Arbitration & Mediation

First DCA Explains How to Avoid Mandatory Forum Selection Clauses

By Christopher B. Hopkins, Esq.

We've reported on five forum selection cases in the last four months. Typically, the dispute is over the whether the language is "mandatory" versus merely permissive. But what about other grounds to avoid a forum selection clause?

Back in August 2007, in Land O'Sun Management v. Commerce and Industry, the First DCA crafted a three prong test -- at least that's how it appeared -- regarding whether the forum selection language (1) was not the result of unequal bargaining power, (2) would not contravene a strong public policy, and (3) would not transfer a local dispute to a foreign venue. But that dealt with the creation of the contract.

Recently, in McWane, Inc. v. Water Management Services, Inc.; Consolidated Pipe & Supply Co.; Boh Brothers Construction; and Blankenship Contracting, Inc., the First DCA took on the issue of whether the change of location would be unfair for other reasons. Reasons which arose after the contract and after performance. In this case, which has to do with water supply pipes, there were four defendants of which two had forum selection clauses. It is unclear whether those alternative forums were distinct but we presume they were. (as an aside, any dispute over municipal water probably should not be transferred to West Palm Beach)

Nonetheless, the Court analyzed whether the forum selection clause was unreasonable and unjust in this case. As an initial step, the avoiding party must demonstrate the agreed-upon forum "will be so gravely difficult and inconvenient that he will, for all practical purposes, be deprived of his day in court." Other grounds for avoiding a venue provision include: (1) enforcement of provision will lead to multiple suits, (2) splitting of the causes of action, and (3) potential for conflicting results in different courts. The First DCA then did some case-specific analysis and found the law and facts of the inter-related claims and cross claims to warrant voiding the forum selection clauses.

Thus, it appears that a party can avoid forum selection by attacking the contract in methods which sound a lot like the unconscionability and public policy arguments in arbitration enforcement cases. Then, as an alternative, there is an "unreasonable and unjust" subjective test. At least in the First DCA.

Full post as published by Florida Arbitration Law on November 27, 2007 (boomark / email).