Robin Petersen v. Boeing Company

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ROBIN P. PETERSEN , No. 11-18075
Plaintiff-Appellant,
D.C. No.
v. 2:10-cv-00999-
ROS
BOEING COMPANY , a Delaware
corporation; BOEING
INTERNATIONAL SUPPORT SYSTEMS OPINION
COMPANY , SAUDI ARABIA LIMITED ,
a corporation or other business entity
or division of The Boeing Company,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Arizona
Roslyn O. Silver, Chief District Judge, Presiding
Submitted March 12, 2013*
Filed April 26, 2013
Before: Harry Pregerson, Stephen Reinhardt,
and William A. Fletcher, Circuit Judges.
Per Curiam Opinion
*
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
2 PETERSEN V . BOEING CO .
SUMMARY**
Forum Selection Clause
The panel reversed the district court’s order dismissing
the action under Fed. R. Civ. P. 12(b)(3) for improper venue
based on a forum selection clause in an employment
agreement.
The panel held that the evidence submitted and the
allegations made by appellant were more than sufficient to
create a triable issue of fact as to whether the forum selection
clause at issue was enforceable under M/S Bremen v. Zapata
Off-Shores Co., 407 U.S. 1 (1972). The panel also held that
the district court abused its discretion by dismissing on the
basis of the forum selection clause without holding an
evidentiary hearing as to whether appellant was induced to
assent to the forum selection clause through fraud or
overreaching. Finally, the panel held that the district court
abused its discretion in denying appellant leave to amend his
pleadings.
COUNSEL
Robin P. Petersen, pro se, Warner Robins, Georgia, for
Plaintiff-Appellant.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
PETERSEN V . BOEING CO . 3
Geoffrey M.T. Sturr, Thomas L. Hudson, and Kathleen Brody
O’Meara, Osborn Maledon, P.A., Phoenix, Arizona, for
Defendants-Appellees.
OPINION
PER CURIAM:
I
Plaintiff Robin P. Petersen, who appears pro se and in
forma pauperis on appeal, is a former Navy pilot with the
rank of Commander who was recruited to work in Saudi
Arabia as a flight instructor for Boeing International Support
Services (“BISS”), a wholly-owned subsidiary of The Boeing
Corporation (“Boeing”). Except as otherwise indicated, the
following account describes the facts as alleged in the
Complaint.
Prior to departing for Saudi Arabia, Petersen was required
to sign a preliminary employment agreement. That
agreement did not contain a forum selection clause. On
arrival in Saudi Arabia, however, he was forced to sign a
second employment agreement—which he was not given
time to read and which he was told he must sign or else return
immediately to the United States at his own expense. This
agreement contained a forum selection clause requiring any
contractual disputes to be resolved in the Labor Courts of
Saudi Arabia. Petersen signed the second agreement without
reading it, as he was instructed to do by his employer.
Petersen’s passport was then confiscated; he was
effectively imprisoned in his housing compound under
4 PETERSEN V . BOEING CO .
miserable living conditions; and his work environment was
marked by rampant safety and ethics violations. When he
attempted to resign and return to the United States, his
employer refused to return his passport for a period of nearly
three months. During his time in Saudi Arabia, Petersen
contracted an upper respiratory infection as a result of his
living conditions and was permanently maimed as a result of
receiving inadequate surgical treatment for an Achilles
tendon tear, which he would have had treated in the United
States had he been permitted to leave Saudi Arabia.
