Introduction
Often companies that contract with parties in various states are faced with litigation across various forums. Being sued in federal and state courts across the United States can be expensive, time consuming and disruptive. To help minimize this problem, businesses sometimes include in their contracts forum-selection clauses, which mandate that any litigation or arbitration be brought in a specific forum. This article addresses the enforceability of forum selection clauses by surveying the laws of fourteen states: Colorado, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, Utah and Wyoming. This survey demonstrates that forum-selection clauses are valid and generally will be enforced except in certain circumstances described below.
Forum-Selection Clauses Are Enforceable and Prima Facie Valid
Uniformly, courts uphold forum selection clauses as valid and enforceable. The United States Supreme Court has held that “the personal jurisdiction requirement is a waivable right.”[i] Similarly, state courts have recognized that parties may waive personal jurisdiction.[ii] Because personal jurisdiction is a waivable right, parties to a contract may agree in advance to waive personal jurisdiction in a particular forum, thereby agreeing to submit to a court’s jurisdiction, through a forum-selection clause.[iii] Mandatory[iv] forum-selection clauses are generally enforceable and presumptively valid.[v]
Courts Examine Certain Factors When a Forum-Selection Clause Is Challenged
Based on case law from the above-mentioned states,[vi] a forum-selection clause will be enforced unless the party opposing enforcement clearly shows that one or more of the following is true: (1) enforcement would be unreasonable or unjust, (2) the clause is invalid for reasons of fraud or overreaching, (3) enforcement would contravene a strong public policy of the forum where the suit was brought, or (4) the selected forum would be seriously inconvenient for trial.[vii] Given that forum-selection clauses are prima facie valid, the party challenging enforcement of the forum-selection clause bears a heavy burden of proof.[viii]
A Forum-Selection Clause Must Be Reasonable and Just
Courts will not enforce a forum-selection clause if the party opposing enforcement shows that doing so would be unreasonable or unjust. In making this determination, some courts simply look to other factors. Other courts, however, consider this factor separately. In these states, whether or not the selected forum is reasonable and just is determined by looking at the nature of the contract and the location of the activities giving rise to the claim. Typically, a forum-selection clause is reasonable and just if there is some minimal nexus between the forum state and the parties or the subject of the contract.[ix] This inquiry does not rise to the level of a traditional jurisdictional/minimum contacts analysis.[x]
A Forum-Selection Clause Must Not Be the Result of Fraud or Overreaching
Courts will not enforce a forum-selection clause if the party opposing enforcement shows it is the result of fraud or overreaching. Overreaching has been defined as a contract that results in an unfair surprise or oppression to the party alleging the overreaching[xi] or the unfair use of unequal bargaining power.[xii] Some courts have held that the fraud or overreaching must involve the forum-selection clause itself—fraud or overreaching that relates to the contract generally is not sufficient.[xiii]
In addressing this factor, many courts have examined preprinted form contracts that contain forum-selection clauses. These courts have determined that such contracts do not automatically constitute fraud or overreaching sufficient to nullify a forum-selection clause, and upon individual examination of such contracts, most courts have found that forum-selection clauses in such contracts are enforceable.[xiv] Outside of the employment context,[xv] when commercial entities or sophisticated and experienced businessmen deal with one another, courts have found that forum-selection clauses found in preprinted form contracts are valid and enforceable.[xvi] But even unsophisticated parties can be bound by such agreements if a corporate defendant deals with individuals from many locations and therefore “has a special interest in limiting the fora in which it potentially could be subject to suit.”[xvii]
A Forum-Selection Clause Must Not Contravene a Strong Public Policy of the Forum Where the Suit Is Brought
Courts will not enforce a forum-selection clause if the party opposing enforcement shows that enforcement would violate a strong public policy of the state in which the reviewing court sits.[xviii] Courts have recognized public policies strong enough to overcome a forum-selection clause in the following illustrative situations:
