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Huddleston v. John Christner Trucking, LLC

United States District Court, N.D. Oklahoma

September 27, 2017

THOMAS HUDDLESTON, individually and on behalf of all others similarly situated, Plaintiff,
v.
JOHN CHRISTNER TRUCKING, LLC, Defendant.

          MEMORANDUM DECISION AND ORDER RE DEFENDANT'S MOTION TO DISMISS FOR LACK OF JURISDICTION, OR, IN THE ALTERNATIVE, TO TRANSFER VENUE (ECF NO. 5)

          LAWRENCE J. O'NEILL UNITED STATES CHIEF DISTRICT JUDGE

         I. INTRODUCTION

         Plaintiff Thomas Huddleston brings this wage-and-hour putative class action lawsuit against defendant John Christner Trucking, LLC (“JCT”). ECF No. 1. JCT moves to dismiss based on lack of personal jurisdiction and improper venue or, in the alternative, to transfer the case to the Northern District of Oklahoma, the forum specified in the forum-selection clause of the contract between the parties. ECF No. 5 (“Mot.”). Plaintiff opposed, ECF No. 10 (“Opp.”), and JCT replied, ECF No. 12 (“Reply”). This matter is now ripe for review and is suitable for disposition without oral argument. See Local Rule 230(g).

         II. BACKGROUND

         According to the complaint, Huddleston worked as an “owner-operator” for JCT until August 2016. In that role, he was responsible for operating a commercial vehicle and transporting customer cargo to assigned destinations. Huddleston claims JCT misclassified its “owner-operators” as independent contractors, rather than employees, and thus violated a variety of state and federal labor laws, including those governing payment of wages, minimum wage, meal and rest breaks, and wage reporting. Huddleston seeks to represent other “owner-operators” in a collective action under the Fair Labor Standards Act (“FLSA”) and class actions under California and Oklahoma law.

         In support of its motion to dismiss, JCT submits, inter alia, a declaration from Shannon Crowley, Vice President of Risk Management. Crowley testifies that JCT is an Oklahoma limited liability company headquartered in Sapulpa, Oklahoma, which operates in the forty-eight contiguous states. JCT keeps all company records at its Oklahoma headquarters and dispatches drivers from there. Also, every “owner-operator” completes an orientation at those headquarters. JCT leases facilities in Phoenix, Arizona, and Oklahoma City, Oklahoma. It also leases “drop yards” in locations throughout the United States, which are used for parking and staging trailers. According to Crowley, JCT does not own or lease any property in California, except for one drop yard it leases in Colton, California. It also does not have any employees in California except one individual who works from his home in Fresno to arrange the transportation of customer freight. JCT does not target any advertising specifically to California and, since at least 2013, only 10- 12% of its total nationwide miles have been logged in California. As to plaintiff specifically, Crowley testifies that only three of Huddleston's twenty-five pick-ups or deliveries were in the Eastern District of California. The Crowley declaration includes as an exhibit a copy of the “Independent Contractor Operating Agreement” (“ICOA”) that Huddleston signed. The forum-selection clause of the ICOA provides as follows:

GOVERNING LAW AND FORUM.This Agreement shall be interpreted in accordance with, and governed by, the laws of the United States and, of the State of Oklahoma, without regard to the choice-of-law rules of Oklahoma or any other jurisdiction. THE PARTIES AGREE THAT ANY CLAIM OR DISPUTE ARISING FROM OR IN CONNECTION WITH THIS AGREEMENT, WHETHER UNDER FEDERAL, STATE, LOCAL, OR FOREIGN LAW (INCLUDING BUT NOT LIMITED TO 49 C.F.R. PART 376), SHALL BE BROUGHT EXCLUSIVELY IN THE STATE OR FEDERAL COURTS SERVING CREEK COUNTY, OKLAHOMA. CARRIER AND CONTRACTOR HEREBY CONSENT TO THE JURISDICTION AND VENUE OF SUCH COURTS.

ECF No. 5-1, Ex. A (ICOA) ¶ 23.

         In response, Huddleston submits his own declaration. ECF No. 10-1. Therein, he states that he is a resident of California and that much of his work activity took place in California. Specifically, he says that a significant portion of his drop-offs and pick-ups were located in Tulare, Stockton, Fresno, Newman, Turlock, Modesto, Merced, Madera, and Livingston (all located within the Eastern District of California) and that the vast majority of his total driving miles were related to either a pick-up or dropoff in California. He testifies that JCT said it would make every effort to make his first and last stop of any given trip in California so his work would be completed close to home, and that his first and last stops were indeed in California. As to the ICOA, he testifies that when he was in Oklahoma for orientation, he was told that the ICOA was nonnegotiable, was told that it was offered on a take-it-or-leave-it basis, and that the forum-selection clause and its effects were never explained to him. He further testifies that litigating this case in Oklahoma would impose a prohibitive economic hardship on him due to the cost of travel and time away from work, problems that he would not experience if the case were to remain in California.

         III. LEGAL STANDARD

         A. Personal Jurisdiction

         Federal Rule of Civil Procedure 12(b)(2) authorizes motions to dismiss for lack of personal jurisdiction. If a defendant challenges the existence of personal jurisdiction, the plaintiff bears the burden of establishing the district court's personal jurisdiction over the defendant. CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1073 (9th Cir. 2011). The plaintiff need only make a prima facie showing of jurisdiction to defeat the motion to dismiss, but “may not simply rest on the bare allegations of the complaint.” Ranza v. Nike, Inc., 793 F.3d 1059, 1068 (9th Cir. 2015). “[U]ncontroverted allegations must be taken as true, and conflicts between parties over statements contained in affidavits must be resolved in the plaintiff's favor.” Id.

