Degan et al v. The Board of Trustees of the Dallas Police and Fire Pension System et al
MEMORANDUM OPINION AND ORDER re 46 MOTION to Change Venue filed by Brian Hass, Ken Haben, Samuel Friar, Tho Tang Ho, Ken Sprecher, The Board of Trustees of the Dallas Police and Fire Pension System, Clint Conway, Gerald Brown, J oe Schutz. It is therefore ORDERED that The Board of Trustees of the Dallas Police and Fire Pension System, Samuel Friar, Ken Haben, Joe Schutz, Gerald Brown, Clint Conway, Brian Hass, Tho Tang Ho, and Ken Sprechers Motion to Transfer Venue (Dkt. #46) is hereby GRANTED, and this case is transferred in its entirety to the Northern District of Texas, Dallas Division. Signed by Judge Amos L. Mazzant, III on 5/19/17. (cm, )
United States District Court
EASTERN DISTRICT OF TEXAS
LADONNA DEGAN, RIC TERRONES,
JOHN MCGUIRE, REED HIGGINS, MIKE
GURLEY, and LARRY EDDINGTON
THE BOARD OF TRUSTEES OF THE
DALLAS POLICE AND FIRE PENSION
SYSTEM, SAMUEL FRIAR, KEN HABEN,
JOE SCHUTZ, GERALD BROWN, CLINT
CONWAY, JENNIFER STAUBACH
GATES, SCOTT GRIGGS, BRIAN HASS,
THO TANG HO, PHILIP T. KINGSTON,
KEN SPRECHER, and ERIK WILSON
§ Civil Action No. 4:17-cv-066-ALM
§ Judge Mazzant
MEMORANDUM OPINION AND ORDER
Pending before the Court is The Board of Trustees of the Dallas Police and Fire Pension
System, Samuel Friar, Ken Haben, Joe Schutz, Gerald Brown, Clint Conway, Brian Hass, Tho
Tang Ho, and Ken Sprecher’s Motion to Transfer Venue (Dkt. #46). The Court, having considered
the relevant pleadings, finds the motion is granted.
The Dallas Police and Fire Pension System (“System”) is a public pension fund created by
the Texas Legislature. The System delivers retirement, disability, and death benefits to the police
officers and firefighters of the City of Dallas under the terms of a Combined Pension Plan
Document (the “Plan”). One aspect of the Plan is a Deferred Retirement Option Plan (“DROP”),
which was created to encourage officers and firefighters eligible for retirement to stay in active
service. DROP permits an active member who is eligible to receive a monthly retirement annuity
to continue working and receive a salary, while simultaneously having the annuity amount they
would have received after retirement credited to a DROP account maintained within the System.
These credits accumulate interest. When a DROP participant leaves active service, he or she may
either leave all or a portion of the accumulated funds in the DROP account, where they continue
to accrue interest, or withdraw all or a portion of the funds using procedures provided for under
the Plan. In 2016, the System began to experience an increase in lump-sum withdrawals from
DROP accounts, causing liquidity issues. In December 2016, Dallas Mayor Mike Rawlings
publicly demanded an immediate suspension of all DROP distributions and filed a lawsuit in state
court in Dallas County seeking injunctive relief. In January 2017, the Board of Trustees of the
Dallas Police and Fire Pension System (the “Board”) made policy changes governing withdrawals
from DROP accounts by implementing an addendum that limits DROP distributions to maintain a
On January 30, 2017, retired police officers LaDonna Degan, Ric Terrones, John McGuire,
Reed Higgins, Mike Gurley, and Larry Eddington (collectively, “Plaintiffs”) sued the Board and
twelve individual trustees on the Board (collectively, “Defendants”) in this Court. Plaintiffs allege
the Defendants are depriving them of property interests without due process by denying them full
access to their DROP accounts. On March 24, 2017, Defendants filed this Motion to Transfer
Venue (Dkt. #46). On April 21, 2017, Plaintiffs filed a response (Dkt. #53). On April 28, 2017,
Defendants filed a reply (Dkt. #57).
