| || Los Angeles Lawyer
The Magazine of the Los Angeles County Bar Association
November 2010 Vol. 33, No. 8
MCLE Article: Location Location Location
California law, in contrast to federal rules, leaves little time at the initiation of a lawsuit for enforcing a forum-selection clause
By Julie J. Bisceglia
Julie J. Bisceglia is a research attorney for California Court of Appeal Justice William Bedsworth, Fourth District. She wrote this article as a civil litigator practicing at the Los Angeles office of Payne & Fears, LLP.
By reading this article and answering the accompanying test questions, you can earn one MCLE credit. To apply for credit, please follow the instructions on the test.
A WELL-WROUGHT forum-selection clause, with or without a companion choice-of-law clause, can have a profound impact on a lawsuit. Because California law requires--and federal law permits--a defendant seeking a change of forum to do so early in litigation, a forum-selection clause can make an action grind to a halt before it even gets underway. As these clauses become more commonplace in commercial contracts, counsel need to be familiar with the governing law. Indeed, searching for and evaluating a forum-selection clause should be one of the top items on a litigation checklist--right alongside insurance coverage.
A forum-selection clause represents an agreement between contracting parties about where a dispute that arises between them will be litigated. Such a clause is usually, though not always, paired with a choice-of-law clause that specifies which law will govern their dispute.1
In simpler times, courts often refused to enforce forum-selection clauses, perceiving them as attempts by private parties to "oust" the court's jurisdiction and also as contrary to public policy.2 In 1972, however, the U.S. Supreme Court, in The Bremen v. Zapata Off-Shore Company,3 took a decidedly more hospitable view. The case concerned a contract to tow an oil rig. A clause within the contract appointed the London Court of Justice as the forum for any dispute. When the oil rig was damaged in the Gulf of Mexico, the owner sued the towing company in Florida. The Florida district court and the Fifth Circuit refused to enforce the forum-selection clause, on the usual "ousting" and public policy grounds. The appellate court added that the plaintiff's choice of forum should rarely be disturbed. Applying a straight inconvenient-forum analysis--one that would be applied in the absence of a forum-selection clause--the appellate court found that the crucial events took place in U.S. waters, potential witnesses were nearby, and London had no interest in the matter.4
The Supreme Court, however, took the opposite view. Signaling a major shift in the law, the Court remarked that "far too little weight and effect were given to the forum clause in resolving this controversy."5 The Court instead held that forum-selection clauses "are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be 'unreasonable' under the circumstances."6 This rule assisted American commercial interests by enforcing the sanctity of contracts and holding parties to their bargain.7 If English law--assumed to apply in the absence of a choice-of-law clause8--was less favorable to the American rig owner than to the German towing company, that was part of the bargain and not grounds for refusing to enforce the clause.9
The Court also made short work of the "ousting" notion, implying that overworked federal district court judges would be happy to be "ousted" from having to hear a complex maritime case.10 Although the Court's holding in The Bremen applied to "federal district courts sitting in admiralty,"11 other courts, federal and state, soon gave it a much broader application,12 and so did the Court itself.13
The Bremen dealt with a unique, carefully negotiated contract concerning international commerce between American and foreign businesses.14 In Carnival Cruise Lines v. Shute, the Court examined a forum-selection clause in a form contract between an American company and its customers.15 Shute involved a clause on a ticket purchased by a couple, the Shutes, for a cruise vacation, during which Mrs. Shute was injured. The Shutes lived in Washington. The forum-selection clause specified Florida--Carnival's home state. When the Shutes sued in Washington, Carnival moved to enforce the clause.16
As it had in The Bremen, the Supreme Court focused on the economic realities, both commercial and judicial, underlying Carnival's clause. Holding that the lack of bargaining power between the passenger and the cruise line did not render a forum-selection clause unenforceable, the Court ticked off the reasons that a cruise line would insist on having one:
First, a cruise line has a special interest in limiting the fora in which it potentially could be subject to suit. Because a cruise ship typically carries passengers from many locales, it is not unlikely that a mishap on a cruise could subject the cruise line to litigation in several different fora....Additionally, a clause establishing ex ante the forum for dispute resolution has the salutary effect of dispelling any confusion about where suits arising from the contract must be brought and defended, sparing litigants the time and expense of pretrial motions to determine the correct forum and conserving judicial resources that otherwise would be devoted to deciding those motions....Finally, it stands to reason that passengers who purchase tickets containing a forum clause like that at issue in this case benefit in the form of reduced fares reflecting the savings that the cruise line enjoys by limiting the fora in which it may be sued.17
The Court also noted the lack of any evidence that Carnival had picked Florida for an untoward purpose, such as discouraging lawsuits, or that Carnival had gained the Shutes' agreement by "fraud or overreaching." Finally the Court observed that the Shutes did not have to go on the cruise if they objected to the clause. They failed to satisfy the "'heavy burden of proof'" required to render the clause unenforceable.18
California hopped on the forum-selection-clause bandwagon in 1976 when the California Supreme Court decided Smith, Valentino & Smith v. Superior Court.19 The Smith court cited The Bremen and the "modern trend" of enforcing these clauses,20 concluding that "forum selection clauses are valid and may be given effect, in the court's discretion and in the absence of a showing [that] enforcement of such a clause would be unreasonable."21 The court even helpfully defined "unreasonable": "[T]he forum selected would be unavailable or unable to accomplish substantial justice."22 Moreover, the court placed the burden of demonstrating unreasonableness on the party opposing enforcement.23
Since the decision in Smith, forum-selection clauses have generally encountered smooth sailing in California courts. Arguments that they appear in adhesion contracts,24 or that it may be more expensive to litigate in the selected forum,25 or that the law of the selected forum may be unfavorable or even hostile to the plaintiff's claims,26 or that the plaintiff did not read the clause,27 have all been held to be insufficient to overcome the plaintiff's heavy burden of showing unreasonableness. As courts and dockets become more crowded, no one even bothers to make the "ousting" argument anymore.28
In California state court, the mechanism for enforcing a forum-selection clause is a motion to dismiss or stay for forum non conveniens under Code of Civil Procedure Section 410.30.29 This motion must be filed within the time to plead to the complaint, unless the court extends the time for good cause.30 Section 418.10 provides directions for review by writ of an order denying the motion.31 A defendant who does not make this motion at the proper time waives any objection on inconvenient forum grounds.32
In federal court, a defendant has more options for enforcing a forum-selection clause, depending on the circumstances and on which circuit's law applies. A defendant can make a motion under 28 USC Section 1404 for a change of venue "in the interest of justice,"33 a motion to dismiss or transfer under 28 USC Section 1406, or, in some circuits (including the Ninth Circuit), a motion to dismiss under Rule 12(b)(3) of the Federal Rules of Civil Procedure.34 Federal law, rather than the law of the state in which the district court sits, governs whether the motion is granted.35 It is also possible to enforce a forum-selection clause through summary judgment, as the cruise line did in Shute.36 A plea of improper forum must, however, be asserted as an affirmative defense.37 If the opposing party has already launched a lawsuit in another forum, the party seeking to enforce the clause may move for an antisuit injunction.38
Terminology and Enforcement
Counsel in both state and federal courts must confront the vexed question of what kind of forum-selection clause they are dealing with--mandatory or permissive. Mandatory clauses usually will be enforced in both California and federal courts. In federal court, however, permissive clauses face an uphill battle. To complicate matters further, forum-selection clauses are sometimes expressed in terms of jurisdiction or venue instead of court location and type. All these refinements have generated voluminous and confusing case law. Minute changes in terminology are deemed sufficient to differentiate two clauses that look indistinguishable to the untutored eye.
Ideally, a mandatory forum-selection clause addresses court location and type (state, federal, or both) and jurisdiction separately and in unmistakably exclusive terms: "Exhibitor...expressly agrees that any and all disputes arising out of or in connection with this Agreement shall be litigated only in the Superior Court for Los Angeles, California (and in no other), and Exhibitor hereby consents to the jurisdiction of said court."39 In reality, however, many clauses are not drafted so tidily.
