Opinion ID: 67517
Heading Depth: 3
Heading Rank: 1

Heading: The McDermott Contract.

Text: McDermott 's precise holding is not that Convention removal waivers must contain magic words, as the Underwriters claim, but merely that the following language from the contract's service of suit clause was insufficient to waive the right of removal to federal court of the particular question being litigated: It is agreed that in the event of the failure of Underwriters hereon to pay any amount claimed to be due hereunder, Underwriters hereon, at the request of the Assured will submit to the jurisdiction of any court of competent jurisdiction within the United States and will comply with all requirements necessary to give such Court jurisdiction and all matters arising hereunder shall be determined in accordance with the law and practice of such court. McDermott, 944 F.2d at 1200 (citations omitted). That provision  because it allowed one party to select a venue  superficially appears consistent with the second of the three New Orleans bases for waiver, but it is not explicit. If the McDermott court had required actual reference to waiver and removal, the analysis of the McDermott contract would have been straightforward: The court could merely have decided that because no such reference was present, there was no waiver. But the McDermott court did not do so; quite to the contrary, it began its analysis by observing that [w]hen a policy's service-of-suit clause applies, its probable effect is to waive the insurer's removal rights. Id. at 1204-05 (citing Nutmeg, 931 F.2d at 15-16). The McDermott court, in other words, would have considered accepting a waiver based on the second ground used in New Orleans, notwithstanding the fact that such a waiver would have been implicit. Other aspects of the contract, however, persuaded the McDermott court that the service-of-suit clause did not in fact constitute a waiver and that the contract's apparent consistency with the second New Orleans basis was illusory. The venue question in McDermott was venue for disputes concerning the proper forum to decide arbitrability questions. Id. at 1205. That question, though, was covered not only by the service-of-suit clause but by a potentially co-equal forum selection clause governing venue for arbitration. The McDermott contract was therefore ambiguous, and the service-of-suit clause did not answer the venue question. Id. The court also observed that the service-of-suit clause could be read as a waiver of personal jurisdiction only, therefore leaving open the possibility of subsequent removal. [6] The court reasoned as follows: Underwriters' exercise of its federal removal right is not necessarily inconsistent with any of its obligations under the service-of-suit clause. Underwriters may remove a case after submitting to the jurisdiction of Louisiana's courts and complying with all necessary requirements to give Louisiana's courts power over the suit. There would be no final decision in that court for Underwriters to abide by if it exercised its removal right. All matters would be determined in accordance with the practice and law of the court chosen by McDermott in the sense that all state courts follow the removal law established by Congress. Id. at 1206. Not only was the McDermott contract's service-of-suit clause ambiguous with respect to venue, but the venue selected in accordance with it would not be exclusive. In short, instead of merely relying on the contract's lack of explicit references to waiver and venue, the McDermott court showed, in great detail, that the contract did not plainly set a venue at all and could in fact permit invocation of federal removal from a state venue. The Underwriters' proposed rule would treat that discussion as redundant. It is evident, nonetheless, that the McDermott court found no waiver  not because the other bases for waiver later set out in New Orleans were inapplicable, but because they were not satisfied. [7]