Mazur v. Mywebgrocer, Inc. ( 2018 )

Mazur v. Mywebgrocer, Inc., No. 639-7-17 Cncv (Mello, J., Mar. 5, 2018).
[The text of this Vermont trial court opinion is unofficial. It has been reformatted from the original. The accuracy of the text and the
accompanying data included in the Vermont trial court opinion database is not guaranteed.]
VERMONT SUPERIOR COURT
CHITTENDEN UNIT
CIVIL DIVISION
│
CHRISTOPHER MAZUR, et al., │
Plaintiffs │
│
v. │ Docket No. 639-7-17 Cncv
│
MYWEBGROCER, INC., │
Defendant │
│
RULING ON THE ENFORCEABILIITY OF THE FORUM SELECTION CLAUSE IN THE
RELEASE SIGNED BY PLAINTIFF KRISTIN PRETTYMAN
This is a class action suit brought by Plaintiffs Christopher Mazur, Vicki Porter
and Kristin Prettyman, on behalf of themselves and other former employees of the
predecessor to Defendant MyWebGrocer, Inc. (“MWG”), claiming that MWG wrongfully
failed to pay them and the other members of the class the full value of “phantom shares”
they had earned under the predecessor’s Phantom Share Plan (“Plan”). Plaintiffs seek
an award of damages for MWG’s alleged breach of its contractual obligations under the
Plan and its alleged breach of the covenant of good faith and fair dealing.
Currently before the court is MWG’s motion to dismiss the Complaint as to one of
the three named plaintiffs, Kristin Prettyman, on the grounds that she signed a release
that bars her claims and requires any claims relating to the release to be brought in the
State of Delaware under Delaware law. Prettyman opposes the motion. She contends
that the release, including its forum selection clause, is an unconscionable contract of
adhesion and is unenforceable for lack of consideration. Prettyman is represented by
Patrick J. Bernal, John D. Stasny, Jonathan M. Feigenbaum and Phillip Gordon, Esqs.
MWG is represented by Jerome F. O’Neill and Navah C. Spero, Esqs.
Plaintiffs Mazur and Porter reside in Chittenden County, Vermont, and Plaintiff
Prettyman resides in Media, Pennsylvania. All three plaintiffs were early employees of
Defendant MWG’s predecessor, a start-up company in Winooski, Vermont, named
MyWebGrocer, L.L.C. (the “LLC”). As employees of the LLC, plaintiffs were also
participants in a Phantom Share Plan, administered by the LLC, the stated purpose of
which was to provide the employees with an opportunity to “share in the growth of the
Company” (see Article 1.1 of Exhibit B to Plaintiff’s Opposition memorandum). Under
that Plan, the Plaintiffs and other vested participants were entitled to have their
“phantom shares” converted into equity and paid off in cash under certain
circumstances, such as if the company should be acquired in the future.
1
In May of 2013, the Start Up was acquired by the Defendant, MWG, which is a
Delaware corporation having its principal place of business in Chittenden County,
Vermont. The acquisition triggered the rights of the participants to be paid for their
vested shares under the Phantom Share Plan. However, the participants were told that
they would have to sign a release before they could be paid for their shares. The release
stated, among other things:
This Acknowledgement and Release shall be governed by, and construed
in accordance with, the internal laws of the State of Delaware, without
reference to the choice of law or conflicts of law principles thereof. Each
party irrevocably submits to the exclusive jurisdiction of the courts of (a)
the state courts located in Wilmington, Delaware and (b) the United States
District Court for the District of Delaware, with respect to any matter
arising hereunder or relating hereto.
(Exhibit A to MWG’s Motion to Dismiss, p. 3).
According to the Complaint, there were approximately 60 participants in the Plan
at the time, all but three of whom signed the release (Complaint, ¶ 70). Plaintiff
Prettyman and approximately 56 others signed the release; Plaintiff Mazur, Plaintiff
Porter, and one other participant (David Tanzer) did not sign the release. Nevertheless,
MWG allegedly paid all 60 participants the same amount per share for their shares,
whether they signed the release, or not. Plaintiffs contend that MWG shortchanged
them and the other participants by paying them approximately $6.5 million less than
what they were entitled to receive under the Plan (Complaint, ¶ 68).
As noted earlier, MWG contends that Plaintiff Prettyman must be dismissed from
this case because she signed a release that bars her claim and requires any claim relating
to the release to be brought in the State of Delaware under Delaware law. Prettyman
contends that MWG’s motion to dismiss must be denied because the release that she
signed release is an unconscionable contract of adhesion and is unenforceable for lack of
consideration. MWG denies Prettyman’s contentions.
In this ruling, the court will not decide whether the release is valid or whether it
bars Prettyman’s claim. Those are matters to be decided later. The only question the
court will decide at this time is whether the choice-of-forum provision of the release
should be enforced. In deciding this question, the court will assume, without deciding,
that the release is lawful and supported by adequate consideration.
“[F]orum selection ‘clauses are prima facie valid and should be enforced unless
enforcement is shown by the resisting party to be “unreasonable” under the
circumstances.’” International Collection Service v. Gibbs, 147 Vt. 105, 107 (1986)
(quoting The Breman v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972). Thus, enforcement
of a forum selection clause is “not automatic, and courts may disregard such clauses if
enforcement would be unreasonable.” Chase Commercial Corp. v. Barton, 153 Vt. 457,
459 (1990).
