Opinion
NOT TO BE PUBLISHED
Appeal from a judgment of the Superior Court of Orange County, Super. Ct. No. 30-2008-00113993, David T. McEachen, Judge. Request for judicial notice. Judgment affirmed. Request denied.
Ingber & Associates, Kenneth S. Ingber and Anthony DiPietra for Plaintiff and Appellant.
Sedgwick, Detert, Moran & Arnold, Curtis D. Parvin and Jemma E. Eriksen for Defendants and Respondents.
OPINION
RYLAARSDAM, ACTING P. J.
Plaintiff Les Troisi filed a notice of appeal from the dismissal of his action for age discrimination, unfair competition, and back wages against Cannon Equipment Company (Cannon) and Cannon Equipment West, Inc. (Cannon West). As to Cannon the court ruled that a forum selection clause designating Minnesota in a contract with plaintiff was valid; as to Cannon West it quashed service of a summons on the ground the company could no longer be sued as it had merged with Cannon. Plaintiff argues the court erred by failing to interpret the contract as a whole when construing the forum selection provision, which, he contends, is unenforceable as to his discrimination and Labor Code violation claims and should not be enforced as a matter of public policy as to his unfair competition claims. Plaintiff does not address the order quashing service and thus has waived that claim. Finding no merit in his arguments, we affirm.
Defendants filed a request for judicial notice of documents from a case they brought against plaintiff in Minnesota. The documents were filed subsequent to the motion and decision in the trial court and were not before the judge when he made his decision. Thus, we decline to take judicial notice.
FACTS
In 1986 Cannon, incorporated and with its principal place of business in Minnesota, hired plaintiff, a California resident, as a sales representative as it was breaking into the business of selling front-end merchandising display racks to retailers. In 1994, plaintiff declined to sign a non-compete agreement when Cannon requested he do so. In 1999, after plaintiff received an employment offer from another company, he ultimately accepted a new position of Vice-President Sales for Front-End Merchandisers (FEM) from Cannon; his territory covered 12 western states. In connection with the promotion, on a Friday Cannon presented an eight-page employment agreement (agreement) to plaintiff and asked him to sign and return it by the following Monday, which he did.
The agreement contained a forum selection/choice of law paragraph, which stated: “The laws of Minnesota will govern the validity, construction, and performance of this Agreement. Any legal proceeding related to this Agreement will be brought in an appropriate Minnesota court, and [Cannon] and [plaintiff] hereby consent to the exclusive jurisdiction of that court for this purpose.” Also contained in the agreement was a provision prohibiting plaintiff from competing with Cannon during his employment and for a period of one year thereafter. Specifically, he agreed not to act, in any manner or capacity, to manufacture, sell, or solicit sales of FEMs, contact any “then-existing vendors or suppliers, ” employ or solicit any of Cannon’s “then employees, ” or interfere with Cannon’s business. The non-compete provision was pointed out in the agreement’s recitals in addition to the terms set out in the body of the eight-page document. This agreement was extended three times over the course of the next seven years. The provisions in controversy here were included in each extension and the non-competition clause was a specific basis for Cannon’s offer to extend the agreement each time.
In 2008 Cannon filed suit against plaintiff in the United States District Court in Minnesota alleging several counts and particularly claiming plaintiff breached the employment agreement by, among other things, helping his son-in-law form a company to compete with Cannon, soliciting both key employees and customers. The complaint sought not only injunctive and declaratory relief but damages as well. Plaintiff filed a motion to dismiss or, alternatively, transfer venue to the Central District of California. Treating it like a motion for summary judgment because both parties relied on declarations and evidence not in the pleadings, the court denied it.
In a lengthy decision it determined Minnesota’s law should apply. Preliminarily it found plaintiff was not coerced into signing the agreement, ruling he had sufficient time to read and understand the short document, which contained clear language. The court proceeded through the required steps in reaching the conclusion the choice of law provision was enforceable, analyzing whether the laws of Minnesota and California were in conflict. It found there was a conflict as to the non-compete provision because Minnesota law allows such a clause as long as it is only as broad as needed to protect an employer’s legitimate interest, while California law generally prohibits such clauses.
It next determined that plaintiff had sufficient contacts with Minnesota to allow application of either state’s law to the controversy, including several visits to that state, regular contact with Cannon corporate employees, and supervision of at least one employee who resided in Minnesota. It then ruled that Minnesota’s law should be used, finding that Cannon did not select it to avoid California law or trick or pressure plaintiff into signing the agreement.
