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High Court to Address Whether Federal Court Is Bound by Contract’s Forum-Selection Clause

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by Publius
Posted April 02, 2013, 10:19 AM

Lyle Denniston writes at SCOTUSblog:

The Supreme Court on Monday agreed to decide whether an agreement by business firms on the place where any legal dispute between them will be decided ordinarily must be put into effect by a federal court.  The case of Atlantic Marine Construction Co., Inc., v. J-Crew Management, Inc. (12-929) was the only one granted.  It will be heard and decided next Term

The Court sent back to lower courts, for a new look, a case on the right of a group of consumers to file a class-action lawsuit against a product manufacturer, when many in the group may not have experienced the same product flaw that led to the case.  The case of Whirlpool Corp. v. Glazer (12-322) was returned to the Sixth Circuit Court to examine the impact of last Wednesday’s ruling in Comcast v. Behrend (11-864).  The lawsuit involves a foul odor emerging from front-end loading washing machines.

 

In a summary ruling that largely applies only to California, the Court overturned a Ninth Circuit Court ruling that an individual who has several times chosen to act as his or her own defense lawyer in a criminal case but then seeks a lawyer’s help after the trial generally must be allowed that legal aid.  The Court, in an unsigned opinion in Marshall v. Rodgers (12-382) did not further clarify the scope of the right of self-representation, but concluded that the Circuit Court had constructed a new legal assistance rule out of its own precedents, not Supreme Court precedents, and that was wrong.  No dissents were noted.

The Atlantic Marine case accepted for review will give the Justices an opportunity to sort out the meaning of two prior rulings that seem to run counter to each other on federal courts’ reaction to forum-selection causes in business contracts.

In the 1972 decision in M/S Bremen v. Zapata Off-Shore, the Court ruled that federal courts should operate on the premise that such a clause in a contract is valid, and should generally be enforced.  But in a 1988 ruling in Stewart Organization v. Ricoh Corp., the Court ruled that federal, not state, law can govern a motion to transfer a case between federal courts.  The Stewart opinion has been interpreted by some courts as indicating that private contractual agreement on the proper venue cannot trump a federal judge’s decision on that question.

The new case grows out of a dispute between a Virginia contractor and a Texas subcontractor over payments for work the subcontractor did on a project at Fort Hood, an Army post near Killeen, Texas.  Their contract specified that any dispute would have to be decided by a court in Virginia, but the subcontractor sued in a federal court in Texas, and the Fifth Circuit Court refused to transfer the case to Virginia. . . .

 

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