Lead Opinion
McKEAGUE, J., delivered the opinion of the court, in which GIBBONS, J., joined. MERRITT, J. (pp. 834-35), delivered a separate concurring opinion.
OPINION
Rose Wong and Patrick Gibson (together “plaintiffs”) filed a lawsuit on behalf of themselves and similarly situated Ohio residents against PartyGaming Ltd., a Gibraltar-based company which hosts online poker games. In the suit, plaintiffs alleged breach of contract, misrepresentation, and violation of Ohio consumer protection laws. PartyGaming moved to dismiss the suit pursuant to a forum selection clause in its terms and conditions, which plaintiffs had agreed to when they registered on the site. The forum selection clause specified that all disputes would be subject to the exclusive jurisdiction of the courts of Gibraltar. Plaintiffs appeal the district court’s dismissal of the suit sua sponte for forum non
I.
PartyGaming runs an online poker business, which plaintiffs actively participated in as players. It is a publicly owned Gibraltar company, with its shares traded on the London Stock Exchange. To participate in online poker games, customers must register on PartyGaming’s website and agree to its “Terms and Conditions of Use.” Two such terms and conditions are relevant to this suit. The first relevant term contains PartyGaming’s anti-collusion policy, which states that customers are prohibited from holding more than one account and that PartyGaming is committed to preventing collusion and cheating. As part of its anti-collusion policy, Party-Gaming also provides information on its website regarding a “Collusion Prevention System” used to identify and ban colluding players and detect multi-account players. The Terms and Conditions also provide that the agreement shall be governed by the laws of Gibraltar and any disputes shall be subject to the exclusive jurisdiction of the courts of Gibraltar. The first paragraph of the Terms and Conditions of Use contains the following warning: “IMPORTANT — PLEASE READ THESE TERMS AND CONDITIONS CAREFULLY BEFORE ACCEPTING THIS AGREEMENT, THEN PRINT THESE TERMS AND CONDITIONS AND STORE THEM.”
Plaintiffs originally filed a diversity suit against PartyGaming in September 2006 in the Northern District of Ohio. The suit alleged that PartyGaming, through its anti-collusion policy, affirmatively represented that collusion and multi-account players did not occur on its website. The suit also claimed that PartyGaming affirmatively represented that it did not encourage gambling by minors or gambling addicts. Plaintiffs contended that these representations were false and, as such, violated Ohio consumer protection laws, breached the agreement, and negligently, recklessly, or intentionally induced plaintiffs to join the website. Plaintiffs sought certification of a class of all similarly situated individuals, which the district court provisionally certified, consisting of all persons in the state of Ohio who paid a registration fee on PartyGaming’s website.
PartyGaming failed to respond to plaintiffs’ first amended complaint, and default was entered in January 2008. PartyGam-ing then moved to set aside default and argued that the suit should be brought in Gibraltar due to the forum selection clause. It subsequently filed a motion to dismiss plaintiffs’ third amended complaint. The motion claimed improper venue under Federal Rules of Civil Procedure (“FRCP”) 12(b)(3), due to the Gibraltar forum selection clause, and failure to state a claim under FRCP 12(b)(6), due to plaintiffs’ failure to plead the elements of the causes of action.
II.
To support its dismissal for forum non conveniens, the district court cited to
1. Applicable Law
To resolve this issue, we first look to the binding law of the Supreme Court and the law of this Circuit. In the context of admiralty cases, the Supreme Court has announced a federal policy favoring enforcement of forum selection clauses and has held that such clauses “should control absent a strong showing that [they] should be set aside.” Carnival Cruise Lines, Inc. v. Shute,
The Sixth Circuit has also declined to answer this question. In the past, we have noted that we did not need to decide the issue because both federal and state law treat forum selection clauses similarly.
Because this Circuit has not affirmatively decided which law governs when a federal court sits in diversity, we look to the law of other Circuits for guidance. In deciding this issue, six Circuits have held that the enforceability of a forum selection clause implicates federal procedure and should therefore be governed by federal law.
