Nike's Forum Selection Clause Wins Over Shoe Store's Complaints

By Casey C. Sullivan, Esq. on June 26, 2015 | Last updated on March 21, 2019

Sometimes you just need to switch it up, whether you're getting a new pair of sneaks or ending a 28 year long business arrangement. In 2013, Nike, the massive shoe and apparel company, decided it was time to make a change when its retailers severed the relationship with Carter's of New Bedford, a tiny, family-owned Massachusetts retailer. Carter's wasn't about to let Nike get away, however.

Carter's, alleging that Nike was turning its back on small businesses, sued the shoe company for breach of contract in Massachusetts court. Unfortunately for Carter's, Nike removed the case to federal court and had it dismissed. The issue? Nike's invoices contained a forum selection clause, limiting contract disputes to courts in Oregon, Nike's home state.

Nike's Forum Selection Clause

At the end of its invoices with the retailer, Nike included language on the "Terms and Conditions of Sale." Within this was a forum selection clause saying that all disputes must be governed by Oregon state law, in Oregon courts. In opposing the forum selection clause, Carter's argues that it was snuck in only three years before the dispute and can only govern issues regarding goods from later invoices. Further, the agreement was one of adhesion, as Carter's never had the opportunity to bargain over any of the terms.

Unfortunately for Carter's, the First Circuit did not agree, since the language of the forum selection clause said it applied to all issues. Further, in its complaint, even before the forum selection issue was raised, Carter's asserted that the agreements governed the dispute.

If Only We'd Thought of This Earlier ...

Indeed, Carter's seemed to have suffered from uncertainty about how to argue its case. As the First Circuit notes, most of its briefing regards whether Nike's reliance on Rule 12(b)(6) -- failure to state a claim -- was a permissible way to address forum selection. It's an interesting question. If the court can't hear the case because of a forum selection clause, then has the plaintiff made a claim that the court can't grant relief for under 12(b)(6)? Who knows, since Carter's counsel renounced that angle at oral arguments. So much for all that briefing.

That left Carter's with few developed arguments to rely on. Arguments that are "perfunctory and undeveloped" are waived, the First ruled, and declined to hear Carter's claims regarding the unilateral addition of the clause.

That doesn't mean Carter's can't have its day in court -- just that such a day will have to be in Oregon.

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