Waivers of Forum Selection Clauses, and How to Use Them to Litigate Your Dispute in Your Preferred Court

Commercial contracts allow you to include a variety of clauses, including one that dictates where disputes will be litigated. Even if you agreed to this kind of forum selection clause, you may still desire to litigate your case somewhere other than the forum required in your contract. If that’s you, it is important to recognize that you potentially may be able to get this done. Successfully doing this requires many things, and those things often include representation from a skilled Atlanta commercial contracts lawyer.

One way you can succeed in litigating outside the forum required by your contract is if the other side waives its right to demand enforcement of the forum selection clause.

So, what does this kind of waiver look like? A recent breach of contract case in federal court makes a good illustration. The dispute pitted a generator manufacturer and distributor against the Pennsylvania software developer and the California software installer it retained to create and install new software that the manufacturer needed.

After the software implementation failed, the manufacturer sued for breach of contract in Florida. The developer and installer moved to dismiss the case arguing that the manufacturer failed to state a valid claim. The two sides litigated that motion in Miami for months. They also engaged in several rounds of discovery.

After all that, the trial court judge noticed that not only did the parties’ contract contain a California choice of law provision, it also had a California forum selection clause. The installer subsequently made a motion to dismiss the manufacturer’s case, arguing that the forum selection provision mandated that the case go forward in California, not Florida.

The manufacturer, however, was able to keep the case in its preferred location of Florida. The key was the installer’s conduct, which demonstrated a waiver of its right to enforce the forum selection clause.

Whether or not the other side ‘substantially participated’ is key

As the federal Eleventh Circuit Court of Appeals (whose rulings directly control cases in Florida, Georgia, and Alabama) stated, whether or not a party’s conduct amounted to a waiver of its contractual right to enforce a forum selection clause depends on two essential analyses. One is whether the party seeking to enforce the provision “substantially participate[d] in [the] litigation to a point inconsistent with an intent to” invoke the forum selection clause.

Substantial participation can include a party’s proactive step of filing an action outside the forum stated in the contract, or it can be filing “a dispositive motion on the merits after” long and substantial litigation, but it doesn’t encompass only those things. Any time the totality of the circumstances points toward a waiver, you can win a waiver argument.

In this manufacturer’s case, the installer filed and pursued a motion to dismiss on the merits in Florida and it also proactively sought discovery (in the form of a request for production of documents and a set of interrogatories) in the Florida case. All of that, taken together, amounted to substantial participation at a level significant enough to constitute a waiver of the forum selection clause.

This result is a logical one from the perspective of fairness. If, for example, a party that you’ve sued in federal court in Georgia proceeds with the case and litigates the case on the merits, it cannot then, months or years later, try to move the case elsewhere based upon a forum selection clause it had not previously brought up or sought to enforce.

This outcome is also a clear reminder that, if you have a forum selection clause that you desire to enforce, it is vital to begin litigating that demand for enforcement right away.

Whether you are negotiating a forum selection clause, seeking to enforce a forum selection clause, or seeking to avoid a forum selection clause based upon the other side’s waiver, you have certain needs. Chief among them is powerful and effective legal representation. Rely on the skilled contract litigation attorneys at Poole Huffman, LLC be the zealous and diligent advocate you and your business need. Contact our attorneys online or by calling 404-373-4008 to schedule your confidential consultation.