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, 2017Background
- 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)
