The plaintiffs in Adams v Raintree Vacation Exchange LLC, 2012 US App LEXIS 26000 (7th Cir, 20 December 2012) were purchasers of timeshare units in Mexico. They bought their interests from Desarollos Turísticos Regina (DTR), a Mexican company which had, by the time of the litigation, become an affiliate of Raintree Vacation Exchange (RVE) through a series of mergers. The timeshare contracts contained a forum-selection clause conferring exclusive jurisdiction on the courts of the federal district of Mexico City. The plaintiffs alleged that RVE had conspired with Starwood Vacation Ownership (SVO) to defraud them through a pretended Mexican subsidiary, taking their money for a timeshare resort that would never be built. RVE and SVO moved to have the action in the US federal courts dismissed, on the basis of the forum-selection clause. The plaintiffs countered with the argument that RVE and SVO could not invoke that clause because neither was a party to the timeshare agreements they had signed with DTR.
Posner J pointed to the line of cases which allows a non-party to enforce a contractual clause where it is 'closely related' to the lawsuit arising from it, but noted that they establish only a 'vague standard'. He nevertheless thought that two 'reasonably precise principles' could be distilled from the authorities: 'affiliation' and 'mutuality', concluding that the first applied to RVE and the second to SVO. Justice Posner observed that too literal an approach to forum-selection clauses could result in evasive tactics and undermine commercial certainty. RVE and DTR were sufficiently closely related to make the substitution of the one for the other unproblematic from the perspective of contract enforcement. As for SVO, it made sense to allow it to rely on the forum-selection clause, given the allegations against it: the plaintiffs were arguing that it had conspired with RVE and would have used the forum-selection clause to sue it in Mexico, so it was only fair to allow SVO to take advantage of the clause and have the action heard in Mexico; to say otherwise would give the plaintiffs a choice of forum but deny SVO (or RVE, for that matter) a mutual right regarding jurisdiction. The lower court's decision to dismiss the US action was affirmed.
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