What's Left to Litigate about Forum Selection Clauses? Atlantic Marine Turns Four

June 12, 2017 Published Work
Franchise Law Journal, Volume 36-4, Spring 2017

It is no secret that home turf is an advantage. Plants grow best in their native soil and climate. Sports teams win more often on their home court or field.[1] This trope remains true in litigation. An attorney litigating in his or her home court knows the judges and can tailor litigation strategy to the assigned judge's preferences and proclivities. The at-home attorney already knows the local procedural rules and practices, including quirks that can trip up out-of-towners. Use of home courts reduces travel, which in turn limits financial costs and lost time and energy. It minimizes the inconvenience to client employees who are witnesses. And, as an added bonus, it often creates the exact opposite burdens on the opposing party.

For some or all of these reasons, many franchisors include a forum selection clause in their franchise agreements and other standard contracts. These clauses usually provide that any litigation relating to the franchise agreement (or depending on the wording, the parties' relationship) may be brought only in a certain state or federal court. Yet, franchisees[2] often ignore forum selection clauses and bring lawsuits in their home courts. In federal court, franchisors often respond by attempting to have the lawsuit transferred to the contractually selected forum under 28 U.S.C. § 1404(a), the federal venue transfer statute that allows for a transfer to a different federal venue "for the convenience of parties and witnesses, in the interest of justice." Federal courts decide § 1404(a) motions by weighing various public and private interest factors. Historically, federal courts considered a forum selection clause just one of the factors in this analysis; although it was a "significant factor," the existence of a forum selection clause was hardly dispositive. That changed four years ago. The U.S. Supreme Court's 2013 decision in Atlantic Marine Construction Co. v. U.S. District Court for the Western District of Texas made it clear that if a forum selection clause is valid, the case should be litigated in the contractually selected forum in all but the "most unusual of cases."[3]

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[1] Earsa Jackson & Jim Meaney, Forum Selection Clauses After Atlantic Marine, at 1 (presented at 37th Annual Forum on Franchising, Oct. 15-17, 2014), /content/uploads/2018/07/w4-authcheckdam.pdf.

[2] Obviously, a franchisor may also sue a franchisee in an improper forum, and the franchisee can seek to enforce the forum selection clause. In the author's experience, that is not common. Therefore, this article will focus on the usual scenario where the plaintiff-franchisee sues the defendant-franchisor in a forum different than the one chosen in the forum selection clause.

[3] 134 S. Ct. 568, 583 (2013).