Court Opinion

ID: 8936607
Source: CourtListenerOpinion
Date Created: 2022-11-27 07:36:09.669524+00
Date Added: 2024-06-11T17:09:38.753306
License: Public Domain

GODBOLD, Chief Judge,
dissenting:
Whether state or federal law is to control the enforcement of choice-of-forum clauses in diversity cases is a difficult question. I am not able to agree with the majority’s analysis.
The issue here is within the twilight zone between substance and procedure that has troubled federal courts since the decision of Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). The enforceability of contract provisions is typically an issue of substance which a federal court sitting in its diversity jurisdiction must decide according to state law. The correctness of venue in the federal court system is, on the other hand, a procedural matter that is governed by federal statute and rules of procedure. The majority correctly point out that the imprecise labels “substance” and “procedure” do not take us very far in this case.
Alabama law is adverse to clauses, such as the one at issue here, which seek to limit “to a specified place” suits arising from future events. See Redwing Carriers, Inc. v. Foster, 382 So.2d 555, 556 (Ala.1980). Were Alabama law flatly in conflict with a constitutionally sound federal statute or rule of procedure, our inquiry would be at an end. This is not the case, however. The conflicting federal rule is decisional, see The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972), and does not derive in any evident way from the constitution or federal statute.1 This is therefore one of the “typical, relatively unguided” Erie choices that must be guided by “the twin aims of the Erie rule: discouragement of forum-shopping and avoidance of inequitable administration of the laws.” Hanna v. Plumer, 380 U.S. 460, 468, 471, 85 S.Ct. 1136, 1142, 1144, 14 L.Ed.2d 8 (1965).
Applying a federal rule to choice-of-forum clauses will create an incentive for out-of-state plaintiffs to shop between state court and the local federal court. Assume that Ricoh, rather than Stewart, had been first to file suit in this dispute, and assume that the choice-of-law clause was not enforceable under Alabama law. If Ricoh found the law of Alabama more to its liking than that of the contracted-for forum, it could choose that law by filing suit in Alabama state court. The “one-way” nature of the federal removal statute, 28 U.S.C. § 1441(b) would block the Alabama defendant’s access to the local federal forum that would enforce the venue clause. This is exactly the sort of situation deplored by the Court in Erie. See 304 U.S. at 74-75, 58 S.Ct. at 820.
Were forum-shopping the only concern underlying Erie this would conclude the inquiry in favor of applying the state rule. Many courts have, however, supplemented the limited guidance given by Hanna with *652an analysis that balances the applicable state and federal interests. See C. Wright, The Law . of Federal Courts 386 (1984); see also, Byrd v. Blue Ridge Elec. Coop., 356 U.S. 525, 78 S.Ct. 893, 2 L.Ed.2d 953 (1958). Careful analysis under Byrd also requires us to apply state rather than federal law. I preface this analysis with an examination of the treatment of two other familiar contractual devices.
Choice-of-forum clauses are often found together with two other similar but legally distinct types of clause. One type is the choice-of-law clause; the other, the consent-to-personal-jurisdiction clause. The enforceability of choice-of-law clauses, like choice-of-law matters generally, is governed by state law in diversity cases. See Klaxon v. Stentor, 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). The enforceability of consent-to-personal-jurisdiction clauses in diversity cases is likewise a state law matter, just as personal jurisdiction in a federal court is generally decided by reference to the law of the state in which the federal court sits. See Washington v. Norton Mfg., Inc., 588 F.2d 441, 444 (5th Cir.1979).
National Equipment Rental, Ltd. v. Szukhent, 375 U.S. 311, 84 S.Ct. 411, 11 L.Ed.2d 354 (1964), is not to the contrary. Szukhent decided the meaning of the term “agent authorized by appointment ... to receive service of process” under F.R. Civ.P. 4; it did not hold that such appointment plus service suffices to confer jurisdiction over the person. Szukhent did note in passing that the appointment-of-agent clause in the contract there was intended to constitute submission to personal jurisdiction in New York, and noted that such agreements had been regularly upheld, but the Court did not decide that validity and effect were governed by federal not state law. See id. at 315-16, 84 S.Ct. at 414; see also id. at 321-22 (Black, J., dissenting); 4 C. Wright & A. Miller, Federal Practice and Procedure § 1075 at 310 n. 51 (1969). I cannot agree with the majority either that the Court decided that the appointment-of-agent clause was effective as a consent to personal jurisdiction — for that issue was not before the Court — or that it upheld the clause “in all respects” without reference to state law. See id. at 316-17, 84 S.Ct. at 414-15.
Against this background, a holding that federal law is to govern the enforceability of choice-of-forum clauses is anomalous. Federal courts may be called upon to construe contractual language that appears to have been intended to waive objections both to personal jurisdiction and to venue, and perhaps to application of particular law as well.2 I see no justification for applying a federal rule to the venue aspect of such a clause and state law to the rest. The more coherent approach would be to apply state law to the entire contract.
It is true that there are federal venue statutes but no federal statutes governing choice-of-law or personal jurisdiction in diversity cases. The anomaly noted above might vanish if the venue statutes could bear the weight that the majority would place upon them, but they cannot. The venue statutes serve to identify the courts that Congress — mindful of the convenience of the parties, Citizens & Southern National Bank v. Bougas, 434 U.S. 35, 44 n. 10, 98 S.Ct. 88, 94 n. 10, 54 L.Ed.2d 218 (1977)—thought suitable to hear diversity cases; they do not address the question whether or under what circumstances a party will be deemed to have antecedently consented to proceed in one or another of the districts in which venue is properly *653laid.3 Moreover, the venue statutes themselves leave important blanks to be filled in by reference to state law, e.g., what is “a claim” and where a corporation is “incorporated or licensed to do business.” 28 U.S.C. § 1391. Thus the venue statutes do not express a wider federal interest that displaces state law in this area.4
Having canvassed the federal interests present, I turn to state policy. Redwing Carriers is the initial Alabama case on non-enforcement of a choice-of-forum clause. While state policies are little discussed, the court’s promulgation of an Alabama rule is not mistakable. Moreover, the use of boilerplate choice-of-forum clauses to require the unsuspecting to litigate in a distant forum is a sharp practice that has been widely criticized. See, e.g., Szukhent, 375 U.S. at 325-33, 84 S.Ct. at 419-23 (Black, J., dissenting). Alabama has fashioned a rule, as it is entitled to do under our system of federalism. Applying principles of federalism correctly, we should respect the state’s decision.

