November 3, 2010
JOHN R. MCCRACKEN, PLAINTIFF-APPELLANT,
MONOSOL RX, LLC, DEFENDANT-RESPONDENT.
On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-1533-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 15, 2010
Before Judges Fuentes, Gilroy and Ashrafi.
In this appeal we are required to determine the enforceability of a forum selection clause in a contract of employment entered into by plaintiff John R. McCracken when he agreed to serve as Senior Vice President for Business Development and Licensing for defendant Monosol RX, LLC, a Delaware corporation. Plaintiff is a New Jersey resident; the employment contract designates Tarrant County, Texas as the venue for "any action brought concerning or arising from" the employment agreement.
The issue arises in the context of a complaint filed by plaintiff in the Law Division in Morris County challenging the grounds for his termination. In lieu of filing a responsive pleading, defendant filed a motion to dismiss the complaint pursuant to the venue selection clause in the agreement. After considering the arguments of counsel, which included a certification from plaintiff attesting to the alleged "inconvenience" he would endure if compelled to prosecute his case in Texas, the trial court granted defendant's motion and dismissed plaintiff's complaint without prejudice, subject to being re-filed in Texas.
We now affirm substantially for the reasons expressed by Judge Wright. Although this case was dismissed before defendant filed a responsive pleading, we are satisfied that the matter was ripe for disposition as a matter of law because the trial court's ruling was not predicated upon the legal viability of plaintiff's underlying claims.
Defendant is a Delaware corporation with its corporate headquarters located in Warren, New Jersey; it also has manufacturing, research, and development facilities in Indiana, and a laboratory in Tennessee. Defendant's principal owner and two members of its board of directors are the only individuals connected to this company who reside in Texas.
Plaintiff, a New Jersey resident, was hired by defendant as its Senior Vice President of Business Development and Licensing on May 15, 2008, to work in its New Jersey facility. In the course of the application process, plaintiff's personal contacts with defendant's representatives occurred only in New Jersey. He did, however, conduct two telephone interviews with two board members who reside outside of this State, one in Texas and one in New York.
As a condition of employment, plaintiff entered into an Executive Employment Agreement (the agreement) on April 28, 2008, that comprehensively described the terms and conditions of his employment. Although for our purposes it is not necessary to describe in detail all of the provisions included therein, we note that the agreement provided for a two-year term of employment, established plaintiff's annual compensation at $250,000 with a forty percent annual bonus if he met certain performance targets, and included a Termination for Cause provision that sets out eleven categories or grounds for terminating plaintiff's employment.
Concerning the adjudication of disputes arising from plaintiff's employment, the agreement included a venue jurisdiction clause providing that any litigation concerning the agreement was to be filed in Tarrant County, Texas. Specifically, Section 12 of the agreement states:
Venue: Jurisdiction. Any suit concerning this Agreement shall be filed solely in the courts of Tarrant County, Texas. In any action brought concerning or arising from this Agreement, [plaintiff] hereby agrees that he shall be subject to the jurisdiction of the state and federal courts of Texas.
On February 4, 2009, plaintiff received a "Cause Notice Period" letter describing defendant's concerns about plaintiff's unsatisfactory job performance. Pursuant to Section 5(a) of the agreement, this notice is intended to apprise plaintiff of the specific problem, or "cause," defendant had with plaintiff's performance and should include "a description of the evidence upon which the Company has relied to support such [a] finding." Plaintiff has thirty days from the receipt of this notice "to cure the action or inaction giving rise to the written notice." At the end of the thirty-day period, plaintiff received a letter terminating his employment for cause.
According to plaintiff, although he traveled to several states in the course of his employment, he did not travel to Texas, did not have any contacts with anyone in Texas, and no one affiliated with defendant in Texas has knowledge of the events surrounding his employment and subsequent termination.
