Massachusetts Court Refuses to Entertain Non-Compete Action Against California-Based Employee

Saul Ewing Arnstein & Lehr LLP

A Massachusetts trial court judge sitting in the Business Litigation Session recently issued a decision, in Oxford Global Resources, LLC v. Hernandez (1684CV003911-BLS2) (June 9, 2017), refusing to enforce Massachusetts choice of law and choice of venue provisions in an employment contract on the ground that enforcement would result in a “substantial injustice” to the defendant, a California-based employee. The decision serves as a warning to employers that Massachusetts courts may not enforce Massachusetts choice of law provisions that have no connection to Massachusetts conduct and are solely intended to obtain the benefits of favorable Massachusetts law.

Plaintiff Oxford Global Resources, LLC is a recruiting and staffing company based in Massachusetts. Oxford maintains a California office. Defendant Jeremy Hernandez, a former Oxford employee, signed a non-compete agreement with Oxford that included Massachusetts choice of law and venue provisions. Hernandez is a California resident, only performed work for Oxford in California, and only serviced California clients. When Hernandez left Oxford to work for a competitor in California, Oxford sued Hernandez in Boston to enforce the non-compete restrictions in his employment agreement.

The Massachusetts court dismissed the case on forum non conveniens grounds. The court rejected the employment contract’s Massachusetts choice of law provision after determining that it was a contract of adhesion—Hernandez has an annual salary of $50,000, was an entry-level employee and was forced to sign the agreement without any negotiation—and that enforcement would result in “substantial injustice.” The court further admonished Oxford for deliberately attempting to circumvent California law prohibiting non-compete agreements by inserting a Massachusetts choice of law provision into a contract that otherwise solely related to an employee and business activity in California. Ultimately, the court invalidated the employment agreement’s Massachusetts venue clause (1) as void against public policy and (2) on forum non conveniens grounds because all of the witnesses are located in, and relevant events occurred in, California.

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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