United States District Court, E.D. Virginia, Alexandria Division
JAMES C. CACHERIS, District Judge.
This matter is before the Court on Defendant Global Linguist Solutions LLC's ("GLS" or "Defendant") Motion to Dismiss the Amended Complaint, [Dkt. 79], and Motion to Strike Plaintiffs' Jury Demand, [Dkt. 91]. For the reasons set forth below, the Court will grant in part and deny in part GLS's Motion to Dismiss and deny the Motion to Strike.
A. Factual Background
GLS is a Delaware corporation with its headquarters and principal place of business in Herndon, Virginia. ( See Am. Compl. [Dkt. 77] ¶ 6.) GLS provides translation and interpretation services to the United States Army. ( Id. ¶¶ 11-12.) Plaintiffs are linguists who either currently work or have worked for GLS in Kuwait. ( Id. ¶¶ 2-4, 11-12.)
During 2012, Plaintiffs worked as translators in Kuwait for a company called Engility, who had subcontracted with GLS to provide linguist services to the U.S. Army under the Translation and Interpretation Management Services Contract ("TIMS contract"). According to Plaintiffs, their contracts with Engility provided for "base salaries; ten-percent hardship pay; per diem for meals; 30-days of vacation; and, completion payments' bonuses." (Am. Compl. ¶ 14.)
Upon their arrival in Kuwait under the TIMS contract, Plaintiffs allege that "GLS took their passports" to obtain work visas from its Kuwaiti sponsor, Al Shora International General Trading & Contracting ("Al Shora"). (Am. Compl. ¶ 16.) Kuwaiti law allegedly requires that all foreign workers be placed on the rolls of a local sponsor. ( Id. at ¶ 17.) The sponsor applies for working visas on behalf of the employees and manages aspects of their payroll. ( Id. ) A foreign employer is required to retain a local sponsor. ( Id. )
Plaintiffs were deployed to several camps during their first few months of employment, eventually ending up at "Camp Arifjan." (Am. Compl. ¶ 18.) Plaintiffs allege they remained "virtual prisoners of GLS" at Camp Arifjan. ( Id. ) According to Plaintiffs, GLS "prohibited [them] from working or leaving the Camps for medical appointments, personal time or even emergency matters. They were told by GLS that they would be arrested, imprisoned and/or deported by the Kuwaiti government if they left the base." ( Id. at ¶ 19.) Plaintiffs further allege that "GLS relegated [them] and other Linguists [to] crammed and abominable substandard living conditions. Forty Linguists were assigned to live in one 3000-square-feet tent with limited air conditioning, running water and electricity." ( Id. at ¶ 20.)
Sometime in late 2012 or early 2013, GLS was awarded a contract to provide linguistic services to the U.S. Army pursuant to the Defense Language Interpretation Translation Enterprise contract ("DLITE contract"). (Transfer Order [Dkt. 40] at 30.) In conjunction, GLS allegedly re-bid its Kuwaiti sponsorship contract. "GLS severed its ties with... Al Shora, in favor of a new Kuwaiti company, KRH." (Am. Compl. ¶ 28(a).) This apparently led to a dispute between Al Shora and GLS. Plaintiffs claim that, "GLS was unable to obtain Al Shora's agreement to continue sponsoring Plaintiffs for GLS or to transfer their sponsorship to another Kuwaiti entity." ( Id. at ¶ 28(d).)
In January 2013, GLS presented Plaintiffs with new employment contracts to provide linguistic services under the DLITE contract. ( See Am. Compl. ¶ 22.) According to Plaintiffs, "GLS forced Plaintiffs to sign new form employment contracts directly with GLS under [the] horrid" living conditions mentioned above. ( Id. ) Plaintiffs claim that these new agreements removed many benefits from their prior contracts with Engility, "including the ten-percent hardship pay; per diem for meals; and, completion payments' bonuses." ( Id. at ¶ 23.) Plaintiffs allege that "GLS expressly told [them] to sign the form without reading anything" and that "GLS never suggested to them that they should discuss the terms with a lawyer." ( Id. at ¶¶ 24-25.) According to Plaintiffs, "they had no choice but to sign the form because GLS threatened to kick them off the base[.]" ( Id. at ¶ 26.) Plaintiffs further allege that, at the time they entered into the new contracts, they were "under GLS's total control and domination because they held their passports." ( Id. at ¶ 27.)
Pertinent here, Plaintiffs allege that when presented with the 2013 contracts they were never advised of the dispute between GLS and Al Shora regarding their sponsorship status. According to Plaintiffs, "[a]t the time GLS had Plaintiffs sign the 2013 [c]ontract, GLS's employment of Plaintiffs in Kuwait was unlawful since GLS was unable to obtain Al Shora's agreement to continue sponsoring Plaintiffs for GLS or to transfer their sponsorship to another Kuwaiti entity." (Am. Compl. ¶ 28(b).) Furthermore, according to Plaintiffs, "[t]he lack of Kuwaiti sponsorship was material and Plaintiffs would not have signed or entered into the 2013 Contract had they been aware that GLS did not have a sponsorship agreement with a Kuwaiti entity that would cover Plaintiffs' employment under the 2013 Contract." ( Id. at ¶ 28(g).)
