Substance-Targeted Choice-of-Law Clauses

Article — Volume 106, Issue 5

106 Va. L. Rev. 1107
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*Martin Luther King, Jr. Professor of Law, University of California, Davis, School of Law; visiting scholar, Freie Universität, Berlin, Germany, 2018–19. I wish to thank Afra Afsharipour and Kevin Johnson for financial support; John Coyle, David Horton, John Patrick Hunt, Lisa Ikemoto, and Courtney Joslin for insightful comments; and Niharika Sachdeva for helpful research assistance. I also thank my hosts at the Freie Universität: Dr. Andreas Fijal, Dr. Felix Hartmann, and Ms. Grit Rother.Show More

Recent cases highlight two persistent problems in United States litigation: the frequency with which parties seek to validate an otherwise unenforceable provision through a choice-of-law clause, and the disparate results courts have reached in such cases. These problems, while not wholly new, have recently become more troublesome and widespread. Courts, however, have not grown more consistent in their approach to them. On the contrary, they increasingly reach varied results on highly similar facts, resulting in endless legal uncertainty, forum shopping, and doubts about judicial impartiality. These effects are all the more problematic because, as most conflicts scholars would agree, parties should not be allowed to choose a jurisdiction’s law solely for the purpose of validating a contested contractual provision; indeed, permitting them to do so is at odds with most purposes of contractual choice-of-law enforcement.

For this reason, this Article proposes that, rather than fall back on complicated public policy exceptions to contractual choice of law, courts should instead identify and refuse to apply choice-of-law clauses that are adopted for the purpose of making a separate contractual provision enforceable. This Article refers to such clauses as “substance-targeted.” Courts typically do not distinguish between targeted and non-targeted choice-of-law clauses. As a result, targeted clauses are often treated as if they represent an ordinary instance of allowing contracting parties the autonomy to choose the law applicable to their dispute. Yet they involve meaningfully different considerations, both because of the reasons that parties choose to include them and because of their ultimate effects. Unlike conventional choice-of-law clauses, substance-targeted clauses are neither aimed at achieving predictability nor likely to result in it. Their frequent use encourages litigation, disadvantages weaker parties, and fosters fear about results-oriented reasoning when their enforceability is tested. These pernicious effects call for a fundamentally different approach to choice-of-law analyses.

Introduction

On October 24, 2001, Christopher Ridgeway, a resident of Louisiana, accepted a job with Michigan-based Stryker Corporation selling medical supplies to Louisiana doctors and hospitals.1.See Stone Surgical, LLC v. Stryker Corp., 858 F.3d 383, 386 (6th Cir. 2017).Show More The offer was conditional on Ridgeway’s signing several documents, among them a noncompete agreement that included Michigan choice-of-law and forum selection clauses.2.Ridgeway initially disputed the authenticity of the noncompete agreement, but evidence produced in discovery suggested that Ridgeway had received a form noncompete identical to 132 others Stryker had signed with its employees over a five-year period. Id. at 387–88. A jury later found that Ridgeway had signed the noncompete.Id.at 388.Show More Ridgeway went on to become a highly successful salesman for Stryker,3.Id. at 386.Show More during which time, according to him, Stryker’s human resource director and other top management assured him on several occasions that no “[noncompete] agreement existed in his file.”4.Id. Stryker unsurprisingly disputed Ridgeway’s view of these conversations, maintaining that they related instead to whether Ridgeway had signed a second noncompete that would enable him to receive stock options. Id. at 387.Show More Based on these assurances, Ridgeway maintains, he began in 2013 to explore employment with a competitor, Biomet.5.Id. at 386.Show More Stryker learned of these discussions and immediately fired Ridgeway, who then began working for Biomet in Louisiana.6.Id. at 387.Show More A few weeks later, Stryker filed suit against Ridgeway in federal court in Michigan.7.Ridgeway was fired on September 10, 2013; Stryker filed suit on September 30, 2013. See Complaint for Injunctive and Other Relief at 4, 34, Stryker Corp. v. Ridgeway, No. 1:13-cv-01066 (W.D. Mich. Sept. 30, 2013), 2013 WL 5526657.Show More

Stryker’s claims—for breach of contract, breach of fiduciary duty, and misappropriation of trade secrets—all directly or indirectly involved the noncompete agreement Ridgeway had signed.8.See Amended Complaint at 1–2, Stryker Corp. v. Ridgeway, No. 1:13-cv-01066 (W.D. Mich. Oct. 21, 2013), 2013 WL 11276336.Show More The enforceability of noncompetes is a point on which state law differs substantially; in this case, the court noted, “Michigan law favors non-competes and Louisiana law severely restricts them.”9.See Stone Surgical, 858 F.3d at 391.Show More There is more consensus on contractual choice-of-law provisions, such as the one in Ridgeway’s contract. Choice-of-law provisions are generally enforced in the United States, with most states recognizing an exception when the chosen law would violate a “fundamental policy” of the state with both the “most significant relationship” to the dispute and a “materially greater interest” in the issue.10 10.See Restatement (Second) of Conflict of Laws §§ 187(2), 188(1) (Am. Law Inst. 1971) [hereinafter Second Restatement].Show More Ridgeway argued that the exception should be applied, but both the district court and the Sixth Circuit disagreed. The Sixth Circuit, while finding both that Louisiana indeed had the most significant relationship to the dispute and that its anti-noncompete policy was “fundamental,” nonetheless concluded that Louisiana’s interest was not “materially greater” than Michigan’s.11 11.Stone Surgical, 858 F.3d at 391.Show More Therefore, Michigan law applied and the noncompete was valid.12 12.Id.Show More

The lawsuit ended badly for Ridgeway. The jury entered a verdict of $745,195 for Stryker.13 13.Id. at 388. The jury also denied relief to Ridgeway in his counterclaims against Stryker, which he originally filed in a separate proceeding but were ultimately consolidated with Stryker’s action. Id.Show More Biomet, fearful of being drawn into the litigation, had terminated Ridgeway’s employment shortly after Stryker’s lawsuit was filed.14 14.Id. at 387.Show More In March 2016, Ridgeway filed for bankruptcy.15 15.See Voluntary Petition for Individuals Filing for Bankruptcy, In re Christopher Martin Ridgeway, No. 16-10643 (Bankr. E.D. La. Mar. 23, 2016).Show More

