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.
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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
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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.
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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
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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.
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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,
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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
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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.
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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
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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
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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
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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
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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),
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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).
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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.
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