Tuesday, November 23, 2010

Boring Case On Venue Dispute Leads Us Into the Holidays (Rihani v. Team Express Distributing, Inc.)

I'm not working tomorrow, and I really don't feel like working today. No, it isn't because I can't wait to listen to the new Kanye West album. It has been a very busy few months, and there is no better way to unwind than to transition right into the suffocating crush of holiday expectations.

But enough sarcasm. I still have to contribute to this blog.

Struggling to find an appropriate topic to talk about today, I was reviewing some of my colleagues' recent posts for inspiration. Rob Radcliffe wrote recently about how it is important when assessing a non-compete agreement to get a proper framework for analysis and lay of the land. He points to venue, waiver of jury trials, and arbitration as three factors any lawyer must consider when examining a non-compete agreement. In Rob's view, these provisions "define the playing field."

It got me thinking that I haven't really spent any time looking at contractual provisions over venue. My readers probably are thanking me for that, but I did stumble across an interesting case from Maryland earlier this year that addressed sort of an interesting contract interpretation question.

The clause in Rihani v. Team Express Distributing provided that "venue for all actions arising out of or in any way related to this Agreement shall be irrevocably set in Howard County, Maryland." The plaintiff filed suit in federal court. Problem: there is no federal court in Howard County, Maryland. The defendant moved to dismiss, contending that the only reasonable interpretation of the forum selection clause means that the action had to be filed in state court.

The court agreed and found that "when [the venue clause] prohibits venue outside a geographic boundary, it must be interpreted to prohibit venue in any court that sits outside that geographic boundary." Interestingly, courts are split on this issue. Some courts reason that under near-identical language, a federal court may have jurisdiction because it is the court with venue over a particular county. I'm not sure after reading this case if I became more educated or more confused.

The bottom line is this: attorneys drafting agreements for their employer clients may want to revisit provisions like the one above. Venue clauses are one area where I see a wide range of contract language, and I can see how disputes like this arise. It probably is a better practice to reserve the option of pursuing a case in either federal or state court located within a certain geographic region. In many cases, federal court is clearly a better option.


Court: United States District Court for the District of Maryland
Opinion Date: 4/30/10
Cite: Rihani v. Team Express Distributing, LLC, 711 F. Supp. 2d 557 (D. Md. 2010)
Favors: N/A
Law: Federal

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