Carolina Cargo Inc of Rock Hill v. Countrywide Payroll & HR Solutions Inc
Filing
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ORDER AND OPINION transferring this matter to the United States District Court for the Southern District of Florida. Signed by Honorable J Michelle Childs on 3/23/2018. (asni, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
ROCK HILL DIVISION
Carolina Cargo Inc. of Rock Hill,
Plaintiff,
v.
Countrywide Payroll & HR
Solutions, Inc. d/b/a Countrywide HR,
Defendant.
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Civil Action No.: 0:16-cv-03249-JMC
ORDER AND OPINION
This matter is before the court pursuant to Plaintiff Carolina Cargo Inc. of Rock Hill’s
Motion for Partial Summary Judgment (ECF No. 24). Defendant Countrywide Payroll and
Countrywide HR filed a response in opposition to Plaintiff’s Motion (ECF No. 29). For the reasons
set forth below, the court transfers this case to the United States District Court for the Southern
District of Florida pursuant to the parties’ forum selection clause in the Service Agreement
(“Agreement”). As such, the pending Motion for Partial Summary Judgment will be heard by the
district court in the Southern District of Florida.
I.
JURISDICTION
The court has jurisdiction over this action pursuant to 28 U.S.C. § 1332. See 28 U.S.C. §
1332. Plaintiff is a corporation organized and existing under the laws of the state of South
Carolina, with its principal place of business located in York County, South Carolina. (ECF No.
1 at 1.) Defendant is a corporation organized and existing under the laws of the state of Florida,
with its principal place of business located in Orange County, Florida. (Id.) The amount in
controversy exceeds $75,000.00, exclusive of interests and costs. (Id. at 2.) When a federal court
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sits in diversity jurisdiction, it applies federal procedural law and state substantive law. See
Gasperini v. Ctr. For Humanities, Inc., 518 U.S. 415, 427 (1996).
II.
RELEVANT FACTUAL AND PROCEDURAL BACKGROUND
On December 17, 2013, the parties entered into the Agreement, whereby Plaintiff would
assign, and Defendant would service, chosen employees and clients of Plaintiff. (ECF No. 29 at
2.) Under the Agreement, Defendant warrants that it “is in the business of providing temporary
contingent staffing services to clients through[out] the United States.” (ECF No. 29-1 at 5.) The
parties expressly contracted that the Agreement would be construed and governed in accordance
with the laws of the state of Florida, and that “all disputes between the parties not otherwise
resolved amicably shall be heard and determined within the appropriate court of general
jurisdiction in Florida, which [the] court shall have sole and exclusive jurisdiction thereof.” (Id.
at 6.)
According to the Agreement, Defendant agreed to assume full responsibility for pay,
withholding, transmitting payroll taxes, making unemployment contributions, making child
support payments, filing certified payroll for clients and handling unemployment and workers’
compensation claims involving payrolled employees, and to invoice Plaintiff under each client
referred for the payroll plus bulk rates. (Id.) Plaintiff agreed to assume full responsibility for
payment of said invoices related to the payroll plus bulk rates, including amounts of all required
FICA, FUTA, SUTA workers’ compensation, general liability insurance and administrative fees.
(Id. at 5.)
On September 27, 2016, Plaintiff filed a Complaint asserting claims for declaratory
judgment, restitution and fraud arising out of the Agreement. (ECF No. 1.) Plaintiff alleges that
the Agreement is void because Defendant violated S.C. CODE ANN. § 40-68-10 (2013) in not
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obtaining licensing as a “professional employer service.” (Id.) Further, Plaintiff asserts that they
are entitled to: (1) full restitution of monies paid to Defendant under the Agreement that Defendant
was not entitled to market or enter into, and under which Defendant has refused to perform, and/or
(2) damages for fraud as related to the Agreement and provision of services thereunder. (Id.)
On July 10, 2017, Plaintiff filed a Motion for Partial Summary Judgment requesting that
the court declare that the Agreement constitutes a contract for the provision of “professional
employer services” and, as a result, is void on account of Defendant’s lack of licensing to operate
as a professional employer organization (“PEO”) in the state of South Carolina. (ECF No. 24.)
On August 7, 2017, Defendant filed a response contending that it is not a PEO and does not provide
“professional employer services” because it has chosen to label itself as a “temporary contingent
staffing” company; (2) the statutory scheme concerning PEOs does not confer a private right of
action; and (3) the suit should be dismissed and/or transferred to the district court in Ft. Lauderdale,
Florida pursuant to the forum selection clause in the Agreement. (ECF No. 29.) On August 14,
2017, Plaintiff filed a reply stating: (1) the facts clearly demonstrate that Defendant was providing
more than “temporary” staffing services and, in fact, was operating as a PEO in the state of South
Carolina; (2) Defendant’s causes of action sound in common law and are not dependent upon a
statutorily conferred right of action; and (3) forum selection or choice of law provisions of a void
contract cannot be enforced. (ECF No. 30).
