Bartels Ex Rel. Bartels v. Saber Healthcare Group, LLC
880 F.3d 668
4th Cir.2018Background
- Saber Healthcare Holdings and several wholly owned LLC subsidiaries operate assisted-living facilities in North Carolina; Franklin Manor is in Franklin County. Residents sign Residency Agreements containing a forum-selection clause designating the county where the facility is located as the “sole and exclusive venue.”
- Three named plaintiffs (former/current Franklin Manor residents) sued in Franklin County state court alleging understaffing, breach of contract, and statutory claims; plaintiffs sought a preliminary injunction.
- After in-court hearings (some held outside Franklin County), defendants removed the case to federal court under CAFA; the state court later signed the injunction but stayed it pending remand.
- Plaintiffs moved to remand, arguing the forum-selection clause precludes removal because there is no federal courthouse in Franklin County. Defendants argued CAFA permits removal by any single defendant and that not all defendants are bound by the Franklin Manor clause.
- District court remanded; Fourth Circuit vacated and remanded for further factual development on whether all defendants are bound by the Franklin Manor forum-selection clause and clarified the burdens of proof.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the forum-selection clause (county designated as "sole and exclusive venue") preclude removal when no federal courthouse is located in that county? | Clause unambiguously requires litigation in designated county; absent a federal courthouse there, removal would move the case out of the contractually selected county and is precluded. | Clause allows venue in any court located in the county; removal permissible so long as a federal court with jurisdiction covers that county (or if federal courthouse physically located there). | The clause is geographic and, because no federal courthouse is in Franklin County, the plain language precludes removal. |
| Do plaintiffs waive the forum-selection clause by (a) suing non-signatory entities, (b) asserting statutory claims, or (c) consenting to out-of-county preliminary hearings? | No—(a) plaintiffs only signed Franklin Manor contracts and sue others as alter egos; (b) statutory claims arise in connection with the contract; (c) consenting to preliminary hearings outside the county (consistent with NC practice) does not clearly waive the clause. | Yes—(a) inconsistent forum clauses across facilities could prevent exclusive enforcement of Franklin Manor clause; (b) statutory claims fall outside the clause; (c) proceeding in other counties shows waiver. | Plaintiffs did not waive enforcement: they signed Franklin Manor contracts; statutory claims relate to the contracts; attending limited out-of-county hearings did not clearly waive the clause. |
| Is a non-signatory defendant (other Saber entities) bound by the Franklin Manor forum-selection clause so as to prevent CAFA removal by any single defendant? | The alter-ego/related-party allegations make non-signatories bound; traditional doctrines (alter ego, estoppel, veil-piercing) can bind affiliates. | Non-signatories are not foreseeably bound; defendants lack evidence tying their conduct closely enough to the Franklin Manor contracts to force them into the clause. | Whether non-signatories are bound is a factual question; the district court erred by accepting plaintiff allegations without findings. The case is remanded for factual development; plaintiffs bear burden to prove waiver of removal. |
| Who bears the burden of proof on whether a forum-selection clause waives removal rights? | Plaintiffs seeking remand must prove the clause waives defendants’ right to remove (i.e., show all defendants are bound). | Defendants removing bear burden to show jurisdictional prerequisites; but on the forum-selection waiver question, burden rests with the party asserting the waiver (plaintiffs). | The court holds that subject-matter jurisdiction under CAFA is for the removing party to prove, but waiver of removal via a forum-selection clause is an affirmative defense; plaintiffs bear the burden to prove the clause binds all defendants. |
Key Cases Cited
- FindWhere Holdings, Inc. v. Sys. Env’t Optimization, LLC, 626 F.3d 752 (4th Cir.) (distinguishes geographic vs. sovereignty forum clauses; clauses requiring litigation "in a state" permit state or federal courts located there)
- Yakin v. Tyler Hill Corp., 566 F.3d 72 (2d Cir.) (forum clause naming a county as venue precludes removal when no federal courthouse is in that county)
- Simonoff v. Expedia, Inc., 643 F.3d 1202 (9th Cir.) (clause vesting venue "in" a county allows state or federal courts located within that county)
- Alliance Health Grp., LLC v. Bridging Health Options, LLC, 553 F.3d 397 (5th Cir.) (venue in a specific county permits state or federal court if a federal courthouse sits in that county)
- Global Satellite Commc’n Co. v. Starmill U.K., Ltd., 378 F.3d 1269 (11th Cir.) ("Venue shall be in Broward County" interpreted to mandate county-only venue; satisfied by state or federal court located in that county)
- J.J. Ryan & Sons, Inc. v. Rhone Poulenc Textile, S.A., 863 F.2d 315 (4th Cir.) ("arising out of or in connection with" language gives broad scope to forum-selection/arbitration clauses)
- Lipcon v. Underwriters at Lloyd’s, London, 148 F.3d 1285 (11th Cir.) (forum-selection clauses affect venue/jurisdictional exercise but do not negate federal subject-matter jurisdiction)
- Breuer v. Jim’s Concrete of Brevard, Inc., 538 U.S. 691 (U.S.) (burden rules in removal context: if action qualifies for removal, plaintiff must point to an express exception)