United States Court of Appeals

For the First Circuit

No. 00-1539

HERIBERTO SILVA,

Plaintiff, Appellant,

v.

ENCYCLOPEDIA BRITANNICA INC. and

ENCYCLOPEDIA BRITANNICA USA (EBUSA INC.),

Defendants, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Héctor M. Laffitte, U.S. District Judge]

Before

Torruella, Chief Judge,

Lynch and Lipez, Circuit Judges.

Osvaldo Pérez-Marrero, was on brief, for appellant.

María I. Santos-Rivera, with whom Fiddler, González & Rodríguez,

LLP, were on brief, for appellee.

February 14, 2001
1 As the district court noted, there is no conflict between federal

common law and Puerto Rico law regarding the enforceability of forumselection clauses. See Stereo Gema, Inc. v. Magnadyne Corp., 941 F.

Supp. 271, 276 (citing Unisys Puerto Rico v. Ramallo Bros. Printing,

Inc., 91 J.T.S. 69, 8855-56 (1991) (D.P.R. 1996)) (stating that the

Puerto Rico Supreme Court has adopted the federal jurisprudence

regarding general enforceability of forum-selection clauses). We

therefore follow the reasoning of the district court and do not reach

the Erie issue of which law should apply to forum-selection clauses in

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TORRUELLA, Chief Judge. Plaintiff-appellant Heriberto Silva

brought suit in the District of Puerto Rico against his employer,

Encyclopedia Britannica, Inc. and Encyclopedia Britannica U.S.A.

(collectively "Britannica"), for breach of contract. The contract,

which granted appellant commissions for selling products manufactured

by Britannica, contained the following choice-of-law and forumselection clause: "This agreement shall be governed and construed by

the laws of the State of Illinois and all actions involving this

agreement must be brought in the State of Illinois." The district

court concluded that the forum-selection clause was valid, enforceable

and mandatory and dismissed the suit without prejudice. For the

reasons set forth below, we affirm.

DISCUSSION

The prevailing view towards contractual forum-selection

clauses is that "such clauses are prima facie valid and should be

enforced unless enforcement is shown by the resisting party to be

'unreasonable' under the circumstances." M/S Bremen v. Zapata OffShore Co., 407 U.S. 1, 10 (1972).1 Appellant advances three arguments
suits based upon diversity of citizenship. See Lambert v. Kysar, 983

F.2d 1110, 1116 & n.10 (1st. Cir. 1993) (declining to confront "the

daunting question whether forum-selection clauses are to be treated as

substantive or procedural for Erie purposes," observing that the

Supreme Court has not yet resolved the issue, and noting circuit split

on proper approach).

2 The original complaint was filed by Silva and sixteen other former

independent contractors employed by Britannica. The court dismissed

the fifteen remaining plaintiffs for failing to meet the required

amount in controversy for diversity jurisdiction. See 28 U.S.C. §

1332(a).

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against enforcing the forum-selection clause here. First, according to

Silva, Britannica waived its venue defense by failing to assert it

timely and properly. Silva also contends that the forum-selection

clause at issue is permissive, rather than mandatory. Finally, Silva

re-asserts the grounds rejected by the district court in support of his

claim that the clause is unreasonable and should not be enforced. We

review a district court's dismissal based on a forum-selection clause

de novo. Lambert v. Kysar, 983 F.2d 1110, 1111 (1st Cir. 1993).

A.

Shortly after commencement of this suit, Britannica filed a

motion to dismiss for lack of subject-matter jurisdiction against all

plaintiffs except Silva.2 See Fed. R. Civ. P. 12(b)(1). The court

granted the motion as to these plaintiffs, and discovery continued with

respect to only Silva's claims. Over a year later, Britannica filed

the motion to dismiss which is the subject of this appeal. Appellant

argues that by failing to consolidate this defense with its initial
3 This is only one of the variegated views among the circuits

concerning the appropriate vehicle for a motion to dismiss based on a

forum-selection clause. The Third Circuit joins this Court in

characterizing the motion as a Rule 12(b)(6) defense, see

Instrumentation Assocs., Inc. v. Madsen Elecs. (Canada) Ltd., 859 F.2d

4, 6 n.4 (3d Cir. 1988), while other circuits have considered such

motions as based on Rule 12(b)(3) (improper venue), see Lipcon v.