In his complaint before the Law Division, plaintiff avers that, contrary to the specific requirements under Section 5(a) of the agreement, the February 4, 2009 Cause Notice Period letter did not provide specific evidence of the duties he allegedly failed to perform. His subsequent efforts to obtain a verbal account of his deficiencies from defendant's representatives were likewise unsuccessful. Plaintiff maintains that without such evidence, defendant cannot establish cause to terminate his employment. Plaintiff's suit against defendant is thus framed as a breach of contract action.
Defendant moved to dismiss plaintiff's complaint based on the venue selection clause in the agreement. In his certification in opposition to the motion, plaintiff requested that the court declare the venue selection clause unenforceable because "it would represent a serious inconvenience to [him], and [he] would effectively be deprived of [his] day in court" if he were compelled to litigate this case in Texas. The only evidence presented by plaintiff in support of his "serious inconvenience" claim was the following statement included in his certification:
If this case were to be heard in Tarrant County, Texas, I do not believe I could continue it. The cost of hiring an attorney in Texas, having that attorney travel to New Jersey to conduct all the depositions and document reviews and [traveling] to Texas and bringing all my witnesses to Texas for trial would present too onerous a financial burden on me.
On the return date of defendant's motion to dismiss, plaintiff's counsel also proffered that none of the potential witnesses or "persons with knowledge" of the relevant facts in the case resided in Texas. Defense counsel disputed plaintiff's claims that defendant did not have any connections to Texas. According to defense counsel, one of defendant's principal owners and two members of its board of directors reside in Texas.
Defense counsel argued, however, that defendant's ties to Texas were not a relevant consideration in determining whether the venue selection clause is enforceable. Relying on Wilfred MacDonald v. Cushman, 256 N.J. Super. 58 (App. Div. 1992), defendant argued that forum selection clauses are presumptively valid contractual provisions and plaintiff had not met his burden of establishing sufficient grounds for not enforcing the particular provision in this case.
Judge Wright rejected plaintiff's argument and granted defendant's motion to dismiss the complaint, reserving plaintiff the right to re-file this action in Texas. In so ruling, Judge Wright found "[p]laintiff's certification that litigation in Texas will preclude his ability to pursue this matter" lacked competent evidential support. Although he recognized that plaintiff had not had the opportunity to conduct discovery, Judge Wright nevertheless concluded that "any facts the [o]pposition might use to establish the grave and serious inconvenience to the [p]laintiff are available to him presently. No further discovery should be necessary on issues pertaining to this particular burden."
Plaintiff now appeals, arguing that the trial court erred in failing to declare the venue selection clause unenforceable because: (1) there is no relationship between the contractual forum and the controversy; (2) the distance between the selected forum and the relevant events contributes to its unreasonableness; and (3) plaintiff is challenging the clause as an individual, as opposed to a business entity.
We review the trial court's decision de novo because the questions raised involve purely issues of law. Estate of Hanges v. Metro. Prop. Cas. Ins. Co., 202 N.J. 369, 382-83 (2010). With this standard in mind, we reject plaintiff's arguments substantially for the reasons expressed by Judge Wright. We add only the following brief comments.
It is now well-established that under our State's common law, we will uphold and enforce a venue selection clause in a contract unless the clause: (1) is the result of "fraud, undue influence, or overweening bargaining power;" (2) violates "a strong public policy;" or (3) enforcement would be seriously inconvenient for the trial. M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10-15, 92 S.Ct. 1907, 1913-16, 32 L.Ed. 2d 513, 520-23 (1972); Kubis & Perszyk Assocs. v. Sun Microsystems, Inc., 146 N.J. 176, 188 (1996). Absent such a showing, venue selection clauses are presumptively valid and should be "specifically" enforced. M/S Bremen, supra, 407 U.S. at 13-15, 92 S.Ct. at 1915-16, 32 L.Ed. 2d at 523.
