Pierman v. Stryker Corporation

• Court: District Court, S.D. California
• Decided: January 24, 2020
• Docket: 3:19-cv-00679
• Status: Unknown

Opinion

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8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 || PETER ERIC PIERMAN, Case No.: 3: 19-cv-00679-BEN-MDD Platt) ORDER DENYING DEFENDANTS 13 || MOTION TO DISMISS OR, IN THE 14 || STRYKER CORPORATION and ALTERNATIVE, TO TRANSFER 5 HOWMEDICA OSTEONICS CORP, (Doe. No. 6] 16 Defendants. 17 18 Presently before the Court is Defendants’ Motion to Dismiss, or in the Alternative, 19 Transfer. The Court has reviewed and considered all the briefing filed with respect to’ 20 Defendants Motion and concludes that oral argument is not necessary to resolve the 21 ||Motion. See Fed. R. Civ. P. 8. Defendants Motion is DENIED. 22 BACKGROUND 23 Plaintiff Peter Eric Pierman (“Plaintiff”), is a citizen of the State of California, who 24 ||resides in San Diego County. (Doc. No. 1 6.) Defendant, Stryker Corporation 25 || CStryker”) is a Michigan corporation with its principal place of business in Kalamazoo, 26 Michigan. Jd. J 7. Co-Defendant, Howmedica Osteonics Corp. (“HOC”) is a New Jersey 27 Corporation which maintains its principal place of business in Mahwah, New Jersey. Jd. 28/18.

1 Plaintiff alleges that he was offered a position as an associate sales consultant for 2 || Stryker Craniomaxillofacial products in March 2016. As a condition of his employment, 3 || he was required to sign an employment agreement (“Agreement”) containing a restrictive 4 covenant in the form of a non-compete provision. Jd. { 8. In 2018, Plaintiff was assigned to handle Stryker Trauma products in HOC’s San 6 Diego sales area. As before, Plaintiff was required to sign a new non-compete 7 ||agreement, protecting the Defendants’ trade secrets.! Jd. 9 13, Ex. B. The Agreement 8 provided that any litigation which arose out of Plaintiff's employment with HOC 9 || would be conducted exclusively in the State of New Jersey, that Plaintiff consented to the 10 || jurisdiction of the courts in New Jersey, and that the Agreement would be interpreted . 11 under New Jersey law.” (Doc. No. 6 at 3.). Due to its nationwide sales force and 12 || legitimate interest in obtaining relative consistency and predictability in the legal 13 || construction and interpretation of its agreements, HOC includes similar mandatory forum 14 || selection clauses and governing law provisions in all of its agreements. Jd. at 4. □ 15 On April 12, 2019, the Plaintiff provided notice that he was resigning from his 16 jjemployment with HOC. (Doc. No. | 7 24.). On that same day, his counsel sent a letter to 17 || Defendants representing that Plaintiff was voiding the forum selection and choice of law 18 ||. 19, . 20 The Stryker Non-Compete provision expressly states that it “supersedes any and all 21 ||prior agreements between the parties with respect to the matters addressed in this Agreement.” Jd. at 15. 2 “8.2 Governing Law and Venue. Although I may. work for [HOC] in various 23 locations, I agree and consent that this Agreement shall be interpreted and enforced as a 4 contract of the applicable state listed on Attachment B as of my date of termination and 24 |! shall be interpreted and enforced in accordance with the internal laws of the state without 25 ||regard’to its conflict of law rules. In such circumstances, I agree and consent that any 36 and all litigation between [HOC] and me relating to this Agreement will take place exclusively in the state listed on Attachment B, and I consent to the jurisdiction of the 27 |\federal and/or state courts in the state listed on Attachment B. J consent to personal □ 28 jurisdiction and venue in both such Courts and to service of process by United States Mail or express courier service in any such action.” (Doc. No. 6 at 3.) □