- A lawsuit involving a real estate partition action regarding land within the forum state. Because the state courts were endowed with “powers to make a just and equitable partition between the parties and to secure their respective interests . . . . [i]t would be difficult to exercise such plenary powers through orders from the courts of two jurisdictions.” As a result of this strong public policy, the court refused to enforce the forum-selection clause, which would have required the suit to be heard in another state, and retained jurisdiction.[xix]
- “Judicial economy” and the “prevention of multiple actions on similar issues.” A court held that where a “crossclaim is inextricably intertwined with issues raised in [the] complaint, the enforcement of a forum selection clause which would separate the claims is unreasonable.”[xx]
- A strong state interest in construing and applying state liquor control legislation in the state’s courts. As a result, the court refused to enforce the forum selection clause in a liquor distributorship agreement governed by state statutes.[xxi]
Generally, when a court identifies a strong public policy sufficient to avoid application of a forum-selection clause, that court is not the forum identified in the forum-selection clause (i.e., the court declines to cede jurisdiction to another court). Although the analysis of these “outbound” forum-selection clauses (i.e., the clause does not select the court analyzing the clause) is in theory no different from the analysis of “inbound” forum selection clauses (i.e., the clause selects the court analyzing the clause), case law suggests that courts addressing inbound clauses are more likely to enforce the forum-selection clause than courts addressing outbound clauses.[xxii]
A Forum-Selection Clause Must Not Provide a Forum That Is Seriously Inconvenient for Trial
Courts will not enforce a forum-selection clause if the party opposing enforcement shows that trial in the contractual forum “will be so gravely difficult and inconvenient that he will for all practical purposes be deprived of his day in court. Absent that, there is no basis for concluding that it would be unfair, unjust, or unreasonable to hold that party to his bargain.”[xxiii] Mere inconvenience or additional expense is not sufficient to overcome a forum-selection clause.[xxiv]
Conclusion
A forum-selection clause in a preprinted contract, mandating jurisdiction in a particular state, is prima facie valid and will likely be enforced. There are, of course, factors that could lead a court in another state to retain jurisdiction should someone file suit first in that state. But as long as there is some nexus to the selected state, the agreement was not the result of fraud, and the agreement was made by sophisticated, experienced parties, the forum-selection clause should be enforced. True, some of the potential adversaries in litigation may still choose to file suit outside of the preferred forum, forcing a company to engage in litigation to enforce the forum-selection clause. But because forum-litigation clauses are generally enforced, such a situation is still preferable to engaging in litigation in multiple forums around the country on the merits.
[i]
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473 n.14 (1985).
[ii]
Colorado: Clinic Masters, Inc. v. District Court, 192 Colo. 120, 123 (Colo. 1976).
Iowa: EFCO Corp. v. Norman Highway Constructors, Inc., 606 N.W.2d 297, 299 (Iowa 2000).
Kansas: Triad Const., Inc. v. Tanner, 1989 Kan. App. LEXIS 381, at *4 (Kan. Ct. App. 1989).
Minnesota: Igo v. Chernin, 540 N.W.2d 913, 914 (Minn. Ct. App. 1995).
Missouri: Whelan Sec. Co v. Allen, 2000 Mo. App. LEXIS 1719, at *6 (Mo. Ct. App. 2000).
Montana: Milanovich v. Schnibben, 2007 MT 128, P10 (Mont. 2007).
Nebraska: Ameritas Inv. Corp. v. McKinney, 269 Neb. 564, 570 (Neb. 2005).
New Mexico: Mata v. Anderson, 760 F. Supp. 2d 1068, 1086 (D.N.M. 2009).
North Dakota: Albrecht v. Metro Area Ambulance, 1998 ND 132, P10 (N.D. 1998).
Oklahoma: Travelers Cas. & Sur. Co. of Am. v. Unistar Fin. Serv. Corp., 35 Fed. Appx. 787, 789 (10th Cir. Colo. 2002).
South Dakota: In re Koch Exploration Co., 387 N.W.2d 530, 537 (S.D. 1986).
Texas: Marrocco v. Hill, 2011 Tex. App. LEXIS 8311, at *11 (Tex. App. Houston 14th Dist. Oct. 20, 2011).
Utah: Phone Directories Co. v. Henderson, 2000 UT 64, P15 (Utah 2000).
Wyoming: Cotton v. Brow, 903 P.2d 530, 531 (Wyo. 1995).
[iii]
See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473 n.14 (1985); Nat’l Equip. Rental, Ltd. v. Szukhent, 375 U.S. 311, 316 (1963).
[iv]
Some courts have drawn a distinction between mandatory forum-selection clauses and permissive forum-selection clauses, enforcing only the former.
