Saturday, July 16, 2011

Forum Selection Clause Enforceable Against Related Non-Signatory

In East Coast Karate Studios, Inc. v. Lifestyle Martial Arts, LLC (4D10-3061 and 4D10-387), the Fourth District addressed "whether a mandatory forum selection clause contained in a non-compete agreement may be applied to nonsignatory parties who are alleged to have interfered with that agreement." 

A lawsuit was filed in Palm Beach County by a former employee and his new employer against the old employer asking the trial court to determine the enforceability of a non-compete agreement. The former employer filed a motion to transfer venue to Broward County based upon a forum selection clause and, while the motion was pending, filed a lawsuit in Broward County attempting to enforce the non-compete agreement. The Circuit Judge in the Palm Beach County case denied the motion to transfer venue and the Circuit Judge in the Broward County case entered an order transferring the action to Palm Beach County.  Both Circuit Judges' relied "on  the  same  two  grounds":       
(1) the causes of action arose in Palm Beach County where the employee and his wife resided and where his new employer maintained its office for the  transaction  of  its customary  business;  and  (2)  the employee’s  wife and  his  new  employer  were  not  signatories  to  the  non-compete agreement.  In support of the second ground, the courts relied on A-Ryan Staffing Solutions Inc. v. Ace Staffing Management Unlimited, Inc., 917 So. 2d 1000 (Fla. 5th DCA 2005).
The Fourth District reversed both orders and held:
We reverse both orders. The forum selection clause clearly is mandatory upon the employee regardless of  his residence or where the causes of action arose....We conclude that the forum selection clause applies to the employee’s wife and his new employer.
The  factors  which  the  fifth  district  identified  in  Deloitte  [Deloitte  & Touche v. Gencor Industries, Inc., 929 So. 2d 678 (Fla. 5th DCA 2006)] apply here. First, there exists a close relationship between the  employee, his wife, and his new employer. Second, the interests of the employee’s wife and his new employer are derivative of the employee’s interests because they all stem from whether the non-compete agreement is enforceable. Third, the  claims  involving the  employee’s  wife  and his new employer arise directly out of the non-compete agreement.
Based on the  foregoing, we reverse the orders on appeal and remand for the Palm Beach County circuit court to transfer venue of both actions to the Broward County circuit court.


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