United States: Boldly Going Where No Court Has Gone Before?

The U.S. Court of Appeals for the Federal Circuit has affirmed a ruling that a defendant contractually waived his Fifth Amendment due process right to challenge personal jurisdiction in an "agreed" forum by executing the plaintiff’s form agreement, which included a forum selection clause on the back. Monsanto Co. v. McFarling, No. 01-1390, 2002 U.S. App. LEXIS 17588 (Fed. Cir. August 23, 2002).

Monsanto licensed certain patented seed to manufacturers and to farmers pursuant to a "Technology Agreement" that contained, among various terms and conditions on its reverse, a forum selection clause. Monsanto filed suit in the U.S. District Court for the Eastern District of Missouri, charging the defendant, an individual farmer, with patent infringement and breach of the agreement. McFarling appeared to contest the Missouri court’s jurisdiction over him, arguing that he purchased, planted and harvested the seeds and executed the agreement in Mississippi. The district court denied McFarling’s motion to dismiss for lack of personal jurisdiction finding that by executing the agreement McFarling consented to the jurisdiction of the Missouri court.

On appeal, the defendant argued that he did not consent to jurisdiction because the forum selection clause was on the back of the technology agreement, which he stated he did not read and of which he was unaware. The Federal Circuit ruled that the forum selection clause was enforceable, the defendant having failed to demonstrate that the clause was invalid or that the selected forum was unreasonable or unjust, and that the defendant’s voluntary failure to read the clause did not render it ineffective.

Judge Clevenger issued a strong dissent arguing that the "Technology Agreement" was a one-side contract of adhesion because the goods or services were not available on alternative terms from another source. Judge Clevenger characterized the majority’s holding as allowing an accused infringer to "surrender his right to due process in advance by signing a contract of adhesion—regardless of whether that accused infringer knew that by so doing he abandoned his constitutional rights." Judge Clevenger noted that no court has gone so far as to hold that a contract of adhesion can subject a defendant to personal jurisdiction in a court that otherwise would have no power over him, and that if any court were to so hold, it should be the U.S. Supreme Court, not the Federal Circuit.