Case 3:16-cv-05622-JSC Document 21 Filed 01/20/17 Page 1 of 8
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`Case No.16-cv-05622-JSC
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`ORDER GRANTING MOTION TO
`TRANSFER
`Re: Dkt. No. 10
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`CHRISTOPHER AMBERGER,
`Plaintiff,
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`v.
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`LEGACY CAPITAL CORPORATION, et
`al.,
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`Defendants.
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`In 1998, Plaintiff Christopher Amberger entered into an investment contract with
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`Defendant Legacy Capital Corporation. The contract contains a forum selection clause which
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`states that “[t]his agreement shall be governed by the laws of the State of New York and any
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`litigation related hereto shall be brought in the State of New York.” Notwithstanding the forum
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`selection clause, in 2016 Plaintiff sued Defendants in the Northern District of California regarding
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`the investment. Defendants now move to enforce that clause and seek an order transferring this
`action to the Southern District of New York under 28 U.S.C. § 1404(a).1 (Dkt. No. 10.) After
`carefully considering the parties’ briefing and having had the benefit of oral argument on January
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`19, 2017, the Court GRANTS Defendants’ motion and TRANSFERS this action to the Southern
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`District of New York. Plaintiff could have filed this action originally in the Southern District of
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`New York and Plaintiff has not met his heavy burden of showing that the forum selection clause
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`should not be enforced.
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`BACKGROUND
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`Plaintiff Christopher Amberger, a California resident, entered into an investment contract
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`1 Both parties have consented to the jurisdiction of a magistrate judge pursuant to 28 U.S.C. §
`636(c). (Dkt. Nos. 7 & 11.)
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`Northern District of California
`United States District Court
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`Case 3:16-cv-05622-JSC Document 21 Filed 01/20/17 Page 2 of 8
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`with Legacy Capital Corporation, a New York corporation, through its agent Josh Brackett, in
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`November of 1998. (First Amended Complaint (“FAC”) at ¶¶ 9-10.) Pursuant to the contract,
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`Plaintiff provided Legacy Capital Corporation with $20,000 for investment in two viatical
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`settlement contracts. (Id.) A viatical settlement is a transaction in which a terminally ill insured
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`sells the benefits of his life insurance policy to a third party in return for a lump-sum cash payment
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`equal to a percentage of the policy’s face value. (Id. at ¶ 3.) Legacy Capital Corporation acquires
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`these life insurance policies and “solicit[s] investors to pool together to purchase fractional shares
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`in the policies.” (Id. at ¶ 4.) Both viators (holders of the life insurance policies) for the settlement
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`contracts Plaintiff invested in are still alive and Plaintiff has yet to receive a return on his
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`investment. (Id. at ¶¶ 25-29.) In October 2015 his interest in the two polices was cancelled. (Id.
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`at ¶ 30.)
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`A year later, Plaintiff filed this action against Legacy Capital Corporation and its alter egos
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`Legacy Benefits Corporation, and Legacy Benefits, LLC (collectively “Legacy”), as well as Mills,
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`Potoczak & Company, the successor to Wesley, Mills & Company who was the escrow agent
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`under the investment contract. (Dkt. No. 1.) Plaintiff alleges violations of (1) California’s
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`Consumer Legal Remedies Act (“CLRA”); (2) fraud; (3) breach of fiduciary duty; (4) violation of
`the California Securities Act2; and (5) declaratory relief. Defendants thereafter moved to transfer
`venue to the Southern District of New York under Section 1404(a) based on the forum selection
`clause in the parties’ investment contract. (Dkt. No. 14 at 27.3) Plaintiff failed to timely file an
`opposition to the motion to transfer, and instead, nearly two weeks after the opposition was due,
`filed an opposition and an amended complaint.4 (Dkt. Nos. 14 & 15.) Defendants thereafter filed
`a reply. (Dtk. No. 16.)
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`2 Plaintiff initially pled this claim as one for relief under the federal Securities Act of 1933, but
`amended it to be under California’s equivalent after the underlying motion was filed. Compare
`Dkt. No. 1 ¶¶ 78-83 with Dkt. No. 14 at ¶¶ 78-82.
`3 Record citations are to material in the Electronic Case File (“ECF”); pinpoint citations are to the
`ECF-generated page numbers at the top of the documents.
`4 Defendants’ objections to the untimeliness of Plaintiffs opposition are well-taken, but given the
`lack of prejudice to Defendants the Court considers the merits of Plaintiff’s arguments.