Nebraska: Polk County Rec. Ass’n v. Susquehanna Patriot Commer. Leasing Co., 273 Neb. 1026, 1036 (July 2007) (“If the forum selection clause is permissive rather than mandatory, § 25-415 does not require dismissal of the Nebraska action.”).
New Mexico: Mueller v. Sample, 135 N.M. 748, 752 (N.M. Ct. App. 2004) (“The rule is that when venue is specified in a forum selection clause with mandatory or obligatory language, the clause will be enforced.”).
Texas: Bogart v. Star Bldg. Sys., 2011 Tex. App. LEXIS 1747, at *12 (Tex. App. Houston 1st Dist. Mar. 10, 2011) (stating that “mandatory forum-selection clauses are presumptively valid and enforceable”) (citing In re Int’l Profit Assocs., 274 S.W.3d 672, 678 (Tex. 2009)).
[v]
Colorado: Adams Reload Co. v. Int’l Profit Assocs., 143 P.3d 1056, 1060-61 (Colo. App. 2005).
Iowa: Liberty Bank, F.S.B. v. Best Litho, Inc., 737 N.W.2d 312, 315 (Iowa Ct. App. 2007).
Kansas: Vanier v. Ponsoldt, 251 Kan. 88, 99-101 (Kan. 1992).
Minnesota: Valspar Refinish, Inc. v. Gaylord’s, Inc., 2006 Minn. App. Unpub. LEXIS 578, at *3 (Minn. Ct. App. 2006).
Missouri: L & L Wholesale, Inc. v. Gibbens, 108 S.W.3d 74, 79 (Mo. Ct. App. 2003).
Montana: Polzin v. Appleway Equip. Leasing, Inc., 191 P.3d 476, 481 (Mont. 2008).
Nebraska: Polk County Rec. Ass’n v. Susquehanna Patriot Commer. Leasing Co., 273 Neb. 1026, 1033-34 (Neb. 2007).
New Mexico: Mueller v. Sample, 135 N.M. 748, 751 (N.M. Ct. App. 2004).
North Dakota: KaeRen Accommodations, Inc. v. Country Hospitality Corp., 243 F. Supp. 2d 993, 995 (D.N.D 2002) (“If it was given the chance, the Court is confident that the North Dakota Supreme Court would do as others have and look to federal law regarding the enforcement of forum selection clauses. . . . [F]orum selection clauses are presumptively valid . . . .”).
Oklahoma: Howard Family Charitable Found., Inc. v. Trimble, 2011 OK CIV APP 85, P44 (Okla. Ct. App. 2011).
South Dakota: O’Neill Farms, Inc. v. Reinert, 2010 SD 25, P9 (S.D. 2010).
Texas: Tri-State Bldg. Specialties, Inc. v. NCI Bldg. Sys., L.P., 184 S.W.3d 242, 248 (Tex. App. Houston 1st Dist. 2005).
Utah: Phone Directories Co. v. Henderson, 2000 UT 64, P14 (Utah 2000).
Wyoming: Durdahl v. National Safety Assocs., 988 P.2d 525, 527 (Wyo. 1999).
[vi]
Almost all of the states listed above rely on common-law principles in analyzing forum selection clauses. But Nebraska has created a statutory scheme to address forum-selection clauses rather than relying on common law regime as the majority of states has done. That said, many of the statutory factors under Nebraska law are similar to the common-law factors. See note 7, infra. The Nebraska statutory scheme states: “If the parties have agreed in writing that an action on a controversy shall be brought only in another state and it is brought in a court of this state, the court will dismiss or stay the action, as appropriate, unless (1) the court is required by statute to entertain the action; (2) the plaintiff cannot secure effective relief in the other state, for reasons other than delay in bringing the action; (3) the other state would be a substantially less convenient place for the trial of the action than this state; (4) the agreement as to the place of the action was obtained by misrepresentation, duress, the abuse of economic power, or other unconscionable means; or (5) it would for some other reason be unfair or unreasonable to enforce the agreement.” Neb. Rev. Stat. § 25-415. Although based in statute, the analysis by a Nebraska court generally mirrors that of a court following the common-law scheme. See, e,g,. Polk County Rec. Ass’n v. Susquehanna Patriot Commer. Leasing Co., 273 Neb. 1026, 1037-40 (Neb. 2007) (analyzing the forum-selection clause under the Nebraska statutory scheme and the Pennsylvania common-law scheme and determining that the clause was enforceable under both).
