Will a Louisiana court enforce this contract's forum-selection clause?
Yes, as a general commercial matter: the Louisiana Supreme Court rejected the position that forum-selection clauses are per se against public policy. In Shelter Mutual Insurance Company v. Rimkus Consulting Group, Inc. of Louisiana, the Court resolved a split among the circuit courts of appeal and held: "We hold that such clauses should be enforced in Louisiana unless the resisting party can 'clearly show that enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching .... [or that] enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by judicial decision.'" The Court grounded this in Louisiana's own freedom-of-contract policy, adopting the same general rule the United States Supreme Court applies to forum-selection clauses under federal law. The holding was not unanimous and a reader should know it: three justices dissented and a fourth concurred only in the result. The decree reversed "the judgments of the lower courts overruling Rimkus' declinatory exception of venue". A hard statutory exception exists for EMPLOYMENT contracts: La. R.S. 23:921(A)(2) makes a choice-of-forum clause in an employee's contract of employment "null and void" unless the employee "expressly, knowingly, and voluntarily" ratifies it after the dispute-triggering incident has already occurred.
The trap
Shelter Mutual's standard puts the burden on the RESISTING party to "clearly show" unreasonableness, fraud, overreaching, or a strong contrary public policy: it is not a neutral, evenly-weighted reasonableness balancing test, and a party resisting a forum-selection clause starts from behind. But do not read Shelter Mutual as reaching employment contracts: § 23:921(A)(2)'s employment-specific voiding rule is a hard statutory carve-out that operates independently of, and more protectively than, the general commercial rule Shelter Mutual states: an employer cannot rely on the general "forum-selection clauses are prima facie valid" rule to enforce a forum clause against an employee. Separate, narrower statutory rules govern other contract types this general rule does not reach. For construction contracts, subcontracts and purchase orders where one party is domiciled in Louisiana and the work is on a project in this state, R.S. 9:2779(C) declares "null, void, and unenforceable as against public policy" any provision that "[r]equires a suit or arbitration proceeding to be brought in a forum or jurisdiction outside of this state" or "[r]equires interpretation of the agreement according to the laws of another jurisdiction", so a construction forum clause can fail even where Shelter Mutual would have upheld the identical clause in an ordinary commercial contract, R.S. 9:2779(A)(1) defines "construction contract" broadly and (A)(2) then excepts four oil-and-gas categories from that definition: a dirt or gravel access road to oil and gas wells, oil flow lines or gas gathering lines downstream of the point where production becomes commingled for transportation, an instrument granting an interest in or the right to possess property even where it carries a right to build on it, and "Upstream, midstream, or downstream oil, gas, chemical, petrochemical, or fuel manufacturing facilities or infrastructure, including refineries, processing plants, terminals, or associated appurtenant structures and facilities." Two further limits close the section: (D) confines it to the contracts described in (B), and (E) provides that "the provisions of this Section do not apply to negotiated labor contracts." The Shelter Mutual dissent shows how live the general question still was: Justice Victory, joined by two colleagues, wrote that "forum selection clauses are prohibited by statute and contravene a strong public policy of Louisiana" and that "they are unenforceable under Louisiana law." That is the minority view and it did not carry, but it is the argument a resisting party will make. Louisiana's insurance code (R.S. 22:868, not read for this rule) has its own, separately-amended rule for forum and venue clauses in insurance contracts. Neither should be analyzed under the general Shelter Mutual standard alone.
10 authorities
- statuteLa. R.S. 23:921enactment date not established
The words that state the rule
The provisions of every employment contract or agreement, or provisions thereof, by which any foreign or domestic employer or any other person or entity includes a choice of forum clause or choice of law clause in an employee's contract of employment or collective bargaining agreement, or attempts to enforce either a choice of forum clause or choice of law clause in any civil or administrative action involving an employee, shall be null and void except where the choice of forum clause or choice of law clause is expressly, knowingly, and voluntarily agreed to and ratified by the employee after the occurrence of the incident which is the subject of the civil or administrative action.
- case148 So.3d 871Shelter Mutual Insurance Company v. Rimkus Consulting Group, Inc. of LouisianaLa.decided 2014read it at the source ↗
The words that state the rule
We hold that such clauses should be enforced in Louisiana unless the resisting party can “clearly show that enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching .... [or that] enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by judicial decision.”
