Edward Venard v. Jackson Hole Paragliding, LLC, a Wyoming LLC, Tom Bartlett, Scott Harris, Matt Combs, Jon Hunt, Andrew Frye, and Jeff Coulter

Citations: 2013 WY 8; 292 P.3d 165; 2013 Wyo. LEXIS 8; 2013 WL 174391Docket: S-11-0232

Court: Wyoming Supreme Court; January 17, 2013; Wyoming; State Supreme Court

Original Court Document: View Document

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Edward Venard filed a lawsuit against Jackson Hole Paragliding, LLC and several individuals for personal injuries sustained during a paragliding lesson. The defendants sought to dismiss the case, citing a forum selection clause in a "Release, Waiver and Assumption of Risk Agreement" that Venard signed as a condition of his membership with the United States Hang Gliding and Paragliding Association (USHPA). Although several defendants had signed similar agreements with USHPA, none were parties to Venard's agreement. The defendants argued that the clause designated California as the appropriate forum for the dispute. The district court granted their motion to dismiss, agreeing that California was the proper venue. Venard appealed this decision, questioning whether the district court abused its discretion in enforcing the forum selection clause. 

The incident occurred in August 2008, during a paragliding training clinic at Palisades Reservoir in Wyoming, where Venard was injured after falling from a height of thirty-five feet due to a failure in the towing operation. Venard had joined USHPA in July 2008 and was required to sign the waiver agreement for his membership and Flight Proficiency Rating. The court ultimately reversed the district court's decision, implying that the forum selection clause could not be enforced against Venard in this context.

Ed Venard, as a pilot and potentially through a legal guardian if he is a minor, and his representatives agree to a legal release regarding membership in the United States Hang Gliding Association (USHGA). The release defines "Released Parties," which include USHGA and various individuals involved in hang gliding or paragliding activities, encompassing a wide range of participants and associated personnel. Venard forever releases these parties from any liabilities, claims, or actions related to sports injuries, even if caused by their negligence, and agrees not to sue them. The agreement is governed by California law, stipulating that any disputes must be litigated in California courts.

On August 4, 2010, Venard filed a lawsuit in Wyoming, alleging an incident at Palisades Reservoir. The defendants, claiming third-party beneficiary rights under Venard’s agreement with USHGA, moved to dismiss the case based on the forum selection clause requiring litigation in California. The Wyoming district court granted this motion, affirming the enforceability of the agreement and the necessity to file suit in California. The appeal focuses on the validity of the forum selection clause. Furthermore, the court noted jurisdictional discretion based on the parties' choice of forum, which is subject to review for abuse of discretion. The district court found the accident occurred on the Idaho side of Palisades Reservoir. The affidavits supporting the defendants' motion were not included in the appeal record, and Venard contested their timeliness concerning the California statute of limitations, although this matter does not need resolution for the current issue.

Absent the forum selection clause, the Wyoming district court would have clear subject matter and personal jurisdiction over the parties, with Wyoming being the most convenient forum for resolving the dispute. Mr. Venard, a Wyoming resident, received paragliding instruction in Wyoming, and the majority of the involved parties and potential witnesses reside there. In contrast, the parties have no significant connections to California, as the incident did not occur there, and JHP, a Wyoming limited liability company, has no substantial ties to California.

The case involves a forum selection clause, raising the question of its enforceability against Mr. Venard by the Appellees. Historically, American courts have been skeptical of forum selection clauses, viewing them as contrary to public policy. However, the U.S. Supreme Court has shifted its stance, endorsing the validity of such clauses, especially when negotiated by experienced parties, as essential for clarity in international commerce. The Court later affirmed the enforceability of forum selection clauses in non-negotiated contracts, emphasizing their role in reducing litigation costs and conserving judicial resources. The fairness of these clauses is assessed to ensure they do not deter legitimate claims, as demonstrated in the Carnival Cruise Lines case, which considered the cruise line's business interests and the location of its operations.

The enforceability of forum selection clauses was affirmed in Durdahl, where the clause required claims to be brought in Shelby County, Tennessee. The Durdahls filed a lawsuit in Wyoming against National Safety Associates, Inc. (NSA) despite the clause. The court held that forum selection clauses are generally valid unless the opposing party can prove they are unreasonable or based on fraud. The Durdahls failed to meet this burden, leading to the enforcement of the clause and the court's decision not to exercise jurisdiction over the matter.

The current case differs from Durdahl because the forum selection clause pertains to a contract between Mr. Venard and the United States Hang Gliding and Paragliding Association (USHPA), which is not a party to the litigation. The Appellees, although claiming to be third-party beneficiaries and asserting rights under the forum selection clause, were not signatories to the original agreement and had not consented to personal jurisdiction in California prior to the lawsuit. They argued that their membership in USHPA and subsequent consent to jurisdiction after the suit was filed in Wyoming should allow enforcement of the clause. The court disagreed with this assertion.

The district court determined that the enforceability of the forum selection clause hinged on whether the defendants were bound by it as third-party beneficiaries of the Plaintiff’s Release Agreement with USHGA. The court clarified that its focus was solely on the implications of the Plaintiff's agreement, not on any agreements signed by the defendants. It concluded that all defendants were indeed third-party beneficiaries and thus bound by the forum selection clause. This conclusion was supported by precedent from the Ninth Circuit, which held that third-party beneficiaries can be bound by contractual clauses, even if they did not sign the contract themselves.

