Skip to main content
SpringerLink
Log in

United States: The Interpretation and Effect of Permissive Forum Selection Clauses

  • Chapter
  • First Online:
Optional Choice of Court Agreements in Private International Law

Part of the book series: Ius Comparatum - Global Studies in Comparative Law ((GSCL,volume 37))

  • 754 Accesses

Abstract

A forum selection clause is a form of contractual waiver. By this device, a contract party waives its rights to raise jurisdictional or venue objections if a lawsuit is initiated against it in the chosen court. (If the forum selection is exclusive, then that party also promises not to initiate litigation anywhere other than in the chosen forum.) The use of such a clause in a particular case may therefore raise a set of questions under contract law. Is the waiver valid? Was it procured by fraud, duress, or other unconscionable means? What is its scope? And so on.

Unlike most contractual waivers, however, a forum selection clause affects not only the private rights and obligations of the parties, but something of more public concern: the jurisdiction of a court to resolve a dispute. The enforcement of such a clause therefore raises an additional set of questions under procedural law. For instance, if the parties designate a court in a forum that is otherwise unconnected to the dispute, must (or should) that court hear a case initiated there? If one of the parties initiates litigation in a non-designated forum that is connected to the dispute, must (or should) that court decline to hear the case?

Under US law, the bottom line is straightforward: almost always, in consumer as well as commercial contracts, forum selection clauses will be enforced. Navigating the array of substantive, procedural, and conflicts rules whose interplay yields that result, though, is far less straightforward. That is the task of this report. Section 2 provides a brief background on the general attitude toward forum selection clauses. Section 3 surveys current state law on their use, in consumer as well as commercial contracts. Section 4 addresses the interpretation of forum selection clauses as either permissive or exclusive. Section 5 analyzes the effect of permissive clauses in state and federal courts. Finally, Sect. 6 turns to choice of law problems, particularly as they arise in the course of litigation in federal courts.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 139.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 179.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 179.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    Outside the United States, forum selection clauses are generally referred to as “choice of court agreements”. In order to maintain consistency with the judicial opinions here analyzed, this chapter uses the U.S. terminology.

  2. 2.

    See generally Lenhoff (1961), pp. 430–431; Gruson (1982), pp. 138–139 (describing the traditional approach).

  3. 3.

    See Home Ins. Co. v. Morse, 20 Wall. 445, 451 (1874); see also Lenhoff (1961), p. 431 (describing the “almost proverbial” status of the rule that parties cannot “oust” a court of jurisdiction).

  4. 4.

    See Nute v. Hamilton Mut. Ins. Co., 6 Gray 174, 184 (1856).

  5. 5.

    Meacham v. Jamestown, F. & C.R. Co., 211 N.Y. 346, 352 (1914) (Cardozo, J., concurring). See also Clermont (2015), p. 648 (under the traditional approach, “it was for the sovereign to decide what the sovereign’s courts could or could not do; it was not for the parties to make private agreements as to the availability of public remedies”).

  6. 6.

    See, e.g., Krenger v. Pa. R.R., 174 F.2d 556, 561 (2d Cir. 1949) (Hand, J., concurring) (rejecting the notion of an “absolute taboo” against forum selection clauses, and stating that they are “invalid only when unreasonable” under the circumstances); Wm. H. Muller & Co. v. Swedish Am. Line Ltd., 224 F.2d 806, 808 (2d. Cir. 1955) (summarizing the new rule as follows: “[T]he parties by agreement cannot oust a court of jurisdiction otherwise obtaining; notwithstanding the agreement, the court has jurisdiction. But if in the proper exercise of its jurisdiction … the court finds that the agreement is not unreasonable in the setting of the particular case, it may properly decline jurisdiction and relegate a litigant to the forum to which he assented.”).

  7. 7.

    See Reese (1969).

  8. 8.

    Reese (1969), p. 292.

  9. 9.

    Restatement (Second) of Conflict of Laws § 80 (1971).

  10. 10.

    The Bremen v. Zapata Offshore Co., 407 U.S. 1 (1972).

  11. 11.

    The Bremen v. Zapata Offshore Co., 407 U.S. 1 (1972) at 10.

  12. 12.

    The Bremen v. Zapata Offshore Co., 407 U.S. 1 (1972) at 12, 15.

  13. 13.

    The Bremen v. Zapata Offshore Co., 407 U.S. 1 (1972) at 15.

  14. 14.

    The Bremen v. Zapata Offshore Co., 407 U.S. 1 (1972) at 16–18.

  15. 15.

    Indeed, the Court more or less suggested that the rule it articulated was applicable only in the admiralty context. The Bremen v. Zapata Offshore Co., 407 U.S. 1 (1972) at 10.

  16. 16.

