Plаintiff Cornelius Uboh, through counsel, has moved the Court to reconsider the decision outlined in the Court's previous memorandum opinion and order [DE 7] denying the parties' joint motion to remand. [DE 8]. In support of his motion, Uboh states that remand to state court is justified based on a procedural defect in removal, namely the "rеsident defendant rule" or the "forum defendant rule." But Uboh's employment agreement with USEF contained a forum-selection clause consenting to the federal jurisdiction for actions or proceedings arising out of or relating to the employment agreement. [DE 1-2 at 37, Pg ID 45]. This forum-selection clause operates as a waiver of this procedural defect with removal since Uboh contractually agreed to litigate any disputes arising out of the employment agreement in federal court. As a result, Uboh's motion to reconsider [DE 8] is DENIED .
I. Procedural History
The Plaintiff filed this action in Fayette Circuit Court on January 11, 2019. [DE 1-2, State Court Record at 6-30, Pg ID 14-38]. Plaintiff sued the Defendants for breach of contract, wage payment and collection law, defamation per se, and defamation. [Id. at 20-28, Pg ID 28-36].
The Defendants removed the action to this Court on February 7, 2019. [DE 1, Notice of Removal]. Subsequently, three of the Defendants, Sonja Keating, William Moroney, and the United States Equestrian Foundation ("USEF"), answered the complaint, filed a counterclaim, and moved to dismiss count two of Plaintiff's complaint. [DE 4, Answer; DE 5, Motion to Dismiss].
Affidavits from two of the Defendants, Murray Kessler and Kent Allen, were attached as exhibits to the notice of removal. The affidavits stated that Kessler and Allen
Previously, four of the parties, Plaintiff Uboh and Defendants Keating, Moroney, and USEF, filed a joint motion or stipulation to remand this action to the Fayette Circuit Court. [DE 6]. The moving parties provided no argument and cited no authority indicating that remand was justified. The parties simply stated that they were "now in agreement and stipulate[d] to the remand of this case to Fayette Circuit Court, Lexington, Kentucky, with each party to bear its own costs." [Id. at 1, Pg ID 117]. The Court denied the parties' joint motion to remand because the parties failed to provide any reason justifying remand to state court or any jurisdictional defect. [DE 7].
Subsequently, Uboh filed a motion asking the Court to alter or amend the memorandum opinion and order denying the joint motion to remand, pointing to the forum defendant rule as justification for remand. [DE 8]. Defendants Keating, Morоney, and USEF filed a response in opposition, asserting that Uboh's consent to litigate in a federal forum in his USEF employment agreement constituted waiver of any procedural defects with removal to federal court.
II. Analysis
Here, Uboh moves the Court to reconsider the previous order denying remand. Uboh contends that the forum defendant rule caused a defect in removal of this action to federal court and asks the Court to amend the previous order to address this issue and remand the action to state court.
A. This Court has Subject Matter Jurisdiction
Federal courts are courts of limited jurisdiction. See, e.g., Kokkonen v. Guardian Life Ins. Co. ,
Jurisdiction based on diversity of citizеnship between the parties exists when there is complete diversity of citizenship between the opposing parties and the amount in controversy exceeds $ 75,000.
Furthermore, the amount in controversy requirement appears to be met. In any action for unliquidated damages, Kentucky law prevents the plaintiff from reciting a sum of alleged damages. See Ky. R. Civ. P. 8.01. When faced with an indeterminate amount of damages in a state court complaint, federal courts may make "an independent appraisal of the amount in controversy or suggest[ ] that the defendant do so." Cole v. Great Atl. & Pac. Tea Co. ,
B. The Forum-Selection Clause Prospectively Waived Any Arguments About Procedural Defects During Removal
In his motion to reconsider, Uboh claims that removal of this action to federal court was improper based on the forum defendant rule. The forum defendаnt rule limits the right of Defendants to remove in diversity cases. Title 28, United States Code Section 1441(b) provides that cases based on diversity of citizenship "shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought."
The weight of federal authority has concluded that the forum defendant rule is a procedural defect that may be waived, not a jurisdictional defеct that deprives the court of subject matter jurisdiction. See, e.g. , RFF Family P'ship, LP v. Wasserman ,
Previously, another judge of this Court also noted that the forum defendant rule is a procedural rule that may be waived. In Hackworth v. Guyan Heavy Equip., Inc. ,
Under normal circumstances, the prеsence of USEF as a Defendant when this action was removed would create a defect in removal based on the forum defendant rule. It is undisputed that USEF was a citizen of both New York and Kentucky when this action was filed for the purposes of determining diversity of citizenship.
