Verdugo v. Alliantgroup, L.P.

Filed 5/28/15

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

RACHEL VERDUGO,

Plaintiff and Appellant, G049139

v. (Super. Ct. No. 30-2013-00643612)

ALLIANTGROUP, L.P., OPINION

Defendant and Respondent.

Appeal from an order of the Superior Court of Orange County, Gail Andrea
Andler, Judge. Reversed.
Law Office of James M. Gilbert, James M. Gilbert; Law Offices of Darren
D. Daniels and Darren D. Daniels for Plaintiff and Appellant.
Littler Mendelson, Julie A. Dunne and Khatereh S. Fahimi for Defendant
and Respondent.
* * *
 Plaintiff and appellant Rachel Verdugo appeals from an order granting a
motion to stay this wage and hour lawsuit based on a forum selection clause in her
employment agreement with defendant and respondent Alliantgroup, L.P. (Alliantgroup).
The clause designates Harris County, Texas, as the exclusive forum for any dispute
arising out of Verdugo’s employment, and also includes a provision designating Texas
law as governing all disputes. Verdugo contends the trial court erred because enforcing
the forum selection clause and related choice-of-law clause violates California’s public
policy on employee compensation. We agree and reverse the trial court’s order.
Although a party opposing enforcement of a forum selection clause
ordinarily bears the burden to show enforcement would be unreasonable or unfair, the
burden is reversed when the underlying claims are based on statutory rights the
Legislature has declared to be unwaivable. In that instance, the party seeking to enforce
the forum selection clause has the burden to show enforcement would not diminish
unwaivable California statutory rights, otherwise a forum selection clause could be used
to force a plaintiff to litigate in another forum that may not apply California law.
Here, Verdugo bases all her claims on Labor Code provisions that not only
establish when and how employers must pay overtime and other forms of compensation,
provide meal and rest breaks, and provide accurate wage statements to all California
employees, but also establish specific remedies for an employer’s violation of these
provisions, including recovery of unpaid wages, interest, civil penalties, and attorney
fees. To protect these important rights and remedies, the Labor Code declares they
cannot be waived by agreement.
Alliantgroup failed to show enforcing the forum selection clause and
related choice-of-law clause in Verdugo’s employment agreement would not diminish her
statutory rights by requiring her to litigate her claims in Texas under Texas law.
Alliantgroup contends Verdugo’s statutory rights would not be affected by enforcing the
forum selection clause because a Texas court “most likely” would reject the parties’

2
choice-of-law clause and apply California law. Alliantgroup’s supposition about what a
Texas court is likely to do is not sufficient to meet its burden because Alliantgroup’s
arguments on appeal suggest it will argue against applying California law if this case is
litigated in Texas, and Alliantgroup has not cited any authority that convinces us a Texas
court necessarily will apply California law.
The few cases Alliantgroup cites do not address how a Texas court will
view a choice-of-law clause in the context of a wage and hour dispute between a Texas
employer and a California employee, and Alliantgroup fails to address the competing
policies of these two states. Alliantgroup could have eliminated any doubt about which
law would apply to Verdugo’s claims by stipulating to have the Texas courts apply
California law, but failed to do so. Instead, Alliantgroup carefully phrased its arguments
in terms of vague possibilities while simultaneously seeking to minimize the significance
of the California statutory rights on which Verdugo bases her claims. Alliantgroup
therefore has not shown Verdugo’s unwaivable statutory rights will not be diminished.

I

FACTS AND PROCEDURAL HISTORY

Alliantgroup provides specialty tax consulting services to businesses
throughout the United States. Its corporate headquarters are located in Harris County,
Texas, and it has regional offices in 11 states, including California. In October 2007,
Alliantgroup hired Verdugo to work as an “Associate Director” at its Irvine office in
California. Verdugo performed inside sales work and provided clerical support for the
sales staff. She had only minimal contact with the corporate office in Texas.
When Alliantgroup hired her, Verdugo signed an “Employment
Agreement” that included a combined forum selection and choice-of-law clause stating,
“Choice of Law/Jurisdiction/Venue: This Agreement shall be governed in all respects,
including, but not limited to, validity, interpretation, effect and performance by the laws

3
of the State of Texas. The parties agree that proper subject matter and personal
jurisdiction shall be had solely in [the] State of Texas. The sole venue for disputes
arising hereunder shall be in Harris County, Texas.” (Italics, underscoring, and bold
typeface omitted.)
In April 2013, Verdugo brought a class action lawsuit alleging the
following claims on behalf of all similarly situated past and present employees of
Alliantgroup: (1) unpaid overtime wages under Labor Code section 1194;1 (2) failure to
provide accurate itemized wage statements under section 226; (3) failure to provide meal
breaks under section 226.7; (4) failure to pay all wages due at time of termination under
section 203; (5) failure to pay commissions under sections 200 to 204; (6) failure to pay
vacation pay under section 227.3; (7) unfair and unlawful business practices under
Business and Professions Code section 17200 et seq.; and (8) civil penalties under the
Labor Code Private Attorneys General Act of 2004 (§ 2698 et seq.; PAGA).
Alliantgroup moved to dismiss or stay the action based on the forum
selection clause in the Employment Agreement. The trial court granted the motion and
stayed this action based on its finding the forum selection clause was enforceable.
Verdugo timely appealed.

