Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-cv-01160/USCOURTS-cand-3_15-cv-01160-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Contract Dispute

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

FCE BENEFIT ADMINISTRATORS, INC.,

Plaintiff,

v.

TRAINING, REHABILITATION & 

DEVELOPMENT INSTITUTE, INC.,

Defendant.

Case No. 15-cv-01160-JST 

ORDER GRANTING IN PART MOTION 

TO REMAND

Re: ECF No. 16

Before the Court is Plaintiff FCE Benefit Administrators, Inc.’s Motion to Remand, ECF 

No. 16. For the reasons set forth below, the Court will grant the motion to remand in part. 

I. BACKGROUND 

Plaintiff FCE Benefit Administrators, Inc. (“FCE”) is a third party administrator that 

provides services including hour tracking, fringe compliance, consolidated premium billing, and 

web enrollment and cloud solutions for fringe benefit health plans. Declaration of Gary Beckman 

(“Beckman Decl.”), ECF No. 18 ¶ 2. Defendant Training, Rehabilitation and Development 

Institute, Inc. (“TRDI”) is a former FCE client. Id. ¶ 3. In September 2008, the parties entered 

into an Adoption Agreement for TRDI’s Health and Welfare Plan and a Third Party Administrator

Agreement (“TPA Agreement”). Id. On June 10, 2014, TRDI notified FCE that it was 

terminating the TPA Agreement. Id. ¶ 7. FCE alleges, however, that it continued to provide 

services through mid-October of 2014, with TRDI’s approval, and that it was not compensated for 

those services. Id.; see also Compl., ECF No. 2. 

On January 30, 2015, FCE filed a complaint against TRDI in San Mateo County Superior 

Court for (1) breach of contract; (2) breach of the covenant of good faith and fair dealing; 

(3) unjust enrichment; and (4) quantum meruit. Compl. at 1. On March 11, 2015, TRDI filed a 

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cross-complaint in San Mateo County Superior Court, stating claims for (1) breach of fiduciary 

duty under the Employee Retirement Income Security Act (“ERISA”); (2) prohibited transactions 

under ERISA; (3) equitable relief pursuant to ERISA; (4) breach of contract; (5) breach of the 

implied covenant of good faith and fair dealing; (6) unjust enrichment; and (7) accounting. Crosscompl., ECF No. 1-2 at 3. On the same day, TRDI removed the action to this Court based on 

diversity of citizenship, pursuant to 28 U.S.C. sections 1332 and 1441(a) and (b). ECF No. 1. 

Plaintiff does not dispute that the requirements for diversity jurisdiction are met. ECF No. 22 at 2. 

FCE filed its motion to remand on April 1, 2015, citing Article VII(f) of the parties’ TPA 

agreement, which provides:

Governing Law and Venue: This Agreement will be governed by the 

internal laws of the State of California except to the extent 

preempted by ERISA, COBRA or other applicable federal law and 

the venue for resolving any dispute under this Agreement will be 

San Mateo County, California. 

ECF No. 16; TPA Agreement, ECF No. 17 Ex. 2.

1

 FCE requests that the Court remand this action 

in its entirety or, in the alternative, to the maximum extent possible, to the San Mateo County 

Superior Court. ECF No. 16 at 2. TRDI opposes the motion. ECF No. 21. 

III. LEGAL STANDARD

In diversity cases, federal law governs the enforceability and interpretation of forum 

selection clauses. Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 513 (9th Cir. 1988) 

(citing The Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972)). In interpreting a forum selection

clause, “we look for guidance to general principles for interpreting contracts.” Doe 1 v. AOL 

LLC, 552 F.3d 1077, 1081 (9th Cir. 2009) (internal quotation marks omitted). “[A] forum section 

clause is ‘prima facie valid and should be enforced unless enforcement is shown by the resisting 

party to be unreasonable under the circumstances.’” Pelleport Investors, Inc. v. Budco Quality 

Theatres, Inc., 741 F.2d 273, 279 (9th Cir. 1984) (quoting The Bremen, 407 U.S. at 10). “A 

 

1

FCE also requests that the Court take judicial notice of: (1) TRDI’s cross-complaint, and (2) the 

TPA Agreement, which is Exhibit 3 to FCE’s complaint. ECF No. 17. Judicial notice is not 

necessary with respect to other pleadings in the same case. Wolfes v. Burlington Ins. Co., Nos. 

