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Past a Certain Point, Contracts are Only Words on Paper (Part 2)

This follows up on a previous blog entry (Past a certain point, contracts are only words on paper) concerning a personal bugbear of mine: the assumption, by some attorneys, of the absolute power of the words of a contract. They aren't, they never were, and they never will be.

This is a pretty minor example, but I think a telling one. In Mitek Sys. v. United Services Automobile Assoc., D.Del. 12-cv-462 (2012-08-30) (Sleet, J.), the forum selection clause of the licensing agreement between the parties stated:

[A]ny suit or action filed to enforce or contest any provision of this Agreement, or the obligations imposed, shall be brought and prosecuted in a court of competent jurisdiction sitting in the State of Delaware.

Judge Sleet held that the first-filed rule trumped the contract and ordered the case transferred to the Western District of Texas, where USAA had filed suit against Mitek two weeks before. Id., p. 5 (" ... the court will not enforce the Delaware forum selection clause of the License Agreement ... ").

What I find telling is that USAA didn't even focus on the public policy arguments for ignoring the forum selection clause—it appears the judge made those arguments pretty much by himself, while USAA instead argued that other agreements (with Texas forum selection clauses) superseded the contract with the Delaware forum selection clause. In other words, USAA's lawyers were so blinded by the clear wording of the contract with the Delaware forum selection clause (and their assumption that such words in a contract are absolute) that the only way they saw out of it was to argue other agreements must apply. Judge Sleet, knowing the law and possessing common sense, didn't waste his time:

The parties' devote a significant amount of their briefing to this issue, but for the moment the court will assume that the 2006 License Agreement, with its Delaware forum selection clause, was not superseded by the later Confidentiality Agreement and does control here.
...
[The court completely rejects] Mitek['s] argu[ment] that the presence of the [forum selection] clause defeats the ordinary application of the first-filed rule ...
...
No [exceptions] are presented here to justify a departure from the ordinary rule favoring the forum of the first-filed action.
Id., pp. 5, 6-7 (emphasis in orginal)

Contracts are not absolute; they never were, and they never will be.

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