II

DISCUSSION

A. Governing Legal Principles on Forum Selection Clauses
“California favors contractual forum selection clauses so long as they are
entered into freely and voluntarily, and their enforcement would not be unreasonable.
[Citation.] This favorable treatment is attributed to our law’s devotion to the concept of
one’s free right to contract, and flows from the important practical effect such contractual

1 All statutory references are to the Labor Code unless otherwise stated.

4
rights have on commerce generally.” (America Online, Inc. v. Superior Court (2001)
90 Cal.App.4th 1, 11 (America Online).) Indeed, “‘[f]orum selection clauses are
important in facilitating national and international commerce, and as a general rule
should be welcomed.’ [Citation.]” (Id. at p. 12, italics omitted.)
A mandatory forum selection clause such as the one included in Verdugo’s
Employment Agreement is generally given effect unless enforcement would be
unreasonable or unfair. (Animal Film, LLC v. D.E.J. Productions, Inc. (2011)
193 Cal.App.4th 466, 471 (Animal Film); Berg v. MTC Electronics Technologies Co.
(1998) 61 Cal.App.4th 349, 358 (Berg).) “‘“Mere inconvenience or additional expense is
not the test of unreasonableness . . .”’ for a mandatory forum selection clause.
[Citation.]” (Berg, at p. 359.) A clause is reasonable if it has a logical connection with at
least one of the parties or their transaction.2 (America Online, supra, 90 Cal.App.4th at
p. 12; CQL Original Products, Inc. v. National Hockey League Players’ Assn.
(1995) 39 Cal.App.4th 1347, 1354 (CQL Products).)
Nonetheless, “California courts will refuse to defer to the selected forum if
to do so would substantially diminish the rights of California residents in a way that
violates our state’s public policy.” (America Online, supra, 90 Cal.App.4th at p. 12;
see Intershop Communications AG v. Superior Court (2002) 104 Cal.App.4th 191, 200
(Intershop Communications) [“a forum selection clause will not be enforced if to do so
would bring about a result contrary to the public policy of this state”]; CQL Products,

2 A forum selection clause is either mandatory or permissive. A clause is
mandatory if it requires the parties to litigate their disputes exclusively in the designated
forum, and it is permissive if it merely requires the parties to submit to jurisdiction in the
designated forum. A permissive forum selection clause is subject to traditional forum
non conveniens analysis to determine whether the designated forum is a suitable
alternative forum and whether the balancing of various private and public interest factors
favors retaining the action in California. These traditional forum non conveniens factors
are not considered when a mandatory forum selection clause exists. (Animal Film, supra,
193 Cal.App.4th at pp. 471-474; Berg, supra, 61 Cal.App.4th at pp. 358-359.)

5
supra, 39 Cal.App.4th at p. 1354; Hall v. Superior Court (1983) 150 Cal.App.3d 411,
416-418 (Hall).)
The party opposing enforcement of a forum selection clause ordinarily
“bears the ‘substantial’ burden of proving why it should not be enforced.” (Global
Packaging, Inc. v. Superior Court (2011) 196 Cal.App.4th 1623, 1633, original italics;
Intershop Communications, supra, 104 Cal.App.4th at p. 198.) That burden, however, is
reversed when the claims at issue are based on unwaivable rights created by California
statutes. In that situation, the party seeking to enforce the forum selection clause bears
the burden to show litigating the claims in the contractually-designated forum “will not
diminish in any way the substantive rights afforded . . . under California law.” (Wimsatt
v. Beverly Hills Weight etc. Internat., Inc. (1995) 32 Cal.App.4th 1511, 1520-1524
(Wimsatt); see America Online, supra, 90 Cal.App.4th at pp. 10-11 [party seeking
enforcement must “prove that enforcement of the forum selection clause would not result
in a significant diminution of rights”].)
Although the parties both contend we should review the trial court’s
decision to enforce the Employment Agreement’s forum selection clause under the
substantial evidence standard, we conclude abuse of discretion is the governing standard
of review. To support their contention, the parties cite Cal-State Business Products &
Services, Inc. v. Ricoh (1993) 12 Cal.App.4th 1666 (Cal-State), which applied the
substantial evidence standard based on the following explanation: “[I]n a contractual
forum non conveniens motion, the trial court must determine if there is sufficient
evidence to satisfy the requirements for invalidating a binding contract. If the trial court
finds there are facts present which satisfy these criteria, it must act in a particular way;
there is no discretion involved. The reviewing court is thus involved in determining the
quantum of evidence adduced, not the manner in which factors were applied.” (Id. at
p. 1681, original italics; see CQL Products, supra, 39 Cal.App.4th at p. 1354.)

6
 The Cal-State decision represents the minority view and has been criticized
as inconsistent with Supreme Court authority: “[G]iven existing guidance on this
question from our Supreme Court, and the more consistent line of Court of Appeal
decisions, which likewise apply the abuse of discretion standard, we disagree with
Cal-State’s conclusion that the substantial evidence standard applies instead.” (America
Online, supra, 90 Cal.App.4th at p. 9; see Smith, Valentino & Smith, Inc. v. Superior
Court (1976) 17 Cal.3d 491, 496 [“we conclude that forum selection clauses are valid and
may be given effect, in the court’s discretion and in the absence of a showing that
enforcement of such a clause would be unreasonable” (italics added)].) We join the
majority of cases and apply the abuse of discretion standard of review. (See, e.g., Trident
Labs, Inc. v. Merrill Lynch Commercial Finance Corp. (2011) 200 Cal.App.4th 147, 154
& fn. 3; Schlessinger v. Holland America (2004) 120 Cal.App.4th 552, 557; Intershop
Communications, supra, 104 Cal.App.4th at pp. 198-199; Bancomer, S.A. v. Superior
Court (1996) 44 Cal.App.4th 1450, 1457 & fn. 7.)

