Opinion
Case No.: 23-cv-01808-AJB-MSB
2024-02-07
Michael SCOTT, Plaintiff, v. AIRSTREAM, INC.; Carefree/Scott Fetzer Company (d/b/a Carefree of Colorado); and Does 1 through 10, inclusive, Defendants.
Larry Chae, Veracis Law Corporation, Orange, CA, for Plaintiff. Dolores E. Gonzales, James R. Robertson, Bravo Law Group, A.P.C., San Diego, CA, for Defendant Airstream, Inc. Hang Thi Alexandra Do, James P. Leonard, II, Robert A. Shields, Wilson Turner Kosmo LLP, San Diego, CA, for Defendant Carefree/Scott Fetzer Company.
Larry Chae, Veracis Law Corporation, Orange, CA, for Plaintiff.
Dolores E. Gonzales, James R. Robertson, Bravo Law Group, A.P.C., San Diego, CA, for Defendant Airstream, Inc.
Hang Thi Alexandra Do, James P. Leonard, II, Robert A. Shields, Wilson Turner Kosmo LLP, San Diego, CA, for Defendant Carefree/Scott Fetzer Company.
ORDER DENYING AIRSTREAM, INC.'S MOTION TO TRANSFER VENUE
Anthony J. Battaglia, United States District Judge.
Defendant Airstream, Inc. moves to transfer venue to the United States District Court for the Southern District of Ohio under 28 U.S.C. § 1404(a). (Doc. No. 8.) Defendant Carefree/Scott Fetzer Co. has filed a joinder to the motion. (Doc. No. 8-4.) The motion has been fully briefed, (Doc. Nos. 11 & 14), and the matter is suitable for determination on the papers. For the reasons set forth below, the Court DENIES Airstream's motion.
I. BACKGROUND
On May 28, 2022, Plaintiff purchased a 2022 Airstream Interstate 19 motor home ("Subject RV") from Bay Area Airstream Adventures in Fairfield, California. (Complaint ("Compl."), Doc. No. 1-4, ¶ 5; Doc. No. 11 at 6.) On the same date Plaintiff signed the contract for the purchase of the Subject RV, he also signed the "Airstream 2022 Interstate Limited Warranty" ("Limited Warranty"). (Declaration of Rick March, Doc. No. 8-3, ¶ 3; Exhibit B (Limited Warranty), Doc. No. 8-7.) The Limited Warranty provides:
EXCLUSIVE JURISDICTION FOR DECIDING LEGAL DISPUTES RELATING TO ALLEGED BREACH OF EXPRESS WARRANTY AND BREACH OF IMPLIED WARRANTIES ARISING BY OPERATION OF LAW AS WELL AS THOSE RELATING TO REPRESENTATIONS OF ANY NATURE RESTS IN THE COURTS WITHIN THE STATE OF MANUFACTURE, WHICH IS OHIO. ALSO, THIS LIMITED WARRANTY SHALL BE INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO. ANY AND ALL CLAIMS, CONTROVERSIES, AND CAUSES OF ACTION ARISING OUT OF OR RELATING TO THIS LIMITED WARRANTY, WHETHER SOUNDING [in] CONTRACT, TORT OR STATUTE, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF OHIO, INCLUDING ITS STATUTE OF LIMITATIONS, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW RULE THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF A DIFFERENT JURISDICTION.
(Ex. B at 2) (capitals and emphasis in original).
Plaintiff alleges his motor home had numerous defects covered by warranty. (Compl. ¶ 10.) On June 30, 2023, Plaintiff filed this case under the Song-Beverly Act in the Superior Court of California, County of San Diego. (See generally id.) On September 29, 2023, Defendants removed the case to federal court. (Doc. No. 1.)
