28 F.4th 956
9th Cir.2022Background
- Waber, a California resident, signed an employment agreement nominally with Stryker (defining Stryker to include subsidiaries) that contained New Jersey choice-of-law and forum-selection clauses and a one-year non-compete/non-solicit.
- Waber left Stryker to work for DePuy in the same California territory; Stryker threatened enforcement and sent a cease-and-desist.
- Waber invoked California Labor Code § 925 to void the forum-selection and choice-of-law clauses (§925 allows unrepresented California employees to void clauses requiring out-of-state adjudication or depriving them of California law).
- DePuy and Waber filed a declaratory-judgment action in Central District of California; Stryker/HOC moved to transfer under 28 U.S.C. § 1404(a) to New Jersey based on the forum clause.
- The district court found § 925 rendered the forum-selection clause void, applied the traditional § 1404(a)/Bremen factors, denied transfer, and granted partial summary judgment holding the forum-selection, non-compete, and non-solicitation clauses void under California law (including Cal. Bus. & Prof. Code § 16600).
- HOC appealed the denial of transfer and the summary-judgment ruling; the Ninth Circuit affirmed both decisions.
Issues
| Issue | Plaintiff's Argument (HOC) | Defendant's Argument (DePuy/Waber) | Held |
|---|---|---|---|
| Whether the district court abused its discretion by denying transfer under § 1404(a) after Waber voided the forum clause | Stewart/§1404(a) preempts state law; a valid forum-selection clause must be enforced and transfer ordered | §925 validly voided the forum clause; once voided there's no clause to invoke and traditional §1404(a)/Bremen factors apply | No abuse of discretion; district court properly found clause void and denied transfer |
| Whether federal law (Stewart/§1404(a)) preempts state-law rules about the validity/voidability of forum-selection clauses | Stewart preempts any state law that would void/enfeeble a forum-selection clause | Stewart presumes a valid clause; state contract-formation law (here §925) governs validity | Stewart does not broadly preempt state law on contract validity; state law may determine whether a clause exists |
| Whether the forum-selection, non-compete, and non-solicitation clauses are void under California law | Clauses are enforceable; federal transfer law should control | Clauses violate Cal. Lab. Code §925 and Cal. Bus. & Prof. Code §16600 and are voidable/void | Clauses were void/unenforceable under California law; partial summary judgment affirmed |
| Appellate jurisdiction/standing of HOC to appeal decisions though Stryker was named in the operative contract | HOC (as actual employer/subsidiary) participated and is the proper party in interest | DePuy took no position; district-court participation sufficed | Ninth Circuit has jurisdiction; HOC entitled to appeal |
Key Cases Cited
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) (forum-selection clauses presumptively valid under federal forum-non-conveniens principles)
- Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22 (1988) (federal § 1404(a) governs transfer analysis and displaces state rules that categorically forbid enforcing forum clauses)
- Atlantic Marine Constr. Co. v. U.S. Dist. Court, 571 U.S. 49 (2013) (when a valid forum-selection clause exists, apply modified § 1404(a) analysis giving preselected forum substantial weight)
- Jones v. GNC Franchising, Inc., 211 F.3d 495 (9th Cir. 2000) (§ 1404(a) analysis includes relevant public-policy considerations of the forum state)
- Barnett v. DynCorp Int’l, LLC, 831 F.3d 296 (5th Cir. 2016) (Atlantic Marine did not decide whether state or federal law governs when forum-selection clauses should be deemed invalid)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (arbitration-agreement threshold issues of formation/validity are governed by ordinary state-law contract principles)