Defendants move to transfer venue pursuant to 28 U.S.C. § 1404(a), which permits a
district court to transfer any civil case “[f]or the convenience of parties and witnesses, in the
interest of justice . . . to any other district or division where it might have been brought.” 28 U.S.C.
§ 1404(a). “Section 1404(a) is intended to place discretion in the district court to adjudicate
motions for transfer according to an ‘individualized, case-by-case consideration of convenience
and fairness.’” Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988) (quoting Van Dusen v.
Barrack, 376 U.S. 612, 622 (1964)). The purpose of 28 U.S.C. § 1404(a) “is to prevent the waste
‘of time, energy and money’ and ‘to protect the litigants, witnesses and the public against
unnecessary inconvenience and expense…’” Van Dusen v. Barrack, 376 U.S. 612, 616 (1964).
The U.S. Supreme Court has held that “when the parties have agreed to a valid forum
selection clause, a district court should ordinarily transfer the case to the forum specified in that
clause.” Atl. Marine Constr. Co. v. U.S. Dist. Ct. for W. Dist. of Tex., 134 S. Ct. 568, 581 (2013)
(emphasis added). The U.S. Supreme Court made clear that its “analysis pre suppose[d] a
contractually valid forum selection clause.” Id. at 581 n.5. The inquiry into a clause’s validity
and scope thus precedes the question of transfer pursuant that clause. See, e.g., Indus. Print Techs.
LLC v. Canon U.S.A., Inc., No. 2:14-CV-00019, 2014 WL 7240050, at *1–2 (E.D. Tex. Dec. 19,
2014) (“[T]he Atlantic Marine analysis . . . presupposes a valid contract and a dispute that
unquestionably falls within the scope of that contract.”); In re Union Elec. Co., 787 F.3d 903, 907
(8th Cir. 2015) (citing with approval a lower court’s preliminary determination of a forum selection
clause’s validity); Ashmore v. Allied Energy, Inc., No. 8:14-CV-00227-JMC, 2015 WL 128596, at
*3 (D.S.C. Jan. 9, 2015) (noting that a “[c]ourt must first determine whether the forum selection
clause is valid under federal law” (internal quotations omitted)); Rogovsky Enter., Inc. v.
Masterbrand Cabinets, Inc., 88 F. Supp. 3d 1034, 1042 (D. Minn. 2015) (treating a relevant forum
selection clause’s validity as a threshold question on a motion to transfer). If the court concludes
that the forum selection clause is applicable, the usual § 1404 analysis is altered in two relevant
ways: (1) the plaintiff's choice of forum merits no weight, and (2) the district court should consider
arguments about public interest factors only. Atl. Marine, 651 U.S. at 581–82. “Because [the public
interest factors] will rarely defeat a transfer motion, the practical result is that forum selection
clauses should control except in unusual circumstances.” Id. at 582. In other words, “[o]nly under
extraordinary circumstances unrelated to the convenience of the parties should a § 1404(a) motion
be denied.” Id. at 581. Where a court finds that the forum selection clause is not valid or that the
dispute does not fall within the scope of the contract, the typical section 1404 venue transfer
analysis comes into play. See Indus. Print Technologies, 2015 WL 128596, at *1.
The threshold inquiry when determining transfer eligibility under section 1404(a) is
“whether the judicial district to which transfer is sought would have been a district in which the
claim could have been filed,” or whether all parties have consented to a particular jurisdiction. In
re Volkswagen AG, 371 F.3d 201, 203 (5th Cir. 2004) (“Volkswagen I”). Once that threshold
inquiry is met, the Fifth Circuit has held that “[t]he determination of ‘convenience’ turns on a
number of public and private interest factors, none of which can be said to be of dispositive
weight.” Action Indus., Inc. v. U.S. Fid. & Guar. Co., 358 F.3d 337, 340 (5th Cir. 2004). The
private interest factors 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; (4) all other practical problems that make trial of a case easy, expeditious and
inexpensive. In re Volkswagen of America, Inc., 545 F.3d 304, 315 (5th Cir. 2008) (en banc)
(“Volkswagen II”). The public interest factors 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 or in the application of foreign law. Id. These factors
are not exhaustive or exclusive, and no single factor is dispositive. Id.
