Johnson v. Academy Mortgage Corporation

Filing 27

ORDER GRANTING MOTION TO TRANSFER VENUE. The 6 defendant's Motion To Dismiss or Transfer Venue is GRANTED consistent with the foregoing findings and conclusions and the following orders. Under 28 U.S.C. § 1404, this case is TRANSFERRED to the United States District Court for the District of Utah. The 19 defendant's Motion for Stay of Decision on Plaintiff's Motion for Conditional Certification is DENIED as moot. The 9 Plaintiff's Motion To Certify Conditionally A Collection Action Under the Fair Labor Standards Act 29 U.S.C. § 216(b) and for Court Assisted Notice Under Authority of Sperling v. Hoffman La Roche, 493 U.S. 165, 169 (1989) is DENIED without prejudice, subject to renewal after this case has been transferred to the District of Utah, by Judge Robert E. Blackburn on 03/12/2012.(wjcsl, ) [Transferred from Colorado on 3/22/2012.]

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Robert E. Blackburn
Civil Case No. 11-cv-01328-REB-CBS
TERESA JOHNSON, on behalf of herself and other persons similarly situated,
Plaintiff,
v.
ACADEMY MORTGAGE CORPORATION, a Colorado corporation,
Defendant.

ORDER GRANTING MOTION TO TRANSFER VENUE
Blackburn, J.
This matter is before me on the defendant’s Motion To Dismiss or Transfer
Venue [#6]1 filed June 17, 2011. The plaintiff filed a response [#8], and the defendant
filed a reply [#16]. I grant the motion in part.
I. JURISDICTION
This court has jurisdiction over this case under 28 U.S.C. § 1331 (federal
question).
II. STANDARD OF REVIEW
The defendant seeks dismissal of this case based on improper venue. The
defendant argues that a mandatory forum selection clause in a contract between the
plaintiff and the defendant mandates that this case be brought in Utah. Motions to
dismiss based on a forum selection clause are analyzed as motions to dismiss for
1

“[#6]” is an example of the convention I use to identify the docket number assigned to a
specific paper by the court’s case management and electronic case filing system (CM/ECF). I use this
convention throughout this order.

improper venue under FED. R. CIV. P. 12(b)(3). In the alternative, the defendant seeks a
transfer of this case to the District of Utah.
28 U.S.C. § 1404(a) contemplates that “[f]or the convenience of the 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.” The district court is vested
with considerable discretion in determining whether transfer is appropriate. Chrysler
Credit Corp. v. Country Chrysler, Inc., 928 F.2d 1509, 1515 (10th Cir. 1991).
Generally, a forum selection clause in a contract is “prima facie valid and should be
enforced unless enforcement is shown by the resisting party to be unreasonable under
the circumstances.” Milk "N' More, Inc. v. Beavert, 963 F.2d 1342, 1346 (10th
Cir.1992).
III. ANALYSIS
The plaintiff, Teresa Johnson, is a former employee of the defendant, Academy
Mortgage Corporation. Ms. Johnson was laid off on March 31, 2011, when Academy
reduced its workforce. On April 14, 2011, Ms. Johnson signed a Severance Agreement
and Release (Agreement) reflecting her agreement with Academy concerning the
termination of her employment. Brief [#7], Exhibit B (Agreement). The Agreement
states that Ms. Johnson accepted 1,250 dollars, which she was “not otherwise entitled
to receive” to “settle and compromise” all claims described in the Agreement.
Agreement, p. 2, ¶¶ 1, 2. The released claims described in the Agreement include
claims under the Fair Labor Standards Act (FLSA). The Agreement contains a venue
provision, which provides, in part: “Any action involving this Agreement shall be brought
solely and exclusively in the state or federal courts located in the state of Utah.”
Agreement, p. 4, ¶ 17.
2

