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Problem 7: Antenuptial Agreements—Choice-of-Forum Clauses and Choice-of-Law Clauses
  • 1 Tina Turner v. Ike Turner

    1
    Tina Turner v. Ike Turner
    2

    Tina Turner and Ike Turner met in college but did not develop a romantic relationship until the year after they graduated when both moved to San Francisco. They were married two years later in 1990. Ike Turner came from a wealthy family and his parents insisted that he encourage Tina to sign an antenuptial agreement waiving the benefits of California’s community property law. Ike did not feel strongly about it but spoke to Tina about their concerns. Neither Ike nor Tina anticipated ever getting divorced; they were very much in love. They agreed to sign a contract to mollify his parents because it would make them happy and they did not anticipate ever having to resort to enforcing the contract. The agreement provided that each party would keep separate bank accounts and would own separately the property and income each earned during the marriage and that, on divorce, neither party would have any right in property acquired by the other during the marriage. The contract also contained the following clauses:

    3

    The parties agree that if either of them sues the other for divorce, suit shall be filed in California courts. The parties waive any objections they may have to such a lawsuit based on alleged lack of personal jurisdiction; each party voluntarily consents to have suit brought in California.

    This agreement is governed by California law. 

    4

    At the time they signed the contract, Ike was in medical school and Tina was enrolled in classes to get a teacher’s certificate to teach in high school in California. A few months after their marriage, Tina got her certification and was lucky to land a job in Santa Clara, California. The couple had two children over the next seven years. When the second child turned four, Ike was offered a job at the oncology department of a major New York hospital. The couple decided to move to the east coast. They purchased a house in Englewood, New Jersey, from which Ike could commute to work in New York City. Two years later, after a twelve year long marriage, the relationship started to sour. Ike moved out of the house and Tina sued Ike for a divorce based on irreconcilable differences in Family Court in New Jersey. Ike then moved back to California.

    5

    Ike moves in the New Jersey Family Court to have the complaint dismissed on the ground that the parties agreed to have such a lawsuit heard in California and that the choice-of-forum clause is fully enforceable in New Jersey. In the alternative, if the choice-of-forum clause is not enforced, Ike argues that the choice-of-law clause should be enforced and the court should apply California, rather than New Jersey, law to the question of how to distribute property owned by the parties on divorce.

    6

    The trial court holds that the choice-of-forum clause is not enforceable because it is fundamentally unfair and would work a severe hardship on Tina Turner. The court also finds that, under California law, the antenuptial agreement is otherwise enforceable in accordance with its terms. This means that the antenuptial agreement is enforceable without regard to any considerations of whether it reflects a fair distribution of property rights acquired during the marriage. It also means that the agreement is presumed to be voluntary in the absence of clear evidence of fraud (active misrepresentation rather than failure to reveal relevant facts) or duress. New Jersey law, in contrast, reviews the agreement to determine whether it is fair to both parties and considers the agreement not to be sufficiently voluntary to enforce in the absence of evidence that the parties fully disclosed to each other, prior to signing the agreement, the full extent of their assets, something that concededly did not happen in this case.  Under New Jersey's modified version of the Uniform Premarital Agreement Act, N.J. Stat. §§ 37:2-31 to 37:2-41, courts are obligated to enforce choice-of-law clauses in premarital agreements. N.J. Stat. §37:2-34. However, neither those clauses nor the agreements themselves are enforceable if they are  "unconscionable at the time enforcement [is] sought."  N.J. Stat. §37:2-38. The trial court holds that the choice-of-law clause is enforceable in New Jersey and that California law, rather than New Jersey law governs the validity and enforceability of the contract.

    7

    On appeal, Ike Turner argues that the trial court erred in not enforcing the choice-of-forum clause. Although happy with trial court’s choice-of-law decision, he worries that, if this ruling is overturned on appeal, he will have to pay millions of dollars to Tina as a property settlement. On the other hand, he rightfully concludes that a California court is more likely to apply California law to adjudicate the parties’ property rights and that his interests would be better protected in California courts as long as Tina insists on appealing the choice-of-law determination of the lower court. Tina Turner argues, in contrast, that the trial court correctly refused to enforce the choice-of-forum clause because it would create a severe financial hardship for her, on a high school teacher’s salary, to litigate in California while living in New Jersey. She further argues that New Jersey law should apply to the property division issue, noting that, under California law, Ike would be able to live in luxury with his current salary and his inheritance (which devolved from a trust to his full control several years after they got married), while Tina would be entitled only to minimal child support payments and no support or property distribution, thus forcing her and the children to move out of their spacious home into a small apartment in a different town, forcing her children to leave their school and their friends. In the absence of a premarital contract entered into with the full disclosure required by the New Jersey statute, New Jersey would grant the wife in a long-term marriage of more than ten years (like this one) roughly 50% of the property earned during the marriage. Thus the contract is unenforceable under New Jersey law; under New Jersey’s equitable distribution statute applicable in the absence of an enforceable premarital agreement, Tina would be entitled to a substantial share of the property acquired by the couple during the marriage on the basis of numerous factors, including Tina’s contribution to the family partnership and the lifestyle to which the family became accustomed during the marriage. If New Jersey law applies, she could afford to stay in the family home in Englewood with the two children. The Appellate Division rules that the choice-of-forum clause is enforceable and dismisses the complaint.

    8

    Tina appeals to the Supreme Court of New Jersey which accepts certification on the following two questions:

    9

    1. Is the choice-of-forum clause enforceable under New Jersey law?

    10

    2. If it is not enforceable, is the choice-of-law clause enforceable under New Jersey law?

    11

    π = Tina Turner

    12

    ∆ = Ike Turner

    13

     

  • 2 New Jersey Uniform Premarital Agreement Act

    1
    New Jersey Uniform Premarital Agreement Act
    2

    N.J. Stat. §§ 37:2-31 to 37:2-41 (adopted in 1988)

    3

     

    4
    §  37:2-31. Short title
    5

    This article shall be known and may be cited as the "Uniform Premarital and Pre-Civil Union Agreement Act."

    6
    §  37:2-32. Definitions
    7

    As used in this article:

    8

    a. "Premarital or pre-civil union agreement" means an agreement between prospective spouses or partners in a civil union made in contemplation of marriage or a civil union and to be effective upon marriage  or upon the parties establishing a civil union;

    9

    b. "Property" means an interest, present or future, legal or equitable, vested or contingent, in real or personal property, including income and earnings;

    10

    c. "Unconscionable premarital or pre-civil union agreement" means an agreement, either due to a lack of property or unemployability:

    11

    (1) Which would render a spouse or partner in a civil union without a means of reasonable support;

    12

    (2) Which would make a spouse or partner in a civil union a public charge; or

    13

    (3) Which would provide a standard of living far below that which was enjoyed before the marriage or civil union.  

    14
    §  37:2-33. Formalities; consideration
    15

    A premarital or pre-civil union agreement shall be in writing, with a statement of assets annexed thereto, signed by both parties, and it is enforceable without consideration. 

    16
    §  37:2-34. Contents of premarital or pre-civil union agreement
    17

    Parties to a premarital or pre-civil union agreement may contract with respect to:

    18

    a. The rights and obligations of each of the parties in any of the property of either or both of them whenever and wherever acquired or located;

    19

    b. The right to buy, sell, use, transfer, exchange, abandon, lease, consume, expend, assign, create a security interest in, mortgage, encumber, dispose of, or otherwise manage and control property;

    20

    c. The disposition of property upon separation, marital dissolution, dissolution of a civil union, death, or the occurrence or nonoccurrence of any other event;

    21

    d. The modification or elimination of spousal or one partner in a civil union couple support;

    22

    e. The making of a will, trust, or other arrangement to carry out the provisions of the agreement;

    23

    f. The ownership rights in and disposition of the death benefit from a life insurance policy;

    24

    g. The choice of law governing the construction of the agreement; and

    25

    h. Any other matter, including their personal rights and obligations, not in violation of public policy.  

    26
    §  37:2-35. Premarital or pre-civil union agreement not to adversely affect right of child support
    27

    A premarital or pre-civil union agreement shall not adversely affect the right of a child to support.  

    28
    §  37:2-36. Effective date of premarital or pre-civil union agreements
    29

    A premarital or pre-civil union agreement becomes effective upon marriage of the parties or upon the parties establishing a civil union.

    30
    §  37:2-37. Amendment or revocation of premarital or pre-civil union agreement
    31

    After marriage of the parties or the parties establishing a civil union, a premarital or pre-civil union agreement may be amended or revoked only by a written agreement signed by the parties, and the amended agreement or revocation is enforceable without consideration. 

    32
    §  37:2-38. Enforcement of premarital or pre-civil union agreement; generally
    33

    The burden of proof to set aside a premarital or pre-civil union agreement shall be upon the party alleging the agreement to be unenforceable. A premarital or pre-civil union agreement shall not be enforceable if the party seeking to set aside the agreement proves, by clear and convincing evidence, that:

    34

    a. The party executed the agreement involuntarily; or

    35

    b. The agreement was unconscionable at the time enforcement was sought; or

    36

    c. That party, before execution of the agreement:

    37

    (1) Was not provided full and fair disclosure of the earnings, property and financial obligations of the other party;

    38

    (2) Did not voluntarily and expressly waive, in writing, any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided;

    39

    (3) Did not have, or reasonably could not have had, an adequate knowledge of the property or financial obligations of the other party; or

    40

    (4) Did not consult with independent legal counsel and did not voluntarily and expressly waive, in writing, the opportunity to consult with independent legal counsel.

    41

    d. The issue of unconscionability of a premarital or pre-civil union agreement shall be determined by the court as a matter of law.  

  • 3 America Online Inc. v. Superior Court

    1
    108 Cal.Rptr.2d 699 (2001)
    2
    90 Cal.App.4th 1
    3
    AMERICA ONLINE, INC., Petitioner,
    v.
    The SUPERIOR COURT of Alameda County, Respondent;
    Al Mendoza, Jr. et al., Real Parties in Interest.
    4
    No. A092813.
    5

    Court of Appeal, First District, Division Two.

    6
    June 21, 2001.
    7
    As Modified July 10, 2001.
    8
    Review Denied October 17, 2001.[1]
    9

    [701] Latham & Watkins, Everett C. Johnson, James K. Lynch, San Francisco, Randall T. Kim, for Petitioner.

    10

    Marion's Inn, Kennedy P. Richardson, Mark Palley, Sam Walker, Yvonne M. Pierrou, Oakland, for Real Parties in Interest.

    11

    [700] RUVOLO, J.

    12
    I.
    13
    INTRODUCTION
    14

    This petition for writ of mandate was filed by petitioner America Online, Inc. (AOL) following the denial of its motion to stay or dismiss a putative consumer class-action lawsuit. The motion was based on a claim that California is an inconvenient forum in which to litigate the dispute concerning AOL's proprietary Internet service. In support of its motion, AOL exclusively relied on a forum selection clause in its contracts with real parties in interest, Al Mendoza, Jr. (Mendoza) and the potential class members, which designated Virginia as the jurisdiction in which all disputes arising out of the relationship would [702] be litigated. The agreement also included a choice of law provision requiring that Virginia law be applied to any such dispute.

    15

    We conclude the court properly denied AOL's motion. First, one of the causes of action seeks class action relief under the California Consumers Legal Remedies Act (CLRA) (Civ.Code, §§ 1750 et seq.). This act contains a provision that voids any purported waiver of rights under the CLRA as being contrary to California public policy. Enforcement of the contractual forum selection and choice of law clauses would be the functional equivalent of a contractual waiver of the consumer protections under the CLRA and, thus, is prohibited under California law.

    16

    Second, we conclude that Virginia law does not allow consumer lawsuits to be brought as class actions and the available remedies are more limited than those afforded by California law. Accordingly, the rights of Mendoza and the California consumer class members would be substantially diminished if they are required to litigate their dispute in Virginia, thereby violating an important public policy underlying California's consumer protection law. For this independent reason, the forum selection clause is unenforceable.

    17
    II.
    18
    FACTUAL AND PROCEDURAL HISTORY
    19

    A class action was filed by Mendoza for himself and others against AOL seeking compensatory and punitive damages, injunctive relief, and restitution. The complaint alleges that real parties are former subscribers to AOL's Internet service who, over the past four years, paid between $5 and $22 each month for the service. Monthly payments were made by allowing AOL to debit automatically the credit cards of class members. The class members terminated their subscriptions to AOL but, without authorization, AOL continued to debit their credit cards for monthly service fees. Mendoza individually alleged that he gave AOL notice of the cancellation of his subscription in October 1999, but AOL continued to charge monthly fees against his credit card at least through February 2000, at which time Mendoza cancelled his credit card in order to stop the debits.

    20

    The complaint alleged separate causes of action including violations of California's Unfair Business Practices Act (First Cause of Action) (Bus. & Prof.Code, §§ 17200 et seq.), violations of California's CLRA (Second Cause of Action) (Civ. Code, § 1770, subd. (a)(14)), common law conversion/trespass (Third Cause of Action), and common law fraud (Fourth Cause of Action). The complaint also prayed that the action proceed as a class action under Code of Civil Procedure section 382, Civil Code section 1781, and Business and Professions Code section 17204, and that Mendoza and the class be awarded compensatory and punitive damages,[2] restitution, prejudgment interest, attorney fees and costs, and a permanent injunction halting AOL's practice, and requiring it to disseminate corrective notices.

    21

    Shortly thereafter, AOL filed a motion to stay or dismiss the action on the ground of inconvenient forum. As noted, the motion was based on the forum selection clause contained in the "Terms of Service" (TOS) agreement entered into between Mendoza and AOL at the time he subscribed to AOL's proprietary Internet [703] service. The TOS, attached as Exhibit A in support of AOL's motion, is a 4½-page, single-spaced, unsigned document. Paragraph 8 of the TOS entitled "LAW AND LEGAL NOTICES" states in part the following: "You expressly agree that exclusive jurisdiction for any claim or dispute with AOL or relating in any way to your membership or your use of AOL resides in the courts of Virginia and you further agree and expressly consent to the exercise of personal jurisdiction in the courts of Virginia in connection with any such dispute including any claim involving AOL or its affiliates, subsidiaries, employees, contractors, officers, directors, telecommunications providers and content providers...." Additionally, paragraph 8 contained a choice of law provision designating Virginia law as being applicable to any dispute between the parties: "The laws of the Commonwealth of Virginia, excluding its conflicts-of-law rules, govern this Agreement and your membership."

    22

    In support of its motion, AOL contended the forum selection clause was presumptively valid under California law, was a rational, voluntary, and conscionable choice, and that its enforcement would not violate any strong public policy of this state. Among the legal authorities on which it relied, AOL referred to several unpublished out-of-state cases in which the clause had been previously enforced.[3]

    23

    In response, Mendoza objected to Exhibit A, claiming that the document did not accurately reflect what was displayed to him when he commenced service with AOL. Instead, he described seeing displayed on his home computer monitor a "densely worded, small-size text that was hard to read on the computer screen." This objection formed the leitmotif for Mendoza's claim that the TOS was an unconscionable adhesion contract, and that under applicable rules of contract construction, the forum selection clause was unenforceable. In addition, Mendoza contended the TOS was unreasonable and unenforceable because it necessarily required him and the putative class members to relinquish legal rights in derogation of California public policy.

    24

    On September 25, 2000, the court entered its order denying AOL's motion. After discussing several of the pertinent cases bearing on the issue, the court denied the motion finding that: 1) the forum selection clause was unfair and unreasonable because it was not negotiated, it was contained in a standard form contract, and was in a format that was not readily identifiable by Mendoza; 2) AOL had failed to carry its burden of proving that the consumer rights afforded under California law would not be diminished by enforcement of the clause; and 3) the remedies available to consumers in Virginia were not comparable to those in California.

    25

    AOL filed a petition for writ of mandamus. On November 28, 2000, we issued an order to show cause why a peremptory writ of mandamus should not issue. Thereafter, on January 4, 2001, we discharged the order to show cause as improvidently granted, and denied the petition. AOL then petitioned the Supreme Court for review. On February 28, 2001, the high court granted the petition for review, and transferred the matter back to this court with directions to issue an order to show cause why the relief requested in [704] the petition should not be granted. On March 2, 2001, we issued a new order to show cause as directed by the Supreme Court.

    26
    III.
    27
    Legal Discussion
    28
    A. Standard of Review and Burden of Proof
    29

    We begin by addressing the standard of review and which party had the burden of proof below, for even these threshold issues are disputed, and not without some muddle. In Smith, Valentino & Smith, Inc. v. Superior Court (1976) 17 Cal.3d 491, 131 Cal.Rptr. 374, 551 P.2d 1206 (Smith Valentino), a decision on a petition for writ of mandamus which will take on even greater importance in later discussion, the Supreme Court denied a request for mandamus concluding that the trial court "acted within its discretion" in upholding a contractual forum selection clause designating Pennsylvania as the proper forum. (Id. at p. 493,131 Cal.Rptr. 374, 551 P.2d 1206.) This statement by our high court clearly implicates a review of the lower court's decision utilizing the most deferential abuse of discretion standard. This standard of review scrutinizes lower court decisions to determine if the ruling made "`exceed[s] the bounds of reason,'" all circumstances before it being considered. (Walker "v. Superior Court (1991) 53 Cal.3d 257, 272, 279 Cal.Rptr. 576, 807 P.2d 418.) If not, the ruling will be affirmed regardless of whether the appellate court might have decided the issue differently. (Avant! Corp. v. Superior Court (2000) 79 Cal.App.4th 876, 881-882, 94 Cal.Rptr.2d 505.) The court in Cal-State Business Products & Services, Inc. v. Ricoh (1993) 12 Cal.App.4th 1666, 16 Cal.Rptr.2d 417 (Cal-State), described the abuse of discretion standard as one which "measures whether the act of the lower tribunal is within the range of options available under governing legal criteria in light of the evidence before the tribunal." (Id. at p. 1680,16 Cal.Rptr.2d 417.)

    30

    Later, in Furda v. Superior Court (1984) 161 Cal.App.3d 418, 207 Cal.Rptr. 646 (Furda), the court began its analysis of the lower court's ruling denying the defendant's motion to stay or dismiss based on forum non conveniens with the following statement: "We next consider whether the superior court abused its discretion in denying Furda's motion to stay or dismiss real parties' action on the ground of forum non conveniens and the forum selection clause." (Id. at p. 424, 207 Cal.Rptr. 646.) Citing Furda, this division similarly began our uncharacteristically laconic opinion in Lu v. Dryclean-U.S.A. of California, Inc. (1992) 11 Cal.App.4th 1490, 14 Cal.Rptr.2d 906 (Lu), by saying "[w]e review a trial court's decision to enforce a forum selection clause for an abuse of discretion. [Citation.]" (Id. at p. 1493, 14 Cal.Rptr.2d 906.) Thus, all of these decisions, and we trust there may be more, performed the same review with which we are charged using the abuse of discretion standard of review.

    31

    However, when faced with this question, the Sixth District, without explanation or citation to authority, commenced its discussion in Lifeco Services Corp. v. Superior Court (1990) 222 Cal.App.3d 331, 271 Cal.Rptr. 385 (Lifeco), with this pronouncement: "The issue is whether substantial evidence supports the trial court's finding that enforcement of the forum selection clause is unreasonable." (Id. at p. 334, 271 Cal.Rptr. 385.)

    32

    This language from Lifeco was cited in Cal-State in support of the following proposition: "In contrast with the abuse-of-discretion standard of review applicable in a noncontractual forum non conveniens [705] motion, a substantial-evidence standard of review applies where a forum has been selected by contract...." (Cal-State, supra, 12 Cal.App.4th at p. 1680, 16 Cal. Rptr.2d 417, citing Lifeco, supra, 222 Cal. App.3d at p. 334, 271 Cal.Rptr. 385.) As we note, the Lifeco court did not make any distinction in the applicable standard of review based on whether the court was reviewing a contractual forum selection clause or applying traditional forum non conveniens doctrine.

    33

    Nevertheless, Cal-State went on to explain why a different standard of review applied depending on whether the motion to stay or to dismiss was contractually derived: "While none of the contractual forum non conveniens cases have explicitly stated the standard of review, it is apparent from their discussion that they are de facto applying the substantial-evidence test, and there is a meaningful basis for distinction. In ruling on a forum non conveniens motion where no contract is involved, the lower tribunal decides whether or not to exercise jurisdiction based on the evidence before it in light of legally prescribed criteria. Some criteria may be present, some not; ultimately, the review does not depend upon the sufficiency of the evidence before the lower tribunal but whether it correctly applied the pertinent criteria. On the other hand, in a contractual forum non conveniens motion, the trial court must determine if there is sufficient evidence to satisfy the requirements for invalidating a binding contract. If the trial court finds there are facts present that satisfy these criteria, it must act in a particular way; there is no discretion involved. The reviewing court is thus involved in determining the quantum of evidence adduced, not the manner in which factors were applied. (Cf. People v. Jackson (1992) 10 Cal.App.4th 13, 22, 12 Cal. Rptr.2d 541 ... [deciding between abuse-of-discretion and substantial-evidence standards of review for motions contesting peremptory challenges].)" (Cal-State, supra, 12 Cal.App.4th at pp. 1680-1681, 16 Cal.Rptr.2d 417, original italics.)

    34

    While we understand the distinction intended by Cal-State, we are not persuaded that appellate review of a contract interpretation issue can be properly analogized to review of an unambiguous forum selection clause. Nor, in light of the language contained in Furda and Lu, as well as in Smith Valentino, do we see justification for the Cal-State court's conclusion that no cases have "explicitly stated" what standard of review is applicable. Instead, given existing guidance on this question from our Supreme Court, and the more consistent line of Court of Appeal decisions, which likewise apply the abuse of discretion standard, we disagree with Cal-State 's conclusion that the substantial evidence standard applies instead. Therefore, we review the lower court's decision using the abuse of discretion standard.[4]

    35

    Turning to the question of which side has the burden of proof when a forum selection clause is challenged, as we have noted, the trial court in the case before us found: "[Defendant AOL did not meet its burden of showing that the substantive rights afforded California plaintiffs were not diminished by enforcement of the forum selection clause." (Italics added.) Normally, the burden of proof is on the party challenging the enforcement of a contractual forum selection clause. (Smith Valentino, supra, 17 Cal.3d at p. 496, 131 Cal.Rptr. 374, 551 P.2d 1206; see also Cal-State, supra, 12 Cal.App.4th at p. 1680, 16 [706] Cal.Rptr.2d 417; Lu, supra, 11 Cal. App.4th at p. 1493, 14 Cal.Rptr.2d 906.) However, the lower court assigned the burden of proof to AOL based on its conclusion that Wimsatt v. Beverly Hills Weight Etc. Internal, Inc. (1995) 32 Cal. App.4th 1511, 38 Cal.Rptr.2d 612 (Wimsatt), controls this case.

