Case Information
*4
LINN, Circuit Judge:
Howmedica Osteonics Corp. (“HOC”) appeals from the denial by the United States District Court for the Central District of California of HOC’s motion to transfer this case to the District of New Jersey based on a forum-selection clause in an employment contract between Jonathan L. Waber (“Waber”), a California resident, and HOC’s parent company, Stryker Corporation (“Stryker”). HOC also appeals from the district court’s ruling that the forum- selection, non-compete and non-solicitation clauses in Waber’s contract were void under California law and from the district court’s consequent grant of partial summary judgment in favor of DePuy Synthes Sales, Inc. (“DePuy”) and Waber. Because the district court did not abuse its discretion in denying transfer under 28 U.S.C. § 1404(a), we affirm the denial of HOC’s transfer motion. Because the district court did not err in holding the forum-selection, non- compete and non-solicitation clauses void under California law, we affirm the grant of partial summary judgment.
I A In September 2017, Waber was hired by HOC as a Joint Replacement Sales Associate for the Palm Springs and Palm E P UY S YNTHES S ALES V . H OWMEDICA O STEONICS Desert areas and signed an employment contract nominally with HOC’s parent, Stryker. That contract included a restrictive one-year non-compete clause and forum-selection and choice-of-law clauses requiring adjudication of contract disputes in New Jersey. [1]
On July 1, 2018, Waber left Stryker to work at DePuy, an HOC competitor, serving the same region he previously serviced for Stryker in apparent violation of the non-compete clause. On July 17, 2018, Stryker threatened enforcement of the non-compete clause and soon thereafter sent Waber a cease-and-desist letter that threatened legal action. On July 23, 2018, Waber sent Stryker a notice stating that he was exercising his right to void the forum-selection and choice- of-law clauses under California Labor Code § 925. That statute forecloses certain contracts with California employees and renders such agreements “voidable by the employee” under specified conditions. The key provisions read:
(a) An employer shall not require an employee who primarily resides and works in California, as a condition of The key provision, § 8.2, reads: “8.2 Governing Law and Venue. Although I may work for Stryker in various locations, I agree and consent that this Agreement shall be interpreted and enforced as a contract of [New Jersey] . . . and shall be interpreted and enforced in accordance with the internal laws of that state without regard to its conflict of law rules. In such circumstance, I agree and consent that any and all litigation between Stryker and me relating to this Agreement will take place exclusively [in New Jersey] . . . .” (emphasis added). employment, to agree to a provision that would do either of the following: (1) Require the employee to adjudicate outside of California a claim arising in California.
(2) Deprive the employee of the substantive protection of *6 California law with respect to a controversy arising in California.
(b) Any provision of a contract that violates subdivision (a) is voidable by the employee , and if a provision is rendered void at the request of the employee, the matter shall be adjudicated in California and California law shall govern the dispute.
. . . (e) This section shall not apply to a contract with an employee who is in fact individually represented by legal counsel in negotiating the terms of an agreement to designate either the venue or forum in which a controversy arising from the employment contract may be adjudicated or the choice of law to be applied.
Cal. Lab. Code § 925 (emphasis added).
B
Having purported to void the forum-selection and choice-of-law clauses, DePuy and Waber, through shared counsel, filed a preemptive declaratory judgment action in the United States District Court for the Central District of California, seeking a ruling that the forum-selection and choice-of-law clauses were void under § 925, that California law governs the dispute, that the non-compete clause was void as a violation of California Business and Professions Code § 16600, and that DePuy was not subject to a tortious interference claim. In response, Stryker, seeking to enforce the forum-selection clause, filed a motion to dismiss under 28 U.S.C. § 1406 or to transfer to the United States District Court for the District of New Jersey under § 1404(a).
In addressing Stryker’s motion, the district court, guided
by
M/S Bremen v. Zapata Off-Shore Co.
,
California courts have said that “section 16600 prohibits employee
noncompetition agreements unless the agreement falls within a statutory
exception.”
