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America Online, Inc. v. Superior Court of Alameda County
108 Cal. Rptr. 2d 699 (1st App. Ca. 2001).
Question and Conflict
Whether the forum selection clause designating Virginia to be the forum is enforceable.
Virginia has less consumer and class action protections than California does.
Rule
California favors contractual forum selection clauses as long as they are “freely and voluntarily, and their enforcement would not be unreasonable” as determine by suitableness, availability, and the ability to accomplish substantial justice. These factors may be evaluated in connection with determining whether enforcement would result in a violation of strong public policy in California.
Holding
Strong public policy would be violated if the provision is enforced, affirmed.
Facts
AOL continued to charge debit cards after subscriptions had been cancelled. The litigation here was filed in California as a class action in California. AOL then filed a motion to dismiss because the terms and conditions signed by the parties stated that the choice of law and forum would be in Virginia. At trial, the court denied this motion because it was clear the plaintiff had not exercised their free will when accepting the terms (being long and in cramped text).
Analysis
California has a CLRA which favors consumers protection and prohibits waiver of their rights. By requiring the plaintiffs to file in Virginia, it would effectively waive their rights under CLRA. This alone is a violation of strong California public policy. Considering other factors, Virginia’s law is must less protective of consumers and disfavors class actions. Adding together the many protective deficiencies, enforcement of the provision would also be a violation of strong California public policy.
Additionally, the court did not that convenience and the cost of travel to the forum is not enough to determine whether enforcement of the provision is reasonable.
Wong v. Party Gaming Ltd.
589 F.3d 821 (6th Cir. 2009).
Question and Conflict
Whether a forum selection clause designating Gibraltar as the forum is enforceable and whether the court was right to sua sponte raise the issue of forum non conveniens.
Rule
“A forum selection clause should be upheld absent a strong showing that it should be set aside.” The court considers whether the clause was fraudulent, whether the forum would be ill suited to handle the suit, and whether the forum would be seriously inconvenient.
Forum non conveniens requires the court to consider public and private factors to determine whether the case should be dismissed.
Holding
The clause is enforceable and forum non conveniens applies. Thus, the trial court did not error, affirmed.
Facts
Party Gaming is an online poker company where it allowed users to gamble on the site for winnings. When users register, they are obligated to sign the terms of services which indicate the choice of forum is Gibraltar (who would apply English law). Here, the plaintiffs sought certification as a class and brought suit against Party Gaming claiming fraudulent misrepresentations and inducement because Party Gaming had indicated that no collusion would appear on the site (and it had), and would not solicit the participation of minors (which it did).
Analysis
First, the court determines that the applicable law for discussing enforcement of the clause is federal law because this is in federal court focusing on a forum selection clause (mostly procedural).
Next, the court says the forum selection clause is enforceable because there was no fraud in inducing the clause (only general fraud), Gibraltar would not be ill-suited to handle the suit (because the defendant would likely want all the lawsuits to occur in one location), and it is not seriously inconvenient for the plaintiff to litigate in Gibraltar.
Finally, the court was not wrong to sua sponte dismiss for forum non conveniens. The public factors lead to application of Gibraltar law because most of the evidence and witnesses related to the misconduct would be located there, and Gibraltar is the home of the defendant. Additionally, the private factors lead to Gibraltar because the parties agreed to the forum within the contract. On another note, the plaintiff’s choice of forum is not deterministic.
Interestingly, the concurrence agrees simply because it would be illogical to litigate the issue in Ohio. Gambling in this manner is criminal in Ohio so it makes no sense to seek enforcement of a gambling contract for monetary damages when the contract itself was illegal.
Atlantic Marine Construction Co. v. U.S. Dist. Ct. for the Western Dist. of Texas
134 S. Ct. 568 (2013).
Question
How a forum selection clause ought to be enforced.
Rule
A forum selection clause works in the method of a transfer (for litigation arising only in the United States) under 28 USC § 1404(a). When considering whether the case should transfer, the court must:
- Give weight to the forum selection clause (rather than the plaintiff’s choice of forum), requiring the dissenting party to show the burden of why the clause should not be enforced.
- Private interests are not to be considered because the forum selection clause is an agreement that those private interests had already been considered and decided on between the parties. Public interests may be considered but are quite unlikely to alter the outcome.
- Finally, in the case of a transfer, the choice of law rules of the original forum does not also transfer. This is different than Van Dusan where a valid venue choice of law will also transfer under a 1404(a) analysis. In other words, Van Dusan does not apply.
Holding
The court was correct in saying the correct analysis was 1404(a), but they incorrectly applied that analysis. Reversed and remanded.
Facts
Atlantic Marine had a contract to construct a child-development center and hired J-Crew Management as a subcontractor on the project. During negotiations, the parties agreed that Virginia would be the choice of law and forum. After a dispute regarding payment arose between the parties, J-Crew sued Atlantic Marine in a federal district court in Texas. In response, Atlantic Marine sought dismissal under 1406(a) and Rule 12(b)(3) for improper venue. In the alternative, Atlantic Marine sought transfer to Virginia under 1404(a) and the forum selection clause.
Analysis
Applying the three principles outlined above: (1) The trial court was incorrect to require Atlantic Marine to show why the forum selection clause was enforceable; instead that burden should have been on the plaintiff with the presumption that the clause was enforceable. (2) Also, the trial court improperly considered private interest factors related to the plaintiff’s witness; at the time of contracting, the plaintiff knew the witnesses and could have negotiated accordingly. (3) Finally, the trial court incorrectly applied Texas choice of laws because the forum selection clause requires Virginia’s choice of laws to apply (regarding enforcement of the clause); a plaintiff cannot circumvent the forum selection clause by simply making an original filing in a forum they deem more favorable.
GreatAmerica Financial Services Corp. v. Carlos F. Concepcion, P.A.
No. LACV084673 (Iowa Dist. Jun. 30, 2016).
Question
Whether there is personal jurisdiction under the choice of forum and law provisions in the contract.
Rule
Where a forum selection clause is contained, the court should consider the contacts of the defendant has with the forum state to determine whether there is personal jurisdiction.
Holding
There is personal jurisdiction so the case is not dismissed.
Facts
Concepcion is a Florida based company that made an agreement with H&G to lease certain equipment for their business. As part of the lease, both parties agreed that any disputes would be resolved in the forum where H&G resided, or if they assigned to lease to another, the forum was to be the principal place of business of the assignee.
Later, H&G assigned the lease to GreatAmerica, an Iowa based company. Under the lease, Concepcion paid GreatAmerica consistently for 22 months but then failed to make the next 17 payments. This lawsuit was instituted by GreatAmerica to recover the missed payments. In response, Concepcion argues there was no authority for the agent to enter the agreement and there is no personal jurisdiction.
Analysis
First, the petition was deficient of any claim about the authority of the agent to enter the agreement, so the court fails to dismiss on those grounds.
Second, after outlining the several rules for personal jurisdiction (long-arm statutes, sufficient minimum contacts, jurisdiction by consent, etc.), the court determines that personal jurisdiction exists here. In this case, the contract contained a choice of law and forum clause that designated the principal place of business of the assignee would govern. Here, GreatAmerica is a business located in Iowa where the defendant made several payments to the plaintiff within the jurisdiction. This is sufficient to establish personal jurisdiction and enforce the choice of forum clause.
Disclaimer
The content contained in this article may contain inaccuracies and is not intended to reflect the opinions, views, beliefs, or practices of any academic professor or publication. Instead, this content is a reflection on the author’s understanding of the law and legal practices.