    36

    Wimsatt was an action by weight-loss center franchisees against their franchisor under California's Franchise Investment Law (FIL) (Corp.Code, §§ 31000 et seq.). The franchisees had signed franchise agreements which, inter alia, required them to sue in Virginia, the home state of the franchisor. (Wimsatt, supra, 32 Cal. App.4th at p. 1513-1514, 38 Cal.Rptr.2d 612.) The trial court dismissed the complaint finding that the plaintiffs had "failed to meet their `heavy' burden of making a `strong' showing that enforcement of the forum selection clause would be `so gravely difficult and inconvenient' that they would, in practical effect, be deprived of `their day in court.'" (Id. at p. 1514, 38 Cal.Rptr.2d 612.)[5]

    37

    In reversing, the Court of Appeal explained that in the context of that case, the customary rule assigning the burden of proof to the party challenging the enforceability of the forum selection clause did not apply. The court noted that the remedies sought by the franchisees were statutorily enumerated, and were specifically designed to protect the rights of persons purchasing and operating franchise businesses in this state. These protections included a non-waiver statute that voids provisions in a franchise agreement purporting to waive any of the protections under the FIL (Corp.Code, § 31512). (Wimsatt, supra, 32 Cal.App.4th at p. 1520, 38 Cal.Rptr.2d 612.) The court reasoned that a franchise agreement's forum selection clause might subject California franchisees to litigation in a state that does not provide the same level of legal protections afforded by California law. Under those circumstances, enforcing the forum selection clause would effectively waive the remedies of California's FIL, thereby violating the anti-waiver component of that law. Faced with this potential, the burden of proof was on the franchisor to prove that enforcing the clause would not violate the statutory anti-waiver provision of the FIL by "diminish[ing] in any way the substantive rights afforded California franchisees under California law." (Id. at p. 1522, 38 Cal.Rptr.2d 612.)

    38

    The trial court in this case concluded that because Mendoza seeks recovery, in part, under the CLRA (Civ.Code, §§ 1750 et seq.), which contains a statutory antiwaiver provision like that involved in Wimsatt, the burden of proof was on AOL to prove that enforcement of the forum selection clause would not result in a significant diminution of rights to California consumers. We agree. In comparing the purpose and remedies afforded to California franchisees under the FIL to those afforded California consumers under the CLRA, we find identical policy considerations which command shifting the burden of proof here to AOL, the party seeking enforcement of the forum selection clause, as was done in Wimsatt.

    39

    The FIL and the CLRA were each enacted to protect the statute's beneficiaries from deceptive and unfair business practices. (Corp.Code, § 31000 et seq.; Broughton v. Cigna Healthplans (1999) 21 Cal.4th 1066, 1077, 90 Cal.Rptr.2d 334, 988 P.2d 67 (Broughton).) Each statutory scheme embodies strong remedial provisions for violations of the statute. (For [707] remedies under the FIL, see Corp.Code, §§ 31004, 31300, 31302, 31302.5, and 31400-31405. For remedies under the CRLA, see Civ.Code, §§ 1752,1780, subds. (a)(1)-(4), (b) & (d), 1781, and 1783.)

    40

    Important to the trial court's finding is the fact that the CLRA, like the FIL, embeds in its statutory scheme a provision prohibiting waivers by consumers of any of these remedies. Civil Code section 1751 warns: "Any waiver by a consumer of the provisions of this title is contrary to public policy and shall be unenforceable and void."

    41

    While the remedial aspects of each statutory scheme are indigenous to the business practices regulated, in both cases the Legislature has ensured that the rights afforded to California citizens against unfair practices cannot be diminished or avoided by contract. Where the effect of transfer to a different forum has the potential of stripping California consumers of their legal rights deemed by the Legislature to be non-waivable, the burden must be placed on the party asserting the contractual forum selection clause to prove that the CLRA's anti-waiver provisions are not violated. For this reason we too embrace the rationale of the Wimsatt decision and conclude that the CLRA claim pleaded by Mendoza, like the FIL claims asserted in Wimsatt, mandates departure from the general rule which normally places the burden of proving unfairness or unreasonableness of the forum selection clause on the party opposed to its enforcement.

    42
    B. Overview of Forum Selection Clause Enforcement
    43

    AOL correctly posits that California favors contractual forum selection clauses so long as they are entered into freely and voluntarily, and their enforcement would not be unreasonable. (Smith Valentino, supra, 17 Cal.3d at pp. 495-96, 131 Cal.Rptr. 374, 551 P.2d 1206.) This favorable treatment is attributed to our law's devotion to the concept of one's free right to contract, and flows from the important practical effect such contractual rights have on commerce generally. This division has characterized forum selection clauses as "play[ing] an important role in both national and international commerce." (Lu, supra, 11 Cal.App.4th at p. 1493, 14 Cal.Rptr.2d 906.) The Wimsatt court similarly exhorted that "[f]orum selection clauses are important in facilitating national and international commerce, and as a general rule should be welcomed." (Wimsatt, supra, 32 Cal.App.4th at p. 1523, 38 Cal.Rptr.2d 612, original italics.)

    44

    We agree with these sentiments, and view such clauses as likely to become even more ubiquitous as this state and nation become acculturated to electronic commerce. (See Carnival Cruise Lines, Inc. v. Shute (1991) 499 U.S. 585, 111 S.Ct. 1522, 1527, 113 L.Ed.2d 622.) Moreover, there are strong economic arguments in support of these agreements, favoring both merchants and consumers, including reduction in the costs of goods and services and the stimulation of e-commerce.

    45

    But this encomium is not boundless. Our law favors forum selection agreements only so long as they are procured freely and voluntarily, with the place chosen having some logical nexus to one of the parties or the dispute, and so long as California consumers will not find their substantial legal rights significantly impaired by their enforcement. Therefore, to be enforceable, the selected jurisdiction must be "suitable," "available," and able to "accomplish substantial justice." (The Bremen v. Zapata Off-Shore Co. (1972) 407 U.S. 1, 17, 92 S.Ct. 1907, 32 L.Ed.2d 513; Smith Valentino, supra, 17 Cal.3d at [708] p. 494, 131 Cal.Rptr. 374, 551 P.2d 1206.)[6] The trial court determined that the circumstances of contract formation did not reflect Mendoza exercised free will, and that the effect of enforcing the forum selection clause here would violate California public policy by eviscerating important legal rights afforded to this state's consumers. Our task, then, is to review the record to determine if there was a rational basis for the court's findings and the choice it made not to enforce the forum selection clause in AOL's TOS agreement.

    46
    C. Enforcement of the Forum Selection Clause Violates Strong California Public Policy
    47

    California courts will refuse to defer to the selected forum if to do so would substantially diminish the rights of California residents in a way that violates our state's public policy. For example, in CQL Original Products, Inc. v. National Hockey League Players' Assn. (1995) 39 Cal. App.4th 347, 46 Cal.Rptr.2d 412 (CQL), a dispute arose following the termination of a merchandise licensing agreement between CQL Original Products, Inc. and the National Hockey League (NHL). The merchandiser's breach of contract suit in California was met with a motion filed by the NHL to dismiss based on a forum selection clause contained in the licensing agreement. (Id. at p. 1353, 46 Cal.Rptr.2d 412.) The trial court granted the NHL's motion. In affirming the trial court's ruling, the appellate court noted that "a forum selection clause will not be enforced if to do so will bring about a result contrary to the public policy of the forum...." (Id. at p. 1354, 46 Cal.Rptr.2d 412, citing Cal-State, supra, 12 Cal.App.4th at p. 1680, 16 Cal.Rptr.2d 417.) After reviewing the agreement in question, the court concluded there was no public policy reason to deny enforcement of the provision. (Id. at p. 1356, 46 Cal.Rptr.2d 412.)

    48

    In Hall v. Superior Court (1983) 150 Cal.App.3d 411, 197 Cal.Rptr. 757 (Hall), two California investors exchanged their interests in an oil and gas limited partnership in return for stock in one of their co-investors, Imperial Petroleum, Inc., a Utah corporation. Closer to the facts of this case, the contract embodying their exchange agreement contained both forum selection and choice of law provisions identifying Nevada as the selected forum and governing law. A dispute arose, and the two investors sued Imperial in California. (Id. at pp. 413-15, 197 Cal.Rptr. 757.) Imperial asserted the forum selection clause, and the trial court found the forum selection clause was enforceable.

    49

    In reversing the lower court's decision, the appellate court undertook an examination of both the choice of law clause as well as the forum selection clause noting that the enforceability of these clauses were "inextricably bound up" in one another. (Hall, supra, at p. 416, 197 Cal.Rptr. 757.) The reason for considering them together was that absent a choice of law clause, the selected forum could apply California law to the dispute under the selected forum's conflict of laws principles. If so, there [709] would be no risk that substantive law might be employed which would materially diminish rights of California residents in violation of California public policy. (Ibid.) However, where the effect of the transfer would be otherwise, the forum selection clause would not be enforced: "While `California does not have any public policy against a choice of law provision, where it is otherwise appropriate' [citation] and `choice of law provisions are usually respected by California courts ...' [citing Smith Valentino, supra, 17 Cal.3d at p. 494, 131 Cal.Rptr. 374, 551 P.2d 1206] `an agreement designating [a foreign] law will not be given effect if it would violate a strong California public policy ... [or] `result in an evasion of ... a statute of the forum protecting its citizens.' [Citation.]" (Hall, supra, 150 Cal.App.3d at pp. 416-417, 197 Cal.Rptr. 757; see also Cal-State, supra, 12 Cal.App.4th at p. 1680, 16 Cal. Rptr.2d 417.)[7]

    50

    The Hall court determined that if the pending securities litigation were transferred to Nevada where Nevada law would be applied, the plaintiffs would lose the benefit of California's Corporate Securities Law of 1968 which would otherwise govern the transaction in question. This California law was designed to protect the public from fraud and deception in securities matters, by providing statutory remedies for violations of the California Corporations Code. (Hall, supra, 150 Cal.App.3d at p. 417, 197 Cal.Rptr. 757.) For this reason, the remedial scheme, like the CRLA involved in this case, contains an antiwaiver provision. (Corp.Code, § 25701; Hall, supra, at pp. 417-418, 197 Cal.Rptr. 757.) The court concluded: "[W]e believe the right of a buyer of securities in California to have California law and its concomitant nuances apply to any future dispute arising out of the transaction is a `provision' within the meaning of [Corporations Code] section 25701 which cannot be waived or evaded by stipulation of the parties to a securities transaction. Consequently, we hold the choice of Nevada law provision in this agreement violates section 25701 and the public policy of this state [citation] and for that reason deny enforcement of the forum selection clause as unreasonable." (Id. at p. 418, 197 Cal.Rptr. 757.)[8]

    51

    It is important to consider that the Hall court denied enforcement of the forum selection clause solely on the inevitability that doing so would eliminate the protections of California's Corporate Securities Law; a result prohibited by the anti-waiver feature of that law. However, it did not compare the California statutory scheme to that afforded by Nevada law to determine if the remedies provided by each were materially different.[9]

    52

    [710] The CLRA parallels the Corporate Securities Law of 1968, at issue in Hall, insofar as the CRLA is a legislative embodiment of a desire to protect California consumers and furthers a strong public policy of this state. "The CLRA was enacted in an attempt to alleviate social and economic problems stemming from deceptive business practices, which were identified in the 1969 Report of the National Advisory Commission on Civil Disorders (i.e., the Kerner Commission). [Citation.] Section 1760 contains an express statement of legislative intent: `This title shall be liberally construed and applied to promote its underlying purposes, which are to protect consumers against unfair and deceptive business practices and to provide efficient and economical procedures to secure such protection.'" (Broughton, supra, 21 Cal.4th at p. 1077, 90 Cal.Rptr.2d 334, 988 P.2d 67.)

    53

    Certainly, the CLRA provides remedial protections at least as important as those under the Corporate Securities Law of 1968. Therefore, by parity of reasoning, enforcement of AOL's forum selection clause, which is also accompanied by a choice of law provision favoring Virginia, would necessitate a waiver of the statutory remedies of the CLRA, in violation of that law's antiwaiver provision (Civ.Code, § 1751) and California public policy. For this reason alone, we affirm the trial court's ruling.

    54

    This conclusion is reinforced by a statutory comparison of California and Virginia consumer protection laws, which reveals Virginia's law provides significantly less consumer protection to its citizens than California law provides for our own. Consumers who prove violations of the CLRA within the three-year limitations period may be entitled to a minimum recovery of $1000, restitution or property, power of injunctive relief, and punitive damages. (Civ.Code, §§ 1780, subd. (a)(1)-(4); 1783.) Attorney fees and costs are also recoverable if the plaintiffs prevail on their claim under the act.[10] (Id., § 1780, subd. (d).) In addition to these extraordinary remedies, if the complaining consumer is a senior citizen or disabled person, up to $5000 may be awarded for substantial physical, emotional distress, or economic damage. (Id, § 1780, subd. (b).) Of course, the CLRA specifies that actions under that act may be prosecuted as class actions. (Id., §§ 1752, 1781.)[11]

    55

    Virginia also has a statutory scheme denominated the Virginia Consumer Protection Act of 1977 (VCPA) (Va.Code Ann., § 59.1-196). The purpose of the VCPA is to "promote fair and ethical standards of dealings between suppliers and the consuming [711] public." (Id., § 59.1-197.) The panoply of prohibited acts appears to be as comprehensive as those under the CRLA, and covers the specific misconduct by AOL alleged in Mendoza's complaint. (Id., § 59.1-200.) Under the VCPA, individuals are entitled to sue and recover actual damages, or a minimum of $500, whichever is greater. If willful misconduct is proved, the minimum damages increase to $1000. Attorney fees and costs "may" be awarded. (Id., § 59.1-204, subd. (B).) Restitution is also available. (Id., § 59.1-205.) However, if the violation is determined to be "unintentional,"[12] the only remedies obtainable are restitution and attorney fees and court costs. (Id., § 59.1-207.) The Virginia act has a two-year limitations period. (Id., § 59.1-204.1, subd. (A).)

    56

    The parties disagree whether, and to what extent, private injunctive relief is available under the VCPA. The applicable statute (Va.Code Ann, § 59.1-203) is somewhat ambiguous. However, at bottom we agree with AOL that a more reasonable reading of the statute appears to support injunctive relief for individuals, although we do not agree that the law allows private persons to obtain injunctive relief on behalf of others similarly situated.[13] In this respect injunctive relief afforded by the CRLA is unique, as its purpose is not simply to correct future private injury but to remedy a public wrong. As explained by our Supreme Court in Broughton, supra, 21 Cal.4th at p. 1080, 90 Cal.Rptr.2d 334, 988 P.2d 67: "Whatever the individual motive of the party requesting injunctive relief, the benefits of granting injunctive relief by and large do not accrue to that party, but to the general public in danger of being victimized by the same deceptive practices as the plaintiff suffered.... In other words, the plaintiff in a CLRA damages action is playing the role of a bona fide private attorney general. [Citation.]" (Fn. omitted.)

    57

    Of greater importance is the absence of any provision in the VCPA that allows suits under the Act to proceed as class actions. Unless specifically allowed by statute, class action relief is not generally available in Virginia in actions at law. (King v. Va. Birth-Related Neurological Injury Compensation Program (1990) 22 Va. Cir. 156); Kuhn v. West Alexandria Properties, Inc. (1980) 22 Va. Cir. 439.[14]

    58

    [712] In contrast to Virginia consumer law's ostensible hostility to class actions, the right to seek class action relief in consumer cases has been extolled by California courts. A notable example is the opinion in Vasquez v. Superior Court (1971) 4 Cal.3d 800, 94 Cal.Rptr. 796, 484 P.2d 964 (Vasquez), in which the Supreme Court considered the question of whether consumers could pursue a class action for restitution for fraud in connection with a now-infamous installment purchase contract scheme to sell freezers and frozen meat to California consumers. (Id at p. 812, 94 Cal.Rptr. 796, 484 P.2d 964.)[15] Justice Mosk, writing for a unanimous Supreme Court, first noted that "[protection of unwary consumers from being duped by unscrupulous sellers is an exigency of the utmost priority in contemporary society." (Id. at p. 808, 94 Cal.Rptr. 796, 484 P.2d 964.) Using memorable prose, Justice Mosk then explained the importance of class actions as an instrumentality of consumer protection: "Frequently numerous consumers are exposed to the same dubious practice by the same seller so that proof of the prevalence of the practice as to one consumer would provide proof for all. Individual actions by each of the defrauded consumers is often impracticable because the amount of individual recovery would be insufficient to justify bringing a separate action; thus an unscrupulous seller retains the benefits of its wrongful conduct. A class action by consumers produces several salutary by-products, including a therapeutic effect upon those sellers who indulge in fraudulent practices, aid to legitimate business enterprises by curtailing illegitimate competition, and avoidance to the judicial process of the burden of multiple litigation involving identical claims. The benefit to the parties and the courts would, in many circumstances, be substantial." (Ibid)

    59

    That this view has endured over the last 30 years is of little surprise given the importance class action consumer litigation has come to play in this state. In light of that history, we cannot accept AOL's assertion that the elimination of class actions for consumer remedies if the forum selection clause is enforced is a matter of insubstantial moment.[16] The unavailability of class action relief in this context is sufficient in and by itself to preclude enforcement of the TOS forum selection clause.

    60

    In addition to the unavailability of class actions and the apparent limitation in injunctive relief, neither punitive damages, nor enhanced remedies for disabled and senior citizens are recoverable under Virginia's law. More nuanced differences are the reduced recovery under the VCPA for "unintentional" acts, a shorter period of limitations, and Virginia's use of a Lodestar formula alone to calculate attorney fees recovery. (Holmes v. L.G. Marion Corp. (1999) 258 Va. 473, 521 S.E.2d 528, [713] 533-534.)[17] Quite apart from the remedial limitations under Virginia law relating to injunctive and class action relief, the cumulative importance of even these less significant differences is substantial. Enforcement of a forum selection clause, which would impair these aggregate rights, would itself violate important California public policy. For this additional reason the trial court was correct in denying AOL's motion to stay or to dismiss.[18]

    61

    In so holding we reject Mendoza's contention that the clause should not be enforced simply because it would be patently unreasonable to require him or other AOL customers who form the putative class to travel to Virginia to litigate the relatively nominal individual sums at issue. He points out that in 1998 and 1999, not a single suit by a non-Virginia resident appears to have been filed in AOL's Virginia home county, a development Mendoza suggests is directly related to the fact that the cost of prosecuting a claim in Virginia vastly exceeds the amounts normally at issue in individual claims against AOL.

    62

    But the additional cost or inconvenience necessitated by litigation in the selected forum is not part of the calculus when considering whether a forum selection clause should be enforced. Our Supreme Court has put this matter to rest in Smith Valentino when it quoted: "`Mere inconvenience or additional expense is not the test of unreasonableness since it may be assumed that the plaintiff received under the contract consideration for these things.' [Citation.]" (Smith Valentino, supra, 17 Cal.3d at p. 496, 131 Cal.Rptr. 374, 551 P.2d 1206; see also Furda, supra, 161 Cal.App.3d at pp. 426-427, 207 Cal. Rptr. 646.)

    63

    Yet Mendoza contends that Smith Valentino's admonition not to consider convenience and cost in evaluating the validity of forum selection clauses applies only where there remains a "practical option [of travel to the selected forum] in terms of the expense and value of the controversy." As we understand it, Mendoza is arguing that expense in litigating in the selected forum can be considered if it exceeds the amount in controversy or at least renders the choice to litigate "impractical."

    64

    We disagree that Smith Valentino can be read so narrowly. No case of which we are aware has interpreted this language as Mendoza suggests we should. Moreover, it is not at all clear what monetary amount was in dispute in that case, or whether it was "practical" to bring the litigation in the selected forum. Although the current dispute between Mendoza and AOL might make it impractical for Mendoza to pursue an individual claim in Virginia, there may be other potential disputes between Mendoza and AOL arising from their relationship which would have significantly greater value. Are we to parse the enforceability of the forum selection clause, then, based on the economic value of the particular claim in issue, so that the clause can be [714] enforced some of the time (depending on the value of the claim), but not all of the time? If so, should trial courts use an objective standard, or consider the proclivities of the individual claimant who may not feel litigation in the selected forum is worth it? How should trial judges calculate the costs of litigation?[19] Should they consider the extent to which the selected forum allows for the recovery of costs, including travel-related expenses? Should courts compute the extent to which extraordinary costs in enforcing contractual rights are included in the consideration paid for the goods or services purchased? (See Smith Valentino, supra, 17 Cal.3d at p. 496, 131 Cal.Rptr. 374, 551 P.2d 1206.)

    65

    As can be seen, in addition to reading a limitation in our Supreme Court's opinion which is not warranted, the practical problems in accepting Mendoza's restricted reading of Smith Valentino are formidable, and will ensnare trial courts in endless proceedings during which these factors would be argued and weighed. It was perhaps just such a concern that, in part, moved the Supreme Court to pronounce costs and convenience "[are] not the test of reasonableness [of forum selection clauses]." (Smith Valentino, supra, 17 Cal.3d at p. 496, 131 Cal.Rptr. 374, 551 P.2d 1206.)

    66

    We also reject AOL's suggestion made at oral argument that this conclusion is inconsistent with our Supreme Court's decision in Broughton. That opinion holds only that remedies under the CRLA are arbitrable so long as the substantive rights of the plaintiffs are not impaired. Indeed, because claims for injunctive relief cannot be arbitrated, the court ordered the arbitrable causes of action severed from the court action. (Broughton, supra, 21 Cal.4th at p. 1072, 90 Cal.Rptr.2d 334, 988 P.2d 67.)

    67

    Similarly, our holding is unaffected by the recent Supreme Court decision in Washington Mutual Bank v. Superior Court (2001) 24 Cal.4th 906, 103 Cal. Rptr.2d 320, 15 P.3d 1071 (Washington Mutual). That case concerns what procedurally must be done by trial courts considering whether to certify a national class action where the dispute arises out of a contract containing a foreign choice of law provision. Relying on its earlier opinion in Nedlloyd Lines B.V v. Superior Court, supra, 3 Cal.4th 459, 11 Cal.Rptr.2d 330, 834 P.2d 1148, the Supreme Court directed trial courts to perform a choice of law analysis as part of the national class certification process. (Washington Mutual, supra, 24 Cal.4th at pp. 915-916, 103 Cal. Rptr.2d 320, 15 P.3d 1071.) As part of that analysis, courts must determine if the substantive law of the selected forum is in conflict with a `"fundamental public policy of California.'" (Id. at p. 916, 103 Cal. Rptr.2d 320, 15 P.3d 1071, italics omitted.) If so, the choice of law provision is not to be enforced if California has an interest in having its own law applied to the dispute. (Id. at pp. 916-917, 103 Cal.Rptr.2d 320, 15 P.3d 1071.) If relevant at all, the legal principles underlying both Nedlloyd and Washington Mutual are entirely consistent with our opinion.

    68

    Lastly, we are also unpersuaded by AOL's contention that the trial court erred in not granting AOL's request for a stay of the California action to allow the Virginia court to determine whether the relief available to Mendoza is consistent with California consumer law. AOL [715] claims that if the Virginia court found inconsistency, the California court could then re-assert jurisdiction, deny enforcement of the forum selection clause, and allow Mendoza to proceed in the California forum. We reject this claim because: 1) it is unnecessary for us to defer our decision until a Virginia course clarifies its consumer law, for we do not find Virginia consumer law to be nearly as opaque as suggested by counsel for AOL; 2) AOL suggests no procedural device which would allow a California court to proceed with the underlying case after a Virginia court has ruled (see U.S. Const, art. IV, sec. 1); and 3) a stay would take an already financially impractical legal dispute and compound the expense to resolve it by necessitating perhaps two lawsuits.

