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Ninth Circuit Held that District Court Abused Discretion in Not At least Holding Evidentiary Hearing on Allegations Strongly Pointing to Unenforceability of Forum Selection Clause

The Ninth Circuit has held that the district court erred by not conducting an evidentiary hearing to determine the enforceability of the forum selection clause at issue. Plaintiff Petersen was recruited to work in Saudi Arabia as a flight instructor for Boeing International Support Services (BISS), a subsidiary of Boeing Corporation. Prior to departing for Saudi Arabia, he signed a preliminary employment agreement and upon arrival was forced to sign a second agreement. He was not given time to read the second agreement and was told he must sign it or he would be forced to return to the United States at his own expense. The second agreement contained a forum selection clause requiring any contractual disputes to be disputed in the Labor Courts of Saudi Arabia.

After being held in Saudi Arabia for an extended period of time, Petersen brought suit against Boeing and BISS alleging breach of contract and other statutory and common law claims upon finally returning to the United States. Under Bremen, there are three times a forum selection clause may be rendered unenforceable: (1) if the inclusion of the clause in the agreement is the product of fraud or overreaching; (2) if the party wishing to repudiate the clause would effectively be deprived of his day in court were the clause enforced; and (3) if enforcement would contravene a strong public policy for the forum in which suit is brought. Petersen’s proposed First Amended Complaint alleged additional facts that should have dismissed any lingering doubt the district court might have had as to whether an evidentiary hearing was needed. Petersen provided specific evidence to demonstrate that he would have been wholly precluded from litigating his claims against Boeing and BISS in a Saudi forum. The Ninth Circuit held that the district court erred by not conducting an evidentiary hearing to determine whether enforcement of the forum selection clause at issue would effectively prevent Petersen’s day in court.