Edwards v. Arthur Andersen LLP
,
Thereafter, DePuy added HOC as a defendant and amended the complaint, repeating the allegations of invalidity of the forum-selection, choice-of-law, and non- compete clauses, deleting the request for relief from the tortious interference claim, and requesting injunctive relief and attorney fees. The district court followed much of the same reasoning it relied on in its denial of HOC’s motion to transfer or dismiss and held that § 925 rendered the forum- selection and choice-of-law clauses “void and unenforceable.” Applying California law, the district court granted partial summary judgment in favor of DePuy and Waber, holding that § 925 and § 16600 rendered the forum- selection, non-compete and non-solicitation clauses in Waber’s contract void and unenforceable. The only issue of material fact left undecided was whether Stryker and HOC were joint employers.
The parties then filed a joint stipulation that dismissed Stryker with prejudice as the wrong party, agreeing that this would not prejudice HOC’s and Stryker’s rights to appeal. That resolved the final fact issue. The district court E P UY S YNTHES S ALES V . H OWMEDICA O STEONICS thereafter entered final judgment in favor of DePuy and Waber. HOC appealed both the order denying transfer and the judgment.
II
A
We first address the threshold question of our
jurisdiction over this appeal. DePuy notes that HOC was not
a party to the case on February 5, 2019, when Stryker’s
Motion to Dismiss or Transfer was decided and that based
on the stipulation entered into by the parties, Stryker has
since been dismissed from the case. While DePuy “takes no
position for or against jurisdiction here” pursuant to the
parties’ stipulation, we are obligated to consider our own
jurisdiction independently of the parties’ stipulation.
See
Bank of N.Y. Mellon v. Watt
,
It is uncontested that HOC participated in the litigation
and filed its notice of appearance with an explanation that
HOC was “improperly named as Stryker Corporation” and
that HOC was the true party in interest. As HOC explained,
and DePuy has not contested, “HOC is a wholly-owned
subsidiary of Defendant Stryker Corporation. Because HOC
employed Waber at the time of his resignation, it is the
correct party to this action.” HOC further explained that
although the employment contract at the heart of the dispute
is between Waber and “Stryker Corporation,” the contract
defines “Stryker Corporation” to include “subsidiaries,
divisions, and affiliates,” and HOC is such a subsidiary. As
the actual employer that participated in the proceedings to
enforce its parent corporation’s forum-selection clause,
HOC has a right to appeal the adverse decision of the district
court on that issue.
See also Devlin v. Scardelletti
, 536 U.S.
*9
1, 7 (2002) (considering the rights of non-named class
members, noting that “[w]e have never, however, restricted
the right to appeal to named parties to the litigation.”);
Commodity Futures Trading Comm’n v. Topworth Int’l,
Ltd.
,
Moreover, HOC properly became a party to this litigation in the district court case, albeit after the district court denied the motion to transfer. We are aware of no authority requiring a party to join the litigation prior to a decision on a motion in order to appeal the final ruling on the issue addressed by that motion. And even if HOC’s official joinder into the case after the district court’s February 5, 2019 decision were deemed to preclude its appeal of that decision, HOC was a party at the time of the district court’s partial summary judgment decision, which also addressed the transfer issue.
For these reasons, we have jurisdiction to hear HOC’s appeal under 28 U.S.C. § 1291.
B
We review the district court’s denial of transfer under 28 U.S.C. § 1404(a) for an abuse of discretion. [3] Jones v. GNC Franchising, Inc. , 211 F.3d 495, 498 (9th Cir. 2000). “A district court abuses its discretion if it does not apply the correct law . . . .” Bateman v. U.S. Postal Serv. , 231 F.3d 1220, 1223 (9th Cir. 2000).
HOC does not separately challenge the district court’s denial of dismissal under § 1406.
We
review
legal
issues,
including
statutory
interpretation, de novo.
Wash. Pub. Utils. Grp. v. U.S. Dist.
