Court Opinion

ID: 9578537
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:46:08.753967+00
Date Added: 2024-06-11T13:28:20.558315
License: Public Domain

BEA, Circuit Judge,
concurring:
I concur in the court’s judgment reversing the district court’s dismissal order and remanding for further proceedings. However, I would remand to allow the plaintiffs an opportunity to plead and prove facts to establish California law and public policy apply to their action and that, therefore, California public policy is violated by enforcement of the AOL contractual forum selection clause.
California has a public policy against the waiver of the class action procedural mechanism by California consumers, as well as the waiver of consumer rights under the California Consumer Legal Remedies Act (CLRA). But that public policy applies to California consumers bringing class action claims under California consumer law. It is not a foregone conclusion that the AOL forum selection clause (or, for that matter, the choice of law clause) is unenforceable as to plaintiffs. For the forum selection and the choice of law clauses to be unen*1086forceable, plaintiffs must establish they are protected by California law and public policy.
As the California Supreme Court has explained, a consumer class action waiver violates California public policy if it is unconscionable because it operates as an exculpatory clause, exempting a defendant from liability — to the extent the obligation at issue is governed by California law. See Discover Bank v. Superior Court, 36 Cal.4th 148, 30 Cal.Rptr.3d 76, 113 P.3d 1100, 1109 (2005) (“Such one-sided, exculpatory contracts in a contract of adhesion, at least to the extent they operate to insulate a party from liability that otherwise would be imposed under California law, are generally unconscionable.” (emphasis added)). Where, however, liability is not controlled by California law — for example because a valid choice of law provision or conflict of laws principles dictate the application of the laws of another state or country — California’s public policy against consumer class action waivers is not implicated. See id.
Moreover, enforcement of the AOL forum selection and choice of law clause violates the CLRA statutory anti-waiver provision, California Civil Code § 1751, only if plaintiffs are California consumers who otherwise would be protected by California law. See Cal. Civ.Code § 1751 (“Any waiver by a consumer of the provisions of this title is contrary to public policy and shall be unenforceable and void.”). If plaintiffs have no contacts with California and are not covered by the CLRA, they have no protection under the California law “which would otherwise govern”; hence, they have nothing to waive. See Am. Online Inc. v. Mendoza, 90 Cal. App.4th 1, 108 Cal.Rptr.2d 699, 706, 708-09 (1st Dist.2001).
Based on the allegations in plaintiffs’ complaint, however, it is not clear whether they are California consumers protected by California law.1 Plaintiffs’ complaint, as it currently stands, is devoid of factual allegations that would support a conclusion that California law would apply, notwithstanding the Virginia choice of law provision. Plaintiffs’ complaint alleges Doe 1 *1087and Doe 2 “currently” — as of the time they filed their complaint — are residents of California. It further alleges the “California subclass” of plaintiffs is comprised of “AOL members in the State of California.” The complaint is silent as to the place of the contracting, the place where the contract was negotiated, the place where the contract was performed, the location of the subject matter of the contract, or the residency of the AOL members at the time of their injuries. Cf. Klussman v. Cross Country Bank, 134 Cal.App.4th 1283, 36 Cal.Rptr.3d 728, 740-41 (1st. Dist.2005) (noting that California had a materially greater interest than Delaware in the application of its own law where the consumer contracts were formed in California, the allegedly illegal conduct took place at the plaintiffs’ homes in California, and the plaintiffs were residents of California at the time of injury). The sole relevant allegation is that, as of the time of filing the complaint, Doe 1 and Doe 2 were residents of California. That alone is simply insufficient to establish California law would govern plaintiffs’ action. Even in the absence of a choice of law or forum selection clause, residency is but one factor to be considered in determining whether California law applies. “California, despite its interest in securing recovery for its residents, will not apply its law to conduct in other jurisdictions resulting in injury in those jurisdictions.” McGhee v. Arabian Am. Oil Co., 871 F.2d 1412, 1425 (9th Cir.1989).
There is no “declarfation] by statute or by judicial decision,” M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 17, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972), that California public policy against consumer rights waivers could possibly be offended by enforcing a contractual class action waiver against a party whose sole connection to California is residency at the time he filed a consumer class action in a California court.2 My colleagues’ suggestion otherwise would permit a citizen of another state to move to California for the sole purpose of serving as a class representative and clothing himself with the protections of consumer-friendly California public policy. This would magnetize California courts to pull in out-of-state contracts, actions or omissions. I see nothing in California consumer-protection statutes or cases that would invite such a new Gold Rush.
I am admittedly not as sanguine as my colleagues as to the non-litigation attractions which bring class action plaintiffs to the Golden State. They mention, but do not describe, “far better reasons” for class action representative plaintiffs moving to California than simply to become class action plaintiffs. I am reminded of Mr. La-*1088zar, of Palm Springs, California, recipient of Mel Weiss’s kickbacks to become a class action representative plaintiff in several cases.3 With thanks to my colleagues for their encomium, it doesn’t really require one to be “imaginative and creative” to suspect the class representatives may not have become California residents for reasons other than class action litigation status and are not really California consumers entitled to California consumer protection.
My concurrence merely requires the plaintiff class representatives plead and prove they really are California consumers by stating facts which make California substantive law applicable to them, pursuant to the well-known rules of federal choice of law, set forth in the Restatement. This point seems to be brushed away by the majority as an unnecessary technicality by a misreading of Mendoza.
Accordingly, I would remand for plaintiffs to be permitted to file an amended complaint to allege facts — if they can so allege — that would demonstrate contacts with California sufficient to establish their causes of action are controlled by California law.