    69
    IV.
    70
    DISPOSITION
    71

    The order to show cause is discharged and the petition for writ of mandate is denied. Costs are awarded to Mendoza.

    72
    HAERLE, Acting P.J., and LAMBDEN, J., concur.
    73

    [1] Kennard, J., dissented.

    74

    [2] The "prayer" portion of the complaint does not specifically enumerate punitive damages as a specie of relief, however, the complaint makes it clear that punitive damages are sought.

    75

    [3] Both here and in the trial court, the parties cite unpublished out-of-state decisions favoring their respective positions. Rule 977 of the California Rules of Court prohibits citation to our own state's unpublished opinions, thus we are hardly inclined to consider those of the Massachusetts Superior Court, federal district courts in Illinois and New York, or Florida trial courts and its Court of Appeal.

    76

    [4] However, we note that while we adhere to the abuse of discretion standard, neither our conclusions, nor the result in this case, would change even were we to apply the less deferential substantial evidence standard.

    77

    [5] We admit to being mystified by AOL's characterization that Wimsatt "applies to choice-of-law issues, not forum selection issues." Clearly, it applies to the latter.

    78

    [6] "Suitability" and "availability" in this context mean that a valid judgment can be obtained in the selected forum. (Stangvik v. Shiley, Inc. (1991) 54 Cal.3d 744, 752, 1 Cal. Rptr.2d 556, 819 P.2d 14.) Normally, this is limited to a determination that there is jurisdiction over the dispute and the statute of limitations has not expired as of the time the motion is considered. (Chong v. Superior Court (1997) 58 Cal.App.4th 1032, 1036-1037, 68 Cal.Rptr.2d 427.) Also, the forum must have a reasonable connection to the parties or the dispute. (Cal-State, supra, 12 Cal.App.4th at pp. 1681-1682, 16 Cal.Rptr.2d 417.) Mendoza does not contest the attributes of Virginia as a proposed "suitable" and "available" forum.

    79

    [7] At oral argument, counsel for AOL suggested for the first time that a Virginia court might apply California's consumer protection law to resolve this dispute. Not only was this suggestion legally unsupported, but we find it counter-intuitive to believe that a Virginia court would invoke California law to resolve a contract-based consumer dispute against a Virginia domiciliary where the parties agreed to have Virginia law applied, and where Virginia has a statutory consumer protection law of its own.

    80

    [8] The court also noted that the defendant had rejected the notion of a stipulation that, if transferred, the parties would agree to have California substantive law applied. In any case, the court cited to Nevada's own securities law (Nev.Rev.Stat., ch. 90, § 90.200, subd. 7), which itself contained an anti-waiver provision, making it problematic whether such a stipulation would be enforced by Nevada courts once transfer occurred. (Hall, supra, 150 Cal.App.3d at p. 419, 197 Cal.Rptr. 757.)

    81

    [9] Hall has been cited with approval by our Supreme Court in its own recent opinion on the enforceability of contractual choice of law provisions. [Nedlloyd Lines B.V. v. Superior Court (1992) 3 Cal.4th 459, 464, 11 Cal. Rptr.2d 330, 834 P.2d 1148.)

    82

    [10] Unlike other provisions of the Civil Code (§ 1717), a defendant's right to recover attorney fees and costs is not reciprocal unless the court finds that the plaintiff did not prosecute the claim against the defendant in good faith (id. at § 1780, subd. (d)).

    83

    [11] The focus of the parties' comparisons appears to relate to the CRLA. Mendoza's complaint also includes a cause of action under California's Unfair Competition Law (Bus. & Prof.Code, §§ 17200 et seq.), which shares some remedial similarities with the CRLA, including a private right to sue as a class action (Reese v. Wal-Mart Stores, Inc. (1999) 73 Cal.App.4th 1225, 87 Cal.Rptr.2d 346), recovery of restitution and injunctive relief (Bus. & Prof.Code, § 17203; Schnall v. Hertz Corp. (2000) 78 Cal.App.4th 1144, 93 Cal. Rptr.2d 439), plus enhanced remedies for senior or disabled persons (Bus. & Prof.Code, § 17206.1). But neither actual damages nor attorney fees are recoverable. (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 96 Cal.Rptr.2d 518, 999 P.2d 706; Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 83 Cal.Rptr.2d 548, 973 P.2d 527.)

    84

    [12] As may be relevant here, "unintentional" for purposes of the VCPA means "the alleged violation resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adopted to avoid a violation (Id. at§ 59.1-207.)

    85

    [13] Section 59.1-203 is comprised of four subdivisions, three of which clearly discuss and are limited to the rights of public entities, acting through public counsel, to seek orders restraining violations of the VCPA for the benefit of the public. However, subdivision C states without qualification "[t]he circuit courts are authorized to issue temporary or permanent injunctions to restrain and prevent violations of [section] 59.1-200." It would be needless duplication to recite the authority of the courts to enjoin misconduct in subdivision C if it were intended to apply only to public entities and not individual actions. However, we see nothing in the statute that allows private individuals to seek injunctive relief for the benefit of others. That authority appears to be reserved to the discretion of public officers under subdivisions A, B and D.

    86

    [14] We disagree with AOL that the omnibus section of the VCRA entitled "Additional Relief" (Va.Code Ann., § 59.1-205), which reserves to the courts the right to make additional orders restoring money or property to "any identifiable person" acquired in violation of the act, can be properly read to allow of consumer class actions. Our conclusion is confirmed by the fact that where the Virginia Legislature intends to allow for class action relief in actions at law, it has done so explicitly. (See id., § 55-79.53; Kuhn v. West Alexandria Properties, Inc., supra, 22 Va. Cir.439.)

    87

    [15] Coincidentally, while that case was pending, the CRLA was passed by the Legislature. (Id. at pp. 817-818, 94 Cal.Rptr. 796, 484 P.2d 964.)

    88

    [16] AOL argues that the unavailability of class action relief in Virginia is not a material difference as compared to California law, and in support cites to a published Maryland case, Gilman v. Wheat, First Securities, Inc. (1997) 345 Md. 361, 692 A.2d 454, which enforced a forum selection clause in favor of Virginia. But this case is of limited value here. First, Gilman obviously did not involve California law in the slightest, nor did the Maryland court purport to analyze California public policy. Second, the court found the difference between Maryland law (which allows class actions) and Virginia (which does not) to be inconsequential because the issue of the forum selection arose in the context of an arbitration clause and not a consumer action at law. (692 A.2d 454 at pp. 454-465.)

    89

    [17] California allows for the use of multiples to enhance the fees recovered in consumer litigation (in addition to the greater recovery incident to consumer class actions suits). (Lealao v. Beneficial California Inc. (2000) 82 Cal.App.4th 19, 49-50, 97 Cal.Rptr.2d 797) The ability to recover these costs is integral to making the CRLA effective by increasing the financial feasibility of bringing actions under the statute. (Broughton, supra, 21 Cal.4th at p. 1086, 90 Cal.Rptr.2d 334, 988 P.2d 67.)

    90

    [18] Because we affirm on other grounds, we need not decide whether the trial court correctly concluded that the TOS was an unconscionable adhesion contract (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 99 Cal.Rptr.2d 745, 6 P.3d 669), or Mendoza's alternative contention that the forum selection clause is unenforceable because it was induced by fraud.

    91

    [19] While it takes no imagination in this case to see how even a year's worth of wrongful debit charges may not justify a trip to Virginia, should courts consider to what extent expenses can be mitigated by careful litigation management? (See Smith Valentino, supra, 17 Cal.3d at p, 496, 131 Cal.Rptr. 374, 551 P.2d 1206.)

  • 4 High Life Sales Co. v. Brown-Forman Corp.

    1
    823 S.W.2d 493 (1992)
    2
    HIGH LIFE SALES COMPANY, Plaintiff-Respondent,
    v.
    BROWN-FORMAN CORPORATION, Defendant-Appellant.
    3
    No. 73494.
    4

    Supreme Court of Missouri, En Banc.

    5
    January 28, 1992.
    6

    [494] Thomas E. Wack, Thomas Walsh, Mark Leadlove, St. Louis, for defendant-appellant.

    7

    Paul V. Herbers, Barbara B. Davydov, Kansas City, for plaintiff-respondent.

    8
    THOMAS, Judge.
    9

    In this case we face the issue of whether the Missouri courts should continue to refuse to enforce forum selection clauses that provide that any action brought on the contract shall be brought outside Missouri on the grounds that such a clause is against public policy and void, per se. We adopt, in place of the old rule, the proposition that such a clause should be enforced unless it is unfair or unreasonable to do so. We affirm the trial court's decision not to enforce the forum selection clause in the present case because we believe it would be unreasonable to require this particular case to be brought in Kentucky pursuant to the forum selection clause, and we affirm the substantive decision of the trial court that § 407.413, RSMo 1986, is applicable and prohibits termination of the Distributorship Agreement involved herein.

    10

    High Life Sales Company (High Life), the plaintiff below, has been engaged in the distribution of alcoholic beverages, principally beer, for many years. It is the exclusive distributor in the Jackson County, Missouri, area for all products of Miller Brewing Company, which constitute the vast majority of its sales (approximately 98%). In 1983, High Life began distributing a low alcohol wine cooler product known as "California Cooler" under an oral agreement with California Cooler, Inc. ("CCI"), whose principal place of business is in California. Subsequently, High Life and CCI negotiated through their respective counsel and, on July 15, 1985, entered into a written Distributorship Agreement.

    11

    The Distributorship Agreement provided that any termination must be in accordance with §§ 407.405 and 407.413. Section 407.413.2 provides that "[n]otwithstanding the terms, provisions and conditions of any franchise, no supplier shall unilaterally terminate" any franchise with the wholesaler except for good cause as defined in section § 407.413.5. Despite this provision, the agreement purported to modify the meaning of "good cause." The agreement also contained a forum selection clause providing that any action for payment for goods sold and delivered may be brought where title to the goods passed to the buyer and that any other action on or related to the agreement shall be brought only in the judicial district containing the defendant's principal place of business.

    12

    Later in 1985, Defendant Brown-Forman, whose principal place of business is in Louisville, Kentucky, acquired the assets of CCI, including the assignment of the Distributorship Agreement from CCI to Brown-Forman. High Life consented to this sale and assignment.

    13

    During 1987, Brown-Forman decided to consolidate all of its Missouri distribution for all of its products in a single distributor, Paramount Liquor Company ("Paramount"), a Missouri corporation not subject to suit in Kentucky. In September 1987, Brown-Forman gave ninety days written notice of termination to all thirty-one of its Missouri distributors, including High Life. The termination was effective December 31, 1987. On November 3, 1987, High Life sued Brown-Forman and Paramount in the Circuit Court of Jackson County, Missouri, claiming the termination violated § 407.413. High Life sought injunctive relief, which was denied, and damages.

    14

    Brown-Forman filed a motion to dismiss claiming that (1) § 407.413 is inapplicable and (2) the forum selection clause requires [495] that the action be brought in Kentucky. The trial court overruled Brown-Forman's motion to dismiss. Thereafter, Paramount filed a motion to dismiss, and High Life filed a motion for summary judgment claiming that § 407.413 is applicable, that its requirements of good cause for termination were not met and that the termination was unlawful. Brown-Forman also filed a motion for summary judgment on the ground that § 407.413 has no application. After briefing and oral arguments, the trial court granted High Life's motion for summary judgment on the issue of liability and overruled Brown-Forman's motion for summary judgment. The court also granted Paramount's Motion to Dismiss. The issue of damages was tried to a jury in February of 1990; the jury returned a verdict in High Life's favor for $91,000. Brown-Forman appeals primarily on the issues of the enforceability of the forum selection clause and the applicability of §§ 407.400 to 407.420.

    15

    We must first decide whether this case can properly be decided by the Missouri courts in view of the parties' agreement that it would be brought in Kentucky, the principal place of business of the defendant, Brown-Forman. Two cases represent the primary authority in Missouri on this issue; they are Reichard v. Manhattan Life Ins. Co., 31 Mo. 518 (1862), and State ex rel. Gooseneck Trailer Mfg. Co., v. Barker, 619 S.W.2d 928 (Mo.App.1981). Reichard was a suit on a life insurance policy claiming misrepresentations as to alcohol use and present state of health in the application for life insurance by the insured. The insurance contract contained a provision that the insured waived all right to bring any action on the policy except in the courts of New York. Missouri had a statute, enacted in 1855, that required any life insurance company doing business in Missouri to authorize any person having a claim against the company growing out of the contract of insurance to sue the insurance company in any court in Missouri. The Reichard court held that this waiver clause (a form of forum selection clause) would not be enforced both because it violates public policy and because of the statute.

    16

    Gooseneck cites Reichard and states that the state courts are not obligated to follow precedent[1] of the federal courts, which have questioned the validity of Reichard; Gooseneck held that the forum selection clause was not a sufficient basis for granting plaintiff's motion to dismiss in the Missouri court.

    17

    There is virtually no case authority in Missouri during the 119 years between Reichard, which defendant Brown-Forman argues is not applicable, and the Gooseneck decision by the Court of Appeals, Southern District. In State ex rel. Marlo v. Hess, 669 S.W.2d 291 (Mo.App.1984), the Eastern District distinguished the Gooseneck situation, which involves an outbound forum selection clause (one providing for trial outside of Missouri) from the inbound clause (one providing for trial in Missouri) at issue in Marlo; the Marlo court held that an inbound clause should be enforced so long as doing so is neither unfair nor unreasonable. See also Chase Third Century Leasing Co., Inc. v. Williams, 782 S.W.2d 408 (Mo.App.1989), where the court again enforced an inbound clause. In Medicine Shoppe Int'l, Inc. v. Browne, 683 F.Supp. 731 (E.D.Mo.1988), the federal court, applying Missouri substantive law, summarized the distinction between Missouri's treatment of outbound and inbound clauses as follows:

    18
    Missouri law on the enforceability of forum selection clauses is clear: forum selection clauses which purport to prevent courts within the State of Missouri from exercising their jurisdiction to hear actions brought by Missouri citizens are void as against the Missouri public policy of providing Missouri citizens with access to courts within the State of Missouri. In contrast, forum selection clauses which designate the State of Missouri or a particular court within the State of Missouri as the exclusive forum in which [496] to bring actions are enforceable so long as the clauses are not unfair and are not unreasonable.
    19

    Id. at 732 (citations omitted). In Medicine Shoppe, the federal court held that the forum selection clause that required any action arising from the franchise agreement be brought in Federal District Court for the Eastern District of Missouri was fair, reasonable and, therefore, enforceable under Missouri law.

    20

    We conclude that Missouri should no longer treat outbound forum selection clauses as per se violations of public policy. Our reasons include: first, there is considerable doubt whether Reichard was based solely upon the public policy aspects of enforcing a forum selection clause since it was based in part upon the 1855 Missouri statute specifically authorizing foreign insurance companies to be sued in Missouri. The refusal in that case to enforce the clause that required all litigation on the policy to be brought in New York is a far cry from the issue of whether this Court should generally enforce the type of forum selection clause involved in the present case. Second, the public policy of allowing and encouraging freedom of contract and enforcing the parties' agreement whether they be citizens of Missouri or elsewhere, so long as doing so is neither unfair nor unreasonable, outweighs any public policy involved in guaranteeing Missouri citizens a right to the Missouri courts when they have entered into an arm's length agreement that provides otherwise. Third, the one-way nature of Missouri's decisions in refusing to enforce outbound agreements while enforcing inbound agreements must be premised on the assumption that the Missouri courts have a corner on fair and just trials. We are proud of the Missouri courts but not so much as to override a valid agreement entered into by our citizens to litigate elsewhere. Finally, the one-way enforcement of the Missouri rule, because of its uneven impact, may well add to any overcrowding condition in the Missouri courts in circumstances where the parties, by their agreement, have indicated a willingness to litigate elsewhere.

    21

    The early cases in many jurisdictions that refused to enforce outbound forum selection clauses often relied upon an "ouster of jurisdiction" theory as the specific public policy argument supporting per se invalidity; it was said that the agreement of the parties should not operate to deprive a court of jurisdiction over parties and issues otherwise properly before that court. This argument was justified by M/S Bremen, GMBH v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972), which made the point that the majority rule that enforces such clauses, so long as doing so is neither unfair nor unreasonable, does not deprive the non-designated state of jurisdiction except to the extent that in its discretion it determines that the enforcement of the clause is neither unfair nor unreasonable. The validity of this observation is best evidenced by the ultimate decision we make in this case to refuse to enforce the forum selection clause because of the importance to Missouri of determining the application of a previously uninterpreted statute in an area of important public policy (liquor control). The rule we adopt today combines the best of both worlds in that it retains jurisdiction when the Missouri courts determine that to be necessary or desirable and not unfair while enforcing the valid agreement of the parties on other occasions.

    22

    Following the important Supreme Court decision in M/S Bremen, many jurisdictions adopted the rule upholding the parties' free contractual choice, at least where the agreement was not unreasonable.[2] [497] Only five states in addition to Missouri presently follow a rule that treats forum selection clauses as unenforceable, per se.[3] It has been suggested Missouri should definitely join the majority of jurisdictions that recognize the validity of freely negotiated forum selection agreements. See Piraino, Forum Selection Clauses in Missouri Courts, 42 Mo.B.J. 130, 133-34 (1991). By this opinion, we join the better-reasoned majority rule and will enforce such clauses, so long as doing so is neither unfair nor unreasonable.

    23

    We must next consider whether enforcing the forum selection clause in the present situation would be either unfair or unreasonable. Many courts have refused to enforce a forum selection clause on the grounds of unfairness if the contract was entered into under circumstances that caused it to be adhesive. Colonial Leasing Co. of New England, Inc. v. Best, 552 F.Supp. 605 (D.Or.1982). An adhesive contract is one in which the parties have unequal standing in terms of bargaining power (usually a large corporation versus an individual) and often involve take-it-or-leave-it provisions in printed form contracts. The agreement in this case was not unfair in this respect; it was between two substantial and successful companies, drafted and agreed upon by their respective counsel following give-and-take negotiations on various provisions. It is not clear whether there was specific negotiation on the forum selection clause, but this is not critical; the important factor is that the contract terms were generally arrived at under circumstances that cannot be described as "adhesive."

    24

    Another factor that mitigates in favor of the fairness of enforcing this forum selection clause is the neutral and reciprocal nature of this particular clause. Rather than providing one particular venue where all litigation shall be brought, this clause provides that the litigation shall be brought at the principal place of business of the defendant. Thus, under this clause if Brown-Forman files the lawsuit, the venue would be in Missouri, but if High Life files a lawsuit, the clause calls for it to be filed in Kentucky. Not only does the reciprocal nature of this clause favor its enforcement, but public policy also should favor such a clause because it discourages hasty litigation. A race to the courthouse by either party puts the lawsuit in the opponent's backyard; as a general proposition, this type of provision should be favored. We do not find circumstances present that would cause the enforcement of this forum selection clause to be unfair.

    25

    We must also consider whether enforcement of the forum selection clause in this particular case would be unreasonable. The controlling substantive issue in this litigation, the application of § 407.413 to the liquor distribution franchise agreement between Brown-Forman, as the supplier, and High Life, as the licensed distributor, involves a matter of important public policy to the state of Missouri. In general, the control of liquor distribution is an important state interest in Missouri. See Vaughan v. EMS, 744 S.W.2d 542, 547 [498] (Mo.App.1988), and May Department Stores v. Supervisor of Liquor Control, 530 S.W.2d 460, 468 (Mo.App.1975). Liquor distribution is an area that has always been heavily regulated by state government; moreover, the methods of distribution and extent of regulation vary enormously from state to state. It is evident that in this area what one state may approve and even encourage, another state may prohibit and declare illegal. This principle even has constitutional endorsement by reason of the Twenty-First Amendment to the United States Constitution repealing Prohibition. Thus, the interest that a particular state has in construing and applying liquor control legislation in its own state is apparent.

    26

    It is very much within the interest of the state of Missouri to protect its licensed liquor distributors from unwarranted or unjustified termination of their franchise. Section 407.413 does just this by providing that no such franchise shall be terminated except for good cause. Both the general subject of liquor control and the specific statutory protection of a holder of a liquor distribution franchise carry heightened public policy considerations that outweigh any public policy considerations involved in the enforcement of a forum selection clause.

    27

    Moreover, the Eighth Circuit Court of Appeals recently recognized the strong public policy reflected in Chapter 407 generally and particularly with respect to § 407.405, which requires a ninety day notice for the termination of a franchise. Section 407.405 is a companion section to § 407.413, and both involve the same issue as to applicability as spelled out in § 407.400(1). In Electrical and Magneto Service Co., Inc. v. AMBAC International Corp., 941 F.2d 660 (8th Cir.1991), the court refused to apply a South Carolina choice of law provision because this would constitute a waiver of the benefits of Chapter 407; "to do so would violate a fundamental policy of Missouri." In holding that the public policy involved in Chapter 407 is so strong that parties will not be allowed to waive its benefits, the court stated:

    28
    In short, Chapter 407 is designed to regulate the marketplace to the advantage of those traditionally thought to have unequal bargaining power as well as those who may fall victim to unfair business practices. Having enacted paternalistic legislation designed to protect those that could not otherwise protect themselves, the Missouri legislature would not want the protections of Chapter 407 to be waived by those deemed in need of protection. Furthermore, the very fact that this legislation is paternalistic in nature indicates that it is fundamental policy: "a fundamental policy may be embodied in a statute which ... is designed to protect a person against the oppressive use of superior bargaining power." Restatement (Second) of Conflicts § 187 comment g.
    29
    * * * * * *
    30
    The Missouri statutes in question, relating to merchandising and trade practices, are obviously a declaration of state policy and are matters of Missouri's substantive law. To allow these laws to be ignored by waiver or by contract, adhesive or otherwise, renders the statutes useless and meaningless.
    31

    Electrical and Magneto Service Co., 941 F.2d at 663, 664.

    32

    Several other factors are present that dictate that it would be unreasonable for Missouri to send this case to Kentucky. Because § 407.413 has never been interpreted by the Missouri courts, there are no guidelines for an out-of-state court with respect to whether the statute should be applied in this situation. Moreover, Kentucky does not have a statute even remotely similar to § 407.400. One could conclude that the absence of such a statute in Kentucky suggests that their public policy is contrary to that of Missouri, which obviously seeks to protect its citizens from an unjustified termination of a liquor franchise agreement.

    33

    Cases in other jurisdictions that enforce forum selection clauses in circumstances that are reasonable have refused to enforce such clauses in circumstances similar to the present case. In Lulling v. Barnaby's [499] Family Inns, Inc., 482 F.Supp. 318 (E.D.Wis.1980), an equipment lease had a forum selection clause that called for suit in Illinois, but Wisconsin law was to be applied, and particularly the Wisconsin Franchise Investment Statute, which regulated the offer and sale of the franchise related to the equipment lease in issue. The court held that it would be unreasonable to require Wisconsin citizens to litigate their claims based on a Wisconsin law in the Illinois courts.

