Edward Melia vs. Zenhire, Inc., & another
Case Details
- Citation
- 462 Mass. 164
- Procedural Posture — the stage the case had reached
- motion to dismiss
- State
- Massachusetts
- Circuit
- 1st Circuit
Related Laws
No specific laws identified for this ruling.
Claim Types
Outcome
The court affirmed the dismissal of the plaintiff's Massachusetts Wage Act claim, holding that the forum selection clause in the employment contract requiring disputes to be resolved in New York courts was enforceable and did not violate public policy, as a New York court would apply Massachusetts law to the wage claim.
Excerpt
Edward Melia vs. Zenhire, Inc., & another. Suffolk. January 3, 2012. May 8, 2012. Present: Ireland, C.J., Spina, Cordy, Botsford, Gants, Duffly, & Lenk, JJ. Contract, Employment, Choice of forum clause. Massachusetts Wage Act. Practice, Civil, Choice of forum, Motion to dismiss. In a civil action alleging a violation of the Massachusetts Wage Act, G. L. c. 149, §§ 148 and 150 (Wage Act), the judge properly granted the defendant employer’s motion to dismiss, where a forum selection clause in the employment contract at issue, which dictated that all disputes arising out of the contract or employment relationship were to be resolved in courts situated in New York, was enforceable under New York law and the plaintiff had not alleged any unfairness that would compel this court to reject the parties’ choice of a foreign forum [168-169]; where public policy did not prevent application of the forum selection clause to Wage Act claims [169-173]; and where, although a forum selection clause that, in operation, would deprive an employee of substantive rights guaranteed by the Wage Act would violate public policy and would be unenforceable, this court was persuaded that a New York court, applying New York’s choice-of-law rules, would apply Massachusetts law in this case [173-181]. Statement of recognition of a presumption that forum selection clauses in employment contracts are enforceable with respect to claims under the Massachusetts Wage Act, G. L. c. 149, §§ 148 and 150, and a description of the evidence that a party seeking to rebut such a presumption must produce. [181-182] Civil action commenced in the Superior Court Department on May 1, 2009. A motion to dismiss was heard by Paul E. Troy, J. The Supreme Judicial Court on its own initiative transferred the case from the Appeals Court. John P. Carr (Christine Ann Faro with him) for the plaintiff. Daniel S. Field for the defendants. Benjamin G. Robbins & Martin J. Newhouse, for New England Legal Foundation, amicus curiae, submitted a brief. Robert H. Fritzinger. Edward Melia’s complaint also named Deborah Fritzinger as a defendant, but in his opposition to the defendants’ motion to dismiss, Melia waived his claims against her and she is not a party to this appeal. Cordy, J. In April, 2007, the plaintiff, Edward Melia, a Massachusetts resident, entered into an executive employment contract with the defendant Zenhire, Inc. (Zenhire). A forum selection clause dictated that all disputes arising out of the contract or the employment relationship were to be resolved in courts situated in Erie County, New York, Zenhire’s principal place of business. Zenhire allegedly failed to pay Melia’s salary from August, 2007, through February, 2008. Melia commenced the present action in the Superior Court, alleging breach of contract, fraud, quantum meruit, and violations of the Massachusetts Wage Act, G. L. c. 149, §§ 148, 150 (Wage Act). With respect to the latter claim, Melia contended that the forum selection clause operated as a “special contract” that impermissibly exempted his employer from the requirements of the Wage Act. A judge in the Superior Court granted the defendants’ motion to dismiss, pursuant to Mass. R. Civ. P. 12 (b) (6), 365 Mass. 754 (1974), reasoning that Melia could pursue his Wage Act claim in New York. Melia appealed, and we transferred the case to this court on our own motion. We conclude that a forum selection clause operates as a special contract only when three conditions are met: the employee’s claim is covered by the Wage Act; the court of the forum State, applying its choice-of-law principles, would choose a law other than that of Massachusetts to govern the dispute; and application of the foreign law will deprive the employee of a substantive right guaranteed by the Wage Act. Under modem choice-of-law doctrines, these conditions will rarely coincide. On the facts alleged in the present case, a New York court, applying New York’s choice-of-law doctrine, would certainly apply the Wage Act to this dispute. Because enforcement of the fomm selection clause would not deprive Melia of the protections of the Wage Act, we affirm the judge’s dismissal of the action. 