A Texas Federal District Court recently ruled on forum selection clauses and the Carmack Amendment in Ledet v. Across USA Moving, Inc., No. 4:14-mc-1846 (S.D. Texas June 11, 2015). The court’s decision is another in a growing trend towards ignoring state forum selection clauses in favor of applying the Carmack Amendment’s forum selection clause. While not unanimous across the country, the trend is for forum selection clauses to yield to federal forums under the Carmack Amendment.
The case at issue involves a family who contracted with a moving and storage company to have their household goods, family furniture, and belongings shipped from Texas to Maryland. The family sued the company because of the job they did, and they brought the case in U.S. District Court for the Southern District of Texas, Houston Division. But the original contract to move the goods included a forum selection clause that would require any dispute between the shipper and carrier to be brought in Dallas County, Texas in a Texas state court. The carrier asked the U.S. District Court to dismiss for improper venue. But the court denied the motion.
Forum Selection Clauses: What Are They?
Contracts are notoriously full of legal information that is hard to understand. Among the many clauses that can be found in convoluted and unnecessarily complicated contracts are forum selection clauses. These particular clauses are not always complicated, and sometimes serve to benefit both a plaintiff and defendant in a case. But more often than not, they are simply an afterthought and included because no one customized the contract, since it may have been easier to just use a pad-contract without any changes.
Forum selection clauses announce where a lawsuit will be brought in the event of a dispute. Typically these clauses are binding, but they can be overturned in certain circumstances. The doctrine of forum non conveniens rules on whether a selection clause will be upheld. This doctrine establishes that the overriding questions for whether a forum selection clause will be upheld asks whether:
- it is convenient for both parties and the court; And
- if the interests of justice indicate that the case should be moved.
In the world of enforcing contract clauses, this standard is not terribly burdensome. It leaves a lot of discretion with a court to choose to enforce it or not. In the present case the court chose not to.
Jurisdictions Trending Towards Ignoring Forum Selection Clauses
In issuing its decision to not apply this forum selection clause, this District Court relied on several other courts’ opinions and the text of the Carmack Amendment. The actual text of the Carmack Amendment is very clear and states that an action under the Amendment can be brought in federal court where the carrier operates or where the alleged losses occurred. 49 U.S.C. § 14706(d)(1)-(2). Many courts have taken this language to mean that the Carmack Amendment overrides forum selection clause. Those courts include:
- The Second Circuit – Transport v. State Farm Mut. Auto. Ins., 537 F.2d 648 (2nd Cir. 1976).
- The Tenth Circuit – Aluminum Products Distributors, Inc. v. Aaacon Auto Transp., Inc., 549 F.2d 1381 (10th Cir. 1997).
- Other, various district courts throughout the country.
This decision is significant for trucking companies because it puts them and their customers on notice for how their contracts are to be drafted. When it comes to trucking contracts, the Carmack Amendment, and other trucking industry laws, we at Anderson and Yamada, P.C. are here to help. Contact us so we can serve you in all your company’s legal needs.