Forum shopping

What Is Forum Shopping?

Forum shopping is the strategic practice by which a plaintiff or litigant chooses the court or jurisdiction they believe is most likely to provide a favorable outcome for their legal case. This selection is based on perceived advantages in substantive law, procedural rules, or judicial tendencies of different courts that have the authority to hear the dispute. As a core element of litigation strategy, forum shopping falls under the broader category of litigation strategy, influencing how legal disputes, often with significant financial implications, are pursued. The goal of forum shopping is to gain a tactical advantage that contributes to a successful resolution, potentially impacting areas such as settlement negotiations or awarded damages.

History and Origin

The concept of forum shopping is not new, with its jurisprudential roots in American law tracing back nearly two centuries. A foundational case often cited in its evolution is Swift v. Tyson (1842), which allowed federal courts to apply general common law rather than state common law in certain diversity cases, creating a dual system that plaintiffs could exploit. The Supreme Court's decision in Erie Railroad Co. v. Tompkins (1938) later sought to curb this practice by mandating that federal courts sitting in diversity jurisdiction apply the substantive law of the state in which they are located, aiming to reduce forum shopping between federal and state courts¹¹.

However, the practice continued to evolve with legal developments that expanded the number of available forums for litigants. For instance, the U.S. Supreme Court's decision in International Shoe Co. v. Washington (1945) broadened the scope of personal jurisdiction, allowing courts to hear cases involving defendants with only "minimum contacts" with the jurisdiction, thereby increasing the potential venues for lawsuits. Historically, this allowed parties to select jurisdictions with more favorable laws and judicial precedents, influencing various legal fields, including civil rights litigation after the Reconstruction Amendments¹⁰.

Key Takeaways

• Forum shopping involves strategically choosing a court or jurisdiction based on its perceived favorability.
• The practice can be driven by differences in substantive laws, procedural rules, judicial precedents, or even the speed of proceedings.
• While sometimes viewed negatively as "gamesmanship," others consider it a natural consequence of litigants' ability to select from multiple available forums.
• Forum shopping can occur between different states, between state and federal courts, or even internationally.
• Measures like the Erie Doctrine and forum non conveniens aim to prevent abusive forum shopping.

Interpreting Forum Shopping

Forum shopping is interpreted as an attempt to leverage differences across legal systems to a party's advantage. When engaging in forum shopping, a litigant assesses various factors to determine the most advantageous venue. This assessment might include the specific laws that would apply, the typical speed of litigation in a given court, the potential for higher damage awards, or the likelihood of a sympathetic jury.

For example, a plaintiff might opt for a state court over a federal court if they believe a local jury would be more empathetic to their arguments against a large corporate defendant. Conversely, a defendant might attempt to remove a case to federal court if they perceive advantages there. The underlying motivation is always to improve the chances of a favorable outcome in a legal dispute, which can have direct financial implications for involved parties. Therefore, understanding the nuances of forum shopping is crucial for risk assessment and legal strategy in any complex dispute.

Hypothetical Example

Consider "Tech Innovations Inc.," a software company based in California, suing "Global Gadgets LLC," a hardware manufacturer headquartered in Delaware, for patent infringement. Tech Innovations believes Global Gadgets infringed upon its intellectual property rights related to a new chip design.

Tech Innovations' legal team identifies several potential jurisdictions for their litigation:

1. California Federal Court: Known for its experienced judges in intellectual property cases and potentially higher damage awards.
2. Delaware Federal Court: While Global Gadgets is based here, Delaware courts might have different procedural rules or a more conservative approach to patent infringement damages.
3. Texas Federal Court (Eastern District): Historically known for its fast-paced dockets and plaintiff-friendly rulings in patent cases, potentially leading to quicker settlement or judgment.

After careful due diligence, Tech Innovations decides to file their lawsuit in the Eastern District of Texas. This decision exemplifies forum shopping: they chose this particular court not because it's their home state or the defendant's, but because they believe its reputation for efficiency and plaintiff-friendly patent rulings offers the highest probability of a favorable and timely outcome for their claim.

Practical Applications

Forum shopping appears in various facets of the legal and financial worlds, particularly where multiple jurisdictions could legitimately hear a case.