As Ridgeway was fighting his lengthy and ultimately unsuccessful legal battles, another employee in a dispute over noncompete enforceability was met with a very different result. In 2013, Nevada resident Landon Shores was hired as a sales trainee by Global Experience Specialists (GES), a Nevada company specializing in event marketing.16 16.Freeman Expositions, Inc. v. Glob. Experience Specialists, Inc., No. SACV 17-00364, 2017 WL 1488269, at *1 (C.D. Cal. Apr. 24, 2017).Show More The large majority of Shores’s sales for GES related to events in Las Vegas.17 17.See id. (“During Mr. Shores’ work at GES, eighty to ninety percent of his sales were for events in Las Vegas, Nevada, and the vast majority of his clients were primarily engaged in Las Vegas.” (internal quotation marks omitted)).Show More Three years later, Shores was promoted to sales manager, a position that required him to sign a noncompete agreement that included a Nevada choice-of-law clause.18 18.Id.Show More

In 2017, Shores gave notice at GES and made plans to move to California to accept a job with one of the California offices of Freeman Expositions, a Texas corporation.19 19.Id.Show More GES did not take the news well, and two GES employees made threatening calls to Shores.20 20.See id. at *2. One asked him “Do you really want to go down this road?” and explained that “[o]ne path is to remain with GES and the other path is to go with Freeman and get sued and go broke. It is a lot easier to get out of an offer letter than a non-compete agreement.” Id.Show More Undeterred, Shores began his job at Freeman, which shortly thereafter filed suit in federal court in California seeking a declaration that Shores’s noncompete clause was invalid.21 21.See id.Show More

In contrast to Ridgeway’s experiences in court, Shores and Freeman encountered a friendly reception. Nominally applying precisely the same doctrinal framework the Sixth Circuit had in Ridgeway’s case, the California district court nonetheless concluded that the Nevada choice-of-law clause was invalid22 22.See id. at *5.Show More—reaching this result despite connections between Shores’s employment and Nevada that were, one might conclude, objectively much stronger than Ridgeway’s with Michigan.23 23.Ridgeway, after all, had left a Louisiana-based sales job for another employer in Louisiana; his only contact with Michigan was that his former employer was headquartered there. See Stone Surgical, LLC v. Stryker Corp., 858 F.3d 383, 386–87, 390 (6th Cir. 2017). By contrast, Shores had lived and worked in Nevada prior to beginning employment with Freeman. See Freeman Expositions, 2017 WL 1488269, at *1.Show More In Shores’s case, the court had little difficulty making the determination that California had a materially greater interest in having its well-established anti-noncompete policy applied.24 24.See Freeman Expositions, 2017 WL 1488269, at *5.Show More California had a stake, the court reasoned, in allowing an employer “to hire a California resident to work in California organizing and facilitating exhibitions to showcase California goods and services.”25 25.Id. at *5.Show More While Nevada, too, had a significant interest in protecting its employer, GES, “its interest pale[d] in comparison to California’s.”26 26.Id.Show More The court declined to stay proceedings in light of an ongoing Nevada court action and instead granted Freeman summary judgment on the noncompete issue.27 27.See id. at *1, *3. The court also declined to dismiss a claim by Freeman for interference with its contractual relationship with Shores. See id. at *8.Show More

These two recent cases highlight two persistent problems in United States litigation: the frequency with which parties attempt to use a choice-of-law clause to validate an otherwise unenforceable provision, and the disparate results courts have reached in such cases. These issues are not wholly new.28 28.As early as 1993, one commentator observed that the issue of choice-of-law enforcement in difficult cases “has generated a raft of judicial decisions marked by confusion, temerity, and vacillation.” Kirt O’Neill, Note, Contractual Choice of Law: The Case for a New Determination of Full Faith and Credit Limitations, 71 Tex. L. Rev. 1019, 1020 (1993).Show More In the realm of noncompetes in particular, employers have attached choice-of-law provisions for decades, despite the fact that the enforceability of such clauses (and thus the noncompete as a whole) is often in doubt.29 29.See Catherine L. Fisk, Reflections on The New Psychological Contract and the Ownership of Human Capital, 34 Conn. L. Rev. 765, 782–83 (2002).Show More Nonetheless, both these problems have recently become more persistent and widespread.30 30.See Larry E. Ribstein, From Efficiency to Politics in Contractual Choice of Law, 37 Ga. L. Rev. 363, 367 (2003) [hereinafter Ribstein, Efficiency] (noting that “the number of cases involving contractual choice is increasing significantly over time”).Show More This is true in part because, with the growing popularity of telecommuting and other sorts of long-distance employment, many disputes over noncompetes affect multiple jurisdictions and thus are likely to require a more extended and complex choice-of-law analysis.31 31.See Norman D. Bishara & David Orozco, Using the Resource-Based Theory To Determine Covenant Not To Compete Legitimacy, 87 Ind. L.J. 979, 980, 984–85 (2012) (discussing the need to adapt the law governing noncompetes in a world where a “trend toward the greater use of noncompetes is occurring when . . . geographic boundaries are becoming less important to economic activity”); Gillian Lester & Elizabeth Ryan, Choice of Law and Employee Restrictive Covenants: An American Perspective, 31 Comp. Lab. L. & Pol’y J. 389, 389 (2010) (noting that more mobile employees and more geographically dispersed employers have contributed to a rise in noncompete litigation).Show More Further, noncompetes are spreading to industries that have not historically relied on them, with hair stylists,32 32.See Steven Greenhouse, Noncompete Clauses Increasingly Pop Up in Array of Jobs, N.Y. Times (June 8, 2014), https://www.nytimes.com/2014/06/09/­business/­noncompete-clauses-increasingly-pop-up-in-array-of-jobs.html?r=0 [https://perma.cc/4KQY-H9PV].Show More camp counselors,33 33.See id.Show More dog walkers,34 34.See Matt O’Brien, Even Janitors Have Noncompetes Now. Nobody Is Safe., Wash. Post. (Oct. 18, 2018), https://www.washingtonpost.com/business/2018/10/­18/even-janitors-have-noncompetes-now-nobody-is-safe/?utm_term=.c316c5c­61­487 [https://perma.cc/W7FU-S6M6].Show More and janitors35 35.See id.Show More sometimes being required to sign them—and facing suit by their employer if they violate them.36 36.See id. (describing suit by employer against janitor that was dropped following media coverage).Show More Moreover, employers are increasingly relying on alternatives to noncompetes, such as clauses requiring employees to pay back a portion of their salary or other financial benefits upon quitting or being fired for cause.37 37.See Stuart Lichten & Eric M. Fink, “Just When I Thought I Was Out . . . .”: Post-Employment Repayment Obligations, 25 Wash. & Lee J. Civ. Rts. & Soc. Just. 51, 54 (2018) (describing growth of such provisions’ popularity). These arrangements have recently attracted national publicity for, among other things, the threat they may pose to journalistic independence. See id. at 54–55. Many Sinclair Broadcasting employees, for example, chose to read “politically charged” statements on air, despite their personal reservations, because of worries about triggering repayment clauses in their contracts. Id. The statements were described as “prepackaged reports reflecting conservative views.” Id. at 54 n.15 (internal quotation marks and citation omitted).Show More As one might expect, state law varies significantly on the enforceability of these provisions as well,38 38.See id. at 68–69, 77–78 (noting differences in particular between the law of California and of other states on the enforceability of post-employment repayment obligations).Show More and employers thus have incentives to couple them with choice-of-law clauses.39 39.It is difficult to assess exactly how common choice-of-law clauses are in such agreements because employment contracts are often between private parties. See Norman D. Bishara, Kenneth J. Martin & Randall S. Thomas, An Empirical Analysis of Noncompetition Clauses and Other Restrictive Postemployment Covenants, 68 Vand. L. Rev. 1, 7 (2015). However, it is reasonable to speculate that employers frequently include such provisions, given their popularity in the noncompete context and the uncertainty of the law in this area. For an example of one such case, see Willis Re Inc. v. Hearn, 200 F. Supp. 3d 540, 545–47 (E.D. Pa. 2016) (discussing contractual choice-of-law clause in dispute involving repayment of a retention bonus following employee’s departure for a competitor).Show More