- case148 So.3d 871Shelter Mutual Insurance Company v. Rimkus Consulting Group, Inc. of LouisianaLa.decided 2014read it at the source ↗
The words that state the rule
We granted this writ application to resolve a split in the circuit courts of appeal regarding whether forum selection clauses are per se violative of public policy in Louisiana.
- case148 So.3d 871Shelter Mutual Insurance Company v. Rimkus Consulting Group, Inc. of LouisianaLa.decided 2014read it at the source ↗
The words that state the rule
This court has long recognized that the freedom to contract is an important public policy.
- case148 So.3d 871Shelter Mutual Insurance Company v. Rimkus Consulting Group, Inc. of LouisianaLa.decided 2014read it at the source ↗
The words that state the rule
Based on our review of the law, we find no reason for Louisiana to deviate from the general rule set forth by the United States Supreme Court that contractual forum selection clauses are prima facie valid.
- statuteLa. R.S. 9:2779enactment date not established
The words that state the rule
B. The legislature finds that, with respect to construction contracts, subcontracts, and purchase orders for public and private works projects, when one of the parties is domiciled in Louisiana, and the work to be done and the equipment and materials to be supplied involve construction projects in this state, any provision in such agreements requiring disputes to be resolved in a forum outside of this state or requiring their interpretation to be governed by the laws of another jurisdiction are inequitable and against the public policy of this state. C. The legislature hereby declares null, void, and unenforceable as against public policy any provision in a contract, subcontract, or purchase order, as described in Subsection B of this Section, which either: (1) Requires a suit or arbitration proceeding to be brought in a forum or jurisdiction outside of this state; rather, such actions or proceedings may be pursued in accordance with the Code of Civil Procedure or other laws of this state governing similar actions. (2) Requires interpretation of the agreement according to the laws of another jurisdiction.
- statuteLa. R.S. 9:2779enactment date not established
The words that state the rule
A.(1) For purposes of this Chapter, "construction contract" means any agreement for the design, construction, alteration, renovation, repair, or maintenance of a building, structure, highway, road, bridge, water line, sewer line, oil line, gas line, appurtenance, or other improvement to real property, or repair or maintenance of a highway, road, or bridge, including any moving, demolition, or excavation. (2) "Construction contract" does not include any design, construction, alteration, renovation, repair, or maintenance of the following: (a) Any dirt or gravel road used to access oil and gas wells and associated facilities. (b) Oil flow lines or gas gathering lines used in association with the transportation of production from oil and gas wells from the point that oil and gas becomes comingled for transportation to oil storage facilities or gas transmission lines. (c) Any deed, lease, easement, license, or other instrument granting an interest in or the right to possess property even if the instrument includes the right to design, construct, alter, renovate, repair, or maintain improvements on such real property. (d) Upstream, midstream, or downstream oil, gas, chemical, petrochemical, or fuel manufacturing facilities or infrastructure, including refineries, processing plants, terminals, or associated appurtenant structures and facilities.
- statuteLa. R.S. 9:2779enactment date not established
The words that state the rule
D. The provisions of this Section apply to contracts, subcontracts, and purchase orders as described in Subsection B of this Section. E. Notwithstanding any other provisions of law to the contrary, the provisions of this Section do not apply to negotiated labor contracts.
- case148 So.3d 871Shelter Mutual Insurance Company v. Rimkus Consulting Group, Inc. of LouisianaLa.decided 2014read it at the source ↗
The words that state the rule
In reaching this conclusion, we recognize the legislature has the authority to enact a statute providing for wholesale prohibition on the enforcement of forum selection clauses. However, Article 44(A) is not such a provision. If indeed it is the intent of the legislature to declare such a public policy, we trust it will move to enact one. DECREE Accordingly, for the foregoing reasons, the judgments of the lower courts overruling Rimkus’ declinatory exception of venue are reversed. REVERSED AND RENDERED.
- case148 So.3d 871Shelter Mutual Insurance Company v. Rimkus Consulting Group, Inc. of LouisianaLa.decided 2014read it at the source ↗
The words that state the rule
VICTORY, J., dissenting. For numerous reasons, I dissent from the majority opinion which upholds the forum selection clause in this case. In my view, forum selection clauses are prohibited by statute and contravene a strong public policy of Louisiana. Further, they are contrary to Louisiana’s comprehensive venue scheme and our law on forum non conveniens. Therefore, they are unenforceable under Louisiana law.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.