[vii]
Colorado: Adams Reload Co. v. Int’l Profit Assocs., 143 P.3d 1056, 1060-61 (Colo. App. 2005).
Iowa: Liberty Bank, F.S.B. v. Best Litho, Inc., 737 N.W.2d 312, 315 (Iowa Ct. App. 2007).
Kansas: Vanier v. Ponsoldt, 251 Kan. 88, 99-101 (Kan. 1992).
Missouri: Whelan Sec. Co v. Allen, 2000 Mo. App. LEXIS 1719, at *8 & n.1 (Mo. Ct. App. 2000).
Minnesota: Valspar Refinish, Inc. v. Gaylord’s, Inc., 2006 Minn. App. Unpub. LEXIS 578, at *5 (Minn. Ct. App. 2006).
Montana: Polzin v. Appleway Equip. Leasing, Inc., 191 P.3d 476, 481 (Mont. 2008).
Nebraska: Polk County Rec. Ass’n v. Susquehanna Patriot Commer. Leasing Co., 273 Neb. 1026, 1033-34 (July 2007) (including in its statutory scheme some of the same common law factors, including whether “the other state would be a substantially less convenient place for the trial of the action than [Nebraska]; . . . the agreement as to the place of the action was obtained by misrepresentation, duress, the abuse of economic power, or other unconscionable means; or . . . it would for some other reason be unfair or unreasonable to enforce the agreement”).
New Mexico: Mueller v. Sample, 135 N.M. 748, 751 (N.M. Ct. App. 2004) (addressing only whether the clause is “unreasonable under the circumstances”).
North Dakota: KaeRen Accommodations, Inc. v. Country Hospitality Corp., 243 F. Supp. 2d 993, 995 (D.N.D 2002) (“If it was given the chance, the Court is confident that the North Dakota Supreme Court would do as others have and look to federal law regarding the enforcement of forum selection clauses. . . . [F]orum selection clauses are presumptively valid and should be enforced unless such enforcement is shown to be unreasonable or unjust or the clause is shown to be invalid because of fraud or overreaching.”).
Oklahoma: Adams v. Bay, Ltd., 2002 OK CIV APP 117 (Okla. Ct. App. 2002) (citing Eads v. Woodmen of the World Insurance, 785 P.2d 328, 331 (Okla. Ct. App. 1989)).
South Dakota: O’Neill Farms, Inc. v. Reinert, 2010 SD 25, P9 (S.D. 2010).
Texas: In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 675 (Tex. 2009).
Utah: Prows v. Pinpoint Retail Sys., 868 P.2d 809, 812 &n.5 (Utah 1993).
Wyoming: Durdahl v. National Safety Assocs., 988 P.2d 525, 527-28 (Wyo. 1999).
[viii]
Colorado: Adams Reload Co. v. Int’l Profit Assocs., 143 P.3d 1056, 1060-61 (Colo. App. 2005).
Iowa: Wells Fargo Fin. Leasing, Inc. v. NCH Healthcare Sys., 756 F. Supp. 2d 1086, 1099 (S.D. Iowa 2010)
Kansas: United States ex rel. Tech Coatings v. Miller-Stauch Constr. Co., 904 F. Supp. 1209, 1213 (D. Kan. 1995).
Missouri: Whelan Sec. Co v. Allen, 26 S.W.3d 592 (Mo. Ct. App. 2000).
Montana: Polzin v. Appleway Equip. Leasing, Inc., 191 P.3d 476, 482 (Mont. 2008).
Nebraska: Polk County Rec. Ass’n v. Susquehanna Patriot Commer. Leasing Co., 273 Neb. 1026, 1037 (July 2007).
New Mexico: Mann v. Auto. Prot. Corp., 777 F. Supp. 2d 1234, 1240 (D.N.M. 2011).
Oklahoma: Howard Family Charitable Found., Inc. v. Trimble, 2011 OK CIV APP 85, P44 (Okla. Ct. App. 2011).
South Dakota: O’Neill Farms, Inc. v. Reinert, 2010 SD 25, P9 (S.D. 2010).
Texas: Marrocco v. Hill, 2011 Tex. App. LEXIS 8311, at *8 (Tex. App. Houston 14th Dist. Oct. 20, 2011).
