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Gipson v. Wells Fargo & Co.

June 24, 2008

YVONNE GIPSON, PLAINTIFF,
v.
WELLS FARGO & CO., ET AL., DEFENDANTS.



The opinion of the court was delivered by: John D. Bates United States District Judge

MEMORANDUM OPINION

Plaintiff Yvonne Gipson brings this class action against defendants Wells Fargo & Company, Wells Fargo Bank, N.A., and the Employee Benefit Review Committee (collectively "Wells Fargo") pursuant to the Employment Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001, et seq. Gipson briefly participated in an employee contribution 401(k) pension plan ("Plan") administered by Wells Fargo and claims that its investment funds were mismanaged. Based on a forum selection clause, Wells Fargo has moved to dismiss the complaint for improper venue under Fed. R. Civ. P. 12(b)(3) or, in the alternative, to transfer the case to the District of Minnesota pursuant to 28 U.S.C. § 1404(a). Upon careful consideration of the motion and the parties' memoranda, the applicable law, and the entire record, the Court will deny Wells Fargo's motion to dismiss but will grant the motion to transfer this case to the United States District Court for the District of Minnesota pursuant to 28 U.S.C. § 1404(a).

BACKGROUND

Gipson worked for Wells Fargo from 1998 to 2004, during which time she participated in the company's 401(k) Plan. Pl.'s Opp'n Mot. Dismiss at 1. Although it was originally disputed whether Gipson ever worked in the District of Columbia for Wells Fargo, it is now conceded that, even though Gipson was based out of an office in Greenbelt, Maryland, she actually worked from her home in the District of Columbia through 2002 and out of a facility leased by Wells Fargo in the District of Columbia until 2004. Defs.' Reply Supp. Mot. Dismiss at 7 n.6. Gipson currently lives in Annapolis, Maryland. Compl. ¶ 16.

Wells Fargo is a Delaware corporation with its principal place of business in California. Defs.' Mot. Dismiss at 7. However, the Plan in question is administered and managed by Wells Fargo staff in Minneapolis, Minnesota. Id. at 3. Furthermore, Minnesota is the district where claims for benefits must be filed, where documents and information about the Plan can be obtained, and where the Plan Trustee is located. Id. The Plan documents include a forum selection clause which requires that "all controversies, disputes, and claims arising" under the Plan "be submitted to the United States District Court for the District of Minnesota." Id. This clause has been included in the Plan since 1976. Id. Despite this explicit venue provision, Gipson has filed this class action suit in the District of Columbia, prompting Wells Fargo's motion to dismiss or transfer the case.

Gipson alleges that from 2001 to the present Wells Fargo failed to "exercise the required care, skill, prudence, and diligence in investing the assets of the 401(k) Plan." Compl. ¶ 8. Specifically, she contends that Wells Fargo improperly invested in funds managed by its own affiliates to generate revenue, while ignoring the impact of higher fees and mediocre returns in comparison to unaffiliated funds. Id. Based on the forum selection clause and convenience considerations, Wells Fargo has filed a motion to dismiss for improper venue under Fed. R. Civ. P. 12(b)(3) or, in the alterative, to transfer to the District of Minnesota pursuant to 28 U.S.C. § 1404(a).

STANDARD OF REVIEW

A motion pursuant to Fed. R. Civ. P. 12(b)(3) seeks to dismiss a case if venue is improper or inconvenient in the chosen forum. "Because it is the plaintiff's obligation to institute the action in a permissible forum, the plaintiff usually bears the burden of establishing that venue is proper." Freeman v. Fallin, 254 F. Supp. 2d 52, 56 (D.D.C. 2003); 15 Charles Alan Wright et al., Fed. Prac. & Proc. § 3826, at 258 (2d ed. 1986 & Supp. 2006) ("[W]hen [an] objection has been raised, the burden is on the plaintiff to establish that the district he chose is a proper venue."). Under 28 U.S.C. § 1406(a), dismissal or transfer of a case is warranted where there is a venue defect. Even if the venue chosen by the plaintiff is valid, a court is still authorized to transfer the case to another jurisdiction "[f]or the convenience of parties and witnesses, in the interest of justice," under 28 U.S.C. § 1404(a). Unless there are pertinent factual disputes to resolve, a challenge to venue presents a pure question of law.

