96 | 2023 Cal-Peculiarities ©2023 Seyfarth Shaw LLP www.seyfarth.com second-arbitrator provision unconscionable even though it neutrally permitted either party to seek review without regard to any monetary threshold.142 5.3 Hostility toEmployer Mandated ForumSelectionandChoiceofLaw Courts throughout America generally enforce forum-selection and choice-of-law provisions. But in California it’s different. California has shown special hostility to these provisions in the employment context. A 2016 California statute forbids employers to require employees who reside and work in California to agree, as a condition of employment, to litigate or arbitrate employment disputes either outside of California or under another state’s laws. The only exception is where the employee was individually represented by a lawyer in negotiating an employment contract.143 The statute applies to any contract “entered into, modified, or extended on or after January 1, 2017.” An employer that modified pay provisions of a 2014 employment agreement in 2018 thus found itself unable to enforce the agreement’s selection of an Ohio forum, even though the forum-selection clause itself had not been modified.144 Even before this statute hobbled employer efforts to select venue and the applicable law, California courts were reluctant to enforce forum-selection and choice-of-law provisions. One Court of Appeal decision reasoned that an arbitration agreement, by choosing Texas law to govern the parties’ disputes, was unconscionable.145 The Court of Appeal faulted Texas law for not recognizing an unconscionability defense, for not recognizing a private right of action to enforce wage and hour protections, for imposing a one-year limitations period, and for permitting the defendant to recover attorney fees and costs it could not recover under California law.146 The Court of Appeal addressed which state—California or Texas—had the greater interest in enforcing its law in this circumstance: “We acknowledge the value and efficiency to [a Texas-based company] of having a predictable, uniform wage-and-hour regime wherever it does business nationally, and we do not minimize the priority Texas may place on providing a hospitable legal climate for Texas-based employers that is conducive to such uniformity. But when weighed against the countervailing interest of California in ensuring that its statutory protections for California-based workers are not selectively disabled by out-of-state companies wishing to do business in this state, we think California has the materially greater interest. … [T]he parties’ choice of Texas law will not be enforced ‘for the obvious reason’ that it would be contrary to ‘fundamental policy’ in California to do so.”147 In another decision pitting California law against Texas law, the Court of Appeal ruled against another Texasbased company.148 In this case, Alliantgroup, LP had an employee agreement containing a forum-selection clause requiring any lawsuit against the company to be heard in Texas.149 The employee nonetheless sued in California when asserting claims for unpaid overtime pay, meal and rest premium pay, and penalties for inadequate wage statements.150 Although the trial court found the forum-selection clause enforceable and stayed the lawsuit, the Court of Appeal reversed, holding that the clause had the potential to operate as a waiver of the employee’s unwaivable statutory rights under the Labor Code.151 The Court of Appeal ruled: “Although a party opposing enforcement of a forum-selection clause ordinarily bears the burden to show enforcement would be unreasonable or unfair, the burden is reversed when the underlying claims are based on statutory rights the Legislature has declared to be unwaivable.”152 In that instance, the party seeking to enforce the forum-selection clause has the burden to show enforcement would not diminish unwaivable California statutory rights; otherwise a forum-selection clause could be used to force a plaintiff to litigate in another forum that may not apply California law.”153
RkJQdWJsaXNoZXIy OTkwMTQ4