The most troublesome clauses are those phrased in terms of jurisdiction rather than court location and type. Although a permissive forum-selection clause hardly seems worth the trouble to print, a permissive jurisdiction clause makes sense. For example, a buyer agrees to be subject to the jurisdiction of the seller's home state, with no arguments about minimum contacts, although other states may also have jurisdiction over the buyer. Agreeing to be subject to the home state's jurisdiction, however, is not necessarily the same as agreeing to litigate disputes in the home state's courts.40
When faced with this kind of ambiguity--does "jurisdiction" mean "jurisdiction" or does it mean "forum"?--courts will do what they can to give effect to the parties' intentions, while remaining mindful of other issues that may bear on the choice of forum. Thus, in one case, the disputed clause stated, "For the purpose of resolving disputes regarding this Agreement...the Government [of Guyana], ATN and GT&T shall submit themselves to the jurisdiction of the courts of Guyana."41 The court combined this clause with a waiver of sovereign immunity by the government of Guyana and a choice of Guyana law and held that litigation had to take place in Guyana's courts.42 In another case, however, the clause "The courts of California, County of Orange, shall have jurisdiction over the parties in any action at law relating to the subject matter or the interpretation of this contract" was held not to require litigation in Orange County.43
If a federal court decides that the clause is mandatory, it will enforce it unless the plaintiff can show that enforcement would be unreasonable or unjust.44 In the Ninth Circuit, the court has identified three circumstances under which a forum-selection clause would not be enforced: fraud or overreaching, depriving nonmoving parties of their day in court, or contravening a strong public policy of the forum.45 The court has further held that if a motion to dismiss is based on controverted facts, "the trial court must draw all reasonable inferences in favor of the non-moving party and resolve all factual conflicts in favor of the non-moving party."46 Even under this test, however, the nonmoving party still carries a heavy burden to establish that the clause is unreasonable or unjust. Inconvenience, even a substantial amount of it, is not enough to "deprive" the nonmoving party of a day in court.47
If the clause is permissive, one of two results can occur. Either the court will ignore the clause and proceed with a standard analysis based on forum non conveniens,48 or the court will take the clause into account as one factor in a standard forum non conveniens analysis.49 This latter alternative is much more likely if the defendant has moved for a transfer rather than for outright dismissal. Here too, courts differ. Some courts give "substantial" weight to a permissive clause,50 while others simply regard it as one of the interests reviewed as part of the standard forum non conveniens analysis.51
California's Legal Wrinkle
The published California state court opinions on forum-selection clauses are mercifully fewer than the federal cases and far more uniform. California, however, has its own legal wrinkle that makes the distinction between mandatory and permissive troublesome.
The California Supreme Court has not issued an opinion on forum-selection clauses since 1976, when it decided the Smith case.52 The Smith court did not address, or even mention, mandatory and permissive clauses.
The California Court of Appeal introduced the concept of mandatory and permissive forum-selection clauses into California law in Berg v. MTC Electronics Technologies Company, Ltd.53--a case that abounds in difficulties. Berg involved a series of shareholder class action lawsuits, most of which were consolidated or coordinated in the Eastern District of New York. After these cases were safely berthed in New York, the Berg plaintiffs filed another shareholder action in Los Angeles, alleging substantially the same theories as those alleged in the New York cases. Not surprisingly, the California court granted the defendants a stay.54
The Berg plaintiffs argued that a statement in the MTC prospectus--not in any agreement--required the defendants to litigate in Los Angeles. According to the sentence in the prospectus, "'The company [MTC] has expressly submitted to the jurisdiction of the State of California and United States Federal courts sitting in the City of Los Angeles, California, for the purpose of any suit, action, or proceedings arising out of this Offering.'"55
The Berg court identified this sentence as a "service of suit clause," a particular type of clause developed for insurance policies.56 A service-of-suit clause provides that an insurer "'will submit to the jurisdiction of any court of competent jurisdiction and will comply with all requirements necessary to give such Court jurisdiction....'"57 The court observed that service-of-suit clauses operate to "confer personal jurisdiction on the selected forum, but not to mandate resolution of the dispute in that forum regardless of other considerations."58
While this is true enough, it is irrelevant to the analysis of a forum-selection clause. By definition, service-of-suit clauses do not "select" a particular forum. In an earlier case, the court in Appalachian Insurance Company v. Superior Court identified the key difference between the two kinds of clauses:
The difference between The Bremen and the case at bench [which dealt with a service of suit clause] lies in the type of forum selection clause involved. In The Bremen selection of the specific forum in London was "clearly a reasonable effort to bring vital certainty to this international transaction and to provide a neutral forum...." Given the strong evidence that the clause was an important part of the agreement, the parties must have conducted their negotiations with the clause prominently in mind....59
By contrast, the service-of-suit clauses served an entirely different purpose. Lloyd's used them to make its products more attractive to American businesses, which might otherwise have hesitated to contract with an insurer that could not be sued in the United States.60 Rather than providing "vital certainty" or protection "from being confronted by a myriad of different state, provincial, and national forums"61 afforded by The Bremen-type forum-selection clauses, a typical service-of-suit clause invites lawsuits in multiple jurisdictions.
