Group 1 Automotive, Inc. v. Aetna Life Insurance Co.

IN THE UNITED STATES DISTRICT COURT July 15, 2020

David J. Bradley, Clerk

FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

GROUP 1 AUTOMOTIVE, INC., AS '

PLAN ADMINISTRATOR FOR THE '

GROUP 1 AUTOMOTIVE, INC. '

COMPREHENSIVE HEALTH AND '

WELFARE BENEFIT PLAN, '

Plaintiff, '

'

v. ' CASE NO. 4:20-CV-1290

'

AETNA LIFE INSURANCE '

COMPANY, '

Defendant. '

MEMORANDUM AND ORDER

Before the Court is Defendant Aetna Life Insurance Company’s (“Aetna’s”)

Motion to Transfer Venue under 28 U.S.C. § 1404(a) [Doc. # 7] (“Motion”).

Plaintiff Group 1 Automotive, Inc., as Plan Administrator on behalf of the Group 1

Automotive, Inc. Comprehensive Health and Welfare Benefit Plan (“Group 1”) has

responded,1 Aetna replied,2 and Group 1 filed a sur-reply.3 The Motion is ripe for

1 Group 1’s Response in Opposition to Aetna’s Motion to Transfer Venue and

Alternative Motion to Consolidate [Doc. # 10] (“Response”).

2 Aetna’s Reply in Support of its Motion to Transfer Venue under 28 U.S.C. § 1404(a)

[Doc. # 17] (“Reply”).

3 Group 1’s Sur-Reply in Further Response to Aetna’s Reply in Support of its Motion

to Transfer Venue [Doc. # 21] (“Sur-Reply”).

decision. Based on the parties’ briefing, pertinent matters of record, and relevant

legal authorities, the Court denies Aetna’s Motion.

I. BACKGROUND

Group 1 operates an automotive retail business throughout the United States.4

Group 1 is a Delaware corporation with its principal place of business in Houston,

Texas.5 Group 1 administers a self-funded health benefit plan for its employees

under the Employee Retirement Income Security Act of 1974 (“ERISA”).6 Aetna

offers health insurance and third-party administration services for self-funded

benefit plans.7 Aetna is a Connecticut corporation with its principal place of

business in Hartford, Connecticut.8

Group 1 executed an Administrative Service Agreement (“ASA”) with Aetna

effective March 1, 2002 for administrative services related to Group 1’s self-funded

4 Complaint for Breach of Fiduciary Duty [Doc. # 1] (“Complaint”) ¶ 1.

5 Id. ¶ 6.

6 Id. ¶ 1.

7 Id. ¶ 11.

8 Id. ¶ 7.

employee health benefit plan.9 Aetna served as third-party administrator for Group

1’s benefit plan until the end of 2015.10

A few years after terminating their contract with Aetna, Group 1 raised

concerns that Aetna breached the ASA by granting certain benefit claims that should

have been denied.11 In 2018, Group 1 commenced an arbitration against Aetna in

Connecticut, as required by an arbitration clause in the ASA.12 Group 1 asserted

several claims in that proceeding, including a claim for breach of fiduciary duty

under ERISA.13 On March 23, 2020, the arbitrator dismissed Group 1’s claims as

time-barred.14 The arbitrator also held that Group 1’s ERISA claim was not

arbitrable and dismissed that claim without prejudice.15

9 Id. ¶ 2; see also Administrative Services Agreement [Doc. # 1-2] (“ASA”).

10 Complaint ¶ 11.

11 Id. ¶ 4.

12 Declaration of Theodore Tucci in Support of Motion to Transfer Venue [Doc. # 7-2]

(“Tucci Decl.”) ¶ 4; see also Demand for Arbitration [Doc. # 7-3].

13 Tucci Decl. ¶ 6; Group 1’s Third Amended Complaint in Arbitration [Doc. # 7-4]

¶¶ 38-48.

14 Tucci Decl. ¶ 7; March 23, 2020 AAA Ruling on Respondent’s Renewed Motion to

Dismiss [Doc. # 7-6].