Ct. for W. Dist. of Wash
.,
III A HOC challenges the district court’s denial of its motion *10 to transfer, arguing that the district court failed to follow Stewart Organization, Inc. v. Ricoh Corp. , 487 U.S. 22 (1988), should have found the forum-selection clause enforceable under federal law, should have applied the analysis required by Atlantic Marine , and should have transferred the case to the District of New Jersey. HOC frames the majority opinion in Stewart as a wholesale rejection of Justice Scalia’s position in his dissent that state law governs the validity of a forum-selection clause, holding instead that § 1404(a) preempts any state law—like § 925— that would render a previously agreed-to forum-selection clause void or unenforceable. HOC thus contends that the district court abused its discretion by applying § 925 to invalidate the forum-selection clause and deny its motion to transfer. HOC does not contest that Waber’s employment agreement is governed by state contract formation law, but argues that only general contract law, rather than any state law directed specifically to forum-selection clauses, can render such a clause invalid and avoid the modified Atlantic Marine analysis.
DePuy and Waber argue that in reason and result Stewart should not be read as broadly as HOC contends. They contend that Stewart does not occupy the entire landscape of state contract law related to the validity and enforcement of forum-selection provisions and dealt with a narrower issue—whether a district court’s categorical denial of a § 1404(a) motion to transfer based on Alabama law was an abuse of discretion. According to Depuy and Waber, § 925 operates at the level of how agreements are made and voided, before the venue question addressed by § 1404(a). Depuy and Waber argue that Bremen , , and Atlantic Marine assumed the presence of a valid forum-selection clause, rather than addressing how forum-selection clauses are made or voided. DePuy and Waber consider HOC’s contention that Stewart preempted all consideration of state law on questions of party agreement and validity of the forum-selection clause to be unsupported and unsustainable.
DePuy and Waber assert that while the
enforceability
of
a forum-selection clause in a federal court is a well-
established matter of federal law in this Circuit following
Bremen, see Gemini Techs., Inc. v. Smith & Wesson Corp.
,
931 F.3d 911, 914–15 (9th Cir. 2019);
Jones
, 211 F.3d at
497;
Manetti-Farrow, Inc. v. Gucci Am., Inc.
,
B
For decades, courts in the United States frowned upon forum-selection clauses. That all changed when the Supreme Court in an admiralty case applied the common law doctrine of forum non conveniens and held that forum- selection clauses are presumptively valid and should be enforced unless “enforcement would be unreasonable and unjust, or . . . the clause [is] invalid for such reasons as fraud or overreaching.” Bremen , 407 U.S. at 15. Several years after Bremen , the Supreme Court in Stewart once again addressed the force of a forum-selection clause, this time deciding what law governs transfer motions in a federal court sitting in diversity.
In Stewart , the plaintiff, alleging breach of contract, brought suit in the United States District Court for the Northern District of Alabama notwithstanding the presence of a forum-selection clause electing a New York court for any dispute arising out of the contract. , 487 U.S. at 24. The defendant responded by moving to transfer to New York under § 1404(a) or to dismiss under § 1406 pursuant to E P UY S YNTHES S ALES V . H OWMEDICA O STEONICS the forum-selection clause. Id. The district court denied transfer, applying an Alabama policy described in an Alabama Supreme Court decision:
[C]ontractual agreements by which it is sought to limit particular causes of action which may arise in the future to a specific place, are held invalid.
See Redwing Carriers, Inc. v. Foster
, 382 So.2d 554, 556
(Ala. 1980) (quoting 6 A.L.R.2d § 4, p. 306 (1957)). The
Court explained that § 1404(a) represented Congress’
mandated standard for venue transfer analysis, one that
required a “flexible and individualized” analysis of multiple
factors including the presence of the forum-selection clause.
,
Following , the Supreme Court once again had an
opportunity to address venue and transfer issues in
Atlantic
Marine.
In that case, the Supreme Court noted that while a
determination under § 1404(a) ordinarily
requires
consideration and balancing of several recognized private
and public interest factors, the existence of a forum-selection
clause in a contract alters the usual transfer analysis and calls
for the consideration of modified public and private interest
factors.
Atl. Marine
,
C
While concerns over the enforceability of a forum-
selection clause and the law governing venue have thus been
resolved, the question remains as to whether federal or state
law governs the validity of a forum-selection clause.
[4]
A
[4]
Our sister circuits have recognized that the Supreme Court did not
answer whether state or federal law governs the validity of a forum-
number of district courts, including several in this circuit,
have ruled that state law governs the
validity
of a forum-
selection clause just like any other contract clause. We hold
that the state law applicable here, § 925(b), which grants
employees the option to void a forum-selection clause under
a limited set of circumstances, determines the threshold
selection clause.