• Commercial Contracts: In international business, parties often include clauses specifying the governing law and jurisdiction for disputes. However, in the absence of such clauses, or when dealing with tort claims, forum shopping can arise as parties seek jurisdictions with more favorable interpretations of corporate law or contract enforcement⁹. This is particularly relevant for companies involved in cross-border transactions, where the stakes can be substantial.
• Securities Litigation: Shareholders or investors might engage in forum shopping when bringing class actions or derivative suits, seeking courts with precedents favorable to shareholder rights or robust disclosure requirements.
• Bankruptcy Proceedings: Corporations often choose to file for bankruptcy in jurisdictions known for debtor-friendly laws or experienced bankruptcy judges, even if their primary operations are elsewhere. Delaware, for instance, is a popular choice for corporate bankruptcies in the U.S.
• Intellectual Property Disputes: Companies involved in patent, copyright, or trademark disputes may select forums based on the courts' historical treatment of specific intellectual property issues, the speed of litigation, or the perceived expertise of the judiciary⁸.
• Regulatory Challenges: Entities challenging government regulations might strategically choose a court division with a single judge known for a particular judicial philosophy, a practice sometimes referred to as "judge shopping." In March 2024, the Judicial Conference of the United States approved a policy aimed at addressing this by assigning cases seeking nationwide injunctions or similar relief to a single judge using a randomized process⁷.

Limitations and Criticisms

Despite its strategic advantages, forum shopping faces significant limitations and criticisms, often labeled as "gamesmanship" that undermines judicial integrity.

One major criticism is that it can lead to inefficiency and unnecessary litigation, potentially causing delays and increased costs for all parties involved⁶. Opponents argue that it allows litigants to exploit loopholes rather than focus on the merits of a case, potentially distorting justice. The practice can also pressure a defendant into an unfavorable settlement if they cannot afford to litigate in an inconvenient or distant jurisdiction chosen by the plaintiff⁵.

Furthermore, critics warn of a "race to the bottom," where courts might try to attract lawsuits by offering overly favorable procedures to domestic plaintiffs, potentially disadvantaging foreign defendants and compromising impartiality⁴. To counteract these concerns, legal systems have implemented measures like the doctrine of forum non conveniens, which allows a court to dismiss a case if another court, even in a different country, is a more appropriate venue for the dispute³. Other judicial doctrines and conflict-of-law rules, such as the Erie Doctrine, also aim to limit the extent to which parties can forum shop².

Forum Shopping vs. Choice of Law

While closely related, "forum shopping" and "choice of law" refer to distinct legal concepts.

Forum shopping is the act of strategically selecting the specific court or jurisdiction in which to file a lawsuit, based on its perceived favorable rules, precedents, or judicial tendencies. It focuses on the venue itself. For instance, choosing a court known for larger jury awards or faster case processing is an example of forum shopping.

Choice of law refers to the legal rules that determine which jurisdiction's substantive laws will be applied to resolve a dispute. It focuses on the rules that govern the rights and obligations of the parties. For example, if a contract specifies that disputes will be governed by New York law, that is a choice-of-law provision. Even if a case is filed in a different state, the chosen law might still apply depending on the forum's choice of law rules.

While forum shopping is often motivated by the desire to have a particular substantive law applied, the act of choosing the court is forum shopping. The court then applies its own choice of law rules to determine which jurisdiction's laws apply to the merits of the case. In essence, forum shopping is selecting the arena, while choice of law is about the rules of engagement within that arena.

FAQs

Is forum shopping legal?

Yes, forum shopping is generally legal, as long as the chosen court genuinely has jurisdiction over the case and the parties involved. It becomes problematic when it is perceived as an abuse of the legal system or when it significantly burdens the opposing party without a legitimate connection to the dispute.

Why do litigants engage in forum shopping?

Litigants engage in forum shopping to gain a strategic advantage in their case. This can include seeking a jurisdiction with laws more favorable to their claims, more sympathetic juries, faster court processes, or judges known for specific legal interpretations. The ultimate goal is to improve the chances of a favorable outcome, whether through a judgment or a more advantageous settlement.

What are the main criticisms of forum shopping?

Main criticisms include concerns that forum shopping can undermine the fairness and integrity of the judicial system, lead to inefficient litigation and wasted resources, and allow parties to exploit differences in legal systems rather than focusing on the merits of their case. Some also view it as "gamesmanship" that creates an unfair advantage.

How do courts try to prevent abusive forum shopping?

Courts use doctrines like forum non conveniens, which allows a judge to decline jurisdiction if another court is a more appropriate forum, and the Erie Doctrine in the U.S., which requires federal courts in diversity cases to apply state substantive law, limiting the ability to choose a federal court simply for different legal rules. Additionally, recent policies, such as those adopted by the Judicial Conference of the United States, aim to prevent "judge shopping" in certain types of cases¹.

Does forum shopping apply only to U.S. courts?

No, forum shopping is a global phenomenon that can occur between courts in different countries, not just within the U.S. legal system. The heterogeneity of legal systems worldwide creates opportunities for parties to seek out favorable jurisdictions for international disputes, especially in areas like international commercial arbitration or cross-border mediation and litigation.