Opinion
Case No. EDCV 08-980-VAP (PLAx).
September 30, 2008
[Motion filed on August 29, 2008] ORDER GRANTING DEFENDANT'S MOTION TO TRANSFER
The Court has received and considered all papers filed in support of, and in opposition to, Defendant's "Motion to Transfer or, in the Alternative, to Dismiss." The Motion is appropriate for resolution without oral argument pursuant to Local Rule 7-15. The hearing, currently set for October 6, 2008 at 10:00 a.m. is VACATED. For the reasons set forth below, the Court GRANTS the Motion.
I. BACKGROUND
A. Procedural History
Plaintiff filed his Complaint on April 30, 2008 in the California Superior Court, San Bernardino County, claiming fraud, violation of 35 U.S.C. § 297, breach of contract, and common counts. Defendant removed the case to this Court on July 22, 2008, based on federal question jurisdiction, 28 U.S.C. § 1332. Defendant filed an Answer on August 28, 2008.Defendant filed a "Motion to Transfer or, in the Alternative, to Dismiss Action" ("Mot.") on August 29, 2008. Plaintiff filed an Opposition ("Opp'n") on September 17, 2008. Defendant filed a Reply ("Reply") on September 29, 2008.
Plaintiff has raised several arguments about Defendant's purported untimely Answer. (See Opp'n.) Plaintiff argues that the Court should not consider Defendant's venue arguments because the Answer, which included an objection to venue, was not filed timely. Since Defendant filed his Answer and subsequent Motion regarding venue before any default was entered, and it should be noted that none has been entered, the Court does not consider these arguments. See, e.g., Mitchell v. Brown Williamson Tobacco Corp., 294 F.3d 1309, 1317 (11th Cir. 2002).
B. Factual Allegations
On or about December 2006, Plaintiff communicated with Defendant about Defendant's representations in patenting, constructing, and marketing inventions. (See Compl. ¶¶ 9, 11.) Plaintiff learned of Defendant's services through advertising by Defendant, viewed by Plaintiff in Rialto, California. (See Opp'n at 12.)
Plaintiff entered into a "Representation Agreement" with Defendant on January 3, 2007. (See Compl. ¶ 18; Mot. Ex. A.) In pertinent part, the contract contained the following language, placed one paragraph above the signature line: "This agreement shall be governed by and interpreted according to the laws of the State of South Carolina, which Client hereby agrees shall be the appropriate venue for any action, and Client submits to the personal jurisdiction thereof." (Mot. Ex. A.) Pursuant to the contract, Plaintiff paid money to the Defendant in the amount of $13,000. (See id. at ¶¶ 18, 19, 28.)
Plaintiff alleges that Defendant willfully and fraudulently misrepresented material facts, Plaintiff relied on those representations and is now damaged because of them. (See id. at ¶¶ 27-29.) Also, Plaintiff alleges that Defendant has breached the Representation Agreement by failing to provide the agreed-upon services. (See id. at ¶¶ 47.)
II. LEGAL STANDARD
Federal courts evaluate forum selection clauses and determine whether an action has been brought in the proper venue under 28 U.S.C. § 1406. See, e.g., Robertson v. Norwegian Cruise Line, 897 F. Supp. 1285, 1286 (C.D. Cal. 1995). Section 1406(a) states:
The Court notes that Defendant's Motion, less than four pages in length, argues no statutory basis upon which the Court should transfer the case and instead relies exclusively on case law. (See Mot. at 3.) Defendant's Alternative Motion to Dismiss, argued in one sentence, invokes 28 U.S.C. § 1406(a) as its foundation. (Id.)
The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.
Federal law governs the validity of a forum selection clause. See TAAG Linhas Aereas de Angola v. Transamerica Airlines, Inc., 915 F.2d 1351, 1353 (9th Cir. 1990). The Ninth Circuit has held that "the rule set forth in M/S Bremen v. Zapata Off-Shore Co. [ 407 U.S. 1 (1972)] controls the consideration of a motion to dismiss for improper venue based upon a forum selection clause." Jones v. GNC Franchising, Inc., 211 F.3d 495, 497 (9th Cir. 2000).
"In Bremen, the Supreme Court held that a forum selection clause is presumptively valid and should not be set aside unless the party challenging the clause `clearly show[s] that enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching.'" Jones, 211 F.3d at 497 (citing Bremen, 407 U.S. at 15.) Under Bremen, "forum selection clauses are prima facie valid and should not be set aside unless the party challenging enforcement of such a provision can show it is `unreasonable under the circumstances.'"Arguenta v. Banco Mexicano, 87 F.3d 320, 325 (9th Cir. 1996) (citing Bremen, 407 U.S. at 10.).
A forum selection clause is "unreasonable under the circumstances" where the clause was the result of "fraud or overreaching," "the contractual forum will be so gravely difficult and inconvenient that [the non-moving party] will for all practical purposes be deprived of his day in court," or "enforcement would contravene a strong public policy of the forum in which suit is brought." Bremen, 407 U.S. at 15-19. "The party challenging the forum selection clause bears a `heavy burden' of establishing the existence of one of the aforementioned grounds for rejecting its enforcement." Jones, 211 F.3d at 497 (citingFireman's Fund Ins. Co. v. M.V. DSR Atlantic, 131 F.3d 1336, 1338 (9th Cir. 1998)).
