Contractual Waiver of the Right to Remove to Federal Court: How Policy Judgements Guide Contract Interpretation

01 December 2010 Publication

The Review of Litigation

Federal statutes allow a state court defendant to remove many kinds of cases to federal court.  A party may waive the right to remove, either by a procedural default during litigation, or by contractually waiving the right before litiigation starts.  When a court finds waiver of removal rights by contract, it often relies upon a venue or forum selection clause, which may not expressly mention removal.  Litigation about how to interpret such clauses in the removal context has surged in recent years as awareness of the issue has spread.  this article analyzes recent trends in this area, including the start and growth of a circuit split.

Part I examines when courts will employ a heightened standard that requires clear and unequivocal evidence of a party's intent to waive the right to remove, an issue on which a circuit split is developing.  Part II considers the effect of forum selection language on the waiver analysis, such as a clause giving a party the right to choose the forum, or a contractual consent to the jurisdiction of a particular court.  Parts III and IV review judicial treatment of seemingly minor, but substantively significant word choices in venue and forum selection clauses.  Finally, Part V examines how, in addition to contract terms, the physical location of a federal courthouse may affect the analysis of whether a defendant has waived the right to remove an action from state court.

Each aspect of this article illustrates how courts apply a general analytical framework in the context of specific policy goals.  A court must, on the one hand, apply settled principles of contract interpretation, while at the same time giving weight to the policy judgments that removal statutes are strictly construed and forum selection clauses are favored. The highly practical question posed in this area - "what court should this case be in?" - also offers instructive examples of how courts approach significan theoretical and policy issues.

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