In an ERISA claim, venue is appropriate "where the plan is administered, where the breach took place, or where a defendant resides or may be found." 29 U.S.C. § 1132(e)(2). "A defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced." 28 U.S.C. § 1391(c). The special venue provision for ERISA expands the normal scope of venue offered under § 1391. Int'l Bhd. of Painters and Allied Trades Union v. Rose Bros. Home Decorating Ctr., Inc., 1992 WL 24036, at *2 (D.D.C. Jan. 14, 1992). If the district in which the action is brought does not meet the requirements of § 1132(e)(2), then the chosen venue is improper and the Court may either dismiss "or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought." 28 U.S.C. § 1406(a). The decision whether dismissal or transfer is "in the interest of justice" is committed to the sound discretion of the district court. Naartex Consulting Corp. v. Watt, 722 F.2d 779, 789 (D.C. Cir. 1983). Generally, the interest of justice requires transferring such cases to the appropriate judicial district rather than dismissing them. Goldlawr, Inc. v. Heiman, 369 U.S. 463, 466-67 (1962); James v. Booz-Allen, 227 F. Supp. 2d 16, 20 (D.D.C. 2002).

To transfer a case, the transferor court must find that the intended transferee court is one in which the plaintiff could originally have brought the action. See 28 U.S.C. § 1406(a). Although the D.C. Circuit does not appear to have addressed the meaning of the phrase "in which [a case] could have been brought," the phrase has been interpreted to mean that the transferee court must have both personal jurisdiction and venue. Davis v. Am. Soc'y of Civil Eng'rs, 290 F. Supp. 2d 116, 120 (D.D.C. 2003); 17 Wright, et al., Fed. Prac. & Proc. § 3827; 17 Moore's Fed. Prac., § 111.33[1] (3d ed. 2008) (citing Minnette v. Time Warner, 997 F.2d 1023, 1026 (2d Cir. 1993) (observing that the district court properly denied transfer to a district in which venue was improper), and Harman v. Pauley, 522 F. Supp. 1130, 1133 (S.D.W.Va. 1981) (noting that "[t]he transferee court must have or be able to obtain personal jurisdiction over the defendant")).

DISCUSSION

I. Forum Selection Clause

As a preliminary matter, the Plan forum selection clause clearly states that litigation relating to the Plan should be conducted in the United States District Court for the District of Minnesota. It is broadly written and sufficiently encompasses the dispute before this Court. See, e.g., Worldwide Network Servs., LLC v. Dyncorp Int'l, 496 F. Supp. 2d 59, 63 (D.D.C. 2007) (observing that "forum selection clauses have been found to encompass even non-contractual causes of action"). But although there is agreement over the applicability of the clause, Gipson questions its impact.

The Supreme Court has consistently recognized forum selection clauses as legitimate and has required deference in their enforcement. M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10, 12 (1972) ("[forum-selection] clauses are prima facie valid" and "should be honored by the parties and enforced by the courts"). This presumption in favor of forum selection clauses even extends to those included in non-negotiated boilerplate contracts. See Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595 (1991). Moreover, the District of Columbia has affirmed this liberal stance towards contractual agreements governing venue. See Furbee v. Vantage Press, 464 F.2d 835, 836 (D.C. Cir. 1972) (concluding that forum selection provisions are commonplace and "should be respected as the responsible expression of the intention of the parties"); see also Millanovich v. Costa Crociere, S.p.A., 954 F.2d 763, 768 (D.C. Cir. 1992) (concluding that in light of M/S Bremen and Carnival the courts should honor contractual provisions for forum and choice-of-law); Marra v. Papandreou, 59 F. Supp. 2d 65, 70 (D.D.C. 1999) ("presumption in favor of enforcing a forum selection clause applies even if the clause was not the product of negotiation"), aff'd, 216 ...


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