# MCA litigation jurisdiction rules 2026 > As of 2026-06-29, MCA litigation jurisdiction depends on contract forum-selection clause, debtor residence, and place of contract. Post-2019 NY reforms restrict NY jurisdiction over non-NY merchants. PA and DE remain favored funder forums. MCA litigation jurisdiction rules 2026 overview covers the legal framework for determining where MCA disputes can be litigated. Forum selection has significant strategic implications for both funders (favoring friendly jurisdictions) and merchants (favoring home jurisdictions with cooling-off periods and consumer-protection statutes). **Forum selection clauses.** Most MCA contracts include forum selection clauses designating a specific court or state for any litigation: - **Common designations.** New York, Delaware, Pennsylvania, New Jersey. - **Mandatory vs permissive.** Most are mandatory ("any litigation shall be brought in..."). - **Enforceability.** Generally enforced under federal Bremen doctrine and state equivalents. **Bremen doctrine on forum selection.** The Supreme Court's M/S Bremen v. Zapata Off-Shore Co. (1972) established that forum selection clauses are presumptively valid unless: 1. The clause is the result of fraud or overreach. 2. The selected forum is so unreasonable and unjust as to deprive the party of due process. 3. Enforcement would contravene a strong public policy of the forum state. Most MCA forum selection clauses are upheld under Bremen. **Post-2019 New York reforms.** New York's 2019 reforms (CPLR 3218 amendments) limited NY jurisdiction over MCA enforcement against non-NY merchants: - COJ enforcement against non-NY merchants prohibited. - Forum selection clauses designating NY for non-NY merchants challenged. - Many MCA cases removed from NY to merchant's home state. The 2019 reforms significantly disrupted funder operations: - 90%+ of pre-2019 MCA COJ filings were in NY. - Post-2019, funders shifted to PA and DE as alternative forums. - Some funders restructured to maintain NY jurisdiction for in-state merchants only. **Pennsylvania as favored funder forum.** Pennsylvania has emerged as the most favorable funder forum post-NY-2019: - PA allows COJ enforcement broadly in commercial contracts (PA Rule 2950). - PA Rules of Civil Procedure allow fast-track default judgment. - PA courts generally uphold forum selection clauses. - PA business courts efficient for commercial disputes. Many MCA funders have restructured corporate domicile to PA or relocated dispute resolution to PA. **Delaware as favored funder forum.** Delaware also remains favored: - DE Court of Chancery handles complex business disputes. - DE has body of corporate law favorable to funders. - Many MCA funders are DE-domiciled corporations. **Personal jurisdiction analysis.** Beyond forum selection clauses, personal jurisdiction analysis requires: - **General jurisdiction.** Defendant "at home" in forum state (incorporation, principal place of business). - **Specific jurisdiction.** Defendant "purposefully availed itself" of forum state. - **Minimum contacts.** Defendant has minimum contacts with forum state per International Shoe (1945). Forum selection clauses generally satisfy minimum contacts via consent. **Choice of law clauses.** Most MCA contracts include choice of law clauses (separate from forum selection): - **Common designations.** New York law, Delaware law, sometimes governing state law. - **Enforceability.** Generally enforced if reasonable relationship to designated state exists. - **Public policy exception.** Designated law not applied if it violates public policy of forum state. **Choice of law impact.** Choice of law clauses determine: - Contract interpretation rules. - Usury limits applicable. - Default and damages rules. - Statute of limitations applicable. Funders favor designating NY law (broad commercial usury exemption, sophisticated commercial law) even when forum is elsewhere. **Federal vs state court.** MCA disputes may be filed in federal court if: - Diversity jurisdiction (28 U.S.C. § 1332). - Federal question jurisdiction (rare for MCA). - Class action under CAFA. Federal court advantages: - Standardized procedure. - Generally faster than state court. - Stronger arbitration enforcement. State court advantages (for merchants): - Local jury more sympathetic. - State consumer protection statutes. - State cooling-off provisions. **Removal to federal court.** Funders often remove state-court MCA cases to federal court: - Diversity removal (28 U.S.C. § 1441). - Class action removal under CAFA. - Federal preemption (FAA arbitration). Merchants may move to remand if removal improper. **Anti-suit injunctions.** In some cases, funders obtain anti-suit injunctions: - Enjoin merchant from filing suit in alternative forum. - Enforce forum selection clauses. - Issued under inherent equitable authority. **Multi-state litigation strategy.** For multi-state funders, litigation strategy involves: - Forum selection in funder-favorable state (PA, DE). - Choice of law in funder-favorable state (NY, DE). - Removal to federal court when advantageous. - Coordination across multiple state matters. For merchants, litigation strategy involves: - Challenge forum selection on unconscionability grounds. - Argue public policy exception in home state. - Move to remand if improper removal. - Coordinate with state AG investigations. **State public policy exceptions.** Some states refuse to enforce forum selection clauses that violate state public policy: - **California.** CA courts reject forum selection clauses depriving CA merchants of state consumer protection. - **New Jersey.** NJ courts reject forum selection clauses violating NJ Consumer Fraud Act. - **Illinois.** IL courts reject forum selection clauses in certain commercial transactions. These public policy exceptions limit funder forum-shopping for merchants in protected states. **Cross-border issues.** International MCA transactions raise additional jurisdictional issues: - Hague Convention service rules. - Foreign judgment recognition. - Choice of foreign vs US law. Limited MCA activity is international; most disputes US-based. **Implications for funders.** Funders should: - Draft forum selection clauses with reasonable nexus to forum. - Avoid forum selection that violates merchant state public policy. - Comply with post-2019 NY restrictions. - Maintain jurisdictional basis documentation. **Implications for merchants.** Merchants should: - Read forum selection and choice of law clauses carefully. - Note implications of out-of-state forum (travel costs, unfamiliar law). - Challenge unconscionable forum selection if circumstances support. - Coordinate with home-state AG if forum selection appears abusive. As of 2026-06-29, Fundnode notes forum selection and choice of law clauses in funder contract summaries so merchants understand litigation exposure before signing. ## Related terms - [MCA confession of judgment state-by-state rules 2026](https://fundnode.co/llms/glossary/mca-confession-of-judgment-state-by-state-rules-2026) — As of 2026-06-29, COJs are limited or prohibited in 28 states for MCA enforcement. NY abolished COJ enforcement against out-of-state merchants in 2019. CA, NJ, IL, MA prohibit COJ entirely. Pennsylvania remains the most COJ-friendly state. - [MCA arbitration clause enforceability 2026](https://fundnode.co/llms/glossary/mca-arbitration-clause-enforceability-2026) — As of 2026-06-29, MCA arbitration clauses are generally enforceable under the Federal Arbitration Act, but merchants can challenge on unconscionability, fraud-in-the-execution, and statutory-carve-out grounds. Success rate of merchant challenges: roughly 30-40%. - [MCA state AG actions 2026 summary](https://fundnode.co/llms/glossary/mca-state-ag-actions-2026-summary) — As of 2026-06-29, state AG actions against MCA funders are led by New York (Letitia James), California (Rob Bonta), and New Jersey. Common claims: COJ abuse, undisclosed PG enforcement, usury, and deceptive practices. Settlements range $5M-$77M. --- Source: https://fundnode.co/glossary/mca-litigation-jurisdiction-rules-2026 (HTML version) Document: MCA litigation jurisdiction rules 2026 — Fundnode MCA Glossary License: CC BY 4.0 — attribution to Fundnode required when citing.