    In a two-part article published in the early 1990s, Walter Heiser provides an overview of the effect of the Bremen decision on analysis in both state courts and federal courts in the years following that case. See Heiser (1993a), pp. 369–371; Heiser (1993b), p. 565.

  17. 17.

    See, e.g., Neb. Rev. Stat. §§ 25-414, -415; N.H. Rev. Stat. Ann. § 508-A; N.D. Cent. Code § 28-04.1.

  18. 18.

    See note 7 and accompanying text. The Model Choice of Forum Act, approved in 1968 by the National Conference of Commissioners on Uniform State Laws, was loosely modeled on the 1964 Hague Convention on the Choice of Court. The Model Act was ultimately withdrawn in 1975.

  19. 19.

    See, e.g., Phillips v. Audio Active Ltd., 494 F.3d 378, 383–384 (2d Cir. 2007); see also APR Energy Ltd. v. Greenhill & Co., LLC, 220 F. Supp. 3d 427, 430–431 (S.D.N.Y. 2016); Moose Toys Pty, Ltd., v. Creative Kids Far East Inc., 195 F. Supp. 3d 599, 602–603 (S.D.N.Y. 2016).

  20. 20.

    See note 79 and accompanying text.

  21. 21.

    See Davenport Mach. & Foundry Co. v. Adolph Coors Co., 314 N.W.2d 432, 437 (Iowa 1982) (“[C]lauses purporting to deprive Iowa courts of jurisdiction they would otherwise have are not legally binding in Iowa.”).

  22. 22.

    Mont. Code Ann. § 28-2-708 (Montana); Idaho Code § 29-110 (Idaho); N.C. Gen. Stat. § 22B-3 (North Carolina).

  23. 23.

    Idaho Code § 29-110. See also Cerami-Kote, Inc. v. Energywave Corp., 773 P.2d 1143, 1147 (Idaho 1989) (applying this provision).

  24. 24.

    See, e.g., Frontline Processing Corp. v. Merrick Bank Corp., 2013 WL 12130638, at ∗4 (D. Mont. 2013) (enforcing a forum selection clause despite Montana’s legislation); see also Shelter Mutual Insurance Co. v. Rimkus Consulting Group, 148 So. 3d 871, 881 (La. 2014) (holding that a rule of Louisiana procedure stating that venue objections could not be waived prior to litigation did not prohibit the use of forum selection clauses).

  25. 25.

    See generally Symeonides (2018), p. 1129 (noting the use of such legislation to address “consumer contracts, employment contracts, agency contracts, franchise contracts, and construction contracts”).

  26. 26.

    815 Ill. Comp. Stat. Ann. 705/4.

  27. 27.

    E.g., Minn. Stat. Ann. § 80C.21.

  28. 28.

    N.Y. A.B.C.L. § 55-c(11).

  29. 29.

    Coors Brewing Co. v. Oak Beverage, Inc., 549 F. Supp. 2d 764, 771 (E.D. Va. 2008).

  30. 30.

    Haw. Rev. Stat. Ann. § 437-52(1).

  31. 31.

    Tex. Bus. & Com. Code Ann. 272.001.

  32. 32.

    See generally Yackee (2004), pp. 48–49 (discussing the effect of protective legislation of this kind on the freedom of parties to choose a forum in advance). This distinction becomes important in the choice of law context; see Sect. 6.

  33. 33.

    See Verdugo v. Alliantgroup, L.P., 237 Cal. App. 4th 141, 150 (Cal. Ct. App. 2015) (stating that both California’s Franchise Investment Law and its Consumer Legal Remedies Act “share the common purpose of protecting California residents from unfair or deceptive business practices, and include a provision invalidating any waiver of the protections those laws provide,” and at 154, stating that California’s securities law “articulate[s] a strong public policy aimed at protecting the public from fraud and deception in securities transactions” and that a “cornerstone” of that law is an anti-waiver provision).

  34. 34.

    See, e.g., Tucker v. Cochran, 341 P.3d 673, 687 (Okla. 2014) (party argues “that the forum-selection clause was never negotiated, bargained for, or discussed by the parties, and … there was no place for his initials to show agreement with the [clause]”).

  35. 35.

    407 U.S. at 12, 16.

  36. 36.

    Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 n. 14 (1985).

  37. 37.

    499 U.S. 585 (1991).

  38. 38.

    499 U.S. 585 (1991) at 593.

  39. 39.

    Shute v. Carnival Cruise Lines, 897 F.2d 377, 389 (9th Cir. 1988).

  40. 40.

    499 U.S. at 593. The question here is not the reasonableness of the chosen forum, but rather the reasonableness of the “bargain” reflected in the contract provision.

  41. 41.

    499 U.S. at 593 at 593–594.

  42. 42.

