURT OF JURISDICTION" in the 2006 agreement.
Page 2 - OPINION AND ORDER

LEGAL STANDARD
The granting of a stay is entirely at the discretion of the Court. "A stay is not a matter of
right, even if itTeparable injury might otherwise result ... It is instead an exercise of judicial
discretion, and the propriety of its issue is dependent upon the circumstances of the patiicular
case." Washington v. Trump, 847 F.3d 1151, 1164 (9th Cir. 2017) (internal quotation marks
omitted) (citations omitted) (alterations normalized). "The standard for evaluating an injunction
pending appeal is similar to that employed by district courts in deciding whether to grant a
preliminary injunction." Feldman v. Arizona Secretwy a/State's Office, 843 F.3d 366, 367 (9th
Cir. 2016) (en bane). Court's consider four factors in dete1mining whether to grant a stay
pending appeal:
(1) whether the stay applicant has made a strong showing that he is likely to
succeed on the merits; (2) whether the applicant will be irreparably injured absent
a stay; (3) whether issuance of the stay will substantially injure the other parties
interested in the proceeding; and (4) where the public interest lies.

Latta v. Otter, 771F.3d496, 498 (9th Cir. 2014) (internal quotation marks omitted).
The first two factors cany more weight as "the most critical," and the latter two are
addressed only when the movant offers a strong showing on the first two. Nken v. Holder, 556
U.S. 418, 434-35.
While the analysis for stays and preliminary injunctions are similar, "a stay simply
suspends judicial alteration of the status quo, . . . injunctive relief grants judicial intervention
that has been withheld by lower courts." Id. at 429 (internal quotation marks omitted)
(alterations normalized).

I II
I II
I II
Page 3 - OPINION AND ORDER

DISCUSSION

Defendant asse1is that the interests of comity between the state and federal comis require
a stay of the remand while CH2M's appeal proceeds, and that an immediate remand may harm
defendant's right to an appeal.
The first two factors described in the above standard carry more weight in the analysis,
and so I must first address likelihood of success on the merits, and then the potential for injury to
defendant if the stay is denied. Nken, 556 U.S. at 435. On the merits: where venue is defined
with specific language, the clause is mandatory, Docksider Ltd. v. Sea Technology Ltd., 875 F.2d
at 762, 764, and I have found the clause at issue is specific.
However, the Ninth Circuit has interpreted a forum selection clause providing "exclusive
jurisdiction and venue ... in King County" as providing venue in both state and federal comis.
Simonojf v. Expedia, Inc., 643 F.3d 1202, 1207 (9th Cir. 2011). Unlike in this case, however,

both federal and state comis are situated in King County, and hence the court in Simonojf held
that it made sense to construe the clause as allowing suit in both state and federal courts. Id.
While the clause at issue here lists Linn County, Oregon as venue for litigation, no federal
district comi sits in in Linn County.
Relying on that factual distinction, the defendant characterizes the question of the
clause's construction in a county without a federal courthouse as a question of first impression
for the Ninth Circuit, thereby making the showing that the appeal raises the "serious legal
questions" required for a stay. Abbassi v. INS., 143 F.3d 513, 514 (9th Cir. 1998).
While this Court found the clause mandatory, meaning that the Circuit Court in Linn
County is the exclusive venue for litigation, the defendant contends that the Ninth Circuit has not
directly addressed the question of a forum selection clause's exclusivity in the instance that no

Page 4 - OPINION AND ORDER

federal court sits in the county listed as the fornm by the contract. In my previous order, I noted
that other comts have examined this issue, and have remanded cases where the federal comt did
not sit in the county specified in a forum section clause. However, the showing of a serious legal
question on appeal is all that is required to tip the scales towards the stay, and the defendant has
shown this.
Turning to the second factor, the potential injury to defendant should the stay be denied, I
find that the risk of duplicitous litigation also cuts in favor of the stay. While the City would
prefer to move their case forward in Oregon state court without delay, the timeframe for the
appeal is not so arduously long that it creates an unnecessary burden on the City. Meanwhile,
the risk of parallel proceedings could result in much greater eventual delay and complications for
both parties.
Plaintiffs indicated that further delay could result in increased hauling costs for the City,
as it is forced to resort to offsite dispose of wastes that cannot be processed at the wastewater
treatment plant. However, should the City succeed in the lawsuit, these costs will ce1tainly be
tallied as damages. Despite passing mention of "environn1ental damage," no irreparable injury
was briefed by the city. Therefore this factor, too, weighs in favor of the stay.
Finally, the public interest lies in granting the stay because of the potential expenditure of
judicial resources on duplicative proceedings. Should defendant prevail in the appeal, and the
Ninth Circuit reverses the previous order to remand, any state proceeding occurring in the
interim could be rendered moot. Without a stay, the remand order could raise serious questions
concerning the legal effect of state court proceedings that occur while a federal appeal is
pending, creating a risk of potentially futile proceedings, supremacy problems, and legal

Page 5 - OPINION AND ORDER

headaches for all parties and both state and federal comis. In an abundance of caution, these risks
can be avoided by granting the stay.
The factors for detennining the issuance of a stay tip in favor of the defendant here. The
Court will grant a stay in entering a final judgment in this case to allow for the appeal to proceed
in the Ninth Circuit without the complication of simultaneous litigation in Oregon state comi.
CONCLUSION

Defendant's Motion to Stay (doc. 14) is GRANTED. The Clerk is ordered to withhold
entering final judgment in this case until the Ninth Circuit has resolved the appeal in Case No.
18-35282 (doc. 18).
IT IS SO ORDERED.
Dated this

~-ti> day ofOctobert 2018.

Ami Aiken
United States District Judge

Page 6 - OPINION AND ORDER