The district court referenced the case of Taag Linhas Aereas de Angola v. Transamerica Airlines, where a third-party beneficiary argued against the enforcement of a forum selection clause but ultimately was held to be bound by it. The court stated that the rights of third-party beneficiaries are defined by the contract, and a forum selection clause can restrict them to a designated forum.

The relevant contract in this matter stipulated that the Plaintiff agreed not to sue for injuries related to paragliding and that any lawsuits would be filed in California. The court maintained that the defendants’ own contracts with USHGA did not affect their obligations under the Release Agreement. Additionally, it noted that neither the district court nor the defendants provided any relevant precedents that aligned closely with the current case, undermining their position. The court distinguished the case at hand from the cited precedents, emphasizing that the defendants’ connection to the contract did not fulfill the criteria necessary for them to enforce the forum selection clause.

The case parallels Gootnick v. Lighter, where the court deemed the TAAG decision inapplicable, highlighting that the promissory note was solely signed by Lighter without reference to the corporate defendants. Since the plaintiffs did not pursue enforcement of the note against either Lighter or the corporate defendants, the corporate defendants' motion to dismiss or transfer based on the note's forum selection clause was denied.

In Lu, the appellate court addressed a forum selection clause in a franchise agreement. Plaintiffs, alleging misrepresentation by the franchisers and parent company, contested the clause's enforceability because two defendants did not sign it. The court upheld the clause, stating that the defendants' actions were closely tied to the contractual relationship, and noted that allowing plaintiffs to bypass a valid clause by merely naming non-signing, closely related parties would undermine the clause's purpose. The court affirmed that the plaintiffs' claims arose directly from the contract, thus validating the forum selection clause's application.

In cases involving forum selection clauses and non-parties, courts assess the non-signatory's relationship to the contracting party to determine if it was foreseeable for the non-signatory to be bound by the clause. The key question revolves around whether the non-signatory could reasonably foresee being bound due to its connections to the signatory and the dispute. Notable cases illustrate this principle, including Medtronic, Inc. v. Endologix, Inc., which emphasizes the need for a "closely related-party" connection to the dispute. Various non-signatories deemed "closely related" include parent corporations, spousal guarantors, directors, controlled corporations, agents, successor corporations, and affiliated corporations. However, in Dayhoff Inc. v. H.J. Heinz Co., the court ruled that affiliated corporations could not enforce the clause due to the principle of respecting corporate structures in legal matters.

Non-signatories may be bound by a forum selection clause if they are deemed "closely related" to a signatory, particularly in light of the principle of mutuality. The Seventh Circuit emphasizes that while terms like "closely related" and "foreseeability" may seem vague, they can be clarified through mutuality, which remains relevant in the context of forum selection clauses despite being less emphasized in other legal areas. For instance, if plaintiffs claim that a non-signatory, such as Refco, secretly controlled the signatories of a contract, they could argue that the forum selection clause should apply to Refco as well. This argument hinges on the premise that if Refco is viewed as the principal behind the signatories, it should equally benefit from the clause to avoid procedural asymmetry. The case of Durdahl reinforces that when both parties to a contract agree to a forum selection provision, it is enforceable against either, ensuring predictability in litigation. Ultimately, mutuality allows a non-signatory to invoke the clause if it could also be invoked against them.

The forum selection clause in the agreement between Mr. Venard and USHPA is valid and enforceable if Mr. Venard had sued USHPA to enforce the contract, as it indicates consent to California's personal jurisdiction. However, Mr. Venard did not sue to enforce this contract, and the Appellees were not parties to it, meaning they are not bound by the forum selection clause. The Appellees argued that California could assert jurisdiction due to their agreements with USHPA and their later consent to jurisdiction post-suit. Mr. Venard countered that the Appellees could have successfully challenged jurisdiction if sued in California. The court noted that whether California could assert jurisdiction based on the Appellees’ agreements is irrelevant, as there was no prior consent to California's jurisdiction regarding the current litigation. Consequently, the forum selection clause is unenforceable against the Appellees, and the district court's dismissal of the complaint is deemed an abuse of discretion, warranting reversal and remand for further proceedings. A dissenting opinion argues that the majority's conclusion overlooks the heavy burden of proof on the party claiming an unreasonable court decision.

The United States Supreme Court has upheld the legitimacy of forum selection clauses, as seen in cases like Carnival Cruise Lines, Inc. v. Shute and M/S Bremen v. Zapata Off-Shore Co. Wyoming adopts a modern stance where such clauses are presumed valid unless the opposing party proves that their enforcement would be unreasonable or stems from fraud or unequal bargaining power. In the case at hand, the district court had sufficient grounds to uphold the forum selection clause based on several factors: USHPA is a California non-profit with a significant portion of its members from California, the accident occurred in Idaho, not Wyoming, some defendants were not Wyoming residents, and the appellant had traveled to California post-accident. The clause’s clarity promotes predictability in contractual obligations. However, the majority opinion undermines the effectiveness of USHPA agreements for the 72% of members not residing in California and complicates proceedings under California law, particularly regarding the appellant's agreement not to sue certain parties. The author expresses support for affirming the district court's decision.