Is a Contract’s Forum-Selection Clause Enforceable in Federal Court?

Of course it is, if it meets three tests:

  1. The clause must be reasonably communicated to the other party;
  2. The clause must make the forum selection mandatory, not merely permissive; and
  3. The claims and the parties involved in the lawsuit must be subject to the forum-selection clause.

If these three tests are met, the forum-selection clause will be presumptively enforceable. The opposing party can overcome this presumption only by a sufficiently strong showing that the clause is unreasonable or unjust, or is invalid because of fraud or overreaching. These “public interest” considerations will rarely defeat a forum-selection clause that is presumptively valid.

Photo by Pixabay on Pexels.com

The operation of these rules was recently demonstrated clearly in Jones v. Povant USA LLC, in a decision by Judge Naomi Reice Buchwald of the Southern District of New York. Plaintiff Kimberly Moffitt Jones, of California, booked round-trip ocean passage for herself, her two daughters, and her autistic son, from Ushuaia, Argentina, to Antarctica, from December 20, 2018, to January 5, 2019. The total cost for the ocean voyage for the four family members was $125,028, which Ms. Jones paid in advance. Because the autistic son was not able to fly commercially, Ms. Jones chartered a private jet to fly the family, and the son’s therapist, from California to Argentina. She paid $355,000 for the private round-trip air travel. She alleges that she told Povant about this necessary additional cost in order for the family to go on the trip to Antarctica.

Problems and delays arose after the family arrived in Argentina. An issue with the ship’s propeller not only caused delays, but it also resulted in a change of the port of embarkation. Frustrated, Ms. Jones canceled the trip and demanded return of both the ocean fare and the air fare. Povant agreed to return the ocean fare but refused to pay Ms. Jones for the private jet travel from California to Argentina. Ms. Jones brought suit against Povant in federal court in New York, with allegations including intentional and negligent misrepresentation. Povant moved to dismiss based upon the forum-selection clause in the line’s General Terms and Conditions, which states that “only” the courts in Marseilles, France, have jurisdiction to hear any proceeding initiated against the line.

Judge Buchwald analyzed and followed precedent from the Supreme Court and the Second Circuit Court of Appeals governing the enforcement of forum-selection clauses. She first found the existence of the clause was properly communicated to Ms. Jones in the line’s General Terms and Conditions, not only to Ms. Jones but also to her travel agents. The payment of the ocean fare is deemed to signify agreement to the terms and conditions. Second, Judge Buchwald found that the clause was mandatory: only the courts in Marselles, France, would have jurisdiction over disputes arising from the ocean contract. Finally, the court concluded that Ms. Jones’s claims, and the parties to the lawsuit, were subject to the forum-selection clause.

Thus, the forum-selection clause was presumptively enforceable. “If a forum-selection clause is valid, then the only remaining inquiry is whether certain public interest considerations outweigh its enforcement.” Judge Buchwald found that Ms. Jones raised no public interest considerations, such as fraud in the contracting, unavailability of a convenient forum in France, or fundamental unfairness of the application of French law militating against enforcement of the clause.

The court dismissed the New York complaint without prejudice to refiling in France.

Palais de justice de Marseille Photo by Philippe Alès / CC BY-SA (https://creativecommons.org/licenses/by-sa/3.0)

Work Continues, At Home And In The Community

As we in New Jersey enter our eighth week of stay-at-home orders, we hope this finds you and your loved-ones healthy. We continue to work from home, conducting appearances via video-conference with those courts equipped to do so. As always, we can be reached 24/7 by email or by phone (press 2 for John, press 3 for Peter).

While we are able to continue working, not all have been so blessed. Food pantries nation-wide have seen an increase in clientele since the emergence of COVID-19. Northwest New Jersey is no exception. John’s grandson, Josh, has been volunteering at the Sparta Ecumenical Food Pantry for 18 months and has noted a marked increase of first-time clients. He has heard many stories of neighbors finding themselves newly out of work and in need of assistance to feed their families. New Jersey Gov. Phil Murphy highlighted this need and Josh’s work during a recent press conference.

Click on the photo to watch Gov. Murphy’s shout-out

We also invite you to watch Josh’s video, which he created to demonstrate the amazing work being done at the food pantry, as well as the urgent need. We’re proud of you, Josh!

Thank you to all who have volunteered your talents to help your neighbors during this time! Thank you to the front-line workers who protect and serve! Thank you to the supply chain workers who keep our country moving!

We Are Here For You

As we continue to work from home, we hope that all of you are doing well, and staying safe, healthy, and self-distanced (a reflexive verb that has entered the lexicon perhaps for as far as we can imagine).  For everyone, our work and world exist on email, phone, Skype, Zoom, and the like.  A Zoom birthday party held this week brought family together from North Carolina and New Jersey, with surprising success.  With courts largely closed for now, we anticipate in-person status conferences and motions moving from the courtroom, past the telephone, and on to Zoom and other videoconference platforms.  Depositions can work well via videoconference in many cases. Mediations, and even arbitrations, are transitioning to video, at least for the foreseeable future, in appropriate cases.  But trials, especially in personal injury cases, are another subject.  Plaintiffs’ attorneys will still want their juries in live courtroom settings . . . until the trial delays bring financial woes to their firms and their clients.  As we prepare for those trials, whenever they resume, we will keep you advised of courts’ changing rules and schedules, and of legal developments of interest.  Stay safe and healthy.

As always, we can be reached 24/7. Our phones will route your calls to John (press 2) or Peter (press 3) at any time, with immediate connection to our cell phones.

LEGISLATIVE UPDATE: Independent Contractor v. Employee

NJ: Proposed Legislation

NJ State House

It was all but certain to pass. New Jersey Governor Phil Murphy was waiting to sign it. Television ads proclaimed its virtues. But the State’s anti-independent contractor bill (similar to California’s AB5) was pulled from the last legislative session. Groups representing independent contractors in myriad occupations made forceful and practical arguments against the bill. Included were freelance writers, musicians, doctors, various independent teachers, truckers, graphic designers, bakers, and others. Many legitimate independent contractor businesspeople prefer the freedom of owning and operating their own businesses. They do not want to be artificially classified as employees, a move they say would harm their businesses. The legislation was re-introduced on January 14th, and referred to the Labor Committees of both the Senate and Assembly. We are watching developments in both New Jersey and New York, which is also considering similar legislation.

CA: Preliminary Injunction Granted

Much to the relief of many, on January 16th, Judge Benitez granted a preliminary injunction to the California Trucking Association, temporarily stopping the enforcement of AB5 upon motor carriers. In his decision, Judge Benitez writes, “…there is little question that the State of California has encroached on Congress’ territory by eliminating motor carriers’ choice to use independent contractor drivers, a choice at the very heart of interstate trucking. In so doing, California disregards Congress’ intent to deregulate interstate trucking, instead adopting a law that produces the patchwork of state regulations Congress sought to prevent. With AB-5, California runs off the road and into the preemption ditch of the FAAAA.”