76 F.4th 675
7th Cir.2023Background
- Nulogy licensed software to Menasha; later Menasha and Deloitte sought Nulogy’s proprietary information to integrate the product, and Nulogy alleges they used it to reverse-engineer a competitor.
- Nulogy sued in Ontario Superior Court for breach of contract (against Menasha) and trade-secret misappropriation (against Menasha and Deloitte). Deloitte contested Canadian jurisdiction.
- Nulogy voluntarily dismissed its Canadian trade-secrets claims and refiled in the U.S. under the DTSA and Illinois trade-secrets law; the Canadian breach claim vs. Menasha remained pending.
- Menasha moved to dismiss the U.S. suit invoking a mandatory forum-selection clause in its contract with Nulogy requiring litigation in Toronto; the district court dismissed the entire complaint on forum non conveniens and denied Deloitte’s Rule 12(b)(6) motion as moot.
- The Seventh Circuit affirmed dismissal of Nulogy’s claims against Menasha (enforcing the mandatory forum clause) but reversed dismissal of the claims against Deloitte because Deloitte never agreed to the clause and did not invoke forum non conveniens.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the contract’s forum-selection clause cover Nulogy’s U.S. trade-secrets claims? | Nulogy: clause applies only to claims "in connection with the Agreement" and thus only to contract-based claims, not trade-secrets claims. | Menasha: trade-secrets claims arise from the parties’ contractual relationship and therefore fall within the clause. | The clause applies: Nulogy’s trade-secrets claims are sufficiently connected to the contract. |
| Is the forum-selection clause mandatory or permissive? | Nulogy: clause not exclusive. | Menasha: clause uses mandatory language ("will initiate" and "irrevocably attorn to the exclusive jurisdiction"). | Mandatory: language shows parties agreed exclusively to Toronto. |
| What is the effect of a mandatory forum clause on forum non conveniens analysis? | Nulogy: forum non conveniens should not apply to bar U.S. litigation, or clause should not control because Deloitte is a nonparty. | Menasha: Atlantic Marine controls; plaintiff bears burden to show public-interest factors defeat dismissal. | Applying Atlantic Marine, the plaintiff bears the burden; private-interest factors are deemed to favor the chosen forum; Nulogy failed to overcome this showing. |
| Can a court dismiss claims against a nonparty-to-the-clause defendant (Deloitte) along with claims against a party who invoked the clause? | Nulogy: cannot use naming of Deloitte to avoid clause; district erred in keeping Deloitte. | Menasha (and district court practice): dismissing entire complaint avoids piecemeal litigation and is appropriate. Deloitte: did not invoke forum non conveniens and contends Canadian courts lack jurisdiction. | Court reversed dismissal of Deloitte: Deloitte never agreed to the clause and did not move forum non conveniens, so its U.S. claims should remain unless Deloitte shows a more convenient forum. |
Key Cases Cited
- Atl. Marine Constr. Co. v. U.S. Dist. Ct. for the W. Dist. of Tex., 571 U.S. 49 (2013) (enforcing mandatory forum-selection clauses through modified forum non conveniens analysis)
- IAC/InterActiveCorp v. Roston, 44 F.4th 635 (7th Cir. 2022) (threshold review of clause applicability and mandatory/permissive character)
- Paper Exp., Ltd. v. Pfankuch Maschinen GmbH, 972 F.2d 753 (7th Cir. 1992) (distinguishing mandatory venue language from mere jurisdictional clauses)
- Deb v. SIRVA, Inc., 832 F.3d 800 (7th Cir. 2016) (forum non conveniens burden on defendants ordinarily, but reversed where clause is mandatory)
- Adams v. Raintree Vacation Exchange, LLC, 702 F.3d 436 (7th Cir. 2012) (discussing whether one defendant can enforce a clause to affect proceedings against another)
- LaDuke v. Burlington N. R.R. Co., 879 F.2d 1556 (7th Cir. 1989) (recognizing concerns about piecemeal litigation)
- Turner Ent. Co. v. Degeto Film GmbH, 25 F.3d 1512 (11th Cir. 1994) (parallel foreign and U.S. proceedings permitted)
- Kamel v. Hill-Rom Co., 108 F.3d 799 (7th Cir. 1997) (alternative forum is available only if all parties are amenable to process there)
- Clerides v. Boeing Co., 534 F.3d 623 (7th Cir. 2008) (forum non conveniens public/private interest framework)