07-cv-00696-RMW, 07-cv-04657-RMW, 2010 WL 842327, at *4 n.3 (N.D. Cal. Mar. 10, 2010); 

see also Fed. R. Civ. P. 10(c) (“A copy of a written instrument that is an exhibit to a pleading is a 

part of the pleading for all purposes.”). 

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district court may remand a case to state court to effectuate a forum selection clause.” Calisher & 

Assocs, Inc. v. RGCMC, LLC, Nos. 08-cv-06523-MMM, 08-cv-06540-MMM, 2008 WL 

4949041, at *2 (C.D. Cal. Nov. 17, 2008); see also Pelleport, 741 F.2d at 275, 281 (affirming 

district court’s remand to state court on the grounds of a forum selection clause); Boggs v. Lewis, 

863 F.2d 662, 663 (9th Cir. 1988) (“This court strictly construes the removal statute against 

removal jurisdiction.”). 

IV. DISCUSSION

A. Forum Selection Clause 

The parties dispute the meaning of the forum selection clause, which states that the “[TPA] 

Agreement will be governed by the internal laws of the State of California except to the extent 

preempted by . . . applicable federal law and the venue for resolving any dispute under this 

Agreement will be San Mateo County, California.” TPA Agreement at 11. FCE contends that this 

is a mandatory forum selection clause that provides for exclusive jurisdiction in the San Mateo 

County Superior Court. ECF No. 16 at 5-6. TRDI contends that the clause is either permissive or 

ambiguous, and does not require that litigation take place in state court. ECF No. 21 at 5-8.

The Court concludes that the forum selection clause is mandatory. “To be mandatory, a 

clause must contain language that clearly designates a forum as the exclusive one.” N. Cal. Dist.

Council of Laborers v. Pittsburg-Des Moines Steel Co., 69 F.3d 1034, 1037 (9th Cir. 1995). Here, 

the language at issue is similar to the mandatory forum selection clause in Docksider, Ltd. v. Sea 

Technology, Ltd., which provided that, “[v]enue of any action brought hereunder shall be deemed 

to be in Gloucester County, Virginia.” 875 F.2d 763, 763 (9th Cir. 1989); see id. at 764 (“This 

mandatory language makes clear that venue, the place of suit, lies exclusively in the designated 

county.”); see also Vogt-Nem, Inc. v. M/V Tramper, 263 F. Supp. 2d 1226, 1231 (N.D. Cal. 2002) 

(“will,” as used in forum selection clause, is mandatory to the same extent as “shall”). 

Because the clause mandates that “venue . . . will be San Mateo County, California,” and 

there is no federal courthouse in San Mateo County, the Court also concludes that the clause

unambiguously requires that disputes under the agreement be resolved in San Mateo County 

Superior Court. See Stone v. Cnty. of Lassen, No. 12-cv-01946-MCE, 2013 WL 269085, at *3 

Case 3:15-cv-01160-JST Document 24 Filed 05/07/15 Page 3 of 8
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(E.D. Cal. Jan. 23, 2013) (“A forum selection clause stating that venue ‘shall be in’ a particular 

county means that venue lies in state court when there is no federal court in that particular countyeven though that county may be part of a judicial district whose courthouse lies elsewhere.”); Air 

Ion Devices, Inc. v. Air Ion, Inc., No. 02-cv-1717-SI, 2002 WL 1482665, at *2 (N.D. Cal. July 5, 

2002) (forum selection clause stating that “[A]ny action commenced by AID to enforce its rights 

against AI shall be brought in the County of Marin, State of California,” establishes that Marin 

County is the only venue for such an action); Yakin v. Tyler Hill Corp., 566 F.3d 72, 76 (2d Cir. 

