Narrow 'Governing Law' Clause Precludes Forum Non Conveniens Motion

Richard Raysman is a Partner in Holland & Knight's New York office

Governing law provisions are seemingly ubiquitous in all contracts, but even so, drafting errors, or an arguable lack of precision, remain prevalent. Unintended consequences can arise from the omission of even two words, as all lawyers undoubtedly recognize. Such an unintended and adverse consequence recently befell a Canadian software company, at least at the preliminary stage of a matter, as the governing law provision in its end-user software license was written too narrow to preclude a forum non conveniens motion to dismiss in a federal court in Illinois. See Beaton v. SpeedyPC Software, No. 13-cv-08389, 2015 WL 3573601 (N.D. Ill. June 5, 2015).

Facts

Archie Beaton (Beaton) sued SpeedyPC Software (SpeedyPC) in a putative class action, alleging that the British Columbia-based company engaged in fraudulent and deceptive marketing of SpeedyPC Pro (Software). SpeedyPC's Software purported to diagnose and repair various computer errors. Antecedent to the installation of the Software, Beaton was required to click "I agree" when SpeedyPC's license agreement (EULA) materialized on his screen. The EULA included a section with respect to the governing law which stipulated that:

Section 3.8 —Governing Law— This Agreement shall be governed exclusively by the laws of the Province of British Columbia and the laws of Canada applicable therein except any principles regarding conflicts of law rules and the United Nations Convention on Contracts for the International Sale of Goods. You hereby irrevocably attorn [sic] and submit to the non-exclusive jurisdiction of the courts of Victoria, British Columbia, and any competent Courts of Appeal therefrom. If any provision shall be considered unlawful, void or otherwise unenforceable, then that provision shall be deemed severable from this License and not affect the validity and enforceability of any other provisions.

SpeedyPC likely designated British Columbia as the governing law and jurisdictional authority under the EULA as all of its employees, including senior management and those responsible for the design, development, marketing, and maintenance (including testing and upgrades) of the Software, reside there. SpeedyPC markets and sells the Software in numerous countries, including Canada and the United States.

In his complaint, Beaton alleged that he purchased the Software as a result of false and misleading statements regarding its capabilities. After viewing an advertisement on the Internet, Beaton purchased the Software, but later...

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