In her complaint [#1], Ms. Johnson asserts a claim for relief against Academy
under FLSA. According to Academy, Ms. Johnson’s FLSA claim implicates the
Agreement and, therefore, the forum selection clause of the Agreement is triggered. If
the forum selection clause is applicable, it requires that Johnson’s FLSA claim be
brought in a court in the state of Utah.
As Ms. Johnson concedes, the language of the forum selection clause is
mandatory. However, she contends her FLSA claim is legally distinct from claims
covered by the Agreement and, therefore, her claim does not involve the agreement.
Ms. Johnson asserts that her FLSA claim is distinct from the Agreement, and does not
involve the Agreement, because the release of her FLSA claim is unenforceable. If the
release of her FLSA claim is unenforceable, Ms. Johnson argues, then the FLSA
release must be written out of the Agreement. According to Ms. Johnson, if the FLSA
release is written out of the Agreement, then the FLSA claim alleged in her complaint
does not involve the Agreement. The venue clause of the agreement covers any
“action involving this Agreement . . . .” Agreement, p. 4, ¶ 17.
Some courts have held that employees may settle or compromise a FLSA back
wages claims only if the Secretary of Labor or a district court approves the settlement.
See, e.g., Dees v. Hydradry, Inc., 706 F. Supp. 2d 1227, 1237 - 1238 (M.D. Fla. 2010).
Other courts have concluded that certain FLSA settlements not approved by the
Secretary of Labor or a district court are enforceable. See, e.g., Martinez v. Bohls
Bearing Equip. Co., 361 F. Supp. 2nd, 608, 618 - 631 (W.D. Tex. 2005); U.S. v.
Allegheny-Ludlum Industries, Inc., 517 F.2d 826, 860 - 862 (5th Cir. 1975). 29 U.S.C.
§ 253 is read by some courts as explicitly permitting compromises of all FLSA claims
involving bona fide disputes, while other courts read § 253 much more narrowly. See
3

Martinez, 361 F. Supp. 2d at 623 - 631. In short, the release of Ms. Johnson’s FLSA
claim, as stated in the Agreement, presents a significant legal issue.
I conclude that Ms. Johnson’s FLSA claim necessarily involves the Agreement.
A court must determine to what extent, if any, Ms. Johnson’s release of her FLSA claim
is effective and enforceable. Inherently, that determination implicates the Agreement. If
the release is enforceable, then the effect of the release on Ms. Johnson’s FLSA claim
also must be determined. Ms. Johnson’s FLSA claim simply cannot be resolved without
addressing the effect of the Agreement. Because this action involves the Agreement,
the mandatory venue provision in the Agreement is applicable and enforceable. Under
that provision, this case may be brought “solely and exclusively in the state or federal
courts located in the state of Utah.” Agreement, p. 4, ¶ 17. I am not persuaded by Ms.
Johnson’s argument that venue in Utah is unreasonable.
IV. ORDERS
THEREFORE, IT IS ORDERED as follows:
1. That the defendant’s Motion To Dismiss or Transfer Venue [#6] filed June
17, 2011, is GRANTED consistent with the foregoing findings and conclusions and the
following orders;
2. That under 28 U.S.C. § 1404, this case is TRANSFERRED to the United
States District Court for the District of Utah (United States Courthouse, 350 S. Main
Street, Salt Lake City, Utah 84101);
3. That the defendant’s Motion for Stay of Decision on Plaintiff’s Motion for
Conditional Certification [#19] filed August 12, 2011, is DENIED as moot; and
4. That the Plaintiff’s Motion To Certify Conditionally A Collection Action
Under the Fair Labor Standards Act 29 U.S.C. § 216(b) and for Court Assisted
4

Notice Under Authority of Sperling v. Hoffman La Roche, 493 U.S. 165, 169 (1989)
[#9] filed July 19, 2011, is DENIED without prejudice, subject to renewal after this case
has been transferred to the District of Utah.
Dated March 21, 2012, at Denver, Colorado.
BY THE COURT:

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