Wednesday, May 7, 2014

Erie Forum Selection Clause Allows for Federal Court Venue Too

In its recent decision in the case of Otto v. Erie Insurance Exchange, NO. 13-6722 (E.D. Pa. March 31, 2014 Brody, J.), Judge Anita B. Brody of the U.S. Federal Court for the Eastern District of Pennsylvania addressed the application of Erie Insurance's forum selection clause in a Post-Koken matter.

Based upon diversity that existed at the time of filing the suit, the Plaintiff filed suit in the Eastern District of Pennsylvania.  

The Erie policy mandated that a suit "must be filed in a court of competent jurisdiction in the county and state of [the Ottos’] legal domicile at the time of the accident." 

Erie asserted that this language required the case be filed in state court only. The Plaintiff countered with the argument that the forum selection clause should be broadly construed to possibly include both the federal and state courts.

Applying the Third Circuit case of Jumara v. State Farm Insurance Company, 55 F.3d 873 (3d. Cir. 1995), the court in Otto ruled that that the language in the Erie Insurance forum selection clause would be construed to include the federal court located in the county the insured resides at the time of the accident. 

Since the Eastern District federal court included Montgomery County where the Ottos’ resided at the time of the accident, then the Eastern District federal court was found to be a proper venue under the clause.

Accordingly, the court denied Erie Insurance’s motion to dismiss based upon forum non conveniens because the Plaintiff's decision to file suit in federal court complied with the terms of the forum selection clause.

I send thanks to Attorney Scott Cooper of the Harrisburg law firm of Schmidt Kramer for bringing this case to my attention.

Anyone wishing to review this case may click this LINK.
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