Another worrisome piercing case

This time it's the US District Court for the Southern District of Georgia that is the culprit.  Let's hope the context of this ruling is important.  The issue was one of venue, not liability.  Here are the relevant facts. Rayonier Wood Products bought a lumber grading system from ScanWare. FinScan, a Finnish company, was not a party to the contract and at the time was only a minority owner of ScanWare.  About 15 months later FinScan acquired 100% of the stock of ScanWare.  As you might imagine, Rayonier was not happy with the performance of the grading system and sued ScanWare and FinScan.  Because the contract between Raynoier and ScanWare contained a choice of law provision, Rayonier filed the action in Georgia.  I'm going to skip over the procedural details to tell you simply that there was a dispute over the proper venue for the case and the question came down to whether FinScan was bound by the choice of law provision in a contract it didn't sign and at a time when it was only a minority shareholder to one of the signatories.  Of course, I wouldn't be writing this if the answer was anything but YES. 

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.