Personnel Staffing Group, LLC v. Protective Insurance Company

• Court: District Court, C.D. California
• Decided: April 28, 2020
• Docket: 2:19-cv-06728
• Status: Unknown

Opinion

JS-6 1 O 2 3 4 5

7 United States District Court 8 Central District of California 9 10 11 PERSONNEL STAFFING GROUP, LLC, Case № 2:19-cv-06728-ODW (JEMx) 12 Plaintiff, ORDER GRANTING 13 v. DEFENDANT’S MOTION TO 14 PROTECTIVE INSURANCE DISMISS [13] COMPANY, 15 Defendant. 16 17 I. INTRODUCTION 18 Plaintiff Personnel Staffing Group, LLC (“PSG”) originally brought this 19 contract dispute action against Defendant Protective Insurance Company 20 (“Protective”) in Los Angeles Superior Court. (Compl., ECF No. 1-1.) Protective 21 removed the action and now moves to dismiss PSG’s complaint. (Notice of Removal 22 (“Removal”), ECF No. 1; Mot. to Dismiss (“Mot.”), ECF No. 13.) For the reasons 23 discussed below, the Court GRANTS Protective’s Motion to Dismiss.1 24 II. FACTUAL AND PROCEDURAL BACKGROUND 25 PSG is a Florida limited liability company headquartered in Illinois that 26 provides staffing and payroll services. (Compl. ¶¶ 1–2.) PSG operates in over forty 27

28 1 After carefully considering the papers filed in connection with the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. 1 different states, yet over half of its workforce lives and works in California. (Compl. 2 ¶¶ 2, 5.) Protective is a workers’ compensation insurance provider that is incorporated 3 and headquartered in Indiana. (Compl. ¶¶ 3, 5.) PSG and Protective entered into a 4 contract in which Protective agreed to fulfill two pairs of annual workers’ 5 compensation insurance policies. (Compl. ¶ 10.) In connection with the policies, 6 PSG and Protective entered into a Collateral Agreement and an Indemnity Agreement. 7 (See Mot. 5.) The Indemnity Agreement contains an Indiana choice-of-law clause 8 which also designates Indiana courts as the exclusive jurisdiction for any dispute. 9 (Mot. 5.) Parties negotiated and entered into all agreements in Indiana and Illinois. 10 (See Mot. 5.) PSG alleges that Protective breached by failing to properly administer 11 workers’ compensation claims made by its employees. (Compl. ¶ 7.) Notably, the 12 breach occurred in Indiana, and PSG does not allege whether Protective committed 13 the breaches in California. (See Compl.; Decl. of Patrick Schmiedt (“Schmiedt 14 Decl.”), ECF No. 13-2 (Plaintiff does not dispute Schmiedt’s assertions that Protective 15 Adjusters worked predominantly from Indiana without California presence).) Simply, 16 this case is a contractual dispute between two non-Californian businesses. 17 On June 28, 2019, PSG brought suit against Protective in Los Angeles County 18 Superior Court, thereafter, Protective removed the action to federal court on August 2, 19 2019. (See Removal.) On August 3, 2019, Protective filed a parallel Indiana 20 state-court action against PSG, asserting that PSG, not Protective, breached the annual 21 workers’ compensation insurance policies and other related contractual agreements. 22 (Decl. of Eliot R. Hudson (“Hudson Decl.”) ¶ 7, Ex. E (“Ind. Compl.”), ECF 23 No. 13-1.) On August 9, 2019, Protective moved to dismiss or stay this action in 24 favor of the Indiana action. (See Mot.) However, on February 5, 2020, the Indiana 25 state-court dismissed Protective’s suit against PSG without prejudice on the grounds 26 of comity. (Req. for Judicial Notice (“RJN”), Ex. 2 (“Ind. Order”) 11, ECF No. 40-2.) 27 The court found that both actions were substantially similar and arose out of the same 28 1 relationship. (Ind. Order 11.) Yet, the Indiana state-court declined to rule on the legal 2 effect of the Indemnity Agreement’s forum selection clause. (Ind. Order 11.) 3 On March 20, 2020, Parties filed supplemental briefing and asked the Court to 4 take judicial notice of the Indiana action. (Protective Suppl. Br., ECF No. 39-1; 5 PSG’s Suppl. Br., ECF No. 39-2.) The Court finds that it is now appropriate to rule 6 on Protective’s Motion to Dismiss or Stay (“Motion”), premised on the Colorado 7 River doctrine and forum non conveniens. (See generally Mot.) 8 III. LEGAL STANDARD 9 A. THE DOCTRINE 10 Under the Colorado River doctrine, “a federal court may stay an action when 11 there is a first-filed, pending action in a foreign jurisdiction.” Superior Indus. Int’l, 12 Inc. v. Macchine Utensili Speciali S.p.A., No. CV 09-08888 RGK (Ex), 2010 WL 13 11597860, at *3 (C.D. Cal. Apr. 29, 2010) (citing Neuchatel Swiss Gen. Ins. Co. v. 14 Lufthansa Airlines, 925 F.2d 1193, 1195 (9th Cir. 1991)). In the Ninth Circuit, 15 “district courts must stay, rather than dismiss, an action . . . under Colorado River.” 