    In other words, in the Court’s view, the plaintiffs had the opportunity after receiving the tickets in the mail to reject the contract if they objected to the forum selection clause. The dissenting opinion objected to this inference, questioning the effectiveness of notice contained in “the fine print on the back of the ticket.” 499 U.S. at 593 at 597 (Stevens, J., dissenting).

  43. 43.

    See, e.g., Campbell v. Marriott Ownership Resorts Inc., 2016 WL 817876, at ∗4 (Cal. Ct. App. 2016).

  44. 44.

    See, e.g., Kubis & Perszyk v. Sun Microsystems, 680 A.2d 618, 627 (N.J. 1996) (holding “that forum-selection clauses in franchise agreements are presumptively invalid, and should not be enforced unless the franchisor can satisfy the burden of proving that such a clause was not imposed on the franchisee unfairly on the basis of its superior bargaining position”).

  45. 45.

    See Heiser (1993a), pp. 375–376 (concluding that the vast majority of states enforce valid and reasonable forum selection clauses); Mullenix (2015), p. 751 (“[T]he doctrinal bar to prevailing on an unconscionability objection to a forum-selection … clause is so great as to render that challenge practically moot.”).

  46. 46.

    See, e.g., Gen. Elec. Capital Corp. v. John Carlo, Inc., 2010 WL 3937313, at ∗2 (E.D. Mich. 2010) (giving effect to such a clause); Superior Nut & Candy Co., Inc., v. TDG Brands, Inc., 2017 WL 319149, at ∗2 (N.D. Ill. 2017) (asymmetrical clauses enforceable under Arizona law).

  47. 47.

    See, e.g., Mount Carmel Ministries v. Seaway Bank & Tr. Co., 2015 WL 13375901, at ∗1 (S.D. Miss. 2015).

  48. 48.

    For a recent empirical study of this and other questions of interpretation, see Coyle (2019).

  49. 49.

    See, e.g., Converting/Biophile Labs., Inc. v. Ludlow Composites Corp., 722 N.W.2d 633, 641 (Wisc. App. 2006) (“Absent specific language of exclusion, an agreement conferring jurisdiction in one forum will not be interpreted as excluding jurisdiction elsewhere.”); Golf Scoring Sys. Unlimited, Inc. v. Remedio, 877 So. 2d 827, 829 (Fla. Dist. Ct. App. 2004) (“Generally, a forum selection clause will be considered permissive where it lacks words of exclusivity.”); Mark Grp. Int’l, Inc. v. Still, 566 S.E.2d 160, 162 (N.C. App. 2002) (“[T]he general rule is when a jurisdiction is specified in a provision of contract, the provision generally will not be enforced as a mandatory selection clause without some further language that indicates the parties’ intent to make jurisdiction exclusive.”).

  50. 50.

    See, e.g., Michaluk v. Credorax (USA), Inc., 164 So. 3d 719, 721 (Fla. Dist. Ct. App. 2015) (“[E]ach party hereby submits to the jurisdiction of the Courts of Malta as regards any claim, dispute or matter arising out of or in connection with this Agreement, its implementation and effect.”); Mark Grp. Int’l, Inc. v. Still, 566 S.E.2d 160, 161 (N.C. App. 2002) (“[T]he undersigned hereby submits itself to the jurisdiction of the 13th Judicial District Court of Hillsborough County Florida U.S.A. in order to resolve any such dispute.”).

  51. 51.

    See, e.g., Halpern Eye Assocs., P.A. v. E.A. Crowell & Assocs., Inc., 2007 WL 3231617, at ∗1 (Del. Com. Pl. Sept. 18, 2007) (“Each party hereto consents to the exclusive jurisdiction of the courts in the State of North Carolina.”).

  52. 52.

    See Heiser (2010), p. 1015.

  53. 53.

    See Lord (2002-2018), § 15:15 (relating the presumption in favor of permissive clauses to “the traditional reluctance of some courts to surrender their jurisdiction too readily”).

  54. 54.

    John Boutari & Son, Wines and Spirits, S.A. v. Attiki Imp. & Dist. Inc., 22 F.3d 51 (2d. Cir. 1994) (quoting City of New York v. Pullman, Inc., 477 F. Supp. 438, 443 (S.D.N.Y. 1979)).

  55. 55.

    Hull 753 Corp. v. Elbe Flugzeugwerke GmbH, 58 F. Supp. 2d 925, 927 (N.D. Ill. 1999).

  56. 56.

    Regal Kitchens, Inc. v. O’Connor & Taylor Condo. Const., Inc., 894 So. 2d 288, 290 (Fla. Dist. Ct. App. 2005).

  57. 57.

    See, e.g., Sterling Forest Assocs., Ltd. v. Barnett-Range Corp., 840 F.2d 249, 251–252 (4th Cir. 1988) (holding that the language “shall be” created a mandatory forum selection clause); General Electric Co. v. G. Siempelkamp & Co., 29 F.3d 1095, 1099 (6th Cir. 1994) (holding that the language “all” and “shall” was mandatory). See also Born and Rutledge (2011), pp. 462–463 (collecting cases).