Employment contracts, however, are just the start. Contracting parties in many other areas have similarly attempted to rely on choice-of-law clauses to secure a validating law, and courts have also met those efforts with varying responses. For example, while the use of choice-of-law clauses to sidestep usury laws initially met with increasingly widespread judicial acceptance in most jurisdictions,40 40.See Erin Ann O’Hara, Opting Out of Regulation: A Public Choice Analysis of Contractual Choice of Law, 53 Vand. L. Rev. 1551, 1563–64 (2000) [hereinafter O’Hara, Opting] (noting that, in contrast to the approach of the First Restatement, courts have transitioned to “almost uniformly enforc[ing] choice-of-law provisions that enable the parties to evade state usury laws”). The Second Restatement likely played a role in this acceptance by including a fairly liberal usury provision that operates even in the absence of a choice-of-law clause, providing that a given interest rate will not be invalidated on usury grounds if it is “permissible in a state to which the contract has a substantial relationship” and “not greatly in excess of the rate permitted by the general usury law of the state of the otherwise applicable law.” Second Restatement § 203. The “substantial relationship” requirement is fairly easily satisfied—if, for example, the applicable rate is that of the lender’s place of business or the place where the loan is to be repaid. See Robert Allen Sedler, The Contracts Provisions of the Restatement (Second): An Analysis and a Critique, 72 Colum. L. Rev. 279, 315–18 (1972).Show More courts in some recent cases have declined to enforce such provisions in usury cases where the state of the chosen law lacks the most significant relationship to the dispute.41 41.See Fleetwood Servs., LLC v. Complete Bus. Sols. Grp., 374 F. Supp. 3d 361, 372 (E.D. Pa. 2019) (finding that, despite parties’ choice of Pennsylvania law, Texas law applied because Texas had the most significant relationship to the dispute and “applying Pennsylvania law would violate a fundamental public policy of Texas, namely its antipathy to high interest rates” (internal quotation marks omitted)); Am. Equities Grp. v. Ahava Dairy Prods. Corp., No. 01 Civ.5207, 2004 WL 870260, at *7–9 (S.D.N.Y. Apr. 23, 2004) (declining to enforce a choice of New Jersey law in a case involving a usury defense on the same grounds); Am. Express Travel Related Servs. Co. v. Assih, 893 N.Y.S.2d 438, 445–46 (N.Y. Civ. Ct. 2009) (declining to enforce a choice of Utah law in action to collect credit card payments based on New York’s materially greater interest and “strong public policy against interest rates which are excessive”); see also TriBar Op. Comm., Supp. Report: Opinions on Chosen-Law Provisions Under the Restatement of Conflict of Laws, 68 Bus. Law. 1161, 1161–62, 1162 n.2 (2013) (discussing analysis of this issue in New York courts and noting that it deviates somewhat from the orthodox Second Restatement approach).Show More Courts have frequently refused to enforce choice-of-law provisions in various contexts involving consumer contracts42 42.See William J. Moon, Contracting Out of Public Law, 55 Harv. J. on Legis. 323, 347 (2018) (“[C]ourts have consistently refused to enforce choice-of-law clauses in the context of . . . consumer contracts.”). In some cases, this refusal has been based on concerns about the substantive content of the chosen law. See, e.g., Masters v. DirecTV, Inc., Nos. 08-55825 & 08–55830, 2009 WL 4885132, at *1 (9th Cir. Nov. 19, 2009) (holding that California law, rather than the parties’ chosen law, applied to consumer class action waivers because such waivers were contrary to a fundamental policy in California); see also William J. Woodward Jr., Legal Uncertainty and Aberrant Contracts: The Choice of Law Clause, 89 Chi.-Kent L. Rev. 197, 207–09 (2014) [hereinafter Woodward, Aberrant] (discussing case law on enforcement of choice-of-law clauses in questions regarding the applicability of state statutes that convert one-way attorney’s-fee-shifting provisions into two-way provisions). Procedural concerns about information asymmetry and bargaining power disparities in form consumer contracts may also weigh in favor of non-enforcement. See generally Giesela Rühl, Consumer Protection in Choice of Law, 44 Cornell Int’l L.J. 569 (2011) (considering these issues and advocating for European-style limits on choice of law in consumer contracts).Show More and have also often opted for non-enforcement of provisions intended to evade state franchise law protections, such as laws prohibiting waiver of a franchisee’s right to sue under certain circumstances.43 43.See Andrew Elmore, Franchise Regulation for the Fissured Economy, 86 Geo. Wash. L. Rev. 907, 954 n.229 (2018) (“States prohibit choice of law provisions and waivers in franchise agreements to contract around state franchise law obligations, which will foreclose evasions of a liability through waiver.”). For example, in Wright-Moore Corp. v. Ricoh Corp., the court found that Indiana law applied, rather than the parties’ chosen law of New York, because Indiana had a materially greater interest in the dispute and waiver of a franchisee’s rights was against Indiana’s fundamental policy. 908 F.2d 128, 132–33 (7th Cir. 1990).Show More Recently, emerging issues such as the protection of privacy rights in biometric data44 44.See, e.g., In re Facebook Biometric Info. Privacy Litig., 185 F. Supp. 3d 1155, 1169–70 (N.D. Cal. 2016) (concluding that a California choice-of-law provision could not be enforced where “California has not legislatively recognized a right to privacy in personal biometric data and has not implemented any specific protections for that right” and biometric data protection was a fundamental policy in Illinois, the state of the most significant relationship).Show More and the practice of telemedicine45 45.See J. Kelly Barnes, Telemedicine: A Conflict of Laws Problem Waiting To Happen—How Will Interstate and International Claims Be Decided?, 28 Hous. J. Int’l L. 491, 526–28 (2006) (discussing potential enforceability of choice-of-law clauses in the context of telemedicine).Show More have also raised issues about choice-of-law clause enforceability.

