## Facts

- Charles B. Jones operated a GNC franchise store in La Verne, California under an option agreement (1995) and a franchise agreement (1996) with GNC Franchising, Inc.
- Both agreements selected Pennsylvania law and required any franchisee suit against GNC to be filed only in Pennsylvania, waiving objections to personal jurisdiction and venue.
- A dispute arose regarding the store’s construction and operation.
- Jones sued GNC in California state court alleging contract, tort, and franchise-related misrepresentation claims.
- GNC removed to the Central District of California on diversity grounds and moved to dismiss or transfer under 28 U.S.C. § 1406(a), or alternatively to transfer under 28 U.S.C. § 1404(a) to the Western District of Pennsylvania.
- The district court denied dismissal and transfer, concluding California Business and Professions Code § 20040.5 rendered the forum selection clause void as to a California franchisee and that the § 1404(a) factors favored keeping the case in California.
- The Ninth Circuit accepted interlocutory review under 28 U.S.C. § 1292(b).

## Issues

1. Whether the district court should have dismissed or transferred the case under 28 U.S.C. § 1406(a) based on the contractual Pennsylvania forum selection clause.
2. Whether the district court abused its discretion in denying transfer to Pennsylvania under 28 U.S.C. § 1404(a) in light of the forum selection clause and convenience considerations.

## Decision

- The Ninth Circuit affirmed the refusal to dismiss or transfer under § 1406(a) because California Business and Professions Code § 20040.5 voided the out-of-state forum selection clause for a California franchisee, making venue in California not “wrong.”
- The Ninth Circuit affirmed the denial of transfer under § 1404(a), holding the district court acted within its discretion after weighing convenience and the interest of justice and giving no weight to an invalid forum selection clause.

## Legal Principles

- In diversity, federal courts apply the forum state’s choice-of-law rules to determine whether a contractual forum selection clause is enforceable.
- California Business and Professions Code § 20040.5 embodies a strong state policy that voids franchise provisions requiring a California franchisee to litigate outside California for claims arising from or related to the franchise.
- A forum selection clause that is void under controlling state law cannot render an otherwise proper federal venue “wrong” for purposes of 28 U.S.C. § 1406(a).
- Under 28 U.S.C. § 1404(a), transfer is discretionary and turns on convenience and the interest of justice; an invalid forum selection clause does not receive presumptive weight.
- Appellate review of a § 1404(a) ruling is deferential; denial of transfer is affirmed absent an abuse of discretion supported by the record.

## Conclusion

The Ninth Circuit held that California’s franchise venue statute voided the agreements’ Pennsylvania-only forum clause as applied to a California franchisee, so dismissal or transfer under § 1406(a) was unwarranted, and the district court did not abuse its discretion in denying transfer under § 1404(a) where the dispute, witnesses, and costs were centered in California.


Jones v. GNC Franchising, Inc., 211 F.3d 495 (9th Cir. 2000)