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1 || provisions contained in the Agreement and further notifying them that he intended to join 2 ||a competitor. (Doc. No. 6 at 4.) Thereafter, Plaintiff filed the instant action. Id. Defendants now seek to have the case dismissed, or in the alternative, transferred 4 ||to New Jersey pursuant to 28 U.S.C. § 1404{a). Atlantic Marine Const. Co., Inc. v. U.S. 5 Dist. Court for W. Dist. of Texas 571 U.S. 49, 59 (2013); see also Russel v, De Los 6 || Suenos, No. 13-CV-2081-BEN DHB, 2014 WL 1028882, at *8 (S.D. Cal. Mar. 17, 2014) 7 (dismissing case based on agreement’s Mexico forum selection clause). 8 DISCUSSION 9 Section § 1404(a) provides that “[flor the convenience of the parties and witnesses, 10 || in the interest of justice, a district court may transfer any civil action to any other district 11 court or division where it might have been brought[.]” 28 U.S.C. § 1 404(a). Section § 12 1404(a) “does not concern the issue whether and where an action may be properly 13 || litigated. It relates solely to the question where, among two or more proper forums, the 14 || matter should be litigated to best serve the interests of judicial economy and convenience 15 of the parties.” Williams v. WinCo Foods, LLC, 2013 WL 211246, *2 (E.D. Cal. 2013) _ 16 (internal quotation marks omitted). 17 The court weighs multiple factors to determine whether a transfer of venue serves 18 convenience of the parties and witnesses and promotes the interests of justice. See 19 || Jones v. GNC Franchising, Inc., 211 F.3d 495, 498-99 (9th Cir.), cert denied, 531 U.S. || 928 (2000); Lopez v. Chertoff, 2007 WL 2113494, *2 (N.D. Cal. 2007). “The presence of 21 ||a forum-selection clause, however, changes the analysis.” Karl v. ZimmerBiomet 22 || Holdings, Inc., 2018 WL 5809428, *1 (N.D. Cal. 2018). A forum-selection clause should 23 enforced unless the party challenging enforcement of the provision can show it is 24 unreasonable. See M/S Bremen v. Zapata Off-shore Co., 407 U.S. 1, 10, 92S. Ct. 1907, 25 ||1913 (1972). However, “[a] contractual choice-of-forum clause should be held 26 || unenforceable if enforcement would contravene a strong public policy of the forum in 27 || which suit is brought, whether declared by statute or by judicial decision.” /d. at 15, 92 28 ||S. Ct. at 1916.

1 |]. FORUM SELECTION CLAUSE. 2 “Given the weight accorded to forum selection clauses in a 28 U.S.C. § 1404(a). || transfer analysis,” the court first examines the enforceability of the forum selection 4 clause.” See Rowsby v. Gulf Stream Coach, Inc., 2009 WL 1154130, *2 (C.D. Cal. 5 2009). Forum selection clauses are “prima facie valid unless enforcement is . 6 unreasonable.” Id. (internal quotations omitted) (citing Bremen, 407 US. at 10, 92 S. Ct. 7 |jat 1913). “[T]he party seeking to avoid a forum selection clause bears a ‘heavy burden’ 8 establish a ground upon which we will conclude the clause is unenforceable.” Doe 1 v, 9 || AOL LLC, 552 F.3d 1077, 1083 (9th Cir. 2009). A forum selection clause may be found 10 || to be unenforceable if one of the following conditions is satisfied: “(1) if the inclusion of 11 || the clause in the agreement was the product of fraud or overreaching: (2) if the party 12 || wishing to repudiate the clause would effectively be deprived of his day in court were the 13 || clause enforced; and (3) if enforcement would contravene a strong public policy of the 14 || forum in which suit is brought.” Holland Am. Line Inc. v. Wartsila N. Am., Inc., 485 F.3d 15 457 (9th Cir. 2007) (internal quotation marks omitted). 16 || Here, Plaintiff's agreement with Defendant, which he signed on February 1, 2018, 17 || contains the following forum selection clause: “[A]ll litigation between [HOC] and me 18 [Plaintiff] relating to this Agreement will take place exclusively in the state listed on 19 || Attachment B[.]” (Doc. No. 6 at 3.) It also states that “this agreement shall be □ 20 interpreted and enforced as a contract of the applicable state listed on Attachment B[.]” (21 Attachment B indicates that either New Jersey or Michigan law should be applied, 22 |idepending upon the entity that employed Plaintiff at the time of his resignation. Id. 23 || _— Plaintiff argues that the forum selection clause is unenforceable because it 24 contravenes “the strong public policy of California” set forth in California Labor Code § 25 ||925 of litigating “California-centric” labor disputes within the state. (See Doc. No. 20 at 26 Defendant responds that § 925 does not apply because “28 U.S.C. § 1404 preempts 27 {| state laws (such as Labor Code § 925) that purport to void forum selection clauses, 28 | .

