Court Opinion

ID: 2763657
Source: CourtListenerOpinion
Date Created: 2014-12-22 22:00:29.167267+00
Date Added: 2024-06-11T10:44:50.378880
License: Public Domain

United States Court of Appeals
                      For the First Circuit

No. 13-1198

       ROSANA CLAUDIO-DE LEÓN; LUIS F. CARRASQUILLO-RIVERA;
            CONJUGAL PARTNERSHIP CARRASQUILLO-CLAUDIO,

                      Plaintiffs, Appellants,

                                v.

     SISTEMA UNIVERSITARIO ANA G. MÉNDEZ; UNIVERSIDAD DEL ESTE;
         EVELYN AYALA, in her official and personal capacity;
    JOHN DOE; CONJUGAL PARTNERSHIP DOE-AYALA; LITZ PRÍNCIPE, in
       her official and personal capacity; JAMES DOE; CONJUGAL
      PARTNERSHIP DOE-PRÍNCIPE; ALBERTO MALDONADO; JOSÉ MÉNDEZ,

                      Defendants, Appellees.

           APPEAL FROM THE UNITED STATES DISTRICT COURT
                  FOR THE DISTRICT OF PUERTO RICO
        [Hon. Carmen Consuelo Cerezo, U.S. District Judge]

                               Before
               Torruella and Lipez, Circuit Judges,
                      Gelpí,* District Judge.

     Saulo Abad Vélez-Ríos, with whom Vélez & Sepúlveda, P.S.C. was
on brief, for appellants.
     Edgar Hernández-Sánchez, with whom Victoria D. Pierce-King and
Cancio, Nadal, Rivera & Díaz, P.S.C. were on brief, for appellee.

                         December 22, 2014

*
    Of the District of Puerto Rico, sitting by designation.
             TORRUELLA, Circuit Judge.      Plaintiffs-Appellants Rosana

Claudio-de     León   ("Claudio"),        Luis    F.   Carrasquillo-Rivera

("Carrasquillo"), and the conjugal partnership Carrasquillo-Claudio

(collectively, "Appellants") appeal the dismissal of Claudio's

Title VII pregnancy and sex discrimination claim and Appellants'

supplemental state law claims due to a forum selection clause

contained in the employment contracts between Claudio and the

University of the East of the Ana G. Méndez University System

("SUAGM" by its Spanish acronym) which precludes adjudication in

federal court.     On appeal, Appellants argue that: (1) the forum

selection    clause   was   not   triggered      because   SUAGM   failed   to

participate in mandatory "constructive negotiations conducted in

good faith between the parties"; (2) Appellees1 waived enforcement

of the forum selection clause due to their delay in raising the

issue before the district court; and (3) even if the district court

was correct in enforcing the forum selection clause, the dismissal

should have been without prejudice.              Though we disagree with

Appellants and find the forum selection clause applicable and

enforceable, we agree that the district court should have dismissed

the case without prejudice. We therefore affirm the district court

1
   In addition to SUAGM, Appellees include Evelyn Ayala-Quintero
("Ayala"), in her official and personal capacity, Litz Príncipe-
Ramírez ("Príncipe"), in her official and personal capacity,
Alberto Maldonado, and José Méndez.

                                    -2-
but modify the judgment to expressly permit re-filing in the

appropriate forum.

                                I.    Background

           On February 15, 2008, Claudio was hired by the SUAGM

School of Continuing Education. The employment contract, which was

for a fixed term, was extended on four separate occasions, each for

approximately six months.            The final two extensions -- covering

August 3 through December 31, 2009, and January 7 through July 31,

2010, respectively -- contained the following provision:

           THIRTEENTH: Any dispute which arises between
           the parties and which cannot be resolved or
           surmounted   by   constructive   negotiations
           conducted in good faith between the parties
           shall be submitted to the jurisdiction and
           competence of the Court of First Instance of
           the Commonwealth of Puerto Rico, San Juan
           Part, for adjudication and resolution.

           According      to   Claudio,         beginning   in    August   2009   she

"experienced a series of continuous actions that reveal a hostile

environment of moral harassment in the employment and of marriage

and pregnancy discrimination" by Ayala, her supervisor.                    This all

stemmed, Claudio claims, from her relationship with, marriage to,

and impregnation by Carrasquillo, the School's Marketing Officer.

