Massachusetts: Court Provides Guidance on Choice of Law and Forum Selection Clauses in Restrictive Covenants

In Oxford Global Resources, LLC v. Hernandez, the Massachusetts Supreme Judicial Court reviewed an employee’s confidentiality, non-solicitation, and non-compete agreement providing for the application of Massachusetts law, which is where the employer was headquartered, as well as a forum selection clause for Massachusetts. The employee left the employer to work for a competitor and allegedly violated the agreement. The employer filed suit for breach of the employee’s agreement in Massachusetts.

However, the employee at issue interviewed, hired, and worked only in California. Moreover, California prohibits non-compete agreements. The Court stated that choice of law provisions are only enforced in Massachusetts if they do not violate public policy. Under the circumstances, California substantive law applied over Massachusetts choice of law principles because of California’s policy favoring open competition and employee mobility. Additionally, the case was more properly heard in California because “everything relevant to [the] case happened in California,” “all relevant witnesses [were] located in California,” and the courts of California had an interest in seeing that California law was correctly applied to the dispute.

Employers who have out-of-state employees will need to be cautious about the restrictive covenants and choice of law provisions they have them sign.