`2
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`Northern District of California
`United States District Court
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`Case 3:16-cv-05622-JSC Document 21 Filed 01/20/17 Page 3 of 8
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`DISCUSSION
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`“For the convenience of parties and witnesses, in the interest of justice, a district court may
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`transfer any civil action to any other district or division where it might have been brought or to
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`any district or division to which all parties have consented.” 28 U.S.C. § 1404(a). When a case
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`concerns an enforcement of a forum selection clause, section 1404(a) provides a mechanism for its
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`enforcement and “a proper application of § 1404(a) requires that a forum-selection clause be given
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`controlling weight in all but the most exceptional cases.” Atlantic Marine Const. Co., Inc. v. U.S.
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`Dist. Court for W. Dist. Of Tex., 134 S.Ct. 568, 579 (2013) (internal quotation omitted). This
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`weight is due because the “enforcement of valid forum-selection clauses, bargained for by the
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`parties, protects their legitimate expectations and furthers vital interests of the justice system.” Id.
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`at 581. In particular, the court should give no weight to “the plaintiff’s choice of forum” or “the
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`parties’ private interests.” (Id. at 581-82.) Instead, the court “may consider arguments about
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`public-interest factors only.[] Because those factors will rarely defeat a transfer motion, the
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`practical result is that forum-selection clauses should control except in unusual cases.” Id. at 582.
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`A. The Forum-Selection Clause
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`Plaintiff does not dispute that the parties’ contract contains a forum selection clause which
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`states: “Section 12. This agreement shall be governed by the laws of the State of New York and
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`any litigation related hereto shall be brought in the State of New York.” (Dkt. No. 14 at 27.)
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`Instead, Plaintiff argues that transfer is improper because (1) the action could not have been
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`brought in the transferee court in the first instance, and (2) enforcement of the forum selection
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`clause is unreasonable. Neither argument is availing.
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`1. Transfer Does Not Destroy Diversity Jurisdiction
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`Section 1404(a) provides that a court may transfer a case to a district “where it might have
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`been brought.” 28 U.S.C. § 1404(a). Plaintiff argues that his case could not have been brought in
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`the Southern District of New York because there would not be diversity jurisdiction. Plaintiff
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`misunderstands diversity jurisdiction. A district court has diversity jurisdiction “where the matter
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`in controversy exceeds the sum or value of $75,000, ... and is between citizens of different states,
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`or citizens of a State and citizens or subjects of a foreign state....” Id. § 1332(a)(1)-(2); see also
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`Northern District of California
`United States District Court
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`Case 3:16-cv-05622-JSC Document 21 Filed 01/20/17 Page 4 of 8
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`Diaz v. Davis (In re Digimarc Corp. Derivative Litig.), 549 F.3d 1223, 1234 (9th Cir. 2008)
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`(“diversity jurisdiction requires complete diversity between the parties—each defendant must be a
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`citizen of a different state from each plaintiff.”) The parties are diverse—Plaintiff is a California
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`resident and Defendants are residents of New York, Delaware, and Ohio— and Plaintiff has
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`alleged that the amount in controversy requirement is satisfied. (FAC at ¶ 33.) Whether the action
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`is venued in New York or this District, the district court has diversity jurisdiction.
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`Plaintiff’s reliance on the “forum defendant rule” for removal jurisdiction in 28 U.S.C.
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`section 1441(b)(2) is misplaced. The forum defendant rule “imposes a limitation on actions
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`removed pursuant to diversity jurisdiction: ‘such action[s] shall be removable only if none of the
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`parties in interest properly joined and served as defendants is a citizen of the State in which such
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`action is brought.’” Spencer v. U.S. Dist. Court for N. Dist. of Ca., 393 F.3d 867, 870 (9th Cir.
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`2004) (quoting 28 U.S.C. § 1441(b)) (emphasis added). The removal rules do not apply here.
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`Section 1404(a) states that an action can be transferred to a district where it “might have been
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`brought,” not to a district where it might have been removed from state court. Since the Southern
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`District of New York would have diversity jurisdiction and venue of this action, it might have
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`been brought there and thus transfer to New York is an available remedy.
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`2. The Reasonableness of the Forum Selection Clause
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` Forum-selection clauses are “prima facie valid and should be enforced unless
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`enforcement is shown by the resisting party to be ‘unreasonable’ under the circumstances.” M/S
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`Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972). This exception is construed narrowly.