2009) (“A reasonable person reviewing the statement ‘It is agreed that the venue and place of trial 

of any dispute that may arise out of this Agreement . . . shall be in Nassau County, New York,’

would necessarily conclude that the parties intended that litigation take place in an appropriate 

venue in Nassau County and that this commitment was not conditioned on the existence of a 

federal courthouse in that county.”); cf. Simonoff v. Expedia, Inc., 643 F.3d 1202, 1207 (9th Cir. 

2011) (“[A] forum selection clause that vests ‘exclusive jurisdiction and venue’ in the courts ‘in’ a 

county provides venue in the state and federal courts located in that county.”); Alliance Health 

Grp., LLC v. Bridging Health Options, LLC, 553 F.3d 397, 400 (5th Cir. 2008) (“[T]he clause at 

hand, providing for venue in a specific county, permits venue in either federal or state court, 

because a federal courthouse is located in that county.”); Global Satellite Commc’n Co. v. Starmill 

U.K. Ltd., 378 F.3d 1269, 1272 (11th Cir. 2004) (suit in either the Seventeenth Judicial District of 

Florida or in the Fort Lauderdale Division of the Southern District of Florida, both located in 

Broward County, would satisfy a requirement that “[v]enue shall be in Broward County”). 

Defendant relies principally on Merrell v. Renier, 06-cv-404-JLR, 2006 WL 1587414 

(W.D. Wash. June 6, 2006), to argue that the forum selection clause does not prohibit removal to 

federal court. ECF No. 21 at 6-8. In Merrell, the parties’ forum selection clause provided that

“venue . . . will reside in the United States and in the county of residence of the non-breaching 

party.” Id. at *1. The relevant county was Snohomish County, which is located within the 

Western District of Washington, but does not have a federal courthouse. Id. at *1-2. The court 

concluded that the forum selection clause was mandatory, citing Docksider, but that it did not 

prohibit a federal court from hearing the case. Id. at *2-3. The court reasoned that the term

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“venue” does not necessarily equate to the location of a courthouse, and the clause was therefore 

ambiguous and failed as a matter of law to prevent the court from hearing the action. Id.

The Court agrees with FCE that the holding in Merrell is inconsistent with the reasoning of 

the Ninth Circuit’s subsequent decision in Simonoff. In the latter case, the Ninth Circuit explained 

that a forum selection clause vesting exclusive jurisdiction and venue in a particular county 

contemplates federal as well as state courts as proper courts for adjudication because “when a 

federal court sits in a particular county, the district court is undoubtedly ‘in’ that county.” 

Simonoff, 643 F.3d at 1206 (citing Alliance Health, 553 F.3d at 399-400; Global Satellite 

Commc’n, 378 F.3d at 1272). As FCE points out, the location of a federal courthouse within a 

particular county would have been irrelevant if the court had concurred with the Merrell court’s 

conclusion that a clause mandating venue in a specific county does not prohibit filing an action “in 

a federal district court that encompasses the county, but has no courthouse within the county.”

Merrell, 2006 WL 1587414, at *2; see Simonoff, 643 F.3d at 1206 n. 2 (“[T]he present action was 

removed to the Seattle Division of the Western District of Washington, which has its only 

courthouse in King County. This case unquestionably was removed to a court ‘in’ King County, 

Washington.”). 

