## Facts

- Pugh Brothers Garage, a Georgia auto repair business, sought specialized equipment through Major Muffler’s Atlanta representative for use in Georgia.
- As part of the transaction, Pugh Bros. signed a preprinted lease form supplied by Colonial Leasing but presented through Major Muffler; Pugh Bros. did not negotiate with Colonial and was not informed Colonial would become the lessor at signing.
- The signed front page was accompanied by standard terms on the back in small print, including a clause consenting to jurisdiction in Oregon.
- The forum clause was not negotiated, discussed, highlighted, or brought to Pugh Bros.’ attention; there was no showing Pugh Bros. read it.
- After receiving the signed form, Colonial approved the transaction, purchased the equipment from Major Muffler, became the lessor, and billed Pugh Bros. from an Oregon office.
- Colonial alleged Pugh Bros. defaulted and sued in the District of Oregon, asserting diversity jurisdiction and relying on the forum-selection/jurisdiction clause.

## Issues

1. Whether an inconspicuous, non-negotiated consent-to-jurisdiction clause on the reverse side of a standard form lease binds an out-of-state lessee as valid consent to personal jurisdiction in Oregon.
2. Whether, absent effective consent, the defendants had sufficient minimum contacts with Oregon to permit personal jurisdiction consistent with due process.

## Decision

- The Ninth Circuit affirmed the district court’s dismissal for lack of personal jurisdiction.
- The court declined to enforce the boilerplate forum/jurisdiction clause as a valid consent to Oregon jurisdiction given its inconspicuous placement and lack of negotiation or notice.
- The court held that the defendants’ connections to Oregon were insufficient to satisfy minimum-contacts requirements; Colonial’s Oregon billing and related in-forum activity were unilateral acts by the plaintiff, not purposeful conduct by the defendants.

## Legal Principles

- A forum-selection or consent-to-jurisdiction clause may be ineffective where it is buried in fine print in a standard form, not negotiated or discussed, and not meaningfully assented to by the party against whom it is invoked.
- Personal jurisdiction requires defendant-initiated contacts showing purposeful availment; a plaintiff’s unilateral decision to locate operations in the forum or send bills from the forum does not, by itself, create minimum contacts.
- Exercising jurisdiction must comport with due process and “traditional notions of fair play and substantial justice,” including reasonable foreseeability of being haled into the forum.

## Conclusion

The Ninth Circuit held that Oregon courts could not exercise personal jurisdiction over Georgia defendants where the only asserted basis was an inconspicuous, non-negotiated boilerplate forum clause and the lessor’s unilateral billing from Oregon, and it affirmed dismissal for lack of personal jurisdiction.


Colonial Leasing Co. of New England, Inc. v. Pugh Bros. Garage, Inc., 735 F.2d 380 (9th Cir. 1984)