Underwriter's at Lloyd's, London, 148 F.3d 1285, 1289 (11th Cir. 1998);

Richards v. Lloyd's of London, 135 F.3d 1289, 1292 (9th Cir. 1998);

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12(b) motion against the other plaintiffs, Britannica was barred from

raising the issue later by Fed. R. Civ. P. 12(g), which reads:

A party who makes a motion under this rule may

join with it any other motions herein provided

for and then available to the party. If a party

makes a motion under this rule but omits

therefrom any defense or objection then available

to the party which this rule permits to be raised

by motion, the party shall not thereafter make a

motion based on the defense or objection so

omitted, except a motion as provided in

subdivision (h)(2) hereof on any of the grounds

there stated.

Silva claims that for the same reason, Britannica has waived its

defense under Fed. R. Civ. P. 12(h)(1)(A), which states that "[a]

defense of lack of jurisdiction over the person, improper venue,

insufficiency of process, or insufficiency of service of process is

waived if omitted from a motion in the circumstances described in

subdivision (g)."

Appellant misconstrues the law of this Circuit, under which

a motion to dismiss based upon a forum-selection clause is treated as

one alleging the failure to state a claim for which relief can be

granted under Fed. R. Civ. P. 12(b)(6).3 Lambert, 983 F.2d at 1112 n.1;
Frietsch v. Refco, Inc., 56 F.3d 825, 830 (7th Cir. 1995); Commerce

Consultants Int'l v. Vetrerie Riunite, 867 F.2d 697, 698 (D.C. Cir.

1989), or on Rule 12(b)(1) (lack of subject matter jurisdiction), see

AVC Netherland B.V. v. Atrium Inv. P'ship, 740 F.2d 148, 153 (2d Cir.

1984). Still others have not yet decided the issue. See Haynsworth

v. Lloyd's of London, 121 F.3d 956, 961 (5th Cir. 1997) (refraining

from resolving the "enigmatic question of whether motions to dismiss on

the basis of forum-selection clauses are properly brought as motions

under Fed. R. Civ. P. 12(b)(1), 12(b)(3), or 12(b)(6), or 28 U.S.C. §

1406(a)"); Shell v. R.W. Sturge, Ltd., 55 F.3d 1227, 1229 (6th Cir.

1995) (stating only that the enforceability of a forum-selection clause

is reviewable de novo); Riley v. Kingsley Underwriting Agencies, Ltd.,

969 F.2d 953, 956 (10th Cir. 1992) (observing that such motions are

"frequently analyzed as [motions] to dismiss for improper venue under

Fed. R. Civ. P. 12(b)(3)," but failing to resolve the question).

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LFC Lessors, Inc. v. Pacific Sewer Maint. Corp., 739 F.2d 4, 7 (1st

Cir. 1984); cf. Ningret Dev. Corp. v. Narragansett Indian Wetuomuck

Hous. Auth., 207 F.3d 21, 34 (1st Cir. 2000) (vacating judgment

focusing on forum-selection clause under Rule 12(b)(6) for

reconsideration of exhaustion of tribal remedies under Rule 12(b)(1)).

Consequently, in this Circuit, a motion to dismiss by reason of a

forum-selection clause is covered by Rule 12(h)(2), which states that

"[a] defense of failure to state a claim upon which relief can be

granted . . . may be made in any pleading permitted or ordered under

Rule 7(a), or by motion for judgment on the pleadings, or at the trial

on the merits." Fed. R. Civ. P. 12(h)(2). This provision constitutes

an exception to the consolidation requirement of Rule 12(g) and

therefore a motion to dismiss on forum-selection grounds is not bound
4 For this reason, we do not address whether Britannica was required

to join its defenses against all plaintiffs into a single motion.

5 We do not consider Britannica's assertion that it raised this defense

in its answer to appellant's complaint.

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to the strict limitations of 12(h)(1).4 See Frietsch v. Refco, Inc.,

56 F.3d 825, 830 (7th Cir. 1995) (observing that if the motion to

dismiss were based on 12(b)(6), defendant "would escape the clutches of

Rule 12(h)(1)").

Accordingly, a motion to dismiss based on a forum-selection

clause may be raised at any time in the proceedings before disposition

on the merits. Cf. Brown v. Trustees of Boston Univ., 891 F.2d 337,

357 (1st Cir. 1989) (holding that by waiting until after the jury

reached its verdict, University had waived its Rule 12(b)(6) defense).

Britannica met this requirement by filing its motion to dismiss before

the completion of discovery.5 Although, as appellant points out,

Britannica erroneously characterized this motion to dismiss as one

based on improper venue, "we are not bound by the label below, and

agree that the case should have been dismissed." LFC Lessors, Inc.,

739 F.2d at 7 (citing Carr v. Learner, 547 F.2d 135, 137 (1st Cir.

1976)).

B.

