Yei A. Sun v. ADvanced China Healthcare, Inc.

Yei Sun, Liping Sun, and Haiming Sun were persuaded

by Alicia Kao to invest $2.8 million in Advanced China

Healthcare. The Suns entered into two Share Purchase

Agreements, each of which contained a forum-selection

clause that required any disputes “arising out of or related to”

the agreements to be adjudicated in California state court.

Notwithstanding the forum-selection clause, the Suns brought

suit against Kao under Washington securities law in a

Washington district court. The district court concluded that

the Suns were bound by the forum-selection clause, and

dismissed the action. Because the Suns have not carried their

heavy burden of showing the sort of exceptional

circumstances that would justify disregarding a forumselection

clause, we affirm the district court.

I

According to the Suns’ complaint, in December 2010,

Kao met with the Suns in Seattle, Washington. Kao told the

SUN V. ADVANCED 4 CHINA HEALTHCARE

Suns that she was the President of Advanced China

Healthcare, a company formed to provide Western-style

medical services (such as sports medicine, pain management,

and physical therapy) in China. According to Kao, Advanced

China Healthcare had received substantial investor funding as

well as all necessary licenses from the Chinese government,

and intended to open its first medical center in Shanghai in

2011. Kao made a number of other representations about the

status of the project to induce the Suns to invest in Advance

China Healthcare’s Series B offering. She told the Suns that

“all funds would be used for the development of medical

centers in China,” and stated that a healthcare venture capital

fund in Alabama had conducted extensive due diligence on

the project and was investing in the Series B offering.

While investigating this potential investment, the Suns

contacted Robert Claassen, who was a partner in Paul

Hastings, LLP, and the head of the corporate department in its

Palo Alto, California office. Claassen informed the Suns that

Advanced China Healthcare was a good investment in which

his firm and he himself had invested, and confirmed that the

Alabama venture capital fund had performed extensive due

diligence before investing.

Following these representations, the Suns executed two

separate, but identical, Series B Preference Share Purchase

Agreements and invested a total of $2.8 million in Advanced

China Healthcare. Both agreements included a forumselection

clause, entitled “Jurisdiction; Venue,” which stated:

With respect to any disputes arising out of or

related to this Agreement, the parties consent

to the exclusive jurisdiction of, and venue in,

the state courts in Santa Clara County in the

SUN V. ADVANCED CHINA HEALTHCARE 5

State of California (or in the event of

exclusive federal jurisdiction, the courts of the

Northern District of California).1

At the closing, which took place in Paul Hastings’s Palo Alto

office, the Suns sent their funds via a wire transfer to Paul

Hastings’s account in Los Angeles, California.

According to the Suns’ complaint, several years after

closing, the Suns discovered that Kao had misled them. The

Suns alleged that they had been shown fabricated financial

records of Advanced China Healthcare. They also alleged

that Kao had not used their $2.8 million investment for the

development and opening of medical centers, but had

converted and misappropriated it for her own use or to cover

up her prior misappropriation of other investments.

The Suns sued Kao and Advanced China Healthcare in

Washington district court under § 21.20.430(1) of the

Washington State Securities Act (WSSA), which imposes

liability on a person who “sells a security in violation of any

provision[] of RCW 21.20.010.” Wash. Rev. Code

§ 21.20.430(1). Section 21.20.010 makes it unlawful for a

person to take certain fraudulent actions in connection

with the offer or sale of a security. A “person who directly

1 The agreements also contained a choice-of-law provision, which

stated:

This Agreement shall be governed in all respects by the

internal laws of the State of California as applied to

agreements entered into among California residents to

be performed entirely within California, without regard

to principles of conflicts of law.

SUN V. ADVANCED 6 CHINA HEALTHCARE

or indirectly controls” such a seller may also be held liable.

§ 21.20.430(3).

