VENUE: Forum selection clause in employment contract is enforceable, suit transferred to employer’s home state of Georgia… Molloy.
TSYS Merchant Solutions of Columbus, Georgia, seeks to transfer venue in this employment contract dispute with John Fayle based on the contract’s forum-selection clause:
Applicable Law. Any dispute in the meaning, effect, or validity of this Agreement shall be resolved in accordance with the laws of the State of Georgia without regard to the conflict of law’s provisions thereof. This Agreement shall be governed by and construed under the laws of the State of Georgia or, at the Company’s sole option, by the laws of the state or states where this Agreement may be at issue in any litigation involving the Company. Venue of any litigation arising from this Agreement shall be in a federal or state court of competent jurisdiction in Muscogee County, Georgia. (emphasis added).
Caselaw governing interplay between public policy and forum-selection clauses has been applied with variable results. Ultimately, following Magistrate Lynch’s analytical approach in Frontline Processing (D.Mont. 2013), TSYS’s motion is granted.
In Federal Court, federal law applies “to the interpretation of” forum selection clauses. Doe 1 (9th Cir. 2009). They may be enforced through forum non conveniens in a motion to transfer under 28 USC 1404(a). Atlantic Marine (US 2013). A court “may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented” provided such a transfer is “for the convenience of parties and witnesses” and “in the interest of justice.” §1404(a). When a motion is filed under this provision, “a district court should transfer the case unless extraordinary circumstances unrelated to convenience of the parties clearly disfavor a transfer.” Atlantic Marine.
What constitutes an “exceptional reason” or “extraordinary circumstance” is governed by the Bremen (US 1972) factors:
A forum-selection clause is controlling unless the plaintiff makes a strong showing that: (1) the clause is invalid due to “fraud or overreaching,” (2) “enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by judicial decision,” or (3) “trial in the contractual forum will be so gravely difficult and inconvenient that [the litigant] will for all practical purposes be deprived of his day in court.” Yei A. Sun (9th Cir. 2018).
But these exceptions must be viewed “through the lens provided by Atlantic Marine,” Yei A. Sun, which means the plaintiff bears the burden of establishing that transfer is unwarranted and the court “should not consider arguments about the parties’ private interests.”
Fayle argues that transfer is inappropriate because Montana has a strong public policy against forum-selection clauses, as articulated by MCA 28-2-708:
Every stipulation or condition in a contract by which any party to the contract is restricted from enforcing the party’s rights under the contract by the usual proceedings in the ordinary tribunals or that limits the time within which the party may enforce the party’s rights is void. This section does not affect the validity of an agreement enforceable under [the Uniform Arbitration Act].
If correct, Fayle’s argument would be dispositive as the satisfaction of Bremen‘s public policy factor is sufficient “to render a forum-selection clause unenforceable.” Gemini Techs (9th Cir. 2019).
Our Court recently addressed this argument in 2 cases with different results. In Bjorgen (D.Mont. 2018), Judge Christensen correctly granted a motion to transfer on the grounds that “the Montana Supreme Court found that ‘forum selection clauses are not presumptively void as against public policy.'” (quoting Polzin (Mont. 2008)). After Bjorgen was decided, the 9th Circuit addressed the venue question in the context of Idaho law in Gemini Techs. Idaho St. 29-110(1) states:
Every stipulation or condition in a contract, by which any party thereto is restricted from enforcing his rights under the contract in Idaho tribunals, or which limits the time within which he may thus enforce his rights, is void as it is against the public policy of Idaho.
The 9th Circuit held that the plain language of this statute satisfied Bremen‘s public policy factor. Although explicitly expressing “no opinion” on the outcome under Montana law, it recognized the similarity between the statutes. As a result of that decision, our Court more recently denied a request to transfer venue in Swank, relying on §28-2-708. But even considering Gemini, in my view Swank misses the mark given Polzin and the difference between the statutes.
The Montana Supreme Court’s inconsistent treatment of forum selection clauses and §28-2-708 was thoroughly addressed in Frontline: while Montana may have previously interpreted the statute to invalidate forum selection clauses on public policy grounds, see Polaris (Mont. 1985), Keystone (Mont. 1998); see also Rindal (D. Mont. 1992), Mills (D.Mont. 2009), it has most recently clarified the confusion when it held that “forum selection clauses are not presumptively void as against public policy,” Polzin; see also Milanovich (Mont. 2007). Swank‘s conclusion and Fayle’s argument are therefore unpersuasive and “simply untenable” in the language of Frontline.
Gemini does not impose a different result. It did not rule on the public policy implications of similar Montana and Idaho statutes, and the statutes here are distinguishable. While the Idaho statute explicitly states that it embodies public policy, there is no such language in §28-2-708. That difference is telling because the Montana Legislature has included such language in other statutes. See, e.g., MCA 28-2-2116 (choice of law and venue in construction contracts), 28-2-702 (contracts that exempt one’s own fraud or willful injury of another). In this case it is a distinction with a difference.
As in Frontline, because Fayle’s challenge to the forum selection clause is based entirely on the public policy embodied in §28-2-702 and Swank, there is no other evidence on which to conclude that it is unenforceable. Fayle v. TSYS Merchant Solutions, 44 MFR 227, 7/2/20.
Douglas Scotti (Frampton Purdy), Whitefish, for Fayle; Mark Williams & Peter Ivans (Williams Law Firm), Missoula, and Nathan Chapman (Kabat Chapman & Ozmer), Atlanta, for TSYS
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