Martinez v. Bloomberg LP, No. 12-3654 (2d Cir. Jan. 14, 2014)

| Jan 17, 2014 | Employment Contracts, Partnership Agreements, & Non-Competes, Expatriate, International Agreements |

Employees should be on their guard when contemplating a secondment or assignment agreement and ensure that they understand through counsel what law applies and where a dispute can be adjudicated. On January 14, the Second Circuit in Martinez v. Bloomberg LP affirmed the dismissal of an employee’s discrimination claims for improper venue, underscoring the enforceability – and importance – of international forum selection and choice of law clauses in cross-border employment agreements. The court held that an American employee’s discrimination claims could only be adjudicated in London under English law, as his employment agreement prescribed.

Brian Martinez worked for Bloomberg LP in the United States and Japan for several years. When he was later assigned to London, he signed an employment agreement which designated England as his “normal place of business.” The agreement also stated that it was to be interpreted in accordance with English law, and any dispute arising under the agreement would be subject to the exclusive jurisdiction of English courts.

Six years later, Bloomberg terminated Martinez’s employment during a reduction in force while he was on medical leave. He then filed a lawsuit in the Southern District of New York alleging violations of the Americans with Disabilities Act and the New York State and City Human Rights Laws. There days after filing that lawsuit, he filed a separate claim with the United Kingdom’s Employment Tribunal claiming that his termination was unlawful under English law.

Martinez later withdrew his UK claims, citing the expense of pursuing them in front of the tribunal and the cap on his recoverable damages under English law. Bloomberg moved to dismiss the American lawsuit for improper venue because of the agreement’s choice of law and forum selection clause. In response, Martinez argued that the clause did not apply to his discrimination claims, that its application to them would be unreasonable and unjust, and that his discrimination claims could be adjudicated in the US because they were statutory and did not “arise under” the agreement.

The S.D.N.Y. granted Bloomberg’s motion to dismiss, citing the strong federal policy in favor of enforcing such agreements and looking with disfavor upon Martinez’s choice to file in both jurisdictions simultaneously.

In affirming the dismissal, the Second Circuit found that the forum selection clause was enforceable under federal law, again emphasizing the strong federal policy in favor of enforcing choice of law and forum selection clauses. It also held that where an agreement contains both a valid choice of law clause and a valid forum selection clause, the substantive law identified in the choice of law clause governs interpretation the forum selection clause.

In this case, under English law Martinez’s discrimination claims “arose under” the employment agreement. Because the statute of limitations for improper dismissal had already run under English law, Mr. Martinez was left without recourse.

The lesson is clear: among other important provisions contained in a local employment agreement or an expatriate agreement, cross-border employees and their counsel should pay particular attention to forum selection and choice of law provisions. Far from being innocuous, such provisions can have enormous consequences for employees’ ability to enforce their rights under employment agreements and anti-discrimination and other laws of the United States and foreign countries.

Ultimately, employees contemplating cross-border employment and attorneys representing them should focus on including reasonable and realistic forum selection and choice of law provisions as part of the negotiation of any expatriate, assignment, or local employment agreements.

A link to the opinion can be found here.

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