Most franchise agreements contain forum selection clauses – language that requires, among other things, disputes to be determined in a particular state or county. But are they enforceable?
The Supreme Court of the United States recently determined that not only are they enforceable, but they will be enforced in almost every instance. Specifically, in Atlantic Marine Construction Co. v. United States District Court for the Western District of Texas, No. 12-929, 571 U.S. ____ (2013), [READ CASE HERE] the Supreme Court held,
Normally, a district court considering a §1404(a) motion must evaluate both the private interests of the parties and public-interest considerations. But when the parties’ contract contains a valid forum-selection clause, that clause “represents [their] agreement as to the most proper forum,” Stewart, 487 U. S., at 31, and should be “given controlling weight in all but the most exceptional cases,” id., at 33 (KENNEDY, J., concurring).
Id. at 2.
The case made it clear that the preference of the party bringing the suit (the Plaintiff) would no longer be taken into account. As the Court stated, “the plaintiff’s choice of forum merits no weight, and the plaintiff, as the party defying the forum-selection clause, has the burden of establishing that transfer to the forum for which the parties bargained is unwarranted.” Id. at 3.
Another interesting aspect of the ruling was that the parties’ private interests would be overridden by the forum-selection clause. Only in unusual circumstances would it not control. “[T]he court should not consider the parties’ private interests aside from those embodied in the forum-selection clause; it may consider only public interests. Because public-interest factors will rarely defeat a transfer motion, the practical result is that forum-selection clauses should control except in unusual cases.” Id. at 3.
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