Opinion
NO: 01-1720
July 25, 2001
Before the Court is the Motion to Dismiss pursuant to Federal Rule 12(b) (Rec. Doc. 4), filed by defendant. Plaintiff opposes the motion. The motion, set for hearing on July 18, 2001, is before the Court on briefs without oral argument. For the reasons that follow, the Court finds that defendant's motion should be denied.
This action is a suit on an employment contract. The employment contract contains the following language: "The validity, interpretation, and performance of this Agreement will be governed by the laws of the State of New York without regard to the conflict of law provisions. The Parties hereby agree to submit to the jurisdiction of the courts of the State of New York." Complaint, Exh. A ("Employment Agreement"), ¶ 26 at 23-24.
Referring to this language, movant argues that the present case must be dismissed for lack of subject matter jurisdiction and venue because the parties "agreed to jurisdiction in the Courts of the State of New York to the exclusion of all other Courts, . . . [and] to venue in the Courts of the State of New York to the exclusion of all other venues . . . " Motion, Rec. Doc. 4, 1.
The Court need only pause momentarily to observe that the cited language makes no reference whatsoever to venue, and thus that there is simply no factual basis for defendant's argument that the clause requires venue in New York.
As for the question whether the clause requires exclusive jurisdiction in New York, Fifth Circuit precedent provides guidance. In Keaty v. Freeport Indonesia, Inc., 503 F.2d 955 (5th Cir. 1974), the Fifth Circuit examined a similar provision. Because the forum selection clause did not clearly limit actions under the contract to a specific locale, the Keaty court concluded that such language "falls short of being a mandatory forum-selection clause," and was therefore a permissive forum-selection clause Id. at 956. The parties were thus not required to litigate in New York, and dismissal from the Eastern District of Louisiana was not warranted.
The contract in Keaty provided: "This agreement shall be construed and enforceable according to the law of the State of New York and the parties submit to the jurisdiction of the courts of New York." 503 F.2d at 956.
More recently, the Fifth Circuit revisited the issue of mandatory versus permissive forum selection clauses in Caldas Sons, Inc. v. Willingham, 17 F.3d 123 (5th Cir. 1994). In Caldas, the court considered a one-sentence forum selection clause which provided that "`the laws and courts of Zurich shall be applicable.'" Id. at 127. Citing Keaty, the court stated that "[e]ven though the clause now before us uses `shall,' which is generally mandatory, this clause need not necessarily be classified as mandatory." Id. Rather, the Caldas court found that the only thing that could be conclusively determined from the clause was that the parties consented to personal jurisdiction in Zurich courts. Id. at 128. The clause did not evidence an intent that Zurich was the exclusive forum for disputes based upon the contract; thus, it was permissive rather than mandatory. Id.
The same analysis applies with equal force in the instant case. The plain language of the "Governing Law" provision in the contract at issue simply does not convey any exclusivity about the choice of New York as a forum. To do so, the parties would have had to have chosen unambiguous, limiting language reflecting a mandatory forum selection in the nature of that used, for example, in M/S Bremen v. Zapata Offshore Co., 407 U.S. 1, 2, 92 S.Ct. 1907, 1909 (1972) "Any dispute arising must be treated before the London Court of Justice." Failing to have employed such unequivocal language, the forum selection clause herein must be classified as permissive rather than mandatory, and dismissal of this action is not required. Accordingly;
IT IS ORDERED that defendant's Motion to Dismiss (Rec. Doc. 4) should be and is hereby DENIED.