II. DISCUSSION
A. Forum Selection Clause
Although Defendant admits that venue is proper in the Central District of California, Defendant moves the Court to transfer the action to the United States District Court, District of South Carolina, pursuant to a forum selection clause contained in the contract between Plaintiff and Defendant. (See Mot. at 3.) The forum selection clause stated: "This Agreement shall be governed by and interpreted according to the laws of the State of South Carolina, which Client hereby agrees shall be the appropriate venue for any action, and Client submits to the personal jurisdiction thereof." (Mot. Ex. A.)Plaintiff argues that enforcement of the forum selection clause would be unreasonable for several reasons. (Opp'n at 9-13.) The Court addresses each in turn.
First, Plaintiff argues "the clause was obtained by fraud." (Opp'n at 10.) Plaintiff alleges that he was induced fraudulently to enter into the contract with Defendant, in violation of 35 U.S.C. § 297. (Id. at 11; Complaint ¶¶ 14-17, 39-42.) "For a party to escape a forum selection clause on the grounds of fraud, it must show that the inclusion of that clause in the contract was the product of fraud or coercion." Batchelder v. Kawamoto, 147 F.3d 915, 919 (9th Cir. 1998) (quotations omitted) (citation omitted). An allegation that the entire contract was fraudulently induced does not, per se, render the forum selection clause unenforceable. Id. Plaintiff has not proffered particularized allegations about the purported fraudulent inclusion of the forum selection clause itself. Thus, this weighs in favor of transfer.
Second, Plaintiff argues that the clause was obtained by "undue influence or overwhelming bargaining power." (Opp'n at 11.) He alleges "[t]he forum selection clause was not the result of negotiation in which the parties agreed on a mutually acceptable venue or a neutral ground" but rather it was part of an "adhesion agreement." (Id. at 12). A forum selection clause is not necessarily unreasonable if it was presented on a `take it or leave it' basis or in a form contract. See Fireman's Fund Ins. Co. v. M.V. DSR Atlantic, 131 F.3d 1336, 1338-39 (9th Cir. 1997); see also Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 593-95 (1991). The validity of a forum selection clause in an adhesion contract depends on whether the existence of the clause was communicated reasonably to the plaintiff. See Carnival Cruise Lines, Inc., 499 U.S. at 595. Here, the forum selection clause was the last clause included in the contract, placed directly above Plaintiff's signature line; under Carnival Cruise, this is conspicuous enough to demonstrate it was communicated reasonably to Plaintiff. Id. at 593-95 (fine-print clause on cruise ticket stub requiring all disputes be litigated in Florida courts enforceable because, in part, plaintiff did not claim lack of notice of the provision). Also, Plaintiff does not claim lack of notice of the forum selection clause in the Representation Agreement. This also weighs in favor of transfer.
Finally, Plaintiff argues that enforcement of the clause would deprive him of his day in court. As an unemployed resident of California, Plaintiff argues "it would be financially impossible for [him] to litigate a matter in South Carolina." (Opp'n at 13.) Although it is a compelling reason to deny transfer, financial hardship, alone, is insufficient to deprive an individual of his day in court. See Murphy v. Schneider Nat'l, Inc., 362 F.3d 1133, 1142 (9th Cir. 2004) (combination of financial hardship and physical inability to travel could effectively deprive litigant of his day in court). In addition, Plaintiff does not offer specific allegations "as to travel costs, availability of counsel . . ., [or] location of witnesses. . . ." Spralin v. Lear Siegler Mgmt. Serv. Co., Inc., 926 F.2d 865, 869 (9th Cir. 1991). This too weighs in favor of transfer.
Plaintiff has not carried his "heavy burden" of establishing that the forum selection clause is not enforceable. See Jones, 211 F.3d at 497; Fireman's Fund Ins. Co., 131 F.3d at 1338. For the foregoing reasons, the Court finds the forum selection clause enforceable.
B. The Interest of Justice
Upon finding that a forum selection clause is enforceable, a district court "shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought." 28 U.S.C. § 1406(a).
"Normally transfer will be in the interest of justice because normally [sic] dismissal of an action that could have been brought elsewhere is `time-consuming and justice-defeating.'"Miller v. Hambrick, 905 F.2d 259, 262 (9th Cir. 1990) (addressing transfer under 28 U.S.C. § 1631), (quoting Goldlawr, Inc. v. Heiman, 369 U.S. 463, 467 (1962) (addressing transfer under 28 U.S.C. § 1406)). Consistent with this presumption, transfer is in the interest of justice in this case. See Flake v. Medline Indus., Inc., 882 F. Supp. 947, 952 (E.D. Cal. 1995) (transferring case because of improper venue based on a forum selection clause).
IV. CONCLUSION
For the foregoing reasons, Defendant's Motion for Transfer is GRANTED and the matter is TRANSFERRED to the United States District Court for the District of South Carolina.