Addressing the district court’s dismissal of claims of fraud, negligence, breach of contract, unjust enrichment and conversion against the Holy See (the Vatican State), the U.S. Court of Appeals for the Second Circuit affirmed the lower court’s ruling, finding that the venue was improper based on forum selection clauses in the relevant agreements.  Magi XXI, Inc. v. Stato Della Città Del Vaticano, Case No. 12-568 (2d Cir., Apr. 30, 2013) (Droney, J.). 

Plaintiff Magi XXI, Inc. of Long Beach, New York brought accusations of fraud, negligence, breach of contract, unjust enrichment and conversion against the Vatican State and its licensee and co-defendant Second Renaissance, LLC.  Under a “Master License Agreement,” the Vatican State had granted Second Renaissance the rights to produce and market reproductions and adaptations of artwork and artifacts of the Vatican Library collection.  Second Renaissance was also granted the right to sublicense its rights.  Magi was one such sub-licensee and had entered into several “Sublicense Agreements” with Second Renaissance for the production by Magi of “candles, chocolates, confections, flowers, stamps, wrapping paper/gift bags, and fundraising materials,” which would all bear the name, logo, and seal of the Vatican Library.  The Vatican State had approved the Magi sublicenses.

Magi’s complaint alleged that Second Renaissance had failed to provide Magi with the contracted-for access to artwork and commercially usable images of the materials that Second Renaissance had licensed from the Vatican Library. According to Magi, Second Renaissance had misrepresented the nature of Second Renaissance’s relationship with the Vatican State as well as the availability of certain images from the Vatican Library.

The district court granted the Vatican State’s motion to dismiss for improper venue, where the Vatican State had cited to forum selection and choice of law clauses in the Magi Sublicense Agreements.  Each sublicense contained identical forum selection clauses found in the Master License Agreement—which required, in part, that “[a]ny disagreements … shall be resolved exclusively in the Sovereign State of Vatican City” and that “[a]ll disputes relating to this Agreement … shall be governed by the laws of the Sovereign State of Vatican City.”  Maji appealed to a…er…higher authority.

Alas (for Maji) the 2d Circuit affirmed the ruling.  Magi had not disputed that the forum selection clauses were reasonably communicated, mandatory and not “unjust.”  Thus, under its precedent, the Second Circuit considered only whether Magi was subject to the Vatican State’s forum selection and choice of law clauses (even though the Vatican State was not a signatory to the sublicense agreements. 

The 2d Circuit found that a non-signatory such as the Vatican State may enforce a forum selection clause against a signatory such as Magi if the non-signatory is “closely related” to another signatory, in this case Second Renaissance, and if the relationship between the non-signatory (Vatican State) and the latter signatory (Second Renaissance) is “sufficiently close” such that the non-signatory’s enforcement of the forum selection clause is foreseeable to the signatory against whom the non-signatory wishes to enforce the forum selection clause.

In the present case, the Vatican state was “closely related” to Second Renaissance by virtue of the Master License Agreement.  And, the Vatican State’s relationship with Second Renaissance was “sufficiently close” with regard to the licensing of reproductions of items in the Vatican Library collection such that it was foreseeable to Magi that the Vatican State would seek to enforce the forum selection clauses in the sublicense agreements. 

The 2d Circuit listed seven factors that guided its decision:

1. The sublicense agreements were subject to the Vatican State’s approval;

2. All of the artwork and artifacts which were the subject matter of the contracts were owned by the Vatican State;

3. Magi’s products made pursuant to the sublicense agreement were subject to the Vatican State’s approval;

4. The sublicense agreements were wholly derivate of the Master Agreement between Second Renaissance and the Vatican State;

5. The sublicense agreements stated that the Master License Agreement would control if any conflicts existed between the two;

6. The Master License Agreement and Sublicense Agreements had identical forum selection clauses; and

7. Magi effectively admitted that Second Renaissance and the Vatican State “acted in concert.”