W.D.N.C.: Morgen v.  Student Loan Finance Corporation- Forum Selection ClauseW.D.N.C.: Morgen v.  Student Loan Finance Corporation- Forum Selection Clause


Ms.  Morgen brought suit alleging violations of the Fair Credit Reporting Act and Student Loan Finance (“SLF”) moved for a change of venue to South Dakota based on a forum selection clause in the contract.
Ms.  Morgen’s initial objection that the loan applications and promissory notes proffered by SLF  had no affidavits from record keepers   denied as the court held that such would be precluded as evidence in a consideration of a motion for summary judgment, but, in part because “there is no plausible contention that these documents are inauthentic,”  allowed them for determination of venue.

In evaluating the forum selection clause,   the  court  first determined  whether it was  mandatory or permissive, with only mandatory forum selection being binding.  Finding that the specific language in the contract both used “shall”, rather than “may”, and referenced South Dakota’s long arm jurisdiction, the district court held that the forum selection was mandatory.
Turning then to evaluate whether the provision was valid and enforceable, the district court examined whether the it was unreasonable based on the following test:

(1) whether its formation was induced by fraud or overreaching;

(2) whether the complaining party will be deprived of their day in court because of grave inconvenience or unfairness of the selected forum;

(3) whether there is fundamental unfairness of the chosen law in depriving the plaintiff of a remedy; or

(4) whether its enforcement would contravene a strong public policy of the forum state.
See Allen v. Lloyd’s of London, 94 F.3d 923, 928 (4th Cir. 1996).

With no evidence of fraud or overreach, the district court held that since the loans were taken out when Ms.  Morgen lived in Minnesota, South Dakota was not a great distance at that time.  Further, since the claims were based solely on federal law, Ms.  Morgen would not face unfairness by being subject to South Dakota, rather than North Carolina law.  Additionally, while N.C.G.S. § 22B-3 holds that forum selection provisions are void as against public policy, the contract was not entered into while Ms.  Morgen lived in North Carolina.

Lastly, the court evaluated whether transfer of venue was proper under 28 U.S.C. § 1404(a), finding that pursuant to Atlantic Marine Const. Co. v. U.S. Dist. Ct. for W. Dist. of Texas, 134 S. Ct. 568 (2013), where forum selection clauses should be enforced unless “extraordinary circumstances unrelated to the convenience of the parties clearly disfavor a transfer” and that consideration convenience or fairness to the parties was not appropriate, instead, looking to the factors, including:

(1) the comparative administrative difficulties flowing from court congestion;
(2) the local interest in having localized interests decided at home;
(3) the familiarity of the forum with the law that will govern the case; and
(4) avoidance of unnecessary problems of conflict of laws or in the application of foreign law.

Finding nothing under these factors in the present case that disfavored transfer, the district court ordered the case be sent to South Dakota.


It is somewhat surprising that court did not evaluate whether the forum selection clause was valid under Minnesota law, which was where the “last act necessary to make the it binding”.  An abbreviated search indicates that there following factors in determining whether a form contract is a “contract of adhesion” such that a forum selection clause should not be enforced:

(1)  the bargaining power of the parties;

(2)  whether they negotiated the contract;

(3)  the business sophistication of the parties; and

(4) the need for the subject of the agreement.

See Valspar Refinish, Inc. v. Gaylord’s, Inc., 2006 Minn. App. Unpub. LEXIS 578, at *5 (Minn. Ct. App. 2006)

For a copy of the opinion, please see:

Morgen v. Student Loan Finance Corporation- Forum Selection Clause



1. Bachelor of Arts degree in English Literature from Washington University, 1993. 2. Juris Doctor degree from George Washington University, 1996. Admissions to Practice of Law: North Carolina Bar, 1996. Federal District Courts for the Eastern and Middle Districts of North Carolina. Specialty Certification: North Carolina State Bar: Certified as a Specialist in Consumer Bankruptcy. Areas of Practice: Practice limited to consumer and business debtor bankruptcy law, 1998 to present. Memberships: National Association of Consumer Bankruptcy Attorneys (NACBA). North Carolina Academy of Trial Lawyers (NCATL). North Carolina Bar Association, Bankruptcy Section. Lectures prepared and presented: North Carolina Academy of Trial Lawyers seminar on bankruptcy; Topic: Counseling the Consumer Debtor Prior to Court - C.Y.A. Forms to Help 'Gird They Loins'; 2001. Middle District Bankruptcy Seminar; Topic: Preparing Chapter 13 Plans; 2002. NACBA National Convention; Topic: Efficient Office Practices; 2003. NACBA National Convention; Topic: Chapter 7 vs. Chapter 13 Debates; 2004. Middle District Bankruptcy Seminar; Topic: Chapter 7 & 13 Hot Issues; 2004. Positions held: NACBA National Convention; Convention Chair; 2008. NACBA National Convention; Panel Moderator: Topic: Basic Bankruptcy Issues; 2008. NACBA National Convention; Panel Moderator; Topic: Chapter 13-Disposable Income and Other Issues; 2007. NACBA National Convention; Panel Moderator; Topic: Representing Members of the Military and Their Families; 2007. NACBA, Member of National Board of Directors, 2006 to present. NCATL, Chair of the Bankruptcy Section, 2003 to 2007. NACBA, Chair of the North Carolina Section, 2003 to 2007. NC Bar Association, Bankruptcy Section, Bankruptcy Council Member, 2004 to present.

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