15 Id.

On April 10, 2020, Group 1 filed this lawsuit asserting its ERISA claim.16 On

April 13, 2020, Aetna filed a petition in the United States District Court for the

District of Connecticut for confirmation of the arbitral award.17 On May 12, 2020,

Aetna moved to transfer this case to the District of Connecticut under 28 U.S.C.

§ 1404(a).18

II. LEGAL STANDARD

“For the convenience of parties and witnesses, in the interest of justice, a

district court may transfer any civil action to any other district or division where it

might have been brought or to any district or division to which all parties have

consented.” 28 U.S.C. § 1404(a). The party seeking to transfer venue bears the

burden to “satisfy the statutory requirements and clearly demonstrate that transfer is

appropriate. In re Volkswagen of Am., Inc., 545 F.3d 304, 315 (5th Cir. 2008) (en

banc) (quoting 28 U.S.C. § 1404(a)) (alteration in original). The ultimate decision

whether to transfer a case pursuant to § 1404(a) is within the sound discretion of the

district court. See Peteet v. Dow Chem. Co., 868 F.2d 1428, 1436 (5th Cir. 1989).

In ruling on a motion to transfer, a court first must address if the civil action

could have originally been brought in the transferee court under the applicable venue

16 See Complaint.

17 Tucci Decl. ¶ 8; Petition to Confirm Arbitral Award [Doc. # 7-7].

18 See Aetna’s Motion.

statute. In re Horseshoe Entm’t, 337 F.3d 429, 433 (5th Cir. 2003). “If the action

could have been brought in the alternate venue, the court must then weigh a series

of non-exhaustive private and public interest factors, none of which is given

dispositive weight.” LeBlanc v. C.R. Eng., Inc., 961 F. Supp. 2d 819, 830 (N.D. Tex.

2013) (citing In re Volkswagen, 545 F.3d at 315).19

In the Fifth Circuit, a plaintiff’s choice of venue is not a separate factor in the

§ 1404(a) analysis, but the importance of a plaintiff’s choice is taken into account

by the significant burden placed on the movant to show good cause for the transfer.

Id., at 314 n.10. Unless the proposed transferee venue is “clearly more convenient”

than the plaintiff’s chosen venue, “the plaintiff’s choice should be respected.” Id. at

315.

Where there is a valid and enforceable forum selection clause, the plaintiff’s

choice of a different forum has no weight, and the party opposing transfer bears the

burden to demonstrate that transfer is unwarranted. Marine Constr. Co., Inc. v. U.S.

Dist. Court, 571 U.S. 49, 63-64 (2013). “[A] court evaluating a defendant’s

§ 1404(a) motion to transfer based on a forum-selection clause should not consider

arguments about the parties’ private interests. When parties agree to a forum-

selection clause, they waive the right to challenge the preselected forum as

19 See infra at 11 for these factors.

inconvenient or less convenient for themselves or their witnesses, or for their pursuit

of the litigation.” Id. at 64. As a result, the court “must deem the private-interest

factors to weigh entirely in favor of the preselected forum” and may consider only

the public interest factors, which “will rarely defeat a transfer motion.” Id.

III. DISCUSSION

Aetna argues that this dispute is subject to a valid and enforceable “forum

selection clause” in Section 26 in the ASA (“Section 26”) requiring that the dispute

be heard in the District of Connecticut.20 The Court first analyzes the applicability

of Section 26. Because the Court concludes that Section 26 does not require

Group 1’s ERISA claim to be heard in Connecticut, the Court will evaluate the

public and private interest factors to determine whether a discretionary transfer to

the District of Connecticut is warranted.

A. Scope of the ASA’s Forum Selection Clause

Aetna argues that this dispute is subject to a valid and binding forum selection

clause in the ASA, citing the first two sentences of Section 26 of the ASA. Those

sentences state:

The Services Agreement shall be governed by, and interpreted in

accordance with, applicable federal law, including but not limited to

ERISA. To the extent such federal law does not govern, the Services

Agreement shall be governed by Connecticut law and the courts in such

20 See ASA [Doc. # 1-2] at 10.

state shall have sole and exclusive jurisdiction of any dispute related

hereto or arising hereunder.21

The parties’ dispute turns on the second sentence, which has three parts: a qualifying

introductory phrase that excludes from its reach claims based on federal law, a

choice of law phrase, and a forum or venue selection phrase.

