Eleventh Circuit Draws a Clear Line Between Contractual and Statutory-Tort Claims in Choice-of-Law Analysis:
NetRoadshow, Inc. v. Carrandi (11th Cir. 2025)

1. Introduction

NetRoadshow, Inc. v. Lisa Carrandi addresses the enforceability of a Georgia choice-of-law clause against an employee’s counterclaim brought under a newly-enacted California statute (Cal. Bus. & Prof. Code § 16600.5). The decision arose after NetRoadshow sued its former senior vice-president, Lisa Carrandi, for allegedly violating non-compete and confidentiality covenants when she joined a competitor, Finsight Group, Inc. Carrandi answered and asserted a counterclaim invoking § 16600.5, which grants California employees damages and injunctive relief when an employer seeks to enforce a void restrictive covenant. The district court dismissed the counterclaim, holding that the contract’s Georgia choice-of-law clause foreclosed reliance on California law. The Eleventh Circuit reversed, holding that:

1. The choice-of-law clause covers only contractual causes of action and not statutory tort claims.
2. A separate Georgia choice-of-law analysis (lex loci delicti and public-policy review) must still be conducted to decide which state’s substantive law ultimately governs the statutory claim.

The judgment thus creates an important federal appellate precedent delineating the scope of choice-of-law clauses under Georgia law and clarifying litigation strategy for non-compete disputes in multi-state employment relationships.

2. Summary of the Judgment

• The district court’s dismissal of Carrandi’s § 16600.5 counterclaim is vacated.
• The case is remanded so the district court can:
  • Apply Georgia’s lex loci delicti doctrine to decide whether Georgia or California law governs.
  • Consider NetRoadshow’s remaining arguments (statutory construction, extraterritoriality, public-policy exception).
• The Eleventh Circuit affirms that the contract’s non-compete clause is unenforceable under Georgia law but holds that such unenforceability does not automatically void the agreement’s severable provisions (including the choice-of-law clause).

3. Analysis

3.1 Precedents Cited and Their Influence

1. Advance Technology Consultants, Inc. v. Roadtrac, LLC, 551 S.E.2d 735 (Ga. Ct. App. 2001) – Clarified Georgia’s pre-2011 rule that invalidity of one restrictive covenant can taint others when the contract lacks a severability clause. – The Eleventh Circuit distinguished it because Carrandi’s contract contained a severability clause, preserving the choice-of-law provision.
2. Early v. MiMedx Group, Inc., 768 S.E.2d 823 (Ga. Ct. App. 2015) & Capricorn Sys., Inc. v. Pednekar, 546 S.E.2d 554 (Ga. Ct. App. 2001) – Hold that Georgia courts will sever an invalid covenant (non-compete) if the contract expressly states survivability. – Supported the Eleventh Circuit’s holding that the void non-compete did not nullify the choice-of-law clause.
3. Young v. W.S. Badcock Corp., 474 S.E.2d 87 (Ga. Ct. App. 1996) & Baxter v. Fairfield Financial Services, Inc., 704 S.E.2d 423 (Ga. Ct. App. 2010) – Key precedents limiting choice-of-law clauses to claims expressly covered by their wording. – The Eleventh Circuit treated Carrandi’s clause (“this Agreement and the rights … hereunder”) as materially identical to Young’s, reaching an identical outcome: tort claims fall outside its scope.
4. Georgia doctrines of lex loci delicti and the public-policy exception, crystallised in Auld v. Forbes, 848 S.E.2d 876 (Ga. 2020). – Provided the roadmap for the remand: determine the place of the last injurious act and then test for any strong Georgia policy that would bar foreign law.

3.2 Legal Reasoning of the Court

1. Contractual Invalidity Does Not Extinguish Severable Clauses – Because the contract included an explicit severability clause, invalidation of the overbroad non-compete did not wipe out the choice-of-law clause. – The court relied on Georgia precedent allowing severance absent “blue-pencilling” for pre-2011 contracts.
2. Scope-of-Clause Analysis (Young Test) – Step 1: Examine clause wording. The phrase “this Agreement and the rights … hereunder” points only to obligations created by the contract itself. – Step 2: Classify the claimant’s cause of action. Carrandi’s § 16600.5 claim is a statutory tort because its duty arises entirely from California legislation, not the employment agreement. – Conclusion: The clause does not control the tort claim.
3. Next-Stage Choice of Law – Having ruled the clause inapplicable, the court triggered Georgia’s default tort conflicts rule (lex loci delicti). – The panel left factual determinations (where NetRoadshow’s last enforcement act occurred, whether California’s policy offends Georgia policy, etc.) to the district court on remand.

3.3 Likely Impact of the Decision

• Employee Mobility Litigation: Employers can no longer assume a Georgia choice-of-law clause will bar employees from invoking more protective foreign statutes (e.g., California’s broad ban on non-competes).
• Drafting Considerations: Counsel may broaden choice-of-law language (“any and all claims, whether sounding in contract, tort, statute or otherwise, arising out of or relating to the relationship between the parties”) to survive the Young test.
• Forum Selection Strategy: Where statutory tort remedies are available (California, Illinois, Minnesota), employees may remove to federal court and counterclaim; employers may seek declaratory relief first in Georgia state court to cement venue, but this ruling weakens the substantive certainty gained by doing so.
• Potential Supreme Court Interest: The interplay between extraterritorial reach of § 16600.5 and Georgia’s public-policy exception could ultimately generate a circuit split, especially if other circuits uphold or reject the statute’s out-of-state application.

4. Complex Concepts Simplified

Choice-of-Law Clause

A contract provision specifying which jurisdiction’s law will govern interpretation and enforcement of the agreement. Not automatically all-encompassing—its wording determines its reach.

Blue-Pencil Doctrine

Judicial power to rewrite or narrow an overbroad restrictive covenant. Georgia forbade blue-pencilling for contracts pre-May 11, 2011, meaning an invalid restraint is void in toto unless severable.

Severability Clause

A contract term providing that invalid portions can be removed without voiding the whole agreement.

Statutory Tort

A civil wrong where the duty breached is created by statute rather than by a contract or by common-law principles.

Lex Loci Delicti

“Law of the place of the wrong.” Under Georgia conflict rules, substantive law of the state where the last injury-producing act occurred governs tort claims.

Public-Policy Exception

Georgia courts may refuse to apply foreign law if doing so would “seriously contravene” Georgia public policy—mere differences are insufficient.

5. Conclusion

NetRoadshow v. Carrandi delivers a two-fold precedent: (1) In Georgia, standard “this Agreement …” choice-of-law clauses govern contractual obligations only; statutory tort claims lie outside their ambit. (2) When such tort claims are asserted, Georgia courts default to lex loci delicti, subject to a narrow public-policy escape valve. The decision empowers employees who relocate (or are recruited) to California to leverage California’s aggressive anti-non-compete regime even when their contracts select Georgia law. It simultaneously nudges employers to modernise their restrictive-covenant drafting and to anticipate multi-state statutory attacks. Going forward, litigants and drafters alike must evaluate not just the enforceability of restrictive covenants, but also the wording and breadth of accompanying choice-of-law provisions—an often overlooked battlefield now spotlighted by the Eleventh Circuit.