Bonuchi Law

Forum Selection Clause Enforced For Tort Claims

Posted: January 19, 2018

The Supreme Court of Missouri enforced a contract’s forum selection clause as to tort claims between the parties in Reed v. The Reilly Company LLC, No. SC96499 (Dec. 5, 2017)****. Reed sued his Kansas-based former employer in Jackson County, Missouri alleging violations of the Missouri Merchandising Practices Act and other tort claims. The employer moved to dismiss the suit, claiming that the parties’ agreement had a valid forum selection clause mandating that Johnson County, Kansas is “the proper jurisdiction and venue to interpret and enforce any and all terms of the Agreement.”

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The opinion is light on background facts, but what’s clear is that Reed’s primary attempt at avoiding the Kansas forum was to say that his claims were not based on the contract itself, but were instead torts, which were not addressed by the forum selection clause. That was true enough, but the Supreme Court held that a forum selection clause is enforceable for any and all claims if “resolution of [the] claims would necessarily require an inquiry into the terms and enforceability of the agreement.” One way or another, the Court found, Reed’s claims would involve interpreting or enforcing the agreement.

Reed’s other arguments fared no better. He tried attacking the contract as a whole, claiming that since he was an “at will” employee the contract was void for want of consideration and so too was the forum selection clause. The Court flatly rejected that theory, noting the “absurdity” that would result for cases in which the initial court upheld the contract and thus sent the case to the selected forum, where the new court would have to address the same arguments about whether the contract is void. Relying on a Seven Circuit case, the Court concluded that the better rule is to have the selected jurisdiction decide questions of enforceability (absent some showing of fraudulent inducement).

Finally, the Court rejected arguments that the contract was unfair or the product of fraud. But because Reed did not contend the contract was one of adhesion, the court couldn’t find it unfair to enforce the forum selection clause. Nor was there any merit to the argument that enforcing the clause would strip him of the benefits of Missouri law because the Kansas court could decide Reed’s MPA claims.

Practice Tip:

The dismissal in this case was without prejudice, just as it would be in a personal jurisdiction case. Typically, the “without prejudice” part makes the judgment non-final for purposes of appeal because the court hasn’t fully decided the merits of parties’ claims and defenses. But when the dismissal has the effect of ending litigation in the plaintiff’s chosen forum, it is a final, appealable judgment.