Legal Question in Technology Law in California

Re: Internet Contract Law

Ms. Covin correctly notes that a contract dispute between residents of different states could end up in federal court under some circumstances. Even then, the contract would still be interpreted according to state law in most cass. There are complex rules to determine *which* state's laws would apply. There are also complex laws to determine which state's courts the case would end up in. Those two sets of laws are largely independent of one another, though, and it is fairly common for the courts of one jurisdiction to have to decide a case according to the laws of another.

Re: Internet Contract Law

If the preceding answers seem confusing, let me muddy the waters even further.

There are two questions being answered here. I'm not sure you asked both questions, but you should understand that there are indeed two questiions that need to be asked, and answered, and that's what the three attorneys have tried to do....

The first question concerns JURISDICTION, and that all has to do with what court may hear the case.

The second question has to do with APPLICABLE LAW; in other words, will the case be decided under California law, Delaware law, New York law, etc.

First, let's look at the jurisdiction question. In order to get jurisdiction in a federal court, there must either be (1) a "federal question" (usually meaning a federal law is being enforced or interpeted in a main issue of the case, such as whether the National Environmental Policy Act has been violated); or (2) there is "diversity jurisdiction" because each plaintiff is a resident of a different state from each defendant AND the amount in controversy exceeds $75,000. Note that for diversity jurisdiction to exist so that a case can be heard in federal court, both criteria (diversity and amount in controversy) must be met.

Jurisdiction also has a baby brother, venue. The venue question involves which (for example) California court can hear the case, e.g. does it belong in Plumas County or Modoc County Superior Court? Or within the federal system, does it belong in the Eastern District of California, or in Nevada District Federal Court?

The second question, applicable law, requires the judge of the court having jurisdiction and venue to decide which state's statutory and decisional law to apply. Usually, Texas courts will apply Texas law, but not always. Situations may arise where a California state court will have to apply the substantive law of Arizona to the issues before it. Federal courts almost always have to apply the law of some state or other, since "there is no Federal law" on a lot of matters. The choice of law often depends upon an express choice made by the parties in their contract, but not always; the judge may have to decide what choice of law the parties would have made if they had bothered to decide that beforehand, or what law is most reasonably foisted on the litigants.

Re: Internet Contract Law

Generally, the contract will (or should) specify the state law which will govern.

Re: Internet Contract Law

Interpretation of a contracts is normally a matter of state law. Where it is instead a question of federal law it is because of the contract's subject matter and/or the identity of the parties. That is is formed over the internet rather than in person, by mail, by fax, etc. is irrelevant.

Re: Internet Contract Law

If parties from different states end up in a dispute, jurisdiction may end up in federal court if there is diversity (everyone is from a different state). It is more common that the case would fall under state venue and the real question is which state! This can be where the defendant lives (or business has its headquarters) or where the contract was formed or where the contract was to be performed. This can sometimes be trickier to determine when the contract was formed over the internet. There can also be a contractual agreement regarding the jurisdiction for any dispute. This can be a good thing to specify in a contract so you don't have to struggle with this question later and don't end up with an inconvenient answer from a court.