1. ERIE AND FORUM SELECTION CLAUSES.
- Author
-
Coyle, John F. and Andrew Hessick, F.
- Subjects
FORUM selection clause ,STATE laws ,LAW enforcement ,FEDERAL courts ,STATE courts ,FEDERAL common law - Abstract
Since Erie Railroad Company v. Tompkins, the U.S. Supreme Court has recognized that federal courts should generally follow state law if not doing so would significantly affect the outcome of the case. This principle suggests that federal courts should apply state law to determine the enforceability of forum selection clauses. Although seemingly mundane, these clauses can make or break a lawsuit. If a clause is enforced, the suit must be filed in a different location. This change in location affects the procedures that will be applied, the substantive law, and the overall cost of litigation. In extreme cases, enforcing a forum selection clause may lead the plaintiff to abandon the case altogether. Although these clauses are critically important, and although they frequently have a major impact on a case, the federal courts do not follow state law to determine whether they should be enforced. Instead, they apply federal common law. In this Article, we illustrate the real-world consequences of this decision. We draw upon a hand-collected dataset of hundreds of state and federal court decisions to show that federal courts sitting in diversity enforce forum selection clauses at a higher rate than state courts in virtually every state and every federal circuit. This divergence presents obvious opportunities for forum shopping between state and federal courts in the same state. And yet the federal courts continue to apply federal law to determine the enforceability of these clauses. The solution to this problem, we argue, is simple. Federal courts should apply state law to determine whether a forum selection clause is enforceable. [ABSTRACT FROM AUTHOR]
- Published
- 2024