Mallory et al v. Lease Supervisors, LLC

Filing 97

Unsealed, redacted version of 94 MEMORANDUM OPINION AND ORDER denying without prejudice 83 MOTION to Enforce Settlement Agreement filed by Ty Farrell, Don Mallory; and denying 85 MOTION to Transfer Case out of District filed by Lease Supervisors LLC. (Ordered by Senior Judge Sidney A Fitzwater on 6/24/2020) (Senior Judge Sidney A Fitzwater)

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IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
DON MALLORY and TY FARRELL,
Individually and on Behalf of All
Others Similarly Situated,
Plaintiffs,
VS.
LEASE SUPERVISORS, LLC,
Defendant.

§
§
§
§
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§ Civil Action No. 3:17-CV-3063-D
§
§
§ on June 9, 2020. It contains redactions requested by the
§ parties.
§

MEMORANDUM OPINION
AND ORDER
Plaintiffs Don Mallory and Ty Farrell move to enforce the settlement agreement
reached with defendant Lease Supervisors, LLC (“Lease Supervisors”) on February 27, 2020.
Lease Supervisors opposes the motion and separately moves to transfer this case to the
United States District Court for the Western District of Texas, Midland-Odessa Division,
under 28 U.S.C. § 1404(a). For the reasons that follow, the court denies plaintiffs’ motion
without prejudice to their refiling their state-law contract claim in a court in Midland County,
Texas or Ector County, Texas that has subject matter jurisdiction, and it denies Lease
Supervisors’ motion to transfer this case.
I
This is a collective action seeking unpaid overtime pay under the Fair Labor Standards
Act of 1938 (“FLSA”), 29 U.S.C. § 201 et seq. On February 27, 2020 the parties entered into
a confidential settlement agreement and release of all claims (“Settlement Agreement”) that

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provides, inter alia, for the payment of $30,000 to plaintiffs, to be “paid in one payment
within thirty days of Defendant’s receipt of a fully executed copy of this Agreement.”
Settlement Agreement at 2. The Settlement Agreement further provides:
Plaintiffs agree that any dispute between or among the parties,
including any dispute arising out of or related to this Settlement
Agreement, must be brought in a court of proper jurisdiction
located in Midland County, Texas, or Ector County, Texas.
Plaintiffs agree to waive any right to a trial by jury related to any
dispute arising out of or related to this Settlement Agreement.
Id. at 4-5 (capitalization omitted). The Settlement Agreement also states that “Plaintiffs will
file all the necessary documents to obtain an order from the Court dismissing the Litigation
with prejudice.” Id. at 4 (underlining omitted).1
On April 2, 2020 plaintiffs filed the instant motion to enforce the Settlement
Agreement, contending that Lease Supervisors has represented that it is planning to pay the
agreed-upon settlement amount in monthly installments, rather than in a lump sum, and has
already sent the first payment. Plaintiffs maintain that, by adopting this incremental
approach to payment, Lease Supervisors has defaulted on its payment obligation under the
Settlement Agreement. They request that the court enforce the Settlement Agreement as
written, enter judgment against Lease Supervisors, and award them their reasonable

1

Although the court entered an order administratively closing the case on February 5,
2020, plaintiffs have not requested, and the court has not entered, a final judgment or order
of dismissal. See, e.g., United States v. Davenport, 897 F.Supp.2d 496, 519-20 n.10 (N.D.
Tex. 2012) (Lindsay, J.) (“The administrative closure of this case for statistical purposes is
simply a docket-management device. As such, it [is] not a final judgment and does not affect
the parties’ rights.”).
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attorney’s fees incurred in prosecuting their motion.
Lease Supervisors opposes plaintiffs’ motion and separately moves to transfer venue
under 28 U.S.C. § 1404(a).2 It contends that the Settlement Agreement contains a mandatory
forum selection clause that requires that any dispute between or among the parties related to
the Settlement Agreement be brought in a court of proper jurisdiction in Midland County,
Texas or Ector County, Texas, and it requests that the court transfer the case to the United
States District Court for the Western District of Texas, Midland-Odessa Division, or, in the
alternative, dismiss all claims with prejudice pursuant to the Settlement Agreement’s terms.
Plaintiffs oppose Lease Supervisors’ § 1404(a) motion.
II
The court begins with Lease Supervisors’ motion to transfer venue under 28 U.S.C.
§ 1404(a).
A
28 U.S.C. § 1404(a) codifies “the doctrine of forum non conveniens for the subset of
cases in which the transferee forum is within the federal court system.” Atl. Marine Constr.
Co. v. U.S. Dist. Court for W. Dist. of Tex., 571 U.S. 49, 60 (2013). Section 1404(a) provides
that, “[f]or 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.” In cases where