B. Alliantgroup Bore the Burden to Show Enforcing the Forum Selection Clause
Would Not Significantly Diminish Verdugo’s Unwaivable Statutory Rights
Verdugo contends Alliantgroup bore the burden to show that litigating her
claims in Texas would not diminish unwaivable rights the Labor Code confers on all
California employees to timely receive their proper pay, meal and rest breaks, and wage
statements. We agree.
In Wimsatt, this court first addressed which party bears the burden of proof
on a motion to enforce a mandatory forum selection clause when the claims at issue are
based on unwaivable statutory rights. The plaintiffs were franchisees who sued their
franchisor under California’s Franchise Investment Law (Corp. Code, § 31000 et seq.;
Franchise Investment Law), which the Legislature enacted to protect California
franchisees. (Wimsatt, supra, 32 Cal.App.4th at p. 1513.) The plaintiffs alleged the
defendant violated the Franchise Investment Law by making numerous

7
misrepresentations to induce them to purchase a franchise. Based on a forum selection
clause in the parties’ franchise agreement, the trial court dismissed the plaintiffs’ action.
(Wimsatt, at pp. 1514-1516.) On appeal, a panel of this court acknowledged the party
opposing enforcement of a mandatory forum selection clause ordinarily bears a heavy
burden to show enforcement would be unreasonable or unjust, but we nonetheless
concluded the burden must be reversed when unwaivable statutory rights are involved
because a forum selection clause otherwise could be used to circumvent those unwaivable
rights. (Id. at pp. 1519-1520.)
Wimsatt explained, “One of the most important protections California
offers its franchisee citizens is an antiwaiver statute which voids any provision in a
franchise agreement which waives any of the other protections afforded by the Franchise
Investment Law. [Citation.] A forum selection clause, however, carries the potential to
contravene this statute by placing litigation in a forum in which there is no guaranty that
California’s franchise laws will be applied to a franchisee’s claims. . . . If a forum
selection clause places in-state franchisees in an out-of-state forum which uses some
balancing test (or equivalent) to determine that the law of the out-of-state forum should
be used in place of California’s, then a forum selection clause in a franchise agreement
will have effectively circumvented California’s antiwaiver statute. . . . [¶] . . . [¶] Given
California’s inability to guarantee application of its Franchise Investment Law in the
contract forum, its courts must necessarily do the next best thing. In determining the
‘validity and enforceability’ of forum selection provisions in franchise agreements, its
courts must put the burden on the franchisor to show that litigation in the contract forum
will not diminish in any way the substantive rights afforded California franchisees under
California law.” (Wimsatt, supra, 32 Cal.App.4th at pp. 1520-1522, fn. omitted.)
In America Online, the Court of Appeal applied Wimsatt’s rationale for
reversing the burden of proof to claims under the Consumers Legal Remedies Act
(Civ. Code, § 1750 et seq.; CLRA) because the CLRA included an antiwaiver provision.

8
There, the plaintiffs brought a class action alleging their Internet provider violated the
CLRA by charging unlawful account fees. The defendant moved to stay or dismiss the
action based on a mandatory forum selection clause in the parties’ contract, but the trial
court denied the motion because the defendant failed to show enforcement would not
diminish the plaintiffs’ rights under the CLRA. (America Online, supra, 90 Cal.App.4th
at pp. 4-7.) The Court of Appeal affirmed because “the CLRA claim pleaded by [the
plaintiffs], like the [Franchise Investment Law] claims asserted in Wimsatt, mandate[d]
departure from the general rule which normally places the burden of proving unfairness
or unreasonableness of the forum selection clause on the party opposed to its
enforcement.” (America Online, at p. 11.)
The America Online court explained both the Franchise Investment Law
and the CLRA share the common purpose of protecting California residents from unfair
or deceptive business practices, and include a provision invalidating any waiver of the
protections those laws provide. (America Online, supra, 90 Cal.App.4th at p. 11.)
Accordingly, to prevent California consumers from potentially losing the CLRA’s
unwaivable rights, the America Online court concluded the burden rests on the defendant
“to prove that enforcement of the forum selection clause would not result in a significant
diminution of rights to California consumers.” (America Online, at p. 10.)
Here, all of Verdugo’s claims are based on her statutory rights under the
Labor Code. She alleges her first six causes of action directly under the Labor Code,
seeking unpaid wages, statutory penalties, interest, and attorneys fees based on
Alliantgroup’s failure to provide overtime compensation, accurate wage statements, meal
breaks, outstanding wages upon termination, earned commissions, and vacation pay.
(§§ 200-204, 226, 226.7, 227.3, 1194.) Verdugo’s seventh and eighth causes of action
seek restitution under Business and Professions Code section 17200 et seq. and civil
penalties under the PAGA based on the same Labor Code violations alleged in the first
six causes of action.

9
 The California Legislature declared these rights cannot “in any way be
contravened or set aside by a private agreement, whether written, oral, or implied.”
(§ 219, subd. (a), italics added; see § 1194, subd. (a) [employee has right to bring civil
action for unpaid minimum wage and overtime compensation “[n]otwithstanding any
agreement to work for a lesser wage”].) California courts repeatedly have recognized
sections 219 and 1194 make the Labor Code provisions on which Verdugo bases her
claims unwaivable, and also make any contract purporting to waive those rights illegal
and unenforceable. (See, e. g., Schachter v. Citigroup, Inc. (2009) 47 Cal.4th 610, 619
(Schachter) [“‘agreement[s] prospectively waiving an employee’s rights under sections
201 [and 202] to receive all his or her earned but deferred or unpaid wages . . . constitute
. . . waivers which section 219 renders illegal and unenforceable’” (italics omitted)];
Gentry v. Superior Court (2007) 42 Cal.4th 443, 455 & fn. 3 (Gentry) [“By its terms, the
rights to the legal minimum wage and legal overtime compensation conferred by
[section 1194] are unwaivable”], abrogated on other issue in Iskanian v. CLS
Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 359 (Iskanian); Hoover v.
American Income Life Ins. Co. (2012) 206 Cal.App.4th 1193, 1208 (Hoover) [“the rights
accorded by sections 203, 1194, and 2802 may not be subject to negotiation or waiver”];
see also Iskanian, at p. 383 [“employee’s right to bring a PAGA action is unwaivable”].)
Like the clauses at issue in Wimsatt and America Online, the Employment
Agreement’s forum selection clause has the potential to contravene an antiwaiver statute
designed to protect California residents from business practices that do not meet Labor
Code standards. If enforced, the forum selection clause would require Verdugo to litigate
her Labor Code wage claims in Texas, where the Employment Agreement’s choice-of-
law clause would require the court to apply Texas law unless a Texas court decides not to
enforce the choice-of-law clause. Accordingly, to prevent the forum selection clause
from operating as a waiver of Verdugo’s unwaivable Labor Code rights, Wimsatt and

