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Spectracom, Inc. v. Tyco International, Inc.

2004 WL 2404539 (3rd Cir. 2004) (Unpublished)

CONTRACTS; FORUM SELECTION; WAIVER—The filing of a removal petition in a diversity action does not constitute a waiver of a forum selection contract clause.

A dealer and manufacturer entered into an Authorized Dealer Agreement under which the dealer would sell the manufacturer’s security systems to homeowners and would assign the homeowner contracts exclusively to the manufacturer. The Agreement contained a forum selection clause that provided that the Agreement should be construed and enforced in accordance with the laws of Colorado, and any suit arising out of the Agreement should be brought in Colorado state court. The dealer initially brought suit against the manufacturer’s parent company in the Superior Court of New Jersey, alleging that the manufacturer breached its contract and that the parent company intentionally interfered with its contract with the manufacturer by inducing the manufacturer to breach its contract with authorized dealers.

The parent and manufacturer removed the case from the New Jersey Superior Court to the U.S. District Court. They then moved to either have the matter transferred to Colorado or to have the case dismissed should the court find that the forum selection clause mandated a Colorado state forum. The District Court dismissed the action, finding that the forum selection clause precluded litigation in any federal forum; and, the parent and manufacturer had waived their right to enforce the forum selection clause.

On appeal, the dealer contended that the District Court erred in finding that the parent and manufacturer’s actions did not constitute a waiver of their right to enforce the forum selection clause. According to the dealer, the parent and manufacturer waived their rights by removing the case from the Superior Court of New Jersey, which was an appropriate forum, to the District Court; and then making a motion to transfer or dismiss. The Circuit Court of Appeals disagreed, holding that the parent’s and manufacturer’s actions did not constitute a waiver. The filing of a removal petition in a diversity action does not constitute waiver. In addition, the District Court had observed that the parent and manufacturer each had been forthright in their intentions in seeking the dismissal or transfer. The Court of Appeals also noted that the parties had each signed a Joint Discovery Plan, which specifically indicated that parent and manufacturer had not waived their position that the action should either be transferred to Colorado or dismissed. Therefore, the Court determined that neither the parent nor the manufacturer waived its right to enforce the forum selection clause, and the dismissal of the action was proper.


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