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Linda Shorter v. Peaches Uniform

September 5, 2012

LINDA SHORTER,
PLAINTIFF,
v.
PEACHES UNIFORM, INC., DEFENDANT.



The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge

MEMORANDUM AND ORDER

Before the Court is Defendant Peaches Uniforms, Inc.'s ("Peaches") Motion to Apply Texas Law (ECF No. 30). For the reasons that follow, the motion is granted.

BACKGROUND

Linda Shorter ("Shorter") was employed by Peaches, a Texas corporation as an at-will employee under an oral employment agreement from 1987 until her termination on May 29, 2008.

(See Peaches' Reply, ECF No. 38 at 5; Shorter's Opp., ECF No. 37, at 2-3; Shorter Decl., ECF No. 37-1 at 2.)*fn1 Shorter was promoted to be Vice President of Merchandising and Design in 1994 and held that title until the time of her termination. (Shorter Decl., ECF No. 37-1 at 2.) In 1994, Shorter moved to Illinois for personal reasons and later moved to Iowa and then, in 2007 to California and worked out of her home. (Id.; Peaches' Brief in Support of its Motion to Apply Texas Law "Peaches' Brief", ECF 32 at 12-13.) Although these moves were unrelated to her job, Peaches permitted Shorter to continue her work from these locations. (Id.) Peaches does not have an office, own real property, or have a bank account in California. (Peaches' Brief at 12.) Although Peaches does business in California, Shorter did not have any responsibility for the business done in California and continued to submit her work to the Peaches' Texas office. (Shorter Decl. at 2; Peaches' Brief at 12-13.)

In May, 2010, Shorter filed a wrongful termination lawsuit in the San Joaquin County Superior Court and Peaches thereafter removed on the basis of diversity jurisdiction. (See ECF No 1, Notice of Removal; ECF No. 1-1 (Compl.). In her Complaint, Shorter brings state law causes of action for (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; (3) detrimental reliance; (4) wrongful termination in violation of public policy; (5) intentional misrepresentation; (6) defamation and slander. (Compl., ECF No. 1-1.)

Peaches thereafter filed the instant Motion to Apply Texas law (ECF No. 30), which Shorter opposes. Peaches generally contends that Texas law is appropriate here because: (1) the laws of Texas and California differ for each of Shorter's causes of action; (2) Texas has the greater interest in having its law applied in this case; and (3) Texas's interests would be more impaired if its law were not applied. (See, Peaches' Brief, ECF 32.) Peaches concedes that California law and Texas law are the same as to Shorter's (1) detrimental reliance, and (2) defamation. In general, Shorter argues that Peaches has significant business dealings with California, that the relevant laws are not materially different, and California's interests will be more impaired if its laws are not applied. (Opp., ECF, 37.)

STANDARD

Federal courts sitting in diversity apply the law of the forum state when making choice of law determinations. Hoffman v. Citibank (South Dakota), N.A., 546 F.3d 1078, 2082 (9th Cir. 2008) (citation omitted). California's choice of law framework is set forth in Restatement § 187(2) and in Nedlloyd Lines B.V. v. Superior Court, 3 Cal.4th 459 (Cal. 1992).

In the absence of a choice of law agreement between the parties, as was the case here, California applies a three-part test, known as the "governmental interest approach" to determine choice of law in the absence of an effective choice-of-law agreement.

See Wash. Mut. Bank v. Superior Court, 24 Cal.4th 906, 915-22 (2001). The governmental interest approach requires:

(1) determining if the foreign law "materially differs" from California law; (2) and if so, next determining each respective state's interest in application of its law; (3) and finally, if the laws materially differ and both states have an interest in the litigation, selecting the law of the state whose interest would be "more impaired" if its law were not applied.

Id.

...


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