When he finally returned to the United States (after the
intervention of the United States Consulate in Jeddah),
Petersen brought suit against Boeing and BISS alleging
breach of contract as well as several statutory and common
law claims. In addition to his Complaint, his submissions to
the district court included a sworn affidavit claiming that
(1) he was not financially capable of traveling to Saudi
Arabia in order to institute proceedings against his employer;
(2) he would be subjected to harsh conditions and internal
travel restrictions if he were somehow able to return to Saudi
Arabia; and (3) the forum selection clause was foisted on him
through fraud and undue pressure. He also submitted a report
from the United States Department of State tending to
demonstrate that (1) he would not be legally permitted to
travel to Saudi Arabia; (2) he would not in any event be able
to obtain a fair trial in Saudi Arabia; and (3) his employer
could detain him in Saudi Arabia for the entire duration of
any legal proceedings. The district court nonetheless
dismissed the entire lawsuit without a hearing under Federal
Rule of Civil Procedure 12(b)(3) for improper venue, holding
that the forum selection clause was enforceable, relying
largely on our opinion in Spradlin v. Lear Sigler Mgmt. Servs.
Co., 926 F.2d 865 (9th Cir. 1991). The district court then
PETERSEN V . BOEING CO . 5
denied Petersen leave to amend his Complaint in order to
address some of the supposed shortfalls identified by the
district court.
II
We review a district court’s decision to enforce a forum
selection clause under Rule 12(b)(3) for abuse of discretion.1
Murphy v. Schneider Nat’l, Inc., 362 F.3d 1133, 1137 (9th
Cir. 2004) (as amended). In doing so, however, we “must
draw all reasonable inferences in favor of the non-moving
party and resolve all factual conflicts in favor of the non-
moving party.” Id. at 1138. The non-moving party’s
pleadings need not be accepted as true, however, and we may
consider facts outside the pleadings. Id. at 1137.
As to the district court’s refusal to grant leave to amend,
“[d]ismissal without leave to amend is improper unless it is
clear, upon de novo review, that the complaint could not be
saved by any amendment.” Moss v. United States Secret
Service, 572 F.3d 962, 972 (9th Cir. 2009) (internal quotation
marks omitted).
1
BISS argues that the district court did not have personal jurisdiction.
That question is fact-intensive and may depend on the relationship
between BISS and the individuals who recruited Petersen while he was
residing in Arizona. See Ochoa v. J.B. Martin & Sons Farms, Inc.,
287 F.3d 1182, 1187–93 (9th Cir. 2002) (holding that an Arizona district
court had personal jurisdiction over a New York farm being sued by
laborers from Arizona for breach of contract and statutory violations
where the only contacts between the farm and Arizona were the efforts
directed at Arizona by the labor contractor who, on the facts of the case,
acted as the farm’s agent under Arizona law when recruiting the laborers).
Because this issue may benefit from further factual development, we
remand it to the district court for its initial consideration.
6 PETERSEN V . BOEING CO .
III
The enforceability of forum selection clauses is governed
by federal law. Manetti-Farrow, Inc. v. Gucci Am., Inc.,
858 F.2d 509, 513 (9th Cir. 1988). The applicable federal
law was first announced in M/S Bremen v. Zapata Off-Shores
Co., 407 U.S. 1 (1972), and later refined in Carnival Cruise
Lines, Inc. v. Shute, 499 U.S. 585 (1991). Under Bremen,
there are three reasons a forum selection clause may be
unenforceable: “(1) ‘if the inclusion of the clause in the
agreement was the product of fraud or overreaching’; (2) ‘if
the party wishing to repudiate the clause would effectively be
deprived of his day in court were the clause enforced’; and
(3) ‘if enforcement would contravene a strong public policy
of the forum in which suit is brought.’” Murphy, 362 F.3d at
1140 (quoting Richards v. Lloyd’s of London, 135 F.3d 1289,
1294 (9th Cir. 1998)). Both the second and first Bremen
exceptions are at issue here, and we address them in that
order.