GLS's dispute with Al Shora apparently went unresolved, and in March 2013 "Al Shora turned over the names of GLS's employees (including Plaintiffs) to Kuwaiti immigration authorities, declared them absent from work, and in violation of their working visas. Consequently Plaintiffs'... work visas were cancelled, and they were placed on Kuwaiti's blacklist' for arrest and/or deportation." (Am. Compl. ¶ 28(k).) According to Plaintiffs, "GLS's actions and legal dispute with Al Shora made Plaintiffs and other Linguists fugitives in a foreign country." ( Id. at ¶ 28(m).) Sometime thereafter, "GLS conveniently demoted and/or terminated Plaintiffs." ( Id. at ¶ 31.)
B. 2013 Contract with GLS
As noted above, prior to starting with GLS under the DLITE contract, Plaintiffs signed new employment agreements directly with GLS. These contracts are uniform and contain a "Governing Law" section that includes a Virginia choice-of-law provision and a Virginia forum-selection clause. ( See Phillips Decl. [Dkt. 91] Ex. 1.) The Governing Law section provides as follows:
This Agreement shall be governed by and interpreted under the laws of the Commonwealth of Virginia of the United States of America. Any cause of action against the Employer must be brought in a federal court within the Commonwealth of Virginia unless the federal court does not have jurisdiction, in which case the cause of action must be filed in Commonwealth court in Virginia.
( Id. at 11.)
In addition to this section, the contracts also make clear that Plaintiffs are at-will employees. The contracts specifically state that GLS has the right "at its sole discretion" to terminate its employment relationship with Plaintiffs "without cause at any time" and that Plaintiffs likewise "may voluntarily terminate this Agreement at any time." (Phillips Decl. Ex. 1 at 8.) The contracts state that GLS will "provide return transportation from the Employee's work location" to the United States "if this Agreement is terminated, " ( id. at 8), but cautioned that "[t]ravel could be significantly restricted, delayed or made more difficult by operational requirements of the military or by restrictions imposed by civil authorities[.]" ( Id. at 4.) The contracts also provide that "this assignment carries the risk of bodily harm/death, " and "[l]iving conditions at the assignment location could be remote and uncomfortable." ( Id. )
C. Procedural History
Plaintiffs initially brought this action in California state court, alleging sixteen causes of action under California law against GLS, DynCorp International LLC, and AECOM Services (collectively "Defendants"). Defendants subsequently removed the case to the United States District Court for the Central District of California ("California court"). (Notice of Removal [Dkt. 1] at 1.) The California Court then granted Defendants' motion to transfer the case to this Court on the basis of the Virginia forum-selection clause. (Transfer Order at 45.)
Following transfer to this Court, Defendants moved to dismiss the complaint. [Dkts. 51, 55, 57.] In response, Plaintiffs voluntarily dismissed every defendant except GLS, [Dkt. 74], and filed an Amended Complaint. In the Amended Complaint now before the Court, Plaintiffs allege eleven causes of action: false imprisonment ("Count 1"); negligent hiring and retention ("Count 2"); intentional infliction of emotional distress ("Count 3"); negligent infliction of emotional distress ("Count 4"); fraud ("Count 5"); rescission ("Count 6"); promissory fraud ("Count 7"); negligent misrepresentation ("Count 8"); breach of contract ("Count 9"); breach of the implied covenant of good faith and fair dealing ("Count 10"); and breach of Kuwaiti labor law ("Count 11"). ( See Am. Compl. ¶¶ 59-132.) With the exception of Count 11, Plaintiffs do not specify what body of law purportedly governs their claims.
GLS has moved to dismiss the Amended Complaint in its entirety and strike Plaintiffs' jury demand. Having been fully briefed, GLS's motions are now before the Court.
II. Standard of Review
"A motion to dismiss under Rule 12(b)(6) tests the sufficiency of a complaint[.]" Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (citation omitted). The Supreme Court has stated that in order "[t]o survive a motion to dismiss, a [c]omplaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. The issue in resolving such a motion is not whether the non-movant will ultimately prevail, but whether the non-movant is entitled to offer evidence to support his or her claims.
"Determining whether a complaint states a plausible claim for relief [is]... a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679 (citations omitted). While legal conclusions can provide the framework for a complaint, all claims must be supported by factual allegations. Id. Based upon these allegations, the court will determine whether the plaintiff's pleadings plausibly give rise to an entitlement to relief. Id. Legal conclusions couched as factual allegations are not sufficient, Twombly, 550 U.S. at 555, nor are "unwarranted inferences, unreasonable conclusions, or arguments, " E. Shore Mkts., Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir. 2000). Moreover, the plaintiff does not have to show a likelihood of success; rather, the complaint must merely allege - directly or indirectly - each element of a "viable legal theory." Twombly, 550 U.S. at 562-63.
In addition, at the motion to dismiss stage, the court must construe the complaint in the light most favorable to the plaintiff, read the complaint as a whole, and take the facts asserted therein as true. Iqbal, 556 U.S. at 678.
