![]() Venue, Jurisdiction and Forum Selection Provisions on what happens in instances of disagreement. One of the first questions presented is where and how the parties can deal with a dispute and whose laws apply. Thus, written contracts should contain clauses pertaining to venue, jurisdiction and choice of law. Boilerplate provisions on these subjects are recycled and passed on for generations. When drafting, it can be easy to forget that every word really counts. Ditching the copy-and-paste outline some of the traps presented, set forth how courts have interpreted various clauses and discuss practical considerations for drafting. clauses are presumed valid. See, e.g., Atlantic Marine Construction Co., Inc. v. U.S. District Court for the Western District of Texas, 134 S. Ct. 568 (2013). Carefully pruning and nourishing such provisions each time they are planted into a new contract can help head off issues. Three prominent issues to be aware of are the sovereignty vs. geography distinction, mandatory vs. permissive language and potential inroads regarding choice of law protection. statements of jurisdiction. For example, a contract could state that the parties may bring an action "in the courts of Utah." However, this may not have the intended result. Many judicial interpretations are finding that a single two-letter word ("in" or "of") may wholly change the meaning of jurisdictional provisions. In Doe 1 v. AOL, LLC, 552 F.3d 1077 (9th Cir. 2009), the parties disputed the meaning of a forum selection clause stating exclusive jurisdiction resides with "the courts of Virginia." One party claimed the phrase included state and federal courts in Virginia, while the other argued it conferred exclusive jurisdiction only to state courts. Id. at 1081. The court looked to the plain meaning of the word "of" as "indicating origin, source, descent, and the like." Id. at 1082 (citation omitted). Thus, the court concluded the word "of" designated only state courts as proper. Id. This creates a sovereignty versus geography distinction, where the word "of" is construed to refer to the sovereignty, while the word "in" refers to the geographical location of the courts. Accordingly, the court interpreted the word "of" to include only state courts of Virginia. Doe 1 also discussed several other cases in line with this distinction. For instance, the court in Am. Soda, LLP v. U.S. Filter Wastewater Group, Inc., 428 F.3d 921, 926 (10th Cir. 2005), concluded that "Courts of the State of Colorado" referred to sovereignty and not geography, allowing only state courts. Dixon v. TSE Int'l Inc., 330 F.3d 396, 398 (5th Cir. 2003), concluded likewise and held that "[f]ederal district courts may be in Texas, but they are not of Texas" and thus "Courts of Texas, U.S.A." meant the state courts. Finally, "the law, and in the courts, of the Commonwealth of Massachusetts" was interpreted to restrict "law" and "courts" to the state in LFC Lessors, Inc. v. Pac. Sewer Maint. Corp., 739 F.2d 4, 7 (1st Cir. 1984) (emphasis added). Conversely, courts have found "in" to mean both state and federal courts. See, e.g., Basicomputer Corp. v. Scott, 973 F.2d 507, 510 (6th Cir .1992) (holding a provision discussing courts "in the State of Ohio" did not exclude the federal & Counsel, PC, where his practice focuses on business, commercial and real estate litigation, transactions and mediation. He has served for many years on the Primerus Board of Directors. practices commercial litigation, commercial real estate, intellectual property, trademarks, contracts and general litigation. 460 South 400 East Salt Lake City, Utah 84111 801.322.2282 Fax mcruz@winderfirm.com winderfirm.com |