Utah: Prows v. Pinpoint Retail Sys., 868 P.2d 809, 812 (Utah 1993).
Wyoming: Durdahl v. National Safety Assocs., 988 P.2d 525, 528 (Wyo. 1999).
[ix]
Utah: Phone Directories Co. v. Henderson, 2000 UT 64, P11, P14 (Utah 2000) (holding that a forum-selection clause “will be upheld as fair and reasonable so long as there is a rational nexus between the forum selected and/or consented to, and either the parties to the contract or the transactions that are the subject matter of the contract”); Advanta Bank Corp. v. Berkowitz, 2010 Utah App. LEXIS 244, at *3 (Utah Ct. App. 2010) (“[O]ne party’s connection to Utah is sufficient to satisfy the rational nexus inquiry . . . .”).
Oklahoma: Adams v. Bay, Ltd., 2002 OK CIV APP 117, P8 (Okla. Ct. App. 2002) (finding the forum-selection clause was reasonable because the chosen forum was “the home county of Appellee and has a reasonable relationship to the transaction at issue”).
Kansas: Aylward v. Dar Ran Furniture Indus., 32 Kan. App. 2d 697, 700 (Kan. Ct. App. 2004) (“A forum selection clause, even if exclusive, will not be enforced unless the selected forum bears ‘a reasonable relationship to the transaction.’”) (quoting Vanier v. Ponsoldt, 251 Kan. 88, 101 (Kan. 1992)).
South Dakota: O’Neill Farms, Inc. v. Reinert, 2010 SD 25, P11 (S.D. 2010) (analyzing whether the forum-selection clause is “reasonable” by looking at a list of factors, including “[t]he residency of the parties [and t]he place of execution and/or performance of the contract”).
[x]
Utah: Phone Directories Co. v. Henderson, 2000 UT 64, P14 (Utah 2000) (“Although the rational nexus element does require some connection between Utah and either the parties to or the actions contemplated by the contract, it need not rise to the level required under [Utah’s long arm statute].”).
Kansas: Vanier v. Ponsoldt, 251 Kan. 88, 101 (Kan. 1992) (“Because [defendant] consented to personal jurisdiction and does not now claim he was not given proper notice of the cause of action, we need not discuss K.S.A. 1991 Supp. 60-308, the long arm statute. Again, by [defendant] consenting to jurisdiction, we need not determine whether [he] has sufficient minimum contacts with Kansas to satisfy constitutional concepts of fundamental fairness.”).
[xi]
Texas: In re Lyon Fin. Servs., Inc., 257 S.W.3d 228, 233 (Tex. 2008).
[xii]
Oklahoma: Adams v. Bay, Ltd., 2002 OK CIV APP 117, P6 (Okla. Ct. App. 2002).
[xiii]
Iowa: Wells Fargo Fin. Leasing, Inc. v. NCH Healthcare Sys., 756 F. Supp. 2d 1086, 1098 (S.D. Iowa 2010) (“When a party asserts overreaching as a defense to a forum selection clause, that party must demonstrate that the forum selection provision itself, and not the entire contract, is a product of overreaching.”) (quoting Kowalski v. YellowPages.com, LLC, 09-2382, 2010 U.S. Dist. LEXIS 85039, at *3 (D.N.J. Aug. 9, 2010)).
Nebraska: Polk County Rec. Ass’n v. Susquehanna Patriot Commer. Leasing Co., 273 Neb. 1026, 1040 (July 2007) (“[T]he fraud allegations relate to procurement of the equipment lease as a whole rather than the forum selection clause itself; therefore, the allegations will not invalidate the clause.”) (quoting Patriot Leasing Co. v. Kremer Restaurant, 915 A.2d 647, 653 (Pa. Super. 2006)).
[xiv]
Colorado: Adams Reload Co. v. Int’l Profit Assocs., 143 P.3d 1056, 1060-61 (Colo. App. 2005) (“We first note that simply because the clause was part of the ‘boilerplate’ of the contract does not make it invalid. Here, the clause in question was in standard size font in an easily readable contract consisting of only two pages. Darrell Adams points out no evidence that he is unsophisticated. To the contrary, he acknowledges that he has operated Adams Reload for twenty years. Nor does the record indicate that he was unaware of the clause or objected to it.”) (internal citation omitted); Clinic Masters, Inc. v. District Court of County of El Paso, 192 Colo. 120, 124 (Colo. 1976) (rejecting arguments that choice of forum clause in contract between Colorado plaintiff and Florida defendant was contract of adhesion and unconscionable, noting, inter alia, that defendant was an educated professional with business experience and was advised of all terms of the contract before entering into it).