Given the possibility of diverging state and federal law on an issue of great economic consequence, the risk of inconsistent decisions in diversity cases, and the strong federal interest in procedural matters in federal court, we find persuasive the law used in the majority of circuits and now adopt it. As the Ninth Circuit has noted, forum selection clauses significantly implicate federal procedural issues. Manetti-Farrow, Inc. v. Gucci Am., Inc.,
2. Enforceability of the Forum Selection Clause
A forum selection clause should be upheld absent a strong showing that it should be set aside. Shute,
Under the first factor, the party opposing the clause must show fraud in the inclusion of the clause itself. Assocs. of Urology,
In the present case, both parties agree that Gibraltar, as a British territory, is governed by English law. Plaintiffs contend that Gibraltar would not be an adequate forum because (1) Gibraltar does not allow jury trials and (2) Gibraltar does not allow class-action suits for damages. As to plaintiffs’ first claim, this argument ignores our precedent upholding an alternative forum even when jury trials were unavailable. See Interamerican Trade Corp.,
Turning to the second argument, plaintiffs offer a statement from an English lawyer and cite English case law to support their claim that Gibraltar does not allow class-action suits for damages. Par-tyGaming counters with its own expert statement and ease citation, claiming that the suit could be maintained in class-action form. Fortunately, we need not decide whether a suit could be maintained in class form in Gibraltar because, even assuming that plaintiffs are correct, the unavailability of representative litigation would not render the forum ineffective. “The fact that parties will have to structure their case differently than if they were litigating in federal court is not a sufficient reason to defeat a forum selection clause.” Shell,
To meet the third prong of our test, the plaintiff must show that enforcement of the clause would be so inconvenient such that its enforcement would be unjust or unreasonable. Assocs. of Urology,
III.
This court reviews a district court’s dismissal for forum non conveniens for an abuse of discretion. Estate of Thomson ex rel. Estate of Rakestraw v. Toyota Motor Corp. Worldwide,
At the outset, we address the district court’s sua sponte dismissal for forum non conveniens. Plaintiffs argue that the dismissal amounted to an abuse of discretion because the district court raised forum non conveniens sua sponte. Plaintiffs claim that the district court was not properly briefed on the relevant forum non conveniens factors because the court was evaluating a motion to dismiss for improper venue under FRCP 12(b)(3), rather than a motion to dismiss for forum non conveniens. Under our precedent, a district court does not abuse its discretion simply by sua sponte raising forum non conveniens. Estate of Thomson,
1. Adequate Alternative Forum
Under the first part of the analysis, an adequate alternative forum must be identified. Stewart v. Dow Chems. Co.,
Moving to the specifics of their first argument, plaintiffs correctly note that a forum will generally be deemed adequate if the defendant is amenable to process. See Piper Aircraft,
In their second claim, plaintiffs argue that the district court abused its discretion by failing to consider their expert’s opinion that they could not maintain a class-action suit in Gibraltar. While the district court did not make a specific finding on plaintiffs’ expert, it did acknowledge, and ultimately rejected, plaintiffs’ claim that they could not bring the suit in class form. Further, even assuming that plaintiffs correctly characterize Gibraltar law, the inability to bring a class suit would not render Gibraltar an inadequate alternative forum. In Piper Aircraft, the Supreme Court noted that the alternative forum had to be so inadequate such that “no remedy at all” was available.
2. Public Factors
After the district court determines that an adequate alternative forum
In claiming an abuse of discretion, plaintiffs cite Ohio’s interest in having its consumer protection laws enforced and claim that the district court did not separately analyze the choice-of-law provision to determine its enforceability. While Ohio might have an interest in this matter, this court has held, and the district court noted, that when state law conflicts with a forum selection clause, the court should not categorically uphold the state policy over the clause. Kerobo,
In their second argument, plaintiffs claim that the district court abused its discretion by finding that Gibraltar law governs without separately evaluating the enforceability of the choice-of-law clause under Ohio law. Plaintiffs argued in the district court that the Gibraltar choice-of-law provision was not enforceable because Ohio has significantly greater interest in the case. In response, the district court simply stated “it is clear from the governing law clause that Gibraltar law should be applied.” Mem. & Order at 10. To begin with, it is not clear from our case law whether the district court was required to separately conduct a choice-of-law analysis for forum non conveniens purposes. See Interface Partners Int’l Ltd. v. Hananel,
Further, the choice-of-law clause was only one public factor advanced by the district court for its decision. The court’s decision is also supported by its finding that Gibraltar has an interest in the litigation. See Piper Aircraft,
3. Private Factors
In weighing private factors, the district court should consider the ease of access to evidence, ability to obtain witness attendance, and practical problems such as ease, expeditiousness, and expense. Estate of Thomson,
Jt. Deference to Plaintiffs’ Choice of Forum
Finally, plaintiffs argue that the district court abused its discretion because it did not give proper deference to their choice of a home forum. Plaintiffs cite to our decision in Duha v. Agrium Inc.,
IV.
