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Sharpe v. Ally Financial, Inc.

United States District Court, W.D. North Carolina

November 3, 2017

MINA SHARPE and BELINDA McKINNON, on behalf of themselves and all others similarly situated, Plaintiffs,



         This matter is before the Court upon Defendant Vaco Nashville, LLC's Motion to Dismiss, or, in the Alternative, Transfer Due to Improper Venue. Plaintiff McKinnon[1] has filed a brief in opposition, and Vaco Nashville has filed a Reply.[2] This matter is now ripe for disposition.


         Plaintiff filed this class and collective action complaint alleging that Defendants violated the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., and North Carolina Wage and Hour Act (“NCWHA”), N.C. Gen. Stat. § 95-25.1, et seq., by failing to pay overtime compensation to Plaintiff and other similarly situated workers. Plaintiff was employed by Vaco Nashville, a professional recruiting, staffing, and consulting company, which is a Tennessee limited liability company with its principal place of business in Brentwood, Williamson County, Tennessee. (Am. Compl. ¶ 13.) Ms. McKinnon was employed by Vaco Nashville and assigned to one of Vaco Nashville's clients, Ally Financial, Inc., formerly known as GMAC. Id. ¶ 9. Vaco Nashville paid Ms. McKinnon's wages and provided employee benefits to her.[3]

         Plaintiff McKinnon signed an employment agreement with Vaco Nashville. Among other things, Plaintiff's employment agreement explicitly provides that she would be paid a specific hourly rate for performing services for the benefit of Vaco Nashville's client, GMAC, and a higher rate (consistent with FLSA requirements) for all overtime hours she worked for GMAC. Further, Ms. McKinnon's employment agreement provides that “[t]his Agreement shall be governed by the laws of Tennessee. Any litigation in connection herewith shall be brought only in the state or federal courts for Williamson County, Tennessee and both parties consent to such courts' exclusive exercise of personal jurisdiction over them.” (Doc. No. 40-1 at 8).

         In her Amended Complaint, Plaintiff alleges that Defendants jointly employed Plaintiff and other Anti-Money Laundering Investigators (“AML Investigators”) pursuant to a scheme in which Ally Financial contracted with staffing agencies, including but not limited to Vaco Charlotte and Vaco Nashville, to recruit, hire and assign them to perform work as AML Investigators for Ally Financial. (Am. Compl. ¶¶ 1-2.) While the staffing agencies employed the workers as W-2 employees and issued their paychecks, Ally Financial oversaw virtually all aspects of their day-to-day work. (Id. ¶ 2.) This alleged “fissured employment” scheme was devised to shield Ally Financial and the staffing agencies from accountability for workplace violations and avoid their statutory obligation to pay overtime under the FLSA and state law. (Id.)

         Vaco Nashville moves under Rule 12(b)(3) of the Federal Rules of Civil Procedure and 28 U.S.C. § 1404(a) to dismiss, or in the alternative, transfer this case to the United States District Court for the Middle District of Tennessee on the basis of the forum selection clause in Plaintiff's employment agreement.


         At the outset, the Court notes that dismissal pursuant to Rule 12(b)(3) would be improper in this case. The Supreme Court has explicitly held that § 1404(a) is the exclusive mechanism to enforce a forum selection clause that points to another federal forum when venue is otherwise proper in the district where the case was brought. Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Texas, 134 S.Ct. 568, 575 (2013) (“We reject petitioner's argument that [a forum selection] clause may be enforced by a motion to dismiss under 28 U.S.C. § 1406(a) or Rule 12(b)(3) of the Federal Rules of Civil Procedure.”). Venue is otherwise proper in this district because “a substantial part of the events or omissions giving rise to the claim occurred” in this district. 28 U.S.C. 1391(b)(2). Plaintiff alleges that she was a citizen and resident of North Carolina and worked as an hourly-paid AML Investigator for Ally Financial in Charlotte, North Carolina. (Am. Compl. ¶¶ 9, 20). Accordingly, Defendant's Motion to Dismiss will be denied.

         A valid forum selection clause that points to a particular federal district may be enforced through a motion to transfer under § 1404(a). Atl. Marine, 134 S.Ct. at 579. In order to be enforceable by a court, a forum selection clause must be applicable to the claims at issue, valid, and mandatory. Tracy v. Loram Maintenance of Way, Inc., No. 5:10-CV- 102-RLV, 2011 WL 2791257, at *3 (W.D. N.C. July 14, 2011). The language of the forum selection clause herein is clearly mandatory because it states that the state or federal courts for Williamson County, Tennessee (the site of Vaco Nashville's principal place of business), shall have exclusive personal jurisdiction over the parties, and that any litigation in connection with the agreement “shall be brought only” in such courts. (emphasis added).