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1 || prohibiting federal courts from giving them weight under that statute.” (Doc. No. 22 at 2 3 First, before embarking on the § 1404 analysis, the court must determine whether 4 || there is a “contractually valid forum-selection clause.” Ati. Marine Constr. Co., Ine. v. - 5 || the U.S. Dist. Ct. for W. Dist. of Texas, 571 U.S. 49, 62 n. 5, 134 S. Ct. 568, 581 n. 5 6 ||(2013) (Atlantic Marine”), See Moretti v. Hertz Corp., 2014 WL 1410432, *2 (N.D. Cal. 7 2014) (noting that before engaging in analysis of forum selection clause pursuant to 8 || Atlantic Marine, a “[c]ourt must first determine whether a valid forum-selection clause 9 exists within the subject contract”); Trendsettah USA v. Swisher Int'l Inc., 2015 WL 10 12697653, *2 (C.D. Cal. 2014) (“Before the court may consider the impact of any forum ‘11 |/selection clause on plaintiff's choice of forum and the motion to transfer, it must first 12 || determine whether a contract exists and, if so, whether it contains the forum selection 13 clause at issue.”) (internal quotation marks omitted). In other words, “[t]o determine the 14 |/enforceability of a forum selection clause, a federal court must [first] ask whether a 15 || contract existed under state law.”. Kellerman v. InterIsland Launch, 2015 WL 6620604, 16 || *3 (W.D. Wash. 2015); Glob. Power Supply, LLC v. Acoustical Sheetmetal Inc., 2018 17 || WL 3414056, *2.(C.D. Cal. 2018) (“Although federal law governs the interpretation and 18 || enforcement of forum selection clauses, state law governs contract formation and the. 19 || interpretation of an agreement’s terms.”) (internal quotation marks omitted). 20 Section 925 provides that “[a]n employer shall not require an employee who 21 ||primarily resides and works in California, as a condition of employment, to agree to a 22 || provision that would do either of the following: (1) [require the employee to adjudicate 23 || outside of California a claim arising in California [or] (2) [deprive the employee of the 24 || substantive protection of California law with respect to a controversy arising in 25 California.” Cal. Lab. Code § 925(a). “Any provision of a contract that violates 26 |) subdivision (a) is voidable by the employee, and if a provision is rendered void at the 27 |\request of the employee, the matter shall be adjudicated in California and California law 28 || shall govern the dispute.” Cal. Lab. Code § 925{b). Section § 925 further provides that it

1 ||“shall apply to a contract entered into, modified, or extended on or after January □□ 2 1}2017.” Cal. Lab. Code § 925(f). 3 Here, there is no dispute that Plaintiff is a California citizen who resides and works 4 |tin San Diego, California. (Doc. No. 1 at 3.) Next, Plaintiff signed the Agreement as a 5 ||condition of his employment on February 1, 2018. Jd. February 1, 2018, is after January 6 2017, the effective date of § 925. (See Doc. No. 20 at 1-2.) Finally, Plaintiff was not 7 ||represented by counsel when he signed the Agreement. Id. |

8 Considering the aforementioned facts, it is clear that § 925 not only applies, but the 9 || forum selection clause, in this case, violates both prongs of § 925(a) by (1) requiring 10 || labor disputes that arise within California to be adjudicated in another state; and (2) by 11 ||imposing another state’s laws on California employees.. See Cal. Labor Code § 925. In 12 || other words, the clause violates “California’s strong public policy against enforcing 13 || forum-selection clauses in employment agreements.”? Karl, 2018 WL 5809428, at *3; cf. 14 || Jones v. GNC Franchising, Inc., 211 F.3d 495, 498 (9th Cir. 2000) (“[Bremen] teaches 15 || that a strong public policy may be declared by statute.”) (citing M/S Bremen, 407 U.S. at 16 92S. Ct..at 1916) (internal quotation marks. omitted). . □ □ 17 | Lastly, Defendant’s assertion that § 925 is preempted, is unconvincing.* See 18 || Stewart Organization, Inc. v. Ricoh Corp.487 U.S. 22 (1988). The Court concurs □□□□ 9 20 . □ 21 1° “In an analogous context, [the Ninth Circuit] made unenforceable a forum- > selection clause due to California’s strong public policy as expressed in an analogous . statute[.]” Karl, 2018 WL 5809428, at *2 (citing Jones, 211 F.3d at 498) (concluding 23 “[b]y voiding any clause in a franchise agreement limiting venue to a non-California forum for claims arising under or relating to a franchise located in the state ... [California Business and Professions Code] § 20040.5 expresses a strong public policy of the State of 25 California to. protect California franchises from the expense, inconvenience, and possible prejudice of litigating in a non-California venue”). 26 |I4 The Supreme Court has been clear that these matters are fundamentally state law 27 ||concerns which must be respected by federal courts sitting in diversity under the Erie . Doctrine. Erie R. Co. v. Timpkins, 304 U.S. 64 (1938). Even in the context of the broad preemptive swathe under the FAA, this principle holds true. First Options of Chicago, .

