Virginia Court Enforces Forum Selection Clause

A federal court in Richmond, Virginia recently held that a Massachusetts employee who left the company and began soliciting former clients was required to defend her actions in a Virginia court, even though she never worked in Virginia. The Hill Group of New England, LLC, v. Susan LePage, No. 3:21cv757 (E.D. Va. 5/16/22).   The decision is a stark reminder that employees who sign restrictive covenant agreements as part of their employment need to pay close attention to the terms of the agreements and be prepared to be bound by their requirements.

The case arose when Susan LePage, an insurance account executive in Massachusetts where she resides, left her employment with The Hilb Group- New England (“THG-NE”) in October 2021.  LePage had worked for the Marsh-Kemp Insurance Agency in Massachusetts for more than 20 years until it was purchased by THG-NE in March 2019. THG-NE is a subsidiary of The Hills Group, whose principal place of business is Richmond. 

When LePage was hired by THG-NE, she signed a “Confidentiality and Non-Solicitation Agreement”  (“Agreement”). The Agreement included a provision barring her, for a two year period following her resignation,  from soliciting any THG-NE customers “for the purpose of selling or providing any Competitive Products or Services.” According to the lawsuit brought by THG-NE, nine days before she resigned, LePage sent a spreadsheet containing a list of nearly 100 customers to her personal email account.  The list, entitled “Sues Book of Biz,” included information about each customer’s purchases, including total revenue, total amount billed to the customer, number of policies owned by the customer, and their premium amounts.  Immediately after leaving, LePage began selling competing insurance products. 

Several weeks after Lepage left THB-NE, the company sent her a letter demanding that she come into compliance  with her obligations under the Agreement.  When LePage did not respond to the letter, THG-NE sued her in federal court in Richmond.  

Lepage moved to dismiss the lawsuit on the grounds of improper venue under Federal Rule of Civil Procedure 12(b)(3) and the doctrine of forum non conveniens.  THG-NE opposed the motion, citing the Agreement’s forum selection clause. That clause provides that “the Company and Employee hereby consent to the exclusive jurisdiction of the courts of the Commonwealth of Virginia located in the City of Richmond and of the United States District Court for the Eastern District of Virginia, Richmond Division … in connection with any action, suit, or other proceeding in connection with or arising out of or relating to this Agreement.”

Judge Gibney denied LePage’s Motion to Dismiss, ruling that the forum selection clause meant what it said. The fact that the clause required that litigation be commenced in Richmond made it presumptively enforceable, and LePage failed to meet her burden of showing that enforcement would be unreasonable. “[A]lthough the Agreement’s forum selection clause compels LePage to defend herself in this District, far from her home, she chose to sign the Agreement instead of seeking a new position in the industry.” 

The Court’s decision in this case should be a wake up call to employees who sign restrictive covenant agreements, as well as attorneys who advise such employees. Notwithstanding the seeming inequity of requiring a Massachusetts resident who had never even been to Virginia to defend her livelihood in a distant courtroom, Judge Gibney found the express language of the forum selection clause to be controlling.  Employees who wish to avoid this result should either seek to negotiate a change at the time of their hire or be prepared to live with the consequences. 

 

 

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