On Kao’s motion, the district court dismissed the

complaint because the Share Purchase Agreements contained

a forum-selection clause that applied to the dispute, was valid

and enforceable, and required the dispute to be resolved in

California. The court conditioned its dismissal on several

requirements: Kao had to “submit to the jurisdiction of the

California court in which Plaintiffs file suit, so long as the

court is proper under the forum selection clause”; the statutes

of limitations on the Suns’ California and Washington statelaw

claims had to remain tolled for the pendency of the

current lawsuit; Kao could not “argue that California

securities laws do not apply to the disputed transaction

because it occurred in Washington State”; and Kao had to

waive service of process.

The Suns timely appealed, arguing that the forumselection

clause in the Share Purchase Agreements was not

enforceable. First, they argue that, as a matter of contract, the

forum-selection clause does not apply to their action.

Alternatively, they argue that the clause is not valid and

enforceable because their action under the WSSA embodies

an important public policy that cannot be waived, and

California is not an adequate alternative forum because it

deprives them of any remedy.

We have jurisdiction under 28 U.S.C. § 1291. We review

a district court’s dismissal of a complaint for failure to

comply with a valid and enforceable forum-selection clause

for abuse of discretion. Doe 1 v. AOL LLC, 552 F.3d 1077,

1081 (9th Cir. 2009) (per curiam). We review the district

SUN V. ADVANCED CHINA HEALTHCARE 7

court’s “application of the principles of contract

interpretation” de novo. Id.

II

We first address the Suns’ argument that the Share

Purchase Agreements’ forum-selection clause does not apply

to their complaint. We apply federal contract law to interpret

the scope of a forum-selection clause even in diversity

actions, such as this one. Doe 1, 552 F.3d at 1081; Manetti-

Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 512–13 (9th

Cir. 1988). In interpreting a forum-selection clause under

federal law, “we look for guidance ‘to general principles for

interpreting contracts.’” Doe 1, 552 F.3d at 1081 (quoting

Klamath Water Users Protective Ass’n v. Patterson, 204 F.3d

1206, 1210 (9th Cir. 1999)); see also Manetti-Farrow,

858 F.2d at 513–14.

By its terms, the forum-selection clause here applies to

“any disputes arising out of or related to” the Share Purchase

Agreements. Accordingly, we must determine whether the

Suns’ claim that Kao violated the WSSA constitutes such a

dispute. We have held that forum-selection clauses covering

disputes “arising out of” a particular agreement apply only to

disputes “relating to the interpretation and performance of the

contract itself.” Cape Flattery Ltd. v. Titan Mar., LLC,

647 F.3d 914, 922 (9th Cir. 2011) (quoting Mediterranean

Enters., Inc. v. Ssangyong Corp., 708 F.2d 1458, 1464 (9th

Cir. 1983)). By contrast, forum-selection clauses covering

disputes “relating to” a particular agreement apply to any

disputes that reference the agreement or have some “logical

or causal connection” to the agreement. See John Wyeth &

Bro. Ltd. v. CIGNA Int’l Corp., 119 F.3d 1070, 1074 (3d Cir.

1997) (Alito, J.) (quoting Webster’s Third New International

SUN V. ADVANCED 8 CHINA HEALTHCARE

Dictionary 1916 (1971)). The dispute need not grow out of

the contract or require interpretation of the contract in order

to relate to the contract. See Cape Flattery, 647 F.3d at 922;

Huffington v. T.C. Grp., LLC, 637 F.3d 18, 22 & n.2 (1st Cir.

2011) (explaining that the phrase “relating to” is synonymous

with the phrases “with respect to,” “with reference to,” “in

connection with,” and “associated with”); Coregis Ins. Co. v.

Am. Health Found., Inc., 241 F.3d 123, 128–29 (2d Cir.

2001) (Sotomayor, J.) (same).

Applying this framework, the Share Purchase

Agreements’ forum-selection clause covers the present suit.