16 Coopers & Lybrand v. Sun-Diamond Growers of CA, 912 F.2d 1135, 1138 (9th Cir. 17 1990); see also Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 721 (1996) (“[W]hile 18 we have held that federal courts may stay actions for damages based on abstention 19 principles, we have not held that those principles support the outright dismissal or 20 remand of damages actions.”) 21 The Colorado River doctrine is applicable only in “exceptional circumstances” 22 and is a “narrow exception to ‘the virtually unflagging obligation of the federal courts 23 to exercise the jurisdiction given them.’” Holder v. Holder, 305 F.3d 854, 867 (9th 24 Cir. 2002) (quoting Colo. River Water Conservation Dist. v. United States, 424 U.S. 25 800, 817 (1976)); see also Smith v. Cent. Ariz. Water Conservation Dist., 418 F.3d 26 1028, 1033 (9th Cir. 2005) (noting that the circumstances where this doctrine can be 27 properly applied are “exceedingly rare”). 28 1 B. 2 “The doctrine of forum non conveniens is a drastic exercise of the court’s 3 ‘inherent power’ because, unlike a mere transfer of venue, it results in the dismissal of 4 a plaintiff’s case.” Carijano v. Occidental Petroleum Corp., 643 F.3d 1216, 1224 (9th 5 Cir. 2011) (quoting Dole Food Co. v. Watts, 303 F.3d 1104, 1118 (9th Cir. 2002)). 6 Forum non conveniens is “an exceptional tool to be employed sparingly,” and not a 7 “doctrine that compels plaintiffs to choose the optimal forum for their claim.” Dole 8 Food, 303 F.3d at 1118. Ordinarily, there is a “strong presumption in favor of the 9 plaintiff’s choice of forum, which may be overcome only when the private and public 10 interest factors clearly point towards trial in the alternative forum.” Carijano, 643 11 F.3d at 1227; see also Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255–56 (1981). 12 IV. DISCUSSION 13 A. REQUEST FOR JUDICIAL NOTICE 14 By joint stipulation, Parties request that this Court take judicial notice of several 15 court documents. (See RJN 1–2.) However, the Court grants judicial notice only as to 16 the Indiana state-court’s order that bears on this matter. (Ind. Order.) 17 Courts may take judicial notice of documents “without converting a motion to 18 dismiss into a motion for summary judgment.” Id. at 999. Federal Rule of Evidence 19 201 provides: “[t]he court may judicially notice a fact that is not subject to reasonable 20 dispute because it: (1) is generally known within the trial court’s territorial 21 jurisdiction; or (2) can be accurately and readily determined from sources whose 22 accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b). Courts routinely 23 take judicial notice of “proceedings in other courts, both within and without the 24 federal judicial system, if those proceedings have a direct relation to matters at issue.” 25 U.S. ex rel Robinson Rancheria Citizens Council v. Borneo, Inc., 971 F.2d 244, 248 26 (9th Cir. 1992). However, when taking judicial notice of another court’s record, a 27 court may do so only for the existence of the document and not for the truth of the 28 1 facts therein. Lee v. City of Los Angeles, 250 F.3d 668, 690 (9th Cir. 2001); M/V Am. 2 Queen v. San Diego Marine Constr. Corp., 708 F.2d 1483, 1491 (9th Cir. 1983). 3 Accordingly, the Court takes judicial notice of the Indiana state-court’s decision 4 granting dismissal of Protective’s complaint on the grounds of comity and recognizes 5 the state-court’s deferment concerning the question of venue. (See RJN 1–2; Ind. 6 Order 10–11.) 7 B. THE COLORADO RIVER DOCTRINE 8 Foremost, Protective moves to dismiss or stay pursuant to the Colorado River 9 doctrine in favor of the parallel Indiana state-court action. (Mot. 14, 17–19.) 10 However, here the Court has taken judicial notice of the Indiana state-court’s decision 11 dismissing that action. (Ind. Order.) Therefore, Protective’s motion to dismiss or stay 12 this case on the basis of the Colorado River doctrine is moot. See generally Superior 13 Indus. Int’l, Inc., 2010 WL 11597860, at *3 (C.D. Cal. Apr. 29, 2010) (stating that the 14 Colorado River doctrine applies only when there is a pending action in a non-federal 15 jurisdiction). Accordingly, Protective’s request to dismiss or stay the case premised 16 on the Colorado River doctrine is DENIED. 