Unreported / Non-Citable
Background
Plaintiff Nuño Iron & Manufacturing, Inc., a California corporation based in King City, purchased a Single Rail 760 automated welding system from Defendants The Lincoln Electric Company, an Ohio corporation headquartered in Cleveland, and Zeman Bauelemente Produktionsgesellschaft, mbH, headquartered in Austria. Plaintiff alleged the equipment did not perform as represented and brought contract, warranty, and misrepresentation claims in California state court. Defendants removed the action to the Northern District of California and then moved to transfer venue to the Northern District of Ohio under 28 U.S.C. § 1404(a), relying on a forum-selection clause in the Lincoln Electric Automation, Inc. Terms and Conditions of Sale.
The clause at issue, paragraph 27 of the T&Cs, stated that if a dispute could not be resolved through good faith discussions, 'either party may commence an action to resolve the Dispute in the Federal or State courts of Ohio,' and that '[t]he parties shall submit to personal jurisdiction and venue in the State of Ohio, County of Cuyahoga.' Defendants argued this language made Ohio the exclusive venue, while Plaintiff contended the word 'may' was permissive and did not bind the parties to litigate exclusively in Ohio.
The Court’s Holding
The court held that the forum-selection clause was mandatory and exclusive. Applying federal law and general contract interpretation principles, the court explained that the term 'may' referred only to a party's option to bring a lawsuit if informal discussions failed, while the same sentence directed that any such action be filed in a Cuyahoga County, Ohio court. The following sentence's instruction that the parties 'shall submit to … venue in the State of Ohio, County of Cuyahoga' confirmed exclusivity, as 'shall submit' denotes mandatory contractual venue under Ninth Circuit precedent.
Because a valid forum-selection clause is given controlling weight in all but the most exceptional cases, the court gave no weight to Plaintiff's choice of forum and deemed all private-interest factors as weighing entirely in favor of the preselected forum. The court then considered only the public-interest factors—familiarity with applicable law, feasibility of consolidation, local interest, and court congestion—and found no extraordinary circumstances to defeat transfer. The court concluded the public-interest factors were neutral or leaned slightly toward transfer, and Plaintiff had not carried its burden to show that transfer to the bargained-for forum was unwarranted. The motion to transfer was granted, and the Clerk was instructed to transfer the case to the Northern District of Ohio.
Key Takeaways
- A forum-selection clause stating that parties 'shall submit to personal jurisdiction and venue' in a specific location is interpreted as mandatory and exclusive under federal law, even if the preceding sentence uses the permissive word 'may' to describe the option to commence an action.
- When a valid forum-selection clause exists, courts give no weight to the plaintiff's choice of forum and do not consider private-interest factors such as party or witness convenience; only public-interest factors may be weighed, and they rarely defeat transfer.
- The party resisting enforcement of a forum-selection clause bears the burden of establishing extraordinary circumstances unrelated to convenience that would make transfer unwarranted.
- Conclusory assertions that a particular state's law will apply, without a showing that maintaining the action in the current forum is preferable, are insufficient to overcome a mandatory forum-selection clause.
- Relative court congestion is at best a minor factor in the § 1404(a) analysis and will not by itself create extraordinary circumstances to defeat a contractual venue selection.
Why It Matters
This order reinforces the strong presumption in favor of enforcing forum-selection clauses under Atlantic Marine and Ninth Circuit precedent. It clarifies that the presence of the word 'may' in one part of a clause does not render the entire provision permissive when the same or following sentences use mandatory language like 'shall submit' to specify venue. Practitioners drafting or challenging forum-selection clauses should focus on whether the language clearly requires exclusive jurisdiction, as courts will interpret such clauses according to their plain meaning and general contract principles.
The decision also underscores the limited scope of the public-interest inquiry once a mandatory clause is found. Even where a plaintiff is a local corporation and the defendant is headquartered in the preselected forum, the court will not weigh private interests or the plaintiff's forum preference. Only a compelling showing on public-interest factors—such as a clear local interest or significant congestion disparity—might suffice, and even then, such factors will rarely defeat transfer. This case serves as a reminder that contractual venue provisions are enforceable absent truly extraordinary circumstances.