If you’ve got a venue selection clause and you are wondering whether you can file in state or federal court, or whether you can remove a state-filed case to federal court, you might look at the Fifth Circuit‘s opinion in Alliance Health Group LLC v. Bridging Health Options LLC.

The venue clause in this case  provided that "exclusive venue for any litigation related hereto shall occur in Harrison County, Mississippi."  The Court held that the particular language of this clause and the fact that Harrison County, Mississippi has a federal courthouse in that county permits venue in federal court.  Significantly, the Court discusses a number of other permutations to the language in venue clauses and draws distinctions that may be of use to practitioners.

For your convenience, I’ve extracted from the court’s opinion its commentary on some of the permutations of venue selection language and what result attaches to the language.

Venue clause

Result according to Alliance Health opinion

“Venue shall be in X County”

If there is an existing federal courthouse in X County, venue is proper in either state or federal court. If not, venue is proper in state court only. It is not sufficient if the federal district court jurisdiction merely includes X County in its jurisdiction.

“Venue shall be in the courts of X state”

“In” and “of” in the context of venue selection are not synonymous. “Of” will limit filing to state courts of X state.

“Venue for disputes shall be X County”

In dicta, the Fifth Circuit states that use of this phrase suggests an intent to limit venue to a single tribunal.

 As an alternative basis for its holding, the Court holds that forum selection clauses are construed against the drafter–in this case the Defendant.  And the Court holds that the less favorable interpretation to the defendant would permit filing in federal court.  This rule of construction raises the question of what would have happened if the Plaintiff had drafted the same clause and had insisted on filing in federal district court, or if the Defendant had drafted the same clause, but the Plaintiff filed in state court and the Defendant removed in reliance on the venue selection clause?  What’s the less favorable interpretation to the drafter under these scenarios?