We next turn to whether the language of the forum-selection

clause is permissive or mandatory. To support his contention in favor

of the former, appellant cites our recent opinion in Autoridad de
6 We emphasize, however, that even a mandatory forum-selection clause

does not in fact divest a court of jurisdiction that it otherwise

retains. See Zapata, 407 U.S. at 12 ("No one seriously contends . . .

that the forum-selection clause 'ousted' the District Court of

jurisdiction over Zapata's action."); LCF Lessors, Inc., 739 F.2d at 6

("[S]uch a provision does not oust the jurisdiction of the courts.")

(quoting Central Contracting Co. v. Maryland Cas. Co., 367 F.2d 341,

345 (3d Cir. 1966)); cf. Brown, 891 F.2d at 357 ("[I]t is well settled

that the failure to state a proper cause of action calls for a judgment

on the merits and not for a dismissal for want of jurisdiction.")

(quoting Bell v. Hood, 327 U.S. 678, 682 (1946)). Rather, "[the

clause] merely constitutes a stipulation in which the parties join in

asking the court to give effect to their agreement by declining to

exercise its jurisdiction." LCF Lessors, Inc., 739 F.2d at 6 (quoting

Central Contracting Co., 367 F.2d at 345). "Exclusive jurisdiction" in

this context thus refers to the intent of the parties rather than the

actual power of the court.

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Energía Eléctrica de P.R. v. Ericsson Inc., 201 F.3d 15 (1st Cir.

2000). In that case, we evaluated a forum-selection clause which

provided: "The parties agree to submit to the jurisdiction of the

courts of Puerto Rico." This Court read that language as "an

affirmative conferral of personal jurisdiction by consent, and not a

negative exclusion of jurisdiction" in the federal district court. Id.

at 18-19. Appellant argues that the same interpretation applies in the

instant case. We disagree.

Our holding in Ericsson did not create a general rule for

forum-selection clauses, as Silva intimates in his brief. Rather, we

based our conclusion on the specific language of the contract at issue.

In fact, we explicitly noted that had they so desired, the parties

"could easily have drafted the contract to provide for exclusive

jurisdiction in the Commonwealth courts."6 Id. at 19. The contract
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here reflects precisely such a case: the word "must" expresses the

parties' intention to make the courts of Illinois the exclusive forum

for disputes arising under the contract. See Zapata, 407 U.S. at 2

(holding that a contract stating that "[a]ny dispute arising must be

treated before the London Court of Justice" required the court to

exercise its jurisdiction no further than necessary to enforce the

forum-selection clause) (emphasis added); accord Keaty v. Freeport

Indon., 503 F.2d 955, 956-57 (5th Cir. 1974) (citing Zapata as an

example of "a situation where the contract, on its face, clearly

limit[ed] actions thereunder to courts of a specified locale"). We

therefore conclude that the forum-selection clause is mandatory.

C.

Since the motion to dismiss was timely raised and the clause

is mandatory, we will uphold the district court's decision unless

"enforcement would be unreasonable and unjust, or . . . the clause [is]

invalid for such reasons as fraud or overreaching." Zapata, 407 U.S.

at 15. Silva points out that the contract contained boilerplate

provisions not subject to negotiation and that the forum-selection

clause was in small print on the back of the contract. He also places

great weight on the "overwhelming bargaining power and influence" of

Britannica in the hiring process to support his view that the clause is

unenforceable. These reasons fall short of meeting the required
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criteria for establishing "fraud or overreaching," id., nor do these

reasons render the enforcement of the clause "unreasonable and unjust."

Id.

First, that the forum-selection clause is a "boilerplate"

provision does not ipso facto render it invalid. "It is not the law

that one must bargain for each and every written term of a contract."

Lambert, 983 F.2d at 1119-20 (internal quotation omitted); see also

Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 593 (1991)

(refusing to find a nonnegotiated forum-selection clause in a form

ticket unenforceable "simply because it is not the subject of

bargaining"). Similarly, the placement of the clause on the reverse

side of the contract is of little consequence where, as here, it is

printed clearly in plain language and in a contract of reasonable

length. Lambert, 983 F.2d at 1120. Finally, Britannica's alleged

bargaining power is not relevant on these facts. Britannica used its

bargaining power to do nothing more than offer an appealing employment

opportunity to appellant, and no evidence suggests that he was coerced

into entering the agreement. All that remains, then, is an arms-length

transaction, the terms of which are binding on both parties. As such,

the enforcement of those terms is not unreasonable, and hence the case

was properly dismissed.

CONCLUSION

The order of the district court is affirmed.