Because the clause covers “any disputes . . . related to this

Agreement,” it applies to any dispute that has some logical or

causal connection to the parties’ agreement. Here, the Suns’

claim that Kao engaged in various fraudulent practices to

induce them to invest $2.8 million in Advanced China

Healthcare relates to the Share Purchase Agreements because

the Suns invested pursuant to those agreements. See

Huffington, 637 F.3d at 22 (holding that a forum-selection

clause covered state-law securities claims because the

plaintiff’s purchase of privately offered securities “could not

have been made without the agreement”); Carter’s of New

Bedford, Inc. v. Nike, Inc., 790 F.3d 289, 293 (1st Cir. 2015)

(holding that a claim for unfair competition fell within scope

of “in connection with” clause). Indeed, the Suns’ complaint

itself alleges that they executed the Share Purchase

Agreements “in reasonable and justifiable reliance on the

representations of Kao.” The Suns argue that their claims do

not relate to the Share Purchase Agreements because they are

challenging fraudulent conduct that occurred before the

agreements were executed by the parties. This argument is

belied by the Suns’ complaint itself, which alleges that Kao

is liable under the WSSA as a seller of securities (or as a

SUN V. ADVANCED CHINA HEALTHCARE 9

person controlling such a seller), which occurred when the

Suns entered into the agreements. Because the Suns’ dispute

is logically connected to the parties’ agreements, it is subject

to the forum-selection clause.

III

We next consider whether the forum-selection clause is

enforceable. “[T]he appropriate way to enforce a forumselection

clause pointing to a state or foreign forum is

through the doctrine of forum non conveniens.” Atl. Marine

Const. Co. v. U.S. Dist. Court for W. Dist. of Tex., 571 U.S.

49, 60 (2013). In conducting this analysis, we are bound by

the Supreme Court’s direction in Atlantic Marine. Although

Atlantic Marine considered the enforceability of a forumselection

clause under 28 U.S.C. § 1404(a),2 the Court

explained that § 1404(a) merely codified the doctrine of

forum non conveniens “for the subset of cases in which the

transferee forum is within the federal court system.” Id.

“[B]ecause both § 1404(a) and the forum non conveniens

doctrine from which it derives entail the same balancing-ofinterests

standard, courts should evaluate a forum-selection

clause pointing to a nonfederal forum in the same way that

they evaluate a forum-selection clause pointing to a federal

forum.” Id. at 61.

Atlantic Marine provided the following approach for

analyzing the enforceability of a forum-selection clause. As

a general rule, “[w]hen the parties have agreed to a valid

2 28 U.S.C. § 1404(a) provides: “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.”

SUN V. ADVANCED 10 CHINA HEALTHCARE

forum-selection clause, a district court should ordinarily

transfer the case to the forum specified in that clause.” Id. at

62. Unlike the situation where there is no forum-selection

clause,3 the plaintiff “must bear the burden of showing why

the court should not transfer the case to the forum to which

the parties agreed.” Id. at 64. The plaintiff’s subsequent

choice of forum merits no weight. Id. at 63–64.

Second, a court must deem all factors relating to the

private interests of the parties (such as the “relative ease of

access to sources of proof; availability of compulsory process

for attendance of unwilling, and the cost of obtaining

attendance of willing, witnesses; possibility of view of

premises, if view would be appropriate to the action; and all

other practical problems that make trial of a case easy,

expeditious and inexpensive”) as weighing “entirely in favor

of the preselected forum.” Id. at 64, 62 n.6 (quoting Piper

Aircraft Co. v. Reyno, 454 U.S. 235, 241 n.6 (1981)). While

a court may consider factors relating to the public interest

(such as “the administrative difficulties flowing from court

congestion; the local interest in having localized

controversies decided at home; [and] the interest in having

the trial of a diversity case in a forum that is at home with the

law,” id. at 64, 62 n.6 (alteration in original) (quoting Piper

Aircraft, 454 U.S. at 241 n.6)), those factors will rarely defeat

a transfer motion. Id. at 64.