    34

    In Cutter v. Scott & Fetzer Co., 510 F.Supp. 905 (E.D.Wis.1981), defendant sought to terminate plaintiff's franchise agreement. The franchise agreement had a forum selection clause calling for venue in Ohio, but plaintiff contended that the termination violated the Wisconsin Fair Dealership Law, a statute that is very much like §§ 407.400-420, in that it is intended "to promote the compelling interest of the public in fair business relations between dealers and grantors, and in the continuation of dealerships on a fair basis." Cutter, 510 F.Supp. at 908, quoting Wis. Stat. § 135.025(2)(a)(1975). One of the issues in the case was whether the termination of plaintiff's dealership was without "good cause." Id. Just as the Eighth Circuit ruled in Electrical and Magneto Service, Inc., 941 F.2d 660, with regard to § 407.405, the Wisconsin court pointed out that the Fair Dealership Law "may not be varied by contract or agreement." The court said that the Fair Dealership Law is intricate and complex and that the Wisconsin courts are better prepared to consider a case under this statute than courts in Ohio because the experience of a Wisconsin judge with this statute is probably greater than that of any judge in Ohio. In holding that it would be unreasonable to enforce the forum selection clause, the Wisconsin court stated:

    35
    In summary, I am persuaded that it would be unjust to require the plaintiff to pursue this action in Ohio. I make this determination fully aware of the nature of the forum-selection clause when considered in conjunction with the nature of the plaintiff's claims. I do not presume to hold that a clause of this type will never be upheld when contained in a contract of this nature, nor do I hold that a claim based on the Fair Dealership Law can only be litigated in a Wisconsin court. However, when the circumstances of this case are considered in totality, I find that the better course is to refuse to apply the forum-selection clause contained in the contract between the parties.
    36

    Cutter, 510 F.Supp. at 909.

    37

    In Hall v. Super. Ct. in & For County of Orange, 150 Cal.App.3d 411, 197 Cal. Rptr. 757 (4 Dist.1983), the enforceability of the forum selection clause contained in two California gas and oil limited partnerships was considered. The partnerships were apparently negotiated in California, but the parties flew to Nevada to execute the agreement. The agreement designated California for the choice of laws but contained a Nevada forum selection clause. The California Corporate Securities Law of 1968 controlled, and it, in turn, contained a clause that provided that any attempt to waive compliance with the California statute was void. The court held that enforcing the Nevada forum selection clause under these circumstances would violate the public policy of California and, therefore, denied enforcement of the forum selection clause as unreasonable. The court stated:

    38
    California's policy to protect securities investors, without more, would probably justify denial of enforcement of the choice of forum provision, although a failure to do so might not constitute an abuse of discretion; but [the statutory provision], which renders void any provision purporting to waive or evade the Corporate Securities Law, removes that discretion and compels denial of enforcement.
    39

    Hall, 197 Cal.Rptr. at 762.

    40

    So it is with Missouri's statute concerning termination of liquor franchises; its importance to the public policy of the state, evidenced in part by the fact that any effort to waive or modify its provisions is unenforceable, dictates that this Court should not abrogate the responsibility of interpreting this important statute to the [500] Kentucky courts. We hold that enforcement of the forum selection clause under these circumstances would be unreasonable and, therefore, even under the rule we adopt today, the issues in this case should be decided by the courts in Missouri.

    41

    Having decided it was proper to bring this action in Missouri, we then turn to the trial court's determination of the substantive issues and, particularly, whether the termination of the franchise was valid under the terms of the Distributorship Agreement and the applicable Missouri statutes. Paragraph 9 of the agreement provides that "any termination must be in accordance with Missouri § 407.405 and § 407.413."

    42

    Paragraph 9 also purported to modify the meaning of "good cause" in § 407.413 by providing: "The parties agree that `good cause' for the purpose of § 407.413 means facts, which under the circumstances would permit a reasonable and prudent person to believe that the action is based upon acceptable and reasonable trade practices...."

    43

    High Life's claim that the termination was improper is based on § 407.413.2, which provides:

    44
    Notwithstanding the terms, provisions and conditions of any franchise, no supplier shall unilaterally terminate or refuse to continue or change substantially the condition of any franchise with the wholesaler unless the supplier has first established good cause for such termination, noncontinuance, or change.
    45

    (Emphasis added.) If the Distributorship Agreement between Brown-Forman and High Life is covered by this provision, it will impact in two very important ways. First, it will nullify the attempt by the agreement to modify the meaning of "good cause." Second, it specifies that "good cause," as defined in § 407.413.5 is required for termination. Section 407.413.5 provides:

    46
    As used in this section, "good faith" is the duty of each party to any franchise and all officers, employees or agents thereof to act in a fair and equitable manner towards each other, and "good cause" means either of the following:
    47
    (1) Failure by the wholesaler to comply substantially with the provisions of an agreement or understanding with the supplier, which provisions are both essential and reasonable; or
    48
    (2) Use of bad faith or failure to observe reasonable commercial standards of fair dealing in the trade.
    49

    Brown-Forman concedes that it did not have good cause as defined by the statute, whereas High Life concedes that Brown-Forman had good cause under the attempted modification of the meaning of good cause. Thus, the sole controlling issue on liability turns on the issue of whether this Distributorship Agreement is controlled by §§ 407.400-420. Because of the respective concessions by the parties, this issue was decided by the trial court and must be decided by this Court as a matter of law upon the parties' respective motions for summary judgment.

    50

    Section 407.413, relied upon by High Life, covers any "franchise" as defined in § 407.400(1). This definitional section is particularly complex because it contains both an original, general definition of "franchise," applying to all types of businesses and not limited to liquor franchises, as well as a specific definition added by the legislature in 1984 to specifically include liquor franchises. Moreover, the relevant portion of the statute is one long, rambling sentence containing various phrases specifying different aspects of the definition. It is helpful in analyzing the meaning of the statute to divide and label the relevant portions, to delete (indicated by ellipses) unnecessary language and to label by descriptive terms the various parts of the definition.

    51

    It is also helpful in analyzing the statute to identify in advance the format of the definition so that the reader knows what to look for and where to "pigeonhole" the various phrases and terms encountered in reading and analyzing the lengthy and rambling sentence. The statute first contains a general definition of "franchise" applicable generally to all types of businesses; it [501] then contains a specific definition of liquor distribution agreements that are included. The latter definition is in terms of the parties that the agreement must be between (a "wholesaler" and a "supplier") and the type of products that must be distributed under such a liquor distribution agreement. The statute, with the respective phrases separated and labeled in the left-hand margin and with language unnecessary to the present inquiry deleted, reads as follows:

    52

    407.400. Definitions As used in sections 407.400 to 407.420: I. Term defined (1) "Franchise" means A. General definition a written or oral arrangement . . . in which a person (not limited grants to another person a license to use a trade to a liquor franchise) name, trademark, service mark, or related characteristic, and in which there is a community of interest in the marketing of goods or services at wholesale, retail, by lease, agreement, or otherwise, II. Liquor franchise defined including but not limited to A. Parties a commercial relationship . . . between: 1. Wholesaler a "wholesaler," —Defined such wholesaler being a person as defined in this section, licensed . . . to sell at wholesale, spirituous liquor and wine containing alcohol in excess of five percent by weight to retailers, duly licensed in this state, and (emphasis added) 2. Supplier a "supplier," —Defined being a person engaged in the business as a manufacturer, distiller, rectifier or out-of-state solicitor whose brands of spirituous liquor and wine are distributed through duly licensed wholesalers in this state, and B. Granting the wherein a wholesaler is granted the right to offer, sell, right to sell and distribute within this state or any designated area thereof 1. Product sold such of the supplier's brands of spirituous liquors and wines, or all of them, as may be specified;III. Exception not applicable except that, . . . [The remainder of the statute excepts certain sales, none of which are claimed to be applicable to the issues in this case.]

    53

    [Separation paragraphing and outline headings in the left-hand margin are ours.] High Life claims it fits under the special liquor distribution definition. (See II above.)

    54

    High Life meets the definition of a wholesaler because it is licensed under Chapter 311, RSMo, to sell at wholesale spirituous liquor and wine containing alcohol in excess of five percent by weight. (See II,A,1.) In fact, it is licensed pursuant to § 311.180.1(8) to sell at wholesale intoxicating liquor containing not in excess of twenty-two percent of alcohol by weight. Although there is a different license for the sale of malt liquor containing not in excess of five percent of alcohol by weight under § 311.180.1(7), the type of license is cumulative so that the holder of a twenty-two percent license can also sell either malt liquor or spirituous liquor and wine containing less than five percent of alcohol by weight.

    55

    Continuing with the definition, Brown-Forman is a "supplier" because it is engaged [502] in the business as a "manufacturer, distiller, rectifier or out-of-state solicitor whose brands of spirituous liquor and wine are distributed through duly licensed wholesalers in this state."

    56

    We then reach the controlling issue: whether the product distributed under the agreement in question must be "spirituous liquor and wine containing alcohol in excess of five percent by weight" (the type of license required by the wholesaler) or whether the product distributed is simply required to be spirituous liquors or wines without regard to whether its percentage of alcohol is greater or less than five percent. The portion of the statute that describes the product required to be distributed (II,B,1.) says simply "spirituous liquors and wines." Brown-Forman argues that the language specifying the type of license required of a covered wholesaler (see II,A,1), namely a license to sell "spirituous liquor and wine containing alcohol in excess of five percent by weight," is constructively carried over and inserted in the phrase "spirituous liquor and wine," referred to in the remaining sections of the statute and, particularly, in paragraph II,B,1, which specifies that the product be "spirituous liquors and wines." High Life argues that there is no reason to carry over the alcoholic content requirement because the two paragraphs refer to entirely different matters; paragraph II,A,1 refers to the type of license required, and paragraph II,B,1 refers to the type of product distributed. More specifically, Brown-Forman argues that to support High Life's interpretation of paragraph II,B,1 you would have to read the specification of the type of product to state by implication, "spirituous liquors and wines, even if containing less than five percent alcohol by weight." We disagree. The most direct, unambiguous, unequivocal method of stating that the percentage of alcohol is not to be a factor in paragraph II,B,2, specifying the type of product, is to make no reference to the percentage of alcohol. "Spirituous liquors and wines" without reference to any requirement as to the percentage of alcohol must certainly mean spirituous liquors and wines without regard to the percentage of alcohol. This conclusion is so obvious that it is redundant to state it; it says what it says. This is not a matter of construing an otherwise ambiguous provision. Rather, Brown-Forman's argument construes and interprets an otherwise unambiguous provision to create the ambiguity and thus justify its version of the interpretation that would constructively carry the alcohol content language from paragraph II,A,1 to paragraph II,B,1.

    57

    High Life is a "wholesaler" as defined in II,A,1 above. Brown-Forman is a supplier as defined in II,A,2. California Cooler is a type of "spirituous liquor and wine" required by II,B,1 to be distributed under a franchise defined in § 407.400. We hold that the distribution agreement between Brown-Forman and High Life covering California Cooler is covered by §§ 407.400-420, and that the good cause requirement of § 407.413 is applicable. Because Brown-Forman did not have good cause as required by § 407.413.2 for the termination, the trial court was correct in granting High Life's motion for summary judgment.

    58

    After the trial court ruled on liability in favor of High Life, the issue of High Life's damages was tried to a jury. Brown-Forman complains that the trial court erred in overruling Brown-Forman's motion in limine to exclude the testimony of Paul Pohle, plaintiff's expert damage witness, and in refusing to strike that testimony. Mr. Pohle explained that in his opinion California Cooler was an "add-on" product because it constituted only two percent of the gross sales of High Life; its volume was so small that most of the company's operating expenses were not increased when California Cooler was added as a product nor were they reduced when it was removed. For example, Pohle testified that the addition of California Cooler at the peak of its distribution averaged no more than fifteen cases per truck. California Cooler was delivered to the same customers to whom beer was delivered, and there was room on those trucks for the requisite amount of Cooler product. Thus, no additional trucks or trips were required to deliver California Cooler, and, therefore, the company did not incur any increase in gas and oil expense, maintenance on trucks or [503] cost for the purchase of the new trucks as a result of adding California Cooler as a product. By the same token, these expense items were not decreased when California Cooler ceased to be a product. No new employees were hired, no new equipment was purchased, and no new warehouse space was added for the California Cooler product.

    59

    In computing damages from the loss of the California Cooler line, Mr. Pohle did not reduce projected gross profits by expenses that remained unchanged in the face of the addition or deletion of the Cooler product. He did reduce the gross profit from projected California Cooler sales by "direct expenses," which include such things as sales commissions, advertising and promotional expenses, interest costs for financing inventory and receivables to the extent that these items were directly attributable to California Cooler. Brown-Forman contends that this was improper and that the proper measure of damages requires that a pro rata share of all general operating expenses be attributed to California Cooler sales in determining loss of profits from the termination of the agreement.

    60

    It is important to note that, although this issue arises as an admissibility of expert testimony problem, it is not really an expert witness/evidence problem in the classic sense. Rather, it is a problem concerning the substantive law of damages and, particularly, the measure of damages; Brown-Forman is arguing that, as a matter of law, damages may not be computed by ignoring expenses that the evidence shows were not affected by the addition or deletion of the California Cooler product. Thus, Brown-Forman contends that expert witness Pohle's conclusions concerning the loss of profits caused by the termination were improper as a matter of law and therefore not relevant and not admissible. We disagree with Brown-Forman's position; we believe it was proper for the jury to determine under all the evidence whether High Life was damaged and, if so, to what extent.

    61

    It was Mr. Pohle's expert opinion that the lost profits from September 29, 1987, the date of notice of intention to terminate the Distributorship Agreement, to the end of 1989 was $111,731. Brown-Forman's expert, Ed Lynch, computed loss of profits by allocating a pro rata share of all operating expenses to the California Cooler product; he concluded that the loss of profits for the same period were $2,157. On cross-examination, Mr. Lynch was asked to add back to his profit all operating expenses that he could not identify as being increased or decreased by California Cooler, and, upon doing so, he arrived at loss of profits for the period of $82,900. The jury returned a damage verdict of $91,000.

    62

    The jury was instructed pursuant to MAI 4.01. MAI 4.01 instructs the jury to "award plaintiff such sum, as you believe will fairly and justly compensate plaintiff for any damages you believe it sustained as a direct result of" the termination of the Distribution Agreement. This instruction properly puts to the jury the factual issue of which expenses were to be considered in determining the loss of profits. The trial court was correct in refusing to exclude or strike testimony of plaintiff's expert damage witness. The issue raised by Brown-Forman with respect to this evidence was an issue of fact for the jury rather than a question of the admissibility of evidence for the court.

    63

    Section 407.413.3 and the Distributorship Agreement both provide that High Life, as the prevailing party, may recover reasonable attorney's fees and the costs of the action. High Life has filed its Motion for Attorney's Fees, covering the period from the trial through the appeal to the court of appeals and to this Court, in the amount of $31,349.00 along with itemized statements setting forth the date, nature of services, person rendering the services, the hourly rates and the total charges for such services. Brown-Forman has filed its response to this motion asserting their basic claim that § 407.413 does not apply, and therefore attorney's fees should not be granted. We have resolved this issue in favor of High Life and against Brown-Forman. Brown-Forman's Response to the Motion for Attorney's Fees does not question the amount of the fees requested, but states that the motion is premature. We sustain High Life's Motion for Attorney's [504] Fees. It is ordered that further judgment shall be entered in favor of High Life Sales Company and against Brown-Forman Corporation in the amount of $31,349.00 covering attorney's fees from the end of the trial through the appeal and for the costs of this action.

    64

    We change the rule of law in Missouri concerning the enforceability of forum selection clauses, but we nevertheless affirm the trial court in its decision to refuse to dismiss so that Brown-Forman could re-file this lawsuit in Kentucky; we affirm the trial court's finding that § 407.413 applies to the Distributorship Agreement (thus Brown-Forman was not entitled to terminate the Distributorship Agreement); and, we affirm the trial court's refusal to exclude the testimony of plaintiff's expert damage witness.

    65

    All concur.

    66

    [1] Public Water Supply District, v. American Ins. Co., 471 F.Supp. 1071 (W.D.Mo.1979), and Dick Proctor Imports, Inc. v. Sumitomo Corp., 486 F.Supp. 815 (E.D.Mo.1980).

    67

    [2] Volkswagenwerk, A.G. v. Klippan, GmbH, 611 P.2d 498 (Alaska 1980), cert. denied, 449 U.S. 974, 101 S.Ct. 385, 66 L.Ed.2d 236 (1980); Societe Jean Nicolas et Fils, J.B. v. Mousseux, 123 Ariz. 59, 597 P.2d 541 (1979); SD Leasing, Inc. v. Al Spain and Assocs., Inc., 277 Ark. 178, 640 S.W.2d 451 (1982); Smith, Valentino & Smith, Inc. v. Super.Ct. of Los Angeles County, 17 Cal.3d 491, 131 Cal.Rptr. 374, 551 P.2d 1206 (1976); ABC Mobile Sys., Inc. v. Harvey, 701 P.2d 137 (Colo.App.1985); Funding Sys. Leasing Corp. v. Diaz, 34 Conn.Supp. 99, 378 A.2d 108 (1977); Elia Corp. v. Paul N. Howard Co., 391 A.2d 214 (Del.Super.1978); Manrique v. Fabbri, 493 So.2d 437 (Fla.1986); Calanca v. D & S Mfg. Co., 157 Ill.App.3d 85, 109 Ill.Dec. 400, 510 N.E.2d 21 (1987); Prudential Resources Corp. v. Plunkett, 583 S.W.2d 97 (Ky.App.1979); Hauenstein & Bermeister, Inc. v. Met-Fab Indus., Inc., 320 N.W.2d 886 (Minn.1982); Air Economy Corp. v. Aero-Flow Dynamics, Inc., 122 N.J.Super. 456, 300 A.2d 856 (1973); Credit Francais Int'l, S.A. v. Sociedad Financiera de Comercio, C.A., 128 Misc.2d 564, 490 N.Y.S.2d 670 (1985); United Standard Management Corp. v. Mahoning Valley Solar Resources, Inc., 16 Ohio App.3d 476, 476 N.E.2d 724 (1984); Reeves v. Chem Indus. Co., 262 Or. 95, 495 P.2d 729 (1972); St. John's Episcopal Mission Ctr. v. South Carolina Dept. of Social Services, 276 S.C. 507, 280 S.E.2d 207 (1981); Green v. Clinic Masters, Inc., 272 N.W.2d 813 (S.D.1978); International Collection Serv., Inc. v. Gibbs, 147 Vt. 105, 510 A.2d 1325 (1986).

    68

    [3] Keelean v. Central Bank of the South, 544 So.2d 153 (Ala.1989); Cartridge Rental Network v. Video Entertainment, Inc., 132 Ga.App. 748, 209 S.E.2d 132 (1974); Alabama and Georgia appear to follow the common law rule of per se invalidity. Cerami-Kote, Inc. v. Energywave Corp., 116 Idaho 56, 773 P.2d 1143 (1989); Polaris Indus., Inc. v. District Court, 215 Mont. 110, 695 P.2d 471 (1985); Fidelity Union Life Ins. Co. v. Evans, 477 S.W.2d 535 (Tex.1972); the latter three states still follow the common law rule of per se invalidity, but their decisions appear to be based on special venue statutes.

  • 5 Perkins v. CCH Computax Inc.

    1
    423 S.E.2d 780 (1992)
    2
    333 N.C. 140
    3
    Jack PERKINS, CPA
    v.
    CCH COMPUTAX, INC.
    4
    No. 185PA92.
    5

    Supreme Court of North Carolina.

    6
    December 18, 1992.
    7

    [781] Law Offices of J. Kenneth Edwards by J. Kenneth Edwards, Raleigh, for plaintiff-appellee.

    8

    Patton, Boggs & Blow by Kenneth J. Gumbiner and Julie A. Davis, Greensboro, for defendant-appellant.

    9
    MEYER, Justice.
    10

    In this case, we address the question left unanswered by this Court in Johnston County v. R.N. Rouse & Co., 331 N.C. 88, 414 S.E.2d 30 (1992), and decide the validity of a forum selection clause contained in a contract for the purchase of software, executed by the parties, Jack Perkins, CPA, and CCH Computax, Inc. Defendant, CCH Computax, contends that the Court of Appeals erred in concluding that forum selection clauses were unenforceable in North Carolina. We agree and therefore reverse the Court of Appeals.

    11

    Plaintiff is a certified public accountant and practices in Raleigh, North Carolina. Defendant is a California software company located in Torrance, California. On 2 February 1990, plaintiff, Jack Perkins, CPA, and defendant, CCH Computax, Inc., entered into a license and service agreement for a computer software program. Plaintiff paid $700.00 for the software.

    12

    The contract executed by plaintiff and defendant contains the following pertinent language:

    13
    D. This Agreement shall be governed by and interpreted in accordance with the law of the State of California.
    14
    E. This Agreement shall be treated as though it were executed in the County of Los Angeles, State of California, and were to have been performed in the County of Los Angeles, State of California. Any action relating to this Agreement shall only be instituted and prosecuted in courts in Los Angeles County, California. Customer/Licensee [plaintiff] specifically consents to such jurisdiction and to extraterritorial service of process.
    15

    Paragraph D is a choice of law clause that we have recently addressed and found to be valid in North Carolina. Rouse, 331 N.C. 88, 414 S.E.2d 30. Paragraph E contains both a consent to jurisdiction clause, which we also found valid in Rouse, and a forum selection clause, which we did not address in Rouse.

    16

    Plaintiff and defendant also entered into three other service agreements, each of which is two pages in length. Each of these three service agreements, initialled by plaintiff, contains a forum selection clause requiring the prosecution of actions arising from the agreements to be instituted in the courts of Los Angeles County, California.

    17

    On 13 May 1991, plaintiff filed a complaint in Wake County District Court seeking damages from defendant for unfair and deceptive trade practices, breach of warranty of merchantability, breach of implied warranty of fitness, breach of express warranty, negligence, and breach of contract. On 10 July 1991, defendant, relying in part on the forum selection clause contained in [782] its contract with plaintiff, filed a motion to dismiss pursuant to N.C.G.S. § 1A-1, Rule 12(b) on the grounds that there was a lack of subject matter jurisdiction, that the action was brought in an improper venue, and that the complaint failed to state a claim upon which relief can be granted. On 13 August 1991, the case was transferred to Wake County Superior Court. On 29 August 1991, plaintiff amended his complaint, stating an additional cause of action for fraud. On 21 October 1991, the trial court entered an order denying defendant's motion to dismiss.

    18

    The Court of Appeals affirmed the trial court, reasoning that this Court in Gaither v. Motor Co., 182 N.C. 498, 109 S.E. 362 (1921), had previously addressed the question of whether parties may select the forum for an action by agreement. The Court of Appeals reasoned that despite numerous developments in the law regarding forum selection clauses, it was without authority to overrule this Court's decision in Gaither. Perkins, 106 N.C.App. at 214, 415 S.E.2d at 758.

