To be clear, this isn't a choice-of-law case. It's not about whether California law applies. It's about whether a court in California has jurisdiction; that is, whether it can hear the case at all.
Jurisdiction has nothing to do with whether laws are applicable to a case. It has to do with whether a particular court can hear a case. Personal jurisdiction questions go back hundreds of years to resolve issues like “is it just to force a defendant to travel hundreds of miles by horse and carriage to defend himself?” versus allowing him to defend himself closer to home.
If the plaintiff sued Shopify in New York, this issue wouldn't have come up at all. (And, yes, a New York court can apply California law.)
This stuff is all covered in first-year civil procedure in law school.
For example, imagine an American tourist visiting the UK drives dangerously and kills a motorcyclist, then escapes to the US before being caught.
A UK criminal court can order jail and a driving ban, but has no way to enforce the sentence unless the tourist decides to return to the UK, or the US decides to extradite.
A US criminal court can't do anything, the crime took place outside of their jurisdiction.
The victim's family can sue the tourist in a US civil court, and that court can take UK law into account - but can basically only impose a cash settlement that gets paid out of the tourist's insurance. They don't actually lose a cent.
So in a sense one state's courts can apply foreign state laws. But in terms of results, i.e. days spent in jail, laws don't appear to apply across borders.
Seems bizarre to me that several lower courts ruled in favor of Shopify though..
The linked opinion's discussion of jurisdiction seems to be about whether the case can be heard in any court, not if there's an alternate venue that would be more proper. FWIW, the retailer's web site[0] does not seem to contain a terms of service or anything with a choice-of-law provision. If the argument is that no court has jurisdiction in which the plaintiff can seek redress, that seems equivalent to saying that the law doesn't apply to the defendants.
Shopify already exercises a huge amount of discretion as to which businesses it's willing to provide services for, and how much it charges them. It does not seem unreasonable to me that the company would either a) be willing to answer to California courts, or b) stop selling its services to California retailers.
That’s why the author said that when the court stated that it would be absurd if there were no state that had jurisdiction, the court was being misleading, because there is always at least one state in which a U.S. entity is subject to jurisdiction.