10
America Online place the burden on Alliantgroup to show enforcing the forum selection
clause will not diminish Verdugo’s substantive rights in any way.
Alliantgroup contends Wimsatt and America Online do not apply here
because those cases did not involve an employment agreement or Labor Code claims.
The specific claims involved in those cases, however, are irrelevant to our analysis. The
decisions in Wimsatt and America Online were based on statutes the Legislature enacted
and specifically made unwaivable to protect California residents. (America Online,
supra, 90 Cal.App.4th at pp. 10-11; Wimsatt, supra, 32 Cal.App.4th at pp. 1520-1522.)
Verdugo’s claims also are based on statutory rights the Legislature has declared
unwaivable, and therefore the analysis of Wimsatt and America Online applies with equal
force here.
Alliantgroup points out the antiwaiver provisions of the Franchise
Investment Law and the CLRA specifically state any “waiver” or attempt to “waive” the
protections of those laws is “void” (Corp. Code, § 31512; Civ. Code, § 1751), but
sections 219 and 1194 do not expressly prohibit a “waiver” or declare any kind of
agreement “void” (§§ 219, subd. (a), 1194, subd. (a)). According to Alliantgroup, the
Labor Code rights on which Verdugo bases her claims do not rise to the level of the
Franchise Investment Law and CLRA rights at issue in Wimsatt and America Online
because the Labor Code rights were declared unwaivable by case authority and common
law, not statute. We do not find this argument persuasive. Section 219 declares the
Labor Code provisions on which Verdugo bases her claims cannot “in any way be
contravened or set aside by private agreement” (§ 219, subd. (a)), and case law uniformly
recognizes these statutory provisions make the rights unwaivable. (See, e.g., Schachter,
supra, 47 Cal.4th at p. 619; Gentry, supra, 42 Cal.4th at p. 455; Hoover, supra,
206 Cal.App.4th at p. 1208.) Moreover, whether the Labor Code provisions include the
words “waiver” or “void” is irrelevant. We must look to the legal effect of these statutes.
(See America Online, supra, 90 Cal.App.4th at pp. 10-11; Wimsatt, supra,

11
32 Cal.App.4th at pp. 1520-1522.) In doing so, it is apparent Sections 219 and 1194 have
the same legal effect as the antiwaiver provisions in the Franchise Investment Law and
the CLRA.
Alliantgroup also contends Wimsatt and America Online do not apply
because Verdugo did not expressly agree to waive her rights under the Labor Code; she
merely agreed to litigate her claims in Texas. Again, Alliantgroup misses the point.
Wimsatt and America Online also involved contractual provisions that designated an
exclusive forum for litigation without an express waiver of the rights under the Franchise
Investment Law or the CLRA. Those courts nonetheless found the burden of proof rested
on the party seeking to enforce the forum selection clause because the clause operated as
a waiver of California statutory rights if the court in the designated forum did not apply
California law and the law in the forum did not provide equivalent rights. (America
Online, supra, 90 Cal.App.4th at p. 5 [“Enforcement of the contractual forum selection
and choice of law clauses would be the functional equivalent of a contractual waiver of
the consumer protections under the CLRA” (italics added)]; Wimsatt, supra,
32 Cal.App.4th at p. 1522 [forum selection clause would be “effective equivalent” of a
waiver].) Here, the forum selection clause has the potential to operate as a waiver, and
therefore Alliantgroup bears the burden to show it does not.
According to Alliantgroup, Intershop Communications supports its
contention the rationale of Wimsatt and America Online does not apply to Labor Code
claims. Alliantgroup misinterprets that case. Intershop Communications involved an
employee’s claim against his former employer for breaching a stock options exchange
agreement that included a forum selection clause designating Germany as the exclusive
forum for any litigation relating to the agreement. (Intershop Communications, supra,
104 Cal.App.4th at p. 195.) The employee argued section 219 precluded the employer
from enforcing the forum selection clause because the stock shares at issue were
essentially unpaid wages. The Intershop Communications court rejected that contention

12
because the employee did not allege any claims under the Labor Code and failed to
explain how the stock options exchange agreement potentially violated any of the
unwaivable statutory provisions identified in section 219. (Intershop Communications, at
pp. 200-201.) Here, all of Verdugo’s claims are based on statutory provisions
section 219 declares unwaivable, and therefore Intershop Communications does not
apply.3
Finally, Alliantgroup contends Olinick v. BMG Entertainment (2006)
138 Cal.App.4th 1286 (Olinick), shows a forum selection clause may be applied to
unwaivable statutory claims arising out of the employer-employee relationship. In
Olinick, a corporate executive and his attorney negotiated an employment contract with
his employer that included a forum selection clause. The executive later sought to avoid
the clause when his employment was terminated and he sued for unlawful discrimination
under California’s Fair Employment and Housing Act (Gov. Code, § 12900 et seq.;
FEHA). (Olinick, supra, 138 Cal.App.4th at pp. 1290-1292.) The Court of Appeal
upheld the trial court’s decision to enforce the forum selection clause because the court
found the designated forum provided the executive an adequate remedy for his
discrimination claims, and therefore the forum selection clause was not contrary to
California’s public policy. (Id. at pp. 1301-1304.) In reaching this conclusion, the
Olinick court emphasized the FEHA lacked an antiwaiver provision, but then

3 Alliantgroup also relies on Galen v. Redfin Corp. (2014) 227 Cal.App.4th
1525, which enforced an arbitration agreement requiring an employee to arbitrate his
Labor Code wage and hour claims in another state. Alliantgroup improperly relies on
Galen because the Supreme Court granted review in that case 12 days before
Alliantgroup filed its brief. (Galen v. Redfin Corp. (2014) 227 Cal.App.4th 1525, review
granted Nov. 12, 2014, S220936.) Moreover, Galen does not support Alliantgroup’s
contention because it does not address Wimsatt, America Online, or determine which
party bears the burden of proof on a motion to enforce a mandatory forum selection
clause.