    19

    Defendant contends that, contrary to the Court of Appeals' decision, Gaither is not controlling here. We agree. The Court in Gaither did consider a choice of forum clause; however, it dealt solely with venues within North Carolina. The Court refused to enforce a provision in a contract entered into by a car dealer located in Richmond County and a distributor located in Mecklenburg County which provided that "any action that may be taken against the distributor shall be brought in the city of Charlotte." Gaither, 182 N.C. at 498, 109 S.E. at 363. The Court in Gaither reasoned that "the general policy of the courts is to disregard contractual provisions to the effect that an action shall be brought either in a designated court or in a designated county to the exclusion of another court or another county in which the action, by virtue of a statute, might properly be maintained." Id. at 499, 109 S.E. at 363 (emphasis added). The Gaither decision is correct on its facts but is distinguishable from this case. There is a difference between attempting to fix the venue by contract within the State of North Carolina, where the North Carolina legislature provides for venue in all cases (chapter 1, subchapter IV, "Venue," article 7 of the North Carolina General Statutes), and attempting to fix the venue by contract in another state. Gaither involved an attempt to fix the venue within North Carolina in contravention of the North Carolina statutory provisions on venue. In this case, the parties agreed by contract to change the venue to another state, and there are no statutory provisions in North Carolina which provide that venue cannot be changed to another state by contract.

    20

    The question of whether forum selection clauses that purport to fix the venue of an action in another state are enforceable in North Carolina is one of first impression. Historically, forum selection clauses have not been favored in American courts. Courts refused to enforce these bargained-for agreements, believing them to be "contrary to public policy" or improper attempts to "oust the jurisdiction" of the court. M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 9, 92 S.Ct. 1907, 1913, 32 L.Ed.2d 513, 520 (1972); Francis M. Dougherty, Annotation, Validity of Contractual Provision Limiting Place or Court in Which Action may be Brought, 31 A.L.R.4th 404, 409 (1984).

    21

    Contrary to the assertion of the dissent, honoring forum selection clauses in contracts will not "allow private parties to determine whether North Carolina's courts will exercise their jurisdiction over cases involving citizens of this state." Generally, courts no longer view forum selection clauses as ousting the courts of their jurisdiction. Forum selection clauses do not deprive the courts of jurisdiction but rather allow a court to refuse to exercise that jurisdiction in recognition of the parties' choice of a different forum. See M/S Bremen v. Zapata Off-Shore Co., 407 U.S. at 12, 92 S.Ct. at 1914, 32 L.Ed.2d at 521 (the contention that forum selection clauses oust the courts of jurisdiction "is hardly more than a vestigial legal fiction"); Smith, Valentino & Smith, Inc. v. Superior Court, 17 Cal.3d 491, 495, 551 P.2d 1206, [783] 1208, 131 Cal.Rptr. 374, 376 (1976) (parties may not deprive courts of their jurisdiction by private agreement, but courts possess discretion to decline to exercise jurisdiction where parties have chosen a different forum); Funding Sys. Leasing Corp. v. Diaz, 34 Conn.Supp. 99, 101, 378 A.2d 108, 109 (1977) (forum selection clauses are no longer seen as affecting the jurisdiction of the courts; a court retains the right to hear the case but is not bound to exercise that right); Manrique v. Fabbri, 493 So.2d 437, 439-40 (Fla.1986) (forum selection clauses do not oust courts of their jurisdiction but provide them with a reason not to exercise that jurisdiction). While Gaither was a case involving "venue" as opposed to "jurisdiction" and can be distinguished on that basis from the present case, as we have done, there is language in Gaither that blurs the two concepts. To the extent that the language in Gaither can be read to condemn forum selection clauses as depriving North Carolina courts of jurisdiction, that language is disavowed. Gaither, 182 N.C. at 500, 501, 109 S.E. 362.

    22

    In recent years, there has been an abundance of state and federal cases enforcing forum selection clauses. The leading case in this area is Bremen. In Bremen, the United States Supreme Court enunciated a standard for the enforceability of forum selection clauses. The Court held that forum selection clauses are "prima facie valid and should be enforced unless enforcement is shown by the resisting party to be `unreasonable' under the circumstances." 407 U.S. at 10, 92 S.Ct. at 1913, 32 L.Ed.2d at 520. The Court further held that the forum selection clause in the contract should be enforced "absent a strong showing that it should be set aside ... [, a] show[ing] that enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching." Id. at 15, 92 S.Ct. at 1916, 32 L.Ed.2d at 523. Additionally, the Court held that a forum selection clause should be invalid if enforcement would "contravene a strong public policy of the forum in which suit is brought." Id. Although Bremen is an admiralty case, its holding with regard to forum selection clauses has been the basis for numerous federal and state court opinions not involving admiralty. See Mercury Coal & Coke v. Mannesmann Pipe & Steel, 696 F.2d 315, 318 (4th Cir.1982); In re Fireman's Fund Ins. Cos., 588 F.2d 93, 95 (5th Cir.1979); Fireman's Fund American Ins. Cos. v. Puerto Rican Forwarding Co., 492 F.2d 1294, 1296-97 (1st Cir.1974); Anastasi Bros. Corp. v. St. Paul Fire & Marine Ins. Co., 519 F.Supp. 862, 863 (E.D.Pa.1981); Smith, Valentino & Smith, Inc. v. Superior Court, 17 Cal.3d 491, 495, 551 P.2d 1206, 1208, 131 Cal.Rptr. 374, 376;[1] Dyersburg Mach. Works, Inc. v. Retenbach Eng'g Co., 650 S.W.2d 378 (Tenn.1983); Paul Business Sys. v. Canon U.S.A., Inc., 240 Va. 337, 341, 397 S.E.2d 804, 807 (1990).

    23

    Plaintiff here is not the first software purchaser to attempt to overcome a forum selection clause in a contract entered into with CCH Computax. There are two federal cases of particular interest which involve CCH Computax as defendant and follow the Bremen line of reasoning with regard to the forum selection clauses that were contained in the respective contracts. In Hoffman v. Burroughs Corp. & CCH Computax Sys., Inc., 571 F.Supp. 545 (N.D.Tex.1982), the United States District Court for the Northern District of Texas transferred an action filed in Texas to the United States District Court for the Southern District of California because the parties had agreed in the license agreement to litigate in San Diego. The court in Hoffman, applying the Bremen standard, held that the forum selection clause should be enforced because the inclusion of the clause was not the result of fraud; the [784] plaintiffs were experienced businessmen who could read; and because CCH Computax was based in San Diego, trial in California was at least as convenient for the action as Texas. Id. at 549-50. In D'Antuono v. CCH Computax Sys., Inc., 570 F.Supp. 708 (D.R.I.1983), the United States District Court for the District of Rhode Island applied the law as set out in Bremen and subsequent cases and recognized that in applying the Bremen standard, federal courts have "synthesized and refined" the rule. Id. at 712. The court in D'Antuono adopted a totality of the circumstances approach and held that the plaintiff fell "far short" of carrying his burden of demonstrating that the forum selection clause was unreasonable. Id. at 715.

    24

    Recently, the Virginia Supreme Court upheld the validity of a forum selection clause and stated that in doing so it was embracing the modern view. Paul Business Sys. v. Canon U.S.A., Inc., 240 Va. at 341, 397 S.E.2d at 807. Relying on Bremen and its progeny, the court adopted a more simplified and restrictive test which requires a greater showing to invalidate a forum selection clause than Bremen initially enunciated. The court held that the plaintiff, who did not contend that the clause at issue was the product of fraud or unequal bargaining power, had failed to establish that enforcement of the forum selection clause would be "unfair or unreasonable." Id. at 343, 397 S.E.2d at 808. The court reasoned that its view "comports with traditional concepts of freedom of contract and recognizes the present nationwide and worldwide scope of business relations which generate potential multi-jurisdictional litigation." Id. at 342, 397 S.E.2d at 807.

    25

    Plaintiff contends that enforcement of forum selection clauses would contravene the public policy of North Carolina. We disagree. Recognizing the validity and enforceability of forum selection clauses in North Carolina is consistent with the North Carolina rule that recognizes the validity and enforceability of choice of law and consent to jurisdiction provisions. Johnston County v. R.N. Rouse & Co., 331 N.C. 88, 414 S.E.2d 30. For the foregoing reasons, we embrace the modern view and hold that forum selection clauses are valid in North Carolina. A plaintiff who executes a contract that designates a particular forum for the resolution of disputes and then files suit in another forum seeking to avoid enforcement of a forum selection clause carries a heavy burden and must demonstrate that the clause was the product of fraud or unequal bargaining power or that enforcement of the clause would be unfair or unreasonable. The dissent argues that this Court's decision in this case "place[s] tens of thousands of our citizens at the mercy of those who will take advantage of them by the use of forum selection clauses." We disagree. Under our decision, the trial court retains the authority to hear the case when it determines that the forum selection clause was the product of fraud or unequal bargaining power or that the clause would be unfair or unreasonable.

    26

    We therefore reverse the decision of the Court of Appeals and remand the case to that court for further remand to the Superior Court, Wake County, in order that plaintiff here may have the opportunity to make such a showing that he meets the burden set forth herein.

    27

    REVERSED AND REMANDED.

    28
    MITCHELL, Justice, dissenting.
    29

    One effect of the majority's election to honor and enforce forum selection clauses in contracts is to allow private parties to determine whether North Carolina's courts will exercise their jurisdiction over cases involving citizens of this state, often when those citizens are most helpless. For this and other reasons, I believe that forum selection clauses are contrary to public policy and should not be recognized by this Court as being valid and binding. See generally Francis M. Dougherty, Annotation, Validity of Contractual Provisions Limiting Place or Court in Which Action May be Brought, 31 A.L.R. 4th 404, 409-414 (1984) (citing cases).

    30

    I fear that under the majority's ruling today, this state's citizens will be left helpless to protect themselves from forum selection clauses in many contracts. Admiralty [785] cases involving international contracts between sophisticated multinational business entities, such as M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972), are not controlling on the issue of state law presented here and are not at all persuasive authority in the more ordinary run of contract cases. For example, contract terms printed in product warranties usually are offered to consumers on a take-it-or-leave-it basis, with consumers having neither an opportunity for bargaining nor the power to bargain. See, e.g., Lee Goldman, My Way and the Highway: The Law and Economics of Choice of Forum Clauses in Consumer Form Contracts, 86 Nw.U.L.Rev. 700 (1992). Further, the release from forum selection clauses that the majority promises if a party carries the burden of demonstrating that a challenged clause is the product of fraud or unequal bargaining power is entirely theoretical and illusory. Id. The very citizens who have the least bargaining power and are most apt to be taken advantage of will also be the citizens who will have the fewest resources available for attempting to carry their burden of proving that a forum selection clause is the product of fraud or unequal bargaining power or is otherwise unfair or unreasonable.

    31

    "In sum, economic, political, and social interests favor nonenforcement of forum selection clauses in consumer contracts." Id. at 730; See also John McKinley Kirby, Note, Consumer's Right to Sue at Home Jeopardized Through Forum Selection Clause in Carnival Cruise Lines v. Shute, 70 N.C.L.Rev. 888 (1992). By its opinion in the present case, the majority elects to place tens of thousands of our citizens at the mercy of those who will take advantage of them by the use of forum selection clauses. In my view, it does so without substantially promoting any desirable counterbalancing public purpose.

    32

    For the foregoing reasons, I dissent.

    33
    FRYE and WEBB, JJ., join in this dissenting opinion.
    34

    [1] As we have noted, the contract at issue in this case contains a clause that provides that the agreement "shall be governed by and interpreted in accordance with the law of the State of California." We have held such choice of law provisions to be valid in North Carolina. Johnston County v. R.N. Rouse & Co., 331 N.C. 88, 414 S.E.2d 30. Assuming California law were to apply to this case, we observe that the California Supreme Court has held that forum selection clauses are valid absent a showing that enforcement would be unreasonable. Smith, Valentino & Smith, Inc., 17 Cal.3d at 495-96, 551 P.2d at 1208-09, 131 Cal.Rptr. at 376-77.

  • 6 Carnival Cruise Lines Inc. v. Shute

    1
    499 U.S. 585 (1991)
    2
    CARNIVAL CRUISE LINES, INC.
    v.
    SHUTE ET VIR
    3
    No. 89-1647.
    4

    Supreme Court of the United States.

    5
    Argued January 15, 1991.
    6
    Decided April 17, 1991
    7

    CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

    8

    [586] Richard K. Willard argued the cause for petitioner. With him on the briefs were David L. Roll and Lawrence D. Winson.

    9

    Gregory J. Wall argued the cause and filed a brief for respondents.[1]

    10
    [587] JUSTICE BLACKMUN delivered the opinion of the Court.
    11

    In this admiralty case we primarily consider whether the United States Court of Appeals for the Ninth Circuit correctly refused to enforce a forum-selection clause contained in tickets issued by petitioner Carnival Cruise Lines, Inc., to respondents Eulala and Russel Shute.

    12
    I
    13

    The Shutes, through an Arlington, Wash., travel agent, purchased passage for a 7-day cruise on petitioner's ship, the Tropicale. Respondents paid the fare to the agent who forwarded the payment to petitioner's headquarters in Miami, Fla. Petitioner then prepared the tickets and sent them to respondents in the State of Washington. The face of each ticket, at its left-hand lower corner, contained this admonition:

    14

    "SUBJECT TO CONDITIONS OF CONTRACT ON LAST PAGES IMPORTANT! PLEASE READ CONTRACT —ON LAST PAGES 1, 2, 3" App. 15.

    15

    The following appeared on "contract page 1" of each ticket:

    16

    "TERMS AND CONDITIONS OF PASSAGE CONTRACT TICKET

    . . . . .
    "3. (a) The acceptance of this ticket by the person or persons named hereon as passengers shall be deemed to be an acceptance and agreement by each of them of all of the terms and conditions of this Passage Contract Ticket.
    17
    . . . . .
    18
    "8. It is agreed by and between the passenger and the Carrier that all disputes and matters whatsoever arising under, in connection with or incident to this Contract [588] shall be litigated, if at all, in and before a Court located in the State of Florida, U. S. A., to the exclusion of the Courts of any other state or country." Id., at 16.
    19

    The last quoted paragraph is the forum-selection clause at issue.

    20
    II
    21

    Respondents boarded the Tropicale in Los Angeles, Cal. The ship sailed to Puerto Vallarta, Mexico, and then returned to Los Angeles. While the ship was in international waters off the Mexican coast, respondent Eulala Shute was injured when she slipped on a deck mat during a guided tour of the ship's galley. Respondents filed suit against petitioner in the United States District Court for the Western District of Washington, claiming that Mrs. Shute's injuries had been caused by the negligence of Carnival Cruise Lines and its employees. Id., at 4.

    22

    Petitioner moved for summary judgment, contending that the forum clause in respondents' tickets required the Shutes to bring their suit against petitioner in a court in the State of Florida. Petitioner contended, alternatively, that the District Court lacked personal jurisdiction over petitioner because petitioner's contacts with the State of Washington were insubstantial. The District Court granted the motion, holding that petitioner's contacts with Washington were constitutionally insufficient to support the exercise of personal jurisdiction. See App. to Pet. for Cert. 60a.

    23

    The Court of Appeals reversed. Reasoning that "but for" petitioner's solicitation of business in Washington, respondents would not have taken the cruise and Mrs. Shute would not have been injured, the court concluded that petitioner had sufficient contacts with Washington to justify the District Court's exercise of personal jurisdiction. 897 F. 2d 377, 385-386 (CA9 1990).[2]

    24

    [589] Turning to the forum-selection clause, the Court of Appeals acknowledged that a court concerned with the enforceability of such a clause must begin its analysis with The Bremen v. Zapata Off-Shore Co., 407 U. S. 1 (1972), where this Court held that forum-selection clauses, although not "historically. . . favored," are "prima facie valid." Id., at 9-10. See 897 F. 2d, at 388. The appellate court concluded that the forum clause should not be enforced because it "was not freely bargained for." Id., at 389. As an "independent justification" for refusing to enforce the clause, the Court of Appeals noted that there was evidence in the record to indicate that "the Shutes are physically and financially incapable of pursuing this litigation in Florida" and that the enforcement of the clause would operate to deprive them of their day in court and thereby contravene this Court's holding in The Bremen. 897 F. 2d, at 389.

    25

    We granted certiorari to address the question whether the Court of Appeals was correct in holding that the District Court should hear respondents' tort claim against petitioner. 498 U. S. 807-808 (1990). Because we find the forum-selection clause to be dispositive of this question, we need not consider petitioner's constitutional argument as to personal jurisdiction. See Ashwander v. TVA, 297 U. S. 288, 347 (1936) (Brandeis, J., concurring) ("`It is not the habit of the Court to decide questions of a constitutional nature unless [590] absolutely necessary to a decision of the case,'" quoting Burton v. United States, 196 U. S. 283, 295 (1905)).

    26
    III
    27

    We begin by noting the boundaries of our inquiry. First, this is a case in admiralty, and federal law governs the enforceability of the forum-selection clause we scrutinize. See Archawski v. Hanioti, 350 U. S. 532, 533 (1956); The Moses Taylor, 4 Wall. 411, 427 (1867); Tr. of Oral Arg. 36-37, 12, 47-48. Cf. Stewart Organization, Inc. v. Ricoh Corp., 487 U. S. 22, 28-29 (1988). Second, we do not address the question whether respondents had sufficient notice of the forum clause before entering the contract for passage. Respondents essentially have conceded that they had notice of the forum-selection provision. Brief for Respondents 26 ("The respondents do not contest the incorporation of the provisions nor [sic] that the forum selection clause was reasonably communicated to the respondents, as much as three pages of fine print can be communicated"). Additionally, the Court of Appeals evaluated the enforceability of the forum clause under the assumption, although "doubtful," that respondents could be deemed to have had knowledge of the clause. See 897 F. 2d, at 389, and n. 11.

    28

    Within this context, respondents urge that the forum clause should not be enforced because, contrary to this Court's teachings in The Bremen, the clause was not the product of negotiation, and enforcement effectively would deprive respondents of their day in court. Additionally, respondents contend that the clause violates the Limitation of Vessel Owner's Liability Act, 46 U. S. C. App. § 183c. We consider these arguments in turn.

    29
    IV
    30
    A
    31

    Both petitioner and respondents argue vigorously that the Court's opinion in The Bremen governs this case, and each side purports to find ample support for its position in that [591] opinion's broad-ranging language. This seeming paradox derives in large part from key factual differences between this case and The Bremen, differences that preclude an automatic and simple application of The Bremen's general principles to the facts here.

    32

    In The Bremen, this Court addressed the enforceability of a forum-selection clause in a contract between two business corporations. An American corporation, Zapata, made a contract with Unterweser, a German corporation, for the towage of Zapata's oceangoing drilling rig from Louisiana to a point in the Adriatic Sea off the coast of Italy. The agreement provided that any dispute arising under the contract was to be resolved in the London Court of Justice. After a storm in the Gulf of Mexico seriously damaged the rig, Zapata ordered Unterweser's ship to tow the rig to Tampa, Fla., the nearest point of refuge. Thereafter, Zapata sued Unterweser in admiralty in federal court at Tampa. Citing the forum clause, Unterweser moved to dismiss. The District Court denied Unterweser's motion, and the Court of Appeals for the Fifth Circuit, sitting en banc on rehearing, and by a sharply divided vote, affirmed. In re Complaint of Unterweser Reederei, GmBH, 446 F. 2d 907 (1971).

    33

    This Court vacated and remanded, stating that, in general, "a freely negotiated private international agreement, unaffected by fraud, undue influence, or overweening bargaining power, such as that involved here, should be given full effect." 407 U. S., at 12-13 (footnote omitted). The Court further generalized that "in the light of present-day commercial realities and expanding international trade we conclude that the forum clause should control absent a strong showing that it should be set aside." Id., at 15. The Court did not define precisely the circumstances that would make it unreasonable for a court to enforce a forum clause. Instead, the Court discussed a number of factors that made it reasonable to enforce the clause at issue in The Bremen and [592] that, presumably, would be pertinent in any determination whether to enforce a similar clause.

    34

    In this respect, the Court noted that there was "strong evidence that the forum clause was a vital part of the agreement, and [that] it would be unrealistic to think that the parties did not conduct their negotiations, including fixing the monetary terms, with the consequences of the forum clause figuring prominently in their calculations." Id., at 14 (footnote omitted). Further, the Court observed that it was not "dealing with an agreement between two Americans to resolve their essentially local disputes in a remote alien forum," and that in such a case, "the serious inconvenience of the contractual forum to one or both of the parties might carry greater weight in determining the reasonableness of the forum clause." Id., at 17. The Court stated that even where the forum clause establishes a remote forum for resolution of conflicts, "the party claiming [unfairness] should bear a heavy burden of proof." Ibid.

    35

    In applying The Bremen, the Court of Appeals in the present litigation took note of the foregoing "reasonableness" factors and rather automatically decided that the forum-selection clause was unenforceable because, unlike the parties in The Bremen, respondents are not business persons and did not negotiate the terms of the clause with petitioner. Alternatively, the Court of Appeals ruled that the clause should not be enforced because enforcement effectively would deprive respondents of an opportunity to litigate their claim against petitioner.

    36

    The Bremen concerned a "far from routine transaction between companies of two different nations contemplating the tow of an extremely costly piece of equipment from Louisiana across the Gulf of Mexico and the Atlantic Ocean, through the Mediterranean Sea to its final destination in the Adriatic Sea." Id., at 13. These facts suggest that, even apart from the evidence of negotiation regarding the forum clause, it was entirely reasonable for the Court in The [593] Bremen to have expected Unterweser and Zapata to have negotiated with care in selecting a forum for the resolution of disputes arising from their special towing contract.

    37

    In contrast, respondents' passage contract was purely routine and doubtless nearly identical to every commercial passage contract issued by petitioner and most other cruise lines. See, e. g., Hodes v. S. N. C. Achille Lauro ed Altri-Gestione, 858 F. 2d 905, 910 (CA3 1988), cert. dism'd, 490 U. S. 1001 (1989). In this context, it would be entirely unreasonable for us to assume that respondents—or any other cruise passenger—would negotiate with petitioner the terms of a forum-selection clause in an ordinary commercial cruise ticket. Common sense dictates that a ticket of this kind will be a form contract the terms of which are not subject to negotiation, and that an individual purchasing the ticket will not have bargaining parity with the cruise line. But by ignoring the crucial differences in the business contexts in which the respective contracts were executed, the Court of Appeals' analysis seems to us to have distorted somewhat this Court's holding in The Bremen.

    38

    In evaluating the reasonableness of the forum clause at issue in this case, we must refine the analysis of The Bremen to account for the realities of form passage contracts. As an initial matter, we do not adopt the Court of Appeals' determination that a nonnegotiated forum-selection clause in a form ticket contract is never enforceable simply because it is not the subject of bargaining. Including a reasonable forum clause in a form contract of this kind well may be permissible for several reasons: First, a cruise line has a special interest in limiting the fora in which it potentially could be subject to suit. Because a cruise ship typically carries passengers from many locales, it is not unlikely that a mishap on a cruise could subject the cruise line to litigation in several different fora. See The Bremen, 407 U. S., at 13, and n. 15; Hodes, 858 F. 2d, at 913. Additionally, a clause establishing ex ante the forum for dispute resolution has the salutary [594] effect of dispelling any confusion about where suits arising from the contract must be brought and defended, sparing litigants the time and expense of pretrial motions to determine the correct forum and conserving judicial resources that otherwise would be devoted to deciding those motions. See Stewart Organization, 487 U. S., at 33 (concurring opinion). Finally, it stands to reason that passengers who purchase tickets containing a forum clause like that at issue in this case benefit in the form of reduced fares reflecting the savings that the cruise line enjoys by limiting the fora in which it may be sued. Cf. Northwestern Nat. Ins. Co. v. Donovan, 916 F. 2d 372, 378 (CA7 1990).

