INTRODUCTION
This case involves a putative class of truck drivers who seek redress for alleged unpaid wages and unlawful deductions from their pay. The named Plaintiff is Juan Montoya, a former employee of the Defendants, CRST Expedited, Inc., and CRST International, Inc.
In March 2016, the Defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6) or to transfer to the Northern District of Iowa under
After considering the initial record and the parties' supplemental materials, the Court declines to enforce the forum-selection clause against Montoya because to do so would be unreasonable and unjust. The Court further concludes that CRST has not met its substantial burden to override the plaintiff's choice of forum, as required under § 1404(a) when the parties are not bound by an enforceable forum-selection clause. Therefore, the Court again DENIES the Defendants' motion to dismiss or transfer (Docket No. 7).
FACTUAL BACKGROUND
The following facts are drawn from the Plaintiff's First Amended Complaint (Docket No. 90) ("FAC") and attached documents.
Montoya, a resident of Boston, Massachusetts, worked for CRST from October to December 2014. Both CRST entities are Iowa corporations that ship goods in interstate commerce. The Defendants recruited drivers, including Montoya, by promising sign-on bonuses and "free" commercial driver's license ("CDL") training. CRST requires new drivers to complete a training program that consists of four phases.
In Phase 1, participants must attend, without pay, a driver training program at an educational facility operated by a third party.
Drivers are required to attend Phase 1 training regardless of whether they already possess a valid CDL. Only after traveling to the third-party facility are drivers asked to sign a Pre-Employment Driver Training Agreement, the first of two contracts relevant to this case.
The Pre-Employment Agreement explains that CRST considers the amounts it pays upfront for trainees to attend the Phase 1 and Phase 2 programs-for instance, their travel, lodging, and tuition expenses-to be advances. Accordingly, the Pre-Employment Agreement provides, in part, that if a driver is dismissed or withdraws from the program prior to Phase 3, or breaches the subsequent Employment Contract or is terminated within eight months of being hired, the driver must repay the advanced sums-an amount that "will equal or exceed the sum of $2,000"-plus interest. Alternatively, once a trainee completes the first week of Phase 4, CRST begins to deduct up to $40 per wеek from the driver's weekly pay until the advanced sums are repaid in full.
After completing Phase 2, drivers are required to sign the second relevant contract, the CRST Driver Employment Contract. This document reiterates the repayment provisions just discussed. It also includes a choice-of-law and forum-selection clause stating that Iowa law shall govern interpretation of the contract and that "any claim, litigation, or dispute arising from or related to this Contract shall be litigated in the appropriate federal or state court located in Cedar Rapids, Iowa."
The FAC alleges that, as a result of the practices described above, CRST drivers are often paid less than the federal minimum wage. It also alleges, among other things, that CRST makes deductions from drivers' paychecks for improper purposes, that certain deductions constitute unlawful kickbacks to the Defendants, and that CRST charges an excessive interest rate.
DISCUSSION
I. Enforceability of the Forum-Selection Clause
A. Which Way to the Forum
In seeking to enforce the forum-selection clause through dismissal or transfer, CRST argues that Montoya's English language proficiency is irrelevant to whether the clause is enforceable. In the alternative, it argues that Montoya's job application, deposition testimony, and other evidence unearthed in discovery reveal that Montoya's English is not so poor as to preclude enforcement of the forum-selection clause. It also argues that forum-selection clauses are routinely enforced in FLSA cases.