Having confused two types of clauses with very different purposes, Berg launches into a discussion of mandatory and permissive forum-selection clauses, a discussion that has no bearing on service-of-suit clauses. The cases cited in Berg regarding mandatory and permissive clauses are, without exception, federal cases applying federal law.62
Since Berg, the fate of a permissive forum-selection clause has been extremely murky under California law. On the one hand, Berg states that the clause is to be given substantial weight.63 On the other hand, Berg says that the "traditional" forum non conveniens analysis, such as that set forth in Stangvik v. Shiley,64 applies.65
The Stangvik analysis, however, was developed for torts. It makes no allowance for a forum-selection clause at all. The traditional California forum non conveniens analysis causes a forum-selection clause simply to disappear, as if it had never existed.66 Moreover, the defendant, not the plaintiff, bears the burden of proof.67 In practice, however, although published opinions since Berg have cited it for the distinction between mandatory and permissive clauses,68 no published California appellate court decision has held a forum-selection clause unenforceable on the grounds that it is merely permissive.69
In state court practice, a forum-selection clause should not be confused with a true venue-selection clause.70 A clause that selects a California county in which a dispute must be litigated will run into trouble if the county is not otherwise appropriate.71 California courts will not allow private parties to override the legislature's determination as to which California county should host an action.72 If the clause selects a county or city in some other state, however, California courts will enforce it, assuming, no doubt, that the other state's courts can sort out their own venue problems.73
California courts usually regard forum-selection clauses with a benign eye. Nevertheless, a court will refuse to enforce even a mandatory clause if enforcement would compromise some important California public policy. An unconscionable forum-selection clause, just like any other unconscionable contract provision, will not be enforced.74 And some California statutes explicitly forbid enforcement of out-of-state forum-selection clauses. For example, Business and Professions Code Section 20040.5 prohibits out-of-state forum-selection clauses in franchise agreements involving a California franchise.75
Still other statutory schemes have been interpreted to forbid enforcement of an out-of-state forum-selection clause indirectly. In America Online, Inc., v. Superior Court,76 the court of appeal interpreted the nonwaiver provision of California's Consumer Legal Remedies Act77 to prohibit enforcement of a Virginia forum-selection clause. Because Virginia did not afford consumers the same rights that they would have under the CLRA, the court reasoned that enforcement of the forum-selection clause would be tantamount to a waiver of the CLRA's provisions.78
Realistically, a successful motion to dismiss or stay for forum non conveniens in state court or to dismiss or transfer in federal court often signals the end of a lawsuit. In many cases, litigation in a distant forum is simply impractical for one reason or another.
