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S & J Rentals, Inc. v. Hilti, Inc.

United States District Court, E.D. California

March 27, 2017

S & J RENTALS, INC. d/b/a TWIN CITIES EQUIPMENT RENTALS, a California corporation, individually and on behalf of all others similarly situated, Plaintiff,
v.
HILTI, INC., an Oklahoma corporation, Defendant.

          MEMORANDUM AND ORDER

          MORRISON C. ENGLAND, UNITED STATES DISTRICT JUDGE.

         S & J Rentals, Inc., (“Plaintiff”) seeks redress on behalf of itself and a putative class from Hilti, Inc. (“Defendant”) due to alleged illegal business practices. Plaintiff's First Amended Complaint (“FAC”) brings a single cause of action on grounds that Defendant violated California's Unfair Competition Law (“UCL”), California Business and Professions Code §§ 17200-17204. ECF No. 4, at 9-10.

         Before the Court are two motions, both filed by Defendant. Through its Motion to Transfer (“Transfer Motion”), (ECF No. 9), Defendant first asks the Court to transfer this case to the United States District Court of the Northern District of Oklahoma, pursuant to a forum selection clause in a contractual agreement between the parties. Def.'s Mem., ECF No. 9-1, at 2:3-8. Secondly, Defendant has submitted a Motion to Dismiss, (ECF No. 8), addressing the merits of Plaintiff's Complaint. According to Defendant, it filed that motion simply “out of an abundance of caution” in the event the Transfer Motion did not suffice as a responsive pleading to Plaintiff's FAC. Def.'s Mem. Supp. Mot. Dismiss, ECF No. 8-1, at 1:18-25. Plaintiff filed oppositions to each of these motions, (ECF Nos. 15 & 16), to which Defendant filed timely replies. ECF Nos. 20 & 21. For the reasons set forth below, the Court GRANTS Defendant's Motion to Transfer and DENIES Defendant's Motion to Dismiss without prejudice.

         BACKGROUND[1]

         Plaintiff is a California corporation that rents construction equipment to the public. Defendant is incorporated in Oklahoma and headquartered in Plano, Texas. Defendant develops, manufactures, and markets products for construction, building maintenance, and mining industries.

         In 2008 and 2010, Plaintiff completed credit applications with Defendant to facilitate its purchase of tools on credit. Schofield Decl., ECF No. 9-2, at 1-2. Plaintiff subsequently made several tool purchases utilizing this credit. Id. at 2. One of those purchases was a TE 3000-AVR breaker chiseling tool obtained from Defendant in 2012.

         Plaintiff claims that it was unaware at the time it purchased Defendant's products that many of its tools are equipped with a “deactivation feature” which causes them to automatically shut down after a specified number of operational hours. Plaintiff claims that in 2015, its TE 3000-AVR breaker shut down due to this deactivation feature, and that Defendant charged “reactivation” fees to make the tool operational again.

         Plaintiff alleges that Defendant failed to disclose the deactivation feature prior to selling these tools, and thus committed unfair business practices, as defined by the UCL.

         STANDARD

         Courts considering a motion to transfer look to 28 U.S.C. § 1404(a), which provides that “[f]or 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.” Typically, “[a] motion to transfer venue under § 1404(a) requires the court to weigh multiple factors in its determination whether transfer is appropriate in a particular case.” Jones v. GNC Franchising, Inc., 211 F.3d 495, 498 (9th Cir. 2000). However, this analysis changes when the dispute is governed by a forum selection clause. Atl. Marine Constr. Co. v. United States Dist. Court, 134 S.Ct. 568, 581 (2013). In the Ninth Circuit, forum selection clauses are presumptively valid, and are only unenforceable if the “party challenging enforcement . . . can show it is unreasonable under the circumstances.” Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 325 (9th Cir. 1996) (citing The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972)). “The Supreme Court has construed this exception narrowly, ” with unreasonableness only being shown if: (1) the clause was the result of fraud, undue influence, or overweening bargaining power; (2) the transfer forum “is so gravely difficult and inconvenient” that plaintiff would essentially be denied its day in court; or (3) “enforcement of the clause would contravene a strong public policy” of California. Argueta, 87 F.3d at 325.

         If no “unreasonableness” exceptions apply, the forum selection clause is deemed prima facie valid, and the clause is analyzed under § 1404(a) taking into account the following considerations: (1) plaintiff's choice of forum is given no weight; (2) only “public-interest” factors[2] are considered, not the parties' private interests; and (3) the original venue's choice-of-law rules do not “follow the case to the forum contractually selected by the parties.” Atl. Marine, 134 S.Ct. at 581-83. When a defendant files a § 1404(a) motion, a district court should transfer the case pursuant to the forum selection clause unless “extraordinary circumstances unrelated to the convenience of the parties” clearly disfavors transfer. Id. at 581.

         ANALYSIS

         A. A Forum Selection Clause Applies To The Current Dispute

         The terms and conditions in the 2008 and 2010 credit applications include a “Consent to ...


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