Montoya argues that discovery has bolstered his assertion that he is unable to read written English and therefore could not have understood the forum-selection clause in the Employment Contract. He also argues that the circumstances under which he signed the Employment Contract would make it unreasonable and unjust for the Court to enforce the forum-selection
B. Legal Standard Under Atlantic Marine
The threshold question is the standard for evaluating a dispute over the enforceability of a forum-selection clause. The Supreme Court addressed thе issue in Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Texas,
Here, CRST's motion to dismiss or transfer travels in two lanes-under both Rule 12(b)(6) and § 1404(a). Given the Supreme Court's apparent preference for enforcing forum-selection clauses under the rubric of § 1404, the Court will primarily apply that framework. Under the typical § 1404(a) analysis, a forum selection clause is "prima facie valid" and should be enforced absent a "strong showing" by the resisting party that the clause is "unreasonable" under the circumstances. Claudio-De Leon,
(1) the clause was the product of fraud or overreaching;
(2) enforcement would be unreasonable and unjust;
(3) proceedings in the contraсtual forum will be so gravely difficult and inconvenient that the party challenging the clause will for all practical purposes be deprived of his day in court; and
(4) enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by judicial decision.
But a procedural roundabout remains. In this case, the parties disagree about what standard the Court should use to determine the facts undеrlying the reasonableness question. Montoya argues that a summary judgment standard should apply because CRST has renewed its motion to dismiss after conducting discovery, which, according to Montoya, requires the Court
The parties do not providе any cases squarely addressing this question, and Atlantic Marine did not discuss it. See
C. Analysis of "Unreasonable and Unjust"
The question before the Court is whether it would be "unreasonable and unjust" to enforce the forum-selection clause against Montoya. The parties burn a lot of rubber discussing Montoya's comprehension of written English. As CRST points out, in Soto v. State Indus. Prod., Inc.,
With the disputed question of Montoya's English skills set aside, CRST has not contested the following facts: In October 2014, enticed by a postcard promising "free" training, Montoya trаveled by Greyhound bus to Marine City, Michigan, where he was presented with, and signed, the Pre-Employment Agreement. This contract did not contain a forum-selection clause, but it bound Montoya to owe CRST a minimum of $2,000, and possibly more, depending on how the employment relationship developed, to reimburse the company for various training-related expenses. Two weeks later, after traveling to Cedar Rapids, Iowa, and completing CRST's orientation program, Montoya was presented with, and signed, the Employment Contract. This contract contained the forum-selection clause at issue here. Thus, at the point in time where Montoya was first presented with the forum-selection clause,
Given that CRST has not disputed these circumstances, even if Montoya spoke Shakespeare's English, the Court has little trouble concluding that Montoya has met his burden to "clearly show that enforcement [of the forum-selection clause] would be unreasonable and unjust." Bremen,
Accordingly, the Court declines to enforce the forum-selection clause because to do so "would be unreasonable and unjust." Bremen,
II. Transfer Under the Traditional Factors of § 1404(a)
A. Parties' Arguments
CRST argues that, even in the absence of an enforceable forum-selection clause, the § 1404(a) factors weigh in favor of transfer to the Northern District of Iowa, primarily because that is the location of the vast majority of the company's employees who are likely to be called as witnesses. Montoya counters that transfer is inappropriate under the § 1404(a) factors because, among other reasons, the plaintiffs' choice of forum in an "opt-in" class action under the FLSA is entitled to substantial deference.
B. Legal Standard
Where, as here, a valid forum-selection clause is not in play, § 1404(a) requires the Court to weigh an array of private-and public-interest factors to determine "whether, on balance, a transfer would serve 'the convenience of parties
C. Analysis
1. Plaintiff's Choice of Forum
CRST argues that Montoya's choice of forum in the District of Massachusetts is entitled to little weight because Montoya seeks to represent a nationwide class, and so far, the other opt-in plaintiffs reside in Mississippi, Michigan, and Florida, thereby diluting whatever weight the Court might afford to Montoya's choice of forum. Montoya counters that the selection of forum by FLSA plaintiffs deserves more, not less, deference because, unlike a typical Rule 23 class, members of an FLSA class must "opt-in" rather than "opt-out" of the collective action.
