STANLEY R. CHESLER, District Judge.
This matter comes before the Court upon the motion filed by Defendant Meracord LLC ("Defendant" or "Meracord") to transfer venue pursuant to 28 U.S.C. § 1404(a). Plaintiff Regina Lomax ("Plaintiff" or "Lomax") has opposed the motion. The Court has considered the papers filed by the parties and proceeds to rule on the motion without oral argument, pursuant to Federal Rule of Civil Procedure 78. For the reasons discussed below, the Court will grant Meracord's motion and transfer this action to the United States District Court for the Western District of Washington.
This putative class action arises out of Plaintiff Lomax's subscription to the "Debt Settlement System" offered by third party P&E Solutions and her agreement to receive the payment processing services of Defendant Meracord in connection therewith. Lomax, a resident of New Jersey, retained the debt settlement services of P&E, which, according to the First Amended Complaint, agreed to negotiate with her creditors. To make the monthly payments required under her agreement with P&E, Plaintiff signed a "Signup Agreement" with Defendant Meracord, authorizing Meracord to debit Lomax's bank account and disburse the money to creditors. Defendant Meracord is Delaware limited liability company, whose sole member is a citizen of the State of Washington. Meracord maintains its principal place of business in Washington.
The "Signup Agreement" states that Meracord (formerly known as "NoteWorld") would provide Lomax with services subject to the Agreement's "Terms and Conditions." Among the listed "Terms and Conditions" is a forum selection clause. It provides as follows:
(Signup Agreement, Terms and Conditions, ¶ 8, attached to First Amended Complaint as Ex. B.)
On November 7, 2012, Plaintiff initiated her lawsuit in New Jersey state court, asserting three causes of action pursuant to New Jersey statutes. She filed it as a putative class action, on behalf of other New Jersey residents. On March 27, 2013, Defendant removed the action to this Court, on the grounds that this Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332(d).
Meracord moves to transfer this action to the Western District of Washington pursuant to 28 U.S.C. § 1404(a). That provision states: "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." 28 U.S.C. § 1404(a). To transfer an action under § 1404(a), venue must be proper both in the transferor court and the transferee court.
Meracord's motion to transfer venue properly falls within the purview of § 1404(a), as both the District of New Jersey and the proposed transferee district would serve as proper venues for this action. The statute governing venue, 28 U.S.C. § 1391, provides that a civil action may be brought in "a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located." 28 U.S.C. § 1391(b)(1). The only Defendant named in this lawsuit, Meracord, resides in the State of Washington, making the federal district courts of Washington appropriate venues. The statute also provides that a civil action may be brought in "a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred." 28 U.S.C. § 1391(b)(1). Lomax, who resided in New Jersey at all relevant times, executed the Signup Agreement and generally received, or was supposed to receive services from Meracord in New Jersey with regard to her debts and accounts.
To determine whether, in its discretion, the Court should order a transfer of the action pursuant to § 1404(a), it must balance various private and public interests.
(2) the defendant's preference; (3) whether the claim arose elsewhere; (4) the convenience of the parties as indicated by their relative physical and financial condition; (5) the convenience of the witnesses (only to the extent that the witnesses may actually be unavailable for trial in one of the fora; and (6) the location of books and records (only to the extent that the files could not be produced in the alternative forum).
Meracord's motion relies heavily on the contractual forum selection clause set forth in the Signup Agreement. The Supreme Court has held that in a federal case grounded in diversity jurisdiction, it is federal law — and particularly § 1404(a) — which governs the district court's enforcement of the forum selection clause in deciding whether to transfer venue.
Here, the forum selection clause weighs heavily in favor of transferring this action to the Western District of Washington. The clause broadly states that "[a]ny and all legal action must be transacted or brought in a court located in the State of Washington." (Signup Agreement, Terms and Conditions, ¶ 8 (emphasis added)). It applies to the instant legal action, as the Signup Agreement between Lomax and Meracord forms the basis for their relationship and for the services performed by Meracord for Lomax. Thus, though the Complaint states non-contractual theories of recovery, the action has a logical connection to the contract and is therefore covered by its broad forum selection clause.
