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CAFA Law Blog Information, cases and insights regarding the Class Action Fairness Act of 2005

CAFA Does Not Trump Valid Forum Selection Clause

Posted in Case Summaries

Bartels v. Saber Healthcare Group, LLC, 2016 WL 6237811 (E.D.N.C. Oct. 25, 2016)

A District Court in North Carolina remanded this putative class action after finding a forum selection clause, which limited venue to a geographic location that did not encompass a federal district court, effectively waived the right to remove to federal court. The District Court rejected the defendants’ argument that CAFA nonetheless provided jurisdiction by trumping the forum selection clause.

The plaintiffs’ complaint, which was filed in Franklin County Superior Court, alleged the defendants’ North Carolina Care Centers violated North Carolina law by understaffing their assisted-living facilities and failing to meet the basic needs of their residents, such as adequate bathing and timely provision of medication.

After the defendants removed the action to federal court, based on both CAFA and diversity jurisdiction, the plaintiffs moved to remand the case to the state court. The plaintiffs contended that a valid forum selection clause precluded jurisdiction in the federal District Court. Specifically, each plaintiff’s residency agreement with the defendants’ assisted-living facilities provided for exclusive venue for any dispute between the parties in the county in which the facility was located. Because the named plaintiffs resided in a facility located in a county with no federal courthouse, they argued that jurisdiction was limited to the state courts in that county.

Though federal courts are split on this issue, the court in Bartels was persuaded by the reasoning in cases that have held that where a forum selection clause limits venue to a geographic location that does not encompass a federal district court, the right to remove to federal court has been waived. See, e.g., Yakin v. Tyler Hill Corp., 566 F .3d 72, 76 (2d Cir. 2009) (forum selection clause which provided for venue and trial “in Nassau County, New York” excluded federal jurisdiction where no federal court was located in Nassau County); Redwood Hill Farm & Creamery, Inc. v. Barry-Wehmiller Design Grp., Inc., No. 16-CV-03200-JST, 2016 WL 4710194, at *2 (N.D. Cal. Sept. 9, 2016) (federal district court cannot be considered “in” a county in which the district court does not have physical presence).

In so ruling, the District Court rejected the defendants’ argument that CAFA served to trump the forum selection clause and allowed the District Court to exercise jurisdiction. The court opined that it was not aware of, and the defendants had not provided, a case holding that CAFA’s lack of anti-removal presumption was sufficient to trump a valid waiver of the right to remove. On the contrary, the District Court noted that “courts have held that the CAFA, like other federal statutes subject to the civil venue statutes, does not preempt a valid forum-selection clause.”

Accordingly, the District Court granted the plaintiffs’ motion to remand.