The Court finds the "opt-in" mechanism of FLSA сlasses to be a persuasive distinction in this case. In essence, it means that FLSA class members who "opt-in" to this litigation are, at least implicitly, signaling that they prefer to join this case in Massachusetts rather than file a claim closer to home. See Johnson v. VCG Holding Corp.,
2. Convenience of the Parties and Witnesses
CRST argues that a transfer to the Northern District of Iowa will best serve the convenience of the parties and witnesses because that is where the vast majority of the relevant witnesses are located. Becаuse CRST is headquartered in Cedar Rapids, all of its personnel-related functions, including its payroll, dispatch, and finance departments, are located there. This includes the employees responsible for determining the amounts charged to trainees for the Driver Training Programs.
Montoya argues that the convenience factor weighs in his favor because most of the witnesses will be the parties themselves and, as discussed abovе, the "opt-in" plaintiffs have all chosen to litigate this case in Massachusetts. He also argues that CRST, as a large corporation, is better positioned to absorb any inconvenience than Montoya, an hourly worker. Montoya further argues that, in terms of air travel, Boston is a far more accessible destination than Cedar Rapids. Finally, he argues that because other CRST employment contracts
The parties appear to agree that most of the witnesses would be either the parties or, in CRST's case, agents. However, the convenience factor remains difficult to evaluate because the witness list is not clear. Cf. Princess House, Inc. v. Lindsey,
Here, therе can be little doubt that a large corporation like CRST is in a better position to absorb the cost of an inconvenient forum than an hourly employee like Montoya. As a result, even if the number of Iowa-based witnesses slightly favors transfer, this consideration is neutralized by the fact that CRST is better able to absorb the cost of such inconvenience.
3. Location of Documents
CRST argues, without providing any detail, that transfer is appropriate because the vаst majority of the relevant documents are located in Iowa. However, the Court agrees with Montoya's rejoinder: "This factor seems like a holdover from a time when businesses kept important records, including payroll records, in paper and the difficulty of physically accessing the paper documents and the burden of transporting them across jurisdictions could be onerous." Johnson,
4. Application of Iowa Law
The final factor the parties raise is that several counts in the FAC call upon the Court to apply Iowa law. Although district courts are "undoubtedly capable" of applying the laws of states outside of their districts, "[a] district's familiarity with the governing law is an appropriate factor to consider" in the § 1404(a) analysis. Johnson,
D. Conclusion
On balance, the § 1404(a) factors weigh against transfer. Given the considerable deference owed to the plaintiffs' choice of forum in an FLSA collective action, CRST-in the absence of an enforceable forum-selection clause-has not done enough to overcome the "strong presumption in favor of the plaintiff's choice of forum." Astro-Med, Inc. v. Nihon Kohden Am., Inc.,
ORDER
CRST's renewed motion to dismiss or transfer (Docket No. 7) is DENIED .
Notes
The Plaintiff alleges that the two named Defendants are "brother/sister" companies owned by the same holding company. Although technically the motion at issue here was filed by only one Defendant (CRST Expedited), the distinction between the two entities is not material for purposes of this memorandum, and they will be referred to collectively.
In Montoya's case, the Phase 1 educational facility was located in Marine City, Michigan.
For Montoya, the Phase 2 program occurred in Cedar Rapids, Iowa.
Given the Court's conclusion below regarding the enforceability of the forum-selection clause in this case, there is no need to address this argument concerning forum-selection clauses in FLSA casеs more generally.
The statute provides: "For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented."
The only forum-selection clause issue the parties raise here is its enforceability-and not its scope, or whether it is permissive or mandatory. See Claudio-De Leon v. Sistema Universitario Ana G. Mendez,
Moreover, Soto is distinguishable. It is hard to argue that Montoya was negligent as a matter of law when he was first presented with the second contract, containing the forum-selection clause, at a CRST facility far from his home, by a CRST instructor who explained portions of the contract but "never mentioned anything about needing to bring any disputes about the contract in an Iowa court."
CRST asserts that Montoya has deposed eight CRST witnesses, seven of whom live and work in Iowa. It is not clear whether all of these witnesses would be called at trial or what the substance of their testimony would be.