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Bayol v. Zipcar, Inc.

United States District Court, N.D. California

September 25, 2014

GABRIELA BAYOL, Plaintiff,
v.
ZIPCAR, INC., Defendant.

ORDER DENYING DEFENDANT'S MOTION TO TRANSFER VENUE

THELTON E. HENDERSON, District Judge

This matter is set for hearing on October 6, 2014. Having considered the parties' arguments in the papers submitted, the Court now DENIES Defendant's motion without oral argument, pursuant to Civ. L.R. 7-1(b).

BACKGROUND

This is a putative class action challenging Zipcar's late fee policies. Plaintiffs claim that Zipcar's fees are illegal liquidated damages provisions under California's consumer protection laws, and seek remedies under the Consumers Legal Remedies Act (CLRA), sections 1750 to 1784 of the California Civil Code. In this motion, Zipcar seeks to enforce the forum selection clause in its Membership Agreement, which provides "All disputes hereunder shall be resolved solely in the applicable state or federal courts of Massachusetts." Zipcar-Bayol Membership Agreement at ¶ 9-5, Ex. 1 to Mot. (Docket No. 17-1). The Membership Agreement also includes a choice of law clause, which provides "This Contract is governed by the laws in force in the Commonwealth of Massachusetts and shall be interpreted according to the internal laws of such Commonwealth, without reference to its conflicts of laws or choice of law rules." Id.

LEGAL STANDARD

"For 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." 28 U.S.C. § 1404(a). District courts generally have broad discretion in deciding a motion to transfer under § 1404(a). Ventress v. Japan Airlines, 486 F.3d 1111, 1118 (9th Cir. 2007). "The calculus changes, however, when the parties' contract contains a valid forum-selection clause.... [A] valid forum-selection clause should be given controlling weight in all but the most exceptional cases." Atl. Marine Const. Co., Inc. v. United States Dist. Court, 134 S.Ct. 568, 581 (2013) (internal quotations and alterations removed).

Because Atlantic Marine 's rule only applies in the context of a valid forum selection clause, district courts "must consider arguments that the clause is invalid." Russel v. De Los Suenos, 2014 WL 1028882 at *6 (S.D. Cal. Mar. 17, 2014). "A forum selection clause is presumptively valid; the party seeking to avoid a forum selection clause bears a heavy burden' to establish a ground upon which [the court] will conclude the clause is unenforceable." Doe 1 v. AOL LLC, 552 F.3d 1077, 1083 (9th Cir. 2009) (quoting M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 17 (1972)). However, "a forum selection clause is unenforceable if enforcement would contravene a strong public policy of the forum in which suit is brought....'" Doe 1, 552 F.3d at 1083 (quoting Bremen, 407 U.S. at 15).

DISCUSSION

Zipcar brings this motion under 28 U.S.C. § 1404(a), which allows district courts to transfer venue "[f]or the convenience of parties and witnesses" and "in the interest of justice." The Supreme Court recently concluded that, where there is a valid forum-selection clause in the contract between the parties, "the interest of justice" is best served by giving effect to the parties' bargain. Atl. Marine, 134 S.Ct. at 581. Therefore, "a valid forum-selection clause should be given controlling weight in all but the most exceptional cases." Id. (internal quotations and alterations removed).

However, the Supreme Court recognized that "[its] analysis presupposes a contractually valid forum-selection clause." Id. at n.5. In the Ninth Circuit, "A forum selection clause is presumptively valid; the party seeking to avoid a forum selection clause bears a heavy burden' to establish a ground upon which [the court] will conclude the clause is unenforceable." Doe 1, 552 F.3d at 1083. However, "a forum selection clause is unenforceable if enforcement would contravene a strong public policy of the forum in which suit is brought....'" Id.

I. The Court Can Consider the Effect of the Choice of Law Clause

Before turning to the enforceability of the forum selection clause, the Court must decide the threshold question of whether it can and should consider the likely effect of the Membership Agreement's choice of law clause. If the Court cannot or should not consider the choice of law clause at this time, as Zipcar argues, then it cannot determine whether enforcement of the forum selection clause would contravene California policy - the questions would be independent, because in theory, Plaintiffs could bring their California claims in federal court in Massachusetts. However, if the Court can and should consider the choice of law clause now, the questions become inseparably entwined - if transferring venue would also likely lead to the application of Massachusetts law, there would be a greater chance that enforcement of the forum selection clause will contravene California policy.

It is clear that the Court can consider the combined effect of forum selection and choice of law clauses. Although the issue was not central to the case, the Supreme Court commented in an international antitrust dispute that, "in the event the choice-of-forum and choice-of-law clauses operated in tandem as a prospective waiver of a party's right to pursue statutory remedies for antitrust violations, we would have little hesitation in condemning the agreement as against public policy." Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 637 n.19 (1985). More recently, and more closely on point for the current case, the Ninth Circuit held that a forum selection clause was invalid where, "together with the choice of law provision, [it would] effect a waiver of statutory remedies provided by the CLRA." Doe 1, 552 F.3d at 1084 (following America Online, Inc. v. Mendoza, 108 Cal.Rptr.2d 699, 710 (2001)); see also Perry v. AT&T Mobility LLC, No. 11-cv-01488-SI, 2011 WL 4080625 at *4 n.4 (N.D. Cal. Sept. 12, 2011) ("Defendants argue that the Court may not consider the choice of law clause, but they do not discuss the Supreme Court and Ninth Circuit law that clearly permits the Court to do so.").

Regardless of whether they may consider the effect of a choice of law clause, courts in this district have taken differing approaches to the question of whether they should consider that effect. Some courts have found that the "strong public policy" at issue should specifically relate to venue, and that considering how another court will resolve a choice of law question calls for inappropriate speculation. E.g., East Bay Women's Health, Inc. v. gloStream, Inc., No. 14-cv-00712-WHA, 2014 WL 1618382 at *3 (N.D. Cal. Apr. 21, 2014) ("[P]laintiffs are burdened to show a fundamental public policy underlying California's Unfair Competition Act that relates to venue because the instant motion seeks a forum-selection determination, rather than a choice-of-law determination."); Voicemail Club, Inc. v. Enhanced Services Billing, Inc., No. 12-cv-02189-SI, 2012 WL 4837697 at *4 (N.D. Cal. Oct. 10, 2012) ("[B]ecause plaintiff improperly speculates as to how the transferee forum would ultimately resolve the issue of what substantive law should be applied to plaintiff's claims, plaintiff fails to demonstrate how transfer of this case would contravene [a] public policy... relate[d] specifically to venue."); Besag v. Custom Decorators, Inc., No. ...


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