A
In Spradlin, we indicated that we were “troubled” by an
employer’s “standard inclusion of a Saudi Arabian forum
selection clause in employment contracts when it is highly
foreseeable that terminated American employees will be
required to return to the United States and will thus face
considerable obstacles in bringing wrongful termination
actions.” 926 F.2d at 869. Nonetheless, we reluctantly
enforced the forum selection clause in Spradlin in light of the
plaintiff’s failure “to come forward . . . with anything beyond
the most general and conclusory allegations of fraud and
inconvenience.” Id. at 868 (emphasis added). In particular,
we noted that Spradlin had not “brought to the district court’s
PETERSEN V . BOEING CO . 7
attention” any facts “that would have militated against
enforcing the forum selection clause,” in particular where
relevant witnesses were located, whether Spradlin was unable
to return to Saudi Arabia, and any facts about the costs of
litigating in Saudi Arabia, the availability of counsel there,
and his financial ability to bear the costs of Saudi litigation.
Id. at 869. We therefore were “compelled to affirm” the
enforcement of the Saudi forum selection clause. Id. at 868.
By contrast, in Murphy, we applied Spradlin and held that
an employee was entitled to an evidentiary hearing as to the
enforceability of a forum selection clause in his employment
contract where he established that litigating in the forum
mandated by the clause might “effectively preclude [his] day
in court.” 362 F.3d at 1142. Murphy established his non-
conclusory case by submitting an affidavit averring that his
financial situation did not permit him to travel to Wisconsin
(the forum indicated in the employment contract) by air and
that he was unable to drive to Wisconsin on account of a
disability. 362 F.3d at 1142. Although there was conflicting
evidence suggesting that Murphy could, in fact, litigate in
Wisconsin, the existence of a “factual contest” as to whether
enforcement of the forum selection clause would “wholly . . .
foreclose” Murphy’s ability to litigate his claim required an
evidentiary hearing. Id. at 1142, 1143.
Here, Petersen did precisely what we held that the
employee in Spradlin needed to have done, and what the
employee in Murphy did do: he provided specific evidence
sufficient to demonstrate that he would be wholly foreclosed
from litigating his claims against Boeing and BISS in a Saudi
forum. His sworn affidavit states that he lacked the resources
8 PETERSEN V . BOEING CO .
to litigate in Saudi Arabia2 and that he was concerned about
returning to Saudi Arabia (even if possible) in light of having
been held as a “virtual prisoner” there. Evidence submitted
by Petersen corroborated his concerns: the United States
Department of State’s 2009 Human Rights Report on Saudi
Arabia states that “[i]n practice, the judiciary was not
independent” and that “the judiciary was subject to influence”
by powerful individuals within the executive or legislative
branch. Furthermore, “judges may discount the testimony of
. . . persons of other [non-Muslim] religions.” Most
important, employers “involved in a commercial or labor
dispute with foreign employees may ask authorities to
prohibit the employees from departing the country until the
dispute is resolved,” often with the intent to “force the
employee to accept a disadvantageous settlement or risk
deportation without any settlement.” See Murphy, 362 F.3d
at 1142–43; cf. Argueta v. Banco Mexicano, S.A., 87 F.3d
320, 327 (9th Cir. 1996) (enforcing a forum selection clause
but noting that “this would be a very different case” if the
plaintiff had submitted admissible evidence to support his
claim that he would be denied his day in court in the selected
forum).
Petersen’s proposed First Amended Complaint alleged
additional facts that should have dispelled any lingering doubt
the district court might have had as to whether an evidentiary
2
Petersen’s affidavit accompanying his motion for permission to
proceed in forma pauperis before this court states that his monthly income
is $1613— $1 more than his monthly expenses— and that he has $66 in
liquid assets.
PETERSEN V . BOEING CO . 9
hearing, at the least, was needed. Just as we indicated that
Spradlin could have alleged additional facts, but did not,
Spradlin, 926 F.2d at 869, Petersen’s proposed amended
complaint alleged that he would need to travel to Saudi
Arabia to litigate his claim, but that he would be unable to do
so because he would not be eligible for a visa. This
allegation is confirmed by the State Department’s public
travel advisory regarding travel to Saudi Arabia, of which we
take judicial notice. The advisory states that visas are
available for Americans to visit Saudi Arabia only for
“business and work, to visit close relatives, and for transit and
religious visits by Muslims” and “all visas require a sponsor
. . . .” U.S. Department of State, Saudi Arabia: Country
Specific Information, available at http://travel.state.gov/travel
/cis_pa_tw/cis/cis_1012.html# (last visited Apr. 18, 2013).