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Plaintiffs contend that enforcement of the release’s forum selection clause would
be unreasonable because it would result in a waste of judicial resources, it would create
a risk of inconsistent outcomes, it would force Prettyman to litigate her claim in a state
having no interest in the litigation, and it would make it difficult, if not impossible for
Prettyman to pursue her claim there because nearly all the witnesses and evidence are
located in Vermont. MWG contends that the clause should be enforced because MWG is
incorporated in Delaware, Prettyman lives just 20 miles from Wilmington, Delaware,
and Prettyman agreed in the release to litigate any issue relating to the release in
Delaware.
For several reasons, the court agrees with the Plaintiffs that, dismissing the
Complaint as to Prettyman, thereby compelling her to litigate her claim in Wilmington,
Delaware, in accordance with the forum-selection clause of the release, rather than here
in Burlington, Vermont, would be unreasonable. First, granting MWG’s motion would
result in two separate lawsuits involving the same underlying dispute, one in
Wilmington, Delaware involving the claims of Plaintiff Prettyman and other Plan
participants who signed the release, and another one here in Burlington, Vermont
involving the claims of Plaintiffs Mazur and Porter, who did not sign the release. The
facts and circumstances relating to the rights of the plaintiffs under the Phantom Share
Plan, and whether those rights were violated, would be identical in both suits. The only
difference between the two suits would be that one of them (the suit in Delaware) would
also involve the question of the enforceability of the release. It would be a waste of
judicial resources, as well as the resources of the parties, to have courts in two states
litigating the same underlying dispute for parties whose circumstances and claims are
identical in all respects but one. Having two courts litigating the same claims at the
same time would also run the risk of inconsistent outcomes.
Second, nearly all of the witnesses and parties necessary for an adjudication of
the Plaintiffs’ claims reside and work in Vermont. Although MWG is incorporated in the
State of Delaware, its principal place of business is located in Winooski, Vermont, which
is just a few miles from this courthouse, and which is where nearly all, if not all of its
officers and employees, including those who would have to testify in this matter, are
located. Other than Prettyman herself, who happens to now live just 20 miles from
Wilmington, Delaware, virtually no one interested in the outcome of the case lives or
works there. Moreover, it would be difficult, if not impossible for Prettyman to compel
witnesses to appear in a court in Wilmington, Delaware, if her case were brought there.1
Third, the only contact that Delaware has with this matter is the fact that
MWG happens to be incorporated there. All of the events which gave rise to this
litigation occurred in Vermont, involved Vermont residents and employees, and
involved a Phantom Share Plan administered in Vermont. Moreover, the Phantom
1
Indeed, it might be impossible for Prettyman to pursue her claim in Delaware at this point in time. The parties
appear to agree that Delaware has a three-year statute of limitations for breach of contract claims. The limitations
period in Vermont is six years.
3
Share Plan contains choice-of-law and choice-of-forum provisions of its own. The Plan
provides:
Consent to Jurisdiction. The parties to this agreement hereby consent to
the non-exclusive jurisdiction of the courts of the State of Vermont in
connection with any matter or dispute arising under this Plan or between
them regarding the affairs of the Company.
Governing Law. The validity and construction of the Plan and any
agreements entered into there under shall be governed by the laws of the
state of Vermont without regard to the principles of conflicts of laws.
(Exhibit B, Articles 7.2 and 7.3).
Fourth, this court has had extensive involvement with the legal and factual issues
that are at the heart of this case. In March of 2014, David Tanzer, a former MWG
employee, filed a suit in this court asserting the same claims as are presented by the
plaintiffs in the case at bar. In August of 2016, the court disposed of some of those
claims and related defenses on cross-motions for summary judgment, and in March of
2017, the court conduced a lengthy jury trial on the remaining claims and defenses. No
other court has as much familiarity with the issues and claims presented by this
litigation. Moreover, this court can without much difficulty determine whether the
release is valid and enforceable under Vermont or Delaware law, whichever is ultimately
determined to apply.
MWG relies heavily upon Atlantic Marine Constr. Co. v. United States District
Court, 134 S. Ct. 568, 582 (2013), which held that “[w]hen the parties have agreed to a
valid forum-selection clause, a district court should ordinarily transfer the case to the
forum specified in the clause.” However, Atlantic Marine involved the transfer of cases
from one federal district court to another, which involves little more than a change in
venue. The case simply does not apply to the state courts, which cannot transfer cases to
courts in another state. In order to honor the forum selection clause in the release, this
court would have to dismiss Prettyman from the case, which would force her to re-file
her suit in Delaware, where she might have no remedy at all, if Delaware’s three-year
statute of limitations were held to apply to her claim.
For the foregoing reasons, the court will not enforce the forum selection clause in
the release. Defendant’s motion to dismiss the Complaint as to Plaintiff Kristin
Prettyman is DENIED.
SO ORDERED this 5th day of March, 2018.
_____________________________
Robert A. Mello, Superior Judge
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