3 According to Atlantic Marine, when there is no forum-selection

clause, a court “must evaluate both the convenience of the parties and

various public-interest considerations.” 571 U.S. at 62. “Ordinarily, the

district court would weigh the relevant factors and decide whether, on

balance, a transfer would serve ‘the convenience of parties and witnesses’

and otherwise promote ‘the interest of justice.’” Id. at 62–63 (quoting

28 U.S.C. § 1404(a)).

SUN V. ADVANCED CHINA HEALTHCARE 11

The practical result is that a forum-selection clause

“should control except in unusual cases.” Id. at 64. This

result is required, according to Atlantic Marine, because a

forum-selection clause “represents the parties’ agreement as

to the most proper forum.” Id. at 63 (quoting Stewart Org.,

Inc. v. Ricoh Corp., 487 U.S. 22, 31 (1988)). It “may have

figured centrally in the parties’ negotiations and may have

affected how they set monetary and other contractual terms;

it may, in fact, have been a critical factor in their agreement

to do business together in the first place.” Id. at 66.

Therefore, the “enforcement of valid forum-selection clauses,

bargained for by the parties, protects their legitimate

expectations and furthers vital interests of the justice system.”

Id. at 63 (quoting Stewart, 487 U.S. at 33 (Kennedy, J.,

concurring)). In short, “[o]nly under extraordinary

circumstances unrelated to the convenience of the parties”

should a motion to enforce a forum-selection clause be

denied. Id. at 62.

Atlantic Marine provides little guidance, however,

regarding what constitutes an “exceptional reason” or

“extraordinary circumstances” in which courts should not

give controlling weight to a valid forum-selection clause.

Therefore, we turn to the Court’s prior guidance on this issue

in M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972).

M/S Bremen held that a forum-selection clause was

controlling unless the plaintiff made a strong showing that:

(1) the clause is invalid due to “fraud or overreaching,”

(2) “enforcement would contravene a strong public policy of

the forum in which suit is brought, whether declared by

statute or by judicial decision,” or (3) “trial in the contractual

forum will be so gravely difficult and inconvenient that [the

litigant] will for all practical purposes be deprived of his day

in court.” 407 U.S. at 15, 18; see also Petersen v. Boeing

SUN V. ADVANCED 12 CHINA HEALTHCARE

Co., 715 F.3d 276, 280 (9th Cir. 2013).4 Here, the Suns do

not contend that the forum-selection clause in their

agreements is the product of fraud or overreaching, so only

the latter two exceptions are at issue. We view these

exceptions through the lens provided by Atlantic Marine.

A

The Suns first argue that applying the forum-selection

clause would contravene a strong public policy of

Washington in preserving its citizens’ remedies under the

WSSA. According to the Suns, the Washington legislature

declared such a public policy by including the following

antiwaiver provision in the WSSA: “Any condition,

stipulation, or provision binding any person acquiring any

security to waive compliance with any provision of this

chapter or any rule or order hereunder is void.” Wash. Rev.

Code § 21.20.430(5).

We rejected a similar argument in Richards v. Lloyd’s of

London, 135 F.3d 1289 (9th Cir. 1998) (en banc). In

Richards, citizens or residents of the United States sued a

foreign firm in California district court under federal and state

securities laws. Id. at 1291–92. Their investment agreement

contained a forum-selection clause requiring the parties to

adjudicate any disputes in “the courts of England” and under

“the laws of England.” Id. at 1292. The plaintiffs argued that

4 Our analysis of the M/S Bremen exceptions does not change when

the agreement includes a choice-of-law clause in addition to a forumselection

clause. We generally treat the analysis as coextensive and

consider the clauses’ impact together. See, e.g., Barnett v. DynCorp Int’l,

LLC., 831 F.3d 296, 308–09 (5th Cir. 2016); Huffington, 637 F.3d at

21–22; Richards v. Lloyd’s of London, 135 F.3d 1289, 1293–97 (9th Cir.

1998) (en banc).