Under Connecticut law, when construing an insurance policy or other contract

[t]he determinative question is the intent of the parties, that is, what

coverage the . . . [insured] expected to receive and what the [insurer]

was to provide, as disclosed by the provisions of the policy. . . . If the

terms of the policy are clear and unambiguous, then the language, from

which the intention of the parties is to be deduced, must be accorded its

natural and ordinary meaning. . . . Under those circumstances, the

policy is to be given effect according to its terms . . . . When

interpreting [an insurance policy], we must look at the contract as a

whole, consider all relevant portions together and, if possible, give

operative effect to every provision in order to reach a reasonable overall

result . . .

Lexington Ins. Co. v. Lexington Healthcare Group, Inc., 311 Conn. 29, 37–38,

(2014). Courts use canons of interpretation to determine the parties’ intent and

expectations from a contract’s language. Metropolitan Life Ins. Co. v. Aetna

Casualty & Surety Co., 255 Conn. 295, 306, (2001).

The threshold procedural issue is whether the qualifying introductory phrase

in the second sentence of Section 26 (“[t]o the extent such federal law does not

govern”) limits the forum selection phrase “the courts in [Connecticut] shall have

21 ASA [Doc. # 1-2] at 10.

sole and exclusive jurisdiction of any dispute related hereto or arising hereunder,”

which is at the end of the sentence. Aetna argues with some force that the entire

sentence should be interpreted using the “nearest reasonable referent” canon of

interpretation. That canon limits the application of the introductory qualifier to the

phrase that immediately follows the limitation. Aetna thus contends that the

sentence’s introductory limitation concerning claims not involving federal law

applies only to the choice of law phrase which immediately follows that limitation,

not the sentence’s concluding forum selection phrase.

Group 1 counters that the disputed sentence should be interpreted using the

“series qualifier” canon, under which the qualifying introductory phrase would apply

to both the choice of law and forum selection phrases.

“When there is a straightforward, parallel construction that involves all nouns

or verbs in a series,” the series qualifier canon applies, under which “a prepositive

or postpositive modifier normally applies to the entire series.” Antonin Scalia &

Bryan A. Garner, READING LAW: THE INTERPRETATION OF LEGAL TEXTS 147 (2012)

(“Scalia & Garner”). On the other hand, “when the syntax involves something other

than a parallel series of nouns or verbs,” the nearest reasonable referent canon

applies, and “a prepositive or postpositive modifier normally applies only to the

nearest reasonable antecedent.” Id. at 152.

Here, the forum selection clause is a parallel construction of nouns in a series.

Both “Services Agreement” and “the courts” are nouns. The conjunction “and”

signifies a parallel construction, and neither phrase modifies the other. Therefore,

the series qualifier canon applies. Under the series qualifier canon, the qualifying

phrase applies to each following phrase. Thus, the qualifying phrase applies to both

the forum selection clause as well as the choice of law clause. In other words,

grammatically, the sentence means both:

• To the extent such federal law does not govern, the Services Agreement

shall be governed by Connecticut law; and

• To the extent such federal law does not govern, the courts in

[Connecticut] shall have sole and exclusive jurisdiction of any dispute

related hereto or arising hereunder.

This interpretation is logical and does not lead to an absurd result when

considered in light of “the entire text, in view of its structure and of the physical and

logical relations of its many parts.” Scalia & Garner, at 167. It makes sense that

Connecticut courts would be best positioned to address disputes under Connecticut

law. On the other hand, federal courts are easily able to address ERISA issues under

federal law. Federal law governs the current dispute, and therefore this case is not

governed by the ASA’s forum selection clause.

The Court turns to the question of whether transfer to the District of

Connecticut is warranted under 28 U.S.C. § 1404.22 See Volkswagen, 545 F.3d at

315.