17 C. FORUM NON CONVENIENS 18 Protective also moves to dismiss on the basis of forum non conveniens. 19 (Mot. 19–25.) PSG opposes and asserts that forum non conveniens applies only in 20 cases where the alternative forum is abroad, not where an alternative inter-state forum 21 is available. (Opp’n to Mot. (“Opp’n”) 5, ECF No. 18.) Protective argues not so. 22 Instead, forum non coveniens is properly applied when channeling litigation to any 23 non-federal forum, which includes state-court forums. (Reply to Opp’n (“Reply”) 4– 24 5, ECF No. 22.) The Court now considers both Parties’ initial arguments. 25 “The common-law doctrine of forum non conveniens has continuing application 26 in federal courts only in cases where the alternative forum is abroad, and perhaps in 27 rare instances where a state or territorial court serves litigational convenience best.” 28 Sinochem Int’l Co. v. Malaysia Int’l Shipping Corp., 549 U.S. 422, 430 (2007) 1 (internal quotation marks omitted). Accordingly, motions to dismiss premised on 2 forum non conveniens are permissible so that litigation may proceed in a state-court— 3 as opposed to a federal court. See, e.g., Atl. Marine Const. Co. v. U.S. Dist. Court for 4 W. Dist. of Tex., 571 U.S. 49, 60–61 (2013) (“For . . . cases calling for a nonfederal 5 forum, § 1404(a) has no application, but the residual doctrine of forum non conveniens 6 has continuing application in federal courts.”) (internal quotation marks omitted). For 7 instance, the Ninth Circuit has held that a forum non coveniens motion is appropriate 8 when the alternative forum is a state-court. See Murphy v. Schneider Nat’l, Inc., 362 9 F.3d 1133, 1143 n.5 (9th Cir. 2004); Mehta v. Power-One, Inc., No. CV 13-4631-GW 10 (CWx), 2014 WL 12603185, at *3 (C.D. Cal. June 2, 2014) (applying forum non 11 conveniens analysis to determine whether litigation was more favorable in Delaware 12 state-court). Also, the doctrine of forum non conveniens is the appropriate procedural 13 mechanism to dismiss an action when parties have entered into a contractual 14 agreement that designates a state-court forum. Atl. Marine, 571 U.S. at 60; Murphy, 15 362 F.3d at 1144 fn. 5. 16 As much as PSG may hope that Protective’s forum non conveniens argument is 17 “dead on arrival,” it is not. (Opp’n 1–2.) Rather, channeling litigation from a federal 18 forum to a non-federal forum is properly enforced through the doctrine of forum non 19 conveniens. See Atl. Marine, 571 U.S. at 61; Murphy, 362 F.3d at 1143 n.5. 20 Accordingly, the issue is whether Protective has met its burden to prevail on a motion 21 to dismiss premised upon forum non conveniens. 22 To prevail on a motion to dismiss based upon forum non conveniens, the 23 defendant bears the burden of showing: (1) an adequate alternative forum exists, and 24 (2) the balance of private and public interest factors favors dismissal. See Dole Food, 25 303 F.3d at 1118. “When a domestic plaintiff initiates litigation in its home forum, it 26 is presumptively convenient.” Carijano, 643 F.3d at 1227. But, when plaintiff’s 27 choice is not its home forum, then the presumption in the plaintiff’s favor applies with 28 1 less force, thus, the assumption that the chosen forum is appropriate is “less 2 reasonable.” Sinochem Int’l Co., 549 U.S. at 430. 3 Protective argues that the Indemnity Agreement’s forum selection clause directs 4 the Parties to litigate a portion of this action in Indiana state-court, and thus, rather 5 than litigate piecemeal, the entire action should be dismissed in favor of that forum. 6 (Reply to Opp’n (“Reply”) 5–6.) Alternatively, even in the absence of a forum 7 selection clause, Protective argues the Court should dismiss the action because Indiana 8 state-court is an adequate alternative forum and both public and private interest factors 9 weigh in favor of litigating in Indiana. (Mot. 19–25; Reply 5–10.) PSG opposes by 10 arguing that the forum selection clause is not relevant to the forum non conveniens 11 analysis. (Opp’n 4 n.5.) For reasons to follow, Protective has met its burden of 12 showing that dismissal is warranted on the grounds of forum non conveniens. 