The issue has arisen, too, in the area of marriage and family law. Many courts, for example, allow choice-of-law provisions to validate antenuptial agreements.46 46.See O’Hara, Opting, supra note 40, at 1564–65 (“Antenuptial agreements are also incorporating choice-of-law provisions with mounting, albeit tentative, judicial support.”); see also John F. Coyle, A Short History of the Choice-of-Law Clause, 91 Colo. L. Rev. 1147, 1162–63, 1162 n.42 (2020) (noting that an example of such a clause exists as far back as 1874).Show More But according to one commentator, “[t]he paucity of court decisions” in areas where potentially applicable law differs significantly continues to “create[] uncertainty for all migratory couples who sign such an agreement.”47 47.See Linda J. Ravdin, Premarital Agreements and the Migratory Same-Sex Couple, 48 Fam. L.Q. 397, 406 (2014).Show More Choice-of-law clauses present distinct but related issues in other areas where states are sharply divided, such as the circumstances (if any) under which gestational surrogacy contracts are enforceable.48 48.See, e.g., Hodas v. Morin, 814 N.E.2d 320, 325–26 (Mass. 2004) (applying Section 187 of the Second Restatement to determine that a surrogacy agreement was valid and finding that no state other than the state of the chosen law, Massachusetts, clearly had the “materially greater” relationship to the dispute). Martha A. Field summarizes the manifold approaches states take toward surrogacy contracts, including fairly broad enforcement, enforcement provided certain requirements are met, toleration without explicitly regulating the subject, and criminalizing paid surrogacy. See Martha A. Field, Compensated Surrogacy, 89 Wash. L. Rev. 1155, 1161–65 (2014). Parties to such contracts have sometimes selected the law of a state hospitable to surrogacy, clauses that courts have enforced in some cases “notwithstanding manipulated contacts with the selected state and strong anti-surrogacy policies in the gestational carrier’s domicile.” Susan Frelich Appleton, Leaving Home? Domicile, Family, and Gender, 47 U.C. Davis L. Rev. 1453, 1512 (2014). Parties, however, cannot count on such a result, meaning that “the safest approach [for parties to a surrogacy contract] is to do something substantial in connection with the surrogacy arrangement in that state beyond just choosing its law.” See Joseph F. Morrissey, Surrogacy: The Process, the Law, and the Contracts, 51 Willamette L. Rev. 459, 509 (2015) (also noting that “courts may not honor the choice-of-law provision” in the absence of a substantial contact such as “using a clinic in [the] state [of the chosen law], or using an agency, surrogate or egg donor from that state”).Show More

Yet despite the proliferation of situations in which the validity of choice-of-law clauses is sharply contested, courts have not grown more consistent in their approach to them. In fact, the opposite is true; as the opening examples suggest,49 49.See supra note 23 and accompanying text.Show More courts increasingly reach disparate results on highly similar facts.50 50.See Woodward, Aberrant, supra note 42, at 208–09 (discussing the uncertainty created by the “fact-based and hopelessly uncertain” analysis under Section 187).Show More In one sense, this is surprising, given that jurisdictions in the United States have widely embraced the same authority—Section 187(2) of the Second Restatement of Conflict of Laws—to guide their approach to contractual choice of law.51 51.See infra notes 89–94 and accompanying text.Show More Notwithstanding this rare consensus on choice-of-law methodology, however, courts interpret Section 187(2) in ever-diverging, often wholly contradictory ways.52 52.See infraSubsection II.B.3.Show More This means that the enforceability of choice-of-law clauses involving controversial issues is driven by judicial reasoning that takes highly variegated approaches to seemingly similar facts and is, as a result, often impossible to predict at the time of contracting.

Courts’ inconsistent resolutions of this category of cases have created several problems. To begin with, the disparate results courts have reached on similar facts have undermined faith in the judiciary’s ability to deal with many contested areas of law in a reasoned, unbiased manner.53 53.See David A. Linehan, Due Process Denied: The Forgotten Constitutional Limits on Choice of Law in the Enforcement of Employee Covenants Not To Compete, 2012 Utah L. Rev. 209, 213 (positing that courts, rather than respecting relevant constitutional constraints, “expansively apply their own restrictive rules against noncompetes to virtually any dispute tried within their borders”).Show More Different commentators have argued in parallel, for example, that decisions refusing to honor contractual choice-of-law provisions in noncompete agreements54 54.See Timothy P. Glynn, Interjurisdictional Competition in Enforcing Non-competition Agreements: Regulatory Risk Management and the Race to the Bottom, 65 Wash. & Lee L. Rev. 1381, 1386–87 (2008) (describing and positing the likely future growth of a phenomenon whereby states seek to export their employer-friendly policies extraterritorially by broadly enforcing both noncompetes and choice-of-law clauses).Show More and those insisting on enforcement55 55.See Linehan, supra note 53, at 212 (arguing that courts have applied their choice-of-law principles in noncompete cases in a way that “fail[s] to respect due process constraints on their power to prefer their own laws to those of sister states”).Show More are driven by forum-law preference or other forms of state favoritism.