Iowa: EFCO Corp. v. Norman Highway Constructors, Inc., 606 N.W.2d 297, 300 (Iowa 2000) (holding the following to be “insufficient to establish the invalidity of the choice-of-forum clause as a matter of law”: “the clause in question was contained on the reverse side of the form contract on which no signature lines appeared . . . . [and] the officer of the company executing the agreement testified that he had not read the choice-of-forum clause”).
Kansas: Vanier v. Ponsoldt, 251 Kan. 88, 101 (Kan. 1992) (“[Defendant] contends he did not read the agreement and that the clause was ‘[b]uried in the mass of type on Page 4.’ Although [defendant] was new to the horse trading business, he was an experienced and astute businessman. In Kentucky, one who can read and has an opportunity to read a contract he signs must abide by the terms of the contract. Furthermore, it is the duty of every contracting party to learn and know the contents of a contract before signing it.”) (internal citations omitted).
Minnesota: Valspar Refinish, Inc. v. Gaylord’s, Inc., 2006 Minn. App. Unpub. LEXIS 578, at *5 (Minn. Ct. App. 2006) (examining the following factors in determining whether a form contract is a “contract of adhesion” such that a forum-selection clause should not be enforced: “the bargaining power of the parties, whether they negotiated the contract, the business sophistication of the parties, and the need for the subject of the agreement”).
Missouri: Chase Third Century Leasing Co. v. Williams, 782 S.W.2d 408, 412 (Mo. Ct. App. 1989) (finding that although a party “suggests . . . there is nothing in the record to suggest that he could have bargained over the language in the preprinted form contract[, t]his suggestion does not include an assertion of the overreaching or fraud necessary to avoid the forum selection clause nor does it indicate unfairness sufficient to overcome the application of the clause”).
Montana: Polzin v. Appleway Equip. Leasing, Inc., 191 P.3d 476, 481 (Mont. 2008) (rejecting the argument that the contract was an adhesion contract, for the following reasons: “First, Polzin has been in the trucking business for nearly twenty years and has often entered into lease-purchase agreements to obtain trucks for use in his business. Over the past fifteen years, Polzin has contracted with Appleway at least four other times to lease trucks. The same standard equipment lease containing Section 4.24 was used each time. Accordingly, it was reasonable for Polzin to expect that Section 4.24 would appear in the current and fifth lease. Failure to read and understand a clear and unambiguous agreement, absent mistake, is not a defense to its enforcement. Second, . . . the handwritten notes on the purchase agreement indicate that this contract was negotiated. . . . This negotiation process mitigates the possibility that the agreement is an adhesion contract as it demonstrates Polzin’s use of legitimate bargaining power. Third, this is not an instance where Polzin had no other option except to sign the contract.”) (internal citations omitted).
North Dakota: KaeRen Accommodations, Inc. v. Country Hospitality Corp., 243 F. Supp. 2d 993, 996 (D.N.D 2002) (“Plaintiffs finally assert that the forum selection clause is unenforceable because the License Agreement was not freely negotiated between parties of equal bargaining power. . . . That plaintiffs signed an ‘as is’ or form contract without actually negotiating its terms does not automatically render the forum selection clause unenforceable.”).
South Dakota: O’Neill Farms, Inc. v. Reinert, 2010 SD 25, P18 (S.D. 2010) (“Because O’Neill Farms[ does business] throughout the Midwest, including a forum-selection clause in its contracts is reasonable. O’Neill Farms has a legitimate reason to limit venue to the state where its principal place of business is located so as to dispel confusion as to where suit can be brought and defended.”).
Texas: Bogart v. Star Bldg. Sys., 2011 Tex. App. LEXIS 1747, at *12 (Tex. App. Houston 1st Dist. Mar. 10, 2011) (“At most, appellants contend that the contract’s terms and conditions of sale, which include the forum-selection clause, are written in such tiny print that they are hardly legible. Appellants have produced no evidence that the forum-selection clause was a surprise or was the result of fraud or other oppressive measure that would render it invalid and unenforceable. As a result, appellants have not met their burden of proving that enforcement of the forum-selection clauses should be barred on the basis of overreaching.”) (internal citation omitted).