Counsel for defendants in state court must be particularly alert to the presence and nature of a forum-selection clause because of the short time period provided by California law for asserting it. When defense counsel receive a lawsuit based on a contract, especially a commercial or boilerplate contract, the terms should be checked immediately for an out-of-state forum-selection clause. If the complaint involves e-commerce, counsel should review the terms and conditions posted on the defendant's Web site. These terms and conditions have been held enforceable, even if they are only accessible by a link.79 If the contract includes a forum-selection clause and the client wishes to enforce it, counsel should then determine as best they can whether a court is likely to regard it as mandatory or permissive. A decision must be made quickly whether to move for dismissal or stay for forum non conveniens. Finally, counsel should become familiar with any statutes, such as those protecting consumers, that could directly or indirectly affect enforcement.
In federal court, the pace need not perhaps be quite so hectic, as a defendant may be able to assert improper venue as an affirmative defense and make a motion for summary judgment at its leisure. But counsel must be careful to follow the dictates of Rule 12 of the Federal Rules of Civil Procedure regarding motions to dismiss to avoid inadvertently waiving the issue.80
Plaintiffs' counsel also should be looking for forum-selection clauses while litigation is being considered. A client who suddenly finds out that he or she will have to litigate in a distant state--and perhaps under different and less favorable law--will likely be annoyed, at the very least, with counsel for failing to bring this game-changer to the client's attention before filing.
Sidebar: Mandatory or Permissive?
Counsel for clients faced with a forum-selection clause must predict whether a court will find the clause mandatory or permissive. Each of the following clauses appeared in a federal case. The endnotes reveal how the clauses were categorized.
1. "I agree and consent to the jurisdiction of the courts of the State of Vermont, with venue in Windham County, Vermont or the United States District Court for the District of Vermont for the resolution of all legal matters concerning this agreement...."1
2. "This Agreement shall be construed and enforced in accordance with the laws of the State of California and the parties agree that in any dispute jurisdiction and venue shall be in California."2
3. "A decision of the Board of Adjustment...or the decision of a permanent arbitrator shall be enforceable by a petition to confirm an arbitration award filed in the Superior Court of the City and County of San Francisco, State of California."3
4. "The parties hereunto consent to jurisdiction in the State of Nevada and the terms of this agreement to be interpreted pursuant to the laws of said State."4
5. "Jurisdiction: Each party expressly submits to the jurisdiction of the State of New York, U.S.A. and the federal courts situated in New York City and to service of process by registered mail."5
6. "The undersigned further acknowledges and agrees...that Michigan is a mutually reasonably convenient place for any trial concerning disputes arising from this Agreement and further agrees to submit to the jurisdiction of the Courts of the State of Michigan with respect to claims arising out of the agreement."6
7. "The undersigned further acknowledges and agrees...that Michigan is a mutually reasonably convenient place for any trial concerning disputes arising from this Agreement and further agrees to submit to the jurisdiction of the Courts of the State of Michigan with respect to claims arising out of the agreement."7--J.J.B.
Endnotes to Sidebar
1 Paster v. Putney Student Travel, Inc., No. 99-2062, 1999 U.S. Dist. LEXIS 9194, at *2 (C.D. Cal., June 17, 1999) (mandatory).
2 Sterling Forest Assocs. Ltd. v. Barnett-Range Corp., 840 F. 2d 249, 251-52 (4th Cir. 1988) (mandatory).
3 Northern Cal. Dist. Council of Laborers v. Pittsburg-Des Moines Steel Co., 69 F. 3d 1034, 1036 (9th Cir. 1995) (permissive).
4 Kachal, Inc., v. Menzie, 738 F. Supp. 371 (D. Nev. 1990) (permissive).
5 Central Coal Co. v. Philbro Energy, Inc., 685 F. Supp. 595, 596 (W.D. Va. 1988) (mandatory).
6 Furrey v. First Nat'l Monetary Corp., 602 F. Supp. 6, 8 (W.D. Okla. 1984) (mandatory).
7 First Nat'l Monetary Corp. v. Chesney, 654 F. Supp. 649, 654 (E.D. Mich. 1980) (permissive).
Endnotes to article
1 The choice-of-law clause usually specifies the law of the state selected as the forum. But see Vogt-Nem, Inc. v. M/V Tramper W. African Shipping Co., N.V., 263 F. Supp. 2d 1226, 1231-32 (N.D. Cal. 2002) (Netherlands forum, Dutch and American law applied).