It also enforced the forum selection clause. It found Minnesota was not inconvenient, ruling plaintiff had not met his “‘heavy burden’” to show otherwise. The forum selection language was “clearly labeled, ” based on plaintiff’s lengthy employment relationship he “‘certainly foresaw the possibility of litigating in Minnesota, ’” and the residence of witnesses and parties was only a minor factor, given the ability to take depositions locally. The court also concluded the agreement was not adhesive or unreasonable.
Thereafter, plaintiff filed the current action seeking damages and injunctive and declaratory relief. He alleges causes of action for violation of Business and Professions Code sections 16600 and 17200 based on the non-compete provision, for wrongful termination based on age and a hostile work environment in violation of the California Fair Employment and Housing Act (FEHA; Government Code section 12900 et seq.), for constructive discharge, and for unpaid wages under the Labor Code. The complaint pleads that plaintiff was a stellar employee during his 21-year tenure. In 1994 he refused Cannon’s request to sign a covenant not to compete. In 1999 when plaintiff was offered a position by one of Cannon’s competitors, Cannon offered to promote him to vice-president; a condition of this promotion was that he sign an employment agreement. It contained a one-year non-compete and non-disclosure provisions. Plaintiff alleges he was given only the weekend to review the agreement, which was insufficient time to fully understand the terms or consult a lawyer. The agreement also contained a forum selection clause designating Minnesota, even though plaintiff was a California resident, managed the western states, and had little contact with Minnesota.
The complaint further alleges that after Chuck Gruber became defendants’ president in 2007 when plaintiff was 69, he “create[d] a hostile and unwelcome work environment, ” openly harassing plaintiff about his age. He assigned certain of the long-term accounts plaintiff had obtained and developed over the years to younger employees. Gruber declined to renew plaintiff’s employment contract and ordered him to work only from home until the current agreement expired. Plaintiff pleads Cannon forced him to retire, effective February 2008, constructively terminating him because of his age. He alleges Cannon did not pay all commissions owed to him.
Cannon moved to dismiss the complaint, or stay the action, on the ground the forum selection clause required plaintiff to file the action in Minnesota. The court granted the motion and ordered the action dismissed. It relied on the language of the clause itself and the rulings of the Minnesota court that the provisions were valid, observing that plaintiff had tried to “re[]litigate the issue.”
Cannon West moved to quash the summons, arguing it no longer existed, having merged with Cannon before the complaint was filed. The court granted the motion on that ground.
DISCUSSION
1. Overview
Despite a variety of lengthy arguments, plaintiff’s objections to the forum selection clause boil down to three basic grounds: 1) enforcement would bring into play an arbitration provision he contends is unconscionable; 2) enforcement is barred by the provisions of Labor Code section 219 providing that a private agreement cannot waive any right to wages; and 3) a Minnesota forum would result in enforcement of a covenant not to compete that is invalid under California law. None of these arguments persuades.
2. Arbitration Provision
Plaintiff asserts the court erred by focusing on the agreement’s forum selection clause rather than interpreting the agreement in its entirety. Specifically he claims the court needed to also construe two additional provisions contained within the same general “Miscellaneous” section of the agreement. One paragraph provided Cannon with an injunction remedy if plaintiff breached the non-compete or confidentiality provisions. Another authorized mediation and arbitration, except for an injunctive relief action for such a breach. The provision limited damages to compensatory damages only. Plaintiff objects to these provisions on the ground that only Cannon may file suit in Minnesota; he is limited to arbitration. He claims the arbitration paragraph is both procedurally and substantively unconscionable and thus cannot be enforced.
The parties devote substantial argument to the applicability and enforceability of the arbitration provision. We need not decide this question, however, because, at least as to the causes of action plaintiff alleges in his complaint, Cannon concedes it has waived its right to enforce the arbitration clause. As a result it would be estopped from attempting to enforce the provision against plaintiff. Thus, plaintiff could litigate the discrimination and Labor Code claims in Minnesota without being subject to the limitations imposed by the arbitration paragraph.
Plaintiff argues the court erred when it granted the motion to dismiss without taking into consideration the provisions of Labor Code section 219, which states that “no provision of this article [relating to the time, amount, and method of paying wages] can in any way be contravened or set aside by a private agreement, whether written, oral, or implied.” He maintains that section prohibits an agreement “require[ing] an employee to seek to recover his unpaid wages in a forum thousands of miles away.”
