FORT LAUDERDALE BUSINESS LITIGATION: FORUM SELECTION CLAUSES IN NON-COMPETE AGREEMENTS ARE ENFORCEABLE

Non-compete agreements between employers and their employees sometimes contain “forum selection clauses” that dictate where subsequent lawsuits related to the non-compete agreement can be filed. Under Florida and federal law, forum-selection clauses are presumptively valid absent a “strong showing” that enforcement would be unfair or unreasonable under the circumstances. It is important for employers to consider whether to include forum selection clauses when drafting their employment agreements because such a clause provides predictability for the employer if litigation ever arises. This is particularly true for businesses attempting to enforce non-compete agreements against former employees residing in different states. Peter Mavrick is a Fort Lauderdale business litigation lawyer, and represents clients in business litigation in Miami, Boca Raton, and Palm Beach. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

Like its federal counterpart, Florida law presumes that a contract’s forum selection clause is valid and enforceable. Am. Safety Cas. Ins. Co. v. Mijares Holding Co., LLC, 76 So. 3d 1089 (Fla. 3d DCA 2011). If an employer’s non-compete agreement contains a forum selection clause, courts will first determine whether the forum selection clause is enforceable. To do this, courts must first assess whether the given clause is mandatory or permissive. Slater v. Energy Servs. Grp. Int’l, Inc., 634 F.3d 1326 (11th Cir. 2011). A mandatory clause “dictates an exclusive forum for litigation under the contract” whereas a “permissive clause authorizes jurisdiction in a designated forum but does not prohibit litigation elsewhere.” Global Satellite Commc’n Co. v. Starmill U.K. Ltd., 378 F.3d 1269 (11th Cir. 2004). Mandatory clauses are accordingly given more weight. AutoNation, Inc. v. Hall, 2019 WL 3712008 (S.D. Fla. May 29, 2019). A mandatory forum selection clause is “presumptively valid and enforceable” absent a “strong showing that enforcement would be unfair or unreasonable under the circumstances.” Krenkel v. Kerzner Int’l Hotels Ltd., 579 F.3d 1279 (11th Cir. 2009).

The Eleventh Circuit Court of Appeals found that a forum selection clause can “be invalidated when: (1) its formation was induced by fraud or overreaching; (2) the plaintiff would be deprived of its day in court because of inconvenience or unfairness; (3) the chosen law would deprive the plaintiff of a remedy; or (4) enforcement of the clause would contravene public policy.” Krenkel v. Kerzner Int’l Hotels Ltd., 579 F.3d 1279 (11th Cir. 2009). Federal and Florida courts have further found that litigants can attempt to avoid a valid forum selection clause by making an evidentiary showing that the “contractually selected forum is inconvenient.” Stewart Organization, Inc., v. Ricoh Corporation, 810 F.2d 1066 (11th Cir. 1987). Indeed, courts routinely hold that a “factor which might justify refusal to enforce a forum selection clause would be ‘if the chosen forum is seriously inconvenient for the trial of the action.’” The Bremen v. Zapata Off–Shore Co., 407 U.S. 1 (1972). However, this is a heavy burden to meet given a presumptively valid forum selection clause.

The Supreme Court of Florida has “emphasize[d] that the test of unreasonableness is not mere inconvenience or additional expense.” A “party seeking to avoid enforcement of a mandatory forum selection clause bears a heavy burden of establishing that the enforcement is unjust or unreasonable and must demonstrate that the contractually designated forum essentially amounts to ‘no forum at all.’” Castro v. Pullmantur, S.A., 220 So. 3d 531 (Fla. 3d DCA 2017). As such, the party opposing the forum selection clause must demonstrate that continuing litigation in the contractually selected forum will be so “gravely difficult and inconvenient that he will for all practical purposes be deprived of his day in court.” Performance Paint Yacht Refinishing, Inc. v. Haines, 190 F.R.D. 699 (S.D. Fla. 1999).

Reasonable and enforceable forum selection clauses ultimately provide benefits to the contracting parties. These clauses allow employers to designate convenient court venues that increase predictability regarding the contract’s enforcement under the chosen forum’s governing law. “Forum selection clauses provide a degree of certainty to business contracts by obviating jurisdictional struggles and by allowing parties to tailor the dispute resolution mechanism to their particular situation.” Manrique v. Fabbri, 493 So. 2d 437 (Fla. 1986). Reasonable forum selection clauses also can reduce unnecessary travel expenses for the parties by choosing a forum based on convenience and proximity. Therefore, it is important for employers to carefully consider the most appropriate and convenient forum for prospective litigation, when drafting their employment agreements.

Peter Mavrick is a Fort Lauderdale business litigation lawyer, and represents clients in Miami, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.