    39

    We also do not accept the Court of Appeals' "independent justification" for its conclusion that The Bremen dictates that the clause should not be enforced because "[t]here is evidence in the record to indicate that the Shutes are physically and financially incapable of pursuing this litigation in Florida." 897 F. 2d, at 389. We do not defer to the Court of Appeals' findings of fact. In dismissing the case for lack of personal jurisdiction over petitioner, the District Court made no finding regarding the physical and financial impediments to the Shutes' pursuing their case in Florida. The Court of Appeals' conclusory reference to the record provides no basis for this Court to validate the finding of inconvenience. Furthermore, the Court of Appeals did not place in proper context this Court's statement in The Bremen that "the serious inconvenience of the contractual forum to one or both of the parties might carry greater weight in determining the reasonableness of the forum clause." 407 U. S., at 17. The Court made this statement in evaluating a hypothetical "agreement between two Americans to resolve their essentially local disputes in a remote alien forum." Ibid. In the present case, Florida is not a "remote alien forum," nor—given the fact that Mrs. Shute's accident occurred off the coast of Mexico— is this dispute an essentially local one inherently more suited to resolution in the State of Washington than in Florida. In [595] light of these distinctions, and because respondents do not claim lack of notice of the forum clause, we conclude that they have not satisfied the "heavy burden of proof," ibid., required to set aside the clause on grounds of inconvenience.

    40

    It bears emphasis that forum-selection clauses contained in form passage contracts are subject to judicial scrutiny for fundamental fairness. In this case, there is no indication that petitioner set Florida as the forum in which disputes were to be resolved as a means of discouraging cruise passengers from pursuing legitimate claims. Any suggestion of such a bad-faith motive is belied by two facts: Petitioner has its principal place of business in Florida, and many of its cruises depart from and return to Florida ports. Similarly, there is no evidence that petitioner obtained respondents' accession to the forum clause by fraud or overreaching. Finally, respondents have conceded that they were given notice of the forum provision and, therefore, presumably retained the option of rejecting the contract with impunity. In the case before us, therefore, we conclude that the Court of Appeals erred in refusing to enforce the forum-selection clause.

    41
    B
    42

    Respondents also contend that the forum-selection clause at issue violates 46 U. S. C. App. § 183c. That statute, enacted in 1936, see ch. 521, 49 Stat. 1480, provides:

    43
    "It shall be unlawful for the . . . owner of any vessel transporting passengers between ports of the United States or between any such port and a foreign port to insert in any rule, regulation, contract, or agreement any provision or limitation (1) purporting, in the event of loss of life or bodily injury arising from the negligence or fault of such owner or his servants, to relieve such owner . . . from liability, or from liability beyond any stipulated amount, for such loss or injury, or (2) purporting in such event to lessen, weaken, or avoid the right of any claimant to a trial by court of competent [596] jurisdiction on the question of liability for such loss or injury, or the measure of damages therefor. All such provisions or limitations contained in any such rule, regulation, contract, or agreement are hereby declared to be against public policy and shall be null and void and of no effect."
    44

    By its plain language, the forum-selection clause before us does not take away respondents' right to "a trial by [a] court of competent jurisdiction" and thereby contravene the explicit proscription of § 183c. Instead, the clause states specifically that actions arising out of the passage contract shall be brought "if at all," in a court "located in the State of Florida," which, plainly, is a "court of competent jurisdiction" within the meaning of the statute.

    45

    Respondents appear to acknowledge this by asserting that although the forum clause does not directly prevent the determination of claims against the cruise line, it causes plaintiffs unreasonable hardship in asserting their rights and therefore violates Congress' intended goal in enacting § 183c. Significantly, however, respondents cite no authority for their contention that Congress' intent in enacting § 183c was to avoid having a plaintiff travel to a distant forum in order to litigate. The legislative history of § 183c suggests instead that this provision was enacted in response to passenger-ticket conditions purporting to limit the shipowner's liability for negligence or to remove the issue of liability from the scrutiny of any court by means of a clause providing that "the question of liability and the measure of damages shall be determined by arbitration." See S. Rep. No. 2061, 74th Cong., 2d Sess., 6 (1936); H. R. Rep. No. 2517, 74th Cong., 2d Sess., 6 (1936). See also Safety of Life and Property at Sea: Hearings before the House Committee on Merchant Marine and Fisheries, 74th Cong., 2d Sess., pt. 4, pp. 20, 36-37, 57, 109-110, 119 (1936). There was no prohibition of a forum-selection clause. Because the clause before us allows for judicial resolution of claims against petitioner and does [597] not purport to limit petitioner's liability for negligence, it does not violate § 183c.

    46
    V
    47

    The judgment of the Court of Appeals is reversed.

    48

    It is so ordered.

    49
    JUSTICE STEVENS, with whom JUSTICE MARSHALL joins, dissenting.
    50

    The Court prefaces its legal analysis with a factual statement that implies that a purchaser of a Carnival Cruise Lines passenger ticket is fully and fairly notified about the existence of the choice of forum clause in the fine print on the back of the ticket. See ante, at 587-588. Even if this implication were accurate, I would disagree with the Court's analysis. But, given the Court's preface, I begin my dissent by noting that only the most meticulous passenger is likely to become aware of the forum-selection provision. I have therefore appended to this opinion a facsimile of the relevant text, using the type size that actually appears in the ticket itself. A careful reader will find the forum-selection clause in the 8th of the 25 numbered paragraphs.

    51

    Of course, many passengers, like the respondents in this case, see ante, at 587, will not have an opportunity to read paragraph 8 until they have actually purchased their tickets. By this point, the passengers will already have accepted the condition set forth in paragraph 16(a), which provides that "[t]he Carrier shall not be liable to make any refund to passengers in respect of . . . tickets wholly or partly not used by a passenger." Not knowing whether or not that provision is legally enforceable, I assume that the average passenger would accept the risk of having to file suit in Florida in the event of an injury, rather than canceling—without a refund— a planned vacation at the last minute. The fact that the cruise line can reduce its litigation costs, and therefore its liability insurance premiums, by forcing this choice on its passengers does not, in my opinion, suffice to render the [598] provision reasonable. Cf. Steven v. Fidelity & Casualty Co. of New York, 58 Cal. 2d 862, 883, 377 P. 2d 284, 298 (1962) (refusing to enforce limitation on liability in insurance policy because insured "must purchase the policy before he even knows its provisions").

    52

    Even if passengers received prominent notice of the forum-selection clause before they committed the cost of the cruise, I would remain persuaded that the clause was unenforceable under traditional principles of federal admiralty law and is "null and void" under the terms of Limitation of Vessel Owner's Liability Act, ch. 521, 49 Stat. 1480, 46 U. S. C. App. § 183c, which was enacted in 1936 to invalidate expressly stipulations limiting shipowners' liability for negligence.

    53

    Exculpatory clauses in passenger tickets have been around for a long time. These clauses are typically the product of disparate bargaining power between the carrier and the passenger, and they undermine the strong public interest in deterring negligent conduct. For these reasons, courts long before the turn of the century consistently held such clauses unenforceable under federal admiralty law. Thus, in a case involving a ticket provision purporting to limit the shipowner's liability for the negligent handling of baggage, this Court wrote:

    54
    "It is settled in the courts of the United States that exemptions limiting carriers from responsibility for the negligence of themselves or their servants are both unjust and unreasonable, and will be deemed as wanting in the element of voluntary assent; and, besides, that such conditions are in conflict with public policy. This doctrine was announced so long ago, and has been so frequently reiterated, that it is elementary. We content ourselves with referring to the cases of the Baltimore & Ohio &c.; Railway v. Voigt, 176 U. S. 498, 505, 507, and Knott v. Botany Mills, 179 U. S. 69, 71, where the previously adjudged cases are referred to and the principles [599] by them expounded are restated." The Kensington, 183 U. S. 263, 268 (1902).
    55

    Clauses limiting a carrier's liability or weakening the passenger's right to recover for the negligence of the carrier's employees come in a variety of forms. Complete exemptions from liability for negligence or limitations on the amount of the potential damage recovery,[3] requirements that notice of claims be filed within an unreasonably short period of time,[4] provisions mandating a choice of law that is favorable to the defendant in negligence cases,[5] and forum-selection clauses are all similarly designed to put a thumb on the carrier's side of the scale of justice.[6]

    56

    [600] Forum-selection clauses in passenger tickets involve the intersection of two strands of traditional contract law that qualify the general rule that courts will enforce the terms of a contract as written. Pursuant to the first strand, courts traditionally have reviewed with heightened scrutiny the terms of contracts of adhesion, form contracts offered on a take-or-leave basis by a party with stronger bargaining power to a party with weaker power. Some commentators have questioned whether contracts of adhesion can justifiably be enforced at all under traditional contract theory because the adhering party generally enters into them without manifesting knowing and voluntary consent to all their terms. See, e. g., Rakoff, Contracts of Adhesion: An Essay in Reconstruction, 96 Harv. L. Rev. 1173, 1179-1180 (1983); Slawson, Mass Contracts: Lawful Fraud in California, 48 S. Cal. L. Rev. 1, 12-13 (1974); K. Llewellyn, The Common Law Tradition 370-371 (1960).

    57

    The common law, recognizing that standardized form contracts account for a significant portion of all commercial agreements, has taken a less extreme position and instead subjects terms in contracts of adhesion to scrutiny for reasonableness. Judge J. Skelly Wright set out the state of the law succinctly in Williams v. Walker-Thomas Furniture Co., 121 U. S. App. D. C. 315, 319-320, 350 F. 2d 445, 449-450 (1965) (footnotes omitted):

    58
    "Ordinarily, one who signs an agreement without full knowledge of its terms might be held to assume the risk that he has entered a one-sided bargain. But when a party of little bargaining power, and hence little real choice, signs a commercially unreasonable contract with little or no knowledge of its terms, it is hardly likely that his consent, or even an objective manifestation of his [601] consent, was ever given to all of the terms. In such a case the usual rule that the terms of the agreement are not to be questioned should be abandoned and the court should consider whether the terms of the contract are so unfair that enforcement should be withheld."
    59

    See also Steven, 58 Cal. 2d, at 879-883, 377 P. 2d, at 295-297; Henningsen v. Bloomfield Motors, Inc., 32 N. J. 358, 161 A. 2d 69 (1960).

    60

    The second doctrinal principle implicated by forum-selection clauses is the traditional rule that "contractual provisions, which seek to limit the place or court in which an action may . . . be brought, are invalid as contrary to public policy." See Dougherty, Validity of Contractual Provision Limiting Place or Court in Which Action May Be Brought, 31 A. L. R. 4th 404, 409, § 3 (1984). See also Home Insurance Co. v. Morse, 20 Wall. 445, 451 (1874). Although adherence to this general rule has declined in recent years, particularly following our decision in The Bremen v. Zapata Off-Shore Co., 407 U. S. 1 (1972), the prevailing rule is still that forum-selection clauses are not enforceable if they were not freely bargained for, create additional expense for one party, or deny one party a remedy. See 31 A. L. R. 4th, at 409-438 (citing cases). A forum-selection clause in a standardized passenger ticket would clearly have been unenforceable under the common law before our decision in The Bremen, see 407 U. S., at 9, and n. 10, and, in my opinion, remains unenforceable under the prevailing rule today.

    61

    The Bremen, which the Court effectively treats as controlling this case, had nothing to say about stipulations printed on the back of passenger tickets. That case involved the enforceability of a forum-selection clause in a freely negotiated international agreement between two large corporations providing for the towage of a vessel from the Gulf of Mexico to the Adriatic Sea. The Court recognized that such towage agreements had generally been held unenforceable in American [602] courts,[7] but held that the doctrine of those cases did not extend to commercial arrangements between parties with equal bargaining power.

    62

    The federal statute that should control the disposition of the case before us today was enacted in 1936 when the general rule denying enforcement of forum-selection clauses was indisputably widely accepted. The principal subject of the statute concerned the limitation of shipowner liability, but as the following excerpt from the House Report explains, the section that is relevant to this case was added as a direct response to shipowners' ticketing practices.

    63
    "During the course of the hearings on the bill (H. R. 9969) there was also brought to the attention of the committee a practice of providing on the reverse side of steamship tickets that in the event of damage or injury caused by the negligence or fault of the owner or his servants, the liability of the owner shall be limited to a stipulated amount, in some cases $5,000, and in others substantially lower amounts, or that in such event the question of liability and the measure of damages shall be determined by arbitration. The amendment to chapter 6 of title 48 of the Revised Statutes proposed to be made by section 2 of the committee amendment is intended to, and in the opinion of the committee will, put a stop to all such practices and practices of a like character." H. R. Rep. No. 2517, 74th Cong., 2d Sess., 6-7 (1936) (emphasis added); see also S. Rep. No. 2061, 74th Cong., 2d Sess., 6-7 (1936).
    64

    [603] The intent to "put a stop to all such practices and practices of a like character" was effectuated in the second clause of the statute. It reads:

    65
    "It shall be unlawful for the manager, agent, master, or owner of any vessel transporting passengers between ports of the United States or between any such port and a foreign port to insert in any rule, regulation, contract, or agreement any provision or limitation (1) purporting, in the event of loss of life or bodily injury arising from the negligence or fault of such owner or his servants, to relieve such owner, master, or agent from liability, or from liability beyond any stipulated amount, for such loss or injury, or (2) purporting in such event to lessen, weaken, or avoid the right of any claimant to a trial by court of competent jurisdiction on the question of liability for such loss or injury, or the measure of damages therefor. All such provisions or limitations contained in any such rule, regulation, contract, or agreement are declared to be against public policy and shall be null and void and of no effect." 46 U. S. C. App. § 183c (emphasis added).
    66

    The stipulation in the ticket that Carnival Cruise sold to respondents certainly lessens or weakens their ability to recover for the slip and fall incident that occurred off the west coast of Mexico during the cruise that originated and terminated in Los Angeles, California. It is safe to assume that the witnesses—whether other passengers or members of the crew—can be assembled with less expense and inconvenience at a west coast forum than in a Florida court several thousand miles from the scene of the accident.

    67

    A liberal reading of the 1936 statute is supported by both its remedial purpose and by the legislative history's general condemnation of "all such practices." Although the statute does not specifically mention forum-selection clauses, its language is broad enough to encompass them. The absence of a [604] specific reference is adequately explained by the fact that such clauses were already unenforceable under common law and would not often have been used by carriers, which were relying on stipulations that purported to exonerate them from liability entirely. Cf. Moskal v. United States, 498 U. S. 103, 110-113 (1990).

    68

    The Courts of Appeals, construing an analogous provision of the Carriage of Goods by Sea Act, 46 U. S. C. App. § 1300 et seq., have unanimously held invalid as limitations on liability forum-selection clauses requiring suit in foreign jurisdictions. See, e. g., Hughes Drilling Fluids v. M/V Luo Fu Shan, 852 F. 2d 840 (CA5 1988), cert. denied, 489 U. S. 1033 (1989); Union Ins. Soc. of Canton, Ltd. v. S. S. Elikon, 642 F. 2d 721, 724-725 (CA4 1981); Indussa Corp. v. S. S. Ranborg, 377 F. 2d 200, 203-204 (CA2 1967). Commentators have also endorsed this view. See, e. g., G. Gilmore & C. Black, The Law of Admiralty 145, and n. 23 (2d ed. 1975); Mendelsohn, Liberalism, Choice of Forum Clauses and the Hague Rules, 2 J. of Maritime Law & Comm. 661, 663-666 (1971). The forum-selection clause here does not mandate suit in a foreign jurisdiction, and therefore arguably might have less of an impact on a plaintiff's ability to recover. See Fireman's Fund American Ins. Cos. v. Puerto Rican Forwarding Co., 492 F. 2d 1294 (CA1 1974). However, the plaintiffs in this case are not large corporations but individuals, and the added burden on them of conducting a trial at the opposite end of the country is likely proportional to the additional cost to a large corporation of conducting a trial overseas.[8]

    69

    Under these circumstances, the general prohibition against stipulations purporting "to lessen, weaken, or avoid" the passenger's right to a trial certainly should be construed to apply to the manifestly unreasonable stipulation in these passengers' [605] tickets. Even without the benefit of the statute, I would continue to apply the general rule that prevailed prior to our decision in The Bremen to forum-selection clauses in passenger tickets.

    70

    I respectfully dissent.

    71

    [605a]

    72

    [605b]

    73

    [1] Briefs of amici curiae urging reversal were filed for the Chamber of Commerce of the United States by Herbert L. Fenster, Stanley W. Landfair, and Robin S. Conrad; and for the International Committee of Passenger Lines by John A. Flynn and James B. Nebel.

    74

    [2] The Court of Appeals had filed an earlier opinion also reversing the District Court and ruling that the District Court had personal jurisdiction over the cruise line and that the forum-selection clause in the tickets was unreasonable and was not to be enforced. 863 F. 2d 1437 (CA9 1988). That opinion, however, was withdrawn when the court certified to the Supreme Court of Washington the question whether the Washington long-arm statute, Wash. Rev. Code § 4.28.185 (1988), conferred personal jurisdiction over Carnival Cruise Lines for the claim asserted by the Shutes. See 872 F. 2d 930 (1989). The Washington Supreme Court answered the certified question in the affirmative on the ground that the Shutes' claim "arose from" petitioner's advertisement in Washington and the promotion of its cruises there. 113 Wash. 2d 763, 783 P. 2d 78 (1989). The Court of Appeals then "refiled" its opinion "as modified herein." See 897 F. 2d, at 380, n. 1.

    75

    [3]See 46 U. S. C. App. § 183c:

    76

    "It shall be unlawful for the . . . owner of any vessel transporting passengers between ports of the United States or between any such port and a foreign port to insert in any rule, regulation, contract, or agreement any provision or limitation (1) purporting, in the event of loss of life or bodily injury arising from the negligence or fault of such owner or his servants, to relieve such owner . . . from liability, or from liability beyond any stipulated amount, for such loss or injury . . . ."

    77

    [4]See 46 U. S. C. App. § 183b(a):

    78

    "It shall be unlawful for the manager, agent, master, or owner of any sea-going vessel (other than tugs, barges, fishing vessels and their tenders) transporting passengers or merchandise or property from or between ports of the United States and foreign ports to provide by rule, contract, regulation, or otherwise a shorter period for giving notice of, or filing claims for loss of life or bodily injury, than six months, and for the institution of suits on such claims, than one year, such period for institution of suits to be computed from the day when the death or injury occurred."

    79

    See also 49 U. S. C. § 11707(e) ("A carrier or freight forwarder may not provide by rule, contract, or otherwise, a period of less than 9 months for filing a claim against it under this section and a period of less than 2 years for bringing a civil action against it under this section").

    80

    [5] See, e. g., The Kensington, 183 U. S. 263, 269 (1902) (refusing to enforce clause requiring that all disputes under contract for passage be governed by Belgian law because such law would have favored the shipowner in violation of United States public policy).

    81

    [6] All these clauses will provide passengers who purchase tickets containing them with a "benefit in the form of reduced fares reflecting the savings that the cruise line enjoys by limiting [its exposure to liability]." See ante, at 594. Under the Court's reasoning, all these clauses, including a complete waiver of liability, would be enforceable, a result at odds with longstanding jurisprudence.

    82

    [7] "In [Carbon Black Export, Inc. v. The Monrosa, 254 F. 2d 297 (CA5 1958), cert. dism'd, 359 U. S. 180 (1959),] the Court of Appeals had held a forum-selection clause unenforceable, reiterating the traditional view of many American courts that `agreements in advance of controversy whose object is to oust the jurisdiction of the courts are contrary to public policy and will not be enforced.' 254 F. 2d, at 300-301." The Bremen v. Zapata Off-Shore Co., 407 U. S. 1, 6 (1972).

    83

    [8] The Court does not make clear whether the result in this case would also apply if the clause required Carnival passengers to sue in Panama, the country in which Carnival is incorporated.

  • 7 Melia v. Zenhire Inc.

    1
    462 Mass. 164 (2012)
    2
    EDWARD MELIA
    v.
    ZENHIRE, INC., & another.[1]
    3
    SJC-10959.
    4

    Supreme Judicial Court of Massachusetts, Suffolk.

    5
    January 3, 2012.
    6
    May 8, 2012.
    7

    Present: IRELAND, C.J., SPINA, CORDY, BOTSFORD, GANTS, DUFFLY, & LENK, JJ.

    8

    John P. Carr (Christine Ann Faro with him) for the plaintiff.

    9

    Daniel S. Field for the defendants.

    10

    Benjamin G. Robbins & Martin J. Newhouse, for New England Legal Foundation, amicus curiae, submitted a brief.

    11
    [165] CORDY, J.
    12

    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.

    13

    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),[2] 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.

    14

    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 modern 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 forum selection clause would not deprive Melia of the protections of the Wage Act, we affirm the judge's dismissal of the action.[3]

    15

    1. Background. In reviewing a dismissal under rule 12 (b) (6), [166] 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).

    16

    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.

    17

    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. Zenhire 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.

    18

    The contract contained choice-of-law and forum selection clauses, as follows:

    19
    "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."
    20

    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. Zenhire withheld Massachusetts income taxes, paid Massachusetts [167] unemployment insurance, and obtained Massachusetts workers' compensation insurance for Melia's benefit.

    21

    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, Fritzinger 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.

    22

    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, Fritzinger, 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.

    23

    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.[4] Consequently, the judge concluded [168] that the forum selection clause would be unfair and unreasonable to Melia.[5]

    24

    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.

    25

    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).

    26

    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.

    27

    [169] 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).

    28

    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.

    29

    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.

    30

    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.

    31

    We begin by reviewing the history, policy, and enforcement mechanisms of the Wage Act. The Wage Act requires "every [170] 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.

    32

    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.

    33

    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).

    34

    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. [171] 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,[6] the type of eligible compensation,[7] and the remedies available to employees whose rights have been violated.[8]

    35

    That the Wage Act prohibits waivers, however, does not require that private Wage Act claims be adjudicated in Massachusetts. [172] 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).[9]

    36

    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.

    37

    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.

    38

    [173] 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 were 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).

    39

    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-law analysis that a New York court would conduct. The Superior Court judge found that the New York court "may apply Massachusetts law to Melia's unpaid wages claim" (emphasis added). Melia argues that the mere possibility of enforcement by a foreign tribunal under New York law is insufficient to protect the public policy embodied in the Wage Act.

    40

    We agree with Melia in principle. A forum selection clause that, in operation, would deprive an employee of substantive rights guaranteed by the Wage Act violates public policy and is unenforceable. See Dixon v. Perry & Slesnick, P.C., supra at [174] 275 & n.5 (arbitration provision enforceable for Wage Act claim because it did not implicate employee's substantive rights). We further agree that public policy demands more than a mere possibility that the forum "may apply" the Wage Act or an equivalent law that would protect all of an employee's substantive rights.[10] See part 3, supra.