SUN V. ADVANCED CHINA HEALTHCARE 13

the forum-selection clause did not apply due to the antiwaiver

provisions of the federal securities laws and the strong public

policy of preserving investors’ remedies under federal and

state securities laws. Id. at 1293–94.5 We first rejected the

plaintiffs’ argument that the antiwaiver provisions barred

enforcement of the forum-selection clause, holding, in effect,

that the strong federal policy in favor of enforcement of such

clauses superseded the statutory antiwaiver provision. Id. at

1294–95; see also id. at 1298 (Thomas, J., dissenting). In

reaching this conclusion, we relied on the fact that plaintiffs

could still pursue relief for fraud, breach of fiduciary duty, or

negligent misrepresentation under British law. Richards,

135 F.3d at 1296; see also Simula, Inc. v. Autoliv, Inc.,

175 F.3d 716, 723 (9th Cir. 1999) (enforcing a forumselection

clause because the plaintiffs would have some

“reasonable recourse” in the foreign forum, even though they

could not bring claims under United States antitrust laws).6

5 The plaintiffs referenced two antiwaiver provisions of the federal

securities laws. Under 15 U.S.C. § 78cc(a), “[a]ny condition, stipulation,

or provision binding any person to waive compliance with any provision

of this chapter or of any rule or regulation thereunder, or of any rule of a

self-regulatory organization, shall be void.” Under 15 U.S.C. § 77n,

“[a]ny condition, stipulation, or provision binding any person acquiring

any security to waive compliance with any provision of this subchapter or

of the rules and regulations of the Commission shall be void.”

6 We note that we would give more weight to Washington’s public

policy interests if plaintiffs would be denied any relief in a California

forum. See Richards, 135 F.3d at 1296 (stating that “were English law so

deficient that the [plaintiffs] would be deprived of any reasonable

recourse, we would have to subject the [forum-selection and choice-oflaw]

clauses to another level of scrutiny”); cf. Doe 1, 552 F.3d at 1084

(holding a forum-selection clause unenforceable when a state court held

that enforcement would deprive California consumers of any remedy in

Virginia courts). This factor tracks the third M/S Bremen exception, that

“trial in the contractual forum will be so gravely difficult and inconvenient

SUN V. ADVANCED 14 CHINA HEALTHCARE

Although Richards involved a forum-selection clause that

pointed to a foreign forum, the conclusion is equally

applicable when a clause points to a state forum. Atlantic

Marine made clear that the analysis of forum non conveniens

“entail[s] the same balancing-of-interests standard” regardless

whether a court is considering transferring an action to

another federal forum or to a non-federal forum. 571 U.S. at

61. Therefore “courts should evaluate a forum-selection

clause pointing to a nonfederal forum in the same way that

they evaluate a forum-selection clause pointing to a federal

forum.” Id. In referring to a nonfederal forum, Atlantic

Marine did not differentiate between a state or a foreign

forum, but rather focused on ensuring that parties obtained

the benefit of their bargain. Accordingly, we conclude that

the strong federal policy in favor of enforcing forumselection

clauses would supersede antiwaiver provisions in

state statutes as well as federal statutes, regardless whether

the clause points to a state court, a foreign court, or another

federal court. See Atl. Marine, 571 U.S. at 66; Huffington,

637 F.3d at 25; Richards, 135 F.3d at 1296.7

that [the litigant] will for all practical purposes be deprived of his day in

court.” 407 U.S. at 18. We discuss this exception in more detail below.

See infra at 17–21.

7 Given that many state and federal statutes include antiwaiver

provisions, a rule that such provisions preclude enforcement of a forumselection

clause would contradict Atlantic Marine’s general rule that

forum-selection clauses are enforceable except in the exceptional case.

See, e.g., 15 U.S.C. § 78cc(a); 15 U.S.C. § 77n; Ariz. Rev. Stat. § 44-

2000; Cal. Civ. Code § 1751; Cal. Corp. Code § 25701; Haw. Rev. Stat.

§ 485A-509; Wash. Rev. Code § 19.120.130; Wash. Rev. Code

§ 19.100.220.

