Today, the Sixth Circuit resolved a federal/state conflict over enforceability of a "floating" forum selection clause as the basis for personal jurisdiction over an out-of-state defendant. Such a clause "floats" when the choice of forum varies according to the location of any possible assignee of the clause-containing contract.
The Sixth Circuit and the Supreme Court of Ohio reached opposite conclusions about enforceability, the latter deeming the clause unenforceable if at the time of signing the contract the beneficiary of the clause intended "almost immediately" to assign the contract but didn’t disclose that intention. The Sixth Circuit held that the law of the forum state, Ohio, controlled the question and that the district court did not err in refusing to enforce the floating forum selection clause. Preferred Capital, Inc. v. Sarasota Kennel Club, Inc., No. 06-3063 (6th Cir. May 29, 2007).
Barry Barnett