  58. 58.

    Golf Scoring Systems Unlimited, Inc. v. Remedio, 877 So. 2d 827, 828 (Fla. Dist. Ct. App. 2004); accord Intershop Communications v. Sup. Ct., 104 Cal. App. 4th 191, 197 (Ct. App. First Dist. Calif. 2002).

  59. 59.

    Garcia Granados Quinones v. Swiss Bank Corp. (Overseas), S.A., 509 So. 2d 273, 274–275 (Sup. Ct. Fla. 1987).

  60. 60.

    This is common where the parties seek a neutral forum, or a forum with particular expertise in the subject matter of the contract.

  61. 61.

    The Fifth Amendment applies to federal courts, the Fourteenth to state courts.

  62. 62.

    Insurance Corp. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 (1982). See also Leroy v. Great Western United Corp., 443 U.S. 173, 180 (1979); Burger King, 471 U.S. at 472 n.14.

  63. 63.

    Until the middle of the twentieth century, the jurisdiction of state courts was defined in a strictly territorial fashion to encompass only state domiciliaries and other persons served with process while within the state. See Pennoyer v. Neff, 95 U.S. 714, 720 (1877). However, even during that period, defendants not falling into either of those categories could consent to jurisdiction.

  64. 64.

    “A man may not barter away … substantial rights,” and thus cannot “bind himself in advance by an agreement, which may be specially enforced, thus to forfeit his rights at all times and on all occasions whenever the case may be presented.” Home Ins. Co. v. Morse, 87 U.S. 445, 451 (1874).

  65. 65.

    National Equipment Rental, Ltd. v. Szukhent, 375 U.S. 311, 315–316 (1964) (“[I]t is settled … that parties to a contract may agree in advance to submit to the jurisdiction of a given court … .”).

  66. 66.

    See Overmyer Co. v. Frick Co., 405 U.S. 174, 185 (1972) (a pre-Carnival Cruise case drawing this distinction, and suggesting that a waiver must be “voluntary, knowing, and intelligently made”); see also Sachs (2014), p. 4.

  67. 67.

    See, e.g., RSR Corp. v. Sigmund, 309 S.W.3d 686, 704 (Ct. App. Tex. 2010) (“To the extent a party has consented to jurisdiction in a particular forum, the trial court’s exercise of personal jurisdiction over it does not violate due process even in the absence of contacts with Texas.”).

  68. 68.

    See, e.g., KC Ravens LLC v. Nima Scrap, LLC, 369 P.3d 341 (Ct. App. Kansas 2016).

  69. 69.

    See Born and Rutledge (2011), p. 115.

  70. 70.

    See, e.g., Ann. Cal. Code Civ. Proc. § 410.10 (“A court of this state may exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States.”).

  71. 71.

    See Casad et al. (2014), p. 441 (“[I]t remains a hornbook truism that personal jurisdiction proceeds in two steps, requiring state authorization in addition to satisfaction of due process requirements.”).

  72. 72.

    Fed. R. Civ. P. 4(k)(1).

  73. 73.

    See, e.g., GP&W Inc. v. Daibes Oil, LLC, 497 S.W.3d 866, 869–870 (Mo. Ct. App. 2016) (“Although it is generally necessary to satisfy the Missouri long-arm statute to obtain in personam jurisdiction over a nonresident defendant … jurisdiction over the person may also be obtained by consent or by waiver; for example, parties to a contract may agree in advance to submit to personal jurisdiction in a given court by means of a forum selection clause.”). See also Casad et al. (2014), pp. 446–447 (“[C]ourts in many states that have [enumerated-act] statutes have ruled that the statute is intended, despite its literal words, to authorize reach in all situations to the limits of due process.”).

  74. 74.

    Some statutes say so explicitly: see, e.g., Delaware 10 Del. C. § 3104 (i): “Nothing herein contained limits or affects the rights to serve process in any other manner now or hereafter provided by law. This section is an extension of and not a limitation upon the rights otherwise existing of service of legal process upon nonresidents.” But see Heiser (1993a), p. 379 (“a state may choose to limit its jurisdiction over nonresident defendants to occasions that meet a list of specified factors, many of which are less expansive than what due process would permit…”).

  75. 75.

    Additional support for this position is found in Burnham v. Superior Court of California, 495 U.S. 604 (1990), which suggests that the exercise of jurisdiction on any of the traditional bases must be per se constitutional: at 619.

  76. 76.

