MAY 2006

JUDICIAL UPDATES

Valid Forum Selection and Choice of Law Provisions in Employment Agreement Can Require Employee to Litigate FEHA Claims in Other State

Companies with operations in more than one state may be interested in the case of Olinick v. BMG Entertainment, in which the California Court of Appeal upheld the forum selection and choice of law provisions of an employment agreement with respect to an employee’s age discrimination claim under the California Fair Employment and Housing Act (“FEHA”). Martin Olinick (the “Employee”), a lawyer who worked for BMG (the “Employer”), started with the company in New York and then relocated to California. The Employer’s headquarters and principal place of business is in New York City. The Employee and Employer negotiated an employment agreement in which they were both represented by counsel. Many drafts were exchanged before the agreement was signed. One section provided that the agreement would be construed and enforced in accordance with New York law, without regard to conflicts of laws (a “choice of law” provision). The parties also agreed to the exclusive jurisdiction of the New York state and federal courts (a “forum selection” clause). When the Employee was 59, he was terminated as part of a broad reorganization following an acquisition. The Employee believed that his age was a motivating factor in the decision to fire him and sued under FEHA in Los Angeles Superior Court. The trial court granted the Employer’s motion to enforce the contract provisions. The court stayed the action to give the Employee an opportunity to file suit in New York.

The appellate court affirmed that decision. Courts will enforce a mandatory forum selection clause unless it is unfair or unreasonable. Inconvenience or additional expense is not part of the determination. Employment discrimination claims may be held subject to forum selection clauses so long as the employee has a legitimate remedy available to him or her. The presence of such a remedy in another state supports the argument that the forum selection clause does not violate California’s public policy against age discrimination. The court found that New York law provides the ability to recover all of the same types of damages as the California FEHA. Therefore, New York law provided an adequate remedy for the Employee, and application of the forum selection clause was reasonable.

If you would like to discuss these or any other employment law matters, please do not hesitate to contact any member of Klinedinst's Employment Law Department.