Jeffrey A. Parness (Northern Illinois University – College of Law) has posted Binding Nonsignatories to Forum Selection Clauses on SSRN. Here is the abstract:
In September 2022, the Fifth Circuit, in Fran/ink Inc. v. BACE Services, 50 F. 4th 432 (2022), joined all other federal appellate courts in employing the "closely related" doctrine to determine whether a nonsignatory to a contract with a forum selection clause was bound by the clause. All other circuits had recognized the doctrine in some form.
The court was "chary to create a circuit split," noting its reluctance to swim against the "tide of authority." But while the doctrine now generally operates nationally, its application will vary. The Fifth Circuit itself recognized the relevant factors had not been considered "holistically," with "no particular test emerging as definitive."
The doctrine is reviewed herein, with an emphasis on how the Fifth and Seventh Circuit approaches to forum selection clauses vary and how practitioners should now approach nonsignatories. First, the facts in Fran/ink are described. Next, some of the varying approaches to the "closely related" doctrine are explored. Finally, concluding remarks focus on how practitioners can better secure or avoid the later use of the doctrine.