United States District Court, N.D. California
ORDER GRANTING IN PART MOTION TO REMAND Re: ECF No. 16
JON S. TIGAR, District Judge.
Before the Court is Plaintiff FCE Benefit Administrators, Inc.'s Motion to Remand, ECF No. 16. For the reasons set forth below, the Court will grant the motion to remand in part.
Plaintiff FCE Benefit Administrators, Inc. ("FCE") is a third party administrator that provides services including hour tracking, fringe compliance, consolidated premium billing, and web enrollment and cloud solutions for fringe benefit health plans. Declaration of Gary Beckman ("Beckman Decl."), ECF No. 18 ¶ 2. Defendant Training, Rehabilitation and Development Institute, Inc. ("TRDI") is a former FCE client. Id. ¶ 3. In September 2008, the parties entered into an Adoption Agreement for TRDI's Health and Welfare Plan and a Third Party Administrator Agreement ("TPA Agreement"). Id. On June 10, 2014, TRDI notified FCE that it was terminating the TPA Agreement. Id. ¶ 7. FCE alleges, however, that it continued to provide services through mid-October of 2014, with TRDI's approval, and that it was not compensated for those services. Id.; see also Compl., ECF No. 2.
On January 30, 2015, FCE filed a complaint against TRDI in San Mateo County Superior Court for (1) breach of contract; (2) breach of the covenant of good faith and fair dealing; (3) unjust enrichment; and (4) quantum meruit. Compl. at 1. On March 11, 2015, TRDI filed a cross-complaint in San Mateo County Superior Court, stating claims for (1) breach of fiduciary duty under the Employee Retirement Income Security Act ("ERISA"); (2) prohibited transactions under ERISA; (3) equitable relief pursuant to ERISA; (4) breach of contract; (5) breach of the implied covenant of good faith and fair dealing; (6) unjust enrichment; and (7) accounting. Cross-compl., ECF No. 1-2 at 3. On the same day, TRDI removed the action to this Court based on diversity of citizenship, pursuant to 28 U.S.C. sections 1332 and 1441(a) and (b). ECF No. 1. Plaintiff does not dispute that the requirements for diversity jurisdiction are met. ECF No. 22 at 2.
FCE filed its motion to remand on April 1, 2015, citing Article VII(f) of the parties' TPA agreement, which provides:
Governing Law and Venue: This Agreement will be governed by the internal laws of the State of California except to the extent preempted by ERISA, COBRA or other applicable federal law and the venue for resolving any dispute under this Agreement will be San Mateo County, California.
ECF No. 16; TPA Agreement, ECF No. 17 Ex. 2. FCE requests that the Court remand this action in its entirety or, in the alternative, to the maximum extent possible, to the San Mateo County Superior Court. ECF No. 16 at 2. TRDI opposes the motion. ECF No. 21.
III. LEGAL STANDARD
In diversity cases, federal law governs the enforceability and interpretation of forum selection clauses. Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 513 (9th Cir. 1988) (citing The Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972)). In interpreting a forum selection clause, "we look for guidance to general principles for interpreting contracts." Doe 1 v. AOL LLC, 552 F.3d 1077, 1081 (9th Cir. 2009) (internal quotation marks omitted). "[A] forum section clause is prima facie valid and should be enforced unless enforcement is shown by the resisting party to be unreasonable under the circumstances.'" Pelleport Investors, Inc. v. Budco Quality Theatres, Inc., 741 F.2d 273, 279 (9th Cir. 1984) (quoting The Bremen, 407 U.S. at 10). "A district court may remand a case to state court to effectuate a forum selection clause." Calisher & Assocs, Inc. v. RGCMC, LLC, Nos. 08-cv-06523-MMM, 08-cv-06540-MMM, 2008 WL 4949041, at *2 (C.D. Cal. Nov. 17, 2008); see also Pelleport, 741 F.2d at 275, 281 (affirming district court's remand to state court on the grounds of a forum selection clause); Boggs v. Lewis, 863 F.2d 662, 663 (9th Cir. 1988) ("This court strictly construes the removal statute against removal jurisdiction.").
A. Forum Selection Clause
The parties dispute the meaning of the forum selection clause, which states that the "[TPA] Agreement will be governed by the internal laws of the State of California except to the extent preempted by... applicable federal law and the venue for resolving any dispute under this Agreement will be San Mateo County, California." TPA Agreement at 11. FCE contends that this is a mandatory forum selection clause that provides for exclusive jurisdiction in the San Mateo County Superior Court. ECF No. 16 at 5-6. TRDI contends that the clause is either permissive or ambiguous, and does not require that litigation take place in state court. ECF No. 21 at 5-8.
The Court concludes that the forum selection clause is mandatory. "To be mandatory, a clause must contain language that clearly designates a forum as the exclusive one." N. Cal. Dist. Council of Laborers v. Pittsburg-Des Moines Steel Co., 69 F.3d 1034, 1037 (9th Cir. 1995). Here, the language at issue is similar to the mandatory forum selection clause in Docksider, Ltd. v. Sea Technology, Ltd., which provided that, "[v]enue of any action brought hereunder shall be deemed to be in Gloucester County, Virginia." 875 F.2d 763, 763 (9th Cir. 1989); see id. at 764 ("This mandatory language makes clear that venue, the place of suit, lies exclusively in the designated county."); ...