TRDI also argues that the forum selection clauses in Stone and similar cases are 

distinguishable from the clause in the parties’ agreement because those clauses provided for venue 

“in” a specific county. ECF No. 21 at 7. The forum selection clause at issue here states that 

“venue . . . will be San Mateo County,” and, TRDI suggests, therefore lacks crucial 

“geographically limiting language.” Id. The Court disagrees with TRDI that the reference to San 

Mateo County in this clause is “oblique” and therefore does not “clearly designate” San Mateo 

County Superior Court as an exclusive forum. Id. It is true that in Simonoff, the Court 

emphasized the importance of the preposition “in.” 643 F.3d at 1206. But in this case, the Court 

does not perceive a material difference between the clauses “the venue will be San Mateo County” 

and “venue will be in San Mateo County.”

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 These phrases equally suggest that disputes should be 

 

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TRDI’s suggestion that the word “in” makes all the difference is somewhat undermined by its 

contention that Merrell is the “most-analogous case” and its reasoning “applies to this matter,” 

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resolved in courts located within San Mateo County, i.e. the San Mateo County Superior Court. 

See Doe 1, 552 F.3d at 1081 (“Contract terms are to be given their ordinary meaning . . . . 

Whenever possible, the plain language of the contract should be considered first.”). 

To summarize, the Court concludes that the forum selection clause is mandatory and 

unambiguous, and contemplates that disputes will be resolved in San Mateo County Superior 

Court. Because the contract language is unambiguous, the Court need not consider TRDI’s 

arguments that: (1) the ambiguous contract language should be construed against the drafter, FCE; 

and (2) “FCE should not be permitted to foist ambiguous language on out-of-state clients,”

particularly in a suit that is the product of a “race to the courthouse.” ECF No. 21 at 8-9. 

In the alternative, TRDI argues that even if the forum selection clause is mandatory and 

unambiguous, the scope of the clause is plainly limited to “resolving any dispute under this 

Agreement,” and therefore applies only to claims relating to the interpretation or performance of 

the TPA Agreement. ECF No. 21 at 10 (citing Mediterranean Enters., Inc. v. Ssangyong Corp., 

708 F.2d 1458, 1464 (9th Cir. 1983) (concerning an arbitration clause). TRDI argues that FCE’s 

unjust enrichment and quantum meruit claims involving third party service providers fall outside 

the scope of the forum selection clause because they will require the Court to consider matters 

outside the TPA Agreement, including any obligations that TRDI owed to third parties pursuant to 

the Plan. ECF No. 21 at 10-11.

3

 FCE argues that the claims fall within the scope of the forum 

selection clause because they relate to the interpretation of the contract. ECF No. 22 at 9 (citing 

Manetti-Farrow, 858 F.2d at 514 (“[F]orum selection clauses can be equally applicable to 

contractual and tort causes of action. Whether a forum selection clause applies to tort claims 

depends on whether resolution of the claims relates to interpretation of the contract.” (internal 

citations omitted); Guenther v. Crosscheck, Inc., No. 09-cv-01106-WHA, 2009 WL 1248107, at 

 

ECF No. 21 at 6, 8, because the forum selection at issue in Merrell provided that “venue. . . will 

reside . . . in the county of residence of the non-breaching party.” See Merrell, 2006 WL 1587414, 

at *1. 

3

TRDI also contends that its ERISA counterclaims are not subject to the forum selection clause. 

ECF No. 21 at 11. As discussed below, the Court has exclusive jurisdiction over these causes of 

action and therefore will not remand them to the San Mateo County Superior Court, regardless of 

whether they fall within the scope of the forum selection clause. 

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*5 (N.D. Cal. April 30, 2009) (“Plaintiff's unjust-enrichment claim, however, does not prevent 

enforcement of the forum-selection clause.”)). 