2 See, e.g., Carbon Black Export v. The SS Monrosa, 254 F. 2d 297, 300-01 (5th Cir. 1958).
3 The Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972).
4 Id. at 6, 7.
5 Id. at 8.
6 Id. at 10.
7 Id. at 11.
8 Id. at 14 n.15.
9 Id. at 15.
10 Id. at 12.
11 Id. at 10.
12 See, e.g., Pelleport Investors, Inc., v. Budco Quality Theaters, Inc., 741 F. 2d 273, 279 (9th Cir. 1984), disapproved on other grounds by Powerex Corp. v. Reliant Energy Servs., 551 U.S. 224 (2007).
13 Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974); see also Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985).
14 The Bremen, 407 U.S. at 9, 10.
15 Carnival Cruise Lines v. Shute, 499 U.S. 585 (1991), superseded by statute, 46 U.S.C. §30509.
16 Id. at 587-88.
17 Id. at 593-94.
18 Id. at 595.
19 Smith, Valentino & Smith v. Superior Court, 17 Cal. 3d 491 (1976).
20 Id. at 494-95. In his dissent, Justice Mosk wrote in favor of the traditional view. Id. at 497-98.
21 Id. at 496.
22 Id. at 494.
23 Id.; see also Benefit Ass'n Int'l, Inc. v. Superior Court, 46 Cal. App. 4th 827, 835 (1996). An inconvenient-forum analysis operating in the absence of a forum-selection clause places the burden on the party advocating dismissal or stay (usually the defendant) to show that the chosen forum is not the right one. Century Indem. Co. v. Bank of Am., 58 Cal. App. 4th 408, 411 (1997).
24 Intershop Commc'ns AG v. Superior Court, 104 Cal. App. 4th 191, 201-02 (2002).
25 Smith, 17 Cal. 3d at 496.
26 CQL Original Prods., Inc. v. National Hockey League Players Ass'n, 39 Cal. App. 4th 1347, 1356-57 (1995).
27 Intershop Commc'ns, 104 Cal. App. 4th at 202; but see Carnival Cruise Lines v. Superior Court, 234 Cal. App. 3d 1019, 1027 (1991) (lack of notice renders clause unenforceable).
28 States differ, however, in their acceptance of forum-selection clauses. For example, the U.S. Supreme Court in Stewart Organization, Inc., v. Ricoh Corporation alluded to the hostility of Alabama state courts toward these clauses. Stewart Org., Inc., v. Ricoh Corp., 487 U.S. 22, 24, 30 (1988).
29 Olnick v. BMG Entm't, 138 Cal. App. 4th 1286, 1294 (2006); Cal-State Business Prods. & Servs., Inc., v. Ricoh, 12 Cal. App. 4th 1666, 1680 (1993). If the plaintiff is a California resident, the court will almost always stay, rather than dismiss, the case. See, e.g., Furda v. Superior Court, 161 Cal. App. 3d 418, 425 (1984).
30 Code Civ. Proc. §418.10(a).
31 Code Civ. Proc. §418.10(c). The standard of review for enforcement of a forum-selection clause is all over the map. See Intershop Commc'ns, 104 Cal. App. 4th at 198-99 (substantial evidence, abuse of discretion, de novo). The standard chosen will most likely depend on how the trial court arrived at its decision. For example, if it interpreted contract language as a matter of law, then the appellate court will probably review de novo. Id.
32 Code Civ. Proc. §418.10(e)(3).
33 Stewart, 487 U.S. at 29. If there is no enforceable choice-of-law provision, the law of the state in which the original court sat will still apply--even if the motion is granted and the case is moved. Van Dusen v. Barrack, 376 U.S. 612, 639 (1964).
34 Argueta v. Banco Mexicano, S.A., 87 F. 3d 320, 324 (9th Cir. 1996). It is important to check the law of the circuit in which the motion is made. In the Sixth Circuit, for example, a Fed. R. Civ. P. 12(b)(3) motion will be denied if the suit was originally filed in a court in which venue would be proper. Kerobo v. Southwestern Clean Fuels Corp., 285 F. 3d 531, 536 (6th Cir. 2002). If the case is transferred for improper venue under 28 U.S.C. §1406, the law of the new forum will apply in the absence of an enforceable choice-of-law provision. Nelson v. International Paint Co., 716 F. 2d 640, 643 (9th Cir. 1983).