SUN V. ADVANCED CHINA HEALTHCARE 15

Because an antiwaiver provision by itself does not

supersede a forum-selection clause, in order to prove that

enforcement of such a clause “would contravene a strong

public policy of the forum in which suit is brought,” M/S

Bremen, 407 U.S. at 15, the plaintiff must point to a statute or

judicial decision that clearly states such a strong public

policy. See Doe 1, 552 F.3d at 1078–79, 1081. In Doe 1,

plaintiffs sued in California district court alleging a violation

of the California Consumers Legal Remedies Act, Cal. Civ.

Code § 1770, despite being bound by a forum-selection

clause requiring that any action be brought in Virginia state

courts. We determined that a California appellate court

decision, America Online, Inc. v. Superior Court of Alameda

Cty. (Mendoza), 90 Cal. App. 4th 1 (2001), had clearly held

that such a forum-selection clause “contravenes a strong

public policy of California,” namely to “protect consumers

against unfair and deceptive business practices.” Id. at

1083–84 (quoting Mendoza, 90 Cal. App. 4th at 15, 17).

Accordingly, we concluded that the forum-selection clause in

Doe 1 was “unenforceable as to California resident plaintiffs

bringing class action claims under California consumer law.”

Id. at 1084.

Applying these principles here, we first reject the Suns’

argument that the WSSA’s antiwaiver provision per se

precludes enforcement of the forum-selection clause. As we

explained in Richards, an antiwaiver provision, without more,

does not supersede the strong federal policy of enforcing

forum-selection clauses. See, e.g., Huffington, 637 F.3d at

25; Richards, 135 F.3d at 1295–96. We next turn to the

Suns’ argument that two Washington state-court decisions

establish that enforcement of the forum-selection clause

would contravene a strong public policy of the state. See

Acharya v. Microsoft Corp., 189 Wash. App. 243, 254–57

SUN V. ADVANCED 16 CHINA HEALTHCARE

(2015); Ito Int’l Corp. v. Prescott, Inc., 83 Wash. App. 282,

287–90 (1996). Neither case is sufficiently on point.

Acharya held that it would contravene Washington’s public

policy to enforce a forum-selection clause that would prevent

a plaintiff from pursuing her discrimination claim under the

Washington Law Against Discrimination. 189 Wash. App. at

255–56. While this judicial decision may declare the state’s

strong public policy in the state’s anti-discrimination law, it

does not support the Suns’ claim that Washington has a

similar policy with respect to its securities law.

The Suns’ reliance on Ito International Corp. v. Prescott,

Inc., is also misplaced. In Ito, the state court considered a

contractual choice-of-law provision which required certain

issues to be interpreted in accordance with Japanese law.

83 Wash. App. at 287–88. When considering whether to

enforce this provision as to the plaintiffs’ WSSA claims, Ito

first explained that “Washington courts will not implement a

choice of law provision if [1] it conflicts with a fundamental

state policy or [2] if the state has a materially greater interest

than the other jurisdiction in the resolution of the issue.” Id.

at 288–89 (emphasis added) (citing Rutter v. BX of Tri-Cities,

Inc., 60 Wash. App. 743, 746 (1991)). The state court

concluded that the second condition applied: “Here, the State

has a strong interest in applying its securities act to a

partnership involving several Washington defendants,

Washington plaintiffs, and property located in Washington.”

Id. at 289. Accordingly, the state court declined to enforce

the contractual choice-of-law provision. Instead, after

conducting a state choice-of-law analysis, it concluded that

“public policy favors the application of Washington law”

SUN V. ADVANCED CHINA HEALTHCARE 17

under the circumstances of that case.8 Id. at 290. Because the

state court did not find that the WSSA was “a fundamental

state policy,” but only that public policy favored applying

Washington law in the context of that case, Ito does not

constitute a judicial decision that enforcement of a forumselection

clause would contravene a strong public policy of

the forum in enforcing the WSSA. Id.

