Bennett v. Hosting.com, Inc., 2008 WL 4951020 (N.D. Cal. Nov. 18, 2008).
Factual Background Edit
Catherine Bennett (“Plaintiff”) owns and operates an internet-based business called “HowFastTheyGrow.com.” In April 2007, Plaintiff entered into a “Managed Hosting Services Agreement” (the “Agreement”) with Hosting.com (“Defendant”) to host her website. The Agreement contained a forum selection clause and choice of law provisions stating “[t]he agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Kentucky and Customer agrees that Jefferson County, Kentucky, shall be the sole and exclusive venue for any legal action or other proceedings.”
Plaintiff began experiencing problems with Defendant’s service. Plaintiff contends that the Defendant was not using the agreed upon software on its web servers and that her website would “crash.” Plaintiff also asserts that as a result of this, she lost valuable customer data and her business suffered. Subsequently, Plaintiff filed a suit against Defendant containing thirty different causes of action under California and federal law.
Trial Court Proceedings Edit
Defendant filed a motion to dismiss for improper venue claiming that in accordance with the forum selection clause in the Agreement. Plaintiff opposed the motion and contended that the forum selection clause was unenforceable and even if it was enforceable, it does not apply in this matter because many of her claims were tort claims and do not relate to the agreement.
The court granted the Defendant’s motion to dismiss for improper venue. The court reasoned that the Plaintiff’s arguments against enforcing the forum selection clause did not satisfy the high burden necessary to prove that “enforcement [of the forum selection clause] would be unreasonable or unjust” or that the clause was the product of fraud or overreaching. The court reasoned that the Plaintiff’s argument that Defendant was in a superior bargaining position and could not negotiate the terms of the contract failed because “neither a power differential between the parties nor the non-negotiability of the contract is sufficient reason to set aside the forum selection clause.”
Additionally, the court stated that forum selection clauses can be equally applicable to contract and tort causes of action depending on whether “the resolution of the [tort] claims relates to interpretation of the contract.” The court reasoned that many of the Plaintiff’s claims that fell outside of the contract still required the fact finder to make determinations “identical to those required by the contract claims.” Thus, the facts of the tort and contract claims overlap and it serves judicial efficiency to have them tried in the same forum.