Moreover, even assuming that judges are applying Section 187 scrupulously and in good faith, the sheer unpredictability of results creates a host of issues in itself.56 56.See id. at 211.Show More Contracting parties are less able to negotiate effectively if the validity of a choice-of-law provision is in doubt,57 57.See, e.g., Lawrence J. La Sala, Note, Partner Bankruptcy and Partnership Dissolution: Protecting the Terms of the Contract and Ensuring Predictability, 59 Fordham L. Rev. 619, 643 n.135 (1991) (“Because parties normally will not enter into a contract if they are unable to foresee accurately their rights and liabilities under the contract, predictability is a prime objective of contract law.”).Show More and disputes are more likely to end in litigation.58 58.See Glynn, supra note 54, at 1385 (calling attention to “the rise of interjurisdictional disputes involving [noncompete] enforcement”).Show More Further, where parties have unequal bargaining power, legal uncertainty about choice-of-law provisions often unfairly disadvantages the weaker party, who might be able to successfully challenge the clause in court but may lack the resources to try.59 59.See, e.g., Woodward, Aberrant, supra note 42, at 212 (noting that “many rational clients will forego using a lawyer in a small claim or defense if they risk paying their lawyer more (probably far more) than the claim or defense is worth”).Show More Finally, the potential to achieve different results in different courts creates an incentive not merely for forum shopping but also for a race to judgment in which parties pursue parallel litigation in hand-picked forums that each hopes will be the first to deliver a final result.60 60.See O’Hara, Opting, supra note 40, at 1566 (“Unfortunately, however, enforcement of these clauses often turns on an ex post race to judgment.”); see also Viva R. Moffat, Making Non-Competes Unenforceable, 54 Ariz. L. Rev. 939, 959 (2012) (noting that disparities in enforcement of both choice-of-law clauses and noncompetes lead to a situation in which both parties “race to the courthouse in an effort to have the jurisdiction with the more favorable law hear the case”). A widely invoked example of this situation is the litigation underlying Advanced Bionics Corp. v. Medtronic, Inc., in which parallel proceedings in Minnesota and California considered the same noncompete but arrived at different outcomes. 59 P.3d 231 (Cal. 2002) (analyzing both Minnesota and California court proceedings). The two courts each ultimately issued contradictory injunctions forbidding the parties from proceeding in the other court, a standoff only resolved when the California Supreme Court ultimately gave way and dissolved the Californian lower court’s injunction. See id. at 237–38; see also Moffat, supranote 60, at 960–63 (describing the case’s procedural history in detail).Show More

A more fundamental objection, however, is that the practice of using a choice-of-law clause to validate a specific provision not only tends to foster judicial confusion, but is out of keeping with the fundamental goals of contractual choice-of-law enforcement. At first glance, this second point might seem counterintuitive: isn’t the whole point of contractual choice-of-law provisions to allow parties to specify the law that will govern their contract? Yet, as this Article will discuss in detail, most advocates of choice-of-law enforcement have assumed that parties will generally choose a particular jurisdiction’s law for reasons other than the content of specific substantive rules—reasons such as, for example, a jurisdiction’s general expertise in a particular area, the desire to choose a law with which both parties are familiar, or the wish to avoid uncertainty.61 61.See infra notes 130–34 and accompanying text.Show More Indeed, conflicts scholars have fairly consistently agreed that contractual choice-of-law clauses should not be used to evade a jurisdiction’s public policy, particularly when it is a strongly defined one.62 62.See infra notes 155–58 and accompanying text.Show More The current approach, however, allows parties to do so in many circumstances, limiting them only through a narrow, difficult-to-apply exception to the general policy of enforcement.63 63.SeeSecond Restatement § 187(2) (delineating a three-pronged exception to the general policy of enforcement).Show More

In response to this situation, this Article argues for a new way of conceptualizing the issue. Rather than fall back on complicated public policy exceptions to contractual choice of law, courts should instead recognize, and generally refuse to enforce, a particularly problematic category of choice-of-law clauses—those that are adopted specifically in the hope of validating a separate contractual provision. This Article refers to such clauses as “substance-targeted.” A provision is substance-targeted, for example, when it reflects an employer’s wish to substitute more favorable Michigan law for the less noncompete-friendly law that would otherwise apply to its Louisiana employee.

Courts typically do not distinguish between targeted and non-targeted choice-of-law clauses. As a result, targeted clauses are often treated as if they represent an ordinary instance of allowing contracting parties to have autonomy to choose the law applicable to their dispute.64 64.See, e.g., Stone Surgical, LLC v. Stryker Corp., 858 F.3d 383, 391 (6th Cir. 2017) (finding “no reason to disturb the parties’ choice of Michigan law” with respect to a noncompete where no state had a materially greater interest than Michigan).Show More Yet they involve meaningfully different considerations, both because of the reasons that parties choose to include them and because of their ultimate effects. Unlike conventional choice-of-law clauses, substance-targeted clauses are neither aimed at achieving predictability nor likely to result in it. Their frequent use encourages litigation, disadvantages weaker parties, and fosters fears about results-oriented reasoning when their enforceability is tested.65 65.See infra Subsection II.B.3.Show More More broadly, scholars have raised concerns about the possibility that choice-of-law clauses adopted to gain the benefit of substantive rules will “undermine the enforcement of public regulatory statutes designed to safeguard a particular vision of the market.”66 66.See Moon, supra note 42, at 325.Show More These pernicious effects—unlike the normally positive consequences of enforcing non-targeted clauses—call for a fundamentally different approach to choice-of-law analyses.

While other authors have advocated reforms in the courts’ approach to choice-of-law clauses,67 67.Notably, Larry Ribstein has argued that courts should “enforce express written choice-of-law clauses notwithstanding common law or statutory restrictions on enforcement, except when the clause is explicitly prohibited by a state where a contracting party resides and no party resides in the designated state.” Ribstein, Efficiency, supra note 30, at 368. Elsewhere, Erin A. O’Hara and Ribstein advocate for a somewhat similar approach under which “choice-maximizing rules proposed in this Article operate as default rules that legislatures can overrule by explicit statutes where necessary to preserve their power to legislate effectively.” Erin A. O’Hara & Larry E. Ribstein, From Politics to Efficiency in Choice of Law, 67 U. Chi. L. Rev.1151, 1153 (2000). In contrast to O’Hara and Ribstein, this Article’s central focus in reforming contractual choice of law is not on legislative involvement, although it does argue that a legislative role in defining areas of significant policy is desirable. See infra notes 269–70 and accompanying text. Rather, this Article argues that targeted and non-targeted choice-of-law clauses are fundamentally different and require distinct treatment.Show More this Article is the first to identify and propose a solution to the problem of substance targeting. The Article argues that it is feasible for courts to identify substance-targeted clauses68 68.See infra Section III.A.Show More and that, once so categorized, such provisions—because they fail to serve the goals of contractual choice of law more generally—should typically not be enforced.69 69.See infra Section III.B.Show More

This Article proceeds in three Parts. The first Part describes the typical framework applied to the enforceability of choice-of-law clauses in the United States. The second argues that substance-targeted choice-of-law clauses should represent a distinct category of conflicts analysis and discusses the reasons why current doctrine fails to adequately address the issues such conflicts present. Finally, the Article sets forth a proposal for reform, arguing that targeted choice-of-law clauses implicating questions of policy should be unenforceable in most cases.