13
paradoxically noted case law has recognized an employee’s FEHA rights are unwaivable.
(Olinick, at pp. 1304-1305.)
Olinick is distinguishable because it relies on the absence of an express
antiwaiver provision in the FEHA. In contrast, the Labor Code claims we address are
governed by an express antiwaiver provision. More importantly, Olinick does not affect
our analysis because it does not address the issue of who carries the burden of proof in
determining whether to enforce a mandatory forum selection clause. Although the
decision acknowledges the party opposing enforcement generally bears the burden of
proof to show enforcement would be unfair or unreasonable, the decision does not
discuss or cite Wimsatt or America Online. (Olinick, supra, 138 Cal.App.4th at p. 1294.)
“A court’s opinion is not authority for a proposition not considered in it.” (People v.
Anderson (2015) 232 Cal.App.4th 1259, 1275 (Anderson).)

C. Alliantgroup Failed to Meet Its Burden to Show Enforcing the Forum Selection
Clause Would Not Diminish Verdugo’s Statutory Rights
Verdugo contends the forum selection clause cannot be enforced because
Alliantgroup failed to show enforcement would not diminish her unwaivable statutory
rights. Thus, according to Verdugo, the forum selection clause is unenforceable as
against public policy because it purports to waive the unwaivable wage and hour
protections the Labor Code provides to all California employees. We agree.
In Hall, this court first addressed whether a forum selection clause was
unenforceable as against public policy. The plaintiffs were two California investors who
purchased shares in a corporation and later sued the corporation for violating California’s
Corporate Securities Law of 1968 (Corp. Code, § 25000 et seq.; Securities Law). The
corporation moved to stay or dismiss the action based on a forum selection clause and a
choice-of-law clause designating Nevada and its laws. The trial court granted the motion,
but the Court of Appeal reversed because enforcing the clauses would violate the public
policy embodied in the Securities Law. (Hall, supra, 150 Cal.App.3d at pp. 413-415.)

14
 The Hall court began its analysis by noting the validity of the forum
selection clause was “inextricably bound up” in the validity of the related choice-of-law
clause because both affected the ability of California investors to invoke the Securities
Law’s protections (Hall, supra, 150 Cal.App.3d at p. 416), and neither clause could be
enforced if doing so “‘would violate a strong California public policy . . . [or] “result in
an evasion of . . . a statute of the forum protecting its citizens”’” (id. at p. 417). The Hall
court determined the Legislature articulated a strong public policy aimed at protecting the
public from fraud and deception in securities transactions by regulating those transactions
and providing statutory remedies under the Securities Law. The “cornerstone” of these
regulations is an antiwaiver provision that voids “‘[a]ny condition, stipulation or
provision purporting to bind any person acquiring any security to waive compliance with
any provision of this law.’” (Hall, at p. 417.)
Noting no published decision had addressed the Securities Law’s
antiwaiver provision, the Hall court relied on a United States Supreme Court decision
that held a similar antiwaiver provision in a federal securities law prevented enforcement
of an arbitration agreement. (Hall, supra, 150 Cal.App.3d at p. 418 citing Wilko v. Swan
(1953) 346 U.S. 427, 434-435.)4 The Supreme Court concluded enforcing the arbitration
agreement would result in a waiver of the unwaivable protections the federal securities
law guaranteed to all investors because the nuanced nature of the securities law likely
would lead an arbitrator to misinterpret the law and the arbitrator’s decision would not be
subject to review. (Hall, at p. 418, citing Wilko at pp. 435-437.)
By analogy, the Hall court concluded the choice-of-law clause requiring the
California plaintiffs to litigate their Securities Law claims under Nevada law violated the

4 The United States Supreme Court later reversed its Wilko decision in
Rodriguez de Quijas v. Shearson/American Express, Inc. (1989) 490 U.S. 477, based on
the Federal Arbitration Act’s (9 U.S.C. § 1 et seq.) public policy favoring arbitration as a
quick and cost effective means of dispute resolution.

15
Securities Law’s antiwaiver provision and thereby rendered the related forum selection
clause unenforceable: “Similarly, we believe the right of a buyer of securities in
California to have California law and its concomitant nuances apply to any future dispute
arising out of the transaction is a ‘provision’ within the meaning of [the antiwaiver
statute] which cannot be waived or evaded by stipulation of the parties to a securities
transaction.” (Hall, supra, 150 Cal.App.3d at p. 418.) In reaching this conclusion, the
Hall court did not conduct a comparative analysis of California’s and Nevada’s laws
because any contractual provision requiring application of another state’s laws
necessarily violated the Securities Law’s antiwaiver provision. (Hall, at pp. 418-419.)
In America Online, the Court of Appeal applied Hall and affirmed the trial
court’s decision refusing to enforce a forum selection clause and related choice-of-law
clause because enforcement would violate the California public policy embodied in the
CLRA and its antiwaiver provision. (America Online, supra, 90 Cal.App.4th at p. 13.)
The America Online court explained, “The CLRA parallels the Corporate Securities Law
of 1968, at issue in Hall, insofar as the [CLRA] is a legislative embodiment of a desire to
protect California consumers and furthers a strong public policy of this state. . . . [¶] . . .
Therefore, by parity of reasoning, enforcement of AOL’s forum selection clause, which is
also accompanied by a choice of law provision favoring Virginia, would necessitate a
waiver of the statutory remedies of the CLRA, in violation of that law’s antiwaiver
provision [citation] and California public policy.” (America Online, at pp. 14-15.)
Like the Hall court, the America Online court explained it was unnecessary
to conduct a comparative analysis of California and Virginia law to determine whether
they provided consumers materially different protections because enforcing the clauses
would “inevitab[ly] . . . eliminate” the specific protections the California Legislature
enacted and made unwaivable. (America Online, supra, 90 Cal.App.4th at p. 14.) The
Court of Appeal also rejected the contention the Virginia court may choose to apply
California law, explaining “it [would be] counterintuitive to believe that a Virginia court

