Introduction

This comprehensive commentary analyzes the Third Circuit Court of Appeals' decision in In re: McGraw-Hill Global Education Holdings LLC; McGraw-Hill School Education Holdings LLC, Petitioners In re: Bob Krist, Petitioner (909 F.3d 48, 2018). The case centers on whether professional photographers, who are non-signatory third-party beneficiaries, are bound by a forum selection clause in a contract they did not sign. The parties involved include McGraw-Hill Global Education Holdings LLC, McGraw-Hill School Education Holdings LLC (collectively "McGraw-Hill"), photographers Ed Kashi and Bob Krist, and Corbis Corporation, a stock photography agency. The key legal issue revolves around the enforceability of forum selection clauses against non-signatory parties in copyright infringement actions.

Summary of the Judgment

The Third Circuit Court concluded that the photographers, Kashi and Krist, are not bound by the forum selection clauses in the contracts between McGraw-Hill and Corbis because they are neither intended beneficiaries nor closely related parties to those agreements. As a result, the court determined that one District Court (in Kashi's case) correctly denied the transfer of venue based on the forum selection clause, while another District Court (in Krist's case) erred in granting such a transfer. However, the appellate court declined to issue a writ of mandamus, an extraordinary remedy, due to the absence of clear or indisputable error by the erring District Court.

Analysis

Precedents Cited

The judgment extensively references several key precedents that shape the court's reasoning:

• Restatement (Second) of Contracts § 302 - Defines intended and incidental beneficiaries.
• DuPont, 269 F.3d at 195 - Discusses the closely related parties doctrine.
• Atlantic Marine Constr. Co. v. State Farm Ins. Co., 571 U.S. 49 (2013) - Modifies the traditional § 1404(a) venue transfer test when a forum selection clause is present.
• Howmedica Osteonics Corp., 867 F.3d 390 (3d Cir. 2017) - Establishes jurisdiction over mandamus actions and the standard of review.
• Wyeth, 119 F.3d at 1074 - Interprets the scope of forum selection clauses.

These precedents collectively inform the court's approach to determining the applicability of forum selection clauses to non-signatory parties and the standards required for mandamus relief.

Legal Reasoning

The court's legal reasoning unfolds through several key steps:

1. Third-Party Beneficiary Status: The court assessed whether the photographers were intended third-party beneficiaries of the Corbis-McGraw-Hill agreements. Applying the Restatement (Second) of Contracts § 302, it determined that the photographers were incidental rather than intended beneficiaries, as there was no direct contractual benefit or obligation owed to them by McGraw-Hill and Corbis.
2. Closely Related Parties Doctrine: McGraw-Hill argued that the photographers should be considered closely related parties to enforce the forum selection clause. The court found no basis for this, noting the absence of ownership relationships, involvement in contract negotiations, or direct benefits from the Corbis-McGraw-Hill agreements.
3. Foreseeability: The court examined whether it was foreseeable that the forum selection clause would apply to the photographers. It found that while the existence of such clauses was foreseeable, the specific application to non-signatory parties without explicit intention was not sufficiently established.
4. Scope of the Forum Selection Clause: Despite concluding that the copyright claims fell within the scope of the forum selection clause, the court reiterated that since the photographers were neither intended beneficiaries nor closely related parties, the clause's applicability was moot in this context.
5. Mandamus Standard: The court emphasized the high threshold for mandamus relief, requiring clear abuse of discretion or error of law. It found that the District Court's error did not meet this standard, thus declining to grant the writ.

Impact

This judgment has significant implications for the enforcement of forum selection clauses against non-signatory third-party beneficiaries:

• Clarification of Beneficiary Status: It reinforces the distinction between intended and incidental beneficiaries, limiting the circumstances under which forum selection clauses can be enforced against non-signatory parties.
• Judicial Consistency: By declining mandamus relief, the court maintains the autonomy of District Courts in handling venue transfer motions, even amidst divergent decisions.
• Contractual Autonomy: Parties drafting contracts with forum selection clauses should be mindful that such clauses may not bind third-parties unless explicitly intended or through close relations.
• Scope of Forum Selection Clauses: The broad interpretation of "dispute regarding" continues to hold, but its enforceability against non-signatories remains constrained.

Future cases involving similar contractual relationships will reference this decision to determine the enforceability of forum selection clauses against third parties.

Complex Concepts Simplified

Forum Selection Clause

A forum selection clause is a contractual provision where parties agree that any legal disputes arising from the contract will be resolved in a specified jurisdiction. This clause aims to provide predictability and convenience by designating a preferred forum for litigation.

Third-Party Beneficiary

A third-party beneficiary is someone who, although not a direct party to a contract, stands to benefit from its terms. There are two types:

• Intended Beneficiary: The contract is expressly made for their benefit.
• Incidental Beneficiary: They may benefit indirectly, but the contract was not made with the intention to benefit them.

Closely Related Parties Doctrine

This doctrine pertains to whether non-signatory parties who are closely related to the contract signatories (e.g., through ownership or agency relationships) can be bound by or enforce terms of the contract, such as forum selection clauses.

Mandamus

A writ of mandamus is an extraordinary court order that compels a government official or lower court to perform a duty they are legally obligated to complete. It is only granted in cases of clear legal error without alternative remedies.

28 U.S.C. § 1404(a)

This statute allows a federal court to transfer a civil case to another federal district for the convenience of parties and witnesses, and in the interest of justice. It is often invoked when a forum selection clause is present.

Conclusion

The Third Circuit's decision in In re: McGraw-Hill Global Education Holdings LLC; In re: Bob Krist establishes a critical precedent regarding the enforceability of forum selection clauses against non-signatory third-party beneficiaries in copyright infringement actions. By determining that photographers who are neither intended beneficiaries nor closely related parties cannot be bound by such clauses, the court delineates the boundaries of contractual autonomy and third-party rights. Furthermore, the decision underscores the stringent standards required for obtaining mandamus relief, preserving judicial discretion and consistency in appellate review. This judgment serves as a guiding framework for future litigants and courts in navigating complex contractual relationships and the scope of forum selection clauses.