B

We now turn to the third M/S Bremen exception, which

asks whether “trial in the contractual forum will be so gravely

difficult and inconvenient that [the litigant] will for all

practical purposes be deprived of his day in court,” 407 U.S.

at 18. Although the Supreme Court has not directly

interpreted this exception, Atlantic Marine suggests it is

difficult to satisfy. Where the parties have agreed to a forum-

8 Ito observed that Washington had numerous other significant

contacts with the transaction, including:

(1) Ito International is a Washington corporation

owning nearly one-third of the shares, (2) all defendants

reside or conduct business in Washington, (3) the

investment involves Washington property, (4) the

building is managed under agreements which each

contain a Washington choice-of-law clause,

(5) Washington individuals guaranteed the 6.4 percent

rate of return, (6) the offering materials emanated from

Seattle, (7) selling and marketing activity occurred in

Seattle, (8) a Seattle attorney was involved in preparing

and reviewing many transaction documents, (9) a

cocktail party soliciting investors occurred in Seattle,

and (10) many of the acts of alleged fraud occurred in

Washington.

83 Wash. App at 289–90.

SUN V. ADVANCED 18 CHINA HEALTHCARE

selection clause, they “waive the right to challenge the

preselected forum as inconvenient or less convenient for

themselves or their witnesses, or for their pursuit of the

litigation.” Atl. Marine, 571 U.S. at 64. A court must dismiss

a suit filed “in a forum other than the one specified in a valid

forum-selection clause,” even if it “makes it possible for

[plaintiffs] to lose out completely, through the running of the

statute of limitations in the forum finally deemed

appropriate.” Id. at 66 n.8 (alteration in original) (quoting

Norwood v. Kirkpatrick, 349 U.S. 29, 31 (1955)). “[W]hen

the plaintiff has violated a contractual obligation by filing suit

in a forum other than the one specified in a valid forumselection

clause . . . dismissal would work no injustice on the

plaintiff.”9 Id. As the Fifth Circuit explained it, under

Atlantic Marine, courts must enforce a forum-selection clause

unless the contractually selected forum affords the plaintiffs

no remedies whatsoever. Weber v. PACT XPP Techs., AG,

811 F.3d 758, 774 (5th Cir. 2016); see also Barnett v.

DynCorp Int’l, LLC., 831 F.3d 296, 308 n.14 (5th Cir. 2016).

“It is the availability of a remedy that matters, not predictions

of the likelihood of a win on the merits.” Weber, 811 F.3d at

774.

9 Prior to Atlantic Marine, we refused to enforce a forum-selection

clause when a plaintiff “provided specific evidence sufficient to

demonstrate that he would be wholly foreclosed from litigating his claims

against [defendants] in a Saudi forum,” because he “lacked the resources

to litigate in Saudi Arabia” and was afraid “about returning to Saudi

Arabia.” Petersen, 715 F.3d at 281. It is not clear whether opinions

declining to enforce forum-selection clauses because of the claimed

obstacles to litigating in the contractually selected forum survive Altantic

Marine. We need not address this issue, however, because the Suns do

not argue that litigation in California would be impossible as a practical

matter.

SUN V. ADVANCED CHINA HEALTHCARE 19

Our precedent is in accord with the Fifth Circuit. Prior to

Atlantic Marine, we held that a clause remains enforceable

even when the contractually selected forum may afford the

plaintiffs less effective remedies than they could receive in

the forum where they filed suit. Richards, 135 F.3d at 1296.

Atlantic Marine confirms this conclusion, and establishes that

“the fact that certain types of remedies are unavailable in the

foreign forum does not change the calculus if there exists a

basically fair court system in that forum that would allow the

plaintiff to seek some relief.” Weber, 811 F.3d at 774.

We now turn to the Suns’ argument. According to the

Suns, the third M/S Bremen exception applies here because:

(1) California courts will not consider their claim under the

WSSA due to the choice-of-law provision in their contract;

and (2) they will not be able to bring a claim under California

securities laws because those laws apply only to conduct

occurring within California.10 We disagree that the Suns

would be unable to obtain any relief in a California court.