A. Choice of Law
Before reaching the merits of Plaintiffs' claims, the Court must first address the important question of the applicable choice of law. See, e.g., Pa. Emp., Benefit Trust Fund v. Zeneca, Inc., 710 F.Supp.2d 458, 466 (D. Del. 2010) (noting that before addressing a motion to dismiss, "the Court must first resolve the choice of law question to determine the applicable law relevant to each [claim]"). It is undisputed that Plaintiffs' employment contracts contain a choice-of-law provision naming Virginia law as controlling. The parties, however, sharply contest the validity of this clause. Plaintiffs assert that this choice-of-law provision is unenforceable because their employment contracts were procured by "fraud and/or overreaching." (Am. Compl. ¶ 96.) According to Plaintiffs, GLS "forced them" to sign these contracts "after their work visas and passports were revoked from them... and [when they] faced the prospect of being thrown into Kuwaiti jail." ( Id. at ¶ 94.) Plaintiffs further allege "that GLS expressly told [them] to sign the form without reading anything" and "they had no choice but to sign the form because GLS threatened to kick them off the base, and subject them to immediate arrest and detention by Kuwaiti official[s]." ( Id. at ¶¶ 24-26.) GLS, in opposition, argues that these claims of fraud and overreaching are insufficient because Virginia law requires that allegations of fraud and overreaching be directed specifically at the inclusion of a dispute resolution provision, which is not the case here. (Def.'s Mot. to Dismiss Mem. [Dkt. 80] at 10-11.) Defendant continues, "[a]bsent allegations of fraud or misleading regarding the inclusion of the choice-of-law provision in particular, ' Plaintiffs' attempt to invalidate the provision fails." ( Id. ) Accordingly, at issue is whether general allegations of fraud and overreaching going to the contact as a whole are sufficient to invalidate a choice-of-law provision.
It is well settled that a federal district court sitting in diversity and resolving a transferred matter must apply the laws of the transferor state, including its choice-of-law rules. See Van Dusen v. Barrack, 376 U.S. 612, 639 (1964). Accordingly, in this case, California law would typically govern both the enforceability of the choice-of-law provision as well as its appropriate scope. Yet, here it is appropriate to depart from this principle given the equally settled principle that the law of the transferor state should not govern when the transfer is based on improper venue. See Atl. Marine Constr. Co., Inc. v. U.S. Dist. Court for W. Dist. of Tex., ___ U.S. ___, 134 S.Ct. 568, 582 (2013) ("[When] a party bound by a forum-selection clause flouts its contractual obligation and files suit in a different forum, a § 1404(a) transfer of venue will not carry with it the original venue's choice-of-law rules."). When the basis for transfer is a forum-selection clause in the parties' contract, this exception to the Van Dusen rule applies because under those circumstances venue in the transferor state is, by the terms of the parties' agreement, improper. To hold otherwise would allow a plaintiff to file a claim in a court without proper venue to avoid the effect of a contractual forum-selection clause and the unfavorable choice-of-law that would otherwise have resulted. In such circumstances the transferee court "must follow the choice-of-law rules of the State in which it sits." Id. Because this case was transferred from California due to improper venue, the Court will apply Virginia law to determine the choice-of-law provision's validity and scope. See Pyott-Boone Elecs. Inc. v. IRR Trust for Donold L. Fetterolf Dated Dec. 9, 1997, 918 F.Supp.2d 532, 542-43 (W.D. Va. 2013).
Virginia has long recognized that parties to a contract may agree in advance which jurisdiction's law will apply to their transaction. See Union Cent. Life Ins. Co. v. Pollard, 94 Va. 146 (1896). In Pollard, the parties included language in their contract that it would be "held and construed to have been made in the city of Cincinnati, Ohio." Id. at 146. The Virginia Supreme Court concluded that "[t]he contract of insurance having been made with reference to the laws of the state of Ohio, the plaintiff had the right to rely upon them in enforcing his contract so far as they related to its validity, nature, interpretation, and effect." Id. Subsequent cases have reinforced this right. See, e.g., Settlement Funding, LLC v. Von Neumann-Lillie, 274 Va. 76, 80 (2007) ("If a contract specifies that the substantive law of another jurisdiction governs its interpretation or application, the parties' choice of substantive law should be applied." (citation omitted)).
Virginia law now looks favorably upon choice-of-law clauses in a contract, giving them full effect except in unusual circumstances. See Colgan Air, Inc. v. Raytheon Aircraft Co., 507 F.3d 270, 275 (4th Cir. 2007). "The only intimations that Virginia might not enforce the parties' choice-of-law provision in a contract concern situations in which there was no reasonable basis for the parties' choice or where one of the parties was misled into agreeing to the provision." Faltings v. Int'l Bus. Machs. Corp., No. 87-1123, 1988 WL 83316, at *3 (4th Cir. Aug. 4, 1988) (citations omitted). More recently, this Court noted "absent a showing that the provisions of the clause are unfair or unreasonable, or are affected by fraud or unequal bargaining power, or that the parties did not clearly intend for ...