    41

    In practice, however, we share neither the judge's hesitation nor Melia's skepticism. On the facts alleged in this case, we are persuaded that a New York court, applying New York's choice-of-law rules, would apply Massachusetts law.

    42

    A New York court would begin by interpreting the reach of the contract's choice of New York law. New York courts are "reluctan[t] ... to construe contractual choice-of-law clauses broadly to encompass extra-contractual causes of action." Finance One Pub. Co. v. Lehman Bros. Special Fin., Inc., 414 F.3d 325, 334 (2d Cir. 2005), cert. denied, 548 U.S. 904 (2006), citing Knieriemen v. Bache Halsey Stuart Shields Inc., 74 A.D.2d 290 (N.Y. 1980). "[T]ort claims are outside the scope of contractual choice-of-law provisions that specify what law governs construction of the terms of the contract, even when the contract also includes a broader forum-selection clause." Finance One Pub. Co. v. Lehman Bros. Special Fin., Inc., supra at 335. "Under New York law, in order for a choice-of-law provision to apply to claims for tort arising incident to the contract, the express language of the provision must be `sufficiently broad' as to encompass the entire relationship between the contracting parties." Krock v. Lipsay, 97 F.3d 640, 645 (2d Cir. 1996), quoting Turtur v. Rothschild Registry Int'l, Inc., 26 F.3d 304, 309-310 (2d Cir. 1994). "However, no reported New York cases present such a broad clause." Finance One Pub. Co. v. Lehman Bros. Special Fin., Inc., supra.

    43

    [175] In the present case, the contract's choice of New York law would not govern the Wage Act claim. The contract states that "this agreement shall be governed and construed in accordance with the laws of the State of New York" but makes no reference to statutory causes of action. New York's general choice-of-law rules must therefore determine the law pertinent to the Wage Act claim. See id.; Krock v. Lipsay, supra.

    44

    New York's choice-of-law principles, following the modern trend, aim to give "controlling effect to the law of the jurisdiction which, because of its relationship or contact with the occurrence or the parties, has the greatest concern with the specific issue raised in the litigation." Babcock v. Jackson, 12 N.Y.2d 473, 481 (1963). New York courts conduct this "interest analysis" somewhat differently with respect to tort and contract causes of actions. The characterization of a cause of action as contract or tort is itself determined by the forum's, in this case New York's, conflict of laws precedents. Arakelian v. Omnicare, Inc., 735 F. Supp.2d 22, 37-38 (S.D.N.Y. 2010), and cases cited.

    45

    For tort cases, New York courts seek "to effect the law of the jurisdiction having the greatest interest in resolving the particular issue." Cooney v. Osgood Mach., Inc., 81 N.Y.2d 66, 72 (1993). The relevant contacts for this determination are "those which relate to the purpose of the particular law in conflict[,] the significant contacts are, almost exclusively, the parties' domiciles and the location of the tort." Schultz v. Boy Scouts of Am., Inc., 65 N.Y.2d 189, 197 (1985). When the law relates to regulation of conduct, as opposed to allocation of losses, the location of the tort will typically control. "If conflicting conduct-regulating laws are at issue, the law of the jurisdiction where the tort occurred will generally apply because that jurisdiction has the greatest interest in regulating behavior within its borders." Cooney v. Osgood Mach., Inc., supra.

    46

    For actions sounding in contract, New York courts determine the applicable law based on the "center of gravity" or the "grouping of contacts" most relevant to the contract. Allstate Ins. Co. v. Stolarz, 81 N.Y.2d 219, 226 (1993). There are typically five significant contacts: the places of contracting, negotiation, and performance; the location of the subject matter of the contract; and the domicil of the contracting parties. Id. at 227, [176] citing Restatement (Second) of Conflict of Laws § 188(2) (1971). In the employment context, the most determinative contact is the place of performance. "With respect to employment contracts, `the matters of performance and breach are to be determined by the law of the place of performance, or, in the alternative, by the law of the [S]tate having the most significant contacts with the matter in dispute.'" Arakelian v. Omnicare, Inc., supra at 38, quoting Tischmann v. ITT/Sheraton Corp., 882 F. Supp. 1358, 1366 (S.D.N.Y. 1995). In addition, when "the policies underlying conflicting laws in a contract dispute are readily identifiable and reflect strong governmental interests," the judge must consider those interests. Allstate Ins. Co. v. Stolarz, supra at 226 (considering public interests with respect to dispute about automobile insurance contract).

    47

    No published New York State opinion has characterized an action for violation of a wage statute as sounding in contract or tort. Nevertheless, we are confident that a New York court would apply to the present dispute the choice-of-law rules for conduct-regulating torts. Melia's claim arises out of a statute that regulates the conduct of all employers, not just Zenhire. A wage law thus effectuates a jurisdiction's "interest in regulating behavior within its borders." Cooney v. Osgood Mach., Inc., supra. See Black's Law Dictionary 1626 (9th ed. 2009) (defining "tort" as "civil wrong, other than breach of contract, for which a remedy may be obtained"). Although the parties did sign a contract, it was not necessary for the accrual of Melia's substantive claim and serves only as a measure of damages.[11]

    48

    New York State courts and Federal courts applying New [177] York's choice-of-law rules[12] have consistently applied tort choice-of-law principles to statutory claims arising from employment situations. See, e.g., Beebe v. N.Y. Times Co., 666 F. Supp. 2d 321, 331 (E.D.N.Y. 2009) (age discrimination); Bass v. World Wrestling Fed'n Entertainment, Inc., 129 F. Supp.2d 491, 504 (E.D.N.Y. 2001) (sexual harassment and discrimination); Padula v. Lilarn Props. Corp., 84 N.Y.2d 519, 522-523 (1994) (workplace safety); DaSilva v. C & E Ventures, Inc., 83 A.D.3d 551, 554 (N.Y. 2011) (workers' compensation). Two unpublished opinions have applied the choice-of-law rules for conduct-regulating torts to wage claims under N.Y. Lab. Law § 198. Chong vs. Healthtronics, Inc., No. CV-06-1287 (E.D.N.Y. June 20, 2007) (Chong); Bierer vs. Glaze, Inc., No. CV-05-2459 (CPS) (S.D.N.Y. Oct. 6, 2006). A New York court would likely do the same in the present case.[13]

    49

    [178] Under tort principles, New York's preference for the "law of the jurisdiction where the tort occurred," Cooney v. Osgood Mach., Inc., 81 N.Y.2d 66, 72 (1993), compels the application of Massachusetts law. Aside from the initial meetings with Fritzinger in New York, Melia performed all of his work for Zenhire—in particular, all the work for which he was allegedly not paid—in Massachusetts. The conduct giving rise to the cause of action—the nonpayment of wages—thus took place in Massachusetts. The decisions applying New York choice-of-law rules to statutory wage claims both deemed the location of the work to be dispositive. See Chong, supra (New York law applied where employee signed contract in Georgia but worked in New York); Bierer, supra (New York law applied where employee worked for New Jersey company out of her New York home office). Similarly here, Massachusetts would have the greatest interest in the outcome of litigation, and Massachusetts law would apply. Cooney v. Osgood Mach., Inc., supra.

    50

    Out of an abundance of caution, we consider the application of New York's choice-of-law principles with respect to claims sounding in contract. We first examine the place of performance and the location of other significant contacts. Arakelian v. Omnicare, Inc., 735 F. Supp.2d 22, 38 (S.D.N.Y. 2010). Here, the place of performance was exclusively Massachusetts. All of the potential clients whom Melia was to have solicited were [179] located in Massachusetts. The other significant contacts do not tilt strongly in favor of either State. Melia's residence was in Massachusetts; Fritzinger's residence was in New York; and Zenhire is a Delaware corporation with principal place of business in New York. The record is silent as to the place of negotiation and execution. Because Melia was a resident of Massachusetts at all relevant times, we may presume that some negotiations took place in Massachusetts. Even assuming that the contract was executed in New York, the contacts remain split between Massachusetts and New York. Contrast Torrico v. International Business Machs. Corp., 213 F. Supp.2d 390, 403-404 (S.D.N.Y. 2002) (in totality of circumstances, center of gravity of employment relationship was headquarters of employer, because executive decisions were made there and employee traveled there substantially during course of employment).

    51

    When a contractual dispute relates to laws whose policies are "readily identifiable and reflect strong governmental interests," those interests may determine the choice-of-law analysis. Allstate Ins. Co. v. Stolarz, 81 N.Y.2d 219, 226 (1993). The New York Legislature has adopted a policy statement[14] explicating the public interests served by its Payment of Wages Law. Those [180] public interests are concentrated in the States where the employee resides and where the work was performed. Here, for example, Massachusetts resources may have been expended to support an unpaid Massachusetts resident; Zenhire's competitors may have been disadvantaged in their solicitation of business in Massachusetts; and tax revenues were not paid to Massachusetts. In sum, the place of performance was Massachusetts, the other contacts do not conclusively direct application of either State's law, and the governmental interests are concentrated in Massachusetts. Therefore, a New York court analyzing this Wage Act claim under contract principles would choose Massachusetts law.

    52

    When choice-of-law principles dictate application of a particular law, New York courts may still refuse to enforce that law if it conflicts with fundamental New York policy. This abstention is limited to laws that would "violate some fundamental principle of justice, some prevalent conception of good morals, some deep-rooted tradition of the common weal." Cooney v. Osgood Mach., Inc., supra at 78, quoting Loucks v. Standard Oil Co., 224 N.Y. 99, 111 (1918). In short, it applies only to "those foreign laws that are truly obnoxious." Cooney v. Osgood Mach., Inc., supra at 79. See Welsbach Elec. Corp. v. MasTec N. Am., Inc., 7 N.Y.3d 624, 630-632 (2006).

    53

    New York courts would not hesitate to apply the Wage Act. The New York Court of Appeals stated this much in a virtually identical case. See Boss v. American Express Fin. Advisors, Inc., 6 N.Y.3d 242 (2006). There, New York-based employees sued their Minnesota-based employer in New York under the New York Labor Law, despite a forum selection clause and choice-of-law clause in their employment agreement that designated Minnesota as the governing jurisdiction and Minnesota law as the governing law. Id. at 245-246. The plaintiffs argued, as does Melia, that because the laws of their State were more protective of their wages than Minnesota law, the forum selection clause should not be enforced. The New York Court of Appeals enforced the forum selection clause and dismissed the [181] case. Id. at 246-247. The court declined to consider the plaintiffs' challenge to the choice of Minnesota law:

    54
    "We express no opinion on the merits of plaintiffs' argument. It could and should have been made to a court in Minnesota — the forum the parties chose by contract. If New York's interest in applying its own law to this transaction is as powerful as plaintiffs contend, we cannot assume that Minnesota courts would ignore it, any more than we would ignore the interests or policies of the State of Minnesota where they were implicated" (emphasis added).
    55

    Id. at 247. In this case, a New York court would certainly recognize that the interests of the Commonwealth are implicated and would apply Massachusetts law.

    56

    5. Future cases. In light of our analysis under New York's choice-of-law rules, we now recognize a presumption that forum selection clauses are enforceable with respect to Wage Act claims. A party seeking to rebut this presumption must produce some evidence indicating that (1) the Wage Act applies; (2) the selected forum's choice-of-law rules would select a law other than that of Massachusetts; and (3) application of the selected law would deprive the employee of a substantive right guaranteed by the Wage Act. On the introduction of such evidence, the proponent of the forum selection clause would retain the ultimate burden of demonstrating that the clause does not operate as a "special contract." See Standerwick v. Zoning Bd. of Appeals of Andover, 447 Mass. 20, 33-35 (2006).

    57

    A presumption that a forum would, like New York, usually apply Massachusetts law to Wage Act claims reflects the tendency of modern choice-of-law doctrines to produce similar results. Of the fifty States and territories (including the District of Columbia and Puerto Rico), forty-two have adopted a modern choice-of-law theory with respect to torts, and forty have done so with respect to contracts. P. Hay, P.J. Borchers, & S.C. Symeonides, Conflict of Laws § 2.20, at 95 (5th ed. 2010). While modern doctrines do vary in emphasis and specific formulations, we abide by our observation that, "despite the rhetoric of choice-of-law scholars, the courts and commentators `are arriving at results broadly consistent with each other's [182] holdings.'" Bushkin Assocs., Inc. v. Raytheon Co., 393 Mass. 622, 631 (1985), quoting R.A. Leflar, American Conflicts Law § 99, at 198 (3d ed. 1977). Jurisdictions that characterize Wage Act claims as sounding in tort and that maintain the traditional rule of lex loci delicti for tort cases would likewise select Massachusetts law for Wage Act claims accruing in Massachusetts.

    58

    Placing the burden of production on the opponent of the forum selection clause also accords with the general policy favoring forum selection clauses. Massachusetts courts enforce forum selection clauses so long as they are fair and reasonable. Jacobson v. Mailboxes Etc. USA, Inc., 419 Mass. 572, 574-575 (1995). The opponent of a forum selection clause bears the "substantial burden" of showing that enforcement of a forum selection clause would be unfair and unreasonable. Cambridge Biotech Corp. v. Pasteur Sanofi Diagnostics, 433 Mass. 122, 133 (2000).

    59

    Finally, presumptive recognition of forum selection clauses reinforces the principles of interstate comity. "The notions of comity demanded by our Federal system require us to concede that the courts of our sister States, even when they reach a different decision than we would have, are endowed with an equal measure of wisdom and sympathy." Cote-Whitacre v. Department of Pub. Health, 446 Mass. 350, 369 (2006) (Spina, J., concurring), citing Delk v. Gonzalez, 421 Mass. 525, 530 (1995). We have long rejected the "provincial attitude regarding the fairness of other tribunals" that lies at the core of resistance to forum selection clauses. The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 12 (1972). The courts of the Commonwealth must respect the ability of the courts of sister States to apply their choice-of-law rules fairly, to give effect to Massachusetts fundamental public policy, and, when appropriate, to adjudicate wage claims under Massachusetts law.

    60

    6. Conclusion. For the foregoing reasons, the judgment of the Superior Court is affirmed.

    61

    So ordered.

    62

    [1] 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.

    63

    [2] Although the defendants characterized this motion as a motion to dismiss for improper venue under Mass. R. Civ. P. 12 (b) (3), 365 Mass. 754 (1974), a motion to dismiss based on a forum selection clause is properly considered under Mass. R. Civ. P. 12 (b) (6), 365 Mass. 754 (1974). See Casavant v. Norwegian Cruise Line, Ltd., 63 Mass. App. Ct. 785, 789-790 (2005), cert. denied, 546 U.S. 1173 (2006).

    64

    [3] We acknowledge the amicus brief of the New England Legal Foundation.

    65

    [4] For example, employees prevailing in actions under the Wage Act are entitled to treble damages, G. L. c. 149, § 150, but those bringing actions under N.Y. Lab. Law § 198 (McKinney 2012 Supp.) are not.

    66

    [5] In his initial memorandum of decision, the judge made rulings with respect to the motion to dismiss each individual count. Those rulings, which were rendered moot by his subsequent dismissal of the entire action, were not appealed from and are not before us.

    67

    [6] The Wage Act was initially limited to employees of a "manufacturing, mining or quarrying, mercantile, railroad, street railway, telegraph, telephone and municipal corporation and every incorporated express company and water company." St. 1886, c. 87, § 1. The Legislature expanded this group of industries over the next fifty years, until it adopted the present language covering "[e]very person having employees in his service...." St. 1935, c. 350.

    68

    [7] Statute 1943, c. 467, extended the Wage Act to cover commissions that are "definitely determined" and "due and payable." See generally Okerman v. VA Software Corp., 69 Mass.App.Ct. 771, 775-780 (2007). Statute 1966, c. 319, expanded the definition of wages to include holiday and vacation pay. See generally Electronic Data Sys. Corp. v. Attorney Gen., 454 Mass. 63, 66-71 (2009).

    69

    [8]The Wage Act initially authorized levying a fine of between ten and fifty dollars. St. 1886, c. 87, § 2. In St. 1929, c. 117, the Legislature added the alternative of imprisonment in a house of correction for up to two months. The Legislature gradually increased the limits of the fine in St. 1971, c. 590 (twenty to one hundred dollars); St. 1977, c. 664 (one hundred dollars to $500); and St. 1987, c. 559, § 29 ($500 to $3,000).

    70

    Remedies were dramatically increased by St. 1993, c. 110, § 182, codified at G. L. c. 149, § 150, which authorized a private right of action, including provision for treble damages and attorney's fees and costs; by St. 2008, c. 80, § 5, which made the treble damages mandatory, overruling our decision in Wiedmann v. Bradford Group, Inc., 444 Mass. 698, 709 (2005); and by St. 1998, c. 236, § 7, codified at G. L. c. 149, § 27C, which authorized punishment of up to $25,000 or imprisonment for one year for wilful violations, and $10,000 or six months imprisonment for nonwilful violations, with both penalties subject to enhancement for subsequent offenses.

    71

    [9] Compare Morris v. Towers Fin. Corp., 916 P.2d 678, 679 (Colo. Ct. App. 1996) (invalidating forum selection clause claims under State's Wage Claim Act where statute authorized civil action in "any court having jurisdiction over the parties"), with Adams Reload Co. v. International Profit Assocs., Inc., 143 P.3d 1056, 1059 (Colo. Ct. App. 2006) (enforcing forum selection clause for claims under State's Consumer Protection Act where statute lacked equivalent wording to Wage Claim Act).

    72

    [10] Application of a foreign law would not impermissibly exempt an employer from the Wage Act if the chosen law would guarantee an employee all the substantive rights afforded by the Wage Act. Cf. 1-800-Got Junk? LLC v. Superior Court, 189 Cal. App. 4th 500, 517-519 (2010) (choice-of-law provision invalid under State franchise investment law if it would diminish franchisee's rights, but not if it would enhance them). What is relevant for these purposes is the private enforcement rights of employees. As discussed part 3, supra, in all circumstances the Attorney General would retain jurisdiction to pursue civil and criminal actions under Massachusetts law.

    73

    [11] Of course, the contract also serves as the basis for a common-law claim for breach of contract. It is elementary, in New York and elsewhere, that the failure to pay wages can simultaneously give rise to both a breach of contract claim and a statutory claim. See, e.g., Simpson v. Lakeside Eng'g, P.C., 26 A.D.3d 882, 883 (N.Y. 2006) (breach of contract claim for nonpayment of wages distinct from alleged violation of labor law; attorney's fees applicable only to latter). Cf. Karlin v. IVF Am., Inc.,93 N.Y.2d 282, 293 (1999) (same actions support common-law claim for lack of informed consent and statutory claim for deceptive advertising).

    74

    Where a complaint contains claims for both breach of contract and violation of a wage statute, the court must conduct a separate choice-of-law analysis for each claim. See, e.g., Arakelian v. Omnicare, Inc., 735 F. Supp.2d 22, 30 n.5, 36-38 (S.D.N.Y. 2010).

    75

    [12] Federal courts sitting in diversity apply the choice-of-law rules of the forum State. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941).

    76

    [13] Two New York cases have suggested otherwise, but their analyses are inapplicable or unconvincing. In Arakelian v. Omnicare, Inc., supra at 37-39, the judge, applying New York choice-of-law principles, analyzed a claim under the Maryland Wage Payment and Collections Law (MWPCL) under both contract and tort rules. The judge expressed uncertainty whether claims under the MWPCL sounded in contract or tort, because a Federal District Court for the District of Maryland had concluded that such claims likely sounded in contract. Id. at 38, citing Yeibyo vs.E-Park of DC, Inc., No. DKC XXXX-XXXX (D. Md. Jan. 18, 2008) (Yeibyo). In both those cases, the contract and tort analyses led to the same result.

    77

    The Arakelian and Yeibyo cases represent a steady line of cases that have interpreted claims under the MWPCL as sounding in contract. Taylor v. Lotus Dev. Corp., 906 F. Supp. 290, 295, 298 (D. Md. 1995) (Taylor), on which Yeibyo relied, dismissed a claim under the MWPCL because of a contractual clause that selected another State's law "to govern [the parties'] contractual rights and duties." Taylor reasoned that the wage claim "simply rehashes [the] breach of contract claim," id. at 297 n. 8, and that "[t]he issue of what remedies are available to an employee if his employer withholds pay is certainly one which the parties could have resolved by explicit agreement." Id. at 298. Recent cases upholding Taylor have reiterated that the "MWPCL is not a fundamental Maryland public policy." Kunda v. C.R. Bard, Inc., 671 F.3d 464, 468 (4th Cir. 2011).

    78

    The Wage Act, by contrast, does embody fundamental public policy. See part 3, supra. Like New York courts, see note 11, supra, Massachusetts courts have emphasized the distinction between Wage Act and contract claims. See Newton v. Commissioner of the Dep't of Youth Servs., 62 Mass. App. Ct. 343, 346-347 (2004) ("prompt payment of wages statute creates an independent statutory right that can be enforced judicially even when a collective bargaining agreement addresses the subject matter of compensation"). To our knowledge, no court has ever suggested applying contract choice-of-law rules to a claim under the Wage Act or N.Y. Lab. Law § 198. We accordingly consider the uncertainty of the Arakelian court to be limited to claims under the MWPCL and not reflective of New York's characterization of statutory wage claims in general.

    79

    The second case, also construing a claim under the MWPCL but not relying on Maryland precedent, stated without hesitation that New York would treat wage claims as sounding in contract. Smith vs. Railworks Corp., No. 10 Civ. 3980 (JPO) (S.D.N.Y. Mar. 6, 2012). The court analogized a Wage Act claim to a breach of duty of loyalty claim, which New York courts deem to sound in contract. Id., citing Western Elec. Co. v. Brenner, 41 N.Y.2d 291 (1977). The court did not consider other statutory causes of actions arising out of the employment relationship, which, like Wage Act claims, relate to wrongful conduct by employers. Nor did it consider the relevance of the governmental interests protected by New York's Payment of Wages Law. See note 14, infra.

    80

    [14]1997 N.Y. Laws c. 605, § 1, provides: "The legislature declares that the working people of the state of New York are the key to our maintenance of a strong economy. The legislature finds, however, that too often the working people of our state do not receive the full wages they have earned, and that some workers are never paid at all for their labor. Underpaid and unpaid workers are found in all areas of commerce and industry, but are concentrated in low-wage areas such as garment factories and the service industry. Exploitation of these most vulnerable workers drives down wages for all working people. Low-wage workers who are unpaid or underpaid cannot support themselves and their families, and may be forced to rely on scarce public resources. Honest employers, who constitute the vast majority of those doing business in our state, suffer from unfair competition when others cut costs by underpaying their workers. Finally, the state loses precious tax revenue when employers avoid payment of wages. Especially as more and more New Yorkers are called upon to earn their living through work, we must ensure that working people are paid what they earn.

    81

    "If our economy is to thrive, the state must pursue enforcement of the wage provisions of the labor law with vigor and fairness. That enforcement is the mandate of the department of labor. The purpose of this legislation, therefore, is to provide the department of labor and working people with stronger and more varied tools with which to collect unpaid wages. The legislature also seeks to ensure that the most vulnerable workers have access to the department's enforcement mechanisms, in an effort to prevent the generalized devaluation of wages for all workers."

