Petersen v. Boeing Co.

In order to determine whether a forum selection clause should be enforced and a case dismissed for improper venue, an evidentiary hearing should be held to determine if the clause was the product of fraud or overreach and if its enforcement would deprive the party wishing to repudiate his day in court.

Robin Petersen worked in Saudi Arabia for Boeing, and upon arrival was told he must sign an employment agreement, which contained a forum selection clause stating that any and all contractual disputes would be resolved in the Labor Courts of Saudi Arabia. He was told that if he did not sign the agreement he would be forced to return to America, and he was not given a proper chance to read the agreement. His passport was confiscated and he was put under a virtual house arrest. When he requested to leave, he was detained for a period of three months. The district court dismissed Petersen’s case under Fed. R. Civ. P. 12(b)(3) for improper venue and held that the forum selection clause was enforceable. The Ninth Circuit disagreed and held that under M/S Bremen v. Zapata Off-Shores Co., the forum selection clause was not enforceable and therefore venue was proper because, “the inclusion of the clause in the agreement was the product of fraud or overreaching;” and “the party wishing to repudiate the clause [was] effectively [] deprived of his day in court, were the clause [to be] enforced.” The panel found that Petersen had supplied sufficient facts in his preliminary complaint that he was put under duress to sign the employment agreement upon his arrival in Saudi Arabia and that it would be an extreme hardship and a risk to his safety and his chances of a fair trial was he to bring suit in Saudi Arabia. In addition, his witnesses were in America, and Boeing has a “close relationship” with the Saudi government. An evidentiary hearing should have been held to establish whether the forum selection clause would “effectively preclude [Petersen’s] day in court”. REVERSED and REMANDED; Motion to Strike GRANTED.