International Forum Selection Clause Enforceable Against Employee, Says The Second Circuit

by Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
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Martinez v. Bloomberg, LP, No. 12-3654 (2d Cir. Jan. 14, 2014): The Second Circuit confirmed that international forum selection and choice of law clauses in cross-border employment agreements are enforceable. Here, a former employee’s disability discrimination suit brought under state and federal law was dismissed for improper venue because the employment agreement provided that claims “arising under” the agreement be adjudicated in England under English law. 

After serving several years as an employee of Bloomberg, LP in the United States and Japan, Brian Martinez accepted a job transfer to London. Upon his transfer, Martinez signed an employment agreement designating that (1) England is his “normal place of business,” (2) the employment agreement would be interpreted in accordance with English law, and (3) any dispute “arising under” the employment agreement would be subject to the exclusive jurisdiction of English courts.

Years later, Bloomberg conducted a reduction-in-force, which affected Martinez’s position. At that time, Martinez was on medical leave, but upon his release, he filed a lawsuit in the Southern District of New York alleging violations of the Americans with Disabilities Act and New York State and City Human Rights Laws. In response, Bloomberg moved to dismiss the claims pursuant to the employment agreement, citing improper venue because of the agreement’s choice of law and forum selection clauses. Martinez asserted that the clauses did not apply to employment discrimination cases, that application would be unjust and unreasonable, and that his claim should be adjudicated in the United States because, rather than “arising under” the agreement, they were grounded in domestic state and federal statutes. Martinez also filed suit contemporaneously in England under English law, but later withdrew those claims citing undue burden and expense.

Affirming the lower court, the Second Circuit emphasized the strong federal policy favoring enforcement of choice of law and forum selection clauses. The court held that an agreement containing both a valid choice of law clause and a valid forum selection clause controls, and that the substantive law identified in the choice of law clause governs interpretation of the forum selection clause. Here, because under English law Martinez’s discrimination claims “arose under” the employment agreement, the English statute of limitations for improper dismissal applied, and because that foreign time limit had already expired under English law, Martinez was without recourse in American (and English) courts.

Note: This article was published in the January 2014 issue of the New York eAuthority.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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