Florida Man Seeks Enforcement of Forum Selection Clause
February 6, 2023
One of the internet’s more enduring memes is that of Florida Man. Florida Man is famous for “performing irrational, maniacal, or absurd actions in the U.S. state of Florida.” Over the years, Florida Man has attacked his neighbor with a tractor, been trapped in an unlocked closet for two days, fed iguanas to alligators in a zoo run by a jail, and impersonated a police officer to obtain a discount at McDonald’s. Florida Man is a busy guy.
A review of recent cases decided by the Florida courts suggest that Florida Man remains at large and has developed an interest in forum selection clauses. The state and federal courts in Florida are regularly asked to enforce these provisions. These requests will only be granted, however, if (1) the contracting parties know enough to draft the forum selection clause to achieve their desired ends, and (2) the courts know enough to interpret the clause in accordance with past precedent. In a number of Florida cases decided in 2022, drafters and courts alike struggled to perform these basic tasks. This post first explores the problems presented in these cases. It then explains how future drafters and courts can do better.
In Buck v. Global Fiduduary Bank, the Third District Court of Appeal of Florida (Judge Kevin Emas) had to decide whether the following forum selection clause was exclusive or non-exclusive:
The courts of the Cayman Islands shall have jurisdiction in relation to any dispute or claim arising out of or in connection with this Agreement or its subject matter or formulation (including non-contractual disputes or claims).
The court concluded that the clause was exclusive because the word “shall” signaled their intent to litigate their disputes in the courts of the Cayman Islands and nowhere else. This decision is flatly incorrect.
It is true that the word “shall” sometimes connotes an intent to create an exclusive forum selection clause. In 2011, for example, the Eleventh Circuit held that a clause which stated that “[a]ll claims or causes of action relating to or arising from this Agreement shall be brought in a court in the City of Richmond, Virginia” was exclusive. This clause is, however, very different from a clause which merely states that the courts “shall have jurisdiction.” In 1987, the Ninth Circuit held that this latter phrase did not signal an intent by the parties to litigate in the chosen forum to the exclusion of all others. In its words:
Here, the plain meaning of the language is that the Orange County courts “shall have jurisdiction” over this action. The language says nothing about the Orange County courts having exclusive jurisdiction. The effect of the language is merely that the parties consent to the jurisdiction of the Orange County courts. Although the word “shall” is a mandatory term, here it mandates nothing more than that the Orange County courts have jurisdiction. Thus, [the defendant] cannot object to litigation in the Orange County Superior Court on the ground that the court lacks personal jurisdiction. Such consent to jurisdiction, however, does not mean that the same subject matter cannot be litigated in any other court. In other words, the forum selection clause in this case is permissive rather than mandatory.
This analysis is compelling. So compelling that it has been adopted in case after case after case after case after case. In light of these precedents, and the strength of the Ninth Circuit’s reasoning, there is no doubt that the clause in Buck should have been interpreted to be non-exclusive.
In EcoVirux, LLC v. BioPledge, LLC, a different panel of the same Florida court of appeals (Judge Bronwyn C. Miller) had to resolve whether a different forum selection clause was exclusive or non-exclusive. In this case, the court correctly held that the clause was exclusive and dismissed the case. The drafting history of the clause recounted by the court, however, provides a salutary lesson to future contract drafters.
The plaintiff in this case was a Florida company. It entered a contract with a Texas company that contained the following clause:
The exclusive venues for any dispute(s) arising under this Agreement (including but not limited to breach, validity, and enforceability of the Agreement) shall be may be brought in the state and federal courts for Denton County, Texas.
The alterations in the text reflect its negotiating history. The Florida company demanded that the phrase “shall be” be replaced with the phrase “may be brought.” In making this change, the Florida company apparently sought to transform an exclusive clause into a non-exclusive one.
Unfortunately, the Florida company overlooked the fact that the word “exclusive” appears in the second word of the clause. Although the company argued that parol evidence should be admitted to show that the clause was intended to be non-exclusive, the court refused to admit this evidence because it concluded that the clause was unambiguously exclusive on its face. If one wants the court to treat a clause as non-exclusive, it is advisable to insist on the deletion of the word “exclusive” in that clause.
A Forum Selection Clause in Disguise?
The Florida Supreme Court (Justice Ricky Polston) had to determine whether a contract provision was, in fact, a forum selection clause in Tribeca Asset Management v. Ancla International. A Colombian private equity fund entered into a confidentiality agreement with a Colombian import/export company that contained the following language:
This agreement will be governed by the laws of the State of Florida of the United States of America (USA), a jurisdiction accepted by the parties irrespective of the fact that the principal activity of the beer project will be conducted in Colombia.
The import/export company subsequently filed a petition in Florida court to compel arbitration against the private equity fund. The fund argued that the Florida court lacked personal jurisdiction over it. The company responded that the clause above was a forum selection clause that conferred personal jurisdiction on the Florida courts.
The Florida Supreme Court correctly held that the clause in question was, in fact, a choice-of-law clause. It was not a forum selection clause. The court explained that the word “jurisdiction” in the clause merely clarified that the parties chose the location of Florida as the source of the law governing the Agreement. It did not select a court in which to resolve disputes. In announcing this decision, the Florida Supreme Court reversed a prior decision by the Florida court of appeals (Judge Norma Lindsay) which had held that the clause was a forum selection clause because it contained the word “jurisdiction.” This head-scratching decision was rightly overturned on appeal.
Florida courts are often asked to enforce forum selection clauses. To make this process work smoothly, however, the parties must do the necessary work at the drafting stage and the courts must interpret the clauses in accordance with past precedents. The TLB Primer on Forum Selection Clauses provides a helpful overview of the various issues presented. Anyone looking to delve even deeper these issues should read this article for a comprehensive discussion of the interpretive issues that most frequently arise in litigation.