35 Stewart, 487 U.S. at 32. Although the court has discretion to dismiss the action pursuant to 28 U.S.C. §1406(a), it will usually transfer the case if the selected forum is domestic and if it perceives that a dismissal may cause limitation problems. See, e.g., Roberson v. Norwegian Cruise Line, 897 F. Supp. 1285, 1289 (C.D. Cal. 1995).
36 Carnival Cruise Lines v. Shute, 499 U.S. 585 (1991), superseded by statute, 46 U.S.C. §30509; see also John Boutari & Sons v. Attiki Imps. & Distribs., Inc., 22 F. 3d 51 (2d Cir. 1994).
37 American Home Assurance Co. v. TGL Container Lines, Ltd., 347 F. Supp. 2d 749, 765 (N.D. Cal. 2004); Fed. R. Civ. P. 12(h).
38 Applied Med. Distrib. Corp. v. The Surgical Co., 587 F. 3d 909 (9th Cir. 2009); E. & J. Gallo Winery v. Andina Licores S. A., 446 F. 3d 984 (9th Cir. 2006). This procedure is also available in state court, but an injunction is granted only in exceptional circumstances. Advanced Bionics Corp. v. Medtronic, Inc., 29 Cal. 4th 697, 707-08 (2002).
39 Pelleport Investors, Inc., v. Budco Quality Theaters, Inc., 741 F. 2d 273, 275 (9th Cir. 1984), disapproved on other grounds by Powerex Corp. v. Reliant Energy Servs., 551 U.S. 224 (2007). The court held that this clause defeated removal to federal court. Pelleport, 741 F. 2d at 280. Parties may not, however, "contract" themselves into federal court. They must still satisfy the subject-matter jurisdictional requirements of federal question or diversity. A clause that specifies a federal district court as the exclusive forum will be unenforceable if the jurisdictional requirements are not met.
40 See Hunt v. Superior Court, 81 Cal. App. 4th 901, 908 (2000).
41 Atlantic Tele-Network, Inc. v. Inter-American Dev. Bank, 251 F. Supp. 2d 126, 133 (D. D.C. 2003).
42 Id. at 134.
43 Hunt Wesson Foods v. Supreme Oil Co., 817 F. 2d 75, 76 (9th Cir. 1987).
44 The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972).
45 Murphy v. Schneider Nat'l, Inc., 362 F. 3d 1133, 1140 (9th Cir. 2003).
46 Id. at 1138.
47 See, e.g., Sharani v. Salviati & Santori, Inc., No. C 08-03854 SI, U.S. Dist. LEXIS 105685, at *6-11 (N.D. Cal. Dec. 29, 2008) (Oakland couple did not provide enough evidence to establish that requiring them to litigate in London would deprive them of their day in court.).
48 See, e.g., Utah Pizza Serv. v. Heigl, 784 F. Supp. 835, 839 (D. Utah 1992).
49 See, e.g., Kachal, Inc., v. Menzie, 738 F. Supp. 371, 374 (D. Nev. 1990); Softwareworks Group, Inc., v. IHosting, Inc., No. C06-04301, 2006 U.S. Dist. LEXIS 75989, at *10 (N.D. Cal. Oct. 4, 2006).
50 See, e.g., Unisys Corp. v. Access Co., Ltd., No. C05-3378, 2005 U.S. Dist. LEXIS 31897 (N.D. Cal. Nov. 23, 2005).
51 See, e.g., Kachal, 738 F. Supp. at 374.
52 The state supreme court repeatedly referred to the Smith decision in its Nedlloyd Lines choice-of-law case. The court did not, however, add to the Smith analysis in Nedlloyd. Nedlloyd Lines, B.V. v. Superior Court, 3 Cal. 4th 459 (1992).
