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By Louis M. Solomon
New Jersey, et al. v. Merrill Lynch & Co., et al. [enhanced version available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law] involves what the Court of Appeals called the "narrow" issue
of the interpretation of forum selection clauses. In fact, in our experience, the
issue is an important one for the development of international practice, both for
the international litigator and for the corporate lawyer drafting agreements containing
forum or dispute resolution clauses.
The language of the contractual provision
at issue in the case provided: "exclusive jurisdiction . . . shall lie in the appropriate
courts of the State [of] New Jersey". The question was (a) whether the clause contemplated
jurisdiction in either the state or the federal courts of New Jersey, or (b) whether
what was contemplated was access exclusively to the state courts of New Jersey,
with access to federal courts in New Jersey being waived.
Before answering the question, the Court
of Appeals needed to determine whether it had subject matter jurisdiction over the
appeal. That in turn depended on whether the appeal was from an order remanding
a matter to state court; in such a case Congress precluded appeals. The Third Circuit
held that the grounds for the appeal in this case were not grounds specified in
§ 1447(c); as a result, the appeal was properly brought.
to the matter at hand, the Court of Appeals ruled that the contracting parties had
advertently waived relief in federal court. Of great significance to the Court of
Appeals was the fact that the contractual language provided for exclusive jurisdiction
in the appropriate courts "of the State of New Jersey" rather than "in" the state
of New Jersey. "Of" indicates a possessive relationship, said the Court citing Webster's
Third International Dictionary of the English Language. Quoting the Fifth Circuit,
the Third Circuit stated that: "Federal district courts may be in [a state],
but they are not of [that state]", quoting Dixon v. TSE Int'l Inc.,
330 F.3d 396 (5th Cir. 2003) [enhanced version / unenhanced version ] .
The Third Circuit was unwilling to indulge in other non-linguistic arguments that
sought to vary text that the Court of Appeals found to be unambiguous. In keeping
with what it described as the "vast majority" of other Circuits, the Court affirmed
the order remanding the case to state New York.
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