B. Public and Private Interest Factors

When considering a motion to transfer, the initial question is whether the

action “might have been brought” in the alternative venue. Id. at 312. Here, it is

clear that litigation about this dispute could have been initiated in the District of

Connecticut. ERISA’s venue provision states that an action may be brought “in the

district where the plan is administered, where the breach took place, or where a

defendant resides or may be found . . .” 29 U.S.C. § 1132(e)(2). Because Aetna is

a Connecticut corporation with its principal place of business in Connecticut, this

case could have been brought there.23

“If the action could have been brought in the alternate venue, the court must

then weigh a series of non-exhaustive private and public interest factors, none of

which is given dispositive weight.” LeBlanc v. C.R. Eng., Inc., 961 F. Supp. 2d 819,

22 It appears from the record that Aetna used a form contract to define the parties’

relationship, at least for the bulk of the contract terms. The Court has concluded the

sentence in issue is not ambiguous under the applicable canon of construction and

the clause does not apply to disputes governed by federal law. The Court

accordingly does not reach Group 1’s argument that the doctrine of contra

proferentem should be applied and any ambiguity in the ASA be construed against

Aetna.

23 Complaint ¶ 7.

830 (N.D. Tex. 2013) (citing Volkswagen, 545 F.3d at 315). The private interest

factors are “(1) the relative ease of access to sources of proof; (2) the availability of

compulsory process to secure the attendance of witnesses; (3) the cost of attendance

for willing witnesses; and (4) all other practical problems that make trial of a case

easy, expeditious and inexpensive.” In re Volkswagen, 545 F.3d at 315 (internal

quotation marks and citation omitted). The public interest factors are “(1) the

administrative difficulties flowing from court congestion; (2) the local interest in

having localized interests decided at home; (3) the familiarity of the forum with the

law that will govern the case; and (4) the avoidance of unnecessary problems of

conflict of laws [or in] the application of foreign law.” Id. (internal quotation marks

and citation omitted) (alteration in original).

A plaintiff’s choice of forum is important, “but in and of itself is neither

conclusive or determinative.” In re Horseshoe Entm’t, 337 F.3d 429, 433 (5th Cir.

2004). However, “the plaintiff’s choice should be respected” unless the proposed

transferee venue is “clearly more convenient” than the plaintiff’s chosen venue.

Volkswagen, 545 F.3d at 315. The party seeking transfer bears a “significant

burden” to show transfer is appropriate. Id. at 314 n.10. Whether to order transfer

is ultimately within a district court’s “broad discretion.” Id. at 311.

1. Private Factors

Aetna has not met its burden to establish that the private interest factors weigh

in favor of transfer to Connecticut.

a. Relative Ease of Access to Sources of Proof

Group 1’s ERISA claim is a broad challenge to Aetna’s company-wide claim

payment systems, policies, and procedures. Aetna argues that resolution of this

dispute will largely depend on facts about Aetna’s claims payment systems adduced

from Aetna’s witnesses and documents. However, Aetna has not identified a single

witness that would need to travel from Connecticut to Texas for trial. Undoubtedly,

documents will be produced electronically and, once produced, will be equally

available to both parties. Group 1 will also need to provide witnesses and documents

at trial. Group 1 is based in Houston and has offices in 15 states, but not Connecticut.

Group 1 claims it directs the ERISA plan in issue from its headquarters in Houston.

Aetna has not shown that this factor weighs in favor of transfer to Connecticut.

b. Availability of Compulsory Process to Secure Witness

Attendance

Witnesses pertinent to this case are likely located in Texas, Connecticut, and

elsewhere. Aetna has not identified any witnesses for which compulsory service of

process would be available in Connecticut but not in Texas. Aetna has not shown

that this factor weighs in favor of transfer to Connecticut.

c. Cost of Attendance for Willing Witnesses

Aetna argues that witnesses with relevant knowledge of its claims processing

policies and procedures will very likely come from Aetna’s headquarters in

Connecticut. In response, Group 1 argues that its fact witnesses will almost certainly

come from its headquarters in Houston. Aetna has not established that it will need

to present substantially more witnesses than Group 1 such that transfer to

Connecticut would reduce the total cost of trial. Transferring this case to

Connecticut would only shift costs from Aetna to Group 1. Aetna has not shown

that this factor weighs in favor of transfer to Connecticut.