53 Berg v. MTC Elecs. Techs. Co., Ltd., 61 Cal. App. 4th 349 (1998).
54 Id. at 355.
55 Id. at 357.
56 Id. at 352-53.
57 Ford Motor Co. v. Insurance Co. of N. Am., 35 Cal. App. 4th 604, 608-09 (1995). These clauses were inserted into insurance policies for marketing purposes. As one insurance company executive explained, the clause "'was voluntarily developed by Lloyd's of London many years ago, as a response to competitor's arguments that Lloyd's was not amenable to process in the United States and that the potential customer should therefore place its business with a domestic company that was subject to service [of] process.'" Appalachian Ins. Co. v. Superior Court, 162 Cal. App. 3d 427, 432 (1984).
58 Berg, 61 Cal. App. 4th at 353.
59 Appalachian Ins. Co., 162 Cal. App. 3d at 439.
60 Id. at 432.
61 CQL Original Prods., Inc. v. National Hockey League Players Ass'n, 39 Cal. App. 4th 1347, 1355 (1995).
62 Berg, 61 Cal. App. 4th at 359-60.
63 Id. at 359.
64 Stangvik v. Shiley, 54 Cal. 3d 744, 751 (1991).
65 Berg, 61 Cal. App. 4th at 359.
66 See, e.g., Hemmelgarn v. Boeing Co., 106 Cal. App. 3d 576, 584-85 (1980).
67 Century Indem. Co. v. Bank of Am., 58 Cal. App. 4th 408, 411 (1997).
68 See Olnick v. VMG Entm't, 138 Cal. App. 4th 1286, 1294 (2006); Intershop Commc'ns AG v. Superior Court, 104 Cal. App. 4th 191, 196 (2002); Hunt v. Superior Court, 81 Cal. App. 4th 901, 907 (2000).
69 The trial court in TSMC North America v. Semiconductor Manufacturing International Corporation found that a forum clause was permissive, following Berg, but this was only one factor in the court's analysis of whether to grant an antisuit injunction prohibiting litigation in China. TSMC N. Am. v. Semiconductor Mfg. Int'l Corp., 161 Cal. App. 4th 581, 588-89 (2008). TSMC was not a forum non conveniens case.
70 Federal courts do not need to be concerned about enforcing clauses that specify a particular location within a state. In addition, the terms "venue" and "forum" are often used interchangeably in federal practice. See Sterling Forest Assocs., v. Barnett-Range Corp., 840 F. 2d 249, 251 (4th Cir. 1988).
71 Code Civ. Proc. §§392 et seq.
72 Alexander v. Superior Court, 114 Cal. App. 4th 723, 731-32 (2003); see also General Acceptance Corp. v. Robinson, 207 Cal. 285, 289 (1929).
73 See, e.g., Smith, Valentino & Smith v. Superior Court, 17 Cal. 3d 491 (1972) (court enforces clause requiring litigation in Philadelphia).
74 Bolter v. Superior Court, 87 Cal. App. 4th 900, 909-10 (2001).
75 This statute has encountered some difficulties. The Ninth Circuit has held that it is preempted by the Federal Arbitration Act when the forum-selection clause purports to regulate the forum for an arbitration. Bradley v. Harris Research, Inc., 275 F. 3d 884, 890 (9th Cir. 2001).
76 America Online, Inc., v. Superior Court, 90 Cal. App. 4th 1 (2001).
77 Civ. Code §§1750 et seq.
78 America Online, 90 Cal. App. 4th at 15; see also Hall v. Superior Court, 150 Cal. App. 3d 411 (1983) (antiwaiver provision of California securities law prevented enforcement of forum-selection clause).
79 Net2phone, Inc. v. Superior Court, 109 Cal. App. 4th 583, 588 (2003); see also Schlessinger v. Holland Am., N.V., 120 Cal. App. 4th 552, 555 (2004) (sample contracts available on cruise line Web site).
80 See, e.g., American Home Assurance Co. v. TGL Container Lines, Ltd., 347 F. Supp. 2d 749, 765 (N.D. Cal. 2004).
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