1. Background. In reviewing a dismissal under mle 12 (b) (6), we may consider the allegations in the complaint, items appearing in the record, and exhibits attached to the complaint. Schaer v. Brandeis Univ., 432 Mass. 474, 477 (2000), quoting 5A C.A. Wright & A.R. Miller, Federal Practice and Procedure § 1357, at 299 (1990). We accept as true the factual allegations in the complaint, as well as any favorable inferences drawn therefrom. Ginther v. Commissioner of Ins., 427 Mass. 319, 322 (1998). Zenhire is a Delaware corporation with a principal place of business in Amherst, New York, a suburb of Buffalo. Zenhire was founded in 2003 to develop Internet-based tools and services for the recruiting industry. The defendant Robert H. Fritzinger, a New York resident, was at all pertinent times Zenhire’s president and chief executive officer. On April 2, 2007, Melia and Zenhire entered into an executive employment contract, pursuant to which Zenhire hired Melia as its vice-president of product and business development. Melia accepted a three-year period of employment with automatic renewal of additional one-year terms, unless either party objected. Zenhire reserved the right to terminate Melia at any time for cause. Zen-hire agreed to compensate Melia with an initial base salary of $150,000. Melia was also eligible to participate in an executive bonus plan and a stock option plan. The contract contained choice-of-law and forum selection clauses, as follows: “This agreement shall be binding upon the parties hereto, and shall be governed and construed in accordance with the laws of the State of New York. Further, Company and Employee (i) agree that any and all disputes arising out of this Agreement or the employment relationship created thereby shall be resolved in the courts situated in the State of New York, County of Erie and (ii) consent to the venue of all courts situated in the State of New York, County of Erie.” Melia worked out of an office in Boston. At the inception of the contract, he regularly spent time in the Buffalo area, but at all times he resided in Boston. Melia conducted meetings with prospective customers of Zenhire only in Massachusetts. Zen-hire withheld Massachusetts income taxes, paid Massachusetts unemployment insurance, and obtained Massachusetts workers’ compensation insurance for Melia’s benefit. Through August 29, 2007, both parties performed their obligations under the contract. Zenhire then experienced financial difficulties and stopped paying Melia. On September 28, 2007, Fritzinger told Melia that he was finalizing a deal that would provide Zenhire with financing. On November 16, 2007, Fritz-inger again confirmed that Zenhire would compensate Melia for his work. Melia alleges he continued performing his duties pursuant to the contract through February, 2008, relying on Zenhire’s repeated promises to compensate him. In February, 2008, Melia alleges he was forced to leave Zenhire for financial reasons and began to collect unemployment compensation. As of the end of February, 2008, Melia was allegedly owed $103,400, including unpaid wages of $75,000, vacation and sick day wages, severance pay, and unreimbursed expenses. In September, 2008, Melia filed a complaint with the Attorney General with respect to Zenhire’s alleged violation of the Wage Act. The Attorney General granted Melia the authority to file a civil action against Zenhire. Melia then commenced the present action in the Superior Court in May, 2009, against Zenhire, Fritz-inger, and Deborah Fritzinger (Fritzinger’s wife and a director of Zenhire), alleging violation of the Wage Act, breach of contract, quantum meruit, and fraud. The defendants moved to dismiss the entire action on the basis of the forum selection clause, and they also moved to dismiss each count on specific grounds. Melia voluntarily waived his claims against Deborah Fritzinger (see note 1, supra) and the count claiming quantum meruit. The judge initially denied the defendants’ motion to dismiss Melia’s Wage Law claim, based on his understanding that the contract’s choice-of-law provision called for application of New York law to all counts. He further concluded that application of New York’s Payment of Wages Law, which was less protective of employees than the Wage Act, would conflict with fundamental Massachusetts policy. Consequently, the judge concluded that the forum selection clause would be unfair and unreasonable to Melia. The defendants moved for reconsideration. After considering arguments from both parties, the judge reversed his prior ruling with respect to the forum selection clause, holding that enforcement of the forum selection clause was fair and reasonable because there was no evidence of fraud, duress, or substantial imbalance of bargaining power between the parties; and that a New York court would engage in the same choice-of-law analysis as a Massachusetts court, and “may apply” the Wage Act to Melia’s claims. Melia appealed. 