In another example of out-of-state employers utilizing choice of forum and choice of law provisions to bind California employees to restrictive covenants, the Pennsylvania Superior Court recently held that a Pennsylvania choice of law and forum clause was enforceable as against a California resident.

The case, Synthes USA Sales, LLC v. Harrison, involved a sales consultant, Harrison, who worked for Synthes in the medical device industry. Harrison signed a non-solicitation agreement in 2007 in which he agreed not to solicit Synthes’s customers for a period of one year after his employment ended.  The agreement contained a clause stating,

CHOICE OF LAW AND FORUM: This agreement will be governed by Pennsylvania law applicable to contracts entered into and performed in Pennsylvania.  I agree that this agreement can be enforced by any federal or state court of competent jurisdiction in the Commonwealth of Pennsylvania and hereby consent to the personal jurisdiction of these courts.

Harrison quit his employment on November 2, 2012, and started working in a similar capacity for a competitor. Within a half hour of giving his notice, Harrison filed an action for declaratory relief in the U.S. District Court for the Eastern District of California.  On November 15, 2012, Synthes filed a complaint in Pennsylvania seeking to enforce the agreement with a preliminary injunction.  Synthes also moved to dismiss the California action, apparently on the grounds that it involved an earlier 2005 agreement between the parties.  The California federal court dismissed the action and an appeal is still pending in the Ninth Circuit Court of Appeals.

Meanwhile, the Pennsylvania Court of Common Pleas dismissed Synthes’s action and applied California law. That court held that the choice of law provision, by its own terms, only applied to contracts “entered into and performed in Pennsylvania.”  The Superior Court reversed this holding. It applied the “last antecedent rule” and interpreted the limiting language of “entered into and performed in Pennsylvania” to define the type of law that would govern and not limiting which contracts were subject to the choice of law.  The court remanded for further proceedings.

This litigation offers important lessons in careful contract drafting and contract interpretation. It also highlights an increasing willingness of courts to enforce restrictive covenant agreements against employees in California, based on a choice of law, choice of forum and consent to jurisdiction provisions.  This trend was bolstered by the U.S. Supreme Court’s decision in Atlantic Marine Construction Co. v. U.S. Dist. Court for the Western District of Texas.