The 7th Circuit Court of Appeals on Monday granted an Indiana business’ petition for writ of mandamus, finding that the Southern Indiana District Court deviated substantially from the course of decision‐making mandated by the U.S. Supreme Court when it transferred the business’ action back to a California court.
The writ was granted Monday in In re: RYZE Claims Solutions, LLC, 19-2930.
In that case, Leslie Billings filed suit against his former employer, RYZE Claim Solution LLC, in California state court despite being required by a forum‐selection clause in his employment agreement to bring claims either in Marion County or Hamilton County, or in the Southern District of Indiana. Relying on Atlantic Marine Construction Co., Inc. v. United States District Court for the Western District of Texas, 571 U.S. 49, 62–63 (2013), the Eastern District of California concluded Billings had failed to show why the forum‐selection clause should not control and granted RYZE’s motion to transfer venue under 28 U.S.C. § 1404(a) to the Southern District of Indiana.
There, Chief Judge Jane Magnus-Stinson granted RYZE’s motion for summary judgment and transferred, sua sponte, the case back to the Eastern District of California, stating that “its own docket was congested and that the Eastern District of California had a greater familiarity with California labor law.” RYZE subsequently petitioned the 7th Circuit for a writ of mandamus directing the Southern District of Indiana Court to request that the Eastern District of California transfer the action back to the Hoosier State.
Finding no exceptional circumstances in the situation at hand, the 7th Circuit granted the petition and issued the writ of mandamus, concluding the Indiana Southern District Court parted from the settled approach for applying the federal transfer statute in cases governed by a forum‐selection clause.
“Our examination of the record convinces us that the district court employed a flawed methodology in deciding to send this case back to the Eastern District of California,” Circuit Judge Kenneth Ripple wrote for the appellate panel. “First, it is evident that the district court improperly placed the burden on RYZE to justify keeping the case in Indiana. This improper allocation of the burden is evident in the district court’s ordering RYZE to respond first to the court’s order to show cause. As the party resisting the application of the forum‐selection clause, Mr. Billings, not RYZE, had the burden of justifying a transfer contrary to the terms of that clause.”
The 7th Circuit further found the Southern District Court erred in concluding that the Eastern District of California’s familiarity with the applicable state law “weigh[ed] heavily in favor of transfer.”
The panel also found the Southern District Court erred in its treatment of the public‐interest factor of its “administrative difficulties flowing from court congestion.” It concluded the Indiana district court evaluated that factor “through a different lens than the one usually employed by the federal courts” when it broadly construed “administrative difficulties.”
“Although the district court noted that it could not schedule a trial for at least fourteen months from the transfer decision (or longer if any scheduling delay occurred), it never addressed whether trial would be speedier in the Eastern District of California. Instead, the district court merely observed that its own docket was crowded, and its resources strained, before concluding that this factor weighed in favor of a transfer,” Ripple wrote.
“Most importantly, the district court should have given more weight to the role that forum‐selection clauses play in the proper application of § 1404(a)’s command that, in deciding a transfer motion, the district court consider ‘the interests of justice,’” the judge concluded.