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Court of Appeal:
Any Change to Employment Contract Voids Forum-Selection Clause
By Sandra Hong, Staff Writer
Any modification to an employment contract after Jan. 1, 2017, triggers a California employee’s right to void a forum-selection clause under Labor Code §925, Div. Four of the First District Court of Appeal has held, denying a petition for writ of mandate sought by an Ohio automotive supplier being sued by an employee in Contra Costa Superior Court.
Midwest Motor Supply, which does business as Kimball Midwest and is based in Columbus, Ohio, argued that its former employee, Patrick Finch, had to litigate his claims against the company in Ohio’s Franklin County, as provided in the forum-selection clause in Finch’s original 2014 employment agreement.
In denying Midwest’s petition for writ relief, Justice Tracie L. Brown said Wednesday:
“We appear to be the first appellate court in this state to address whether section 925 applies to any modification to a contract or is limited to the modification of a forum-selection clause specifically.”
Labor Code §925(f)
Midwest moved to dismiss or stay Finch’s lawsuit based on forum non conveniens, arguing that modifications to Finch’s employment contract in 2017 and 2018 did not touch the forum-selection clause, and that Finch therefore could not void the clause under §925.
Contra Costa Superior Court Judge Edward G. Weil denied Midwest’s motion, finding that the modifications, which were specific to Finch’s compensation, allowed him to void the forum-selection clause in the original agreement.
Section 925 prohibits an employer from requiring any California-based employee to agree to litigate claims arising within the state in an outside forum. Any violating contract provision “is voidable by the employee” and would bounce the matter into a California court.
Midwest and Finch disagreed as to the specific meaning of §925(f), which provides:
“This section shall apply to a contract entered into, modified, or extended on or after January 1, 2017.”
Plain Reading
Brown said a “plain and commonsense” reading of the statutory language was enough to resolve the scope and meaning behind §925(f).
“Applying these principles, we agree with Finch’s interpretation and conclude that under section 925, a forum-selection clause is voidable by an employee if it is contained in a contract that is modified on or after January 1, 2017, irrespective of whether the modification was to the forum-selection clause or another provision,” she wrote.
Brown rejected Midwest’s argument that §925(f) only applies if the forum-selection clause is modified.
“Instead, section 925 applies, without limitation, to the modification of a ‘contract,’ which is well understood to mean every promise agreed to as part of a transaction,” she said, adding:
“Read together, the provisions of section 925 state unambiguously that a forum-selection clause in a contract is voidable by an employee when any provision of the contract is modified on or after January 1, 2017.”
Finch filed a lawsuit against Midwest in September 2019 alleging violations of the Labor Code for failing to pay wages in a timely manner and reimbursement of business expenses. He also alleged violation of Business and Professions Code §17200, the Unfair Competition Law, and pled a cause of action under the Private Attorneys General Act.
Presiding Justice Stuart R. Pollack and Justice Alison M. Tucher joined in Brown’s opinion.
The case is Midwest Motor Supply Co. v. Contra Costa County Superior Court, 2020 S.O.S. 5135.
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