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Chen v. Premier Financial Alliance, Inc.

United States District Court, N.D. California

December 19, 2019

Rui Chen and Wenjian Gonzales, Plaintiffs,
Premier Financial Alliance, Inc. et al., Defendants.



         Defendants Life Insurance Company of the Southwest, National Life Insurance Company, NLV Financial Corporation, and National Life Holding Company filed a Motion for Leave to Seek Reconsideration of this Court’s January 22, 2019 Order, which denied defendants’ motions to compel arbitration as to plaintiffs Rui Chen and Wenjian Gonzalez[1] in this action. (Dkt. No. 95.) In the alternative, defendants seek an order transferring this action to the Northern District of Georgia pursuant to 28 U.S.C. section 1404(a). (Id.)

         I. Reconsideration of Arbitration Order

         On the motion for leave to seek reconsideration, defendants contend that if the Court grants the motion to compel arbitration in the related action entitled Wang v. Life Insurance Company of the Southwest et al, 4:19-cv- 01150-YGR, it should reconsider its prior ruling denying arbitration in the instant action for defendants’ failure to submit sufficient evidence that plaintiffs affirmatively agreed to the terms of the Premier Financial Alliance Associate Marketing Agreement (“AMA”) by clicking a box in an online registration form. Defendants state that the “proof of affirmative consent that PFA submits with the instant motion applies equally to all PFA Associates, including not only the Chen Plaintiffs but all putative members of the classes pleaded in both cases.” (Motion, Dkt. No. 95, at 4:4-6.)

         By separate order issued this date in the Wang action, the Court denied the motion to compel arbitration as to plaintiffs therein. As set forth more fully in that order, based upon the evidence submitted in support of and in opposition to the motion, there are disputed issues of material fact as to whether the plaintiffs in the Wang action themselves entered into the AMA, since they declare that the recruiting PFA associates completed the online form for them such that the Wang plaintiffs never saw any of the terms of the AMA at the time they registered.

         Consequently, the Court declines to reconsider its January 22, 2019 Order in the instant action denying the motion to compel arbitration. The motion for leave to seek reconsideration is Denied.

         II. Motion to Transfer Pursuant to 28 U.S.C. § 1404(a)

         With respect to the motion to transfer under section 1404, the Court Denies the motion.[2]Defendants contend that this action “might have been brought” in the Northern District of Georgia, where PFA is incorporated and headquartered, and plaintiffs, by their acceptance of the AMA, consented to venue and jurisdiction in Georgia. (Martin Decl. ¶ 20 and Exh. A at § 14.) Plaintiffs counter that they cannot be bound by the AMA’s terms as to venue for the same reason as they cannot be bound by the arbitration provision. Moreover, they contend the section 1404 factors favor maintaining their choice of venue.

         Under section 1404(a), a district court has discretion to transfer an action to another forum. 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.” Atlantic Marine Const. Co. v. U.S. Dist. Court, 571 U.S. 49, 59 (2013). Forum selection clauses may be enforced through a motion to transfer under section 1404(a). Id.

         “In the typical case not involving a forum-selection clause, a district court considering a [section] 1404(a) motion . . . must evaluate both the convenience of the parties and various public-interest considerations.” Id. at 62. Private convenience concerns take into account “relative ease of access to sources of proof[,] availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses[,] . . . and all other practical problems that make trial of a case easy, expeditious and inexpensive.” Id. at 63 n. 6 (internal citation omitted); see also Jones v. GNC Franchising, Inc., 211 F.3d 495, 499 (9th Cir. 2000) (factors to be considered include “(1) the location where the relevant agreements were negotiated and executed, (2) the state that is most familiar with the governing law, (3) the plaintiff’s choice of forum, (4) the respective parties’ contacts with the forum, (5) the contacts relating to the plaintiff’s cause of action in the chosen forum, (6) the differences in the costs of litigation in the two forums, (7) the availability of compulsory process to compel attendance of unwilling non-party witnesses, and (8) the ease of access to sources of proof.”). Public interest factors to be considered include relative court congestion, local interest in the controversy, and familiarity with the applicable law. Atlantic Marine, 571 U.S.

         “[T]he calculus changes . . . when the parties’ contract contains a valid forum selection clause.” Id. “[A] valid forum selection clause should be given controlling weight in all but the most exceptional cases,” and the “plaintiff bears the burden of establishing that transfer to the forum for which the parties bargained is unwarranted,” based upon public interest factors. Id. (citation and brackets omitted).

         Here, defendants’ assertion of a binding forum selection clause in the AMA carries no weight in the Court’s analysis, for several reasons. The Court denied defendants’ motion to compel arbitration in this matter for “failure to establish the existence of an agreement to arbitrate” (Order Denying Motions to Compel Arbitration dated January 22, 2019, Dkt. No. 56.) For the same reasons, the Court cannot find the forum selection provision in the AMA to be binding on plaintiffs here. See Long v. Provide Commerce, Inc., 245 Cal. App. 4th 855, 868 (2016) (party could not simply invoke a forum selection clause when validity of the larger contract was in doubt).

         Moreover, even if defendants could show that plaintiffs agreed to the forum selection clause in the AMA, that clause is permissive, not mandatory. The AMA provides in section 13 that “PFA . . . may elect to file civil litigation in Gwinnett County, Georgia” in the case of a breach of the agreement, and in section 14 that “[a]ll parties consent to jurisdiction and venue in Gwinnett County, Georgia for any disputes that may arise hereunder.” (Declaration of Kelly Martin, Dkt. No. 95-1, Exh. A at 8.) Where a forum selection clause uses only permissive language, it need not be enforced. Terra Tech Corp. v. Vandevrede, No. SACV 18-602 JVS (JDEx), 2018 WL 8131761, at *7 (C.D. Cal. Dec. 4, 2018) (citing Docksider, Ltd. v. Sea Tech., Ltd., 875 F.2d 762, 764 (9th Cir. 1989) and Hunt Wesson Foods, Inc. v. Supreme Oil Co., 817 F.2d 75, 77 (9th Cir. 1987)). “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). The AMA does not so state.

         Finally, the forum selection clause in the AMA is limited to matters arising under the agreement, including “conflict as to the interpretation, breach or other default events.” (Martin Decl. Exh. A at 8.) The Court is not persuaded that the forum selection clause would encompass the tortlike claims alleged here. See Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 514 (9th Cir. 1988) (“[w]hether a forum selection ...

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