  1. * Martin Luther King, Jr. Professor of Law, University of California, Davis, School of Law; visiting scholar, Freie Universität, Berlin, Germany, 2018–19. I wish to thank Afra Afsharipour and Kevin Johnson for financial support; John Coyle, David Horton, John Patrick Hunt, Lisa Ikemoto, and Courtney Joslin for insightful comments; and Niharika Sachdeva for helpful research assistance. I also thank my hosts at the Freie Universität: Dr. Andreas Fijal, Dr. Felix Hartmann, and Ms. Grit Rother.

  2. See Stone Surgical, LLC v. Stryker Corp., 858 F.3d 383, 386 (6th Cir. 2017).

  3. Ridgeway initially disputed the authenticity of the noncompete agreement, but evidence produced in discovery suggested that Ridgeway had received a form noncompete identical to 132 others Stryker had signed with its employees over a five-year period. Id. at 387–88. A jury later found that Ridgeway had signed the noncompete. Id. at 388.

  4. Id. at 386.

  5. Id. Stryker unsurprisingly disputed Ridgeway’s view of these conversations, maintaining that they related instead to whether Ridgeway had signed a second noncompete that would enable him to receive stock options. Id. at 387.

  6. Id. at 386.

  7. Id. at 387.

  8. Ridgeway was fired on September 10, 2013; Stryker filed suit on September 30, 2013. See Complaint for Injunctive and Other Relief at 4, 34, Stryker Corp. v. Ridgeway, No. 1:13-cv-01066 (W.D. Mich. Sept. 30, 2013), 2013 WL 5526657.

  9. See Amended Complaint at 1–2, Stryker Corp. v. Ridgeway, No. 1:13-cv-01066 (W.D. Mich. Oct. 21, 2013), 2013 WL 11276336.

  10. See Stone Surgical, 858 F.3d at 391.

  11. See Restatement (Second) of Conflict of Laws §§ 187(2), 188(1) (Am. Law Inst. 1971) [hereinafter Second Restatement].

  12. Stone Surgical, 858 F.3d at 391.

  13. Id.

  14. Id. at 388. The jury also denied relief to Ridgeway in his counterclaims against Stryker, which he originally filed in a separate proceeding but were ultimately consolidated with Stryker’s action. Id.

  15. Id. at 387.

  16. See Voluntary Petition for Individuals Filing for Bankruptcy, In re Christopher Martin Ridgeway, No. 16-10643 (Bankr. E.D. La. Mar. 23, 2016).

  17. Freeman Expositions, Inc. v. Glob. Experience Specialists, Inc., No. SACV 17-00364, 2017 WL 1488269, at *1 (C.D. Cal. Apr. 24, 2017).

  18. See id. (“During Mr. Shores’ work at GES, eighty to ninety percent of his sales were for events in Las Vegas, Nevada, and the vast majority of his clients were primarily engaged in Las Vegas.” (internal quotation marks omitted)).

  19. Id.

  20. Id.

  21. See id. at *2. One asked him “Do you really want to go down this road?” and explained that “[o]ne path is to remain with GES and the other path is to go with Freeman and get sued and go broke. It is a lot easier to get out of an offer letter than a non-compete agreement.” Id.

  22. See id.

  23. See id. at *5.

  24. Ridgeway, after all, had left a Louisiana-based sales job for another employer in Louisiana; his only contact with Michigan was that his former employer was headquartered there. See Stone Surgical, LLC v. Stryker Corp., 858 F.3d 383, 386–87, 390 (6th Cir. 2017). By contrast, Shores had lived and worked in Nevada prior to beginning employment with Freeman. See Freeman Expositions, 2017 WL 1488269, at *1.

  25. See Freeman Expositions, 2017 WL 1488269, at *5.

  26. Id. at *5.

  27. Id.

  28. See id. at *1, *3. The court also declined to dismiss a claim by Freeman for interference with its contractual relationship with Shores. See id. at *8.

  29. As early as 1993, one commentator observed that the issue of choice-of-law enforcement in difficult cases “has generated a raft of judicial decisions marked by confusion, temerity, and vacillation.” Kirt O’Neill, Note, Contractual Choice of Law: The Case for a New Determination of Full Faith and Credit Limitations, 71 Tex. L. Rev. 1019, 1020 (1993).

  30. See Catherine L. Fisk, Reflections on The New Psychological Contract and the Ownership of Human Capital, 34 Conn. L. Rev

    .

    765, 782–83 (2002).

  31. See Larry E. Ribstein, From Efficiency to Politics in Contractual Choice of Law, 37 Ga. L. Rev. 363, 367 (2003) [hereinafter Ribstein, Efficiency] (noting that “the number of cases involving contractual choice is increasing significantly over time”).

  32. See Norman D. Bishara & David Orozco, Using the Resource-Based Theory To Determine Covenant Not To Compete Legitimacy, 87 Ind. L.J. 979, 980, 984–85 (2012) (discussing the need to adapt the law governing noncompetes in a world where a “trend toward the greater use of noncompetes is occurring when . . . geographic boundaries are becoming less important to economic activity”); Gillian Lester & Elizabeth Ryan, Choice of Law and Employee Restrictive Covenants: An American Perspective, 31 Comp. Lab. L. & Pol’y J. 389, 389 (2010) (noting that more mobile employees and more geographically dispersed employers have contributed to a rise in noncompete litigation).

  33.  See Steven Greenhouse, Noncompete Clauses Increasingly Pop Up in
    Array of Jobs, N.Y. Times (June 8, 2014), https://www.nytimes.com/2014/06/09/­business/­noncompete-clauses-increasingly-pop-up-in-array-of-jobs.html?r=0 [https://perma.cc/4KQY-H9PV].

  34. See id.

  35. See Matt O’Brien, Even Janitors Have Noncompetes Now. Nobody Is Safe., Wash. Post. (Oct. 18, 2018), https://www.washingtonpost.com/business/2018/10/­18/even-janitors-have-noncompetes-now-nobody-is-safe/?utm_term=.c316c5c­61­487 [https://perma.cc/W7FU-S6M6].

  36. See id.

  37. See id. (describing suit by employer against janitor that was dropped following media coverage).

  38. See Stuart Lichten & Eric M. Fink, “Just When I Thought I Was Out . . . .”: Post-Employment Repayment Obligations, 25 Wash. & Lee J. Civ. Rts. & Soc.
    Just. 51, 54 (2018) (describing growth of such provisions’ popularity). These arrangements have recently attracted national publicity for, among other things, the threat they may pose to journalistic independence. See id. at 54–55. Many Sinclair Broadcasting employees, for example, chose to read “politically charged” statements on air, despite their personal reservations, because of worries about triggering repayment clauses in their contracts. Id. The statements were described as “prepackaged reports reflecting conservative views.” Id. at 54 n.15 (internal quotation marks and citation omitted).