1 “[t]he holding of Stewart is very narrow and does not impact in any way the continuing 2 |\applicability of the Bremen analysis.” (Doc. No. 20 at 16.) Specifically, the Ninth - 3 ||Circujt in Jones v. GNC Franchising, Inc., 211 F.3d 495 (9th Cir. 2000), explicitly held 4 under Bremen, a forum selection clause that is rendered void by a state statute is □

5 ||invalid and unenforceable. Jd. at 497-98. Moreover, the court in Jones went on to hold, 6 ||consistent with Stewart, that in the context of a § 1404 analysis, California’s strong 7 public policy of providing a protective local forum for its own citizens was a relevant and 8 ||important factor, among others, to be considered in denying a motion for transfer of 9 || venue under § 1404(a). See Id. . 10 Accordingly, given that the agreement at issue “falls within Section § 925’s orbit 11 |{and contravenes California’s strong public policy against litigating labor disputes out-of- 12 state[,]” “[the] forum-selection clause [in Plaintiff's contract] is unreasonable ... and 13 not be enforced. Nor shail the choice of law provision, for the same reasons.” Karl, 14 2018 WL 5809428, at *4. 15 CONVENIENCE AND FAIRNESS FACTORS. _

16 “Because the forum-selection clause has been found to be unenforceable, this order 17 considers the factors of § 1404(a) to decide the defendant[‘s] motion to transfer[,]” Karl, 18 2018 WL 5809428, at *5, rather than engaging in a modified Atlantic Marine analysis. 19 To determine whether to exercise their “broad discretion” to transfer venue under § 20 || 1404, Amini Innovation Corp. v. JS Imports, Inc., 497 F. Supp. 2d 1093, 1108 (C.D. Cal. 21 2007), district courts weigh various factors of “convenience and fairness.” Jones, 211 22 ||F.3d at 498. While there is no definitive list, courts typically look to some or all of the 23 || following factors to determine whether transfer to the alternative forum is proper: (1) the 24 25 || 26 Inc. v. Kaplan, 514 U.S. 938 (1995) (“When deciding whether the parties agreed to 27 || arbitrate a certain matter (including arbitrability), courts generally ... should apply 28 ordinary state-law principles that govern the formation of contracts.”). (Doc. No. 20 at 17 n. * 6.)

1 || plaintiff's choice of forum; (2) the convenience of the parties; (3) the convenience of the 2 || witnesses; (4) the ease of access to the evidence; (5) the familiarity of each forum with □ 3 applicable law; (6) the feasibility of consolidation of other claims; (7) any local 4 interest in the controversy; (8) the relative court congestion in each forum; and (9) the 5 availability of compulsory process. See Decker Coal Co. v. Commonwealth Edison Co., 6 F.2d 834, 843 (9th Cir. 1986); Atlantic Marine, 571 U.S. at 62 n. 6, 134 S. Ct. at 581 7 6 (describing “[f]actors relating to the parties’ private interests” and “{pJublic-interest 8 || factors” for a court to consider in determining whether to transfer an action; Jones, 211_ 9 || F.3d at 498-99 (same). 10 The Court first considers Plaintiff's choice of forum, which is “generally It || accorded” “great weight[.]” Lou v, Belzberg, 834 F.2d 730, 739 (9th Cir. 1987), cert. || denied, 485 U.S. 993 (1988). However, the weight granted to “plaintiff s chosen venue is 13 ||substantially reduced where [it] ... lacks a significant connection to the activities alleged 14 ||in the complaint.” Williams v. Bowman, 157 F. Supp. 2d 1103, 1106 (N.D. Cal. 2001) 15 ||(Gnternal quotation marks omitted), □ 16 || Defendant contends the forum selection clause is valid under Federal law because | 17 11§ 1404 “leaves no room for the operation of state laws which purport to void forum 18 || selection clauses or otherwise render them ineffective.” (Doc. ‘No. 22 at 8.) Moreover, 19 if this Court were to disregard Stewart and use state law to determine whethera 20 || forum selection clause exists, the cases relied upon by Plaintiff to argue that California