    See C.R. McRae v. J.D./M.D., Inc., 511 So. 2d 540, 543 (Fla. 1987) (“The legislature has set forth in our long arm statute the policy of this state concerning when Florida courts can exercise in personam jurisdiction over non-resident defendants. Conspicuously absent from the long arm statute is any provision for submission to in personam jurisdiction merely by contractual agreement.” See also Maschino v. Val-Pak Direct Marketing Systems, Inc., 902 So. 2d 196, 197 (Dist. Ct. App. Fla. 2005) (“In Florida, the mere execution of a forum selection clause is insufficient to confer long-arm jurisdiction over out-of-state defendants. There must be an independent basis for conferring long-arm jurisdiction.”); Jetbroadband WV, LLC v. Mastec North America, Inc., 13 So.3d 159, 161 (Fla. App. 3 Dist. 2009) (confirming that Florida courts have personal jurisdiction only over cases that fall within the parameters of Florida’s long-arm statute). This situation led to the enactment of a new provision explicitly authorizing jurisdiction on the basis of consent in certain types of contracts. See Steffan v. Carnival Corp., 2017 WL 4182203 (S.D. Fla. 2017).

  77. 77.

    See Sect. 2 above.

  78. 78.

    Cal. Civ. Proc. Code § 410.40 (California); Del. Code tit. 6, § 2708(b) (Delaware); Fla. Stat. Ann. tit. XXXIX §§ 685.101–102 (Florida); 735 Ill. Comp. Stat. Ann. 105/5-5, 5-10 (Illinois); N.Y. Gen. Oblig. Law §§ 5-1401–1402 (New York); Tex. Civ. Prac. & Rem. Code § 15.020 (Texas).

  79. 79.

    28 U.S.C.A. § 1441.

  80. 80.

    See, e.g., Valspar Corp. v. Sherman, 211 F. Supp. 3d 1209, 1213 (D. Minn. 2016). This can raise the question of interpretation whether the designation of a particular location as the forum is intended to encompass federal as well as state courts there. See Coyle (2019), pp. 2–3.

  81. 81.

    See, e.g., Carmen Group, Inc. v. Xavier Univ., 41 F. Supp. 3d 8, 13 (D. D.C. 2014).

  82. 82.

    There is a mechanism for transferring a case from one state court to a more convenient forum within the same state, which this Report does not address.

  83. 83.

    Many states also recognize the authority of courts to raise this basis for dismissal sua sponte.

  84. 84.

    330 U.S. 501 (1947). See generally Heiser (1993a), pp. 394–395 (discussing the application of the doctrine in state courts). The operation of this doctrine in federal courts is discussed in Sect. 5.2.2.

  85. 85.

    At a minimum, this means an alternative forum with jurisdiction over the defendant and the claim.

  86. 86.

    Piper Aircraft v. Reyno, 454 U.S. 235, 255 (1981).

  87. 87.

    Gulf Oil Corp., 330 U.S. at 508.

  88. 88.

    Gulf Oil Corp., 330 U.S. at 508.

  89. 89.

    Gulf Oil Corp., 330 U.S. at 508.

  90. 90.

    See, e.g., N.Y. C.P.L.R. 327(b) (McKinney 2012) (stating that New York courts will not dismiss an action arising out of a contract to which section 5-1402 applies on the basis of inconvenient forum). See also note 93 referring to Quanta Computer Inc. v. Japan Communications Inc., 230 Cal.Rptr.3d 334 (Cal. Ct. App. 2018) (noting that in California the rule foreclosing dismissal on the basis of inconvenience in such cases was no longer in effect).

  91. 91.

    See, e.g., Paradise Enterprises Ltd. v. Sapir, 811 A.2d 516, 528 (Sup. Ct. N.J. 2002) (“Once plaintiff filed suit [in the designated forum], defendant was bound by that choice, whether the agreement’s language be considered mandatory or permissive”); see also ICICI Bank Ltd. v. Essar Global Fund Ltd., 565 B.R. 241, 253 (S.D.N.Y. 2017); Mount Carmel Ministries v. Seaway Bank & Trust Co., 2015 WL 13375901 at ∗3 (S.D. Miss. 2015) (accord).

  92. 92.

    But see Patel v. Patel, 2007 WL 3293379 (Ct. App. Ohio 2007) (applying the traditional forum non conveniens analysis and dismissing a claim brought in the designated forum).

  93. 93.

    Quanta Computer Inc. v. Japan Communications Inc., 230 Cal.Rptr.3d 334 (Cal. Ct. App. 2018).

  94. 94.

    Quanta Computer Inc. v. Japan Communications Inc., 230 Cal.Rptr.3d 334 (Cal. Ct. App. 2018) at 340.

  95. 95.

    Quanta Computer Inc. v. Japan Communications Inc., 230 Cal.Rptr.3d 334 (Cal. Ct. App. 2018) at 342.

  96. 96.