10 The relevant provision of California law states:

It is unlawful for any person to offer or sell a security

in this state or buy or offer to buy a security in this state

by means of any written or oral communication that

includes an untrue statement of a material fact or omits

to state a material fact necessary in order to make the

statements made, in the light of the circumstances under

which the statements were made, not misleading.

Cal. Corp. Code § 25401 (1968) (emphasis added). Although the law has

since changed, see id. § 25401 (2016), the law in effect at the time of the

transaction applies to the Suns’ suit, Cal. Corp. Code § 25704(a) (“[P]rior

law exclusively governs all suits, actions, prosecutions or proceedings

which are pending or may be initiated on the basis of facts or

circumstances occurring before the effective date of this law.”).

SUN V. ADVANCED 20 CHINA HEALTHCARE

First, the Suns will have an opportunity to pursue both their

Washington and California securities claims without

opposition from the defendant. At oral argument in this case,

Kao committed to refraining from raising any argument that

the WSSA was inapplicable in California state court.11

Moreover, the district court ordered Kao not to contest the

applicability of California securities laws to the transaction at

issue, and the Suns may pursue a remedy in district court if

Kao violates that condition of dismissal. See Cooter & Gell

v. Hartmarx Corp., 496 U.S. 384, 396 (1990) (“A court may

make an adjudication of contempt and impose a contempt

sanction even after the action in which the contempt arose has

been terminated.”); Chambers v. NASCO, Inc., 501 U.S. 32,

44 (1991) (“[T]he power to punish for contempts is inherent

in all courts. This power reaches both conduct before the

court and that beyond the court’s confines[.]” (citation and

quotations omitted)).

Not only do the district court’s conditions of dismissal

and Kao’s commitment at oral argument mean that the Suns

may pursue a remedy under California and Washington

securities laws, supra at 20, but (as in Richards) the Suns also

“have recourse” under California common-law theories, such

as fraud or negligent misrepresentation. 135 F.3d at 1296.

Unlike with securities fraud, California law does not limit

common-law fraud or negligent misrepresentation to conduct

occurring within California. See Cal. Civ. Code §§ 1709–10.

California courts regularly permit plaintiffs to bring such

claims for securities transactions. See Small v. Fritz Cos.,

Inc., 30 Cal. 4th 167, 174 (2003) (explaining that California

11 See U.S. Court of Appeals for the Ninth Circuit, 16-35277, Sun v.

Advanced China Healthcare, Inc., YouTube 15:40–17:13, (May 10,

2018), https://www.youtube.com/watch?v=650qohdOnI8&t=940s.

SUN V. ADVANCED CHINA HEALTHCARE 21

courts have “entertained common law actions for fraud or

negligent misrepresentation” when “misrepresentations have

occurred in connection with the sale of corporate stock”).

Finally, the Suns would be able to bring claims under

California law for any alleged misrepresentations that

originated in Palo Alto. See Hall v. Superior Court, 150 Cal.

App. 3d 411, 417 (1983) (concluding that an offer to buy or

sell securities was likely made in California when in-person

and telephone negotiations occurred in the state).

Given that the Suns retain remedies under Washington

securities law, California securities law, and California

common law, they have not carried their heavy burden to

show that enforcement of the forum-selection clause would

deprive them of their day in court. Nor does enforcement of

the forum-selection clause contravene Washington’s public

policy of protecting investors and deterring securities fraud.

See Richards, 135 F.3d at 1296. Therefore, we conclude that

the district court did not abuse its discretion in dismissing the

complaint.12



* * *



12 The Suns do not identify any public interest factors, such as

administrative difficulties or local interest, that would make this an

exceptional case in which the court should decline to dismiss the case

despite the presence of a valid forum-selection clause. See Atl. Marine,

571 U.S. at 62 n.6, 64.

AFFIRMED.