Muzumdar v. Wellness International Network , 438 F.3d 759 (2006)

When is a forum selection clause valid?

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The Seventh Circuit ruled that a forum selection clause is valid if it is clear and unambiguously the choice of forum of the parties to the agreement. The plaintiffs sued Wellness International in Illinois District Court claiming that the company was an illegal pyramid scheme, and further alleged fraud and RICO violations. The plaintiff claimed that the forum selection clause, naming Dallas Texas as the forum, was not the exclusive forum of a claim under the distributor agreement. In addition to the distributor agreement, the plaintiff signed an additional agreement, the "WIN Rules and Regulations," that incorporated all of the terms of the distributor agreement and stated that jurisdiction was "non-exclusive" in Dallas County. The Court held that the "non-exclusive" phrase was not controlling because it did not refer to venue, a different concept from jurisdiction. The Rules and Regulations were not in conflict with the Distributor Agreement, and the venue clause was valid and enforceable.

Full case and case summary also available online at: http://www.mlmlegal.com/legal-cases/Muzumdar_v_WellnessInternationalNetwork.php

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Published In: Civil Procedure Updates, Franchise Updates, MLM / Direct Sales Updates, MLM Consulting / Network Marketing Updates

Reference Info:Federal, 7th Circuit, Illinois | United States

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