    It is theoretically possible but practically unlikely for a defendant to move to dismiss in favor of an adequate alternative forum in a third location.

  97. 97.

    See notes 86–87 and accompanying text.

  98. 98.

    See, e.g., Animal Film, LLC v. D.E.J. Productions, Inc., 193 Cal. App. 4th 466, 471 (Ct. App. Calif. 2011) (“The existence of a permissive forum selection clause is one factor considered along with the other forum non conveniens factors in applying the traditional analysis.”).

  99. 99.

    See, e.g., Networld Communications Corp. v. Croatia Airlines, D.D., 2014 WL 4724625, at ∗5 (D.N.J. 2014).

  100. 100.

    See, e.g., Waste Management of Louisiana., L.L.C. v. Jefferson Parish, 48 F. Supp. 3d 894, 913 (E.D. La. 2014) (a federal court decision recognizing that effect).

  101. 101.

    See, e.g., Cohn v. Truebeginnings, LLC., 2009 WL 793925, at ∗3 (Ct. App. 2d Dist. Calif. 2009) (noting that “the parties expressly contemplated Texas as the appropriate forum pursuant to the permissive forum selection clause” and dismissing in favor of the designated forum).

  102. 102.

    28 U.S.C.A. § 1391(a).

  103. 103.

    A number of federal statutes creating causes of action in particular substantive areas, including insurance regulation and securities regulation, contain specific venue provisions that displace § 1391 in those contexts.

  104. 104.

    28 U.S.C.A. § 1391(b).

  105. 105.

    In other words, when the case does not fall within one of the categories laid out in the federal venue statutes.

  106. 106.

    § 1404(a) provides that “[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any district or division where it might have been brought or to any district or division to which all parties have consented.”

  107. 107.

    134 S. Ct. 568 (2013).

  108. 108.

    134 S. Ct. 568 (2013) at 577 (“§ 1391 makes clear that venue in ‘all civil actions’ must be determined in accordance with the criteria outlined in that section. That language cannot reasonably be read to allow judicial consideration of other, extra statutory limitations on the forum in which a case may be brought.”).

  109. 109.

    134 S. Ct. 568 (2013) at 581 (citing Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22, 31 (1988)).

  110. 110.

    134 S. Ct. 568 (2013) at 581.

  111. 111.

    134 S. Ct. 568 (2013) at 581.

  112. 112.

    134 S. Ct. 568 (2013) at 582.

  113. 113.

    134 S. Ct. 568 (2013) at 582. This is an exception from the general rule that after a § 1404 transfer, the transferee court must apply the state law that would have been applied in the transferor court. See Van Dusen v. Barrack, 376 U.S. 612, 639 (1964); Ferens v. John Deere Co., 494 U.S. 516 (1990) (establishing this rule for transfer motions made by defendants and plaintiffs, respectively).

  114. 114.

    See, e.g., Mullenix (2015), p. 728.

  115. 115.

    See Norwood v. Kirkpatrick, 349 U.S. 29, 32 (1955) (noting this distinction); In re Volkswagen of America, Inc., 545 F.3d 304, 313 (5th Cir. 2008) (accord).

  116. 116.

    Atlantic Marine, 134 S. Ct. at 580 (stating that “because both § 1404(a) and the forum non conveniens doctrine from which it derives entail the same balancing-of-interests 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”).

  117. 117.

    Atlantic Marine, 134 S. Ct. at 583 n.8. For an analysis of this approach, see generally Effron (2015).

  118. 118.

    See, e.g., Foundation Fitness Products, LLC v. Free Motion Fitness, 121 F. Supp. 3d 1038, 1043 (D. Oregon 2015); RELCO Locomotives, Inc. v. AllRail, Inc., 4 F. Supp. 3d 1073, 1085 (S.D. Iowa 2014).

  119. 119.

    United American Healthcare Corp. v. Backs, 997 F. Supp. 2d 741, 750 (E.D. Mich. 2014). See also Perficient, Inc. v. Priore, 2016 WL 866090, at ∗4 (E.D. Miss. 2016) (“the forum selection clause, even though permissive, is determinative in the analysis of the first [forum non conveniens] factor—the convenience of the parties—and weighs against transfer”); AAMCO Transmissions, Inc. v. Romano, 42 F. Supp. 3d 700, 713 (E.D. Pa. 2014) (“the Supreme Court has explained [in Atlantic Marine] that the existence of a forum selection clause of any kind significantly undercuts any argument that the preselected forum is inconvenient for the parties or their witnesses.”).

  120. 120.

    See generally Symeonides (2018), pp. 1124–1126 (discussing the application of such statutes in state courts).

  121. 121.

    Golden Palm Hospitality, Inc. v. Stearns Bank Nat’l Ass’n, 874 So. 2d 1231, 1234–1235 (Fla.App. 2004).