. To determine whether California or Virginia law would apply, we would apply federal conflict of law rules, as set forth in the Restatement (Second) of Conflicts of Laws. See Huynh v. Chase Manhattan Bank, 465 F.3d 992, 997 (9th Cir.2006). Under the Restatement, the parties' chosen law of Virginia will apply unless either (a) Virginia has no substantial relationship to the parties or transaction and there is no other reasonable basis for the parties' choice of law, or (b) application of Virginia law "would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of [Restatement (Second) of Conflict of Laws] § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties.” Restatement (Second) of Conflict of Laws § 187 (1971). Plaintiffs do not claim Virginia has no substantial relation to the transaction; after all, Virginia is where AOL has its principal place of business. See Discover Bank v. Superior Court, 134 Cal.App.4th 886, 36 Cal. Rptr.3d 456, 458-59 (2005) (holding Delaware had a substantial relation to transaction where defendant Discover Bank was domiciled in that state).
To determine whether California "has a materially greater interest” than Virginia and would be the state of the applicable law in the absence of an effective choice of law by the parties, § 188 directs us to take into account the following contacts to determine the applicable law: (a) the place of contracting; (b) the place of negotiation of the contract; (c) the place of performance; (d) the location of the subject matter of the contract; and (e) the domicile, residence, nationality, place of incorporation, and place of business of the parties. Restatement (Second) of Conflict of Laws § 188 (1971). Here, plaintiffs’ voluminous complaint is curiously silent as to any and all of the determinative contacts mentioned in the Restatement.

. The majority cites Mendoza for the proposition that mere residency at the time of filing a complaint is sufficient to invoke California public policy. Mendoza neither said nor held any such thing. In Mendoza, there was no dispute whether the plaintiffs were California consumers entitled to invoke the protection of California consumer law, not merely California residents. See Mendoza, 108 Cal.Rptr.2d at 706, 707, 708 (discussing "California consumers” and "this state’s consumers”). What Mendoza did was use the phrase “California residents” twice. See id. at 708, 709. And in each case, the court explained California courts would not enforce contract provisions that would diminish the rights of California residents in a way that would violate California public policy. Id. at 708, 709. These statements assume, but do not put, analyze, nor determine, the ultimate question: whether the forum selection and choice of law clauses violate California public policy.
The majority’s logical syllogism — all California residents are California consumers— says nothing about whether the plaintiffs are California consumers of AOL products entitled to invoke the protection of California public policy in the instant litigation.

. See The Wall Street Journal Law Blog, http ://blogs. wsj. com/law/?s=seymour + lazar (last visited August 20, 2008).