Consistent with Third Circuit authority, this Court must interpret that clause, contained in the contract signed by Lomax, as an expression of her agreement that the State of Washington would be a convenient and preferable location to litigate her disputes with Meracord.
Lomax has not argued that this dispute falls outside the scope of the forum selection clause, or that the clause is invalid. Rather, she contends that Meracord has waived its right to enforce it by removing the action to the District of New Jersey and proceeding with litigation in this venue, rather than immediately seeking enforcement of the forum selection clause in New Jersey state court or, at the latest, raising improper venue as a basis for a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(3). Plaintiff stresses that this motion to transfer venue was not filed until eight months after removal, by which time Defendant had already filed a motion to compel arbitration, made a Rule 68 offer of judgment and engaged in discovery.
Plaintiff's waiver argument, however, lacks legal basis. As Defendant points out, even if the Third Circuit were to treat a motion to enforce a forum selection clause as one to dismiss for improper venue pursuant to Rule 12(b)(3),
In a related argument, Lomax maintains that Meracord is estopped from invoking the forum selection clause because it has already argued, albeit unsuccessfully, that this dispute should be resolved by arbitration in the State of Florida under the laws of the State of Florida (per the terms of the arbitration clause in Lomax's contract with the third party debt settlement company), not through the courts and not under the laws of the State of Washington. Plaintiff relies on the doctrine of judicial estoppel. "Judicial estoppel generally prevents a party from prevailing in one phase of a case on an argument and then relying on a contradictory argument to prevail in another phase."
Of all the arguments opposing enforcement of the forum selection clause, the one that most closely approximates one of the narrow grounds for non-enforcement is that due to her health and age, Lomax will be deprived of her day in court if forced to litigate in a forum thousands of miles from her New Jersey home. While it is sympathetic, the Court is not persuaded that Lomax's personal circumstances render the Western District of Washington a forum so seriously inconvenient as to be unreasonable. Lomax's physical presence in Washington State is not required to afford her a fair opportunity to litigate. "A plaintiff may have [her] `day in court' without ever setting foot in a courtroom."
In sum, Plaintiff has not made the strong showing required to establish a proper basis upon which to invalidate a forum selection clause. The forum selection clause in the Signup Agreement must, therefore, factor into this Court's consideration of whether the Western District of Washington would present a more convenient forum. The Court turns, then, to an analysis under § 1404(a), as informed by the relevant
The private factors weigh in favor of transfer. As a manifestation of the parties' desire to litigate in Washington, the enforceable forum selection clause is a significant consideration. Though Lomax nevertheless chose to initiate her action in New Jersey, a plaintiff's choice of forum is not entitled to deference "where the plaintiff has already freely contractually chosen an appropriate venue."
Likewise, the public factor considerations support transfer. In particular, judicial efficiency will be served by transfer to the Western District of Washington, where a similar class action suit is pending against Meracord. That case, captioned Canada v. Meracord, et al., No. 12-cv-5657-BHS (the "Canada action"), consolidates two actions brought by residents of Illinois and Pennsylvania, which, incidentally, were filed before Lomax filed her suit in New Jersey state court. The Canada action asserts various claims, including federal RICO and Washington Consumer Protection Act claims, on behalf of a nationwide class based on Meracord's involvement in the debt settlement services for which plaintiffs signed up, ostensibly through independent debt settlement companies, an overall arrangement alleged to be a sham. While Lomax filed this action on behalf of a class of New Jersey residents, and asserts causes of action under New Jersey statutes, the related nature of the alleged misconduct by the same defendant involving almost identical factual circumstances to those presented in the national class action pending in Washington strongly suggest that transfer of this action will minimize duplicative discovery and save the courts and parties time and expense. Moreover, the Canada action demonstrates that the dispute arising out of Meracord's transactions in debt settlement arrangements is not a local controversy specific to New Jersey, such that a great interest in litigating in this state would be presented. The Court observes that, in her opposition brief, Lomax does not contest any of Meracord's arguments regarding the weight of the factors.
Based on the forum selection clause and the
For the foregoing reasons, the Court will grant Meracord's motion to transfer venue. This action will be transferred, pursuant to § 1404(a), to the United States District Court for the Western District of Washington. An appropriate Order with be filed together with this Opinion.