d. Other Practical Problems Making Trial Easy,

Expeditious and Inexpensive

Aetna argues that transferring this case to Connecticut would allow it to be

consolidated with Aetna’s petition for confirmation of the arbitral award currently

pending in that District. In response, Group 1 points out that Aetna’s petition for

confirmation of the arbitral award is a perfunctory, summary proceeding unrelated

to the ERISA claim asserted here. The Court agrees. Because Group 1 has

committed it does not intend to challenge the arbitration award, the confirmation of

the award is a “straightforward proceeding[] in which no other claims are to be

adjudicated.” Lummus Global Amazonas v. Aguaytia Energy Del Peru, 256

F. Supp. 2d 594, 635 (S.D. Tex. 2002) (quoting Katz v. Feinberg, 167 F. Supp. 2d

556, 572 (S.D.N.Y. 2001)); see also Florasynth, Inc. v. Pickholz, 750 F.2d 171, 176

(2d Cir. 1984) (“[T]he confirmation of an arbitration award is a summary proceeding

that merely makes what is already a final arbitration award a judgment of the

court.”). Aetna has not shown that this factor weighs in favor of transfer to

Connecticut.

2. Public Factors

Aetna has not met its burden to establish that the public interest factors weigh

in favor of transfer to Connecticut.

a. Administrative Difficulties Flowing from Court

Congestion

Aetna argues that transfer to the District of Connecticut would promote

judicial efficiency because the Southern District of Texas handles more cases per

year than the District of Connecticut. However, the mere fact that the Southern

District of Texas handles more cases per year than the District of Connecticut does

not establish that this Court is experiencing congestion that prevents it from having

the capacity to adjudicate this lawsuit in a timely and efficient manner. Group 1 has

presented evidence that the average time from filing to trial of civil cases was a few

months shorter in the Southern District of Texas than in the District of Connecticut.

This evidence, to which Aetna does not directly respond, weighs against transfer.

Aetna has not shown that this factor weighs in favor of transfer.

b. Local Interest in Having Localized Interests Decided at

Home

Aetna argues that there is no localized interest in the dispute because

Group 1’s ERISA claim is a broad challenge to Aetna’s claims processing policies

and practices. In response, Group 1 argues that because it is headquartered in

Houston, Aetna’s alleged breaches of fiduciary duty had a disproportionate impact

in this District. Group 1 argues that many of the payments at issue in this case were

made to medical providers in this district on behalf of insureds residing in this

district. Aetna has not presented any controverting evidence on the degree to which

the payments at issue in this case relate to plan members or providers outside of this

District. Aetna has not shown that this factor weighs in favor of transfer.

c. Familiarity of the Forum with the Law Governing the

Case

This dispute depends on the interpretation and application of ERISA, and not

the law of Connecticut or any other state. This Court is as well-positioned as any

other federal court to interpret and apply ERISA. Aetna has not shown that this

factor weighs in favor of transfer.

d. Avoidance of Unnecessary Problems with Conflict of

Laws

The sole cause of action is for breach of fiduciary duty under ERISA. Aetna

does not argue that this case poses any conflict-of-law issues, and therefore has not

shown that this factor weighs in favor of transfer.

The Court concludes that the private and public interest factors do not favor

transfer. Aetna has not met its heavy burden to show that Connecticut is “clearly

more convenient” for litigation of the ERISA claim in issue than the Southern

District of Texas. Volkswagen, 545 F.3d at 314.

IV. CONCLUSION

The forum selection clause in the ASA does not apply to disputes governed

by federal law. Since Group 1|’s claim arises under ERISA, it is not subject to the

forum selection clause. The private and public interest factors do not weigh in favor

of transferring this case to the District of Connecticut. It is Therefore

ORDERED that Aetna’s Motion to Transfer Venue under 28 U.S.C.

§ 1404(a) is DENIED.

SIGNED at Houston, Texas, this 15thday of July, 2020.

dh F. ATLAS

SENIOR UNI STATES DISTRICT JUDGE

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