2

In its response to plaintiffs’ motion, Lease Supervisors incorporates the arguments
and authorities stated in its motion to transfer venue.
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there is no forum-selection clause, district courts “must evaluate both the convenience of the
parties and various public-interest considerations.” Atl. Marine, 571 U.S. at 62. They
analyze § 1404(a) motions under the familiar private- and public-interest factors3 and “decide
whether, on balance, a transfer would serve ‘the convenience of parties and witnesses’ and
otherwise promote ‘the interest of justice.’” Id. at 62-63 (quoting § 1404(a)).
But in cases where there is a valid forum-selection clause “[t]he calculus changes,”
because the clause “represents the parties’ agreement as to the most proper forum.” Id. at 63
(quoting Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 31 (1988)). In that circumstance,
district courts must “adjust their usual § 1404(a) analysis in three ways.” Id. “First, the
plaintiff’s choice of forum merits no weight. Rather, as the party defying the forum-selection
clause, the plaintiff bears the burden of establishing that transfer to the forum for which the
parties bargained is unwarranted.” Id. “Second, a court evaluating a defendant’s § 1404(a)
motion to transfer . . . should not consider arguments about the parties’ private interests.”
Id. at 64. “Third, when a party bound by a forum-selection clause flouts its contractual
obligation and files suit in a different forum, a § 1404(a) transfer of venue will not carry with
it the original venue’s choice-of-law rules—a factor that in some circumstances may affect
public-interest considerations.” Id. Accordingly, in a case involving a forum-selection
clause, “a district court should transfer the case unless extraordinary circumstances unrelated
to the convenience of the parties clearly disfavor a transfer.” Id. at 52.

3

In Atlantic Marine the Court identifies non-exclusive private- and public-interest
factors. Atl. Marine, 571 U.S. at 62 n.6.
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B
The Settlement Agreement states, in unmistakable terms, that “any dispute between
or among the parties, including any dispute arising out of or related to this Settlement
Agreement, must be brought in a court of proper jurisdiction located in Midland County,
Texas, or Ector County, Texas.” Settlement Agreement at 4-5. Plaintiffs do not dispute that
their motion to enforce the Settlement Agreement constitutes a “dispute arising out of or
related to [the] Settlement Agreement,” that is therefore governed by the forum selection
clause therein. Nor do they argue that the Settlement Agreement’s forum selection clause
is unenforceable. In fact, plaintiffs’ entire response to Lease Supervisors’ § 1404(a) motion
consists of the following paragraph:
Plaintiffs would show the Court that under the applicable
standards in the Fifth Circuit, Defendant’s motion is not well
taken. There are two provisions which govern venue in federal
court: 28 U.S.C. § 1404 and 28 U.S.C. § 1406. Neither of these
provisions are cited by Defendants and neither apply. The
bottom line is that Defendants have unilaterally chosen to not
pay the consideration cited in the settlement agreement and
instead have chosen to try to pay the consideration in monthly
installments of $1,000. The court should enforce the settlement
agreement and disregard the spurious motion to transfer.
Ps. Resp. at 1. Aside from their incorrect assertion that Lease Supervisors has failed to cite
the relevant statutory provision, see D. Br. at 2 (“Defendant requests the Court to transfer this
case to the appropriate court under 28 U.S.C. § 1404(a)[.]”), plaintiffs have failed to present
any argument for why the forum-selection clause in the Settlement Agreement should not be
enforced as written.

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III
Having concluded that the forum selection clause is enforceable with respect to
plaintiffs’ motion to enforce the Settlement Agreement, the court must address a
jurisdictional issue. Lease Supervisors apparently seeks to transfer all of the claims in this
case to the Western District of Texas pursuant to the forum selection clause in the Settlement
Agreement. See id. at 3 (“the Court should transfer this case to the appropriate forum chosen
by the parties.” (emphasis added)). But Lease Supervisors has not established—or even
argued—that the forum selection clause in the Settlement Agreement governs plaintiffs’
underlying FLSA claim. Nor has it provided the court any other ground for transferring
plaintiffs’ FLSA claim to the Western District of Texas.4
This court has supplemental jurisdiction over plaintiffs’ motion to enforce the
Settlement Agreement under 28 U.S.C. § 1367, because their state-law contract claim is part
of the same nucleus of facts as the FLSA claim on which jurisdiction in this case is
predicated. See Arena v. Graybar Elec. Co., 669 F.3d 214, 221 (5th Cir. 2012) (“[Section]
1367 gives the court discretion to exercise jurisdiction over state-law claims when: (1)
federal question jurisdiction is proper, and (2) the state-law claims derive from a common
nucleus of operative facts.” (footnote omitted)). But if the court were to grant any part of
Lease Supervisors’ motion to transfer, it would not transfer the now-settled FLSA claim;

