As promised on Wednesday, today I will talk about a March 2011 decision from the Eleventh Circuit Court of Appeals, which upheld the forum selection clause in an employment agreement against the [former] employee's attempt to sue in her state of residence. In Slater v. ESG International, Inc. (No. 09-13794, March 8, 2011), a former employee appealed the federal district court's dismissal of her Civil Rights Act and Whistleblower Act claims for improper venue based on a forum-selection clause found in her employment agreement. From time to time, a significant federal court case vindicates our practice.
The former employee/plaintiff claimed that the company could not enforce the forum selection clause in her employment agreement because the clause:
- was not mandatory by its terms,
- did not apply to her claims, since they were statutory-based, and not based on the employment agreement, and/or
- should not be enforced for public policy reasons.
Ms. Slater had signed an employment agreement with the company upon commencement of her employment, which set the terms and conditions of her employment. The agreement stated that Slater was an at-will employee and included the following forum-selection clause: "The parties agree that all claims or causes of action relating to or arising from this Agreement shall be brought in a court in the City of Richmond, Virginia." The agreement also included a choice of law provision designating Virginia law as controlling and stated that the agreement "constitutes the sole and entire agreement" between Slater and the company.
The selection of Richmond, Virginia as the forum for disputes under the agreement became an issue after the company staffed her at its facility Crystal River, Florida. Later, the company terminated Ms. Slater's employment either (i) for performance concerns and excessive absenteeism, after her supervisor accused Slater of making an error in a physical examination of a crane operator, according to the company, or (ii) because she informed her supervisor that she was pregnant, according to Ms. Slater. The court's decision does not explore the substance or merits of the claims, because Ms. Slater sued the company in the Middle District of Florida, and the company filed a motion to dismiss for improper venue based on the forum-selection clause in the employment agreement.
The Eleventh Circuit reviewed the district court's construction of the forum selection clause de novo, meaning without regard to the district court's decision or the parties interpretation, rather than under the more deferential abuse of discretion standard.
Mandatory vs. Permissive: Regarding the plaintiff's claim that the contractual forum selection clause was not mandatory, the court observed that the use of the term "shall" is one of requirement, and held that claims within the scope of the forum-selection clause must be brought in a court in Richmond, Virginia. (The court first explained that: "If no other contract principles point to a particular meaning, the court will prefer the reasonable interpretation that operates more strongly against the party who drafted the document." – highlighting another one of our design and drafting strategies.)
Scope of the Forum-Selection Clause: Regarding the issue of whether the plaintiff's statutory-based claims fell with the scope of the forum-selection clause, the court concluded that the parties intended the contract for employment to govern the entirety of the employment relationship between them and, thus, the plaintiff's claims fall squarely within the scope of the forum-selection clause. The clause is expressly applicable to "all claims or causes of action relating to or arising from [the employment agreement]."
Public Policy: Finally, the court cited prior case law holding unambiguously that Mandatory forum-selection clauses are "presumptively valid and enforceable" absent a "strong showing that enforcement would be unfair or unreasonable under the circumstances."
"A forum-selection clause will be invalidated when: (1) its formation was induced by fraud or overreaching; (2) the plaintiff would be deprived of its day in court because of inconvenience or unfairness; (3) the chosen law would deprive the plaintiff of a remedy; or (4) enforcement of the clause would contravene public policy."
The court found nothing preventing – or having prevented – Ms. Slater from filing her lawsuit in Richmond, Virginia.