II. LEGAL STANDARD
Under 28 U.S.C. section 1404(a), "for the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district ... where it might have been brought." The ultimate determination is subject to the discretion of the court and must be made on a case-by-case basis. Jones v. GNC Franchising, Inc., 211 F.3d 495, 498 (9th Cir. 2000). However, an action may also be transferred under § 1404(a) where the parties have previously entered into an agreement that includes a valid forum-selection clause. See Atl. Marine Constr. Co., Inc. v. U.S. Dist. Court for W. Dist. of Tex., 571 U.S. 49, 59, 134 S.Ct. 568, 187 L.Ed.2d 487 (2013). Section 1404(a) permits transfer to any district where venue is also proper, or to any other district to which the parties have agreed by contract or stipulation. Id. Therefore, where the parties have previously agreed by contract for a specific federal district to hear their disputes, § 1404(a) facilitates enforcement of the forum-selection clause by transfer to the agreed-upon venue. Id.
The Supreme Court has held that a valid forum-selection clause must be "given controlling weight in all but the most exceptional cases." Atl. Marine, 571 U.S. at 60, 134 S.Ct. 568 (quoting Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 33, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988) (Kennedy, J., concurring)). Consequently, when evaluating a § 1404(a) motion based on a forum-selection clause, a court should transfer the case to the forum specified in the clause, unless extraordinary circumstances exist which are unrelated to the convenience of the parties. See id. at 62, 134 S.Ct. 568; see also Huddleston v. John Christner Trucking, LLC, No. 1:17-cv-00925-LJO-SAB, 2017 WL 4310348, at *3 (E.D. Cal. Sept. 27, 2017) ("The Court applies federal law to the interpretation and enforcement of a forum-selection clause.").
Typically, when venue is proper in both the original and the proposed districts, a motion to transfer venue under § 1404(a) requires the court to weigh multiple factors to determine whether transfer is appropriate. However, when a district court is evaluating a defendant's § 1404(a) motion to transfer based on a valid forum-selection clause, the analysis changes in three ways. First, the court should give no weight to the plaintiff's choice of forum.
Atl. Marine, 571 U.S. at 63, 134 S.Ct. 568. Rather, as the party arguing against the forum-selection clause, the plaintiff bears the burden of showing why transfer to the bargained forum is unwarranted. Id. Second, the district court "should not consider arguments about the parties' private interests[,]" such as ease of access to sources of proof, the cost of obtaining attendance of willing witnesses, et cetera. Id. at 64, 134 S.Ct. 568. The court need only consider arguments about public-interest factors, though even these factors will "rarely defeat a transfer motion" when the parties have agreed to a forum-selection clause. Id. Third, though transfers under § 1404(a) usually carry with them the original venue's choice-of-law rules, the "transferee court" specified in a forum-selection clause need not apply the law of the original venue in which the plaintiff filed suit upon transfer. Id.
III. DISCUSSION
A forum-selection clause is prima facie valid unless the party challenging the provision can show it is unreasonable under the circumstances. M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972). A forum selection clause may be deemed unreasonable under the following circumstances: "(1) if the inclusion of the clause in the agreement was the product of fraud or overreaching; (2) if the party wishing to repudiate the clause would effectively be deprived of his day in court were the clause enforced; and (3) if enforcement would contravene a strong public policy of the forum in which suit is brought." Holland Am. Line Inc. v. Wartsila N. Am., Inc., 485 F.3d 450, 457 (9th Cir. 2007) (quoting Murphy v. Schneider Nat'l, Inc., 362 F.3d 1133, 1140 (9th Cir. 2004)). Plaintiff asserts the Court should not enforce the forum-selection clause here because all three circumstances apply. (Doc. No. 11 at 10.)
A. Fraud or Overreaching
Plaintiff first contends the forum selection clause is a result of fraud and overreaching because he traveled from Southern California to Northern California to complete the transaction and planned to use the Subject RV as his method of return, and he was rushed into signing the Limited Warranty or be forced to incur additional unanticipated expenses either for return travel or lodging. (Doc. No. 11 at 10-11.) Plaintiff further asserts Bay Area Airstream Adventures' employees refused to provide Plaintiff with the documents in advance of actual signing, placed a strict time limitation on completion of the signing process, and assured him that he was protected under California law. (Id. at 11.)