To support his claim he relies on Arreguin v. Global Equity Lending, Inc. (N.D.Cal. Sept. 2, 2008, No. C 07-06026 MHP) 2008 WL 4104340. There, after the plaintiff, who had been employed by the defendant, sued in the California federal district court for, among other things, reimbursement for travel expenses under Labor Code section 2802, the defendant moved to dismiss relying on a forum selection clause designating Georgia. The court denied the motion pursuant to Labor Code section 2804, which provides that any contract to waive an employee’s rights under the article was void. It stated that the “right to reimbursement under Labor Code section 2802 exists regardless of what is provided for in the agreement.” (Arreguin v. Global Equity Lending, Inc., supra, 2008 WL at p. *4.)
Contrary to defendants’ claim, unpublished federal district court cases are “citable as persuasive, although not precedential, authority. [Citation.]” (Olinick v. BMG Entertainment (2006) 138 Cal.App.4th 1286, 1301, fn. 11.) We, however, do not find Arreguin persuasive. In denying enforcement of the forum selection clause, the court merely set out the code section prohibiting a contract waiving an employee’s right to recover travel expenses. It engaged in no analysis as to why the contract designating an out-of-state forum was a waiver.
Nor has plaintiff explained that theory. It appears his objection is being required to seek relief in another state. But that is not the equivalent of a waiver. And the applicability of a mandatory forum selection provision is not based on convenience. (Intershop Communications v. Superior Court (2002) 104 Cal.App.4th 191, 196.) There is no showing plaintiff will not be permitted to fully try the claim on the merits. Further, plaintiff provided no authority that Minnesota law will in any way limit his right to recover. If his argument is somehow based on the provisions of the arbitration agreement limiting recovery to compensatory damages, we have fully disposed of that issue above.
We are persuaded by Intershop Communications. The plaintiff there, too, relied on Labor Code section 219 to oppose enforcement of a forum selection clause that designated Hamburg, Germany. The appellate court disagreed, finding no violation of public policy and stating there had been no showing “how any provision of the Labor Code relating to the time, place, and manner of paying wages was contravened by the [applicable] agreement.” (Intershop Communications v. Superior Court, supra, 104 Cal.App.4th at pp. 200, 201.)
4. Covenant Not to Compete
Plaintiff argues that the forum selection clause is unenforceable based on the strong public policy underlying Business and Professions Code section 16600, which prohibits covenants not to compete.
A forum selection provision is generally enforceable in California. “California favors contractual forum selection clauses so long as they are entered into freely and voluntarily, and their enforcement would not be unreasonable. [Citation.]” (America Online, Inc. v. Superior Court (2001) 90 Cal.App.4th 1, 11.) “‘Given the importance of forum selection clauses, both the United States Supreme Court and the California Supreme Court have placed a heavy burden on a plaintiff seeking to defeat such a clause, requiring it to demonstrate that enforcement of the clause would be unreasonable under the circumstances of the case.’ [Citation.]” (Miller-Leigh LLC v. Henson (2007) 152 Cal.App.4th 1143, 1149; see also Smith, Valentino & Smith, Inc. v. Superior Court (1976) 17 Cal.3d 491, 495 [forum selection clause enforced when “a plaintiff has freely and voluntarily negotiated away his right to a California forum”].) “‘[I]f there is a mandatory forum selection clause, the test is simply whether application of the clause is unfair or unreasonable, and the clause is usually given effect. Claims that the previously chosen forum is unfair or inconvenient are generally rejected. [Citation.] A court will usually honor a mandatory forum selection clause without extensive analysis of factors relating to convenience. [Citation.]’” (Olinick v. BMG Entertainment, supra, 138 Cal.App.4th at p. 1294, italics omitted.)
We agree the court’s ruling was correct. Plaintiff made this same claim in the Minnesota case, where he was unsuccessful. In a reasoned and detailed analysis the Minnesota district court determined the forum selection clause was enforceable because Minnesota was not an unreasonable location, given plaintiff’s contacts with the state, his knowledge the clause was in the contract, and the minor inconvenience to parties and witnesses. Further, the agreement was not adhesive or itself unreasonable.