But Uboh contractually agreed to litigate аny disputes arising out or relating to the employment agreement in federal court, assuming no defects with subject matter jurisdiction. Section eleven of Uboh's employment agreement with USEF stated,
Consent to jurisdiction and venue. Each of the USEF and Uboh hereby (i) consents to the jurisdiction of the United States District Court for the District of Kentucky, or, if such court doеs not have subject matter jurisdiction over such matter, the appropriate Commonwealth of Kentucky Court, and (ii) irrevocably agrees that all actions or proceedings arising out of or relating to this Agreement shall be litigated in such court[.] Each of the USEF and Uboh accepts for itself or himself in conneсtion with its or his properties, generally and unconditionally, the exclusive jurisdiction and venue of aforesaid courts and waives any defense of forum non conveniens or any similar defense.
[DE 1-2 at 37-38, Pg ID 45-46 (emphasis in original) ]. The contract appears to be signed by Uboh and is dated September 19, 2016. [Id. at 38, Pg ID 46].
Forum selection prоvisions are generally held to be valid and there are no apparent defects with the forum selection provision in the USEF contract. Generally, "[forum selection] clauses are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be 'unreasonable' under the сircumstances." Bremen v. Zapata Off-Shore Co. ,
Additionally, the clause appears reasonable based on the circumstances of this case. Uboh entered into an employment contract with USEF to serve as Laboratory Director for USEF in Lexington, Kentucky. The forum selection provision provides that the parties will litigate claims in federal courts encompassing the Commonwealth of Kentucky, the place where Uboh's work was to be performed. Moreover,
As a result, the only question that remains is whether Uboh's agreement to the forum selection clause, and waiver of the defense of forum non conveniens and similar defenses, constituted a prospective waiver of any defect with removal based on the forum defendant rule. Whether a party may prospectively waive a removal defect based on the forum defendant rule in a contractual forum selection provision appears to be a matter of first impression for this Court.
Other courts have found that permissive forum selection clauses do not result in a waiver of the right to rely on the forum defendant rule. See, e.g. , Klayman v. Judicial Watch, Inc. ,
Of course, the cases cited above dealt with a slightly different situation than the case at bar-in those cases, the courts were tasked with the question of whether a valid forum selection clause could result in waiver of the right to remove a case from state to federal court. Still, there is good reason to hold that Uboh waived any objection based on the forum defendant rule when he signed the employment agreement containing the forum-selection clause here. The Court reaches this conclusion for three reasons.
First, other federal courts have held that forum selection clauses should be upheld unless they are shown to be unreasonable. Here, the pаrties unambiguously agreed to litigate in federal court. [DE 1-2 at 37-38, Pg Id. 45-46]. USEF and Uboh agreed to litigate in the Courts of the Commonwealth of Kentucky only if subject matter jurisdiction was lacking in federal court. Additionally, there is no doubt that this case could have been brought in federal court in the first instance based on diversity of citizenship jurisdictiоn. As such, the forum selection provision in this case is mandatory and should be enforced.
Second, the forum defendant defect was present and apparent at the time the parties signed the employment agreement. USEF's principal place of business appears to have been in Kentucky when the parties signed the employment agreement. As such, Uboh knew, or should have known, that USEF was a Kentucky resident for jurisdictional purposes when he contractually agreed to the forum selection provision. Thus, Uboh had knowledge of the forum defendant defect when he contracted with USEF and yet he still signed the emplоyment agreement; therefore, Uboh made a knowing waiver of any objections to removal to federal court based on the forum defendant rule.
Third, and finally, the plain language of the employment agreement indicates that Uboh waived the forum defendant defect in removal. The relevant provision оf the
III. Conclusion
In sum, the fly in the ointment for Uboh is that the forum selection clause in the employment contract between Uboh and USEF waived any рrocedural defects with removal. The issue here is not that Uboh's objection was untimely. Instead, Uboh clearly and unequivocally agreed to litigate in a federal forum in his employment contract. Uboh has presented no argument that this provision is unenforceable or that agreement to this forum selection сlause and accompanying waiver of defenses did not constitute prospective waiver of the forum defendant rule as a defense to removal. As such, Uboh has waived any objection to a defect in removal based on the forum defendant rule. Accordingly, IT IS ORDERED that the motion to reconsider [DE 8] is DENIED .
Notes
The initial joint motion to remand [DE 6] was signed by Catherine S. Wright, counsel for USEF and counsel for Keating, and Moroney at the time of the filing of the motion to remand. [DE 6 at 2, Pg ID 118]. Wright's signature indicates that these Defendants were initially in favor of remand of this action to state court. Regardless, the response in opposition filed by the same Defendants [DE 11] indicates that they now oppose remand to state court. [See DE 11 at 3 n.2, Pg ID 168 n.2].