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`Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 325 (9th Cir. 1996). “A forum selection clause is
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`unreasonable if (1) its incorporation into the contract was the result of fraud, undue influence, or
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`overweening bargaining power; (2) the selected forum is so gravely difficult and inconvenient that
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`the complaining party will for all practical purposes be deprived of its day in court; or (3)
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`enforcement of the clause would contravene a strong public policy of the forum in which the suit
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`is brought.” Id. (internal citations and quotation marks omitted). “[T]he party seeking to avoid a
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`forum selection clause bears a ‘heavy burden’ to establish a ground upon which [the court] will
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`conclude the clause is unenforceable.” Doe 1 v. AOL LLC, 552 F.3d 1077, 1083 (9th Cir. 2009)
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`Northern District of California
`United States District Court
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`Case 3:16-cv-05622-JSC Document 21 Filed 01/20/17 Page 5 of 8
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`(citing Argueta, 87 F.3d at 325). Plaintiff appears to argue that the forum selection clause is
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`unreasonable under each prong of the Argueta test.
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`a) The Forum Selection Clause Was Not the Result of Fraud,
`Undue Influence or Overweening Bargaining Power
`Plaintiff makes an offhand comment that the forum selection clause is part of an adhesion
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`contract, but makes no substantive argument in this regard. Instead, Plaintiff suggests that he was
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`not on equal footing with Defendants and that he was somehow “duped” into investing in these
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`viatical settlement contracts. “Even if plaintiff’s contentions were true, defendants[’] purportedly
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`unequal bargaining power and the fact that plaintiff did not negotiate the terms of the forum
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`selection clause do not alone render the clause unreasonable.” Voicemail Club, Inc. v. Enhanced
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`Servs. Billing, Inc., No. C 12-02189 SI, 2012 WL 4837697, at *2 (N.D. Cal. Oct. 10, 2012); see
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`also Murphy v. Schneider Nat’l, Inc., 362 F.3d 1133, 1141 (9th Cir. 2004) (“a differential in power
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`or education on a non-negotiated contract will not vitiate a forum selection clause.”).
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`b) The Difficulty of the Selected Forum
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`Next, Plaintiff contends that it is unfair to require Plaintiff to litigate this case in New
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`York. However, as with his adhesion claim, Plaintiff has not identified any evidence
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`demonstrating that litigating in the parties’ bargained-for venue—the Southern District of New
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`York—would be “so gravely difficult and inconvenient” that he would essentially be “deprived of
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`[his] day in court.” Argueta, 87 F.3d at 325. Plaintiff’s argument fails for this reason alone. See
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`Spradlin v. Lear Siegler Mgmt. Servs. Co., 926 F.2d 865, 869 (9th Cir. 1991) (rejecting unfairness
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`argument where plaintiff “failed to produce evidence of inconvenience he would suffer by being
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`forced to litigate in Saudi Arabia,[] failed even to offer any specific allegations as to travel costs,
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`availability of counsel in Saudi Arabia, location of witnesses, or his financial ability to bear such
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`costs and inconvenience.”). The argument also fails, however, because these are private-interest
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`concerns that, under the Supreme Court’s decision in Atlantic Marine, “may not be considered in
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`analyzing whether a forum selection clause is reasonable.” Cream v. N. Leasing Sys., Inc., No. 15-
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`CV-01208-MEJ, 2015 WL 4606463, at *7 (N.D. Cal. July 31, 2015) (collecting cases).
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`Northern District of California
`United States District Court
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`Case 3:16-cv-05622-JSC Document 21 Filed 01/20/17 Page 6 of 8
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`c) Transfer does not Violate California Public Policy
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`Finally, Plaintiff contends that enforcement of the forum selection clause would violate
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`California public policy because the CLRA has a provision preventing waiver of its protections.
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`See Cal. Civ. Code § 1751 (CLRA provides that “[a]ny waiver by a consumer of the provisions of
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`this title is contrary to public policy and shall be unenforceable and void.”); see also Cordua v.
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`Navistar Intern. Transp. Corp., 2011 W.L. 62493 (N.D. Cal. Jan. 7, 2011). In Doe 1 v. AOL LLC,
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`the Ninth Circuit refused to enforce a forum-selection clause because the forum selected—a
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`Virginia state court—would force plaintiffs to waive both their right to proceed as a class action
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`and to receive enhanced remedies under the CLRA). 552 F.3d at 1084-85. In doing so, the Ninth
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`Circuit relied heavily on a California Court of Appeals decision concluding that the same forum
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`selection clause was unenforceable. See America Online Inc. v. Superior Court of Alameda
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`County (Mendoza), 90 Cal.App.4th 1, 108 Cal.Rptr.2d 699 (2001) (same). The court noted that
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`enforcement of the forum selection clause would necessarily require a waiver of the CLRA
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`statutory remedies and that the remedies available in Virginia were not comparable to those in
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`California. Doe I, 552 F.3d at 1083-84; Mendoza, 90 Cal.App.4th at 15.