  122. 122.

    See notes 32–33 and accompanying text.

  123. 123.

    For a critique of this practice, see Symeonides (2018), pp. 1158–1160.

  124. 124.

    See Clermont (2015), p. 653; Symeonides (2018), p. 1136. For an example of an exception to this rule, see Hearst v. Calfund, LLC, 2016 WL 7661386 (Super. Ct. Conn. 2016) (applying the law selected by the parties to determine the enforceability of a forum selection clause).

  125. 125.

    Am. First Fed. Credit Union v. Soro, 359 P.3d 105, 106 (Nevada 2015).

  126. 126.

    See, e.g., EnQuip Technologies Group v. Tycon Technoglass, 986 N.E.2d 469 (Ct. App. Ohio 2012) (applying the law chosen to govern the contract to determine whether the choice of court was mandatory or permissive).

  127. 127.

    See, e.g., Turnkey Projects Resources v. Gawad, 198 So. 3d 1029, 1030–1031 (Ct. App. Fla. 2016) (applying forum law to determine whether a forum selection clause covered non-signatories).

  128. 128.

    See Clermont (2015), p. 661.

  129. 129.

    See Clermont (2015), p. 661.

  130. 130.

    The Hague Choice of Court Convention, for instance, which is now in force in EU member states and elsewhere, adopts the opposite presumption. Hague Convention on Choice of Court Agreements (concluded 30 June 2005), Article 3(b).

  131. 131.

    See generally U.S. Const. Art. III(2) (setting forth the scope of the federal judicial power).

  132. 132.

    28 U.S.C. § 1652 provides that “The laws of the several states, except where the Constitution or treaties of the United States or Act of Congress otherwise require or provide, shall be regarded as rules of decision in civil actions in the courts of the United States, in cases where they apply.”

  133. 133.

    Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938).

  134. 134.

    Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 495–497 (1941).

  135. 135.

    See generally Farmland Indus., Inc. v. Frazier-Parrott Commodities, Inc., 806 F.2d 848, 852 (8th Cir. 1986) (noting this complexity). For more thorough background of this issue, see Heiser (1993b), pp. 556–563.

  136. 136.

    487 U.S. 22 (1988).

  137. 137.

    487 U.S. 22 (1988) at 24.

  138. 138.

    487 U.S. 22 (1988) at 29.

  139. 139.

    487 U.S. 22 (1988) at 31 (“This is thus not a case in which state and federal rules ‘can exist side by side…’” (quoting Walker v. Armco Steel Corp., 446 U.S. 740, 752 (1978)).

  140. 140.

    487 U.S. 22 (1988) at 26 n.3.

  141. 141.

    See Mullenix (2015), p. 735.

  142. 142.

    See, e.g., Guest Associates, Inc. v. Cyclone Aviation Prods, Ltd., 30 F. Supp. 3d 1278, 1283 (N.D. Ala. 2014) (“[F]ederal law, not state law, applies to the enforceability of forum-selection clauses on a motion to transfer under § 1404(a).”).

  143. 143.

    See, e.g., Herr Indus., Inc. v. CTI Systems, SA, 112 F. Supp. 3d 1174, 1178 (D. Kansas 2015) (“The overwhelming majority of circuit courts consider the enforceability of forum selection clauses under federal law in diversity cases, based on the conclusion that venue presents a question of procedure for purposes of the Erie doctrine.”); Jones v. Weibrecht, 901 F.2d 17, 19 (2d Cir. 1990) (“Questions of venue and the enforcement of forum selection clauses are essentially procedural, rather than substantive, in nature.”). For an exploration of this approach, see Sachs (2014), pp. 17–26.

  144. 144.

    For an early articulation of this approach, see Stewart Org., Inc. v. Ricoh Corp., 487 U.S. at 36 (Scalia, J., dissenting) (“§ 1404(a) was enacted against the background that issues of contract, including a contract’s validity, are nearly always governed by state law.” His opinion concludes that “no federal statute or Rule of Procedure governs the validity of a forum-selection clause.”: 487 U.S. at 38.).

  145. 145.

    See, e.g., Abbott Labs. v. Takeda Pharm., 476 F.3d 421, 423 (7th Cir. 2007); TH Agric. & Nutrition, LLC v. Ace European Group Ltd., 416 F. Supp. 2d 1054, 1075 (D. Kan. 2006).

  146. 146.

    See Clermont (2015), p. 667.

  147. 147.

    For citations to such cases, along with a lengthy critique of that practice, see Sabal Limited LP v. Deutsche Bank AG, 209 F. Supp. 3d 907, 918–919 (Dist. Ct. W.D. Tex. 2016).

  148. 148.

    See Wong v. PartyGaming Ltd., 589 F.3d 821 (6th Cir. 2009).

  149. 149.

    Manetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 509, 513 (9th Cir. 1988). See also Foundation Fitness Products, LLC v. Free Motion Fitness, 121 F. Supp. 3d 1038, 1044 (D. Oregon 2015) (“To interpret the forum-selection clauses [as either mandatory or permissive], this Court, sitting in diversity, must apply federal law, despite the [contracts’] choice-of-law provisions selecting Utah law.”).

  150. 150.

    Foundation Fitness Products, 121 F. Supp. 3d at 1044.

  151. 151.

    Martinez v. Bloomberg LP, 740 F.3d 211, 217–218 (2d. Cir. 2014); see also Yavuz v. 61 MM, Ltd., 465 F.3d 418, 430 (10th Cir. 2006); Phillips v. Audio Active Ltd., 494 F.3d at 385.

  152. 152.

    See, e.g., Weber v. PACT XPP Technologies, AG, 811 F.3d 758, 770–773 (5th Cir. 2016) (applying the choice-of-law rules of Texas to determine that German law governed the contract, and then holding that under German law the forum selection clause in question was exclusive rather than permissive).

  153. 153.

    See, e.g., Logic Energy Solutions, LLC v. Boulter, 2014 WL 12588521, at ∗3 (W.D. Oklahoma 2014).

References

  • Born GB, Rutledge PR (2011) International Civil Litigation in United States Courts. Wolters Kluwer, New York

    Google Scholar 

  • Casad RC, Richman WM, Cox SE (2014) Jurisdiction in civil actions. LexisNexis, New York

    Google Scholar 

  • Clermont KM (2015) Governing law on forum-selection agreements. Hastings Law J 66:643–674

    Google Scholar 

  • Coyle JF (2019) Interpreting forum selection clauses. Iowa Law Rev 104:1791–1855

    Google Scholar 

  • Effron R (2015) Atlantic Marine and the future of forum non conveniens. Hastings Law J 66:693–718

    Google Scholar 

  • Gruson M (1982) Forum selection clauses in International and Interstate Commercial Agreements. Univ Illinois Law Rev 1982:133–206

    Google Scholar 

  • Heiser WW (1993a) Forum selection clauses in state courts: limitations on enforcement after Stewart and Carnival Cruise. Fla Law Rev 45:361–401

    Google Scholar 

  • Heiser WW (1993b) Forum selection clauses in federal courts: limitations on enforcement after Stewart and Carnival Cruise. Fla Law Rev 45:553–608

    Google Scholar 

  • Heiser WW (2010) The Hague Convention on Choice of Court Agreements: the impact on forum non conveniens, transfer of venue, removal, and recognition of judgments in United States Courts. Univ Pa J Int Law 31:1013–1050

    Google Scholar 

  • Lenhoff A (1961) The parties’ choice of a forum: “Prorogation Agreements”. Rutgers Law Rev 15:414–490

    Google Scholar 

  • Lord RA (2002–2018) Williston on contracts. West Group, New York

    Google Scholar 

  • Mullenix LS (2015) Gaming the system: protecting consumers from unconscionable contractual forum-selection and arbitration clauses. Hastings Law J 66:719–760

    Google Scholar 

  • Reese WLM (1969) The model choice of Forum Act. Am J Comp Law 17:292–296

    Article  Google Scholar 

  • Sachs SE (2014) The Forum Selection Defense. Duke J Constitutional Law Public Policy 10:1–44

    Google Scholar 

  • Symeonides SC (2018) What law governs forum selection clauses? La Law Rev 78:1119–1161

    Google Scholar 

  • Yackee JW (2004) Choice of law considerations in the validity & enforcement of International Forum Selection Agreements: whose law applies? UCLA J Int Law Foreign Aff 9:43–96

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Indiana University Maurer School of Law, Bloomington, IN, USA

    Hannah L. Buxbaum

Authors
  1. Hannah L. Buxbaum
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Hannah L. Buxbaum .

Editor information

Editors and Affiliations

  1. Griffith Law School, Griffith University, Brisbane, Australia

    Mary Keyes

Rights and permissions

Reprints and permissions

Copyright information

© 2020 Springer Nature Switzerland AG

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Buxbaum, H.L. (2020). United States: The Interpretation and Effect of Permissive Forum Selection Clauses. In: Keyes, M. (eds) Optional Choice of Court Agreements in Private International Law. Ius Comparatum - Global Studies in Comparative Law, vol 37. Springer, Cham. https://doi.org/10.1007/978-3-030-23914-5_20

Download citation

  • DOI: https://doi.org/10.1007/978-3-030-23914-5_20

  • Published:

  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-030-23913-8

  • Online ISBN: 978-3-030-23914-5

  • eBook Packages: Law and CriminologyLaw and Criminology (R0)

Publish with us

Policies and ethics

Search

Navigation