Ryze Claims Solutions, LLC v. Jane Magnus-Stinson
968 F.3d 701
7th Cir.2020Background
- Billings (a remote employee) sued RYZE in California state court alleging FLSA and California state-law claims; his employment agreement contained a forum-selection clause requiring suit in Indiana state court (Marion or Hamilton County) or the Southern District of Indiana (SDIN).
- RYZE removed to the Eastern District of California (EDCA) and moved to transfer under 28 U.S.C. § 1404(a); EDCA applied Atlantic Marine and transferred the case to SDIN.
- In SDIN the parties conducted discovery; SDIN added RYZE counterclaims and granted summary judgment for RYZE on Billings’s FLSA claim; two issues (an expert-strike motion and Rule 23 class-certification) remained pending.
- SDIN sua sponte ordered the case transferred back to EDCA, citing its docket congestion and EDCA’s greater familiarity with California labor law; it ordered RYZE to respond first to an order to show cause.
- RYZE petitioned the Seventh Circuit for a writ of mandamus asking SDIN to request EDCA re-transfer the action to SDIN; the Seventh Circuit granted the petition, holding SDIN erred in its methodology and must give controlling weight to the forum-selection clause absent exceptional circumstances.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether SDIN could transfer the case back to EDCA despite a valid forum-selection clause | SDIN/Billings argued public-interest factors (court congestion; EDCA familiarity with CA law) justified return to EDCA | RYZE argued the clause controls under Atlantic Marine and Billings bears the burden to show exceptional circumstances | Court held forum-selection clause must be given controlling weight; no exceptional circumstances here, so SDIN erred in ordering transfer back |
| Who bears burden to oppose enforcement of forum-selection clause | Billings implicitly treated burden as on RYZE to justify keeping case in SDIN | RYZE: plaintiff bears burden to show why clause should not control | Held: plaintiff (Billings) bears the burden; SDIN improperly required RYZE to respond first |
| Weight of a transferee court’s familiarity with state law | SDIN emphasized EDCA’s greater familiarity with California law as a strong reason to transfer back | RYZE argued federal courts routinely apply other states’ law and familiarity is rarely dispositive | Held: SDIN overstated this factor; federal judges can and do apply nonlocal state law; familiarity alone does not overcome a forum clause |
| Whether docket congestion justifies transfer contrary to forum clause | SDIN relied on administrative difficulties and strained resources to favor transfer back | RYZE argued the operative metric is relative speed to trial and SDIN was faster; also pointed to time already spent in SDIN | Held: SDIN applied an improper, broad metric; relevant question is whether trial would be speedier in transferee court; SDIN failed to show that and ignored time already expended in SDIN |
Key Cases Cited
- Atlantic Marine Constr. Co. v. U.S. Dist. Ct. for W. Dist. of Tex., 571 U.S. 49 (2013) (forum-selection clauses are to be given controlling weight in all but the most exceptional cases)
- Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22 (1988) (discusses forum-selection clause significance and transfer analysis)
- Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991) (upholds validity and predictability-promoting role of forum-selection clauses)
- Salve Regina College v. Russell, 499 U.S. 225 (1991) (federal courts can apply other states' law; local familiarity not dispositive)
- In re Mathias, 867 F.3d 727 (7th Cir. 2017) (mandamus is appropriate to review § 1404(a) transfer decisions)
- Rsch. Automation, Inc. v. Schrader-Bridgeport Int’l, Inc., 626 F.3d 973 (7th Cir. 2010) (lists public- and private-interest factors for § 1404(a) analysis)
- In re Factor VIII or IX Concentrate Blood Prod. Litig., 484 F.3d 951 (7th Cir. 2007) (court congestion matters only insofar as it affects speed to trial)