The Court concludes that the claims involving third parties fall within the scope of the 

forum selection clause. The relevant allegations in the complaint involve benefits conferred on 

TRDI by third party service providers. Compl. ¶¶ 54-55, 61. According to the complaint, “FCE 

has invoiced TRDI for payment” on behalf of these “other named service providers,” and these 

invoices have gone unpaid. Id. ¶ 35. The complaint references Article IV, section (a) of the TPA 

Agreement, providing for “payment to FCE and/or other named service providers,” and alleges 

that “[w]hen FCE provides TPA Services and when other service providers provide benefits or 

services under the Plan, as part of the TPA Services FCE provides, FCE submits the invoices for 

all such services.” Id. ¶¶ 17-18. The claims involving third parties are therefore tied into the 

parties’ contractual dispute and fall within the scope of the forum selection clause governing “any 

dispute under this Agreement.” See Manetti-Farrow, 858 F.2d at 514. 

B. Remand

Although the forum selection clause contemplates that all disputes will be resolved in San 

Mateo County Superior Court, FCE acknowledges that this Court has exclusive jurisdiction over 

TRDI’s ERISA counterclaims. ECF No. 16 at 3; ECF No. 22 at 10. FCE also concedes that “if 

remanding the state law claims would result in parallel duplicative lawsuits in both federal and 

state court on the same set of facts, then the Court may retain jurisdiction of both the claims 

subject to exclusive federal jurisdiction and the remaining claims over which it has pending

jurisdiction.” ECF No. 16 at 7. Nevertheless, FCE argues that the Court should not allow TRDI 

to avoid its obligations under the forum selection clause, and should therefore remand either the 

entire action, or the entire action except the ERISA claims, to the San Mateo County Superior 

Court. Id. at 3. FCE argues that parallel lawsuits would not be duplicative because the primary 

issues raised by the ERISA litigation are distinct from the contract-related state law claims. Id. at 

9-10. TRDI contends that the ERISA and contractual claims arise out of the same nucleus of 

operative facts, and the Court should therefore retain jurisdiction over all of the causes of action in 

this matter. ECF No. 21 at 11-12. 

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The Court will retain jurisdiction over TRDI’s ERISA counterclaims.4 However, the Court 

concludes that the questions raised in the state law claims and the ERISA claims are sufficiently 

distinct that parallel litigation would not be duplicative or waste judicial resources. As Plaintiff 

explains, whether FCE was a fiduciary, whether it breached any fiduciary duties to the Plan, and 

whether it was a party in interest that engaged in prohibited transactions, are questions that do not 

substantially overlap with the resolution of the state law contract and quasi-contract claims at the 

heart of this action. ECF No. 16 at 9-10. Accordingly, the Court will enforce the forum selection 

clause to the extent it is “[]reasonable under the circumstances,” and remand all of the non-ERISA 

claims to San Mateo County Superior Court. Pelleport, 741 F.2d at 279 (internal quotation marks 

omitted). To the extent TRDI is concerned that it would be impracticable to simultaneously 

pursue litigation in both this Court and the Superior Court, the Court has discretion to stay this 

action pending resolution of the contract claims in state court. See Clinton v. Jones, 520 U.S. 681, 

706 (1997) (“The District Court has broad discretion to stay proceedings as an incident to its 

power to control its own docket.”). 

IV. CONCLUSION

For the foregoing reasons, the motion to remand is granted in part. This Court retains 

jurisdiction over Counts I, II, and III of the cross-complaint. The remainder of the action is 

remanded to the Superior Court of the State of California, County of San Mateo. 

IT IS SO ORDERED.

Dated: May 7, 2015

______________________________________

JON S. TIGAR

United States District Judge

 

4

FCE suggests without explanation that by agreeing to the forum selection clause, TRDI waived 

“jurisdiction over inconsistent compulsory counterclaims.” ECF No. 22 at 10. FCE also states 

that “courts have held that even compulsory counterclaims within the scope of a valid forum 

selection clause – such as the (purportedly compulsory) ERISA claims here – may be subject to 

dismissal despite the existence of both jurisdiction and venue.” Id. at 11. Neither statement 

presents a persuasive reason to dismiss TRDI’s ERISA claims, and the Court declines to do so. 

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