The Court is not persuaded by Plaintiff's contentions. "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.'" Richards v. Lloyd's of London, 135 F.3d 1289, 1289 (9th Cir. 1998) (quoting Scherk v. Alberto-Culver Co., 417 U.S. 506, 518, 94 S.Ct. 2449, 41 L.Ed.2d 270 (1974)). "'Overreaching' is a ground 'short of fraud,' and a mere showing of 'non-negotiability and power difference' does not render a forum selection clause unenforceable." Mahoney v. Depuy Orthopaedics, Inc., No. CIV F 07-1321 AWI SMS, 2007 WL 3341389, at *7 (E.D. Cal. Nov. 8, 2007). Plaintiff's arguments fall short of demonstrating that the forum-selection clause was a product of either fraud or overreach. As discussed, the contract for the purchase of the Subject RV included the Limited Warranty, which included the forum-selection clause. Plaintiff's argument that he was rushed to finalize the purchase and that he did not secure transportation or lodging in the
event he did not purchase the Subject RV at that time do not excuse compliance with the forum selection clause "absent some form of fraudulent inducement by the party seeking to enforce the clause." Blanco v. Royal Caribbean Cruises, Ltd., No. C-96-1976 BZ, 1996 WL 479529, at *1 (N.D. Cal. Aug. 15, 1996) (citing cases). Moreover, the fact that Plaintiff was "repeatedly assured... during the signing process that they did not need to worry about any of the details since California law provided them with a lot of protections for the purchase" does not rise to the level of fraud or overreaching.
The Court also finds this case distinguishable from Petersen v. Boeing Co., 715 F.3d 276 (9th Cir. 2013). In Peterson, the court found there were sufficient facts to demonstrate that the forum selection clause was included in the employment contract by fraud or overreaching. Id. at 282-83. The facts the court relied on were submitted by sworn affidavit, which stated the initial employment contract plaintiff signed in the United States did not mention a Saudi Arabian forum selection. Id. at 282. However, upon arrival in Saudi Arabia, plaintiff was required to sign a new employment contract, which did contain a Saudi Arabian forum selection clause. Id. at 282-83. Further, the supervisor did not permit plaintiff time to read the contract and told plaintiff that if he did not sign it, he would be forced to return to the United States immediately at his own expense. Id. at 283.
Here, the facts alleged by Plaintiff is unsubstantial and does not amount to fraud or overreaching. Although Plaintiff claims he was "rushed into signing the Airstream Warranty[,]" this Court finds it reasonable to take the time to read the Limited Warranty. Additionally, Plaintiff did not sign any contract, let alone one without a forum selection clause, before his travel from Southern California to Northern California, and it would have been reasonable for Plaintiff to find lodging or transportation if he had been unable to purchase the Subject RV at that time. For these reasons, the Court finds the forum-selection clause was not a product of fraud or overreach.
