How One Word Can Change Everything: Forum Selection in Non-competition Agreements.
A forum selection clause within a contract allows parties to agree that any litigation resulting from a conflict within a contract will be conducted in a specific forum. In some circumstances, an employee and his or her new employer, a non-signatory, may be bound to the terms within a binding non-competition agreement with a prior employer that contains an exclusive forum selection clause, based on the mandatory or permissive language used regarding such exclusivity as exemplified in cases East Coast Karate Studios, Inc. v. Lifestyle Martial Arts, LLC and A-Ryan Staffing Solutions, Inc. v. Ace Staffing Management Unlimited, Inc. Moreover, as illustrated in Deloitte & Touche v. Gencor Industries, Inc., non-signatories may also be bound by an employee’s former agreement. Attorneys for clients who require forum selection clauses in contracts should 1) draft clauses carefully to increase certainty in selection of both forum and governing law; and 2) ensure that forum selection and choice of law provisions implement the client’s forum expectations as to exclusivity and as to entire range of interactions and possible claims between parties, not just specifics of contractual agreement. Additionally, it is imperative to question potential employees as to whether they have signed any such agreement with a previous employer. If so, it is necessary to review the agreement and determine its validity and scope, applying many of the principles in the aforementioned cases.