. The Bremen was an admiralty case dealing with an international transaction. Although the Supreme Court has applied The Bremen in a non-admiralty case, see Scherk v. Alberto-Culver Co., 417 U.S. 506, 94 S.Ct. 2449, 41 L.Ed.2d 270 (1972), it did so in an international context. Facilitation of international trade was a policy concern extensively discussed by the Court both in The Bremen, 407 U.S. at 8-15, 92 S.Ct. at 1912-16, and in Scherk, 417 U.S. at 516-19, 94 S.Ct. at 2455-57. This circuit has applied The Bremen in an international context, Citro Florida, Inc. v. Citrovale, S.A., 760 F.2d 1231 (11th Cir.1985) and in a domestic case where the issue raised was founded on federal question jurisdiction, In re Firemen's Fund, 588 F.2d 93 (5th Cir.1979). As one commentator has noted, many of the courts that have applied The Bremen in domestic diversity cases have done so in the absence of a conflicting state rule, and have therefore not addressed the very real Erie problem that arises in the domestic context. See Gruson, Forum-Selection Clauses in International and Interstate Commercial Agreements, 1982 U.Ill.L.Rev. 133, 154-55.

. For example, the following clause is the subject of an appeal pending before this circuit, Lee Myles Assoc. Corp. v. Connor, 85-5059:
New York Interpretation. This argument [sic] is being executed in the City and State of New York and shall be construed by and governed as to both form, substance and procedure, and rights and remedies, solely by the laws of the State of New York and in the Supreme Court of the State of New York for the County of New York.
This language is said by one party to be merely a choice-of-law provision, while the other party argues that it determines both choice-of-law and choice-of-forum. Cf. Neirbo Co. v. Bethlehem Corp., 308 U.S. 165, 167-68, 175, 60 S.Ct. 153, 158, 84 L.Ed. 167 (1939) (consent to venue and consent to personal jurisdiction).

. Nor do the venue statutes address the question of what constitutes waiver of objections to venue in the state courts of another state. The contractual provision at issue here speaks of “any appropriate state or federal district court located in the Borough of Manhattan, New York City, New York ...” Record at 29 (emphasis added). It is difficult to understand what federal purpose is served by refusing to apply state law to this aspect of the clause.

. Brown v. Pyle, 310 F.2d 95, 97 (5th Cir.1962), applied Byrd and Olberding v. Illinois Central R. Co., 346 U.S. 338, 74 S.Ct. 83, 98 L.Ed. 39 (1953), and found that the policy underlying the then federal venue statute outweighed the state interest embodied in a state non-resident motorist statute. The non-resident motorist statutes in Pyle and Olberding would have laid venue in a district where venue was improper under the federal statute. Here, venue in the Alabama district court is proper under § 1391. Olberding made it impossible for a federal court in which a claim had arisen to hear a case over objection if neither all plaintiffs nor all defendants resided there. Unhappiness with the result in Ol-berding eventually led to the adoption of the "where the claim arose" provision of the present § 1391(a). See generally 15 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 3806 at 25-27 (1976).
Other authorities of this circuit that assign a preponderant weight to a federal interest, e.g., Boeing Co. v. Shipman, 411 F.2d 365 (5th Cir.1969) (en banc); Monarch Ins. Co. v. Spach, 281 F.2d 401 (5th Cir.1960), emphasize the importance of a uniform federal trial procedure. The present issue is one that must be determined before trial and pretrial proceedings begin.