Judge: Alison Mackenzie, Case: 24STCV29959, Date: 2025-03-28 Tentative Ruling
Case Number: 24STCV29959 Hearing Date: March 28, 2025 Dept: 55
NATURE OF PROCEEDINGS: Hearing on Defendant’s Motion
to Dismiss
Defendant’s Motion
to Dismiss is denied.
BACKGROUND
Plaintiff Peterson Transport,
Inc. (Plaintiff) filed this action against Total Quality Logistics (Defendant), alleging breach of a “Broker
Carrier Agreement” (the Agreement). The Agreement includes a mandatory forum selection
clause designating the state court in Clermont County, Ohio, as the exclusive
jurisdiction for any dispute between the parties.
Defendant filed a Motion to Dismiss for Forum Non Conveniens.
Plaintiff filed an Opposition.
LEGAL STANDARD
“In California, the procedure for enforcing a forum
selection clause is a motion to stay or dismiss for forum non conveniens
pursuant to Code of Civil Procedure sections 410.30 and 418.10.” Berg v. MTC
Electronics Technologies (1998) 61 Cal.App.4th 349, 358 (Berg). “[A]
motion based on a forum selection clause is a special type of forum non
conveniens motion. The factors that apply generally to a forum non conveniens
motion do not control in a case involving a mandatory forum selection clause.” Ibid.
On a motion to dismiss for forum non conveniens pursuant to
a mandatory forum selection clause, the only issues for the court’s
consideration are (1) whether the forum selection clause is indeed mandatory,
as opposed to permissive; (2) whether the forum selection clause covers the
claims in the case; and (3) whether the forum selection clause is “unreasonable.”
Id. at pp. 358-359.
Regarding reasonableness, “[m]ere inconvenience or
additional expense is not the test….” Smith, Valentino & Smith, Inc.
v. Superior Court (1976) 17 Cal.3d 491, 496 (citations omitted)
(internal quotation marks omitted). Instead, a forum selection clause is
unreasonable if “the forum selected would be unavailable or unable to
accomplish substantial justice.” CQL Original Products, Inc. v. National
Hockey League Players’ Assn. (1995) 39 Cal.App.4th 1347, 1354. “California
courts will refuse to defer to the selected forum if doing so would
substantially diminish the rights of California residents in a way that
violates our state’s public policy.” America Online, Inc. v. Superior Court
(2001) 90 Cal.App.4th 1, 12.
“[T] party opposing enforcement of the clause ordinarily
bears the burden of proving why it should not be enforced. However, the burden
is ‘reversed when the claims at issue are based on unwaivable rights created by
California statutes [in which case] the party seeking to enforce the forum
selection clause bears the burden to show litigating the claims in the
contractually designated forum will not diminish in any way the substantive
rights afforded … under California law.’” Handoush v. Lease Finance Group,
LLC (2019) 41 Cal.App.5th 729, 734, fn. omitted (Handoush) (quoting Verdugo
v. Alliantgroup, L.P. (2015) 237 Cal.App.4th 141, 147) (internal quotation
marks omitted).
“[C]hoice of law is commonly considered together with a
forum selection clause…[where] enforceability of forum selection and choice of
law clauses is ‘inextricably bound up’ in one another.” Id. at p. 739 (quoting
Hall v. Superior Court (1983) 150 Cal.App.3d 411, 416).
ANALYSIS
Here, the Agreement provides, in relevant part, “This
Agreement will be governed by the laws of the State of Ohio…. The Parties
consent to the jurisdiction of the state court located in Clermont County,
Ohio, waive any objection to the jurisdiction of that court, and agree that any
dispute between the Parties, including, without limitation, those arising under
or related to this Agreement, will be brought in that court, which will have
exclusive jurisdiction over such dispute….” Compl. Ex. 1 at p. 17 ¶ 15.
It is undisputed that the forum selection clause is
mandatory and that it applies to the claims in this case. Therefore, the only
issue the Court needs to resolve is whether the clause is unreasonable.
The California Constitution provides, “Trial by jury is an
inviolate right and shall be secured to all, but in a civil cause three-fourths
of the jury may render a verdict. A jury may be waived in a criminal cause by
the consent of both parties expressed in open court by the defendant and the
defendant’s counsel. In a civil cause a jury may be waived by the consent of
the parties expressed as prescribed by statute.” Cal Const, Art. I § 16. It
further states, “In civil causes the jury shall consist of 12 persons or a
lesser number agreed on by the parties in open court. In civil causes other
than causes within the appellate jurisdiction of the court of appeal the
Legislature may provide that the jury shall consist of eight persons or a
lesser number agreed on by the parties in open court.” Cal Const, Art. I § 16.
In Meder v. Safeway Stores, Inc. (1979) 98 Cal.App.3d
497, 504 (Meder), the Court held “ article I, section 16, requires that
a stipulation to a jury of less than 12 be formally entered on the minutes in
open court and that the failure to do so here was error.” However, the court
further held “that defendant, by its express stipulation in chambers and by its
ratification of a smaller jury by participation without objection in the trial,
is estopped to raise the error.” Ibid (fn. omitted). There, “[a]fter consulting
with his client, counsel for defendant stipulated in chambers prior to trial to
a six-person jury…. Defendant first raised the issue of a six-person jury in
its notice of intention to move for a new trial.” Id. at p. 502. The
court declined to “reach the issue whether an estoppel can occur by any conduct
less than an express stipulation and ratification of the stipulation.” Id. at
p. 504 fn. 2.