Even assuming that Petersen could somehow enter Saudi
Arabia, the same report confirms his fears that he would be
trapped there again: “Persons involved in legal cases are not
permitted to leave the Kingdom until the case has been
resolved or abandoned,” which “generally takes several
months.”3 Id. Also, unlike Spradlin, Petersen plausibly
alleged that the majority of his witnesses would be American.
He named at least 16 such witnesses, including other
3
The only evidence that Boeing and BISS presented that addressed
Petersen’s ability to litigate in Saudi courts was an affidavit from a Saudi
attorney stating that the Saudi Labor Courts have jurisdiction over this
dispute. Notably, that affidavit does not rebut any of the concerns
expressed by Petersen. It does not state that Petersen could receive a fair
trial against an employer with ties to the Saudi military. It does not state
that Petersen would be permitted to enter Saudi Arabia to participate in the
litigation or that he could somehow do so without traveling to Saudi
Arabia, nor does it rebut Petersen’s fears, confirmed by the State
Department, that he would be forced to remain in Saudi Arabia until his
litigation terminated.
10 PETERSEN V . BOEING CO .
Boeing/BISS employees who experienced similar conditions
during their time in Saudi Arabia and United States-based
recruiters working for Boeing/BISS. Finally, Petersen
plausibly alleged that he was warned by Boeing/BISS
managers—presumably the same individuals responsible for
detaining him in Saudi Arabia against his will—that Boeing,
which provides training to the Saudi air force under the
program in which Petersen was participating, enjoys a “very
close relationship” with the Saudi government.
In light of the fact that leave to amend “should be granted
with ‘extreme liberality,’” we hold that the district court
abused its discretion in denying Petersen leave to amend to
include these additional allegations. Moss, 572 F.3d at 972(quoting Owns v. Kaiser Found. Health Plan, Inc., 244 F.3d
708, 712 (9th Cir. 2001)). Furthermore, even without the
additional allegations, we hold that the district court erred by
not—at the very least—conducting an evidentiary hearing to
determine whether enforcement of the forum selection clause
at issue here would “effectively preclude [Petersen’s] day in
court,” Murphy, 362 F.3d at 1142, based on the admissible
evidence Petersen presented.4
4
Because we remand for the district court to conduct an evidentiary
hearing, our approach is consistent with Carnival Cruise Lines, 499 U.S.
at 594. In that case, the Supreme Court held that we erred when we
declined to enforce a forum selection clause based in part on the fact that
some evidence showed that the plaintiff would experience difficulty
litigating in the selected forum. Id. The Supreme Court held that we
impermissibly engaged in fact finding because “the District Court [had]
made no finding regarding the physical and financial impediments to the
[plaintiffs’] pursuing their case in [the selected forum].” Id. W e therefore
follow the approach we announced in Murphy and remand to the district
court for factual findings. W e also note that here, unlike the passengers
in Carnival Cruise Lines, Petersen introduced evidence and allegations
that he “lack[ed] notice of the forum selection clause,” that the clause
PETERSEN V . BOEING CO . 11
B
In addition, Petersen argues that the forum selection
clause should not be enforced under the first Bremen
exception because he was induced to agree to the clause only
through fraud or overreaching.5 To establish the invalidity of
a forum selection clause on the basis of fraud or
overreaching, the party resisting enforcement must “show that
‘the inclusion of that clause in the contract was the product
of fraud or coercion.’” Richards, 135 F.3d at 1297 (emphasis
in original) (quoting Scherk v. Alberto-Culver Co., 417 U.S.
519 n.14 (1974)).
Petersen has done just that. His sworn affidavit states that
the initial employment contract he signed in the United States
made no mention of a Saudi forum selection clause, but that
he was required to sign a new employment contract
containing such a clause upon his arrival in Saudi Arabia.
