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Oxford Global Resources, LLC v. Hernandez

Superior Court of Massachusetts, Suffolk, Business Litigation Session

June 9, 2017

Oxford Global Resources, LLC
Jeremy Hernandez No. 137045


          Kenneth W. Salinger, Justice of the Superior Court.

         Oxford Global Resources, LLC is a recruiting and staffing company that places individual contractors who have specialized technical expertise with businesses who need workers having such skills. Oxford hired Jeremy Hernandez to work in its Campbell, California, office. To accept Oxford's offer Hernandez had to and did sign an offer letter and a separate " protective covenants agreement" (the " Agreement") that contains confidentiality, non-competition, and non-solicitation provisions. The Agreement provides that it is governed by Massachusetts law and that any suit arising from or relating to that contract must be brought in Massachusetts.

         Oxford alleges that Hernandez breached the Agreement by using information regarding the identity of Oxford's customers to solicit those customers on behalf of a competitor in California. Hernandez has moved to dismiss this action under the forum non conveniens doctrine, arguing that this action should be heard in California, where he lives and worked for Oxford.

         The Court concludes that the forum selection clause is unenforceable and that the interests of justice require that this case be heard in California. The Court will therefore ALLOW the motion to dismiss pursuant to G.L.c. 223A, § 5, and the common-law doctrine known as forum non conveniens .

         1. Enforceability of the Forum Selection Clause

         1.1. California Law Governs the Agreement

          Whether Massachusetts courts will enforce a forum selection clause like the one agreed to by Hernandez must be decided under whatever law governs the contract as a whole. See Melia v. Zenhire, Inc., 462 Mass. 164, 168, 967 N.E.2d 580 (2012); Jacobson v. Mailboxes Etc. U.S.A., Inc., 419 Mass. 572, 575, 646 N.E.2d 741 (1995). Thus, before deciding whether the Agreement's mandatory forum selection clause is enforceable the Court must decide which State's law governs this contract.[1] Although the Agreement specifies that it is governed by Massachusetts law, the Court concludes that choice-of-law provision is unenforceable and that the contract is instead governed by California law.

          " A choice-of-law clause should not be upheld where, " as here, " the party resisting it did not have a meaningful choice at the time of negotiation--i.e., where the parties had unequal bargaining power, and the party now attempting to enforce the choice-of-law clause essentially forced the clause upon the weaker party, " and enforcing the clause would be unfair to the weaker party. Taylor v. Eastern Connection Operating, Inc., 465 Mass. 191, 195 n.8, 988 N.E.2d 408 (2013). This follows from the general rule that contracts of adhesion are not enforceable if " they are unconscionable, offend public policy, or are shown to be unfair in the particular circumstances." McInnes v. LPL Fin., LLC, 466 Mass. 256, 266, 994 N.E.2d 790 (2013), quoting Chase Commercial Corp. v. Owen, 32 Mass.App.Ct. 248, 253, 588 N.E.2d 705 (1992); accord Sonic-Calabasas A, Inc. v. Moreno, 57 Cal.4th 1109, 163 Cal.Rptr.3d 269, 311 P.3d 184, 202-03 (Cal. 2013). As the American Law Institute has explained:

A choice-of-law provision, like any other contractual provision, will not be given effect if the consent of one of the parties to its inclusion in the contract was obtained by improper means, such as by misrepresentation, duress, or undue influence, or by mistake. Whether such consent was in fact obtained by improper means or by mistake will be determined by the forum in accordance with its own legal principles. A factor which the forum may consider is whether the choice-of-law provision is contained in an " adhesion" contract, namely one that is drafted unilaterally by the dominant party and then presented on a " take-it-or-leave-it" basis to the weaker party who has no real opportunity to bargain about its terms . Such contracts are usually prepared in printed form, and frequently at least some of their provisions are in extremely small print. Common examples are tickets of various kinds and insurance policies. Choice-of-law provisions contained in such contracts are usually respected. Nevertheless, the forum will scrutinize such contracts with care and will refuse to apply any choice-of-law provision they may contain if to do so would result in substantial injustice to the adherent .

         Restatement (Second) of Conflict of Laws § 187 comment b (1971) (emphasis added).

         It is apparent that the Agreement is a contract of adhesion and that Hernandez had neither the opportunity nor the bargaining power to negotiate over whether California or Massachusetts law would govern his non-competition, non-solicitation, and confidentiality agreements. The complaint specifically alleges that Oxford would not have hired Hernandez if he did not sign the Agreement, which makes clear that Hernandez had no opportunity to negotiate these issues. Oxford has neither alleged nor proffered any evidence suggesting that the parties had any negotiation over the choice of law or forum selection provisions contained in § 6.3 of the Agreement, or even that Oxford expressed any willingness to discuss those issues. The complaint also reveals that Hernandez had no bargaining power with respect to these issues. The complaint and its attachments indicate that Hernandez was hired to work as an entry-level employee. Oxford agreed to pay Hernandez $50, 000 per year to work as an " account manager, " and alleges that Hernandez " had no previous experience or skill in the information technology staffing and consulting industry." The only fair inference from the facts alleged by Oxford in its complaint is that Hernandez had no power to bargain over the combined choice-of-law and forum selection provision.

         Oxford notes that § 7.5 of the Agreement states that Hernandez, by signing the contract, acknowledged that he had the opportunity to read the Agreement and to ask his own lawyer to review it, that he understood each provision, and that he was not under duress. But that boilerplate language cannot change the apparent facts that Hernandez had no bargaining power with respect to the choice-of-law and forum selection clauses in Oxford's standard form contract, and that the Agreement signed by Hernandez was not the product of any negotiations between the parties.

         It is also apparent that the choice-of-law provision was an attempt by Oxford to circumvent California's strong public policy against the enforceability of non-competition agreement. If the Agreement did not contain a choice of law provision, then California law would govern Oxford's claims under the Agreement because California " has the most significant relationship to the transaction and the parties." Bushkin Associates, Inc. v. Raytheon Co., 393 Mass. 622, 632, 473 N.E.2d 662 (1985); accord, e.g., Nile v. Nile, 432 Mass. 390, 401, 734 N.E.2d 1153 (2000); OneBeacon America Ins. Co. v. Narragansett Elec. Co., 90 Mass.App.Ct. 123, 128, 57 N.E.3d 18 (2016). It is undisputed that Hernandez was a California resident who was recruited and hired by Oxford in California, to work in Oxford's California office, and to service only California clients. Although Oxford says its principal place of business is in Massachusetts, Oxford has alleged no facts and presented no evidence suggesting that Hernandez's contract with and work for Oxford implicated Massachusetts in any way.

         Non-competition agreements like the one that Oxford required Hernandez to sign are not enforceable under California law. See Cal. Bus. & Prof. Code § 16600 (" every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void"). This statute codifies " California's strong public policy against noncompetition agreements." Advanced Bionics Corp. v. Medtronic, Inc., 29 Cal.4th 697, 128 Cal.Rptr.2d 172, 59 P.3d 231, 236-37 (Cal. 2002). Even before the passage of ยง 16600, " it has long been the public policy of [California] that '[a] former employee has the right to engage in a competitive business for himself and to enter into competition with his former employer, even for the business of . . . his former employer, provided such competition is fairly and legally ...

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