Barnett v. DynCorp Int’l, LLC
,
[5]
Pierman
,
question of whether Waber’s contract contains a valid forum-selection clause.
Section 925 includes three provisions relevant here. First, § 925(a) prohibits employers from requiring California employees to agree to litigate disputes outside California and to give up the protection of California laws. Second, § 925(b) protects a California employee who is not represented by counsel from being bound by such a provision and gives them the right to declare that provision void. Third, § 925(e) specifies that the first two provisions do not apply to any California employee who is represented by counsel when signing the agreement. Such an employee is free to negotiate whatever forum-selection clause they want. Unlike the Alabama policy at issue in Stewart , § 925 as applied by the district court here is not a rule of state law that would remove all discretion from a federal court on questions of venue. Rather, the provisions in § 925 circumscribing the kinds of employment agreements permitted and allowing parties unrepresented by counsel to void a forum-selection clause under certain circumstances relate to the terms of the agreement between the parties and, at least to that extent, are not contrary to or within the scope of § 1404(a). As discussed, infra , Waber voided the forum- selection clause in his employment contract under § 925(b). Waber’s voiding of that provision excised the forum- selection clause from the agreement as presented to the district court.
HOC argues that § 1404(a), as interpreted by , preempts § 925 and renders Waber’s voiding of the forum- We need not decide whether state law would govern validity of a forum-selection clause that had not been voided and is before the district court for consideration in the transfer analysis.
selection clause ineffective. But nothing in § 1404(a) relates to questions of contract formation or a party’s unilateral withdrawal of consent to a provision, and nothing in Bremen , Stewart , Atlantic Marine or any other Supreme Court decision creates a federal rule of contract law that preempts a state law like § 925 from addressing the upstream question of whether the contract sought to be enforced includes a viable forum-selection clause. HOC overreads the Stewart majority decision as preempting all state laws relating to forum-selection clauses. That is not what the Supreme Court did.
The Supreme Court in Stewart did not adopt a sweeping rule of preemption of all state laws relating to forum- selection including issues of contract formation and voidability between the parties. Instead, the Court simply held that, on matters of venue in federal court, § 1404(a) governed and took primacy over any state law purporting to set a categorical rule within the scope of § 1404(a). The Supreme Court recognized that the question before it was to assess the effect of the Alabama law on an existing and presumptively valid forum-selection clause. Stewart , 487 U.S. at 29 (“[T]he first question for consideration should have been whether § 1404(a) itself controls respondent’s request to give effect to the parties’ contractual choice of venue and transfer this case to a Manhattan court” (emphases added)); id. at 32 (“We hold that federal law, specifically 28 U.S.C. § 1404(a), governs the District Court’s decision whether to give effect to the parties’ forum-selection clause and transfer this case to a court in Manhattan.” (emphasis added)); s ee also Atl. Marine , 571 U.S. at 58 (explaining Stewart ’s holding similarly).
HOC argues that its position on preemption is supported
by ’s statement that its determination under
E P UY S YNTHES S ALES V . H OWMEDICA O STEONICS § 1404(a) renders it “unnecessary to address the contours of
state law.”
See Stewart
,
HOC next argues that Stewart ’s footnote 10 stands for the broad proposition that any state law voiding a forum- selection clause that “makes the applicability of a federal statute depend on the content of state law” is necessarily preempted. See id. at 31 n.10. Again, HOC’s argument cannot be sustained. In this footnote, the majority rejected the dissent’s position that “if the forum-selection clause would be unenforceable under state law, then the clause cannot be accorded any weight by a federal court.” Id. The point the majority was making was simply that any state law that would prohibit the multi-factor analysis required by § 1404(a) must give way to the federal law. Id. (“[A] State cannot pre-empt a district court’s consideration of a forum- selection clause . . . by holding the clause automatically void.” (emphasis added)).