For the foregoing reasons, we AFFIRM the decision of the district court.
Notes
. A motion to certify a class of citizens of twenty-three other states was pending before the district court when the dismissal was ordered.
. PartyGaming asks us to consider the merits of its 12(b)(6) motion to dismiss. Because we affirm the district court's dismissal for forum non conveniens, we need not consider this argument.
. Plaintiffs argue that PartyGaming waived its right to enforce the forum selection clause under FRCP 12(h)(1) because it failed to timely respond to the complaint. Leaving aside the fact that the district court did not dismiss the suit under FRCP 12(b), plaintiffs’ argument lacks merit because a party does not waive an argument under FRCP 12(b) simply by failing to timely respond. See Reynolds v. Int'l Amateur Athletic Fed'n,
. See, e.g., Assocs. of Urology,
. See, e.g., Fru-Con Constr. Corp. v. Controlled Air, Inc.,
. This holding does not offend our decision in Preferred Capital, Inc. v. Sarasota Kennel Club, Inc.,
Concurrence Opinion
concurring.
I concur in much of the reasoning of the court, if we look at the problem in a purely legalistic way. But for me the most important considerations are not the splits in the circuits or the ambiguities inherit in the existing law on forum selection clauses, but rather the fact that the gambling contract entered into between the parties here is likely illegal in Ohio but completely legal in Gibraltar. If we read Ohio law as controlling the contract in question, the parties probably are guilty of a crime under Ohio law, the contract is void, and both parties could be extradited and prosecuted together in an Ohio criminal court.
Surely the parties assumed that if the plaintiff won at gambling, the plaintiff would get some money and if the plaintiff lost, the winner and the house would split the winnings. So when the plaintiff comes into court and says he wants money in an Ohio court under what he regards as an Ohio contract, but does not want the Ohio court to say that under the governing Ohio law the gambling contract is illegal, the plaintiff is a bit inconsistent in his logic, to say the least.
This illegality factor is particularly salient because the defendant now reports that it has completely stopped carrying on its online gambling business in Ohio and in the United States because Congress recently passed a criminal statute outlawing this kind of internet gambling. See Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006, 31 U.S.C. §§ 5361-5367 (effective October 13, 2006).
Obviously, neither the plaintiff nor the defendant’s employees want to go to jail in Ohio. On a principle analogous to the rule of lenity I would interpret the forum selection clause as controlled by English law which, so far as I can tell, is the only way to keep the contract from being void and subject to criminal penalties.
. See Ohio Rev.Code Ann. § 2915.02(A) (2003) (prohibiting any person from engaging in "conduct that facilitates any game of chance conducted for profit” or "engag[ing] in betting or in playing any scheme or game of chance as a substantial source of income or livelihood”); Ohio Rev.Code Ann. § 2915.01(D) (2003) (defining poker as a game of chance) (unrelated section of statute held unconstitutional by Pickaway Cty. Skilled Gaming, L.L.C. v. Cordray, No. 08AP-1032,
. "The rule of lenity requires ambiguous criminal laws to be interpreted in favor of the defendants subjected to them. This venerable rule not only vindicates the fundamental fairness principle that no citizen should be held accountable for a violation of a statute whose commands are uncertain, or subjected to punishment that is not clearly prescribed. It also places the weight of inertia upon the party that can best induce Congress to speak more clearly and keeps courts from making criminal law in Congress’s stead.” U.S. v. Santos, - U.S. -,
. See 18 U.S.C. § 1084 (2000) (unlawful to "use a wire communication facility for the transmission in interstate and foreign commerce of bets and wagers on sporting events and contests, and for the transmission of a
