A federal district court recently enforced a forum selection clause in National Equipment Dealers, LLC v. IROCK Crushers LLC, transferring the case to Ohio and confirming the enforceability of venue clauses in commercial contracts.
Background
National Equipment Dealers (NED), a heavy equipment distributor, entered into a dealer agreement with IROCK Crushers in 2023. The contract included a clause requiring all disputes to be litigated in Cuyahoga County, Ohio. In 2024, IROCK Crushers terminated the agreement and refused to repurchase inventory from NED. NED sued IROCK Crushers in North Carolina state court, alleging this refusal violated North Carolina law. IROCK Crushers removed the case to federal court and moved to transfer venue to Ohio based on the contract's forum selection clause.
NED opposed the transfer, arguing that public interest factors favored keeping the case in North Carolina. Specifically, NED relied on the high caseload of Ohio courts potentially leading to delay in adjudicating the present case and North Carolina's interest in trying a case that involves its own state laws.
Decision
The court upheld the forum selection clause and granted IROCK Crusher's motion to transfer the case to the U.S. District Court for the Northern District of Ohio. The court emphasized such clauses are presumptively valid, absent the presence of extraordinary public interest factors. The court rejected NED's attempt to demonstrate North Carolina's extraordinary interest in hearing the dispute, explaining that a high caseload did not equate to unreasonably delayed adjudication. Both Ohio and North Carolina had routine interests in trying the case, not extraordinary ones. The court maintained that a plaintiff's usual privilege to select a forum is exercised when it agrees to a forum selection clause and is no longer available when a dispute arises. Ultimately, a court will typically give deference to freely negotiated venue agreements.
Key Takeaways
- Dealers and manufacturers should carefully review forum selection clauses to ensure disputes are resolved in a predictable venue in the event litigation arises.
- Minor inconveniences like slower litigation or the routine interest of a particular forum in hearing the dispute do not constitute "extraordinary" public interest factors.
- A plaintiff exercises its right to choose a venue for potential litigation when they agree to a forum selection clause and cannot later challenge the agreement.
Special thanks to JJ Gramlich, a summer associate in Foley's Dallas office, for her contributions to this article.
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