         The Plaintiff does not dispute the mandatory nature of the forum selection clause. Rather, she focuses her argument on whether the clause applies to her claims. Plaintiff asserts that the forum selection clause does not encompass her non-contractual statutory claims asserted under the FLSA and NCWHA. Although Plaintiff acknowledges that the Fourth Circuit has not addressed the issue of whether forum selection clauses can apply to non-contractual claims, she cites several cases where district courts have held that suits based on independent statutory rights, such as those to recover overtime payments under the FLSA, are not controlled by a forum selection clause when those rights do not depend on any provision of the employment agreement. See Pacheco v. St. Luke's Emergency Assocs., P.C., 879 F.Supp.2d 136, 141-42 (D. Mass. 2012); Crouch v. Guardian Angel Nursing, Inc., No. 07-CV-00541, 2009 WL 3738095, at *2-3 (M.D. Tenn. Nov. 4, 2009); Perry v. Nat'l City Mortg., Inc., No. 05-CV-891-DRH, 2006 WL 2375015, at *4-5 (S.D. Ill. Aug. 15, 2006); Saunders v. Ace Mortg. Funding, Inc., No. 05-CV-1437 (DWF/SRN), 2005 WL 3054594, at *3 (D. Minn. Nov. 14, 2005).

         The cases cited by Plaintiff, however, are largely distinguishable from this case in that the language of the forum selection clause here is significantly broader than the ones at issue in those cases. For example, the forum selection clause in Pacheco was limited to “any dispute derived out of” the employment agreement, and the court explained that “derive” meant “to take, receive, or obtain especially from a specified source.” Pacheco, 879 F.Supp.2d at 140-41. Accordingly, the court determined that the plaintiff's FLSA claims were not “derived from” the employment agreement and thus beyond the scope of the contractual forum selection clause. In Crouch, the court held that the plaintiff's FLSA claim was not governed by a forum selection clause that applied to “any action to enforce any provision of this agreement.” Crouch, 2009 WL 3738095, at * 2-3. The Saunders court found that a forum selection clause that applied to “this contract” did not apply to FLSA claims and was limited to breach of contract actions. Saunders, 2005 WL 3054594, at * 3. Similarly, the forum selection clause in Perry stated that it applied to “this Agreement” and the district court, citing Saunders, held that it did not apply to plaintiff's FLSA claim. Perry, 2006 WL 2375015, at * 4; see also Fuller v. Goldstar Estate Buyers Corp., No. 10-cv-5839, 2011 WL 809429, at *3 (N.D. Ill. Mar. 1, 2011).

         The forum selection clause in Plaintiff's employment agreement is substantially broader, stating that it will apply to all litigation “in connection” with the employment agreement. Because her agreement specifically defines Plaintiff's wage rate, including her overtime wage rate, her claims are “connected” to her agreement, and the forum selection clause applies. See, e.g., Goodly v. Check-6, Inc., No. CV 16-1936, 2016 WL 3090293, at *3 (E.D. La. June 2, 2016) (holding that forum selection clause in employment agreement applied to FLSA claims, where it applied to any lawsuit filed “in connection with” the employment agreement); Newman v. Advanced Tech. Innovation Corp., No. 1:12CV24 JCC/TRJ, 2012 WL 1414859, at *6 (E.D. Va. Apr. 20, 2012) (holding that forum selection clause contained in employment agreement applied to FLSA claims, where the clause applied to “all matters regarding” the employment agreement and the agreement set forth the employee's rate of pay).

         In Ruifrok v. White Glove Restaurant, the Maryland District Court examined a forum selection clause that encompassed “[t]his Agreement and the parties' performance hereunder.” No. DKC 10-2111, 2010 WL 4103685, at *1 (D. Md. Oct. 18, 2010). In Ruifrok, the court explained, “[i]n providing that [the forum selection clause] applies to any action arising from ‘the parties' performance' of the agreement, the clause encompasses the rate and manner of pay and reimbursement to Plaintiff, which is the core of the FLSA and related state law claims.” Id. at *6; see also Marzano v. Proficio Mortg. Ventures, LLC, 942 F.Supp.2d 781, 790 (N.D. Ill. 2013) (contrasting the forum selection clauses in Pacheco, Perry, Saunders, and Fuller with the forum selection clause in Ruifrok). Similar to the facts in Ruifrok, here the issues of ...

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