13 1. Adequate Alternative Forum 14 An alternative forum is adequate if: “(1) the defendant is amenable to process 15 there; and (2) the other jurisdiction offers a satisfactory remedy.” Carijano, 643 F.3d 16 at 1225. The remedy available in the alternative forum need not be equivalent to that 17 in the original forum; however, it must not be “so clearly inadequate or unsatisfactory 18 that it is no remedy at all.” Piper, 454 U.S. at 254. 19 As Protective is incorporated and headquartered in Indiana, Protective has 20 established that it is “amenable to process” in Indiana. (Schmiedt Decl. ¶ 3.) Further, 21 Protective has indicated a willingness to consent to the jurisdiction of Indiana state- 22 courts as to PSG’s claims, and the Court has the power to condition any dismissal for 23 forum non conveniens on such consent by the defendant. See Contact Lumber Co. v. 24 P.T. Moges Shipping Co., 918 F.2d 1446, 1450 (9th Cir. 1990) (citing Piper Aircraft, 25 454 U.S. at 254 n.22). Finally, the remedies PSG seeks from this Court for breach of 26 contract and tortious breach are not fundamentally different from those an Indiana 27 state-court could order. In re: CytRx Corp. Stockholder Derivative Litig., No. CV 14- 28 6414-GHK (PJWx), 2015 WL 9871275, at *7 (C.D. Cal. Oct. 30, 2015) (finding a 1 state-court an adequate alternative forum because plaintiffs did not bring any causes of 2 action that could not be litigated there); see also Lueck v. Sundstrand Corp., 236 F.3d 3 1137, 1143 (9th Cir. 2001) (internal quotation marks omitted) (“[I]t is only in rare 4 circumstances where the remedy provided by the alternative forum is so clearly 5 inadequate or unsatisfactory . . . that this requirement is not met.”). Thus, Indiana 6 state-court is an adequate alternative forum. 7 2. Private Interest Factors 8 The balance of private and public factors must also favor dismissal. Private 9 interest factors include: 10 (1) the residence of the parties and the witnesses; (2) the forum’s convenience to the litigants; (3) access to physical evidence and other 11 sources of proof; (4) whether unwilling witnesses can be compelled to 12 testify; (5) the cost of bringing witnesses to trial; (6) the enforceability of 13 the judgment; and (7) all other practical problems that make trial of a case easy, expeditious and inexpensive. 14 Bos. Telecomms. Grp. v. Wood, 588 F.3d 1201, 1206–07 (9th Cir. 2009) (quoting 15 Lueck, 236 F.3d at 1145). 16 First, the ordinary strong presumption in favor of plaintiff’s choice of forum 17 applies with less force here because PSG is a non-domestic company; in such cases 18 the assumption that the chosen forum is appropriate is “less reasonable.” Sinochem 19 Int’l Co., 549 U.S. at 430 (the presumption “applies with less force” when the 20 plaintiff’s choice is not its home forum). Here, neither Parties calls California home 21 as PSG is incorporated in Florida and headquartered in Illinois, and Protective is 22 headquartered and incorporated in Indiana. Second, amid the COVID-19 pandemic, 23 traveling to California is inconvenient for Protective and PSG, whereas traveling to 24 Indiana forum is much less inconvenient. For instance, PSG’s Illinois headquarters is 25 three hours from Protective’s headquarters in Indiana, and both Parties are familiar 26 with and have done significant business in Indiana. (Mot. 1.) Thus, this factor favors 27 Indiana. See Mentawai v. Marcotti, No. CV 15-02156-RGK (DFMx), 2016 WL 28 1 7496750, at *4 (C.D. Cal. Mar. 28, 2016) (finding factor favored dismissal because 2 parties were familiar with and frequently did business in the alternative forum). 3 Third, as this action involves a contractual dispute, most if not all physical 4 evidence in this case will presumably be documents, and “[g]iven the ease of 5 electronic transmission of documents, this factor should be given minimal weight.” 6 Mayberry v. Int’l Bus. Machs. Corp., No. CV 09-1369 CW, 2009 WL 1814436, at *5 7 (N.D. Cal. June 25, 2009). Fourth, Protective points out potential witnesses 8 unwilling to testify, which include PSG’s Illinois-based insurance broker and PSG’s 9 counsel that instructed Protective adjusters on claim handling. Additionally, most of 10 the witnesses relevant to this action are located in Indiana and Illinois and appear to be 11 citizens of those states. (Schmiedt Decl. ¶¶ 22–29.) Accordingly, they are outside of 12 this Court’s subpoena power and thus this factor favors Indiana. Huthart v. News 13 Corp., No. CV 13-04253-MWF (AJWx), 2014 WL 12577175, at *10 (C.D. Cal. May 14 21, 2014) (finding factor weighed in favor of alternative forum because most of the 15 witnesses relevant to the action were located outside of the court’s subpoena power). 