Finally, HOC broadly contends that, under Stewart , once the parties agree to a forum-selection clause, that agreement is locked in by § 1404(a). Again, nothing in Stewart supports such an expansive view. The majority in repeatedly presumed the validity of the forum-selection clause and nowhere addressed the effect of any state law like § 925 that permits a party to unilaterally void a forum- selection clause agreed to without the assistance of counsel. For the foregoing reasons, we hold that §1404(a) and Stewart do not broadly preempt all state laws controlling how parties may agree to or void a forum-selection clause.
D
Here, the district court found that Waber satisfied all the
prerequisites of § 925 and effectively voided the forum-
selection clause under § 925(b). Having found that the
*17
forum-selection clause was void, the district court turned to
the traditional § 1404 factors under
Bremen
. It found that
the “plaintiff’s choice of forum weighs heavily against
transfer,” as does the convenience of the parties. It also
found that the familiarity of the forum with California laws
slightly favors denial of transfer. The district court
additionally found that § 925 represented California’s strong
public policy in adjudicating this action in California and
“preventing contractual circumvention of its labor laws.”
(quoting
Karl v. Zimmer Biomet Holdings, Inc.
, No. C 18-
04176 WHA,
HOC argues that the district court erred by applying
California’s choice-of-law rules because
Atlantic Marine
requires applying the choice-of-law rules of the forum
selected by the parties.
See Atl. Marine
,
HOC argues that the district court, by declining to
enforce the forum-selection clause, abused its discretion for
three reasons. First, HOC argues that state law is irrelevant
to the determination of enforcement of a forum-selection
clause under § 1404. As noted,
supra
, HOC is incorrect that
prohibits a federal court from considering the state
public policy in deciding a § 1404(a) motion. The majority
in
Stewart
only prohibited categorically “focusing on a
single concern or a subset of the factors identified in
§ 1404(a),” like the Alabama law required.
Second, HOC argues that
Bremen
is inapplicable to
adjudication of § 1404(a) motions because
Stewart
limited
Bremen
to the context of
forum non conveniens
rather than
transfer.
See Stewart
,
Third, HOC argues that even if
Bremen
applies, the
district court abused its discretion by denying transfer
because § 925 represents an even weaker public policy than
the policy embodied in the Alabama law in
Stewart.
HOC
contends that the district court should have applied the
modified
Atlantic Marine
factors. DePuy and Waber
respond that the
Bremen
analysis “controls the enforcement
of forum clauses in diversity cases,”
Manetti-Farrow
, 858
F.2d at 513, and that this court has repeatedly held forum-
E P UY S YNTHES S ALES V . H OWMEDICA O STEONICS selection clauses unenforceable as violating forum state
public policy,
see, e.g., Doe 1 v. AOL LLC,
In Atlantic Marine , the Court explained the procedure for addressing § 1404(a) motions in the absence of a forum- selection clause: “In the typical case not involving a forum- selection clause, a district court considering a § 1404(a) motion (or a forum non conveniens motion) must evaluate both the convenience of the parties and various public- interest considerations.” 571 U.S at 62–63; see Gemini , 931 F.3d at 914–15 (recognizing that “ Bremen continues to provide the law for determining the validity and enforceability of a forum-selection clause”). The district court here considered these factors in its analysis. HOC does not argue that the balance of private or public factors separate from the enforcement of the forum-selection clause required the district court to grant the transfer motion, and we see no reason to question or overturn the district court’s analysis or its denial of HOC’s motion to transfer.
IV
HOC also appeals from the district court’s ruling on summary judgment in favor of DePuy and Waber that the forum-selection, non-compete and non-solicitation clauses were void. The district court, in ruling on the cross-motions for summary judgment, found that the forum-selection clause satisfied all the prerequisites for voidability under § 925 and was properly voided by Waber. It also found the forum-selection and non-compete clauses unenforceable as *20 contrary to California public policy as expressed in § 925 and § 16000. Beyond the argument we have already rejected that preempts consideration of § 925, HOC presents no persuasive reason for us to overturn the district court’s ruling of partial summary judgment.
V
In conclusion, because the district court did not abuse its discretion in denying transfer under 28 U.S.C. § 1404(a), we affirm the denial of HOC’s transfer motion. Furthermore, because the district court did not err in holding the forum- selection, non-compete and non-solicitation clauses void under California law, we affirm the grant of partial summary judgment and the entry of judgment in favor of DePuy and Waber.
