Academic journal article The Review of Litigation

Contractual Waiver of the Right to Remove to Federal Court: How Policy Judgments Guide Contract Interpretation

Academic journal article The Review of Litigation

Contractual Waiver of the Right to Remove to Federal Court: How Policy Judgments Guide Contract Interpretation

Article excerpt

I. INTRODUCTION

Federal statutes allow a state court defendant to remove many kinds of cases to federal court. A party may waive the right to remove, either by a procedural default during litigation, or by contractually waiving the right before litigation starts. When a court finds waiver of removal rights by contract, it often relies upon a venue or forum selection clause, which may not expressly mention removal. Litigation about how to interpret such clauses in the removal context has surged in recent years as awareness of the issue has spread. This article analyzes recent trends in this area, including the start and growth of a circuit split.

Part I examines when courts will employ a heightened standard that requires clear and unequivocal evidence of a party's intent to waive the right to remove, an issue on which a circuit split is developing. Part II considers the effect of forum selection language on the waiver analysis, such as a clause giving a party the right to choose the forum, or a contractual consent to the jurisdiction of a particular court. Parts III and IV review judicial treatment of seemingly minor, but substantively significant word choices in venue and forum selection clauses. Finally, Part V examines how, in addition to contract terms, the physical location of a federal courthouse may affect the analysis of whether a defendant has waived the right to remove an action from state court.2

Each aspect of this article illustrates how courts apply a general analytical framework in the context of specific policy goals. A court must, on the one hand, apply settled principles of contract interpretation, while at the same time giving weight to the policy judgments that removal statutes are strictly construed and forum selection clauses are favored. The highly practical question posed in this area - "what court should this case be in?" - also offers instructive examples of how courts approach significant theoretical and policy issues.

II. STANDARDS OF INTERPRETATION

The federal circuits are split as to the overall standard to apply when determining whether parties have contractually waived the right of removal. The Eleventh Circuit states that it applies "ordinary contract principles,"3 while the Fifth, Sixth, and Tenth Circuits say they require a higher standard of "clear and unequivocal" language to find waiver, although they apply that standard in distinct ways.4 The remaining circuits have not directly addressed this issue5 or are split among their district courts as to the applicable standard.6

A. "Lower" Standard

Eleventh Circuit courts have rejected the higher standard demanding clear and unequivocal waiver, and instead rely on "ordinary contract principles" to analyze a waiver issue.7 The principle of interpretation most frequently cited in this circuit on this point is the construction of an ambiguous clause against its drafter. Unlike cases decided under what courts in other circuits call "ordinary contract principles" (discussed infra), the Eleventh Circuit has not easily found waiver of the right to remove even under the "lower" standard for proving waiver. In Priority Healthcare, for example, the forum selection clause read in part, "[the] customer shall be subject to personal jurisdiction of the State of Florida and accept venue in Seminole County, Florida."8 The court found no waiver because it held this language was ambiguous and construed it against the plaintiff who drafted it.9

The Eleventh Circuit again found no waiver in Global Satellite, based on a venue clause that could amount to waiver under the "lower" contract interpretation standard as applied by other circuits.10 The clause stated, "[v]enue shall be in Broward County, Florida . . . [and] [t]he parties . . . expressly waive the right to contest any issues regarding venue or in personam jurisdiction and agree in the event of litigation to submit to the jurisdiction of Broward County, Florida. …

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