His new supervisor, however, did not permit him time to read
the agreement and told him that failure to sign it would result
in his being forced to return immediately to the United States
at his own expense. These specific facts, contained in an
would further Boeing/BISS’s “bad-faith motive” of “discouraging
[Petersen] from pursuing legitimate claims,” and that Petersen did not
have the option of “rejecting the contract with impunity.” Id. at 595.
5
Boeing and BISS argue that Petersen waived his Bremen-based fraud
argument because he did not raise it before the district court. W e agree
that the argument was not squarely presented to the district court.
However, the district court expressly held that Petersen could not
invalidate the forum selection clause on the basis of fraud or overreaching.
Our waiver rules do not apply where, as here, “the district court
nevertheless addressed the merits of the issue not explicitly raised by the
party.” Ahanchian v. Xenon Pictures, Inc., 624 F.3d 1253, 1260 n.8 (9th
Cir. 2010) (internal quotation marks omitted).
12 PETERSEN V . BOEING CO .
admissible affidavit, are sufficient, if true, to demonstrate that
the forum selection clause’s inclusion in the employment
agreement was obtained via fraud or overreaching by taking
undue advantage of Petersen’s vulnerable position as a
newly-arrived employee in Saudi Arabia. Cf. Murphy,
362 F.3d at 1141 (finding no overreaching or fraud where
employee voluntarily renewed his employment agreement for
four consecutive years under no undue influence aside from
the need to find a new job if he refused to sign). Therefore,
the district court abused its discretion by dismissing on the
basis of the forum selection clause without at the very least
holding an evidentiary hearing as to whether Petersen was
induced to assent to the forum selection clause through fraud
or overreaching.6
CONCLUSION
We hold that the evidence submitted and the allegations
made by Petersen were more than sufficient to create a triable
issue of fact as to whether the forum selection clause at issue
here is enforceable under Bremen. The district court
therefore abused its discretion by granting BISS’s motion to
dismiss without convening an evidentiary hearing. It also
6
In their briefs, Boeing and BISS take the position that Petersen was
presented with a full copy of the employment agreement he signed in
Saudi Arabia prior to arriving there. W e recognize that some evidence in
the record might be consistent with this account. Because Petersen’s
sworn testimony is to the contrary, however, he created a triable issue of
fact as to any potential fraud. The question cannot, therefore, be resolved
against him absent an evidentiary hearing. See Murphy, 362 F.3d at 1143(“It does not matter at the Rule 12(b)(3) motion stage that there are
contrary facts submitted by the moving party. Absent an evidentiary
hearing to resolve the factual contest, the Rule 12(b)(3) motion should
have been denied.”).
PETERSEN V . BOEING CO . 13
abused its discretion in denying Petersen leave to amend his
pleadings. On remand, if the district court still determines
after an evidentiary hearing that the forum selection clause is
enforceable, it should separately analyze whether the clause
also requires dismissal of Petersen’s non-contract claims.7
We do not reach the alternate, fact-intensive bases for
affirming urged by Boeing and BISS on appeal and leave
those to be resolved in due course by the district court.8 See
Stormans, Inc. v. Selecky, 586 F.3d 1109, 1141 (9th Cir.
2009).
REVERSED and REMANDED; Motion to Strike
GRANTED.
7
The district court did not mention this issue when it dismissed all of
Petersen’s claims on the basis of the forum selection clause. It is true that
in some circumstances, a contractual forum selection clause may also
apply to related non-contract claims. See Manetti-Farrow, 858 F.2d at
514. This is so, however, only when “resolution of the [tort] claims
relates to interpretation of the contract.” Id.8
W e do, however, grant Boeing’s and BISS’s joint motion to strike the
portions of Petersen’s reply brief that include new evidence or allege new
facts not in the record before the district court. W e have not relied on any
of those additional facts or evidence, although we observe that it may be
prudent for Petersen to submit this additional evidence and allege these
additional facts on remand.