Concerned with this hostile environment, Claudio met with several

SUAGM administrators: Ayala on December 11, 2009; Príncipe, the

Associate Dean of the Continuing Education School, on January 14,

2010;   María   Socorro    Díaz      de   Burgos     ("Díaz      de   Burgos"),   the

Executive Assistant to the Chancellor, on January 15, 2010; and

                                          -3-
Mildred Y. Rivera-Cordero ("Rivera"), the System Vice-President of

the    Continuing   Education   School      and   the   Professional    Studies

School, around April 2010.2       In all of these meetings, Claudio was

told to "limit herself to her duties and to always greet Mrs. Ayala

to teach her how professionals worked and to not assume the same

attitude."      On June 3, Príncipe informed Claudio that her contract

would not be renewed because Ayala "did not want her" there and

because of Claudio's "low productivity."

              The next day, June 4, 2010, Claudio filed a complaint

before    the    Equal   Employment     Opportunity      Commission    ("EEOC")

alleging pregnancy and sex discrimination.                   On July 16, 2010,

Appellants filed suit in the Court of First Instance of the

Commonwealth of Puerto Rico, Ponce Part.           On October 12, 2010, the

EEOC    issued   Claudio   a   Notice   of   Right      to   Sue.     Appellants

subsequently filed the instant action against SUAGM and numerous

individuals in the district court on January 10, 2011, alleging

marriage discrimination, pregnancy and gender discrimination, and

retaliation under Title VII, and various state law claims.

              On April 15, 2011, Appellees filed a motion to dismiss,

arguing that Title VII does not provide for individual liability

and    that   Appellants   failed     to    exhaust     their    administrative

remedies. On November 30, 2011, the district court agreed in part,

2
   Unlike the other meetings, the meeting with Rivera was not in
person but rather through a telephone conversation.

                                      -4-
dismissing all claims except Claudio's Title VII pregnancy and sex

discrimination claim against SUAGM and Appellants' supplemental

state law claims against all Appellees.           Approximately two weeks

later, on December 16, 2011, Appellees filed a second motion to

"[d]ismiss the verified complaint without prejudice," seeking, for

the first time, to enforce the forum selection clause in the

employment contracts.        The district court granted this motion on

May 14, 2012, but was silent as to whether the dismissal was with

or without prejudice.

            The   district    court    denied    Appellants'   motion   for

reconsideration on December 26, 2012, and this timely appeal

followed.

                              II.   Discussion

            In this Circuit, "we treat a motion to dismiss based on

a forum selection clause as a motion alleging the failure to state

a claim for which relief can be granted under Rule 12(b)(6)."3

3
   In December 2013, the Supreme Court decided Atlantic Marine
Construction Co. v. United States District Court for the Western
District of Texas, 134 S. Ct. 568, 579-80 (2013), which held that
"the appropriate way to enforce a forum-selection clause" is
"through a motion to transfer under § 1404(a)" or, if the clause
points to a state or foreign forum, "through the doctrine of forum
non conveniens," and not through an improper venue § 1406(a) or
Rule 12(b)(3) motion. The Court explicitly declined to express a
view as to whether a Rule 12(b)(6) motion is a proper alternative.
See id. at 580 ("We therefore will not consider [the
appropriateness of using Rule 12(b)(6)]. Even if a defendant could
use Rule 12(b)(6) to enforce a forum-selection clause, that would
not change our conclusions that § 1406(a) and Rule 12(b)(3) are not
proper mechanisms to enforce a forum-selection clause . . . .").
Thus, absent a clear statement from the Supreme Court to the

                                      -5-
Rivera v. Centro Médico de Turabo, Inc., 575 F.3d 10, 15 (1st Cir.

2009); see also, e.g., Silva v. Encyclopedia Brittanica Inc., 239
F.3d 385, 387 (1st Cir. 2001). We thus review the district court's

decision de novo.    Rivera, 575 F.3d at 15.    In conducting this

review, we, like the district court, may consider "documents the

authenticity of which are not disputed by the parties," "documents

central to plaintiffs' claim," and "documents sufficiently referred

to in the complaint."    Id. (quoting Alt. Energy, Inc. v. St. Paul

Fire & Marine Ins. Co., 267 F.3d 30, 33 (1st Cir. 2001)) (internal

quotation marks omitted); see also Beddall v. State St. Bank &

Trust Co., 137 F.3d 12, 17 (1st Cir. 1998) ("When . . . a

complaint's factual allegations are expressly linked to -- and

admittedly dependent upon -- a document (the authenticity of which

is not challenged), that document effectively merges into the

pleadings and the trial court can review it in deciding a motion to

dismiss   under   Rule   12(b)(6).").   The   employment   contracts

containing the forum selection clause at issue fall under each of

these categories.

contrary, the use of Rule 12(b)(6) to evaluate forum selection
clauses is still permissible in this Circuit, and we will not
decline to review or enforce a valid forum selection clause simply
because a defendant brought a motion under 12(b)(6) as opposed to
under § 1404 or forum non conveniens.