2. Validity of the forum selection clause in general. We first examine the validity of the forum selection clause irrespective of the Wage Act claim. Because the contract states that it is to be governed and construed according to the laws of New York, we determine the validity of the forum selection clause according to the law of our sister State. See Jacobson v. Mailboxes Etc. U.S.A., Inc., 419 Mass. 572, 575 (1995). Like Massachusetts courts, see id. at 574-575, New York courts consider forum selection clauses to be “prima facie valid and enforceable unless shown by the resisting party to be unreasonable.” Brooke Group Ltd. v. JCH Syndicate 488, 87 N.Y.2d 530, 534 (1996), citing The Bremen v. Zapata Offshore Co., 407 U.S. 1, 15-18 (1972). A “forum selection clause is prima facie valid and enforceable unless it is shown by the challenging party to be unreasonable, unjust, in contravention of public policy, invalid due to fraud or overreaching, or it is shown that a trial in the selected forum would be so gravely difficult that the challenging party would, for all practical purposes, be deprived of its day in court.” Adler v. 20/20 Cos., 82 A.D.3d 918, 919 (N.Y. 2011), and cases cited. “Forum selection clauses are enforced because they provide certainty and predictability in the resolution of disputes.” Boss v. American Express Fin. Advisors, Inc., 6 N.Y.3d 242, 247 (2006), quoting Brooke Group Ltd. v. JCH Syndicate 488, supra. New York courts have enforced broadly worded forum selection clauses to dismiss statutory causes of action arising from the employment relationship. Boss v. American Express Fin. Advisors, Inc., supra at 245-247 (requiring plaintiffs to litigate alleged violations of N.Y. Lab. Law § 193 [McKinney 2009] [impermissible deduction from wages] and § 198-c [McKinney 2009] [failure to pay wages] in Minnesota); Adler v. 20/20 Cos., supra at 920 (requiring plaintiffs to litigate alleged violation of N.Y. Lab. Law § 215 [McKinney 2012 Supp.] [prohibiting retaliation] in Texas). In the present case, the forum selection clause is enforceable under New York law. Melia has not demonstrated, or even argued, that litigating his claims in New York would be unreasonable, unjust, or for all practical purposes deprive him of his day in court. The forum selection clause is broadly worded to cover “all disputes arising out of this Agreement or the employment relationship created thereby.” Under New York law, this clause encompasses all of Melia’s claims, including the alleged statutory violation. Finally, Melia has not alleged any unfairness that would compel this court to reject the parties’ choice of a foreign forum, such as fraud, duress, the abuse of economic power, or any other unconscionable means. See Cambridge Biotech Corp. v. Pasteur Sanofi Diagnostics, 433 Mass. 122, 130 n.8 (2000); Jacobson v. Mailboxes Etc. U.S.A., Inc., supra at 575 n.5. We conclude that the forum selection clause is prima facie valid and enforceable. 3. Validity of forum selection clauses for claims under the Wage Act. Melia argues that even if a forum selection clause is generally enforceable, public policy should prevent its application to Wage Act claims. According to Melia, the enforcement scheme and policy of the Wage Act dictate that a Massachusetts forum should always be available to aggrieved employees. We reject Melia’s argument. Although the Wage Act does embody fundamental public policy, nothing in the Wage Act’s text or structure suggests that enforcement must always be available in Massachusetts. We begin by reviewing the history, policy, and enforcement mechanisms of the Wage Act. The Wage Act requires “every person having employees in his service” to pay “each such employee the wages earned” within a fixed period after the end of a pay period. G. L. c. 149, § 148. The purpose of the Wage Act is “to prevent the unreasonable detention of wages.” Boston Police Patrolmen’s Ass’n v. Boston, 435 Mass. 718, 720 (2002), citing American Mut. Liab. Ins. Co. v. Commissioner of Labor & Indus., 340 Mass. 144, 147 (1959). “The statute was intended and designed to protect wage earners from the long-term detention of wages by unscrupulous employers as well as protect society from irresponsible employees who receive and spend lump sum wages.” Cumpata v. Blue Cross Blue Shield of Mass., Inc., 113 F. Supp. 2d 164, 167 (D. Mass. 2000), citing American Mut. Liab. Ins. Co. v. Commissioner of Labor & Indus., supra. The Wage Act provides for both public and private enforcement. The Attorney General may initiate a civil complaint against any person for a violation of the Wage Act. G. L. c. 149, § 150. An employee may also file a complaint with the Attorney General; if the Attorney General grants leave or fails to commence an action within ninety days, the employee may “institute and prosecute in his own name and on his own behalf, or for himself and for others similarly situated, a civil action for injunctive relief, for any damages incurred, and for any lost wages and other benefits.” Id. An employee who prevails in a private action shall be awarded treble damages, costs, and attorney’s fees. Id. The Wage Act also provides for criminal penalties of varying severity, depending on whether the violation was wilful and whether there were subsequent offenses, up to imprisonment for two years and a fine of $50,000. G. L. c. 149, § 27C. The Wage Act proscribes “special contracts” that exempt employers from its provisions. In a provision of the Wage Act first appeared in St. 1896, c. 241, § 1, the Legislature decreed that “[n]o person shall by a special contract with an employee or by any other means exempt himself from [the Wage