Bisnar Chase Employment Attorneys Victorious in California Appellate Court
The appellate court decision is the first to address what California Labor Code Section 925 means when it says it applies to a contract that has been modified. Specifically, it looked at whether this modification must be to a forum-selection clause (which is the voidable provision addressed in Section 925) or can be to any provision of the contract.
By: Bisnar Chase
The California Court of Appeal, First District Division 4, upheld a Contra Cost County trial court's decision that the plaintiff Patrick Finch, in an employment lawsuit against his former employer, had the right to file the complaint in California instead of Ohio, despite a forum selection clause in his 2014 employment contract. The trial court denied Defendant Midwest Motor Supply Company's motion to dismiss or stay the lawsuit based on the forum selection clause. Instead, it held that the forum selection clause was voidable by Mr. Finch under California Labor Code Section 925. Defendant Midwest Motor Supply Co sought writ relief in the California Court of Appeal from that trial court order.
Midwest Motor Supply Co. argued that the action should be dismissed or stayed because Finch was required under the forum-selection clause in his 2014 employment contract to litigate his lawsuit in Franklin County, Ohio. However, the trial court held that Finch's 2017 and 2018 Compensation and Annual Plan letters modified the 2014 employment agreement that contained the forum-selection clause. Because these changes were made after Jan. 1, 2017, the court concluded that they triggered Finch's right under Section 925 of the California Labor Code to void the forum selection clause.
Section 925 states that an employer shall not require an employee who primarily resides and works in California, as a condition of employment, to agree to a provision that would require the employee to adjudicate outside of California a claim arising in California or deprive the employee of the protections offered by California law with respect to a controversy that arises in California. Section 925 applies to a contract entered into, modified or extended on or after Jan. 1, 2017. If Section 925 applies, the forum-selection clause is voidable by the employee. The issue at the center of the writ was what the statute means by a contract "modified". Defendant argued that it meant only a modification to the forum selection clause, while Plaintiff's position was that it meant a modification to any provision of the contract (which is consistent with the trial court ruling). Prior to this case, no appellate court had addressed what modified meant in terms of Section 925. The Appellate Court upheld the trial court's decision, affirmed that modification means any modification to the contract and rejected claims that such a holding would violate the Contracts Clause in the U.S. and California Constitutions.
Silvers and Beligan proved their deep knowledge of federal and state employment laws by prevailing in this case, said Brian Chase, senior partner at Bisnar Chase.
"Our employment lawyers go the extra mile when it comes to fighting hard to protect the rights of our clients," he said. "This was a precedent-setting, groundbreaking, first-ever decision of its kind from the appellate court. I'm proud of the time and commitment our team has poured into this case. The results are telling."
Silvers said this decision is significant because, as stated by the appellate court itself, that this was the first time an appellate court had even addressed this issue of what the statute meant by modified.
"This is significant because the appellate court held that the California Labor Section 925 is triggered when there is a modification to any provision of a contract on or after Jan. 1, 2017, and not just a modification to a forum-selection clause as argued by the Defendant," he said. "The court vindicated the plain meaning of the statute to apply to any modification to the contract."
The Appellate Court also affirmed the intent of the statute as being to provide employees based in California with a forum in California to litigate employment-related claims if the terms of his or her employment changed after Jan. 1, 2017, Silvers said. In addition, the court held that the statute is not retroactive and does not violate the Contract Clause of the U.S. and California Constitutions. Further, it held that the result of voiding the forum-selection clause does not result in a violation of the Contracts Clause because there is no substantial impairment since "the provision does not affect the substantive obligations of the contract, but only the procedures by which the parties may seek redress for violations of those obligations."
"This victory confirms that an employer cannot make a change to any provision of a contract that contains a forum-selection clause without triggering Section 925," Silvers said. "An employer cannot get around this statute by modifying other provisions of the agreement except the forum-selection clause, and then claim that the statute does not apply." This decision is also significant because it confirmed that including modification in the statute closed this potential loophole that Defendant tried to exploit here, Silvers said.
"Hopefully this will help ensure that such forum selection clauses in California go by the wayside, as was intended by the statute."
About Bisnar Chase
Bisnar Chase represents employees' rights and those injured by defective products and acts of negligence. The firm has been featured on a number of popular media outlets including Newsweek, Fox, NBC, and ABC, and is known for its passionate pursuit of results for their clients. Since 1978, Bisnar Chase has recovered hundreds of millions of dollars for victims and their families. For more information, please call 800-561-4887 or visit http://www.BestAttorney.com for a free consultation. We are located at 1301 Dove Street #120, Newport Beach, CA 92660.