What Made News?
A recent ruling out of West Texas in Mendoza v. Microsoft, Inc., 5:13-CV-00378 (W.D. Tex. March 5, 2014) serves as a reminder that companies must make sure their service agreements and online privacy policies conform to industry best practices, as well as legal requirements. The structure and format of these agreements can be critical to their enforceability and companies should not take any aspect for granted.
What Did the Court Rule?
Why was the Suit Brought?
“The Court noted that the clauses are ‘presumed enforceable’ in the Fifth Circuit and should be upheld”
What was the Basis of the Court’s Finding?
In the Fifth Circuit, the Court explained, forum selection clauses are subject to the four prong test first annunciated in Haynsworth v. The Corp., 121 F.3d 956, 962 (5th Cir. 1997). In that case, the Fifth Circuit held that the clauses are unenforceable only if the following conditions are met:
- The incorporation of the forum selection clause into the agreement was the product of fraud or overreaching;
- The party seeking to escape enforcement will for all practical purposes be deprived of his day in court;
- The chosen law is fundamentally unfair; or
- Enforcement of the clause would contravene a strong public policy of the forum state.
What is the Takeaway?