In Grafton Partners v. Superior Court (2005) 36
Cal.4th 944, 967 (Grafton Partners), the California Supreme Court held, “governing
California constitutional and statutory provisions do not permit predispute
jury waivers ….” In Handoush, the parties’ contract included a New York
forum selection clause and a jury trial waiver. The trial court granted the
defendant’s motion to dismiss based on the forum selection clause. The
appellate court reversed. “[B]ecause enforcement of the forum selection clause
here has the potential to contravene a fundamental California policy of
zealously guarding the inviolate right to a jury trial, which is unwaivable by
predispute agreements, [the defendant seeking to enforce it] bears the burden
of showing that litigation in New York ‘will not diminish in any way [Handoush’s]
substantive rights … under California law.’” Handoush, supra,41
Cal.App.5th at p. 739 (quoting Wimsatt v. Beverly Hills Weight etc.
Internat., Inc. (1995) 32 Cal.App.4th 1511, 1522).
Subsequently, in EpicentRx, Inc. v. Superior Court
(2023) 95 Cal.App.5th 890, 899 (EpicentRx), review granted Dec. 13,
2023, S282521, the Court of Appeal considered whether a forum selection clause was
enforceable, even when it did not include express jury trial waivers, but where
the selected forum, the Delaware Court of Chancery, does not guarantee a right
to a jury. The court held that “the trial court properly declined to enforce
the forum selection clauses because they constituted implied predispute jury
trial waivers—waivers of an inviolate, fundamental, and constitutionally
protected right.” EpicentRx, supra, 95 Cal.App.5th 890, 908 review
granted Dec. 13, 2023, S282521. While not binding, the Court finds EpicentRx
persuasive. See Cal. Rules of Court, rule 8.1115(e)(1) (“Pending review
and filing of the Supreme Court’s opinion, unless otherwise ordered by the
Supreme Court under (3), a published opinion of a Court of Appeal in the matter
has no binding or precedential effect, and may be cited for potentially
persuasive value only.”)
Before turning to the question directly raised here, the
Court considers the enforceability of a pre-dispute agreement to reduce the
size of the jury to fewer than twelve jurors. Based on the constitutional and
statutory language, the Court concludes that a pre-dispute agreement to reduce
the size of the jury is not enforceable.
“Under the California Constitution, a civil jury ‘shall
consist of 12 persons or a lesser number agreed on by the parties in open
court.’” Salton Bay Marina v. Imperial Irrigation Dist. (1985) 172
Cal.App.3d 914, 943 (quoting Cal. Const., art. I, § 16); Code Civ. Proc., § 220
(“A trial jury shall consist of 12 persons, except that in civil actions and
cases of misdemeanor, it may consist of 12 or any number less than 12, upon
which the parties may agree.”). The constitutional language “or a lessor number
agreed on by the parties in open court” suggests that any agreement to reduce
the size of the jury must occur post-dispute because the opportunity to appear
in open court necessarily occurs once litigation has commenced. Code of Civil
Procedure section 631 subdivision (f)(3) similarly authorizes parties to waive
their right to a jury trial “[b]y oral consent, in open court, entered in the
minutes.” Yet, that statute does not support the enforceability of a pre-dispute
jury waiver. Cf. Grafton Partners, supra, 36 Cal.4th at p.
958 (rejecting the argument that “written consents can[] be prepared before the
action is instituted and then filed in court during the pending action within
the meaning of section 631([f])(2)”). Accordingly, the Court concludes
pre-litigation agreements to reduce the number of jurors are unenforceable.
Next, the Court must determine if enforcing the forum
selection clause here would substantially diminish the rights of California
residents in a way that violates our state’s public policy. The Court concludes
that it would.
Rule 38 of the Ohio Rules of Civil Procedure provides in
relevant part, “[i]n all other civil actions the jury shall be composed of
eight members unless the demand specifies a lesser number; and in the event of
timely demand by more than one party in such actions the jury shall be composed
of the greater number not to exceed eight.”
Defendant argues that there is no California caselaw “standing
for the proposition that the number of jurors in a civil trial
represents an important public policy of California that may not be
contravened.” Opp. at p. 5:17-19. While the Defendant is correct that this
specific issue is one of first impression, it is clear from the California
state constitution that the number of jurors is an important public policy of
the state. First, as already noted, the California Constitution sets the number
of jurors at “12 persons or a lesser number agreed on by the parties in open
court.” Cal. Const., art. I, § 16. Additionally, the California Constitution
authorizes the Legislature to lower the number of jurors required to eight only
in cases that are not within the appellate jurisdiction of the Court of Appeal.
Ibid. These provisions suggest that, in all other cases, there is a
public policy of twelve-member juries. Moreover, because, unlike the federal
Constitution, the California Constitution explicitly provides for twelve-member
juries, the Court finds the federal cases Defendant cites unpersuasive. Reply
at pp. 2-3.
If, over the objection of a party, a California trial court
empaneled a jury of fewer than twelve people, it would do so in violation of the
objecting party’s rights and the state’s public policy. See Meder, supra,
98 Cal.App.3d at p. 504 (“[A]rticle I, section 16, requires that a stipulation
to a jury of less than 12 be formally entered on the minutes in open court and …
the failure to do so here was error.”); see also Hitchcock v. Caruthers
(1890) 82 Cal. 523, 526 (describing the prospect of “a court compelling a party
to go to trial against his consent with less than twelve jurors” as “[an]
extraordinary spectacle”). It follows that enforcing the forum selection clause
at issue here will likewise violate the state’s public policy, by requiring Plaintiff
to plead its case before a jury of fewer than twelve jurors. Accordingly,
Defendant’s motion to dismiss is denied.
CONCLUSION
Defendant’s Motion to Dismiss is denied.