Choice of Forum Clause Compels Remand of Case to State Court

                   Choice of Forum Clause Compels Remand of Case to State Court

The specific wording of a choice of forum provision in an agreement may dictate whether or not the suit may (or may not) be removed to federal court. In this case, that is what happened. Grand Isle Shipyard, L.L.C. v. Siroco, LLC, 2025 WL 3157572 (E.D. La. Nove. 11, 2025).

This dispute arose out of computer services contract; Grand Isle filed suit against Siroco for a breach whose nature is not revealed in this decision. Siroco removed the action to federal court. In turn Grand Isle sought to remand the action to the Louisiana state court on the basis that (i) diversity jurisdiction was not present and (ii) the contract at the center of the suit preluded the removal. The court would address only the second argument. 

After reviewing Fifth Circuit law as to whether and how the right of removal may be made, the court recited the applicable terms of the contract, namely:

13. APPLICABLE LAW and Exclusive Venue. The Contract Documents shall be governed by the general maritime laws of the United States to the maximum extent permitted by law. If the general maritime law is held inapplicable, the Contract Documents shall be governed by the laws of the State of Louisiana regardless of any conflict of law provisions. The Parties hereto agree that the sole and exclusive venue with respect to any claim or controversy arising under or governed by this [sic] Contract Documents shall only be proper in the United States Federal District Court of the Eastern District of Louisiana located in New Orleans, Louisiana, regarding general maritime claims and the Louisiana Seventeenth Judicial District Court located in Thibodaux, Louisiana, regarding any claim not governed by the general maritime laws of the United States. Id., *2.

Applying the law as to waiver, the court wrote, “[F]or Plaintiff’s motion to remand to be successful, the above provision must represent an exclusive or mandatory venue clause. After reviewing a member of other cases addressing whether particular language vested exclusive jurisdiction in a particular court to the exclusion of any other, including a federal court to which removal might be sought, found:

Because Plaintiff and Defendant clearly demonstrated their intent to make jurisdiction exclusive in one of two courts, depending on the type of claim at issue, the parties have waived their right to remove claims that are not governed by the general maritime laws of the United States, which claims must be litigated in the 17th Judicial District Court located in Thibodaux, Louisiana. Id., *3.

The court then disposed of Siroco’s argument that the state court exclusivity provision applies only if and after there has been determination that the dispute is not maritime in nature.

On the facts that the contract did not involve any “maritime nexus,” it wrote “While the Court acknowledges that there might be ‘close’ cases when determining whether a contract is maritime, this is not one of them.” Id. *4.

Grand Isle’s request for remand was granted.

Who Is a Member and Diversity Jurisdiction?

 Who Is a Member and Diversity Jurisdiction?

            It is black letter law that for purposes of Federal diversity jurisdiction (28 U.S.C. § 1332) an LLC has the citizenship of each of its members. One implication of this role is that in a suit by an LLC against one of its members there will never be diversity jurisdiction; the plaintiff LLC and the defendant member will always share the latter’s citizenship. But who is a member?, that being a question addressed in a recent decision from Texas. Edge Communications Solutions, LLC v. Werthamer, 2025 WL 3298312 (E.D. Tx. Nov. 26, 2025).

            Edge filed suit in Texas state court against its former employees Heide Werthamer and Marima Willis alleging what appear to be garden variety claims of theft of business secrets and as to Werthamer breach of a noncompete. The defendants removed the action to Federal court, and this decision addressed Edge’s motion to remand to state court on the basis that in fact diversity was not present.

            For purpose of this discussion the status of Werthamer as a member of Edge was the crux question. There was no dispute that she had been a member, and if she remained a member there would be no diversity. Werthamer alleged that upon the end of her employment by Edge she ceased to be a member. Edge maintained she remained a member notwithstanding ceasing to be an employee.

            The Court looked to the Delaware LLC Act, pursuant to which Edge was organized, and particularly the provisions addressing termination of member status, writing:

A member of a Delaware LLC may only resign “at the time or upon the happening of events specified in a limited liability company agreement and in accordance with the limited liability company agreement.” 6 Del. C. § 18-603. “[U]nless a limited liability company agreement provides otherwise, a member may not resign from a limited liability company prior to the dissolution and winding up of the limited liability company.” Id. Other than resignation, an individual can cease to be a member of an LLC upon assignment of all of the member’s limited liability company interest. 6 Del. C. § 18-702(b)(3).  2025 WL 3298312, *6.

            On the basis that Werthamer (she bearing the burden of showing diversity to exist) had not shown either on assignment of her interest in Edge or that her membership had been otherwise terminated, combined with the fact that Edge alleged she remained a member, the court found diversity to be lacking. Further, and building upon the fact that Werthamer bore the burden, it was noted by the court she could have as a member of Edge sought its membership list and avoided “any confusion.” 6 Del. Code § 18-305. For myself I’m a bit confused by this part of the opinion; Werthamer’s claim was that she is not a member and attempting to assert a member’s right would be antithetical to her petition. Still, if the LLC had responded with “you are not a member” it would have supported her position. In contrast if Edge had produced its list of members including Werthamer the situation would have been more clear.

            The decision is otherwise a useful primer on how to carry burden of showing diversity via proving the citizenship of the parties and their constituents.