Do You Use a Forum Selection Clause?

DO YOU USE A FORUM SELECTION CLAUSE?

A forum selection clause is a valuable tool which allows suppliers of materials and providers of services to control where they can sue and be sued. It can save a business time and money by requiring litigation where they are located rather than where their commercial debtor resides.

In the recent case of Chebotnikov v. Limolink (December 11, 2015, U.S.D. Ct. Mass. 1:2014 CV13475), the United States District Court of Massachusetts tackled the question as to whether a wage claim was outside of the scope of a forum selection clause. Limolink’s service-provider agreement provided:

If a dispute arises under the terms of this Agreement, such disputes shall be submitted to arbitration in Cedar Rapids, Iowa. . . . In the event that the parties agree, in writing, to forgo arbitration and to litigate any disputes under this Agreement, the parties hereby agree to the sole and exclusive jurisdiction of the state and federal courts of Iowa for resolution of any dispute arising from this Agreement. . . .

Relying on First Circuit decisions construing the phrase “arising out of” to be narrower than other phrases, the Court rejected the application of the forum selection clause.

To avoid being pulled into a non-convenient jurisdiction, call Attorney Alan M. Cohen at (508) 620-6900 or email alanmcohen@collections-law.com and have your contracts reviewed by an experienced commercial litigation attorney.