A Uniform System for the Enforceability of Forum Selection Clauses in Federal Courts

By Holt, Ryan T. | Vanderbilt Law Review, November 2009 | Go to article overview

A Uniform System for the Enforceability of Forum Selection Clauses in Federal Courts


Holt, Ryan T., Vanderbilt Law Review


I. INTRODUCTION: THE TALE OF STEWART, RICOH, AND CAROL

In the early 1980s, a successful and ambitious Alabama businessman named Walter H. Stewart purchased a failing local copying business. Through the Stewart Organization, a corporation he controlled, Stewart sought to steer this troubled business to the realm of profitability. To do so, he entered into a dealership contract with Ricoh Corporation, a national manufacturer of copy machines that conducted its operations in New York. Unfortunately, their relationship soured. Stewart sued Ricoh in an Alabama federal district court, basing jurisdiction on diversity of citizenship.1

Ricoh did not want to litigate in Alabama, and the original dealership contract seemed to provide a way out. That contract included a forum selection clause stating that any litigation arising out of the agreement had to be filed in a state or federal court located in Manhattan.2 Ricoh had two basic options for attempting to enforce this clause. It could move for the case to be transferred under the federal transfer statute3 to the federal district court in Manhattan.4 Alternatively, it could ask the court to enforce the clause by dismissing the Alabama suit.5 Ricoh chose to do both, but the district court, applying Alabama law to both motions, refused to enforce the clause.6 Ricoh preferred the application of federal law, which generally favored enforcing forum selection clauses,7 and it litigated the choiceof-law issue all the way to the U.S. Supreme Court. The Court sided with Ricoh, holding that the decision to transfer is governed by federal rather than state law.8 Thus, in the end, Ricoh from New York prevailed over Stewart from Alabama in selecting the forum for litigation.

Notably, the Court did not address the proper choice of law for motions to dismiss, because Ricoh abandoned that particular issue after losing at the district court level.9 The Eleventh Circuit, nonetheless, provided guidance on this issue, suggesting in broad dicta that federal law not only determines whether forum selection clauses should be enforced through a motion to transfer, but also a motion to dismiss.10 Thus, a defendant seeking to enforce a forum selection clause through a motion to dismiss in the Eleventh Circuit would likely benefit from the application of favorable federal law, rather than state law.

Yet if this exact situation were to recur in a state located in a different federal circuit, a federal court considering a forum selection clause's enforceability could reach a dramatically different result. Assume the following scenario. Carol from North Carolina enters into a contract with Ricoh from New York, and their contract contains a forum selection clause identical to the one in Stewart Organization, Inc. v. Ricoh Corp. The deal falls apart, and Carol files suit in federal district court in North Carolina.11 Ricoh again seeks to enforce the clause and bring the litigation home to New York. Nonetheless, Ricoh still faces the choice of bringing a motion to dismiss or a motion to transfer. If Ricoh files a motion to transfer, the North Carolina federal court would follow Stewart and apply federal law in determining whether the case should be transferred.12 As a practical matter, this would likely result in the clause being enforced through transfer to the New York federal court.13 However, if Ricoh files a motion to dismiss, the district court - lacking any guidance from Stewart on choice-of-law as to motions to dismiss - would likely apply state law in its determination as to dismissal.14 The district court would therefore apply North Carolina law,15 which disfavors forum selection clauses as a matter of public policy.16 The motion to dismiss would accordingly be denied, and the litigation would continue in North Carolina. Thus, whether Ricoh would be successful in moving litigation from North Carolina to New York would turn on the procedural device it employed to enforce the clause. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • A full archive of books and articles related to this one
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

A Uniform System for the Enforceability of Forum Selection Clauses in Federal Courts
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

    Already a member? Log in now.