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Public Policy Unenforceable Contract Terms

Lathrop GPM

Citing California Franchise Relations Act, California Federal Court Rejects Franchisor’s Attempt to Dismiss Case

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A federal court in California recently denied a franchisor’s motion to dismiss litigation, holding that a franchise agreement provision requiring the parties to mediate in Texas prior to instituting litigation or arbitration...more

A&O Shearman

Disputes 101 – What can’t you agree to do in your contract?

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Beware of a penalty shoot-out - The rule against penalties is rooted in public policy, aiming to prevent contractual provisions that punish the breaching party rather than protecting the interests of the innocent party. The...more

Miller Canfield

Michigan Court of Appeals: No Parental Indemnification for Child Injuries

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Can parents legally agree to financially protect third parties from claims arising from their children’s injuries? In MK v. Auburnfly, LLC, (No. 364577, 2024 WL 5148278, Dec. 17, 2024), a published opinion, the Michigan Court...more

Ballard Spahr LLP

New Jersey Supreme Court Enforces Stand-Alone Class Action Waiver

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Earlier this year, the New Jersey Supreme Court held in Pace v. Hamilton Cove that class action waivers in consumer contracts that do not contain an arbitration clause (i.e., a stand-alone class action waiver) are not per se...more

Mandelbaum Barrett PC

New Jersey Supreme Court Invalidates Non-Disparagement Provision Against Alleged Victim of Discrimination and Harassment

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In Savage v. Township of Neptune, et al., (A-2-23, decided May 7, 2024), the New Jersey Supreme Court analyzed and invalidated a non-disparagement provision included in a settlement agreement against a plaintiff alleging...more

Saiber LLC

New Jersey Supreme Court Holds That Non-Disparagement Provisions Seeking to Preclude Discussion About Claims of Discrimination,...

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In a recent unanimous decision, the New Jersey Supreme Court held that non-disparagement provisions in settlement agreements or employment agreements are against public policy and unenforceable if they seek to bar speech...more

Holland & Knight LLP

California's New Nationwide Focus on Noncompetition Agreements

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For decades, California has taken arguably the most pro-employee-mobility position on noncompetition and non-solicitation agreements in the country – generally, post-employment noncompetition and non-solicitation agreements...more

Ogletree, Deakins, Nash, Smoak & Stewart,...

Wyoming Supreme Court Eliminates the Blue Pencil Rule for Noncompete Agreements

On February 25, 2022, the Wyoming Supreme Court issued a decision prohibiting courts from revising, or “blue penciling,” noncompete agreements to be reasonable and enforceable under the law. The decision overrules the Wyoming...more

Lewitt Hackman

Franchisee 101: Great Lakes Forum Selection Dispute

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A federal appellate court declined to enforce a choice-of-forum clause finding enforcement would conflict with Michigan’s Franchise Investment Law (“MFIL”). Lakeside Surfaces, Inc., a maker of stone countertops, sued...more

Hinshaw & Culbertson - Lawyers for the...

Florida Court Rules That Retainer Agreement Arbitration Provision is Enforceable and Severable From Agreement's Unenforceable Fee...

Lemos v. Sessa, No. 3D20-1362, 2021 Fla. App. LEXIS 4527 (Dist. Ct. App. Mar. 31, 2021) - Brief Summary A Florida appellate court held that plaintiff was required to arbitrate her claims against the attorney and her law...more

Hogan Lovells

Client Alert: Virginia Court Invalidates Government Contractor’s Non-Competition and Non-Solicitation Agreement with Independent...

