Make Certain Your Forum Selection Clause Actually “Selects” a Forum

Make Certain Your Forum Selection Clause Actually “Selects” a Forum

By: Claudia Carrizales

Edited by: Andrew Lifsey

Salacia Logistics v. Four Winds Logistics, LLC., No. 15-01512, 2015 WL 4645695 (E.D. La. Aug. 4, 2015).Salacia Logistics, LLC (hereinafter “Salacia”), a limited liability company headquartered in New Orleans and organized in Delaware, contracted with FWLL, LLC (hereinafter “FWLL”), a limited liability company, both headquartered and organized in Texas.[1] In October of 2014, the parties established a contract by which Salacia would, for the term of one year, provide a tugboat and six barges to transport sand from FWLL’s source location down the Mississippi River, and into the Gulf of Mexico. The following month, the parties established a second written agreement, the Three Barge Agreement, under which Salacia agreed to furnish an additional three barges for hauling sand pursuant to nearly identical terms as the first charter. Finally, the parties entered into an oral agreement, the “Spot Run” Agreement, by which Salacia agreed to transport sand via six barges from Greenville, Mississippi, to Corpus Christi, Texas, on what the parties referred to as a “spot run.”[2]These agreements were confected in Louisiana as a result of FWLL’s advertising in the state, traveling to the state to meet with Salacia’s representatives, communicating over the phone with Salacia’s representatives, and the parties’ understanding that the agreements entailed the transport of materials through Louisiana.[3]Significantly, the written Six and Three Barge Agreements contained identical choice of forum clauses, which specified that a party filing suit must do so in federal or state court of the state where the materials were located.[4] The oral spot run agreement contained no such provision.[5]In February 2015, FWLL refused to accept the barges arriving for completion of the spot run, and Salacia was forced to store the sand.[6] In March, months before the expiration of the Six and Three Barge Agreements, FWLL’s CEO terminated the agreements prematurely and without cause, prompting Salacia to file suit in Louisiana state court for damages for breach of contract. After removing the matter to federal court, FWLL moved for dismissal for lack of personal jurisdiction under Fed. R. Civ. P. 12(b)(2) or, alternatively, to transfer venue to the Southern District of Texas. Salacia opposed the motion.[7]Although the Court found that Salacia failed to prove FWLL was “at home” in Louisiana for purposes of general jurisdiction, there was sufficient evidence to establish satisfactory minimum contacts to uphold a finding of specific jurisdiction over the defendants.[8] However, the crux of the matter rested on how the court resolved the ambiguity inherent in the parties’ unusual forum selection clause.The forum selection clause, which premised selection of the forum on the location of the materials that were to be transported down the Mississippi River, necessarily “embraced the possibility of Louisiana as the appropriate forum.”[9] When Salacia filed suit, approximately 16,900 tons of sand transported by Salacia pursuant to the Three and Six Barge Agreements were located in New Orleans.[10] Thus, the Court found that the defendants had “expressly agreed to subject itself to the laws & courts of Louisiana” through the terms of the clause.[11] Further, the Court found that the exercise of jurisdiction in Louisiana as opposed to Texas did not impose an overwhelming burden on FWLL, especially since FWLL traveled to Louisiana at least three times when negotiating the disputed Three and Six Barge Agreements.[12]The Court continued its discussion of the forum selection clause in the analysis of the motion to transfer venue. The clause did not truly “select” a forum, but gave only a “vague pronouncement as to proper venue based on the location of the material.”[13] Thus, the Court declined to disturb Salacia’s chosen forum when the minimal jurisdictional and venue requirements were satisfied.[14]Ultimately, because the Court properly had personal jurisdiction over FWLL in Louisiana, and because the forum selection clause did not “select” a specific venue but did encompass the possibility of proper venue in Louisiana, the Court denied FWLL’s motion to dismiss and the alternative motion to transfer.[15][1] Salacia Logistics v. Four Winds Logistics, LLC., No. 15-01512, 2015 WL 4645695, at *1 (E.D. La. Aug. 4, 2015).[2] Id.[3] Id. at *6.[4] Id.[5] Id. at *7.[6] Salacia, 2015 WL 4645695 at *1.[7] Id. at *2[8] Id. at *6.[9] Id.[10] Id.[11] Salacia, 2015 WL 4645695 at *6.[12] Id. at *6-7.[13] Id. at *8.[14] Id.[15] Id.