Friday, December 29, 2017

Forum selection clause in employment agreement sends Title VII case to California

The Court of Appeals has ruled that a Title VII plaintiff who signed a forum selection clause when she commenced employment in New York must litigate his claim in California.

The case is DeBello v. VolumeCocomo Apparel, a summary order issued on December 28. Plaintiff worked for a clothing manufacturer for an annual salary of $360,000. The salary was reduced over time and plaintiff was eventually fired without explanation after he complained about workplace harassment over his perceived sexual orientation. He filed suit in the Southern District of New York, but the trial case granted defendant's motion to transfer the case to state court in California pursuant to a forum selection clause that plaintiff signed, stating that any dispute arising from the employment relationship must be venued in the Superior Court in Los Angeles. 

A forum selection clause is presumptively enforceable if it was ʺreasonably communicated to the party resisting enforcement,ʺ has ʺmandatory force,ʺ and ʺcovers the claims and parties involved in the dispute.ʺ Plaintiffs can overcome that presumption if the clause ʺwould be unreasonable or unjust.ʺ The Second Circuit says:

We decline to enforce a forum selection clause if: ʺʹ(1) its incorporation was the result of fraud or overreaching; (2) the law to be applied in the selected forum is fundamentally unfair; (3) enforcement contravenes a strong public policy of the forumʹ in which suit is brought; ʹor (4) trial in the selected forum will be so difficult and inconvenient that the plaintiff effectively will be deprived of his day in court.ʹʺ
Plaintiff chooses option three, the public policy objection, arguing that "the forum selection clause at issue contravenes a strong public policy, reflected in Title VIIʹs special venue provision, for litigating employment discrimination claims in a local venue affected by the discriminatory acts." As it happens, Title VII provides for venue in judicial districts where the discrimination took place, where the relevant documents are located and where the plaintiff would have worked but for the discrimination. If the employer is not located in any of those districts, then venue is proper in the district where the employer's principal office is located.

The Second Circuit notes that while no circuit court ruling is on point, district court cases have held that forum selection clauses are not enforceable when they conflict with Title VII's special venue provision.

But in this case, "DeBelloʹs public policy argument does not overcome the presumption that 'a valid forum‐selection clause [should be] given controlling weight in all but the most exceptional cases.' . . . We are not persuaded here that the freely‐bargained forum selection clause is unenforceable based solely on its conflict with a policy preference reflected in Title VIIʹs special venue provision. Although DeBello is deprived of his choice of venue, he retains his right to litigate his discrimination claims." And, the Court of Appeals says, "DeBello, an experienced professional who was hired for an executive position at a relatively high salary, willingly entered into his employment agreement knowing it contained a forum selection clause, and he did so after he had the opportunity to consult with an attorney and make changes to the Agreement. VolumeCocomo is headquartered in Los Angeles and DeBello regularly interacted with VolumeCocomoʹs California‐based employees."

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