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In January 2020, Judge John Tran of the Fairfax County Circuit Court in Virginia held unenforceable non-competition and non-solicitation provisions in a government contractor’s consulting agreements entered into with...more

Littler

EEOC Rescinds Policy Statement Disfavoring Arbitration Agreements

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As part of its efforts to rescind outdated guidance on a rolling basis, the EEOC recently dispensed with a 22-year-old policy statement that disfavored mandatory arbitration agreements between employers and employees....more

Sheppard Mullin Richter & Hampton LLP

Start Spreadin' the News: California Court Says No to New York, New York; Rejects Forum Selection Clause

Sinatra may have found success in the city that never sleeps, but a California court has just made it more difficult for any party doing business with a California resident to do the same. At least, when it comes to resolving...more

Proskauer - Law and the Workplace

New Jersey Enacts Law Limiting Non-Disclosure Obligations in Settlement Agreements

On March 18, 2019, New Jersey Governor Phil Murphy signed into law Senate Bill 121, which prohibits nondisclosure clauses in settlement agreements relating to workplace discrimination, retaliation or harassment....more

King & Spalding

New York Bankruptcy Court Finds That Aircraft Leases' Liquidated Damages Clauses and Guarantees Are Unenforceable

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On February 14, 2019, Judge Lane of the Bankruptcy Court for the SDNY issued an opinion in Republic Airways Holdings Inc. addressing whether the liquidated damages provisions in certain aircraft “true leases” under Article 2A...more

Hogan Lovells

Hong Kong court refuses to enforce an arbitral award on the basis of violation of public policy

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In Z and Y [2018] HKCFI 2342, the Hong Kong Court of First Instance (“CFI”) refused to recognize and enforce an arbitral award (“Award”) of the China Guangzhou Arbitration Commission (“Commission”) on the basis that...more

Mintz - Bankruptcy & Restructuring Viewpoints

Bankruptcy Restrictions in Operating Agreement Held Unenforceable

In In Re Lexington Hospitality Group, LLC, the United States Bankruptcy Court for the Eastern District of Kentucky thwarted a lender’s efforts to control whether its borrower could file bankruptcy. As a condition to the loan,...more

Payne & Fears

Recent Developments Regarding Noncompete Agreements

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There is no question that noncompete agreements in California employment contracts are generally unenforceable. Many other states, however, may enforce such agreements if they are “reasonable” in duration and geographic...more

Proskauer - Minding Your Business

Enforcing a Jury Trial Waiver in California: An Impossible Task?

It is not uncommon for parties to enter into agreements containing jury waiver provisions. However, enforcing such provisions in California courts may be a losing battle. California has a strong public policy in favor of the...more

Foley & Lardner LLP

Private Arbitration Agreements which Prohibit Public Injunctive Relief Violate Public Policy and are Unenforceable Under...

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In an April 5, 2017 unanimous opinion, the California Supreme Court (the “Court”) held that private arbitration agreements which prohibit public injunctive relief in any forum are contrary to California public policy and...more

Akin Gump Strauss Hauer & Feld LLP

McGill v. Citibank and Arbitration Agreements

On Thursday, April 7, 2017, in McGill v. Citibank, the California Supreme Court held that a pre-dispute arbitration agreement that waives the right to seek public injunctive relief is contrary to public policy and thus...more

Miller Starr Regalia

Built-In Contract Remedies: Avoiding the Unenforceable Penalty

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Under California law, a provision of a contract found to impose a penalty is unenforceable as a forfeiture and contrary to public policy. The characteristic feature of a penalty is the lack of proportional relation between...more

Proskauer - Employee Benefits & Executive...

District Court Finds Forum Selection Clause Unenforceable in ERISA Action

A federal district court in Illinois ruled that a plan’s forum selection was unenforceable because it conflicts with ERISA’s public policy of providing plaintiffs “ready access to the Federal courts.” Darlene Harris...more

Jackson Lewis P.C.

Nevada Confirms Its Restrictive Covenant Law, But Rejects Blue Penciling

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In the first decision to reach the Nevada Supreme Court on whether state district courts may modify or “blue pencil” non-competition agreements, the high court has concluded that doing so would violate Nevada law. Golden Road...more

McCarter & English, LLP

Delaware Law Updates – Freedom of Contract in LLC Structure Is Not Absolute Where Parties Seek Bankruptcy Relief

In re Intervention Energy Holdings, LLC, Case No. 16-11247 (D. Del. June 3, 2016), the Bankruptcy Court for the District of Delaware dealt with the issue of whether a Delaware LLC lacked authority to file a Chapter 11...more

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