                                 -6-
A.   The Forum Selection Clause Is Applicable and Enforceable

           "Under          federal    law,    the     threshold      question      in

interpreting a forum selection clause is whether the clause at

issue is permissive or mandatory."                   Rivera, 575 F.3d at 17.

"Permissive forum selection clauses . . . authorize jurisdiction

and venue in a designated forum, but do not prohibit litigation

elsewhere. . . .          In contrast, mandatory forum selection clauses

contain clear language indicating that jurisdiction and venue are

appropriate exclusively in the designated forum."                        Id. (second

alteration in original) (quoting 14D Charles Alan Wright, Arthur R.

Miller & Edward H. Cooper, Federal Practice and Procedure § 3803.1

(3d ed. 1998)) (internal quotation marks omitted).

           Here, there is no doubt that the forum selection clause

contained within the employment contracts is mandatory. The clause

states that disputes "shall be submitted to the jurisdiction and

competence of the Court of First Instance of the Commonwealth of

Puerto Rico, San Juan Part," and it is axiomatic that the word

"shall"   has       a    mandatory   connotation.          See,    e.g.,    Jama   v.

Immigration     &       Customs   Enforcement,      543 U.S. 335,   346   (2005)

(contrasting the discretionary word "may" with the mandatory word

"shall"); Rivera, 575 F.3d at 17 n.5 (including "shall" in a list

of "typical mandatory terms"); Black's Law Dictionary 1585 (10th

ed. 2014) (defining "shall" to mean "[h]as a duty to; more broadly,

                                        -7-
is required to" and explaining that it is used to express "the

mandatory sense that drafters typically intend").

              The next step in evaluating the applicability of a forum

selection clause is ascertaining its scope.                     Rafael Rodríguez

Barril, Inc. v. Conbraco Indus., Inc., 619 F.3d 90, 92-93 (1st Cir.

2010).    This is a clause-specific analysis, so "it is the language

of the forum selection clause itself that determines which claims

fall within its scope."         Rivera, 575 F.3d at 19.                The clause at

issue here covers "[a]ny dispute which arises between the parties

and   which    cannot   be    resolved      or   surmounted       by    constructive

negotiations      conducted    in    good    faith      between    the     parties."

Notwithstanding Appellants' acknowledgment of the broad reach of

the term "any dispute," they argue that the phrase "which cannot be

resolved or surmounted by constructive negotiations conducted in

good faith" limits the reach of the clause by creating a condition

precedent.      According to Appellants, because the parties never

engaged   in    constructive    negotiations       in    good     faith    prior   to

Appellants filing suit, the mandatory forum selection clause was

never triggered, and thus Appellants were free to file wherever

they wanted.

              We reject this reading because such an interpretation

leads to absurd results.            In normal cases, plaintiffs initiate

lawsuits and thus ordinarily have their choice of venue.                    See Atl.

Marine, 134 S. Ct. at 581 ("Because plaintiffs are ordinarily

                                       -8-
allowed to select whatever forum they consider most advantageous

(consistent with jurisdictional and venue limitations), we have

termed their selection the 'plaintiff's venue privilege.'" (quoting

Van Dusen v. Barrack, 376 U.S. 612, 635 (1964))).   The purpose of

a forum selection clause, therefore, is, at least in part, to

protect defendants and give them a voice as to where a dispute will

be heard and resolved.    See, e.g., Huffington v. T.C. Grp., LLC,

637 F.3d 18, 22-23 & n.3 (1st Cir. 2011); C. Pappas Co. v. E. & J.

Gallo Winery, 565 F. Supp. 1015, 1018 (D. Mass. 1983).          If

Appellants' interpretation were accepted, the forum selection

clause would effectively be rendered meaningless: if a plaintiff

wanted to litigate his or her claim in the forum agreed to, he or

she could file the lawsuit there in the first instance; if he or

she did not want to be in that forum, he or she could file the

lawsuit somewhere else as soon as a dispute arose, without giving

the defendant a chance to "constructive[ly] negotiat[e] . . . in

good faith," and then argue, as Appellants do here, that the clause

was never triggered due to the failure to conduct pre-filing

negotiations.4   Such an outcome would defeat the entire purpose of

including a forum selection clause to begin with, and thus cannot

have been the intent of the parties when they entered the contract.