16
would invoke California law to resolve a contract-based consumer dispute against a
Virginia domiciliary where the parties agreed to have Virginia law applied, and where
Virginia has a statutory consumer protection law of its own.”5 (Id. at p. 14, fn. 6.)
Nonetheless, the America Online court compared California and Virginia consumer
protection laws and concluded they provided materially different protections because
Virginia law did not authorize class actions, allowed only limited injunctive relief, and
did not allow enhanced remedies for disabled and senior consumers, or punitive damages.
These material differences “reinforced” the America Online court’s conclusion that
enforcing the forum selection clause would violate the California public policy embodied
in the CLRA. (America Online, at pp. 16-18.)
Here, Verdugo also bases her claims on important statutory rights the
Legislature made unwaivable through an express antiwaiver provision. The Labor Code
provisions underlying all of Verdugo’s claims further California’s fundamental public
policy of requiring California employers to fully and promptly pay all wages due their
employees. (See Crab Addison, Inc. v. Superior Court (2008) 169 Cal.App.4th 958, 970
[“So great is the public policy protecting employees’ right to [wages and] overtime
compensation that the right is ‘unwaivable’”]; Phillips v. Gemini Moving Specialists
(1998) 63 Cal.App.4th 563, 574 [“‘Public policy has long favored the “full and prompt
payment of wages due an employee.” [Citation.] “[W]ages are not ordinary debts . . . .
[B]ecause of the economic position of the average worker and, in particular, his

5 The choice-of-law clause in America Online required Virginia law to be
applied without regard to any conflict-of-law analysis. (America Online, supra,
90 Cal.App.4th at p. 6 [“‘The laws of the Commonwealth of Virginia, excluding its
conflicts-of-law rules, govern this Agreement and your membership’” (italics added)].)
The America Online court, however, did not rely on the italicized portion of the
choice-of-law clause to support its analysis. To the contrary, it treated the clause as an
ordinary choice-of-law clause, noting the clause “favor[ed]” Virginia without ever citing
the italicized language or stating the clause mandated application of Virginia law despite
any conflict-of-law analysis. (Id. at p. 14, fn. 6 & p. 15.)

17
dependence on wages for the necessities of life for himself and his family, it is essential
to the public welfare that he receive his pay” promptly’”], abrogated on a different issue
by Miklosy v. Regents of University of California (2008) 44 Cal.4th 876, 901.) Indeed,
not only does the Labor Code provide specific standards governing when and how
employers must pay wages and provide meal and rest breaks to their employees (§§ 200-
244, 1194), the Labor Code also provides specific remedies designed to encourage
employees to bring civil actions to enforce those rights, including statutory penalties,
interest, and attorney fees in addition to all unpaid compensation (§§ 203, 218.5, 218.6,
226, 226.3, 1194). Accordingly, Hall and America Online prevent Alliantgroup from
using a forum selection and choice-of-law clause to circumvent Verdugo’s unwaivable
statutory rights.
Although we conclude Hall and America Online apply to prevent
Alliantgroup from enforcing its forum selection and choice-of-law clause, we depart from
those cases on the need for conducting a comparison between California’s laws and those
of the foreign jurisdiction. Simply stated, a comparison is necessary to determine
whether enforcing a forum selection and choice-of-law clause would violate California’s
public policy embodied in its governing statutes. As explained above, a defendant
seeking to enforce a mandatory forum selection clause bears the burden to show
enforcement will not in any way diminish the plaintiff’s unwaivable statutory rights. By
definition, this showing requires the defendant to compare the plaintiff’s rights if the
clause is not enforced and the plaintiff’s rights if the clause is enforced. Indeed, a
defendant can meet its burden only by showing the foreign forum provides the same or
greater rights than California, or the foreign forum will apply California law on the
claims at issue. (Cf., 1-800-Got Junk? LLC v. Superior Court (2010) 189 Cal.App.4th
500, 512 [choice-of-law provision designating Washington law did not violate public
policy embodied in California Franchise Relations Act (Bus. & Prof. Code, § 20000
et seq.) and its antiwaiver provision because Washington law provided franchisees

18
greater protections against termination by prohibiting same acts as California plus
additional acts].) Verdugo has not suggested any other way Alliantgroup could meet this
burden.
Hall was decided 12 years before Wimsatt first recognized an exception to
the ordinary burden of proof on a motion to enforce a mandatory forum selection clause
(see Wimsatt, supra, 32 Cal.App.4th at p. 1511; Hall, supra, 150 Cal.App.3d at p. 411),
and therefore Hall did not consider whether placing the burden on the defendant to show
the plaintiff’s rights will not be diminished would require a comparison of the two
forums’ laws. (See Anderson, supra, 232 Cal.App.4th at p. 1275 [opinion is not authority
for proposition it did not consider].) America Online was decided after Wimsatt and
extended its exception to claims under the CLRA, but America Online did not address
how a defendant could show enforcing a forum selection clause would not diminish a
plaintiff’s unwaivable statutory rights. Moreover, although America Online stated no
comparative analysis of the two forums’ laws was required, it nonetheless conducted an
extensive comparison of California and Virginia law to “reinforce[]” its conclusion
enforcing the forum selection clause would diminish the plaintiffs’ statutory rights.
(America Online, supra, 90 Cal.App.4th at pp. 15-18.) Accordingly, we conclude
Alliantgroup may rely on a comparison of California and Texas law to meet its burden to
show enforcing the Employment Agreement’s forum selection clause will not in any way
diminish Verdugo’s unwaivable Labor Code rights.
Toward that end, Alliantgroup contends enforcing the forum selection
clause will not diminish Verdugo’s statutory rights because, “[u]nder Texas’[s] choice of
law doctrine, a Texas court would most likely apply California law to Verdugo’s claims
notwithstanding the [Employment Agreement’s] choice of law provision.” (Italics
added.) According to Alliantgroup, enforcing the forum selection clause would not
violate the Labor Code’s antiwaiver provisions if Texas’s choice-of-law doctrine required
the Texas court to apply California law. This conclusory speculation, however, does not