[xv]
The result may be different in employment cases, where one party typically is more sophisticated and has more bargaining power than the other. For example, in one case, the court refused to enforce a forum-selection clause where three months after an employee signed his second of two employment contracts, both of which contained no forum-selection provision, he was forced to sign the third one with a forum-selection provision “under the threat that if [he] did not sign, [he] would not have a job.” EADS v. WOODMEN OF THE WORLD LIFE INS. SOC’Y, 785 P.2d 328, 329 (Okla. Ct. App. 1989). Another court, however, refused to find “overreaching or fraud necessary to avoid the forum selection clause on the grounds of unfairness” in a similar situation. The second court held that “[t]he fact that an employment contract is a prerequisite to employment does not force the employee to accept and execute it; the employee has the option of foregoing the employment if the terms of the agreement are not satisfactory.” Whelan Sec. Co v. Allen, 26 S.W.3d 592 (Mo. Ct. App. 2000) (internal citation omitted).
[xvi]
Colorado: Adams Reload Co. v. Int’l Profit Assocs., 143 P.3d 1056, 1060-61 (Colo. App. 2005) (upholding a forum-selection clause, in part, because there was “no evidence that [the party opposing the clause] is unsophisticated” but rather that “he has operated [his business] for twenty years”); Clinic Masters, Inc. v. District Court of County of El Paso, 192 Colo. 120, 124 (Colo. 1976) (rejecting arguments that choice of forum clause in contract between Colorado plaintiff and Florida defendant was contract of adhesion and unconscionable, noting, inter alia, that defendant was an educated professional with business experience).
Kansas: Vanier v. Ponsoldt, 251 Kan. 88, 101 (Kan. 1992) (upholding a forum-selection clause, in part, because the party opposing enforcement “was an experienced and astute businessman”).
Minnesota: Valspar Refinish, Inc. v. Gaylord’s, Inc., 2006 Minn. App. Unpub. LEXIS 578, at *5 (Minn. Ct. App. 2006) (examining “the business sophistication of the parties”as part of determining whether a form contract is a “contract of adhesion” such that a forum-selection clause should not be enforced).
Montana: Polzin v. Appleway Equip. Leasing, Inc., 191 P.3d 476, 481 (Mont. 2008) (rejecting the argument that the contract was an adhesion contract, for the following reasons: “Polzin has been in the trucking business for nearly twenty years and has often entered into lease-purchase agreements to obtain trucks for use in his business. Over the past fifteen years, Polzin has contracted with Appleway at least four other times to lease trucks.”).
[xvii]
Carnival Cruise Lines v. Shute, 499 U.S. 585, 593-96 (1991).
[xviii]
Minnesota: Valspar Refinish, Inc. v. Gaylord’s, Inc., 2006 Minn. App. Unpub. LEXIS 578, at *6 (Minn. Ct. App. 2006) (“Generally, when a forum selection clause is at issue, the clause is unreasonable if it contravenes a strong public policy, such as judicial economy and the prevention of multiple actions on similar issues, which may render a forum selection clause patently unreasonable.”) (internal quotation marks and alterations omitted).
[xix]
Kansas: Nelson Energy Programs, Inc. v. Oil & Gas Tech. Fund, Inc., 36 Kan. App. 2d 462, 470-472 (Kan. Ct. App. 2006).
[xx]
Minnesota: Interfund Corp. v. O’Byrne, 462 N.W.2d 86, 88-89 (Minn. Ct. App. 1990) (comparing a case in which a forum-selection clause was not enforced because it “involved 98 parties aligned into three groups who raised five basic crossclaims and counterclaims in addition to the original claim [where e]nforcing the forum selection clause in [that case] would have forced the trial court to dismiss over ninety crossclaims inextricably intertwined with the main claim,” with a case where the forum-selection clause was enforced because it “involve[d] only two parties and two claims”).
[xxi]
Missouri: High Life Sales Co. v. Brown-Forman Corp., 823 S.W.2d 493, 498 (Mo. 1992).