Defendants contend the Court should transfer this case to the Northern District of Texas
because a valid forum selection clause requires Plaintiffs to bring any lawsuit against the Board
“in any courts in the City of Dallas, Dallas County, Texas.” Plaintiffs contend the forum selection
clause is invalid. Plaintiffs argue in the alternative that even if the Court finds the forum selection
clause applicable, the Eastern District of Texas is a proper forum and the balance of private and
public factors weighs against transfer.
The forum selection clause at issue is found in the “Administration” part of the Plan at
Section 3.01(o). The relevant portion provides: “The System and the Board may only be sued in
any courts in the City of Dallas, Dallas County, Texas with proper subject matter jurisdiction”
(Dkt. #46, Appendix at 18). Defendants argue, and the Court agrees, that this is a valid forum
selection clause. In the Fifth Circuit, mandatory forum selection clauses are presumed valid unless
the plaintiff shows the clause is unreasonable under the circumstances. See Barnett v. DynCorp
Int’l, L.L.C., 831 F.3d 296, 301 (5th Cir. 2016) (explaining that the Fifth Circuit “requires a party
attacking a forum selection clause to overcome a presumption of enforceability by showing that
the clause is ‘unreasonable’ under the circumstances”).
The Court finds the forum selection clause presumptively reasonable. However, Plaintiffs
may avoid enforcement if they can demonstrate unreasonableness. See id. Unreasonableness
potentially exists where:
(1) the incorporation of the forum selection clause into the agreement was the
product of fraud or overreaching; (2) the party seeking to escape enforcement “will
for all practical purposes be deprived of his day in court” because of the grave
inconvenience or unfairness of the selected forum; (3) the fundamental unfairness
of the chosen law will deprive the plaintiff of a remedy; or (4) enforcement of the
forum selection clause would contravene a strong public policy of the forum state.
Haynsworth v. The Corporation, 121 F.3d 956, 963 (5th Cir. 1997). Here, Plaintiffs do not claim
the forum selection clause is unreasonable under any of the recognized situations under Fifth
Circuit law. Rather, Plaintiffs assert the Court should hold the forum selection clause invalid
because Defendants did not reasonably communicate to Plaintiffs the existence of the forum
selection clause in the Plan. But Plaintiffs rely on cases outside this circuit and ignore the standard
applied in the Fifth Circuit. See, e.g., Philips v. Audio Active Ltd., 494 F.3d 378, 383 (2d Cir. 2007)
(explaining that the first inquiry in determining whether to dismiss a claim based on a forum
selection clause in the Second Circuit is “whether the clause was reasonably communicated to the
party resisting enforcement”); Estate of Myhra v. Royal Caribbean Cruises, Ltd., 695 F.3d 1233,
1244 (11th Cir. 2012) (explaining the Eleventh Circuit utilizes a two-part test of “reasonable
communicativeness”). The Fifth Circuit does not require “reasonable communicativeness.” In fact,
the Fifth Circuit has held that a forum selection clause can bind a plaintiff who never bargained
for the clause. See Hellenic Inv. Fund, Inc. v. Det Norske Veritas, 464 F.3d 514, 517–20 (5th Cir.
2006) (binding a nonsignatory to a forum selection clause because it benefitted from the underlying
contract and noting that “[Plaintiff] cannot embrace the Rules by bringing a claim . . . alleging, in
essence, a violation of the [defendant’s] Rules without accepting the consequences of those Rules.
[Plaintiff] is estopped from denying the entire contract, including the forum selection clause”).
Here, as in Hellenic, the Plaintiffs are bound to the forum selection clause because they are suing
for a violation of the Plan, which provides Plaintiffs with retirement benefits.