Act].” G. L. c. 149, § 148. An agreement to circumvent the Wage Act is illegal even when “the arrangement is voluntary and assented to.” Camara v. Attorney Gen., 458 Mass. 756, 760-761 (2011). Antiwaiver provisions are characteristic of laws that protect fundamental public policy. See, e.g., Bonny v. Society of Lloyd’s, 3 F.3d 156, 160-161 (7th Cir. 1993), cert. denied, 510 U.S. 1113 (1994) (Federal securities laws); Wimsatt v. Beverly Hills Weight Loss Clinics Int’l, Inc., 32 Cal. App. 4th 1511, 1520-1521 (1995) (State franchise investment law). “ ‘Public policy’ in this context refers to a court’s conviction, grounded in legislation and precedent, that denying enforcement of a contractual term is necessary to protect some aspect of the public welfare.” Beacon Hill Civic Ass’n v. Ristorante Toscano, Inc., 422 Mass. 318, 321 (1996). In addition to prohibiting waivers, the Legislature has highlighted the fundamental importance of the Wage Act by repeatedly expanding its protections. Since the enactment of the Wage Act in 1886, St. 1886, c. 87, the Legislature has broadened the scope of employees covered, the type of eligible compensation, and the remedies available to employees whose rights have been violated. That the Wage Act prohibits waivers, however, does not require that private Wage Act claims be adjudicated in Massachusetts. Nowhere does the text of the Wage Act, which refers simply to a “civil action,” guarantee venue in a Massachusetts court. See G. L. c. 149, § 150; Dixon v. Perry & Slesnick, P.C., 75 Mass. App. Ct. 271, 273 (2009) (arbitration provision binding with respect to Wage Act claim). Contrary to Melia’s argument, the private and public enforcement mechanisms of the Wage Act need not be enforceable in identical venues. Melia correctly notes that a forum selection clause cannot bar the Attorney General from commencing an action to enforce the Wage Act in Massachusetts. Cf. Dixon v. Perry & Slesnick, P.C., supra at 276 (arbitration provision cannot prevent enforcement by Attorney General). From this Melia infers that, because an employee seeking to bring a Wage Act claim must first receive approval from the Attorney General, G. L. c. 149, § 150, the employee is acting as a “de facto private attorney general” who must also be permitted to litigate in Massachusetts. Melia’s argument misconstrues the relationship between the Wage Act’s public and private enforcement mechanisms. General Laws c. 149, § 150, merely grants an employee a private right of action. See Salvas v. Wal-Mart Stores, Inc., 452 Mass. 337, 373 (2008); Smith v. Winter Place LLC, 447 Mass. 363, 368 n.12 (2006). It in no way vests an employee with the standing of the Attorney General. See Carroll v. Marzilli, 75 Mass. App. Ct. 550, 553-555 (2009) (rejecting argument that Massachusetts Civil Rights Act “places private parties in a parallel position to the Attorney General in terms of the enforcement of public rights” by analogizing to private actions for wage and hour violations). An employee may limit his remedies without similarly restraining the Attorney General. Cf. Joulé, Inc. v. Simmons, 459 Mass. 88, 95 (2011) (arbitration clause binds employee but does not restrain Massachusetts Commission Against Discrimination); Dixon v. Perry & Slesnick, P.C., supra. We also reject Melia’s contention that enforcing forum selection clauses would subvert practical enforcement of the Wage Act. Melia argues that it may be difficult for unpaid employees to assert their rights out of State. As noted above, however, the Attorney General always retains the power to enforce the Wage Act in Massachusetts. Should the Attorney General commence an enforcement proceeding, the forum selection clause could not prevent an employee from testifying, providing information, or otherwise participating in such a proceeding. Cf. Joulé, Inc. v. Simmons, supra at 98. Furthermore, as previously discussed, Massachusetts courts will not enforce a forum selection clause that was obtained through duress, abuse of economic power, or other unconscionable means. Jacobson v. Mail Boxes Etc. U.S.A., Inc., 419 Mass. 572, 575 n.5 (1995). By contrast, when sophisticated parties negotiating at arm’s length agree to litigate in a given forum, they presumably are aware of the potential costs of such an agreement. Massachusetts law requires us to respect their wishes. See Cambridge Biotech Corp. v. Pasteur Sanofi Diagnostics, 433 Mass. 122, 133 (2000). 4. Choice-of-law analysis. Finally, and most vigorously, Melia argues that the forum selection clause is unenforceable because the chosen forum may apply a law other than that of Massachusetts. Should the foreign court apply another State’s law that is less protective of employees, the forum selection clause would effectively deprive the employee of substantive rights guaranteed by the Wage Act. The forum selection clause would thus operate as a “special contract,” exempting an employer from the requirements of the Wage Act. G. L. c. 149, § 148. Melia draws support from the uncertainty of the judge regarding the outcome of the choice-of-l
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