B. Deprive Plaintiff of Day in Court / Contravene Public Policy
Plaintiff's arguments as to whether enforcement of the forum-selection clause would deprive him of his day in court and would contravene public policy are largely similar, and thus the Court addresses them together. (See Doc. No. 11 at 12-16.) Specifically, Plaintiff argues the Song-Beverly Act's anti-waiver provision suggests that enforcement of the forum-selection clause would contravene California's public policy of protecting consumers, and that the forum-selection clause "only allows Ohio state law to govern the resolution of any claims[.]" (Id.) The Song-Beverly Act states that "[a]ny waiver by the buyer of consumer goods of the provisions of this chapter, except as expressly provided in this chapter, shall be deemed contrary to public policy and shall be unenforceable and void." Cal. Civ. Code § 1790.1; Murillo v. Fleetwood Enters., Inc., 17 Cal. 4th 985, 990, 73 Cal.Rptr.2d 682, 953 P.2d 858 (1998) ("[T]he Song-Beverly Act is strongly pro-consumer, expressly providing that waiver of its provisions by a buyer, except as expressly provided in this chapter, shall be deemed contrary to public policy and shall be unenforceable and void." (internal quotation marks and citation omitted)). Plaintiff contends that because the choice-of-law provision in the Limited Warranty requires Ohio law to govern his claims, that provision forces him to forego remedies under California's Song-Beverly Act, which thereby renders both the choice-of-law provision and forum-selection clause void. (Doc. No. 11 at 12-16.) Airstream does not argue the choice-of-law or forum-selection clauses conform to California public policy. (Doc. No. 14 at 4.) Instead, Airstream offers to stipulate that Plaintiff may pursue claims under California law in Ohio. (Id. at 5); see Verdugo v. Alliantgroup, L.P., 237 Cal. App. 4th 141, 158, 187 Cal.Rptr.3d 613 (2015) (stating that stipulation as to unwaivable rights may alter transfer analysis). Plaintiff does not agree to this stipulation. (See Doc. No. 11 at 16.)
Without the choice-of-law clause, the public policy concern Plaintiff raises would be eliminated. But accepting Airstream's stipulation would also contravene California public policy. When arguments about this type of clause are initially raised in California courts, Airstream may agree to stipulate them away. But there may be California consumers who file suit in Ohio originally, only to later discover that they somehow lost certain unwaivable rights. That scheme is contrary to California public policy and the Court should not condone or encourage it. Waryck v. Thor Motor Coach, Inc., No.: 22-cv-1096-L-MDD, 2023 WL 3794002, at *5 (S.D. Cal. Jan. 13, 2023); see, e.g., Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal. 4th 83, 129 n.13, 99 Cal.Rptr.2d 745, 6 P.3d 669 (2000) (Brown, J., concurring) ("[A]n employer will not be deterred from routinely inserting such a deliberately illegal clause into the arbitration agreements it mandates for its employees if it knows that the worst penalty for such illegality is the severance of the clause after the employee has litigated the matter. In that sense, the enforcement of a form arbitration agreement containing such a clause drafted in bad faith would be condoning, or at least not discouraging, an illegal scheme, and severance would be disfavored unless it were for some other reason in the interests of justice."); M/S Bremen, 407 U.S. at 15, 92 S.Ct. 1907 (A "choice-of-forum clause should be held unenforceable if enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by judicial decision.").
Other district courts have transferred actions based on similar stipulations. See, e.g., Zastawnik v. Thor Motor Coach, Inc., No. CV 22-08663-PSG-AS, 2023 WL 5167363 (C.D. Cal. June 16, 2023); Derosa v. Thor Motor Coach, Inc., No. 220CV04895SVWPLA, 2020 WL 6647734 (C.D. Cal. Sept. 30, 2020); Baxter v. Thor Motor Coach, Inc., No. 219CV01532JAMCKD, 2020 WL 1911549 (E.D. Cal. Apr. 20, 2020).
Overall, Plaintiff has met his heavy burden. Again, enforcing the forum-selection clause, in combination with the choice-of-law clause, would contravene strong California public policy. Moreover, accepting Airstream's proposed stipulations would likewise contravene California public policy because it would not deter the drafter from including such a clause. See, e.g., Armendariz, Inc., 24 Cal. 4th at 129, 99 Cal.Rptr.2d 745, 6 P.3d 669. The Court therefore declines to sever those clauses and rejects Airstream's proposed stipulations.
Airstream does not argue transfer is warranted under section 1404 even in the absence of an enforceable forum selection clause (i.e., based on the normal 1404 factors). Jones, 211 F.3d at 499. Regardless, the applicable factors demonstrate California is the more appropriate forum.
IV. CONCLUSION
For the reasons stated above, Airstream's motion to transfer venue is DENIED.
IT IS SO ORDERED.