Massachusetts’ “Provincial” Discussion board Choice Requirement Could Not Trump Cheap Overseas Discussion board Choice Clause | Seyfarth Shaw

Almost 5 years in the past, the Massachusetts Noncompetition Settlement Act (“MNAA”, additionally typically abbreviated because the “MNCA”) went into impact. That statute ushered in new necessities for non-competes within the Bay State (together with not solely residents of Massachusetts, but in addition those that are solely employed in Massachusetts). Among the many MNAA’s necessities is a discussion board choice provision that purports to require civil fits associated to non-competes to be introduced completely within the county wherein the worker resides, or if each events agree, in Suffolk county in Massachusetts.

Regardless of being in impact for almost a half-decade, there have been comparatively few revealed instances deciphering the MNAA (see right here and right here for a synopsis of a few these instances). Lately, nonetheless, a federal choose in Virginia weighed in on the statute’s discussion board requirement, figuring out {that a} go well with towards a Massachusetts worker may proceed in federal courtroom within the Japanese District of Virginia, fairly than be dismissed and re-filed in Massachusetts.

In Hilb Group of New England, LLC v. LePage, the courtroom noticed that the worker, Susan LePage, had labored for the plaintiff or its predecessor as an insurance coverage account government for greater than 20 years in Massachusetts. Upon Hilb’s acquisition of her former employer in 2019 (after the MNAA’s efficient date), LePage was required to signal a brand new restrictive covenants settlement in Hilb’s favor. Two years later, she resigned and started promoting competing merchandise, seemingly aided by buyer info that she had emailed to her private e-mail account (together with contact info, income figures, and different particulars of Hilb accounts that LePage had serviced). Hilb then sued LePage in federal courtroom in Virginia for breach of the settlement, misappropriation, and different claims. Notably, regardless of LePage being a Massachusetts worker, the settlement designated Virginia state and federal courts because the unique discussion board for any go well with associated to the settlement, though it was concurrently designated Massachusetts legislation as controlling.

In response to the go well with, LePage moved to dismiss, arguing amongst different causes that below the MNAA, Massachusetts is the one applicable discussion board for the go well with. The courtroom disagreed, noting that the Supreme Courtroom in M/S Bremen v. Zapata Off-Shore Co. (The Bremen), 407 US 1 (1972), had introduced a coverage of implementing discussion board choice clauses besides the place it will be “unreasonable” to take action. Such a clause is unreasonable, the courtroom famous, the place its enforcement would “contravene a robust public coverage of the discussion board state” (amongst different issues). Regardless of the MNAA’s purported requirement that Massachusetts be the unique discussion board for litigation, and even though the settlement particularly designated Massachusetts legislation as controlling, the courtroom reiterated that federal legislation preempts Massachusetts’ procedural guidelines. Furthermore, the courtroom held that the presumption of enforceability for discussion board choice clauses introduced in The Bremen was not weakened by Massachusetts’s obvious disfavor for international discussion board choice clauses, and that permitting Massachusetts legislation to trump the federal coverage in favor of enforcement of discussion board choice clauses would “permit provincial attitudes to dominate.” Lastly, the courtroom noticed that to this point, no Massachusetts courtroom has decided that the MNAA evinces a “sturdy public coverage” of the Commonwealth that will require enforcement of the statute’s discussion board choice provision over the contractually agreed-upon Virginia discussion board clause.

Tellingly, one other federal courtroom issued the same opinion only a few days in the past. In Onward Search LLC v. Noble, a choose within the District of Connecticut shot down a Massachusetts resident’s comparable argument {that a} lawsuit arising out of his alleged violations of restrictive covenants ought to be dismissed. In that case, the contract designated Connecticut legislation as controlling (not Massachusetts legislation, as was the case in LePage). The courtroom agreed with the employer that the Connecticut choice-of-law provision was enforceable, and that Connecticut was the suitable discussion board for the litigation, however that the worker was a Massachusetts resident. Just like the LePage courtroom, the Noble courtroom held that federal legislation determines whether or not a compulsory discussion board chosen in a contract is enforceable, and likewise held that the MNAA couldn’t overrule the events’ chosen legislation.

Notably, the coverage in favor of enforcement of discussion board choice clauses introduced in The Bremen (and reiterated in each LePage and Noble) solely applies in federal instances, so it stays unclear whether or not a international state courtroom would allow litigation to proceed towards a Massachusetts worker within the face of the MNAA discussion board choice requirement, or if such a courtroom would dismiss the case to be heard in Massachusetts. Nevertheless, based mostly on the LePage and Noble instances, employers could have luck implementing a international discussion board choice clause towards Massachusetts workers, however the statute’s necessities (and even the place Massachusetts legislation applies). The place there isn’t any fee-shifting or different monetary penalty below the statute for failure to adjust to the MNAA (not like in another states reminiscent of Washington and Illinois), international employers nonetheless relying upon out of state discussion board clauses could hope that courts outdoors of the Commonwealth will take the identical method because the LePage and Noble courts.