ADVERTISEMENTS

On April 27, 2010, the United States District Court of the Eastern District of Washington granted a Motion for Change of Venue to transfer a case to the Eastern District of Virginia, after finding that a forum selection clause was never ?agreed? to by the party to be bound.  K.S., by her guardian at litem, Isserlis v. Ambassador Programs, Inc., 2010 WL 1704719 (E.D. WA April 27, 2010).

K.S. is the minor daughter of Dorothy and Paul Spiotta.  The Spiotta family lives in Virginia.  In October 2005, Mr. Spiotta applied online for his daughter to enroll in the Defendants? summer 2006 study abroad program in Australia.  K.S., then eleven years old, traveled to Australia for the program in summer 2006.  Shortly after returning, K.S. was hospitalized and over the next five months spent roughly seven weeks in the hospital.

Consequently, Plaintiffs filed this lawsuit alleging negligence, breach of contract, fraud and consumer protection violations.  The parties agreed to dismiss the action in state court in Washington and pursue the action in federal court in Washington.  Plaintiffs then filed a Motion for Change of Venue under 28 U.S.C. § 1404(a), arguing that Virginia was a more convenient forum for the parties and the witnesses than Washington.  28 U.S.C. §1404 provides that ?For the convenience of the parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.?  The Court balances several considerations when determining whether transfer is appropriate, including plaintiff?s choice of forum, convenience of the parties, convenience of the witnesses and availability of compulsory process, ease of access to the evidence, feasibility of consolidation of other claims, familiarity of each forum with the applicable law, local interest in the controversy, and the relative court congestion and time to trial in each forum.  Decker Coal v. Commonwealth Edison,  805 F.2d 834 (9th Cir. 1986).

Defendants argued that there was a forum selection clause in the online application process which bound the parties to the State of Washington.  Specifically, to prove that a valid forum selection clause existed, the Defendants did not produce copies of the completed forms that Mr. Spiotta allegedly submitted in 2005 to apply to the program, but instead offer declarations from its employees with printouts of the screens of the website containing the 5 application steps as they allegedly appeared during the application season for the 2006 programs.

Step 2 of the online application process consisted of ?Terms and Conditions and Information.?  Step 2 included a clause stating that ?[t]he venue for any disputes regarding this agreement or the program shall be Superior Court of Spokane County, Spokane, Washington.  This agreement shall be construed in accordance with the laws of the state of Washington? (bold emphasis added).  At the bottom of the page for Step 2, an applicant would have to select ?I agree? or ?I do not agree? to the statement ?I/We have read and understand the terms and conditions? in order to proceed.

In the Motion for Change of Venue, as is required to transfer venue, Plaintiffs were able to show that the Eastern District of Virginia has subject matter jurisdiction over the action and that complete diversity jurisdiction would exist in Virginia as well.

Further, the Defendants did not dispute that Virginia has personal jurisdiction over the Defendants.  Defendants held informational meetings and reached out to families and students who would be traveling from Virginia to participate in the programs.  The Spiottas transactions with Defendants were via the internet and via the representatives who interacted with the Spiottas in Virginia.

However, Defendants did dispute whether venue was proper in the Eastern District of Virginia because of the forum selection clause that Defendants allege was part of an agreement between the two parties.  Defendants were unable to provide a written agreement signed by any member of the Spiotta family, but instead simply relied on the screen printouts that Mr. Spiotta allegedly would have clicked on to proceed through the process.

The Court held that the Spiottas never agreed to be bound by the forum selection clause.  Instead, at best, the Spiottas may have clicked on the button that stated that they had ?read and under[stood]? the forum selection clause.  The Court held that this did not constitute an agreement to the forum selection clause.  Further, it was unclear as to whom and what claims the forum selection clause applies.

Additionally, even where parties have definitively agreed to a forum selection clause, that clause is a significant but not determinative factor in the §1404(a) balancing analysis.  Stewart Organization, Inc. v. Ricoh Corporation, 487 U.S. 22, 29 (1988).  The district courts have the discretion to adjudicate motions for transfer ?according to an individualized, case-by-case consideration of convenience and  fairness.?  Id. (internal quotation omitted).

The Court held that the location of likely witnesses weighed heavily towards Virginia over Washington because that would make it much more convenient to the witnesses, the attorneys, and the parties.  Since the forum selection clause was never ?agreed? to, it is less significant in the analysis than the other factors.  The interests of justice and interests of the parties in resolving this case weigh towards transfer to Virginia.

Photo Credit:  http://www.flickr.com/photos/sir_mervs/ / CC BY-NC 2.0

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