_ 21 law should govern are also distinguishable because they involved allegations that □ 22 ||some defect occurred in the process of contract formation. See Moretti v. Hertz Corp., 23 C 13-02972, 2014 WL 1410432, at *2-3 (N.D. Cal. April 11, 2014) (whether a party 24 |jreceived notice and agreed to a forum selection clause at the time of contract formation.) 25 ||The Court disagrees. 26 Here, as in Karl, . Defendant[‘s] corporate headquarters may be [outside of California] but, □ □ 28 defendant[] hired [a] California citizen[] as [a] sales representative[] and

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1 implemented policies that allegedly violate California labor laws. That 2 defendantt] [is] headquartered [outside of California] does not negate the local impact of [its] decisions when they are implemented elsewhere. 3 Moreover, as pled in plaintiff]s’] complaint, the operative facts of this action 4 occurred within California which has a strong interest in adjudicating labor disputes within the forum. Plaintiff has established significant contacts 5 between the chosen forum and the allegations of his complaint. 6 7 1/2018 WL 5809428, at 5 (internal citations and quotation marks omitted); See Schultz v. 8 || Hyatt Vacation Mktg. Corp., 2011 WL 768735, *5 (N.D. Cal. 2011) (similar). Thus, 9 Plaintiff? s choice of forum weighs heavily against transfer. □ 10 _ Court next considers the convenience of the parties. Given that Defendant |/employed Plaintiff in California, (see Doc. No. 1 at fff 2, 6, 12, and 13), aside from 12 asserting that it seeks “relative consistency and predictability in the legal construction and 13 interpretation of its agreements”, Defendant has not demonstrated that litigating in 14 California would be an inconvenience. (Doc. No. 6 at-4.) Plaintiff, on the other hand, is 15 California citizen. (Doc. No. 1 { 2.) He would be inconvenienced by having to travel 16 New Jersey, the district to which Defendant seeks transfer. (Doc. No. 20 at 14.) Thus, 17 factor weighs heavily against transfer. 18 As for the convenience of non-party witnesses, ease of access to evidence, and 19 || docket congestion, the Defendant does not even address these factors, and Plaintiff 20 merely provides them lip-service, (see, generally, Doc. No. 20 at 13-14) so the Court 21 || finds them to be neutral. □ 22 The next factor, familiarity with governing law, weighs slightly against transfer. 23 || This case involves only one state law claim. (See Doc. No. 1 {4 29 - 37.) Given the 24 Court’s finding that the choice of law provision of the contract is unenforceable, the 25 || Plaintiffs claims under § 925 will be governed by California law. See Cal. Labor Code § 26 1|925(b) (“[I]f a provision is rendered void at the request of the employee, ... California 27 || law shall govern the.dispute.”); (Doc. No. 1 {J 29-37.) While this district and the District 28 New Jersey are equally familiar with federal law, “this district is more familiar with 3:

1 state laws underlying the California ... claims. But since other federal courts are fully 2 capable of applying California law, this factor weighs only slightly against transfer.” _ 3 || Karl, 2018 WL 5809428, at *6. . 4 Finally, the Court considers the local interest in the controversy. Here, □ -S ||“California’s strong public policy as discussed in the above forum-selection analysis ... 6 || shows that the local interest in adjudicating this action is great. Section § 925 expresses 7 California’s interest in preventing contractual circumvention of its labor law — tipping the 8 scales against transfer.” Karl, 2018 WL 5809428, at *7 (denying motion to transfer 9 under § 1404 after finding. forum selection clause unenforceable under § 925 and that 10 |} plaintiff 5 choice of forum parties” convenience, familiarity with governing law, and local 11 |/interest in controversy weighed against transfer). 12 In sum, even assuming, arguendo, that this case could have been brought in. New 13 || Jersey, consideration of the § 1404(a) convenience factors weighs against transfer. 14 |) Plaintiff filed the instant action in this District, and his choice is afforded great weight. 15 |} Three of the § 1404(a) factors — convenience of the parties, governing law, □□□□□ 16 interest in the controversy — weigh against transfer, and none of the others favor transfer, 17 || Given that the balance of factors weighs against transfer, the Court finds that Defendants 18 have not met their burden to make a “strong showing of inconvenience to warrant 19 || upsetting the plaintifi[s’] choice of forum.” Decker, 805 F.2d at 843. 20 CONCLUSION 21 Based on the foregoing, IT IS ORDERED THAT: 22 1. Defendants Motion to Dismiss, or in the Alternative, Transfer is DENIED. 23 2, Defendant shall file an answer to the Complaintfo later than February 3, 2020. 24 IF IS SO ORDERED. 25 ||Dated: January KZ 2020 □ 7 LLL La 96 HON. RO ER T. BENE Of Fhited States District Judge 27 28 || 10