Many contracts, whether or not related to hospitality, specifically delineate where a lawsuit or arbitration will occur if there's a dispute, and which law will govern the interpretation of the agreement.
The Supreme Court of the United States previously has recognized the ability of a party to designate an exclusive jurisdiction for any legal action, and this decision was recently reinforced by the U.S. Court of Appeals for the Seventh Circuit. The judge dismissed a suit following a motion by the defendant, who argued that the case wasn't being tried in the contested contract's designated jurisdiction; the dismissal kept the case from going forward to discovery -- i.e., getting documents and taking depositions.
Carefully read every line of your contract and be sure to get any ambiguities explained.
• Make sure exclusive jurisdiction of a specific court is named if a claim is to be made. If you disagree with the country or state named, respectfully renegotiate the clause.
• In some cases, arbitration might be a better avenue for finding an amicable solution, but be careful. If chosen, outline this option specifically in the contract.
A HONEYMOON WITH A HITCH
The above case was not meetings-related, but this issue can come up during disputes concerning hotel, speaker, venue, A/V or other event contracts. While on her honeymoon, the plaintiff suffered a severe bout of food poisoning after being served a contaminated dish at her resort. She sued several affiliated companies that sold and managed the vacation package, and filed the case in the U.S. Federal District Court for the Eastern District of Wisconsin, where she and her husband live and where they purchased the trip.
One of the defendants, the trip operator who sold the couple their package, moved to dismiss the case, citing the dispute-resolution's forum-selection clause. Their argument was based on the doctrine of "forum non conveniens" -- where the court can decline to take a case because another court might be the correct venue.
The Court of Appeals upheld an earlier ruling, saying the original judge's decision to dismiss the case was sound, and requiring that the contract's clause on forum selection be enforced.
The court noted that, had the plaintiffs held that the "public interest" required the case to be heard in Wisconsin, the case might have had a chance to go forward. But as no public interest was introduced to justify overriding the forum-selection clause, the dismissal was entirely appropriate. To continue the case, the plaintiff would need to file in Pennsylvania.
PENNSYLVANIA OR BUST
The clause in question stated in bold-face type on travel vouchers given to the plaintiff that "the exclusive forum for the litigation of any claim or dispute arising out of this trip shall be the court of common pleas of Delaware County, Pennsylvania."
The net result of this case once again supports the concept of a forum selection. While not at issue in this case, the courts also generally uphold clauses supporting selection of the law to be applied in interpreting the agreement. In this case it would have been the laws of Pennsylvania.
Jonathan T. Howe, Esq., is a senior partner of the Chicago and Washington, D.C., law firm of Howe & Hutton Ltd., specializing in meetings and hospitality law. Email questions to him at [email protected]