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S & J Rentals v. Hilti, Inc. – A Win for KCT in Oklahoma

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Today, a District Court Judge for the Northern District of Oklahoma issued an order granting our request to re-transfer a case back to California—a very rare occurrence.

The case is S & J Rentals v. Hilti, a class action lawsuit brought on behalf of California business owners against a manufacturer of power tools, Hilti, Inc. Plaintiff alleges that Hilti has engaged in a fraudulent business scheme involving its tools’ “automatic shutoff” function which requires purchasers to pay roughly $600 for reactivation exclusively to Hilti. Class members were never fully informed of this mandatory cost and therefore seek redress under California Law for fraudulent business practices.

The issue was that, although this case only involves California residents and was filed in California federal court, Hilti asserted that the case belongs in Oklahoma federal court due to a forum-selection clause buried in its sale contracts. We opposed Hilti’s position since Oklahoma law limits class actions to only Oklahoma residents and Plaintiff would have no remedy there. However, the California judge adopted Hilti’s interpretation of the forum-selection clause—that forum was proper in state or federal court where plaintiff would have the same procedural protections under Rule 23 as in California—and transferred the case to federal court in Oklahoma.

Upon receiving the case, the Oklahoma district court judge interpreted the forum selection clause as requiring the case to be filed in Oklahoma state court and issued an Order to Show Cause as to why she should not dismiss the case. Contrary to its original position, Hilti asserted that the forum selection clause requires the case to be filed exclusively in Oklahoma state court and requested dismissal. We filed a brief, (1) arguing that Hilti waived enforcement of the forum-selection clause by initially requesting transfer to Oklahoma federal court, and (2) requesting re-transfer to California for a reconsideration of the original judge’s ruling.

In her Order, the Oklahoma judge accepted our argument in its entirety. She noted that, although reconsideration of a transfer order should be extremely rare, due to the extraordinary circumstances in this case, it would be a “manifest injustice” to not permit reconsideration here. She continued, “[t]his procedural muddle is a mess of defendant’s creation,” and since Hilti was familiar with the laws of Oklahoma, “[i]t would have been the height of incompetence for [Hilti] to draft a forum selection clause without understanding [which forum it required] and the Court does not believe that defendant behaved in such a careless manner when drafting this forum selection clause.” Ultimately, since the California judge’s original transfer “order relies on [Hilti’s] misrepresentations” of the forum-selection clause to its benefit and plaintiff’s detriment, the case was transferred back to the Eastern District of California for further proceedings.

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