  39. See id. at 68–69, 77–78 (noting differences in particular between the law of California and of other states on the enforceability of post-employment repayment obligations).

  40. It is difficult to assess exactly how common choice-of-law clauses are in such agreements because employment contracts are often between private parties. See Norman D. Bishara, Kenneth J. Martin & Randall S. Thomas, An Empirical Analysis of Noncompetition Clauses and Other Restrictive Postemployment Covenants, 68 Vand. L. Rev. 1, 7 (2015). However, it is reasonable to speculate that employers frequently include such provisions, given their popularity in the noncompete context and the uncertainty of the law in this area. For an example of one such case, see Willis Re Inc. v. Hearn, 200 F. Supp. 3d 540, 545–47 (E.D. Pa. 2016) (discussing contractual choice-of-law clause in dispute involving repayment of a retention bonus following employee’s departure for a competitor).

  41. See Erin Ann O’Hara, Opting Out of Regulation: A Public Choice Analysis of Contractual Choice of Law, 53 Vand. L. Rev. 1551, 1563–64 (2000) [hereinafter O’Hara, Opting] (noting that, in contrast to the approach of the First Restatement, courts have transitioned to “almost uniformly enforc[ing] choice-of-law provisions that enable the parties to evade state usury laws”). The Second Restatement likely played a role in this acceptance by including a fairly liberal usury provision that operates even in the absence of a choice-of-law clause, providing that a given interest rate will not be invalidated on usury grounds if it is “permissible in a state to which the contract has a substantial relationship” and “not greatly in excess of the rate permitted by the general usury law of the state of the otherwise applicable law.” Second Restatement § 203. The “substantial relationship” requirement is fairly easily satisfied—if, for example, the applicable rate is that of the lender’s place of business or the place where the loan is to be repaid. See Robert Allen Sedler, The Contracts Provisions of the Restatement (Second): An Analysis and a Critique, 72 Colum. L. Rev. 279, 315–18 (1972).

  42. See Fleetwood Servs., LLC v. Complete Bus. Sols. Grp., 374 F. Supp. 3d 361, 372 (E.D. Pa. 2019) (finding that, despite parties’ choice of Pennsylvania law, Texas law applied because Texas had the most significant relationship to the dispute and “applying Pennsylvania law would violate a fundamental public policy of Texas, namely its antipathy to high interest rates” (internal quotation marks omitted)); Am. Equities Grp. v. Ahava Dairy Prods. Corp., No. 01 Civ.5207, 2004 WL 870260, at *7–9 (S.D.N.Y. Apr. 23, 2004) (declining to enforce a choice of New Jersey law in a case involving a usury defense on the same grounds); Am. Express Travel Related Servs. Co. v. Assih, 893 N.Y.S.2d 438, 445–46 (N.Y. Civ. Ct. 2009) (declining to enforce a choice of Utah law in action to collect credit card payments based on New York’s materially greater interest and “strong public policy against interest rates which are excessive”); see also TriBar Op. Comm., Supp. Report: Opinions on Chosen-Law Provisions Under the Restatement of Conflict of Laws, 68 Bus. Law. 1161, 1161–62, 1162 n.2 (2013) (discussing analysis of this issue in New York courts and noting that it deviates somewhat from the orthodox Second Restatement approach).

  43. See William J. Moon, Contracting Out of Public Law, 55 Harv. J. on Legis

    .

    323, 347 (2018) (“[C]ourts have consistently refused to enforce choice-of-law clauses in the context of . . . consumer contracts.”). In some cases, this refusal has been based on concerns about the substantive content of the chosen law. See, e.g., Masters v. DirecTV, Inc., Nos. 08-55825 & 08–55830, 2009 WL 4885132, at *1 (9th Cir. Nov. 19, 2009) (holding that California law, rather than the parties’ chosen law, applied to consumer class action waivers because such waivers were contrary to a fundamental policy in California); see also William J. Woodward Jr., Legal Uncertainty and Aberrant Contracts: The Choice of Law Clause, 89 Chi.-Kent L. Rev. 197, 207–09 (2014) [hereinafter Woodward, Aberrant] (discussing case law on enforcement of choice-of-law clauses in questions regarding the applicability of state statutes that convert one-way attorney’s-fee-shifting provisions into two-way provisions). Procedural concerns about information asymmetry and bargaining power disparities in form consumer contracts may also weigh in favor of non-enforcement. See generally Giesela Rühl, Consumer Protection in Choice of Law, 44 Cornell Int’l L.J. 569 (2011) (considering these issues and advocating for European-style limits on choice of law in consumer contracts).

  44. See Andrew Elmore, Franchise Regulation for the Fissured Economy, 86 Geo. Wash. L. Rev. 907, 954 n.229 (2018) (“States prohibit choice of law provisions and waivers in franchise agreements to contract around state franchise law obligations, which will foreclose evasions of a liability through waiver.”). For example, in Wright-Moore Corp. v. Ricoh Corp., the court found that Indiana law applied, rather than the parties’ chosen law of New York, because Indiana had a materially greater interest in the dispute and waiver of a franchisee’s rights was against Indiana’s fundamental policy. 908 F.2d 128, 132–33 (7th Cir. 1990).

  45. See, e.g., In re Facebook Biometric Info. Privacy Litig., 185 F. Supp. 3d 1155, 1169–70 (N.D. Cal. 2016) (concluding that a California choice-of-law provision could not be enforced where “California has not legislatively recognized a right to privacy in personal biometric data and has not implemented any specific protections for that right” and biometric data protection was a fundamental policy in Illinois, the state of the most significant relationship).

  46. See J. Kelly Barnes, Telemedicine: A Conflict of Laws Problem Waiting To Happen—How Will Interstate and International Claims Be Decided?, 28 Hous. J. Int’l L. 491, 526–28 (2006) (discussing potential enforceability of choice-of-law clauses in the context of telemedicine).

  47. See O’Hara, Opting, supra note 40, at 1564–65 (“Antenuptial agreements are also incorporating choice-of-law provisions with mounting, albeit tentative, judicial support.”); see also John F. Coyle, A Short History of the Choice-of-Law Clause, 91 Colo. L. Rev. 1147, 1162–63, 1162 n.42 (2020) (noting that an example of such a clause exists as far back as 1874).

