The Court of Appeals for the Seventh Circuit held that non-parties to a contract can enforce a forum selection clause. In Adams v. Raintree Vacation Exchange, LLC, 702 F.3d. 436 (7th Cir. 2012) the plaintiffs were 250 purchasers of time share interest in villas and a resort known as Club Regina in Baja, California from a Mexican company referred to by the parties as DTR. DTR no longer exists having become an affiliate of the defendant Raintree through a series of mergers. The court first held that Raintree as the parent of DTR’s successor could enforce the forum selection clause.
Starwood is not in the ownership chain although it bought a significant part of the assets of the resort property that DTR had planned to develop. The court pointed out that the plaintiffs allege a conspiracy between Raintree and Starwood to defraud them and that they were secret principals of DTR. The Court of Appeals held that Starwood could enforce the forum selection clause because an alleged conspirator can invoke the forum selection clause contained in a contract alleged to be signed by his co-conspirator.
The court concluded by saying that because Raintree is alleged to be a secret principal along with Starwood, it can enforce the forum selection clause on the same ground as Starwood, as well as on the affiliation ground that the court found. The Court of Appeals affirmed the dismissal of the lawsuit by the district court.