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Whitaker d/b/a The Whitaker Companies, Inc. v. Vista Staffing Solutions, Inc. Case remanded to The 127th District Court of Harris County, Texas.
4:17-cv-00876
S.D. Tex.
Jul 11, 2017
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Background

  • Bruce and Betty Whitaker (Texas) sold Whitaker Medical, LLC to Vista Staffing in December 2013 under a Membership Interest Purchase Agreement containing a forum-selection clause requiring each party to submit to state or federal courts sitting in Houston, Harris County, Texas, and waiving venue objections and jury trial rights.
  • On Assignment guaranteed payment of the purchase price; Envision (successor defendant) later acquired Vista.
  • Whitaker sued in Texas state court alleging the defendants suppressed Whitaker Medical’s growth to avoid paying an earn-out under the Purchase Agreement.
  • Defendants removed the case to federal court based on diversity jurisdiction; Whitaker moved to remand, arguing the forum-selection clause waived defendants’ removal rights.
  • The district court analyzed Fifth Circuit precedent on contractual waivers of removal and whether mutual forum-selection clauses effect a clear and unequivocal waiver.
  • The court granted remand, holding the mutual forum-selection clause gave the plaintiff the right to choose state or federal court in Harris County and thus waived removal when plaintiff filed in state court.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether the Purchase Agreement’s forum-selection clause waived defendants’ right to remove a state-court suit Whitaker: clause grants Whitaker the right to choose state or federal forum in Harris County, so defendants waived removal by consenting to jurisdiction and waiving venue objections Defendants: clause is mutual (each party) and therefore does not effect a clear, unilateral waiver of removal rights; Waters is distinguishable Court: waiver applies—mutual clause still gives first-moving plaintiff the choice; filing in state court triggered waiver and remand is required

Key Cases Cited

  • Grand View PV Solar Two, LLC v. Helix Elec., Inc., 847 F.3d 255 (5th Cir. 2017) (contractual forum clause can be a clear and unequivocal waiver of removal)
  • City of New Orleans v. Mun. Admin. Servs., Inc., 376 F.3d 501 (5th Cir. 2004) (party may waive removal rights by contract; right-to-choose test)
  • Waters v. Browning-Ferris Indus., Inc., 252 F.3d 796 (5th Cir. 2001) (forum-selection clause consenting to state courts and waiving venue objections waives removal)
  • iNet Directories, LLC v. Developershed, Inc., 394 F.3d 1081 (8th Cir. 2005) (mutual forum-selection clauses can bar removal when parties waive jurisdiction and venue objections)
  • Gasch v. Hartford Accident & Indem. Co., 491 F.3d 278 (5th Cir. 2007) (doubt about propriety of removal resolved in favor of remand)
Read the full case

Case Details

Case Name: Whitaker d/b/a The Whitaker Companies, Inc. v. Vista Staffing Solutions, Inc. Case remanded to The 127th District Court of Harris County, Texas.
Court Name: District Court, S.D. Texas
Date Published: Jul 11, 2017
Docket Number: 4:17-cv-00876
Court Abbreviation: S.D. Tex.