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`Here, in contrast, Plaintiff has not shown, or even argued, that transferring this action to
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`New York federal court will require waiver of Plaintiff’s CLRA remedies. “A forum selection
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`clause determines where the case will be heard, it is separate and distinct from choice of law
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`provisions that are not before the court.” Besag v. Custom Decorators, Inc., No. 08-05463 JSW,
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`2009 WL 330934, at *4 (N.D. Cal. Feb. 10, 2009). Indeed, courts often conclude—as Defendants
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`insist here—that once the case is in its proper venue, the plaintiff is free to argue for application of
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`California law. See Gamayo v. Match.com LLC, No. C 11-00762 SBA, 2011 WL 3739542, at *6
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`(N.D. Cal. Aug. 24, 2011) (collecting cases re: same). “Enforcing the venue clause, and locating
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`the forum in [New York], do[es] not require the application of [New York] law to the claims.”
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`Marcotte v. Micros Sys., Inc., No. C 14-01372 LB, 2014 WL 4477349, at *8 (N.D. Cal. Sept. 11,
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`2014). Under this analysis, a forum selection clause is unreasonable only when it contravenes a
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`policy specifically related to venue. See, e.g., East Bay Women's Health, Inc. v. gloStream, Inc.,
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`No. 14–cv–00712–WHA, 2014 WL 1618382 at *3 (N.D. Cal. Apr. 21, 2014) (“[P]laintiffs are
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`Northern District of California
`United States District Court
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`Case 3:16-cv-05622-JSC Document 21 Filed 01/20/17 Page 7 of 8
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`burdened to show a fundamental public policy underlying California’s Unfair Competition Act
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`that relates to venue because the instant motion seeks a forum-selection determination, rather than
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`a choice-of-law determination.”); Voicemail Club, 2012 WL 4837697 at *4 (“[B]ecause plaintiff
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`improperly speculates as to how the transferee forum would ultimately resolve the issue of what
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`substantive law should be applied to plaintiff’s claims, plaintiff fails to demonstrate how transfer
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`of this case would contravene [a] public policy ... relate[d] specifically to venue.”); Besag v.
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`Custom Decorators, Inc., No. 08–cv–05463–JSW, 2009 WL 330934 at *4 (N.D. Cal. Nov. 4,
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`2010) (“[A] party challenging enforcement of a forum selection clause may not base its challenge
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`on choice of law analysis.... [These challenges] are problematic because they require courts to
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`speculate as to the potential outcome of the litigation.”).
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`At oral argument Plaintiff urged that it is the public policy of California to require that
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`California plaintiffs have their CLRA claims heard in California if their claims are connected to
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`California as are Plaintiff’s claims here. When pressed, however, the only authority Plaintiff
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`could muster to support this alleged public policy was the Song-Beverley Act, a statute not at issue
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`in this case. Plaintiff has not met his burden of showing that enforcement of the forum selection
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`clause and transfer of this action to the Southern District of New York would contravene a strong
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`California public policy. Argueta, S.A., 87 F.3d at 325; see also Washington v.
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`Cashforiphones.com, No. 15-cv-0627, 2016 WL 6804429, at *6 (S.D. Cal. Jun. 1, 2016) (granting
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`motion to transfer under 1404(a) because “Plaintiff fails to demonstrate how a transfer pursuant to
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`a contractual forum selection clause and § 1404(a) would contravene an express California public
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`policy underlying the CLRA.”); Sawyer, 2011 WL 7718723 at *8 (granting a motion to transfer
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`concluding that the forum selection clause “by itself does not contravene California public policy
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`because Plaintiff is able to argue, in the appropriate forum, that California state law [and
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`specifically the CLRA] applies”).
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`CONCLUSION
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`The parties’ forum selection clause is valid and does not contravene a strong California
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`public policy. Defendants’ motion to transfer this action is GRANTED.
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`The Clerk shall transfer this action to the Southern District of New York.
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`Northern District of California
`United States District Court
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`Case 3:16-cv-05622-JSC Document 21 Filed 01/20/17 Page 8 of 8
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`This Order disposes of Docket No. 10.
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`IT IS SO ORDERED.
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`Dated: January 20, 2017
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`JACQUELINE SCOTT CORLEY
`United States Magistrate Judge
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`Northern District of California
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