16 Fifth, regarding the cost of bringing witnesses to trial, this factor weighs in 17 favor of Indiana, where the majority of the witnesses and virtually all of the important 18 witnesses in this action are located in either Indiana or Illinois. Id. Sixth, neither side 19 has raised an argument that a judgment in this forum would be more or less 20 enforceable than one in Indiana, and therefore, this factor weighs neutral. Id. at *11. 21 Seventh, Protective offers the Indemnity Agreement’s forum selection and choice of 22 law clauses as a practical consideration, arguing they indicate the Parties’ intent to 23 submit to the courts of Indiana. (Reply 5.) The Parties dispute whether the forum 24 selection clause in the Indemnity Agreement is permissive or mandatory, and whether 25 the Indemnity Agreement is illegal.2 (Opp’n 23–25.) Regardless, PSG’s challenges to 26 the Indemnity Agreement do not bear on the Parties’ intent to enter into the 27

28 2 Parties are currently litigating the legality of Indemnity Agreement before the California Department of Insurance. (Opp’n 24.) 1 agreement, and therefore the Indemnity Agreement reflects an intent by both Parties to 2 be bound and submit to the laws and courts of Indiana. Thus, this factor weighs in 3 favor of Indiana. 4 3. Public Interest Factors 5 Public interest factors include: “(1) the local interest in the lawsuit, (2) the 6 court’s familiarity with the governing law, (3) the burden on local courts and juries, 7 (4) congestion in the court, and (5) the costs of resolving a dispute unrelated to a 8 particular forum.” Bos. Telecomms., 588 F.3d at 1211 (quoting Tuazon v. R.J. 9 Reynolds Tobacco Co., 433 F.3d 1163, 1181 (9th Cir. 2006)). 10 First, the local interest factor examines whether “the forum in which the 11 lawsuit was filed has its own identifiable interest in the litigation which can justify 12 proceeding.” Carijano, 643 F.3d at 1232. Protective argues that “Indiana has a far 13 stronger interest in this dispute than California in assessing the extent to which 14 Indiana contracts, performed in Indiana by an Indiana corporation, were breached.” 15 (Mot. 24.) PSG provides no opposing argument, hedging its bets entirely on the 16 erroneous notion that forum non conveniens is inapplicable. (Opp’n 5.) Accordingly, 17 this factor favors Indiana. Herbert v. VWR Int’l, LLC, 686 F. App’x 520, 522 (9th Cir. 18 2017) (discussing that forum where injury occurred has a strong interest in deterring 19 and ensuring compensation for injuries that occurred in its territory). 20 Second, the insurance policy agreements, Collateral Agreement, and Indemnity 21 Agreement were all negotiated and entered in Indiana and Illinois. Also, the 22 Indemnity Agreement contains an Indiana choice of law clause, depicting Parties 23 willingness and intent for Indiana law to apply. Glob. Quality Foods, Inc. v. Van 24 Hoekelen Greenhouses, Inc., No. CV 16-00920-LB, 2016 WL 4259126, at *9 (N.D. 25 Cal. Aug. 12, 2016) (considering a choice of law provision in its analysis of the 26 “familiarity with governing law” factor). Moreover, the Court is at loss as to why 27 California law would apply, as the alleged infractions all occurred in Indiana and each 28 agreement was negotiated and entered into outside of California. Therefore, this 1 || factor favors Indiana. Jd. (determining that state courts “are surely better versed in their own law”). Third, Fourth, and Fifth, as discussed above, California’s interest 3 || in this controversy is limited, and does not justify the burden on local courts and 4 || juries, congestion, and related costs. See Piper, 454 U.S. at 261. 5 4. Weighing the Factors 6 Here, the private and public interest factors clearly point towards trial in the Indiana. Carijano, 643 F.3d at 1227. Accordingly, Protective has met its burden to 8 || overcome PSG’s choice of forum. Therefore, the Court GRANTS Protective’s 9 || motion to dismiss pursuant to forum non conveniens, without prejudice. 10 V. CONCLUSION 11 For the reasons discussed above, the Court GRANTS Protective’s Motion to 12 | Dismiss (ECF No. 13). 13 14 IT IS SO ORDERED. 15 16 April 28, 2020 17 ‘ “ gf

19 OTIS D. WRIGHT, II 50 UNITED STATES DISTRICT JUDGE

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