Non-compete, proprietary information, and confidentiality agreements often contain forum selection provisions, which specify where any related litigation must be brought. But what is to happen when the underlying agreements contain different forum selection provisions? A United States District Court for the Southern District of Indiana recently addressed this very issue, and held that in such cases, a court must decide for itself which proposed forum has the greater connection to the underlying dispute by focusing on just the facts. See High Tech Nat’l, LLC v. Wiener, No. 119-CV-02489-SEB-MJD (S.D. Ind. Nov. 26, 2019).
In High Tech, the plaintiffs—a mobile automotive locksmith company and its affiliate—sued their former president for misappropriating trade secrets and for breach of contract.
Plaintiffs allege that the former president conspired with co-defendants to breach their contracts with Plaintiffs by starting their own competing company, Defendant Steelers Keys (“Steelers”). Plaintiffs further allege Defendants conspired to steal proprietary information by arranging a lease between HTL and Steelers for five mobile locksmith vehicles equipped with HTL’s proprietary equipment.
The case was filed in the Southern District of Indiana, per the terms of the Defendants’ employment contracts with Plaintiffs. Defendants, however, moved to transfer the case to the Southern District of Florida under a competing forum selection clause within the lease agreement between the parties. Faced with competing forum selection clauses, the Court noted “[t]here is simply no way to enforce both of the mandatory forum selection clauses that apply to the claims in this case.” Instead, the Court looked to the underlying facts of the case and determined the claims were more appropriately brought in the Southern District of Florida.
In reaching this determination, the Court analyzed three public-interest factors: (1) the court’s familiarity with the applicable law; (2) the speed at which the case will proceed to trial; and (3) the desirability of resolving disputes in the region in which they arose. The Court found the first factor to be neutral, as any judge in the Southern District of Florida could fully apply Indiana law, and vice versa. In analyzing the second factor, the Court determined the Southern District of Florida could dispose of the case more quickly because it had fewer cases overall than the Southern District of Indiana. As such, the second factor weighed in favor of transferring the case to Florida. Finally, the court noted the majority of parties to the case were citizens of Florida. Consequently, the third element also favored transferring the case to the Southern District of Florida.
Importantly for litigants, this case provides insight as to how courts within the Seventh Circuit resolve competing forum selection clauses. That is, when faced with two enforceable forum selection clauses, federal courts will likely look beyond the agreements themselves, and instead, will turn to the underlying facts of the case to determine the most appropriate forum. Consequently, in such cases, litigants should be sure to argue the factors supporting the appropriateness of their desired forum in addition to arguments regarding enforceability of the agreements.
Trade secret misappropriation impacts businesses across a variety of industries, and the consequences can be severe. A potential victim of trade secret theft, or one accused of same, should swiftly consult experienced litigation counsel.