III.
ANALYSIS
A. The Agreement’s Forum Selection Clause
Plaintiff avers that because the validity, and therefore, the enforceability of the Agreement
is in question, then any forum selection clause is void and unenforceable. (ECF No. 30 at 8.) The
court disagrees. In fact, before getting to the merits of the case (i.e., the validity of the Agreement),
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the court must first decide whether the matter is properly before this court. See Republic Leasing
Co., Inc., v. Haywood, 329 S.C. 562, 566 (Ct. App. 1998) (“Under South Carolina law, a consent
to jurisdiction clause is generally presumed valid and enforceable when made at arm’s length by
sophisticated business entities.”) Given that both parties consented to the forum selection clause
in the Agreement and are sophisticated business entities, the court will transfer this case to the
federal district court in Ft. Lauderdale, Florida, as it has exclusive jurisdiction over the claims
under the valid, mandatory and enforceable forum selection clause. The Agreement, which sets
forth the respective rights and obligations of Defendant and Plaintiff, includes the following clear
and unequivocal choice of law and forum selection clause:
This Agreement made pursuant to and shall be governed by and construed in
accordance with the laws of the [s]tate of Florida, without regard to its principles
of conflicts laws; and all disputes between the parties not otherwise resolved
amicably shall be heard and determined within the appropriate [c]ourt of general
jurisdiction in Ft. Lauderdale, FL, which [the] court shall have sole and exclusive
jurisdiction thereof.
(ECF No. 24-1 at 6.)
In the Fourth Circuit, the enforceability and scope of a forum selection clause in a diversity
action, as here, is governed by the law of the forum state, giving effect to its conflicts of laws
principles. Nutter v. New Rents, Inc., No. 90-2493, 1991 WL 193490, at *5 (4th Cir. Oct. 1, 1991).
As such, South Carolina law, giving effect to its conflicts of laws principles, governs the
enforceability and scope of the forum selection clause in the Agreement. Choice of law clauses
are typically honored in South Carolina. Nucor Corp. v. Bell, 482 F. Supp. 2d 714, 728 (D.S.C.
2007) (“Generally, under South Carolina choice of law principles, if the parties to a contract
specify the law under which the contract shall be governed, the court will honor this choice of
law.”); Russell v. Wachovia Bank, N.A., 353 S.C. 208, 221 (2003) (“We hold that a settlor may
designate the law governing his trust, and absent a strong public policy reason, or lack of
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substantial relation to the trust, the choice of law provision will be honored.”); see also Ellis v.
Taylor, 316 S.C. 245, 248 (1994) (“When the language of a contract is plain and capable of legal
construction, that language alone determines the instrument’s force and effect.).
The Agreement includes a clear choice of law provision requiring that the terms of the
agreement be interpreted under Florida law: “This Agreement made pursuant to and shall be
governed by and construed in accordance with the laws of the [s]tate of Florida.” (ECF No. 24-1
at 5) (emphasis added). Under South Carolina law, this choice of law provision will be given
effect unless “application of foreign law results in a violation of South Carolina public policy.”
See Nucor Corp., 482 F.Supp.2d at 728 (referencing contracts that unreasonably restrain a
[person’s] right to exercise his trade or calling to be a violation of public policy). Plaintiff asserts
that Defendant “cannot remove itself from the ambit of South Carolina’s statutory and regulatory
requirements by evoking Florida law in its contracts, as such undoubtedly violates South Carolina
public policy.” (ECF No. 30 at 8.) Plaintiff maintains that Defendant marketed itself to South
Carolina companies, like Plaintiff, and entered into contract with South Carolina companies where
employees were assigned in South Carolina, were paid in South Carolina, and received human
resources services in South Carolina. (Id.)
The court disagrees with the assertion that the application of the choice of law and forum
selection clause violates the fundamental public policy of the state of South Carolina. There is a
clear and reasonable basis for the selection of Florida law. Defendant is a corporation organized
and existing under the laws of the state of Florida, with its principal place of business located in
Orange County, Florida, and conducts business throughout the entire United States. (ECF No. 29
at 12.) Moreover, Defendant specifically negotiated for the choice of law and forum selection
clause as an integral component of the Agreement. (Id.) Therefore, the court determines that it
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need not proceed to the substantive claims of this matter in regard to the Agreement’s validity.
Accordingly, this case is transferred to the United States District Court for the Southern District
of Florida.
IV.
CONCLUSION
For the foregoing reasons, the court transfers this matter to the United States District Court
for the Southern District of Florida.
IT IS SO ORDERED.
United States District Judge
March 23, 2018
Columbia, South Carolina
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