In rejecting plaintiff’s motion the trial court relied on Swenson v. T-Mobile USA, Inc. (S.D.Cal. 2006) 415 F.Supp.2d 1101, in which the court granted the defendant’s motion to dismiss based on a forum selection clause designating Washington, where the defendant had already filed suit. Plaintiff in that case similarly claimed that upholding the forum selection clause conflicted with the public policy set out in Business and Professions Code section 16600. The court disagreed, stating that in arguing public policy, the plaintiff was “cleverly, but impermissibly, combining the forum selection and choice of law analyses....” (Swenson v. T-Mobile USA, Inc., supra, 415 F.Supp.2d at p. 1104.) “The question is not whether the application of the forum’s law would violate the policy of the other party’s state, but rather, whether enforcement of the forum selection agreement would violate the policy of the other party’s state as to the forum for litigation of the dispute.” (Id. at p. 1105.)
The court determined “[e]nforcement of the forum selection clause itself here does not contravene a strong public policy of California. [Citation.] While... a Washington court’s application of Washington law... may arguably lead to a result conflicting with the provisions of [Business and Professions Code section] 16600, [the plaintiff] was free to, and in fact, did argue for the application of California law. The fact that the Washington court ruling resulted in a decision unfavorable to [the plaintiff] does not mandate a finding that the clause requiring the case be litigated in Washington is invalid.... The Washington court dutifully considered whether to apply Washington or California law to the agreement in question and its determination was based on an application of each states’ choice of law standards.” (Swenson v. T-Mobile USA, Inc., supra, 415 F.Supp.2d at p. 1104.)
We find this case persuasive, based on both the facts and the legal principles. And the court’s deference to the findings in the Minnesota decision is not improper reliance on collateral estoppel, as plaintiff argues.
The cases on which plaintiff relies to support his public policy argument, America Online, Inc. v. Superior Court, supra, 90 Cal.App.4th 1, Application Group, Inc. v. Hunter Group, Inc. (1998) 61 Cal.App.4th 881, and Hall v. Superior Court (1983) 150 Cal.App.3d411, are distinguishable. First, Application Group deals with a choice of law clause, not a forum selection provision as is the case here.
Second, although America Online and Hall refused to enforce a forum selection clause, the circumstances were different. In both cases the statute on which the plaintiff was relying to advance the public policy argument contained anti-waiver provisions that were the basis for the court’s refusal to enforce the forum selection clauses. In America Online it was the California Consumers Legal Remedies Act (Civ. Code, § 1750 et seq.); section 1751 of that act makes any attempt to waive the statute void. (America Online, Inc. v. Superior Court, supra, 90 Cal.App.4th at pp. 14-15 [forum selection clause not enforced based on Civ. Code, § 1751].) Hall involved Corporations Code section 25701, which voids any agreement “purporting to waive or evade the Corporate Securities Law... and compels denial of enforcement” of the forum selection clause. (Hall v. Superior Court, supra, 150 Cal.App.3dat p. 418.) Section 16600, on which plaintiff relies here, does not have such an anti-waiver provision.
Importantly, too, in none of these cases had the foreign court already rendered a ruling on the enforceability of the disputed provision. In America Online, the California suit was filed first and the issue on appeal was whether the trial court had correctly denied America Online’s writ petition to dismiss or stay the case based on a claim of inconvenient forum. Hall involved the same procedural process. Even in Application Group, where a Maryland court ruled a covenant not to compete was enforceable under Maryland law, our appellate court noted that “the parties did not actively litigate, and the Maryland court did not actually decide, the choice-of-laws issue presented in the instant action.” (Application Group, Inc. v. Hunter Group, Inc., supra, 61 Cal.App.4th at p. 887, fn. 3., italics omitted.)
In our case, however, plaintiff has already had the opportunity to and actually did fully litigate the enforceability of the forum selection clause. Only after receiving the adverse ruling did plaintiff file the instant action, presumably hoping for a friendlier attitude and favorable ruling in his home state. Given all the circumstances, plaintiff has not satisfied his heavy burden to show application of the forum selection provision would be unreasonable.
5. Amendment of Complaint
In response to a discussion in the respondent’s brief, plaintiff argues for the first time in his reply brief that the court erred in dismissing the complaint because he had the right to amend it to plead the entire agreement is void on the ground Cannon was suspended in California at the time the agreement was made (Rev. & Tax. Code, § 23304.1). Although plaintiff had the right to respond to the argument in the respondent’s brief, he has forfeited the right to challenge this issue by failing to raise it in his opening brief. (State Water Resources Control Bd. Cases (2006) 136 Cal.App.4th 674, 835-836.)
DISPOSITION
The judgment is affirmed. The request for judicial notice is denied. Respondents are entitled to costs on appeal.
WE CONCUR: ARONSON, J., IKOLA, J.