31 F.4th 914
5th Cir.2022Background
- Dynamic licensed software to UMA in June 2019; the license prohibited reverse engineering and derived development without consent.
- The license contained a forum-selection clause requiring that “any dispute arising out of or under this Agreement shall be brought before the district courts of Harris County, Texas,” with a carve‑out permitting injunctive relief for IP/confidentiality violations “in any appropriate jurisdiction.”
- Dynamic sued UMA in Harris County state court (claims: breach, fraudulent inducement, conversion, quantum meruit, lien foreclosure, TTLA, TUTSA, damages and injunctive relief).
- UMA removed to federal court based on diversity; Dynamic moved to remand, arguing the forum clause barred removal.
- At a pretrial conference Dynamic sought leave to amend to drop conversion, quantum meruit, lien foreclosure, and TTLA claims; the district court allowed the amendment and remanded the case to state court.
- UMA appealed the remand; the Fifth Circuit affirmed, holding the forum clause constituted a contractual waiver of removal and that the district court properly allowed the amendment.
Issues
| Issue | Plaintiff's Argument (Dynamic) | Defendant's Argument (UMA) | Held |
|---|---|---|---|
| Whether the forum‑selection clause waived the right to remove and is exclusive | Clause’s mandatory language (“shall be brought before”) and provisos show exclusive Harris County state‑court forum | Clause is not exclusive because it lacks the word “exclusive” or “sole” | The clause is exclusive and constitutes a waiver of removal rights |
| Whether the phrase “brought before” permits removal after initial state filing | “Brought before” in ordinary/legal meaning includes presenting a dispute to a tribunal (removal brings matter before federal court) | “Bring an action” means to institute proceedings; initial filing in state court satisfies clause | “Brought before” encompasses removal; removal would violate the clause |
| Whether certain dropped claims (conversion, TTLA) were federal‑preempted so remand improper | Dynamic eliminated those claims by amendment to avoid preemption issue | UMA argued those claims were subject to exclusive federal jurisdiction and thus remand improper | District court properly allowed amendment; remand stands without those claims |
| Whether Dynamic properly moved to amend under Rule 15 and whether UMA may raise other preemption arguments on remand | Dynamic requested leave to amend on the record at the initial conference and stated reasons (preemption concerns) | UMA contended Dynamic never properly moved to amend and sought leave to litigate preemption of other claims | Request at conference satisfied Rule 15(a); district court did not abuse discretion; UMA forfeited not‑raised preemption arguments |
Key Cases Cited
- Waters v. Browning‑Ferris Indus., Inc., 252 F.3d 796 (5th Cir. 2001) (contractual waiver of removal must be clear but may be implied)
- City of New Orleans v. Mun. Admin. Servs., Inc., 376 F.3d 501 (5th Cir. 2004) (a party may waive removal by establishing an exclusive contractual venue)
- Karl Koch Erecting Co. v. New York Convention Ctr. Dev. Corp., 838 F.2d 656 (2d Cir. 1988) (forum clause requiring actions be commenced in a state court precludes removal)
- Matter of Meyerland Co., 960 F.2d 512 (5th Cir. 1992) (removal is more akin to original jurisdiction; removed actions are treated as if commenced in federal court)
- Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594 (5th Cir. 1981) (Rule 15(a) bias in favor of allowing amendments)
- Milk ’N’ More, Inc. v. Beavert, 963 F.2d 1342 (10th Cir. 1992) (forum selection clause specifying county venue met clear‑and‑unequivocal standard to waive removal)
- All. Health Grp., LLC v. Bridging Health Options, LLC, 553 F.3d 397 (5th Cir. 2008) (interpretation of forum‑selection clauses reviewed de novo)