[xxii]
The statutory scheme in Nebraska makes this distinction explicit. In Nebraska, the factors to be considered when addressing an inbound forum-selection clause are distinct from the factors to be considered when addressing an outbound forum-selection clause. Compare Neb. Rev. Stat. § 25-415 (titled “Choice of forum in another state; action pending in this state; procedures”), with id. § 25-414 (analyzing the situation where “parties have agreed in writing that an action on a controversy may be brought in this state”). Historically under the common law, there was also a distinction in some states between inbound and outbound forum-selection clauses, the latter being disfavored. See, e.g., Whelan Sec. Co v. Allen, 2000 Mo. App. LEXIS 1719, at *8 n.1 (Mo. Ct. App. 2000) (stating that “Missouri courts had previously treated [outward bound forum selection clauses] as per se violations of public policy”). In theory, this disparate treatment no longer exists; although in practice it appears outbound forum-selection clauses may still be disfavored. This reality may counsel for bringing suit promptly in the favored, selected forum.
[xxiii]
M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 18 (1972).
[xxiv]
Colorado: Adams Reload Co. v. Int’l Profit Assocs., 143 P.3d 1056, 1060-61 (Colo. App. 2005) (“It should be incumbent on the party seeking to escape his contract to show that trial in the contractual forum will be so gravely difficult and inconvenient that he will for all practical purposes be deprived of his day in court. Absent that, there is no basis for concluding that it would be unfair, unjust or unreasonable to hold that party to his bargain.”).
Missouri: Whelan Sec. Co v. Allen, 2000 Mo. App. LEXIS 1719, at *10 (Mo. Ct. App. 2000) (recognizing that a “forum selection clause may be unreasonable if it results in undue hardship, such as a necessity to travel or transport witnesses such a distance that expenses would render access to the courts impractical” but not finding that the party opposing enforcement made a showing of such impracticality).
Minnesota: Valspar Refinish, Inc. v. Gaylord’s, Inc., 2006 Minn. App. Unpub. LEXIS 578, at *5 (Minn. Ct. App. 2006) (“Location and convenience of witnesses are generally not considered a serious inconvenience. Further, other litigation costs, including the cost of sending evidence to Minnesota, were presumably considered when the parties negotiated the contract and do not amount to a large portion of appellant’s anticipated costs.”).
Nebraska: Polk County Rec. Ass’n v. Susquehanna Patriot Commer. Leasing Co., 273 Neb. 1026, 1039-40 (July 2007) (“[L]ocation and convenience of witnesses do not necessarily make a forum seriously inconvenient because deposition testimony can be taken and used without disadvantage at trial. . . . [T]he convenience of witnesses is a matter that should be within the contemplation of the parties when they agree to a forum selection clause and therefore generally should not be a basis for avoiding enforcement of the clause.”) (internal citations, quotation marks and alterations omitted).
Oklahoma: BAKHSH v. JACRRC ENTERPRISES, 895 P.2d 746, 747 (Okla. Ct. App. 1995) (“To demonstrate the unreasonableness of a forum selection clause, it must be shown that trial in the contractual forum will be so gravely difficult and inconvenient that a party opposing transfer will, for all practical purposes, be deprived of his day in court.”).
South Dakota: O’Neill Farms, Inc. v. Reinert, 2010 SD 25, P16 (S.D. 2010) (“[C]onvenience of witnesses and accessibility of records . . . are not sufficient reasons to allow parties to a contract to disavow their promises. . . . [D]efendants can receive a fair hearing by using deposition testimony of its witnesses from distant places.”) (internal quotation marks omitted).
Texas: In re Laibe Corp., 307 S.W.3d 314, 317 (Tex. 2010) (“Mere assertions of inconvenience are not sufficient to prove that a forum is so gravely inconvenient as to deprive the party of its day in court.”).
Utah: Coombs v. Juice Works Dev., Inc., 2003 UT App 388, P16 n.5 (Utah Ct. App. 2003) (“Plaintiffs maintain that despite the limited discovery which was conducted, litigating in Arkansas would be a severe financial burden for them. Inconvenience to a party is an insufficient basis to defeat an otherwise enforceable forum selection clause.”) (internal quotation marks omitted).
Wyoming: Durdahl v. National Safety Assocs., 988 P.2d 525, 527 (Wyo. 1999) (“In order for a forum selection clause to be unreasonable . . . the chosen forum must be seriously inconvenient for trial of the action.”).