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Forum-selection and
choice-of-law clauses declared
void
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DePuy Synthes Sales v.
Howmedica Osteonics (8th Cir 03/14/2022)
http://case.lawmemo.com/9/depuy.pdf
Sent to Custom Alerts™
subscribers on 03/15/2022
The 9th Circuit held that
forum-selection and choice-of-law clauses requiring adjudication
of contract disputes in New Jersey were void under California law.
WWaber was hired by Howmedica Osteonics Corp., and signed
an employment contract with Howmedica’s parent company, Stryker
Corporation. The contract included a restrictive one-year
non-compete clause and forum-selection and choice-of-law clauses
requiring adjudication of contract disputes in New Jersey.
Waber left Stryker to work at DePuy, a Howmedica competitor.
The court considered whether federal or state law governed the
validity of a forum-selection clause. The court held that the
state law applicable here, Cal. Labor Code § 925(b), which grants
employees the option to void a forum-selection clause under a
limited set of circumstances, determined the question of whether
Waber’s contract contained a valid forum-selection clause.
Section 925 as applied by the district court here is not a
rule of state law that removed all discretion from a federal court
on questions of venue. Rather, the provisions in § 925
circumscribing the kinds of employment agreements permitted and
allowing parties unrepresented by counsel to void a
forum-selection cause under certain circumstances relate to the
terms of the agreement between the parties and, at least to that
extent, are contrary to or within the scope of 28 U.S.C. §
1404(a). Waber’s voiding of the forum-selection clause in his
employment contract under § 925(b) excised the forum-selection
clause from the agreement as presented to the district court. The
court held that § 1404(a) and Stewart Organization, Inc. v.
Ricoh Corp., 487 U.S. 22 (1988), did not broadly preempt all
state laws controlling how parties may agree to or void a
forum-selection clause.
Having found that Waber satisfied
all the prerequisites of § 925 and effectively voided the
forum-selection clause under § 925(b), the district court turned
to the traditional § 1404 factors under M/S Bremen v. Zapata
Off-Shore Co., 407 U.S. 1, 12–13 (1972), and held they
favored denial of transfer.
The court held there was no
error in applying the California choice-of-law rules here where
there was no valid forum-selection clause. The court rejected
Howmedica’s challenges. There was no error in the district court’s
consideration of § 925 as part of its transfer analysis. Howmedica
was incorrect when it asserted that Bremen was
inapplicable to adjudication of § 1404(a) motions because
Stewart limited Bremen to the context of forum non
conveniens rather than transfer.
Finally, the district
court did not abuse its discretion in finding that the
forum-selection clause was void and unenforceable and that the
modified Atlantic Marine Construction Co. v. United States
District Court for the Western District of Texas, 571 U.S.
49, 62 n.5 (2013), analysis was thus inapplicable.
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