4
   Appellants emphasized at oral argument that the constructive
negotiations had to be conducted pre-filing, so, according to
Appellants, even if Appellees offered to negotiate prior to filing
their motion to dismiss, it would have been too late for purposes
of the forum selection clause.

                                -9-
We see no reason to deviate from the accepted practice of avoiding

interpretations that either give a clause no effect or go against

the intent of the parties.      See P.R. Laws Ann. tit. 31, § 3474 ("If

any stipulation of a contract should admit of different meanings,

it should be understood in the sense most suitable to give it

effect."); Irizarry v. García, 155 D.P.R. 713, 726, __ P.R. Offic.

Trans. __, 2001 WL 1555664 (P.R. Nov. 27, 2001) ("[W]hen construing

a contract, one must presuppose fairness, correction and good faith

in its wording and construe it in such a manner that leads to

results consonant with the contractual relationship as required by

ethical standards. In other words, one cannot seek to obfuscate or

distort the interpretation of contracts to reach absurd or unfair

results."); Restatement (Second) of Contracts § 203(a) (1981) ("In

the interpretation of a promise or agreement or a term thereof, the

following standards of preference are generally applicable: (a) an

interpretation which gives a reasonable, lawful, and effective

meaning to all the terms is preferred to an interpretation which

leaves a part unreasonable, unlawful, or of no effect.").

           Moreover,     even    if    we   did   accept   Appellants'

interpretation, they would still be subject to the forum selection

clause.   First, it is not clear to us that the so-called condition

precedent was not met.    Appellants' complaint states that Claudio

met with Ayala, Príncipe, Díaz de Burgos, and Rivera between

December 11, 2009, and April 2010 to discuss her alleged hostile

                                   -10-
environment.      In each case, Claudio was allegedly given advice as

to how to handle the situation and improve it.                 Nothing in the

complaint suggests that these conversations "between the parties"

could   not      be    considered    "constructive"      and    "good       faith"

negotiations to alleviate Claudio's concerns.                That the meetings

did not fix the problem and Claudio was eventually terminated is

irrelevant.      The burden is on Appellants to establish that a forum

selection clause should not be enforced -- in this case by showing

that constructive negotiations in good faith never occurred -- and

they have not done so.       See M/S Bremen v. Zapata Off-Shore Co., 407
U.S. 1, 17 (1972) (explaining that the party arguing that a forum

selection     clause    is   inapplicable    "bear[s]    a   heavy    burden    of

proof");    In   re    Mercurio,    402 F.3d 62,    66   (1st    Cir.    2005)

(recognizing the "'heavy burden of proof'" to overcome a forum

selection clause on inconvenience grounds (quoting Carnival Cruise

Lines, Inc. v. Shute, 499 U.S. 585, 595 (1991))).

            And, even if they were not negotiations as envisioned by

the contract, Appellants make no claim that they attempted to

constructively negotiate but that Appellees refused to participate

(or did so in bad faith).          By failing to do so, instead opting to

bypass the so-called condition precedent and immediately file a

claim -- first with the EEOC, then with the Commonwealth court, and

finally before the district court -- Appellants would be estopped

                                      -11-
from   relying   on   Appellees'   failure   to   comply   with   the   same

requirement to justify litigation outside of the agreed-upon forum.

           Having established that the forum selection clause is

mandatory and its scope covers Appellants' claims, the final step

in evaluating the clause involves asking "whether there is some

reason the presumption of enforceability should not apply." Rafael

Rodríguez Barril, 619 F.3d at 93.         A forum selection clause is

"prima facie valid" and, absent a "strong showing" by the resisting

party that the clause is "'unreasonable' under the circumstances,"

it should not be set aside.    Bremen, 407 U.S. at 10, 15.        There are

four grounds for finding such a clause unreasonable, and thus

unenforceable:

           (1) the clause was the product of "fraud or
           overreaching";

           (2) "enforcement would be unreasonable and
           unjust";

           (3) proceedings "in the contractual forum will
           be so gravely difficult and inconvenient that
           [the party challenging the clause] will for
           all practical purposes be deprived of his day
           in court"; or

           (4) "enforcement would contravene a strong
           public policy of the forum in which suit is
           brought, whether declared by statute or by
           judicial decision."

Rafael Rodríguez Barril, 619 F.3d at 93 (alteration in original)

(quoting Bremen, 407 U.S. at 15, 18) (internal citations omitted).

Appellants make no argument that the clause was obtained through

fraud or overreaching, that enforcement will deprive Appellants of

                                   -12-
their day in court, or that any public policy counters against

enforcement of the clause.

