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City of Albany v. Ch2m Hill, Inc.

United States District Court, D. Oregon, Eugene Division

March 30, 2018

CITY OF ALBANY, Plaintiff,
CH2M HILL, INC., Defendants.


          Aim Aiken United States District Judge.

         Plaintiff City of Albany brought suit against defendant CH2M Hill, Inc. ("CH2M") in Linn County Circuit Court alleging claims for breach of contract, professional negligence, attorney fees, and reckless misrepresentation. Defendant removed this case to federal court on the basis of diversity jurisdiction, (doc. 1) Plaintiff now seeks remand of the case back to state court based on the exclusive language of the venue selection clause in the agreements between the parties. For the reasons set forth below, plaintiff's Motion to Remand (doc. 5) is GRANTED.


         Plaintiff initially filed this lawsuit in the Circuit Court of the State of Oregon, Linn County. The complaint alleges claims for breach of contract and professional negligence, attorney fees, and reckless misrepresentation against defendant.

         Plaintiff contracted defendant's professional engineering services to design and oversee the construction of two infrastructure projects for a new wastewater treatment plant and a 30-acre wetland. The first agreement between the parties was signed on May 15, 2005, whereby plaintiff engaged defendant's services related to modifications to Albany's wastewater treatment system. The second agreement was signed on October 12, 2006, whereby plaintiff engaged defendant's engineering services related to the design of a constructed wetland that would reduce the temperature of effluent from the treatment facility before its discharge into the Willamette River. Both agreements contained identical venue selection clauses providing that: "The laws of Oregon shall govern the validity of this agreement, its interpretation and performance, and other claims related to it. Venue for litigation shall be in Linn County, Oregon."[1]

         Defendant removed the action to federal court in the District of Oregon, Eugene Division, asserting diversity jurisdiction. Plaintiff is an Oregon municipal corporation located within Linn County, Oregon. Defendant is a Florida corporation, with its principal place of business in Colorado. Plaintiff filed the present motion to remand arguing the venue selection clause in the two agreements mandates Oregon Circuit Court in Linn County as proper venue for their dispute. Defendant argues that the venue selection clause in their agreements can be considered either permissive or mandatory, but under either interpretation, the clause allows for this suit to remain before this Court.


         Federal law is applied in interpreting a venue selection clause in federal court. Doe 1 v. AOL LLC, 552 F.3d 1077, 1081 (9th Cir. 2009). Forum selection clauses in commercial contexts are prima facie valid. The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972); Pelleport Inv'rs. Inc. v. Budco Quality Theaters, Inc., 741 F.2d 273, 279 (9th Cir. 1984). Forum selection clauses are not set aside "unless the enforcement is shown by the resisting party to be unreasonable under the circumstances." Docksider, Ltd. v. Sea Tech., Ltd., 875 F.2d 762, 763 (9th Cir, 1989). "To establish unreasonableness of a forum selection clause the party resisting enforcement of the clause has a heavy burden of showing that tiial in the chosen forum would be so difficult and inconvenient that the party effectively would be denied a meaningful day in court." Pelleport, 741 F.2d at 281 (citing Bremen, 407 U.S. at 18).

         The "plain language of the contract should be considered first." Doe 1, 552 F.3d at 1081 (quoting Klamath Water Users Protective Ass'n v. Patterson, 204 F.3d 1206, 1210 (9th Cir. 1999)). In considering the plain language of the contract, "common or normal meaning of language will be given to the words of a contract unless circumstances show that in a particular case a special meaning should be attached to it." Hunt Wesson Foods, Inc. v. Supreme Oil Co., 817 F.2d 75, 77 (9th Cir. 1987)).


         Plaintiff asserts that because the language of the venue selection clause lists Linn County, Oregon as venue for litigation and no federal district court sits in in Linn County, the Circuit Court in Linn County is the exclusive venue for litigation. Thus, plaintiff argues that the language of the clause is mandatory and must be enforced. Defendant avers that the language of the clause is ambiguous and thus it must be construed against plaintiff, the drafter of the contract. Defendant also argues that the ambiguous language of the clause means that it can be construed as both permissive and mandatory, but in either case, it cannot preclude venue in federal court.

         I must first determine whether the clause is mandatory or merely permissive. The Ninth Circuit directs that a venue selection clause must contain mandatory and exclusive language in order to require litigation of disputes in a particular court, See Hunt Wesson Foods, 817 F.2d at 78. "To be mandatory, a clause must contain language that clearly designates a forum as the exclusive one." N. Cat Dist, Counsel of Laborers v. Pittsbitrgh-Des Moines Steel Co., 69 F.3d 1034, 1037 (9th Cir. 1995). However, where venue is not specified with exclusivity, the clause is permissive. Hunt Wesson Foods, 817 F.2d at 77.

         Where venue is defined with specific language, the clause is mandatory. Docksider, 875 F.2d at 764. Docksider involved a license to distribute equipment manufactured by the defendant which included a forum selection clause stating that "venue . . . shall be deemed to be in Gloucester County, Virginia." 875 F.2d at 763 (emphasis added). The court there found the clause mandatory based on this additional language as "indicating the parties' intent to make jurisdiction exclusive." Id. at 764. Thus, the court noted that the defendant had not only consented to the jurisdiction of state courts of Virginia but also further agreed to the Gloucester County, Virginia as the venue for litigation. Id.

         Docksider can be contrasted with the Ninth Circuit's decision in Pittsburgh-Des Moines Steel Co. There, the Circuit panel vacated a district court's remand order in an action to confirm an arbitration award filed in California state court, finding that the forum selection clause at issue was permissive. Pittsburgh-Des Moines Steel Co. 69 F, 3d at 1036, 1038. The language in the forum selection clause in that case read that the arbitration decision "... shall be enforceable .. . in the Superior Court of the City and County of San Francisco, State of California." Id. at 1036. The Ninth Circuit panel opined that "shall be enforceable" was not enough to make the clause mandatory absent additional language, such as, "venue . . . shall be deemed to be in" or "cases may only be litigated only in" a particular venue. Id. at 1037. Since there was no language "clearly requiring exclusive jurisdiction, " the clause was permissive, not mandatory, Id. See also Hunt Wesson Foods, 817 F.2d at 77 ...

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