  48. See Linda J. Ravdin, Premarital Agreements and the Migratory Same-Sex Couple, 48 Fam. L.Q. 397, 406 (2014).

  49. See, e.g., Hodas v. Morin, 814 N.E.2d 320, 325–26 (Mass. 2004) (applying Section 187 of the Second Restatement to determine that a surrogacy agreement was valid and finding that no state other than the state of the chosen law, Massachusetts, clearly had the “materially greater” relationship to the dispute). Martha A. Field summarizes the manifold approaches states take toward surrogacy contracts, including fairly broad enforcement, enforcement provided certain requirements are met, toleration without explicitly regulating the subject, and criminalizing paid surrogacy. See Martha A. Field, Compensated Surrogacy, 89 Wash. L. Rev. 1155, 1161–65 (2014). Parties to such contracts have sometimes selected the law of a state hospitable to surrogacy, clauses that courts have enforced in some cases “notwithstanding manipulated contacts with the selected state and strong anti-surrogacy policies in the gestational carrier’s domicile.” Susan Frelich Appleton, Leaving Home? Domicile, Family, and Gender, 47 U.C. Davis L. Rev. 1453, 1512 (2014). Parties, however, cannot count on such a result, meaning that “the safest approach [for parties to a surrogacy contract] is to do something substantial in connection with the surrogacy arrangement in that state beyond just choosing its law.” See Joseph F. Morrissey, Surrogacy: The Process, the Law, and the Contracts, 51 Willamette L. Rev. 459, 509 (2015) (also noting that “courts may not honor the choice-of-law provision” in the absence of a substantial contact such as “using a clinic in [the] state [of the chosen law], or using an agency, surrogate or egg donor from that state”).

  50. See supra note 23 and accompanying text.

  51. See Woodward, Aberrant, supra note 42, at 208–09 (discussing the uncertainty created by the “fact-based and hopelessly uncertain” analysis under Section 187).

  52. See infra notes 89–94 and accompanying text.

  53. See infra Subsection II.B.3.

  54.  See David A. Linehan, Due Process Denied: The Forgotten Constitutional Limits on Choice of Law in the Enforcement of Employee Covenants Not To Compete, 2012 Utah L. Rev. 209, 213 (positing that courts, rather than respecting relevant constitutional constraints, “expansively apply their own restrictive rules against noncompetes to virtually any dispute tried within their borders”).

  55.  See Timothy P. Glynn, Interjurisdictional Competition in Enforcing Non-competition Agreements: Regulatory Risk Management and the Race to the Bottom, 65 Wash. & Lee L. Rev. 1381, 1386–87 (2008) (describing and positing the likely future growth of a phenomenon whereby states seek to export their employer-friendly policies extraterritorially by broadly enforcing both noncompetes and choice-of-law clauses).

  56. See Linehan, supra note 53, at 212 (arguing that courts have applied their choice-of-law principles in noncompete cases in a way that “fail[s] to respect due process constraints on their power to prefer their own laws to those of sister states”).

  57. See id. at 211.

  58.  See, e.g., Lawrence J. La Sala, Note, Partner Bankruptcy and Partnership Dissolution: Protecting the Terms of the Contract and Ensuring Predictability, 59 Fordham L. Rev. 619, 643 n.135 (1991) (“Because parties normally will not enter into a contract if they are unable to foresee accurately their rights and liabilities under the contract, predictability is a prime objective of contract law.”).

  59.  See Glynn, supra note 54, at 1385 (calling attention to “the rise of interjurisdictional disputes involving [noncompete] enforcement”).

  60.  See, e.g., Woodward, Aberrant, supra note 42, at 212 (noting that “many rational clients will forego using a lawyer in a small claim or defense if they risk paying their lawyer more (probably far more) than the claim or defense is worth”).

  61.  See O’Hara, Opting, supra note 40, at 1566 (“Unfortunately, however, enforcement of these clauses often turns on an ex post race to judgment.”); see also Viva R. Moffat, Making Non-Competes Unenforceable, 54 Ariz. L. Rev

    .

    939, 959 (2012) (noting that disparities in enforcement of both choice-of-law clauses and noncompetes lead to a situation in which both parties “race to the courthouse in an effort to have the jurisdiction with the more favorable law hear the case”). A widely invoked example of this situation is the litigation underlying Advanced Bionics Corp. v. Medtronic, Inc., in which parallel proceedings in Minnesota and California considered the same noncompete but arrived at different outcomes. 59 P.3d 231 (Cal. 2002) (analyzing both Minnesota and California court proceedings). The two courts each ultimately issued contradictory injunctions forbidding the parties from proceeding in the other court, a standoff only resolved when the California Supreme Court ultimately gave way and dissolved the Californian lower court’s injunction. See id. at 237–38; see also Moffat, supra note 60, at 960–63 (describing the case’s procedural history in detail).

  62. See infra notes 130–34 and accompanying text.

  63. See infra notes 155–58 and accompanying text.

  64. See Second Restatement § 187(2) (delineating a three-pronged exception to the general policy of enforcement).

  65. See, e.g., Stone Surgical, LLC v. Stryker Corp., 858 F.3d 383, 391 (6th Cir. 2017) (finding “no reason to disturb the parties’ choice of Michigan law” with respect to a noncompete where no state had a materially greater interest than Michigan).

  66. See infra Subsection II.B.3.

  67. See Moon, supra note 42, at 325.

  68. Notably, Larry Ribstein has argued that courts should “enforce express written choice-of-law clauses notwithstanding common law or statutory restrictions on enforcement, except when the clause is explicitly prohibited by a state where a contracting party resides and no party resides in the designated state.” Ribstein, Efficiency, supra note 30, at 368. Elsewhere, Erin A. O’Hara and Ribstein advocate for a somewhat similar approach under which “choice-maximizing rules proposed in this Article operate as default rules that legislatures can overrule by explicit statutes where necessary to preserve their power to legislate effectively.” Erin A. O’Hara & Larry E. Ribstein, From Politics to Efficiency in Choice of Law, 67 U. Chi. L. Rev.

     

    1151, 1153 (2000). In contrast to O’Hara and Ribstein, this Article’s central focus in reforming contractual choice of law is not on legislative involvement, although it does argue that a legislative role in defining areas of significant policy is desirable. See infra notes 269–70 and accompanying text. Rather, this Article argues that targeted and non-targeted choice-of-law clauses are fundamentally different and require distinct treatment.

  69. See infra Section III.A.

  70. See infra Section III.B.

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