Validity of a contractual forum-selection clause; Whether a party could be bound by the clause through the “closely related” doctrine even though it was not a signatory to the contract; Whether a forum-selection clause’s applicability is distinct from & antecedent to its enforceability; The “Erie doctrine”

The court reversed the district court’s dismissal of plaintiff-Firexo Inc.’s claims under a forum-selection clause in a contract to which it was not a signatory, an agreement between defendant-Firexo Group Ltd. (FGL) and a nonparty. The court concluded “the applicability of a forum-selection clause is distinct from and antecedent to its enforceability, so courts must use the Erie approach to contract interpretation to determine the clause’s applicability under that appropriate law.” FGL, a British company, contracted with a nonparty (Smith) to sell their fire extinguishers in the U.S. They entered into a Joint Venture Agreement (JVA), wherein Smith purchased 70% of FGL’s wholly owned subsidiary, plaintiff. The JVA contained a forum-selection clause, designating England or Wales as the exclusive forum for settling disputes. Plaintiff later sued FGL in Ohio state court due to problems with FGL’s fire extinguishers, alleging various contract claims. FGL removed the case to federal court and then successfully moved to dismiss based on the forum-selection clause. On appeal, the court addressed the closely related doctrine, which the district court applied here. After considering the doctrine’s history and prior applications, the court expressed concerns about this “federal common law rule” including the lack "of consideration under the objective theory of contracts or the absence of ‘minimum contacts’ under constitutional personal-jurisdiction analysis.” It then addressed plaintiff’s contention that “a forum-selection clause’s applicability is distinct from and antecedent to its enforceability, so the district court had to begin with the ordinary Erie approach to contract interpretation, to determine the governing law and then determine applicability under that law.” The court noted that circuits are split on this issue, and that the Sixth Circuit had yet to formally take a position. It concluded plaintiff’s position on the question was stronger than FGL’s. Applying “English law as the law governing the interpretation of the JVA’s forum-selection clause[,]” the court concluded that under that governing law, “contracts do not apply to non-signatories. Therefore, the JVA does not apply to Firexo and, correspondingly, the JVA’s forum-selection clause does not apply to Firexo.” Remanded.