             Appellants' waiver argument, however, implicates the

second category.      Appellants contend that by waiting eleven months

after filing suit (a year-and-a-half if one counts the dismissed

lawsuit in the Ponce court) to invoke the forum selection clause,

Appellees consented to adjudicating the dispute before the district

court and any argument to the contrary was waived. They argue that

because discovery was well under way, significant resources had

already been expended, and substantive and dispositive motions were

filed, Appellees essentially "test[ed] the waters" of federal court

"before invoking their rights under the forum selection clause."

It   would   be   "completely   unreasonable   and   unjust,"   Appellants

assert, to grant the Rule 12(b)(6) motion and require them to

"start over" in state court.

             This contention is easily dispensed with. "[A] motion to

dismiss based on a forum-selection clause may be raised at any time

in the proceedings before disposition on the merits."           Silva, 239
F.3d at 388.      Claudio's pregnancy and sex discrimination claim and

Appellants' supplemental claims under Puerto Rico law were never

disposed of on the merits.        Thus, the Rule 12(b)(6) motion was

properly made and no waiver occurred.          While we acknowledge that

waiting so long to enforce the clause does, at first blush, appear

unfair to Appellants, there is nothing in the record to suggest

                                   -13-
that any potential unfairness rises to the level of being "unjust"

or "unreasonable."        Indeed, if Appellants wanted to avoid any

seeming unfairness, they should have filed their suit in the proper

forum to begin with.

           Finding   no    reason   to   overcome   the   "presumption   of

enforceability," we agree with the district court that the forum

selection clause requiring Appellants to bring their claims before

the Court of First Instance of the Commonwealth of Puerto Rico, San

Juan Part is valid and applicable. Appellees' Rule 12(b)(6) motion

was, therefore, properly granted.

B.   Dismissal Should Have Been Without Prejudice

           When the district court granted Appellees' motion to

dismiss, it was silent on the issue of prejudice.           Generally, we

presume that such a dismissal was with prejudice.              See United

States ex rel. Karvelas v. Melrose-Wakefield Hosp., 360 F.3d 220,

241 (1st Cir. 2004) ("[I]n the absence of a clear statement to the

contrary, a dismissal pursuant to Fed. R. Civ. P. 12(b)(6) is

presumed to be with prejudice."), abrogated on other grounds by

United States ex rel. Gagne v. City of Worcester, 565 F.3d 40 (1st

Cir. 2009).   Still, it is our practice for dismissals due to forum

selection clauses to be dismissed without prejudice so the case may

be re-filed in the appropriate forum.        See, e.g., Huffington, 637
F.3d at 21, 26 (affirming the district court's dismissal of

plaintiff's claims "without prejudice, Fed. R. Civ. P. 12(b)(6),

                                    -14-
concluding     that   the   forum   selection   clause   encompassed    his

claims"); Rafael Rodríguez Barril, 619 F.3d at 92, 95 (affirming

the   district   court's    dismissal    without   prejudice   under   Rule

12(b)(6) due to a valid forum selection clause); Odishelidze v.

Aetna Life & Cas. Co., 853 F.2d 21, 23 (1st Cir. 1988) ("[The

district court] also ordered the complaint dismissed 'for failure

to plead a cognizable claim under federal jurisdiction' and noted

that the dismissal was 'without prejudice of [plaintiff] filing

another action in the proper local forum.'").

             Indeed, Appellees' motion to dismiss specifically sought

dismissal without prejudice.         Because courts generally grant the

relief requested of them, and the district court gave no indication

that it was departing from the requested relief in its order, it

seems fair to presume that the court intended to grant the relief

as requested by Appellees.          We therefore modify the judgment so

that Claudio's Title VII pregnancy and sex discrimination claim and

Appellants' supplemental claims are dismissed without prejudice to

re-file in the Court of First Instance of the Commonwealth of

Puerto Rico, San Juan Part.          See 28 U.S.C. § 2106 (allowing a

"court of appellate jurisdiction" to "modify . . . any judgment .

. . as may be just under the circumstances"); González-de-Blasini

v. Family Dep't, 377 F.3d 81, 89 (1st Cir. 2004) (recognizing the

court's power under 28 U.S.C. § 2106 to modify a dismissal with

prejudice to only bar federal claims).

                                     -15-
                         III.   Conclusion

          For the foregoing reasons, we affirm the district court's

dismissal under Rule 12(b)(6) of the Federal Rules of Civil

Procedure due to an applicable and enforceable forum selection

clause but modify the judgment to be without prejudice to re-file

in the appropriate forum.

          So ordered.

                                -16-