Even a “Bullet-Proof” Forum Selection Clause Might Be Vulnerable

When Jeremy Hernandez, a California resident, went to work for Oxford Global Resources, a Massachusetts company, in 2013, he signed a non-competition agreement. In 2016, Hernandez resigned from Oxford and, apparently unbeknownst to Oxford, began working for one of its competitors. Several months later, Oxford received an anonymous tip that Hernandez had taken Oxford’s confidential, client information and was using it to solicit customers for his new employer. Shortly thereafter, Oxford sued Hernandez in the Superior Court in Massachusetts based on a forum selection clause stating:

All suits, proceedings and other actions relating to, arising out of or in connection with this Agreement will be submitted to the in personam jurisdiction of … the courts of the Commonwealth of Massachusetts …. Venue for all such suits, proceedings and other actions will be in Massachusetts. Employee hereby waives any claims against or objections to such in personam jurisdiction and venue. [Emphasis added]

Notwithstanding the foregoing language, Hernandez moved to dismiss Oxford’s complaint on the grounds of forum non conveniens and the Superior Court allowed that motion. Oxford appealed, and the Supreme Judicial Court of Massachusetts took the case on its own initiative (by-passing the Appeals Court). Surprisingly, the SJC affirmed dismissal, ruling that the forum selection clause did not bar Hernandez from asserting forum non conveniens as a defense. Further, the SJC expressly noted that its ruling did not hinge on the hyper-technicality that the forum selection clause did not specifically reference forum non conveniens. Rather, the decision makes clear that, under Massachusetts law, even an express waiver of the defense of forum non conveniens is unenforceable as a matter of public policy:

Forum non conveniens considers both public concerns, such as “administrative burdens caused by litigation that has its origins elsewhere and the desirability of the trial of a case in a forum that is at home with the governing law,” and private concerns, such as the “practical problems that do or do not make a trial easy, expeditious, and inexpensive, such as the ease of access to proof, the availability of compulsory process, and the cost of attendance of witnesses.” … These are matters affecting the “interest of substantial justice,” G. L. c. 223A, § 5, that a court cannot ignore regardless of any prior agreement between the parties. Moreover, when the parties enter into an agreement regarding the choice of forum, they cannot foresee the particular circumstances of future litigation and predict at that time whether the interest of substantial justice might require the litigation to be tried in a more convenient forum.

Interestingly, the SJC noted that while its ruling contradicted a 2013 decision by the Supreme Court of the United States, “We are not bound by the Supreme Court’s guidance” because the ultimate issue is one of procedural and not substantive law.

One way to ensure a case is litigated in Massachusetts would be to pursue it in the federal district court (assuming, of course, that you have federal subject matter jurisdiction). Another option to have certainty over the forum is to use a forum selection clause identifying a state whose procedural law is more like the federal law than like Massachusetts. (Of course, if there is no reasonable connection between the parties and that jurisdiction, you likely have given the opposing party another viable way to avoid that provision.) One last idea is to consider arbitration. If none of those mechanisms is an option, in-house counsel needs to know (and make sure their business clients know) that their Massachusetts forum selection clause is not bulletproof.

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