19
satisfy Alliantgroup’s burden of proof. As explained above, Alliantgroup must show
enforcing the forum selection clause “will not diminish in any way” Verdugo’s statutory
rights. (Wimsatt, supra, 32 Cal.App.4th at pp. 1522, italics added; see America Online,
supra, 90 Cal.App.4th at pp. 10-11.) Although Alliantgroup postulates about what a
Texas court is “likely” to do, it carefully avoids making any specific and definitive
argument that Texas courts either have applied or will apply California wage and hour
laws despite a choice-of-law clause designating Texas law.
Alliantgroup could have eliminated any uncertainty on which law a Texas
court would apply by stipulating to have a Texas court apply California law in deciding
Verdugo’s claims, but Alliantgroup failed to do so. Instead, Alliantgroup has carefully
preserved its ability to argue to a Texas court that it should apply Texas law, and
Alliantgroup has hinted at its intention to do so by seeking to downplay the significance
of the statutory rights Verdugo seeks to enforce through this action. As explained above,
Alliantgroup has argued the Labor Code provisions on which Verdugo bases her claims
are not as significant as the Securities Law and CLRA provisions at issue in Wimsatt and
America Online, and therefore are not entitled to the same protections. Nothing prevents
Alliantgroup from making that same argument in Texas.
This court confronted a similar situation in Hall. There, the defendant
argued the possibility a Nevada court would apply California law rendered the forum
selection clause enforceable, but we rejected that argument because the defendant had
previously argued Nevada law should be applied and the defendant declined the
opportunity to eliminate any doubt by refusing to stipulate that California law applied.
We also noted Nevada law included an antiwaiver provision comparable to California’s
that would have rendered any stipulation by the parties to apply California law
unenforceable in a Nevada court. (Hall, supra, 150 Cal.App.3d at pp. 418-419.)
Although a stipulation to apply California law may have been ineffective because of
Nevada’s antiwaiver provision, that is not the case here. Texas law does not include an

20
antiwaiver provision that would prevent the parties from preserving Verdugo’s
unwaivable Labor Code rights by stipulating to have a Texas court apply California law.
Accordingly, Alliantgroup’s failure to stipulate that California law applies, coupled with
its efforts to minimize the significance of the public policy underlying Verdugo’s Labor
Code rights, presents an even stronger case for rejecting Alliantgroup’s contention a
Texas court most likely would apply California law.
To support its contention a Texas court “would most likely” reject the
parties’ choice-of-law clause and apply California law, Alliantgroup cites a Texas
Supreme Court case establishing a three-part test for determining whether to enforce a
choice-of-law clause. (See DeSantis v. Wackenhut Corp. (Tex. 1990) 793 S.W.2d 670,
677-678 (DeSantis).) That test examines and compares the significance of each state’s
relationship to the parties and their transaction, each state’s interest in having its laws
applied to the parties’ dispute, and the impact applying one state’s laws would have on
any fundamental policy underlying the other state’s laws.6 (Id. at p. 678.) Alliantgroup,
however, does not apply these three steps to show that enforcing the choice-of-law clause
would contravene the fundamental public policy embodied in the Labor Code’s wage and
hour provisions. Indeed, consistent with its effort to preserve the right to argue a Texas
court should enforce the choice-of-law clause and apply Texas law, Alliantgroup fails to
identify or compare Texas and California law on overtime pay, breaks, and the other
compensation issues Verdugo raises, it does not identify or compare the policies

6 More specifically, the test’s three parts ask (1) whether another state has a
more significant relationship with the parties and the transaction than the contractually
designated state such that the other state’s laws would apply in the absence of the
choice-of-law clause; (2) whether that other state has a materially greater interest in the
issues presented; and (3) whether applying the laws of the contractually-designated state
would contravene a fundamental policy of the state with the materially greater interest.
(DeSantis, supra, 793 S.W.2d at p. 678.) All three steps must be satisfied for the court to
reject the parties’ choice-of-law clause; if any step is lacking, the parties’ choice will be
enforced. (Mary Kay, Inc. v. Woolf (Tex.Ct.App. 2004) 146 S.W.3d 813, 816-817.)

21
underlying Texas’s and California’s laws or either state’s interests in having its laws
applied, and it fails to address the impact applying Texas law would have on any
fundamental California policy.
Instead, without any analysis, Alliantgroup cites two United States District
Court cases for the conclusion “Texas courts routinely hold that out-of-state law applies
despite choice-of-law provisions in employment agreements dictating the applicability of
Texas law.” (See Cardoni v. Prosperity Bank (S.D.Tex. 2014) 2014 U.S. Dist. Lexis
142027 (Cardoni); Maxxim Medical, Inc. v. Michelson (S.D.Tex. 1999) 51 F.Supp.2d
773 (Maxxim), reversed and vacated on other grounds, 182 F.3d 915 (5th Cir.1999).)
Alliantgroup fails to acknowledge both of these cases address whether a choice-of-law
clause should be enforced in the context of a challenge to a noncompete agreement.7
(Cardoni, at pp. *5-*6; Maxxim, at pp. 778-779.) The state policies these cases examine
and compare involve the restraint on trade that arises when a noncompete agreement
prevents an employee from starting a new business or taking a new job. (Cardoni, at
pp. *13-*16; Maxxim, at pp. 780-781.) The state policies underlying Verdugo’s claims
for unpaid wages and the failure to provide breaks and accurate wage statements are
much different, and Alliantgroup does not address them.8 Accordingly, Alliantgroup

