Thanks to this post by Venkat Balasubramani on Eric Goldman’s Technology & Marketing Law Blog, I learned about the Ninth Circuit’s recent opinion in Simonoff v. Expedia.
The bit of interest to me related to the following forum-selection provision:
You hereby consent to the exclusive jurisdiction and venue of courts in Kings County, Washington … in all disputes arising out of or relating to the use of this Website.
The plaintiff had argued that state courts had exclusive jurisdiction, so federal courts had no jurisdiction. The Ninth Circuit disagreed, holding that “a forum selection clause that specifies ‘courts of’ a state limits jurisdiction to state courts, but specification of ‘courts in’ a state includes both state and federal courts.”
I understand why the court decided the way it did, but I don’t know that that’s what the parties had intended, as you can’t assume that the drafter had had in mind the nuances of in versus of. And if the drafter had been aware of the distinction, he or she was reckless in using language that the parties could, and ultimately did, end up arguing over.
Instead, make it clear in your forum-selection provisions, by means other than your cunning choice of prepositions, whether jurisdiction lies with federal courts, state courts, or both. For example, here’s a fragment of language from a contract drafted using Koncision’s NDA template:
… may bring that proceeding only in the United States District Court for the Southern District of New York or in any state court of the state of New York …
[Updated May 31, 2011: I just learned of a comparable recent case, this one decided by the Third Circuit. (Go here for a PDF copy.) The provision at issue stated that “exclusive jurisdiction … shall lie in the appropriate courts of the State [of] New Jersey.” The plaintiff, the state of New Jersey, brought suit in state court. The defendant, Merrill Lynch, moved the proceedings to federal court, but the district court remanded to state court. The defendant appealed but the Third Circuit affirmed, citing various cases to the effect that the phrase courts of X refers to state courts.
The lesson to be drawn from this case, too, is that unless you want to risk a fight over forum selection, don’t rely on a preposition to do your work for you.]
[Updated 6 September 2022: See also my post How Not to Specify Jurisdiction (15 Mar. 2010).]