Tuesday, July 5, 2011
‘Venue’ Clause Not Consent to Personal Jurisdiction—Court of Appeal
By a MetNews Staff Writer
A company that contractually agreed that any lawsuit between the parties would be “venued” in Orange County did not thereby assent to personal jurisdiction in California, the Fourth District Court of Appeal has ruled.
Div. Three Thursday granted a writ quashing service on Global Packaging, Inc., a Pennsylvania-based company that was sued in connection with its purchase of software from Orange County-based Epicor Software Corporation.
Epicor filed suit in Orange Superior Court last year. Global moved to quash service on the ground that it lacked an actual presence in, or minimum contacts with, California.
Judge John Gastelum denied the motion on the ground that Global had agreed to be sued in Orange County. He cited a provision in the parties’ contract stating that claims between the parties “shall be venued only in the state or federal court in...Orange County, California or...the jurisdiction in which the Software is located,” at the plaintiff’s option.
The ruling was erroneous, Justice William Bedsworth wrote for the appellate court, because it “conflated venue, forum, and jurisdiction to imply Global Packaging’s consent to personal jurisdiction.”
Historically, the justice wrote, courts were hostile to forum-selection clauses, although the courts of many states, including California, have specifically upheld them, or at least upheld the discretion of the courts to enforce them, and the U.S. Supreme Court has held them enforceable.
But “an agreement to litigate in a certain location, a forum” does not, he said, “necessarily imply an additional, separate agreement to submit to the jurisdiction of that forum, one in which personal jurisdiction would not otherwise be available....”
Unlike forum-selection or choice-of-law agreements, he elaborated, the issue of personal jurisdiction implicates constitutional due process protection, a waiver of which should not lightly be implied.
He took issue with the reasoning of the trial judge, who concluded that “these parties” would not “bother” to include a venue clause in their contract if they did not intend to submit to California jurisdiction.
Bedsworth noted that the contract was a form whose provisions were determined by Epicor for use with many customers. “As to why bother, the ways in which contract drafters can fall down on the job are unlimited,” he wrote, adding that “a court should not be called upon to function as a backstop for sloppy contract drafting.”
It would have been “ridiculously easy” for the parties to have included a specific jurisdictional waiver, he noted, had they intended to do so. If they had, he said, it would have been clear to Global that it was opening itself up to being sued on Epicor’s home turf “and it would very probably have kept this contract interpretation dispute out of the court.”
The trial court ruling, he said, “stretches paragraph 11 beyond what its actual words can bear and pulls Epicor out of a pit of its own digging.”
San Diego attorney Stephen M. Hogan represented Global on appeal. Epicor was represented by Calvin House of Pasadena’s Gutierrez, Preciado & House, along with Kenneth J. Richard of Rancho Santa Margarita.
The case is Global Packaging, Inc. v. Superior Court (Epicor Software Corporation), 11 S.O.S. 3591.
Copyright 2011, Metropolitan News Company