         B. Venue

         Federal Rule of Civil Procedure 12(b)(3) authorizes motions to dismiss for improper venue. When venue is challenged, the court must determine whether the case falls within one of the three categories set out in the general venue statute, 28 U.S.C. § 1391. Plaintiff bears the burden of showing that venue is proper. See Piedmont Label Co. v. Sun Garden Packing Co., 598 F.2d 491, 496 (9th Cir. 1979). In the context of a motion under Rule 12(b)(3), a court need not accept as true all allegations in the complaint, but may consider facts outside the pleadings. See Murphy v. Schneider Nat'l, Inc., 362 F.3d 1133, 1137 (9th Cir. 2004). The court, however, “is obligated to draw all reasonable inferences in favor of the non-moving party and resolve all factual conflicts in favor of the non-moving party.” Id. at 1138.

         C. 28 U.S.C. § 1404 And Forum-Selection Clause

         28 U.S.C § 1404(a) 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.” The Supreme Court has commanded that “[i]n the light of present-day commercial realities and expanding international trade[, ] . . . [a] forum [selection] clause should control absent a strong showing that it should be set aside.” M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972). When a case concerns enforcement of a forum-selection clause, § 1404(a) provides a mechanism for its enforcement and “a proper application of section 1404(a) requires that a forum-selection clause be given controlling weight in all but the most exceptional cases.” Atlantic Marine Const. Co., Inc. v. U.S. Dist. Court for W. Dist. of Tex., 134 S.Ct. 568, 579 (2013) (internal quotation omitted). Plaintiff bears the burden of showing the exceptional circumstances that make transfer inappropriate. Id. at 581.

         The Court applies federal law to the interpretation and enforcement of a forum-selection clause. Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 513 (9th Cir. 1988). The U.S. Supreme Court has held that forum-selection clauses are presumptively valid and should only be set aside if the party challenging enforcement can “clearly show that enforcement would be unreasonable and unjust.M/S Bremen, 407 U.S. at 1. A “valid forum-selection clause [should be] given controlling weight in all but the most exceptional cases.” Atl. Marine Const. Co, 134 S.Ct. at 581.

         A forum-selection clause may be deemed unreasonable under the following circumstances: (1) if the inclusion of the clause in the agreement was the product of fraud or overreaching; (2) if the party wishing to repudiate the clause would effectively be deprived of his day in court were the clause enforced; and (3) if enforcement would contravene a strong public policy of the forum in which suit is brought. Holland Am. Line, Inc. v. Wartsila N. Am., Inc., 485 F.3d 450, 457 (9th Cir. 2007). Forum-selection clauses are also scrutinized for “fundamental fairness, ” and may be deemed unfair if inclusion of the clause was motivated by bad faith, or if the party had no notice of the forum provision. Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595 (1991). “The party challenging the clause bears a ‘heavy burden of proof.'” Murphy, 362 F.3d at 1140 (quoting M/S Bremen., 47 U.S. at 17).

         IV. DISCUSSION

         Although it is not mandatory, courts considering a challenge to both personal jurisdiction and venue generally decide the issue of personal jurisdiction first. See Leroy v. Great W. United Corp., 443 U.S. 173, 180 (1979) (“The question of personal jurisdiction, which goes to the court's power to exercise control over the parties, is typically decided in advance of venue, which is primarily a matter of choosing a convenient forum.”). The Court begins its analysis with JCT's challenge to personal jurisdiction.

         A. Personal Jurisdiction

         Federal courts ordinarily follow state law in determining the bounds of their jurisdiction over persons. See Fed. R. Civ. P. 4(k)(1)(A). Under California's long-arm statute, courts may exercise personal jurisdiction “on any basis not inconsistent with the Constitution of this state or of the United States.” Cal. Civ. Proc. Code Ann. § 410.10 (2004). Because California's long-arm statute allows the exercise of personal jurisdiction to the full extent permissible under the U.S. Constitution, the question here is whether assertion of personal jurisdiction over JCT comports with the limits imposed by federal due process. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 464 (1985). It is well established that the Fourteenth Amendment's Due Process Clause limits the power of a court to exercise jurisdiction over out-of-state defendants who do not consent to jurisdiction. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011). There are two kinds of personal jurisdiction that a court may exercise over an out-of-state defendant. Id. at 919. The first, known as “general jurisdiction, ” exists if the defendant's contacts with the forum are “so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities.” International Shoe Co. v. Washington, 326 U.S. 310, 318 (1945). The second, known as “specific jurisdiction, ” exists where the litigation is derived from obligations that “arise out of or are connected with the [company's] activities within the state.” Id. at 319. JCT argues that neither general nor specific personal jurisdiction exists here. Huddleston does not argue that the Court could exercise general jurisdiction over JCT but contends that the Court does have specific jurisdiction over JCT.

         1. Specific Jurisdiction

         The touchstone for asserting specific jurisdiction over a nonresident defendant is “the relationship among the defendant, the forum, and the litigation.” Walden v. Fiore, 134 S.Ct. 1115, 1121 (2014) (citation omitted). “The proper question is whether the defendant's conduct connects him to the forum in a meaningful way.” Id. at 1125. The Ninth Circuit has established a three-prong test for analyzing a claim of specific personal jurisdiction: (i) the defendant must have purposefully availed itself “of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws”; (ii) the cause of action must “arise[] out of or relate[] to the defendant's forum-related activities”; and (iii) “the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.” Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004). ...


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