In Wilfred MacDonald we upheld a venue selection clause in a dealership agreement between a New Jersey business and its supplier that selected Lincoln, Nebraska as the venue to litigate its breach of contract cause of action. Wilfred MacDonald, supra, 256 N.J. Super., at 62. Similar to plaintiff's argument here, the plaintiff in Wilfred MacDonald argued that it would be seriously inconvenient to litigate the case in Nebraska. Id. at 64-65. In rejecting this argument, we made the following observations:
Neither do we find the difficulty MacDonald might have in producing its witnesses in Nebraska to be the type of inconvenience that would warrant non[-]enforcement. As Bremen emphasizes, it is not inconvenience per se to the parties, but whether enforcement of the forum selection is "seriously inconvenient for the trial," or as further characterized in Bremen, whether "trial in the contractual forum will be so gravely difficult and inconvenient that he will for all practical purposes be deprived of his day in court." The most MacDonald has asserted here is that proceeding in Nebraska would make it difficult to obtain the presence of non-party witnesses.
However, it does not indicate whether such witnesses would not voluntarily testify or whether other less burdensome procedures could not be employed to obtain such testimony, such as de bene esse depositions. [Id. at 65 (internal citations omitted) (emphasis added).]
Plaintiff raises similar generalized allegations of inconvenience with respect to the depositions of potential witnesses in Texas and the cost involved in document production, traveling to Texas, and retaining local counsel in Texas. We reject these arguments essentially for the same reasons expressed by our colleagues in Wilfred MacDonald. Indeed, we note that in the eighteen years that have transpired since Wilfred MacDonald was published, revolutionary technological advancements have occurred that make the modern practice of law significantly more efficient and far less dependent on direct personal interactions. Video-conferencing enables lawyers to conduct live de bene esse depositions from the convenience of their local offices, and electronic document transmissions and other forms of electronic communications have greatly decreased the cost of document production. Plaintiff has also failed to present any evidence showing that he will be unable to retain counsel in Tarrant County, Texas or that an attorney in Texas will be more costly than one in New Jersey.
We also reject plaintiff's argument predicated upon the lack of contacts between Texas and both himself and defendant's business activities. These considerations are irrelevant here because we do not review the enforceability of a contractual venue selection clause under the standards applicable to a forum non conveniens analysis. Paradise Enterprises Ltd. v. Sapir, 356 N.J. Super. 96, 105-06 (App. Div. 2002).
Finally, we share Judge Wright's concerns that the timing of defendant's motion deprived plaintiff of the opportunity to conduct discovery or otherwise investigate the potential cost in litigating this case in Texas as opposed to New Jersey. However, plaintiff did not oppose defendant's motion before the trial court based on a lack of discovery, nor did plaintiff's counsel ask the court to set a period of discovery limited to these issues. Plaintiff's counsel's strategy before Judge Wright was succinctly stated as follows:
The burden is not ours, Your Honor. We didn't file this motion, we're opposing the motion. The burden is on the defendant.
If we make an assertion of fact to which there is no counter statement of fact, the court should be accepting that fact. We have as assertion of fact from a litigant that he cannot afford the cost of hiring a lawyer in Texas who would have to handle this case and come to New Jersey for depositions. And -- and then he would have to go to Texas to litigate the case.
Plaintiff implicitly continued this approach on appeal by not arguing that the trial court erred in deciding this motion without affording him the opportunity to conduct discovery to identify with particularity the evidence supporting his claim of "serious inconvenience."
Plaintiff's position before the trial court and implicitly on appeal fails to appreciate that the venue selection clause at issue is presumptively valid. Defendant's burden as the moving party was limited to presenting evidence that plaintiff duly executed the agreement containing the venue selection clause. Once this was established, it was plaintiff's burden to rebut the presumption of validity. A certification containing language that states, in a conclusory fashion, that to conduct depositions and document reviews in Texas and bring witnesses to Texas for trial "would present too onerous a financial burden" is insufficient.
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