Illinois Appellate Court Honors Venue Provision

Posted in Commercial

When entering into a business arrangement, venue provisions for future litigation are sometimes an afterthought. The prospect of litigation seems remote, and to some parties, it seems as if any venue provision will do. The First District’s recent opinion in Saba Software v. Deere & Company, 2014 IL App (1st) 132381, serves as a reminder that venue provisions should be given careful consideration. They may serve as a basis for litigating in an unwanted jurisdiction years later. For the defendant in Saba Software, when the relationship between the parties went south, they were forced to head east.

In Saba Software, the plaintiff, a Delaware corporation with its principal place of business in California, entered into a series of service contracts with the defendant, a Delaware corporation with its principal place of business in Moline, Illinois, which is part of Rock Island County. Id. Included in one of these agreements was the following “Venue” provision:

The parties consent to the exclusive jurisdiction of, and venue in, any federal or state court of competent jurisdiction located in Illinois for the purposes of adjudicating any matter arising out of or relating to this Agreement. Id. at ¶13.

After a disagreement arose between the parties, Saba Software filed a breach of contract action in Cook County, Illinois. Before answering, the defendant filed a motion to transfer venue to Rock Island County based on the Illinois venue statute, 735 ILCS 5/2-104, and the doctrine of forum non conveniens. In support of its motion, the defendant offered evidence that most of the witnesses resided in Rock County and that a majority of the contract negotiations took place in Rock County. Moreover, it demonstrated that no part of the relevant transaction at issue in this litigation occurred in Cook County, and no relevant witnesses for either party resided or worked in Cook County. Id. at ¶28. The plaintiff did not contest any of the evidence, but merely referenced the venue provision in the parties’ agreement. Id. at ¶34.

Despite there being no meaningful connection to Cook County, the trial court denied the plaintiff’s motion based on the venue provision in the parties’ agreement. Id. at ¶40.

The First District Appellate Court affirmed. Looking to prior decisions interpreting similar venue provisions, the Court noted that such provisions are against public policy, and thus unenforceable, when they are “boilerplate agreements” imposed on parties with limited bargaining power. Id. at ¶58 (citing Williams v. Illinois State Scholarly Comm’n, 139 Ill. 2d 24 (1990)). Where, as here, the parties are sophisticated businesses engaging in arm’s length negotiations, venue provisions are prima facie valid and will be enforced by the courts. Id. at ¶59. Finding no basis to conclude that it would be unfair, unjust, or unreasonable to hold the defendant to its bargain, the Court affirmed that Cook County was a proper place to adjudicate the dispute. Id.

Saba Software serves as a reminder that venue provisions are important, and as such should be a critical part of contract negotiations. Careful attention to venue provisions at the start of a business relationship may mean the difference between litigating in a nearby, well-known jurisdiction or litigating in one that is unfamiliar and far away.

Alex Campos

Alex Campos

Alex Campos is an associate attorney at Cassiday Schade LLP in the firm’s Chicago office. He concentrates his practice in civil litigation, with an emphasis on medical malpractice defense.