Miller-Garcia v. Avani Media, LLC

Background

Rachel Miller-Garcia brought employment and breach-of-contract claims against Avani Media, LLC and The 615 Group, LLC. Avani had negotiated with Miller-Garcia to hire her as its President and General Manager for a startup that was to be based in the San Francisco area. She signed an employment agreement on January 15, 2018, with a January 29 start date.

Section 10.9 of the agreement stated that Tennessee law governed the agreement and that litigation had to be brought in a court in Davidson County, Tennessee. Miller-Garcia alleged that Avani terminated her on March 12, 2018, because of discrimination based on her medical condition and disability, her request for a reasonable accommodation, and in violation of her employment contract.

After Miller-Garcia indicated that she intended to sue, Avani and The 615 Group filed a Tennessee state-court action seeking a declaration that she had been terminated for gross negligence, along with claims concerning breach of and rescission of the employment agreement. Miller-Garcia later exercised her claimed right under California Labor Code section 925 to void the agreement’s Tennessee choice-of-law and forum-selection terms. She then filed this California action, which defendants removed to federal court.

The motion

Defendants asked the court to stay or dismiss this action based on improper venue under Federal Rule of Civil Procedure 12(b)(3), the forum non conveniens doctrine, the Colorado River doctrine, and the convenience factors in 28 U.S.C. § 1404(a). They argued that the forum-selection clause was valid and required the dispute to be heard in Davidson County, Tennessee, and that the California case should be paused while the Tennessee action proceeded.

California Labor Code section 925

Section 925 applies to certain employment contracts entered into, modified, or extended on or after January 1, 2017. It prohibits an employer from requiring an employee who primarily resides and works in California, as a condition of employment, to agree to a term requiring litigation outside California for a claim arising in California or depriving the employee of California law’s substantive protections. The statute allows the employee to void such a term; if voided, the dispute is to be adjudicated in California under California law.

The court found that Avani required Miller-Garcia, as a condition of employment, to accept a provision requiring her to litigate California claims in another state and depriving her of California-law protections. The court relied on the agreement’s language that employment was offered “upon the terms and conditions of this Agreement,” as well as communications indicating that the Tennessee law and venue terms were not negotiable. The court therefore concluded that the forum-selection clause was invalid under section 925.

Because the defendants’ venue and forum non conveniens arguments depended on that clause, the court rejected those grounds. The court also explained that Rule 12(b)(3) does not authorize dismissal merely because a contract contains a forum-selection clause when federal venue law otherwise makes the district a proper venue.

Colorado River doctrine

The Colorado River doctrine permits a federal court, in limited and exceptional circumstances, to stay or dismiss a case because a parallel state-court action is pending. The court concluded that the doctrine did not apply here. Although the two cases overlapped substantially, they did not present identical issues. Miller-Garcia’s California-law claims were viable, were not adequately protected in the Tennessee action, and were not then asserted as counterclaims there.

The court also noted that the defendants had not shown that the California federal forum was inconvenient. The company was based in San Francisco during Miller-Garcia’s employment and termination, and the court stated that the defendants had not established that the presence of Tennessee-based witnesses could not be compelled. These considerations favored denying a stay.

Section 1404(a) and disposition

Section 1404(a) allows a federal court to transfer a case to another proper federal forum or to a forum chosen by a valid contractual agreement. The court balanced private and public-interest factors, including the location of relevant events, the applicable law, the parties’ contacts, witness-related issues, court administration, and California’s interest in enforcing section 925.

The court found that California had the advantage because much of the relevant conduct occurred there, California courts were more familiar with the applicable law, and the parties had greater relevant contacts with California. It concluded that a stay under section 1404(a) was groundless.

Order

The court DENIED the Motion to Dismiss or Stay. It ordered defendants to file their answer by January 30, 2020, set an initial case-management conference for February 24, 2020, and terminated Docket No. 11. The order did not decide whether Miller-Garcia would ultimately prevail on her employment or contract claims.