7 DeSantis also involved whether a choice-of-law clause should be enforced
in the context of a challenge to a noncompete agreement. The DeSantis court refused to
enforce a choice-of-law clause designating Florida law and instead applied Texas law.
(DeSantis, supra, 793 S.W.2d at p. 681.)
8 Alliantgroup quotes Cardoni for the proposition that where the employee
performed his or her work “‘alone can be conclusive in determining what state’s law
applies.’” (See Cardoni, supra, 2014 U.S. Dist. Lexis at p. *10.) Similarly, Alliantgroup
quotes Maxxim for the proposition “the ‘factor that tips the balance to California is that
the gist of the agreement was the performance of personal services, for the most part, in
California.’” (See Maxxim, supra, 51 F.Supp.2d at p. 778.) Alliantgroup presents these
two quotes to establish that the location of the employee’s work determines whether a
Texas court will apply a choice-of-law clause. Not true. Alliantgroup fails to
acknowledge both of these quotes are from the courts’ analysis of the first step of the
DeSantis test—i.e., determining which state has the most significant contacts with the

22
failed to show a Texas court would apply California law, and therefore Alliantgroup
failed to meet its burden to show enforcing the forum selection clause would not diminish
the unwaivable statutory rights on which Verdugo bases her claims.
Alliantgroup also contends the forum selection clause may be enforced
even if a Texas court refuses to apply California law because Texas law provides
Verdugo with “adequate” remedies. That contention fails for two reasons. First, the
question is whether enforcing the forum selection clause would diminish Verdugo’s
unwaivable rights under the Labor Code, not whether Texas law provides “adequate”
remedies. (Wimsatt, supra, 32 Cal.App.4th at p. 1522; see America Online, supra,
90 Cal.App.4th at pp. 10-11.) Alliantgroup cites Olinick to support its contention
adequacy of the remedies is the proper standard. As explained above, however, Olinick
did not address Wimsatt or America Online and did not decide which party bears the
burden of proof on a motion to enforce a forum selection clause when unwaivable
statutory rights are at issue.
Second, Alliantgroup fails to show the remedies Texas law provides are
“adequate,” let alone that enforcing the forum selection clause would not diminish
Verdugo’s rights. According to Alliantgroup, Verdugo’s rights are adequately protected
because Texas law authorizes her to bring a claim for breach of contract or common
count for money had and received to recover her unpaid wages. Alliantgroup, however,
fails to cite any Texas authority granting Verdugo rights comparable to the rights the
Labor Code establishes regarding overtime compensation, wage statements, meal and rest

parties and their transaction such that its laws would apply in the absence of a
choice-of-law clause. As explained above, the test also requires an analysis to determine
which state has the materially greater interest and whether a fundamental policy of the
non-designated state would be contravened by applying the law of the
contractually-designated state. Alliantgroup fails to acknowledge Cardoni’s and
Maxxim’s analysis of these steps, nor does Alliantgroup conduct any analysis under these
latter two steps.

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breaks, pay upon termination, commissions, and vacation pay. (See, e.g., §§ 200-244,
1194.) Alliantgroup also fails to cite any Texas authority granting Verdugo comparable
remedies for the violation of these rights, including interest, statutory penalties, and
attorneys fees in addition to unpaid wages. (See, e.g., §§ 203, 218.5, 218.6, 226, 226.3,
1194.)
Finally, at oral argument, Alliantgroup argued we should affirm the trial
court’s ruling because the court stayed rather than dismissed the action, and therefore the
trial court retains jurisdiction to lift the stay and proceed with the action if the Texas court
refuses to apply California law. According to Alliantgroup, the ability to resume the
action if “something goes awry” is the reason California trial courts generally are
required to stay rather than dismiss an action when ordering parties to litigate their
dispute in a foreign jurisdiction under the forum non conveniens doctrine. Alliantgroup,
however, overstates a trial court’s authority to resume an action after staying it on forum
non conveniens grounds.
As Alliantgroup contends, a trial court that stays an action on forum non
conveniens grounds retains jurisdiction over the parties and the cause to protect the
interests of the California resident pending the foreign forum’s final decision. (Archibald
v. Cinerama Hotels (1976) 15 Cal.3d 853, 857; Ferreira v. Ferreira (1973) 9 Cal.3d 824,
841 (Ferreira).) The California court “‘can compel the foreign [party] to cooperate in
bringing about a fair and speedy hearing in the foreign forum; it can resume proceedings
if the foreign action is unreasonably delayed or fails to reach a resolution on the merits.’”
(Archibald, at p. 857; see Ferreira, at p. 841.) In short, “the staying court can resume
proceedings if the foreign forum proves unsuitable.” (Archibald, at p. 862, italics added.)
In the forum non conveniens context, a forum is unsuitable only if it lacks
jurisdiction or its statute of limitations bars the action. “It bears emphasis that ‘[i]t is
sufficient that the action can be brought, although not necessarily won, in the suitable
alternative forum.’ [Citations.] That the law is less favorable to the plaintiffs in the

24
alternative forum, or that recovery would be more difficult if not impossible, is irrelevant
to the determination whether the forum is suitable unless ‘the alternative forum provides
no remedy at all.’ [Citations.]” (Guimei v. General Electric Co. (2009) 172 Cal.App.4th
689, 696; see Stangvik v. Shiley, Inc. (1991) 54 Cal.3d 744, 764.)
Contrary to Alliantgroup’s contention, the Texas court’s decision to apply
Texas law in deciding Verdugo’s claims would not make Texas an unsuitable forum, and
would not necessarily allow the trial court to resume proceedings on Verdugo’s claims.
If the trial court sought to resume proceedings every time the foreign jurisdiction made an
adverse ruling, the unseemly conflicts among jurisdictions that the forum non conveniens
doctrine is designed to eliminate would be commonplace. (See Ferreira, supra, 9 Cal.3d
at p. 841.) Accordingly, the possibility the trial court could resume proceedings on
Verdugo’s claims fails to establish enforcing the forum selection clause would not
diminish Verdugo’s unwaivable statutory rights under the Labor Code.9

9 Because we conclude the forum selection clause is unenforceable as against
public policy, we do not address Verdugo’s numerous other challenges to the clause.

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 III
DISPOSITION

The order is reversed. Verdugo shall recover her costs on appeal.

ARONSON, J.

WE CONCUR:

O’LEARY, P. J.

IKOLA, J.

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