Plaintiffs further argue that the forum selection clause is not enforceable because it is not
incorporated into the statute that governs the Plan. But Plaintiffs do not provide any authority for
an incorporation requirement. Further, the statute grants the Board “full power to make rules and
regulations pertaining to . . . the operation of the pension system . . . .” Tex. Rev. Civ. Stat. Ann.
art. 6243a-1 § 3.01(j). Plaintiffs have offered no support to show that every Board decision or
regulation must be codified. The Court finds the statute provides an appropriate avenue for the
Board—two-thirds of which is elected by members—to approve an enforceable forum selection
Plaintiffs argue in the alternative that even if the forum selection clause is valid, the Eastern
District of Texas is a proper venue under the clause. But Plaintiffs ignore the plain language of the
forum selection clause, which dictates that Plaintiffs must sue the Board “in any courts in the City
of Dallas, Dallas County, Texas” (emphasis added). Although a portion of the City of Dallas
reaches two counties—Collin and Denton—in the Eastern District of Texas, Sherman Division,
this Court’s jurisdiction does not reach any part of the City of Dallas that is in Dallas County. The
Court finds Plaintiffs’ interpretation of the clause unreasonable in light of the plain, clear language
prescribing a Dallas County forum.
The Court finds that the forum selection clause dictates transfer and Plaintiffs have not met
their burden in showing that enforcement would be unreasonable or that “extraordinary
circumstances” militate against transfer. Atl. Marine, 134 S. Ct. at 581–82. A convenience analysis
is unnecessary in light of the Court’s determination that the forum selection clause is enforceable
because “[o]nly under extraordinary circumstances unrelated to the convenience of the parties
should a § 1404(a) motion be denied.” Id. at 581. Even if the Court were to conduct a traditional
§ 1404(a) convenience analysis, the balance would favor transfer. In the Fifth Circuit, courts weigh
a number of public and private interest factors to determine whether to transfer a case. The public
interest factors 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 or in the application of foreign law. Volkswagen II, 545 F.3d 304, 315 (5th Cir. 2008) (en
banc). Here, the first factor is neutral because the latest statistics from the Administrative Office
of the U.S. Courts show that the Northern District of Texas’s median time-to-disposition is 6.7
months, compared to 7.1 months for the Eastern District, while the Northern District’s median
time-to-trial is 24.3 months, compared to 20.2 months for the Eastern District. See Admin. Office
of the U.S. Courts, Federal Court Management Statistics—Comparison Within Circuit—During
the 12-Month Period Ending September 30, 2016, p.5, http://www.uscourts.gov/sites/default/
files/data_tables/fcms_na_distcomparison0930.2016.pdf. The second factor favors transfer
because Dallas police and firefighters work in and serve Dallas and the System is headquartered
in Dallas. The third and fourth public interest factors are neutral because there is no indication that
the Eastern or Northern District of Texas is better equipped to handle Texas pension law or federal
civil rights law. Finally, the private interest factors weigh in favor of transfer because a valid forum
selection clause exists. See Atl. Marine, 134 S. Ct. at 581–82 (holding that private interest factors
favor transfer if a valid forum selection clause exists). In sum, no public or private interest factors
weigh against transfer and a transfer to Dallas better serves the “interest of justice.”
The Court finds that the valid forum selection clause requires Plaintiffs to bring this suit in
Dallas. Plaintiffs have neither shown that enforcement of the clause would be unreasonable under
the circumstances nor that the convenience factors weigh against transfer.
It is therefore ORDERED that The Board of Trustees of the Dallas Police and Fire Pension
System, Samuel Friar, Ken Haben, Joe Schutz, Gerald Brown, Clint Conway, Brian Hass, Tho
Tang Ho, and Ken Sprecher’s Motion to Transfer Venue (Dkt. #46) is hereby GRANTED, and
this case is transferred in its entirety to the Northern District of Texas, Dallas Division.
SIGNED this 19th day of May, 2017.
AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE
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