Do Your Forum Selection Clauses Cover Trade Secret Misappropriation Claims?

Drafters beware: Forum selection clauses referencing only "this Agreement" may be insufficient for sending trade secret claims to the selected forum. A state court judge in Massachusetts recently denied Uber's motion to send a trade secret misappropriation case from Massachusetts to Brazil. In that case (Zemcar, Inc. v. Uber Tech, Inc., Case No. 2484CV01525-BLS2, Suffolk Sup. Ct. Mass., Jan. 29, 2025), Uber relied on a provision that stated: "This Agreement shall be governed by and construed in accordance with Brazilian laws without regard to its choice of laws provisions. [Zemcar] hereby consents to exclusive jurisdiction and venue in the state courts sitting in [São Paolo, Brazil]." Trial Judge Debra Squires-Lee found the clause did not require Zemcar to pursue its tort claims in Brazil.

The court held: "[t]he second sentence does not identify the nature of the disputes subject to that exclusive jurisdiction. But because it follows the sentence that provides that the Agreement would be governed by Brazilian law, I conclude that [Zemcar] consented to the exclusive jurisdiction of the courts of São Paolo, Brazil for the resolution of claims that 'have their inception' in the 2020 MSA and not claims or disputes that precede the contract, merely relate to the 2020 MSA, or stem more generally from the relationship of the parties."

Judge Squires-Lee's holding is an important reminder to contract drafters that forum selection clauses can be subject to careful scrutiny and that general references to the underlying agreement may not be enough to cover all claims. In Zemcar, Zemcar sued Uber for trade secret misappropriation in relation to a software-based video recording application designed to enhance driver and rider safety. Zemcar and Uber agreed to several pilot programs for a rollout of the software pursuant to a 2019 Master Agreement for Services (the "MSA" referenced in the court's holding) but, ultimately, Zemcar alleges Uber terminated the relationship and shortly thereafter developed and used its own "copycat" software in place of Zemcar's.

Zemcar sued for trade secret misappropriation and other tort and/or statute-based claims but, perhaps tactically, did not pursue a claim for breach of the MSA, which also included confidentiality restrictions and could have impacted a court's analysis. Presumably, Zemcar preferred to proceed in Massachusetts and under U.S. law. Per the court, the claims therefore did not have "their inception" in the contract. The trial court made this finding even though the contract governed the rollout of the at-issue software.

The holding in Zemcar is a helpful reminder to practitioners to treat forum selection clauses with increased care during the drafting process. Using the "broad" language often associated with arbitration provisions (e.g., "relating to" and/or "arising out of") and specifying the nature of the claims subject to the forum selection clause (e.g., claims based in contract, tort, common law, statute, etc.) may provide more support that all claims muse be litigated in the preferred forum.