4

In fact, the court already denied Lease Supervisors’ motion to transfer plaintiffs’
FLSA claim to the Western District of Texas in Mallory v. Lease Supervisors, LLC, 2018
WL 1457250, at *6 (N.D. Tex. Mar. 23, 2018) (Fitzwater, J.).
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instead, it would transfer the state-law contract claim that is the subject of the pending
motion to enforce the Settlement Agreement. The state-law contract claim and the motion
under which that claim is brought appear, however, to involve non-diverse parties,5 i.e., to
present a claim over which the Western District of Texas would not have subject matter
jurisdiction. That court, unlike this one, would not be exercising supplemental jurisdiction
over a state-law contract claim tied to federal-question jurisdiction conferred by an FLSA
claim.
Accordingly, because Lease Supervisors has not established that transfer under §
1404(a) is proper with respect to plaintiffs’ FLSA claim, and because the Western District
of Texas would not have subject matter jurisdiction over plaintiffs’ motion to enforce the
Settlement Agreement if the court were to transfer only their state-law contract claim, the
court denies Lease Supervisors’ motion to transfer under 28 U.S.C. § 1404(a).6

5

The court assumes that plaintiffs are citizens of Texas, even though they allege their
state of residency. See, e.g., Realty Holding Co. v. Donaldson, 268 U.S. 398, 399 (1925)
(holding that allegations of residency, rather than of citizenship, are inadequate to invoke the
court’s diversity jurisdiction). Likewise, even though plaintiffs have not pleaded the
citizenship of each member of Lease Supervisors, see, e.g., Harvey v. Grey Wolf Drilling
Co., 542 F.3d 1077, 1080 (5th Cir. 2008) (“All federal appellate courts that have addressed
the issue have reached the same conclusion: like limited partnerships and other
unincorporated associations or entities, the citizenship of a LLC is determined by the
citizenship of all of its members.”), because Lease Supervisors is a Texas LLC with its
principal place of business in Texas, the court assumes that at least one member is a citizen
of Texas and that, accordingly, Lease Supervisors is a citizen of Texas.
6

The court also denies Lease Supervisors’ alterative request that the court dismiss the
case with prejudice pursuant to the Settlement Agreement’s terms. The Settlement
Agreement provides that “[p]laintiffs will file all the necessary documents to obtain an order
from the Court dismissing the Litigation with prejudice.” Settlement Agreement at 4
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IV
The court also denies without prejudice plaintiffs’ motion to enforce the Settlement
Agreement. Lease Supervisors has conclusively established that this motion is governed by
the forum selection clause in the Settlement Agreement and that this court is therefore not
the proper forum in which to litigate it. Accordingly, the court denies plaintiffs’ motion to
enforce the Settlement Agreement without prejudice to their refiling their state-law contract
claim in a court in Midland County, Texas or Ector County, Texas that has subject matter
jurisdiction. See, e.g., Peacock v. Ins. & Bonds Agency of Tex., PLLC, 2012 WL 3702920,
at *5 (N.D. Tex. Aug. 28, 2012) (Fitzwater, C.J.) (dismissing, without prejudice, state law
claim governed by forum selection clause, and retaining jurisdiction over federal claim). By
denying the motion without prejudice, Lease Supervisors can pursue the motion in
compliance with the forum selection clause, in a court that has subject matter jurisdiction.
And by declining to transfer to the Western District of Texas a state-law contract claim
involving non-diverse parties (the court would only consider transferring the state-law
contract claim, not the FLSA action), the court is not burdening the Western District of Texas
with dismissing a case over which it would lack subject matter jurisdiction. Id.

(underlining omitted). Whether plaintiffs have failed to comply with this provision of the
Settlement Agreement is an issue that should also be decided by a court with proper
jurisdiction in Midland or Ector County, pursuant to the forum selection clause of the
Settlement Agreement.
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V
The court has filed this memorandum opinion and order under seal because it may
disclose materials submitted under seal during the briefing process. Because this litigation
is a matter of public record, the court concludes that the entire memorandum opinion and
order should not remain sealed. Instead, only the parts that should be protected from public
disclosure will remain sealed.
Accordingly, within 14 days of the date the memorandum opinion and order is filed,
the parties must file a joint request identifying the parts that they request remain sealed. If
they cannot agree on a particular joint request, they must state an individual request and
explain why agreement could not be reached as to that request. The court grants the parties
leave to file the joint request under seal.
*

*

*

For the reasons explained, the court denies plaintiffs’ motion to enforce the Settlement
Agreement without prejudice to their refiling their state-law contract claim in a court in
Midland County, Texas or Ector County, Texas that has subject matter jurisdiction, and it
denies Lease Supervisors’ motion to transfer.
SO ORDERED.
June 9, 2020.
_________________________________
SIDNEY A. FITZWATER
SENIOR JUDGE

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