Jurisdiction, Venue and Choice of Law

In a prior post, I noted that if you want all disputes between contracting parties to be resolved in one and only one specific forum, it is imperative to expressly state this with great clarity in your agreement.  In light of the Massachusetts Appeals Court’s recent decision in Try Switch, Ltd. v. Endurance International Group, a similar approach should be taken if a contracting party wants a non-party to be a bona fide “third-party beneficiary” who is legally permitted to enforce some right or obligation under that contract.

In Try Switch, the plaintiff sued Endurance International Group in the Massachusetts Superior Court for breach of contract, and Endurance moved to dismiss for improper venue.  More specifically, Endurance argued that it was the third-party beneficiary of a contract between Try Switch and ValueClick International, and that contract included the following provision:

The exclusive forum for any actions related to this [a]greement shall be in the [c]ourts in Dublin, Ireland.

While the Superior Court agreed with Endurance and dismissed the case, the Appeals Court reversed.  In doing so, the Appeals Court first acknowledged that even though no Massachusetts case addresses the issue as to whether a non-party to … Keep reading

Beware of Choice of Law When Drafting Independent Contractor Agreements

As we have previously posted in Choice of Law in a Contract Can Be Critical, Ensuring Your Dispute Is Resolved in the Forum You Want Is Not Always Easy, and Selection of Forum Other Than Massachusetts May Not Avoid Wage Act Enforcement, choice of law and forum selection provisions should be conscious decisions made in the context of each specific contract.  If in-house counsel do not carefully draft these provisions in their independent contractor or consulting agreements, they may be overlooking a possible means of avoiding or minimizing liability in Massachusetts under the so-called Massachusetts Independent Contractor Law (M.G.L. c. 149, §148B), the Massachusetts Weekly Payment of Wages Act (M.G.L. c. 149, §148) and/or the Massachusetts minimum wage and overtime laws.  Because these statutes do not contain any explicit geographic restriction on their application, their applicability to non-Massachusetts residents performing work outside of Massachusetts for Massachusetts companies has been unsettled.  (I have previously posted here and here on the staggering ramifications of misclassifying a worker as an independent contractor in Massachusetts.) 

In Taylor v. Eastern Connection Operating, Inc., the Massachusetts Supreme Judicial Court took up the issue of whether New York residents who perform … Keep reading

In a post this summer, I raised three issues employers may want to consider before even requesting that an employee execute a covenant not to compete.  One issue that I did not mention is whether the company’s employee lives and works in California.  Although where an employee lives may be relevant, contrary to what many attorneys think, it may be possible for a Massachusetts company to enforce a non-compete against a California resident.… Keep reading

In Some Cases Victory Can be Determined by a Preemptive Suit

First to file in local jurisdictionIn my recent post, Ensuring Your Dispute is Resolved in the Forum You Want is Not Always Easy, I discussed various issues related to contractual forum selection clauses, i.e., clauses which dictate where parties can or must sue.  If a contract does not have a forum selection clause, courts in each of the contracting parties’ home states might be able to exercise jurisdiction over a dispute.  Further, and as many in-house counsel have experienced, the ultimate venue for litigation can create a substantial amount of leverage in favor of the home team and work to the detriment of the out-of-state party. 

If you believe that your company is likely to be sued by another in some far off jurisdiction, consider the following advice:

If you know you are going to be in a fight, make sure to get in the first punch."

I can’t emphasize enough the importance in evaluating whether you are going to be sued – as opposed to whether you might be sued. If you do not see any way to avoid litigation, following the above rule can pay real dividends, as it did for one of my clients several years ago.  In Keep reading

In addition to having a choice of law provision in a contract (a topic on which I posted last week), many contracts also include what is commonly known as a forum selection clause.  Such clauses can be extremely important and can have an impact that goes well beyond simply setting up one party as the “home team” and the other an outsider.

For instance, even if a contract has a choice of law provision calling for the law of New York to apply to all contract disputes, if a forum selection clause requires suit to be brought in Massachusetts, the procedural law of Massachusetts applies.  Consequently, while New York law does not have a trustee process attachment rule like we have in Massachusetts, a plaintiff should be able to obtain a freeze on the defendant’s bank account as long as a showing is made that the plaintiff is likely to succeed on the merits of its claim.  The logic behind this is that, freezing a bank account (known as a “trustee process attachment”) is governed by procedural law (Rule 4.2 of the Massachusetts Rules of Civil Procedure), not by substantive law.  Alternatively, if a suit was … Keep reading

Often, one of the last provisions in a contract will say:

This contract shall be governed and construed in accordance with the laws of the State of ______.”

Most courts will abide by the parties’ choice and apply the law designated by them – even if the law selected is not from the state where the case is being tried.  It is only in limited situations, such as (i) where application of the selected law would undermine a significant public policy of the jurisdiction where suit is filed, or (ii) if the locale of the law selected has no relation to the parties or the dispute, that a court is unlikely to abide by the parties’ choice of governing law.

Why should in-house counsel care about choice of law?  Well, while most states may have similar common law with respect to garden variety contract or tort claims, all states have statutory claims that only can be pursued if their own law is applicable.… Keep reading

Before last week, a non-Massachusetts employer could insulate itself from employee claims under the Massachusetts Weekly Payment of Wages Act (“Wage Act”) simply by having its employees agree that all employment disputes be litigated in the employer’s home state.  That all changed with the Massachusetts Supreme Judicial Court’s decision in Melia v. Zenhire, Inc.   

In that case, plaintiff Edward Melia, who worked and lived in Massachusetts, challenged the validity of a forum selection clause contained in his employment agreement requiring that any disputes related to his employment  be litigated in New York.  Melia’s claims against Zenhire included claims for unpaid wages, unpaid vacation and sick day wages, severance pay and unreimbursed expenses.  Melia argued that the forum selection clause was a “special contract” prohibited by the Wage Act and against Massachusetts public policy.  The SJC disagreed, determining that, due to comity amongst state courts, and in light of most states’ choice of law rules, there is a presumption that other jurisdictions would apply laws such as the Wage Act.  As such, there was no public policy reason to invalidate a forum selection clause in an employment agreement. 

The SJC did leave one opening for employees in this regard, in … Keep reading