  • 8 Kubis & Perszyk Associates Inc. v. Sun Microsystems Inc.

    1
    146 N.J. 176 (1996)
    2
    680 A.2d 618
    3
    KUBIS & PERSZYK ASSOCIATES, INC., D/B/A ENTRE COMPUTER, PLAINTIFF-APPELLANT,
    v.
    SUN MICROSYSTEMS, INC., SUN MICROSYSTEMS COMPUTER CORPORATION, KARL E. HOLZTHUM, ELLIOT MAYO, AND ROBERT B. KLOPMAN, DEFENDANTS-RESPONDENTS.
    4

    The Supreme Court of New Jersey.

    5
    Argued February 26, 1996.
    6
    Decided July 23, 1996.
    7

    [177] Douglas S. Eakeley argued the cause for appellant (Lowenstein, Sandler, Kohl, Fisher & Boylan, attorneys; Mr. Eakeley and Maureen A. Ruane, on the briefs).

    8

    Andrew T. Berry argued the cause for respondents (McCarter & English, attorneys; Mr. Berry and Teresa L. Moore, on the brief).

    9
    The opinion of the Court was delivered by STEIN, J.
    10

    In Instructional Systems, Inc. v. Computer Curriculum Corp., 130 N.J. 324, 614 A.2d 124 (1992), we declined to enforce a provision in a franchise agreement subject to the New Jersey Franchise Practices Act, N.J.S.A. 56:10-1 to -15 (Franchise Act), mandating that the agreement and the relationships of the signatory parties be governed by California law. We determined that application of California law to the franchise agreement in issue "would be contrary to a fundamental policy of [New Jersey] which has a materially greater interest than [California] in the determination of the particular issue and which * * * would be the state of the applicable law in the absence of an effective choice of law by the parties." Id. at 342, 614 A.2d 124 (quoting Restatement (Second) of Conflict of Laws § 187(2)(b) (1969)).

    11

    The franchise agreement involved in this appeal also provides that it shall be governed by California law, and in the same subparagraph requires that any suit related to the agreement "be brought exclusively in the United States District Court for Northern California or the California Superior Court for the County of [178] Santa Clara." When the franchisor terminated the agreement in October 1993, the franchisee instituted suit in the Law Division of the Superior Court of New Jersey, and that court dismissed the action on the franchisor's motion, holding that the forum-selection clause was enforceable. In an unreported opinion, the Appellate Division affirmed the dismissal on the condition that the California court apply New Jersey law if it concluded that the agreement between the parties constituted a franchise subject to the Act, and temporarily enjoined termination of the agreement until an application for injunctive relief could be filed with and adjudicated by the designated California court.

    12

    We granted plaintiff's petition for certification, 142 N.J. 571, 667 A.2d 189 (1995), to consider the enforceability of forum-selection clauses in franchise agreements subject to the Act. We reverse.

    13
    I
    14

    Plaintiff, Kubis & Perszyk Associates, Inc., doing business as Entre Computer (Entre), was a New Jersey corporation founded in 1983 by its sole owners, Robert Kubis and Benedict Perszyk. From 1983 to mid-1990, Entre was a franchisee of Entre Computer Centers, Inc., engaging in the sale of personal computers manufactured by IBM, Compaq, and other producers.

    15

    Defendant Sun Microsystems, Inc. is a California corporation engaged in the distribution of computing technologies, products, and services. Its subsidiary, defendant Sun Microsystems Computer Corp. (Sun Computer), is primarily responsible for marketing the computer-hardware segment of Sun Microsystem's business, including workstations, servers, central processing units, and operating systems. Sun Computer sells its products through a direct sales force as well as through indirect resellers. Allegedly, Sun Microsystems and Sun Computer (collectively "Sun") command a large share of the growing market for computer workstations and servers. Sun maintains three New Jersey offices.

    16

    Sun solicited Entre in 1990 to serve as a reseller of Sun products. Entre elected to become a Sun distributor, committing [179] itself to de-emphasizing the sale of personal computers to concentrate on marketing Sun's more sophisticated workstations and operating systems. Sun and Entre entered into a Value Added Dealer Agreement as of December 21, 1990. That agreement was superseded as of April 9, 1993, by a new Indirect Value Added Reseller Agreement (IVAR Agreement). Pursuant to the IVAR Agreement, Entre was obligated to use its best efforts to promote the sale of Sun products and to market those products in accordance with a Sun-approved business plan. Entre agreed to maintain a prescribed inventory of Sun demonstration products at its sales office, and to employ a Sun-trained sales representative and systems engineer. Entre was also authorized to distribute and sub-license Sun software for use on Sun Central Processing Units sold to Entre customers, and to use the Sun Value Added Reseller logo and Sun trademarks in its advertising and marketing materials. Entre alleges that its sales of Sun products totaled $4,866,490.23 in 1991, constituting 86.3% of Entre's total sales, and $4,052,479.07 in 1992, comprising 85.7% of Entre's sales.

    17

    The IVAR Agreement described the contracting parties as independent contractors, stating expressly that no other relationship was contemplated: "The parties are independent contractors under this Agreement and no other relationship is intended, including a partnership, franchise, joint venture, agency, employer/employee, or master/servant relationship."

    18

    The critical provision of the IVAR Agreement is subparagraph 17A, entitled Dispute Resolution, which provides:

    19
    Any action related to this Agreement will be governed by California law, excluding choice of law rules, and will be brought exclusively in the United States District Court for Northern California or the California Superior Court of the County of Santa Clara. The parties hereby submit to the personal jurisdiction and venue of such courts.
    20

    Sun states that Entre's principals did not object to the forum-selection clause before signing the IVAR Agreement and asserts that the clause was negotiable. Entre characterizes the forum-selection clause as a "boilerplate" provision in Sun's standard [180] contract, and Entre's principals assert that they did not believe that the clause was negotiable.

    21

    Entre alleges that Sun's decision to terminate their relationship was precipitated by the individual defendants who were employed by Sun as part of its direct sales force in New Jersey. Entre contends that those defendants interfered with a large Entre sale of Sun products to AT&T;, disparaged Entre's abilities and services to potential customers, and refused to provide information and assistance contemplated by the IVAR Agreement. According to Entre, those defendants allegedly induced Sun to terminate the IVAR Agreement by letter of October 1, 1993, effective as of December 31, 1993. Entre asserts that the termination was without good cause.

    22

    Entre instituted this action against Sun and the individual defendants in December 1993, alleging in part that the termination of the IVAR Agreement violated the Franchise Act and that the defendants tortiously interfered with Entre's business relationships. Entre sought to enjoin termination of its contract, and also sought damages and counsel fees. Sun moved for dismissal of the complaint on the basis of the forum-selection clause. Without addressing whether the underlying contract was subject to the Franchise Act, the Law Division dismissed the complaint, concluding that the forum-selection clause was enforceable. Prior to resolving Entre's appeal, the Appellate Division stayed the order of dismissal and temporarily enjoined Sun from terminating the agreement and from instituting an action against Entre in California.

    23

    Before the Appellate Division, Sun contended that its relationship with Entre did not constitute a franchise. However, Sun conceded that if its agreement were determined to create a franchise, the choice-of-law provision would not be enforceable and the rights of the parties would be governed by the Franchise Act. The Appellate Division also took note of Sun's concession that, if the forum-selection clause were to be sustained, dismissal of the New Jersey action could be conditioned on the California court's [181] application of the Franchise Act to the parties' relationship, with the result that the agreement's choice-of-law provision would apply only if the California court determined that no franchise had been created.

    24

    The Appellate Division concluded that the forum-selection clause should be enforced, observing that "we should trust the courts of California to be as protective of the rights of the New Jersey litigant under New Jersey law as it would hope another state would protect a California resident under California law, if the case were referred elsewhere." The court stated:

    25
    We do not see our enforcement of these clauses as committing our residents to the "tender mercies" of provincial judges. Rather, we are merely permitting the decision to be made by a jurist of a sister state who will fairly and impartially adjudicate the dispute between the parties in accordance with the governing law, which in this case might happen to be the law of New Jersey.
    26

    The Appellate Division's affirmance of the dismissal order was conditioned on the California court's applying New Jersey law to ascertain whether a franchise existed and, if so, the rights of the parties, and the court continued its temporary injunction in effect until an application for similar relief could be presented to a California court.

    27
    II
    28
    A. New Jersey Franchise Practices Act
    29

    Primarily, we note our agreement with the assumption implicit in the Appellate Division's decision that the enforceability of the forum-selection clause should be determined prior to final resolution of the question whether Sun's agreement with Entre constitutes a franchise subject to the Franchise Act. In our view, the latter issue should be resolved on remand by the Law Division on the basis of an adequate record, informed by the analysis of the definitional components of a franchise set forth in Instructional Systems, Inc., supra, 130 N.J. at 351-66, 614 A.2d 124. For purposes of resolving the enforceability of forum-selection clauses in franchise agreements, we shall assume that the Sun-Entre agreement is a franchise subject to the Franchise Act.

    30

    [182] To determine whether forum-selection clauses are reconcilable with the broad statutory protections accorded to New Jersey franchises under the Franchise Act, we first review the conditions that prompted the Legislature to pass the Act as well as the provisions enacted to compensate for the economic imbalance between franchisors and franchisees. As the Court observed in Westfield Centre Service, Inc. v. Cities Service Oil Co., 86 N.J. 453, 432 A.2d 48 (1981):

    31
    Though economic advantages to both parties exist in the franchise relationship, disparity in the bargaining power of the parties has led to some unconscionable provisions in the agreements. Franchisors have drafted contracts permitting them to terminate or to refuse renewal of franchises at will or for a wide variety of reasons including failure to comply with unreasonable conditions. Some franchisors have terminated or refused to renew viable franchises, leaving franchisees with nothing in return for their investment. Others have threatened franchisees with termination to coerce them to stay open at unreasonable hours, purchase supplies only from the franchisor and at excessive rates or unduly expand their facilities.
    32
    [Id. at 461-62, 432 A.2d 48.]
    33

    See also Shell Oil Co. v. Marinello, 63 N.J. 402, 408, 307 A.2d 598 (1973) ("[I]t becomes apparent that Shell is the dominant party and that the relationship lacks equality in the respective bargaining positions of the parties. For all practical purposes Shell can dictate its own terms."), cert. denied, 415 U.S. 920, 94 S.Ct. 1421, 39 L.Ed.2d 475 (1974).

    34

    At the legislative hearing preceding enactment of the Franchise Act, several proponents of the Act complained that franchise agreements often were contracts of adhesion, the franchisors not being willing to negotiate in good faith about terms and conditions of the franchise. A witness representing gasoline retailers stated that "our dealers ... should take these contracts — these franchise contracts — to their lawyers [], but the pressure is put on them to sign these things in a hurry and often they do sign them with clauses in them that should not be there." Franchise Practices Act: Hearing on A. 2063 Before the Assembly Judiciary Comm., 194th Leg., 2d Sess., at 29 (March 29, 1971) (statement of Jacob Petuska, President, N.J. Gasoline Retailers Assoc.). Another witness observed: "At the core of the franchise relationship is [183] unilateral control exercised by the franchisor over every aspect of the franchisee's business.... The franchise agreement in many cases is not a matter of mutual consent but actually a contract of adhesion — either take it or leave it." Id. at 35 (statement of Robert M. Burd, President, N.J. Automobile Dealers Assoc.). Another witness acknowledged the problem of unequal bargaining power:

    35
    When a man wants to sign up for a particular franchise, I think that he should have an ability to negotiate the contractual relationship pursuant to which, in many instances, his entire life savings are going to be invested. However, the older more established businesses, franchisors, such as in the automobile industry, will not tolerate the negotiation of even a comma, even a period.
    36
    [Id. at 114 (statement of Glen Davis, Esq., representing Gulf Oil Corp.).]
    37

    Another recurring theme at the hearing on the Franchise Act was the complaint that franchisees whose contracts were cancelled could not obtain prompt and effective judicial relief. As one veteran Buick dealer explained:

    38
    Today, if I wanted to sue the manufacturer on a vital issue, such as cancellation, it would cost me somewhere between one-quarter and one-half million dollars. And today I could very likely be out of business two or three years before the situation came to a hearing.
    39
    This bill — one of the greatest things in this bill, as the gasoline dealer testified to, is that it gives us a day in court. It gives us virtually an automatic injunction if our cause for going into court is reasonable. Today this is very difficult to get.
    40
    [Id. at 52-53 (statement of Walter W. Stillman).]
    41

    Another automobile-dealer representative concurred:

    42
    A-2063 would utilize our own State courts — the traditional forum for resolving disputes between businessmen — as the arbitrator of any dispute that may arise in the franchise relationship.... Today in New Jersey, a franchisee has no automatic right to obtain an injunction against a capricious cancellation. Without adequate notice or injunctive relief — both of which are provided in A-2063 — a dealer could be put out of business immediately.
    43
    ... By the time a dealer obtains a court ruling, his place of business could long since have been closed. Even if he wins in court, he would most likely find it almost impossible to renew operations. A-2063 would give the small businessman adequate time to begin a court action to preserve his business.
    44
    [Id. at 39-40 (statement of Robert M. Burd, President, N.J. Automobile Dealers Assoc.).]
    45

    Gulf Oil Corporation's representative also endorsed the proposed bill's provision authorizing injunctive relief:

    46
    [184] What [A-2063] does is establish, quite clearly and conclusively, a course of action which a dealer would merely point to and allege in his pleadings, that given acts or actions on the part of the franchisor are unreasonable, and, based upon that, a court — a chancery court — would, assuming the validity of the allegations of unreasonableness and the acts complained of, grant the interlocutory relief on a temporary basis so that the case could proceed.
    47
    One of the tactics utilized in fighting termination cases by the manufacturers, of course, is their overwhelming resources. So, the harder they make it to get that initial injunction, the more likely they will be able to avoid the determination of the ultimate issues by an impartial court of law — a tactic that in itself is somewhat unfair and, if you will, subversive of the American system of jurisprudence.
    48
    [Id. at 117-18 (statement of Glen Davis, Esq., representing Gulf Oil Corp.).]
    49

    As enacted, the Franchise Act addressed the concerns relating to both unequal bargaining power and the unavailability of prompt judicial relief. The Act expressly prohibits franchisors from requiring franchisees to agree to unreasonable standards of performance, or to releases or waivers that would relieve franchisors from liability under the Act. N.J.S.A. 56:10-7. In addition, termination of or failure to renew a franchise without good cause constitutes a violation of the Act, and good cause is limited to a franchisee's failure "to substantially comply with those requirements imposed ... by the franchise." N.J.S.A. 56:10-5. The Act expressly authorizes franchisees to institute suit against franchisors "in the Superior Court of the State of New Jersey to recover damages sustained by reason of any violation of this act and, where appropriate, ... [for] injunctive relief." N.J.S.A. 56:10-10. Successful franchisees are also entitled to recover reasonable attorney's fees. Ibid.

    50

    In 1989, the Legislature amended the Act, L. 1989, c. 24, specifically to enhance the protection afforded to motor-vehicle franchisees. The legislative findings incorporated in the amendment included declarations that inequality of bargaining power continues to favor motor-vehicle franchisors notwithstanding the provisions of the Franchise Act; that such inequality of bargaining power enables such franchisors to compel motor-vehicle franchisees to execute agreements containing detrimental terms and conditions that require franchisees "to relinquish their rights ... established by the [Franchise Act];" and that such terms and [185] conditions deny to motor-vehicle franchisees "the opportunity to have disputes ... heard in an appropriate venue, convenient to both parties, by tribunals established by statute for the resolution of these disputes." N.J.S.A. 56:10-7.2. The Sponsor's Statement also observed that under the Franchise Act and similar state statutes, the franchisees' rights

    51
    generally are enforceable in state courts or through state agencies. However, in the last several years manufacturers and distributors have sought to circumvent these laws by offering dealers franchise renewal agreements which require them to settle disputes through compulsory arbitration instead of exercising their rights as spelled out under New Jersey law. Other proposed agreements transfer the disputes from New Jersey's courts or administrative tribunals, as provided by the "Franchise Practices Act," to another state.
    52
    [Sponsor's Statement to S. 2737, L. 1989, c. 24 (June 30, 1988).]
    53

    Accordingly, the 1989 amendment provides that a motor-vehicle franchisor violates the Act if it requires a motor-vehicle franchisee to accept a provision in a franchise agreement that specifies the jurisdictions in which disputes shall or shall not be submitted for resolution or prohibits a motor-vehicle franchisee from instituting suit in a forum otherwise available under New Jersey law. Any such provision may be revoked by the franchisee by notice to the motor-vehicle franchisor within sixty days of receipt of the executed franchise agreement. N.J.S.A. 56:10-7.3. Pursuant to the amendment, forum-selection clauses are presumed to be invalid unless the franchisor can prove that it offered the franchisee the opportunity to sign an identical franchise agreement containing no forum-selection clause. Ibid.

    54

    Sun contends that the 1989 amendment reflects the Legislature's intention to prohibit forum-selection clauses only in motor-vehicle franchise agreements. We agree that by the amendment the Legislature effectively invalidated forum-selection clauses in franchise agreements covering automobile dealerships. However, the legislative findings persuade us that the Legislature considered such clauses in general to be inimical to the rights afforded all franchisees under the Act. The Legislature apparently elected to limit their express prohibition only to motor-vehicle franchises based on its determination that the use of unequal bargaining [186] power to compel the inclusion of such clauses was largely confined to motor-vehicle franchise agreements.

    55
    B. Forum-Selection Clauses
    56

    The earliest attempts by parties to designate the jurisdiction in which suits against them could be instituted were generally rejected by state and federal courts. For example, in Nute v. Hamilton Mutual Insurance Co., 72 Mass. (6 Gray) 174 (1856), the insurance company's by-laws required suits to be brought in the County of Essex and the insured filed suit in the County of Suffolk. Rejecting the insurance company's plea of lack of jurisdiction, the court held that no agreement of the parties can alter the legal rules that determine "in what courts and counties actions may be brought." Id. at 184. The principle developed that "parties by agreement cannot oust a court of jurisdiction otherwise obtaining." Wm. H. Muller & Co. v. Swedish Am. Line Ltd., 224 F.2d 806, 808 (2d Cir.), cert. denied, 350 U.S. 903, 76 S.Ct. 182, 100 L.Ed. 793 (1955); cf. Krenger v. Pennsylvania R. Co., 174 F.2d 556, 561 (2d Cir.1949) (Hand, J., concurring) ("In truth, I do not believe that, today at least, there is an absolute taboo against such contracts at all; in the words of the Restatement, they are invalid only when unreasonable."), cert. denied, 338 U.S. 866, 70 S.Ct. 140, 94 L.Ed. 531 (1949). See generally Arthur Lenhoff, The Parties' Choice of a Forum: "Prorogation Agreements," 15 Rutgers L.Rev. 414, 430-39 (1961) (reviewing earlier cases and contemporary approaches to forum-selection clauses).

    57

    The modern approach to the question of enforceability of forum-selection clauses is characterized by the United States Supreme Court's decision in M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972), in which the Court enforced a forum-selection clause in a contract between Zapata, a Texas-based American corporation engaged in the oil-drilling business, and Unterweser Reederei GMBH, a German corporation engaged in the vessel-towing business. Unterweser had contracted to tow Zapata's ocean-going, self-elevated drilling rig (Chaparral) from Louisiana to the Adriatic Sea near Ravenna, Italy, where [187] Zapata planned to drill for oil. Responding to Zapata's request for towing bids, Unterweser was the low bidder and submitted a contract that provided: "Any dispute arising must be treated before the London Court of Justice." 407 U.S. at 2, 92 S.Ct. at 1909, 32 L.Ed.2d at 516. Zapata reviewed the contract and negotiated various modifications, but did not seek to modify the forum-selection clause. Id. at 3, 92 S.Ct. at 1910, 32 L.Ed.2d at 516.

    58

    While Unterweser's deep-sea-tug Bremen was towing the Chaparral in the Gulf of Mexico en route to Italy, a severe storm caused the Chaparral's elevator legs to break off, seriously damaging the vessel. Zapata instructed the Bremen to tow the damaged rig to Tampa, Florida, the nearest port. Zapata then instituted a suit in admiralty in the federal court in Tampa against Unterweser and against the Bremen in rem, alleging negligence and breach of contract. Invoking the forum-selection clause, Unterweser moved to dismiss for lack of jurisdiction or on forum non conveniens grounds. The District Court denied Unterweser's motion on the basis that forum-selection clauses were contrary to public policy, and a divided panel of the Court of Appeals affirmed. Id. at 4-8, 92 S.Ct. at 1910-12, 32 L.Ed.2d at 517-19.

    59

    Reversing, the Supreme Court observed that "[t]he expansion of American business and industry will hardly be encouraged if, notwithstanding solemn contracts, we insist on a parochial concept that all disputes must be resolved under our laws and in our courts." Id. at 9, 92 S.Ct. at 1912, 32 L.Ed.2d at 519-20. Concluding that forum-selection clauses should be enforced unless "enforcement is shown by the resisting party to be `unreasonable' under the circumstances," id. at 10, 92 S.Ct. at 1913, 32 L.Ed.2d at 520, the Court noted that the contract in question was "a freely negotiated private international agreement, unaffected by fraud, undue influence, or overweening bargaining power." Id. at 12, 92 S.Ct. at 1914, 32 L.Ed.2d at 522. The Court observed that because the vessel was to be towed a long distance through international waters, the parties could reasonably conclude that a forum-selection [188] clause was in their mutual interest and was taken into account in negotiating the financial terms of the agreement. Id. at 13-14, 92 S.Ct. at 1915, 32 L.Ed.2d at 522-23. The Court acknowledged that "[a] contractual choice-of-forum clause should be held unenforceable if enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by judicial decision." Id. at 15, 92 S.Ct. at 1916, 32 L.Ed.2d at 523. The Court remanded the matter to the District Court to permit Zapata to attempt to prove that "enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching." Ibid.

    60

    The holding in The Bremen represents the prevailing view on the enforceability of forum-selection clauses, and is consistent with the position adopted by the Restatement (Second) of Conflict of Laws § 80 (1969) ("The parties' agreement as to the place of the action cannot oust a state of judicial jurisdiction, but such an agreement will be given effect unless it is unfair or unreasonable."). The Bremen approach generally has been applied by federal and state courts confronted by jurisdictional choices involving forum-selection clauses. See, e.g., Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 593-95, 111 S.Ct. 1522, 1527-28, 113 L.Ed.2d 622, 632-33 (1991) (upholding, 7-2, validity of forum-selection clause in form cruise-ship passage contract although not subject to bargaining, and noting special interest of cruise line in limiting fora in which passengers might sue and that enforcement of clause benefits passengers because cruise line's savings undoubtedly are reflected in lower fares); Moses v. Business Card Express, Inc., 929 F.2d 1131, 1136-39 (6th Cir.) (upholding Michigan district court's discretionary ruling not to return venue to Alabama after Alabama district court changed venue from Alabama to Michigan in damage suit by Alabama franchisee pursuant to contract requiring that suit be brought only in Michigan court, but noting that forum-selection clause is not dispositive of change of venue motions and should be considered along with convenience of parties and witnesses and overall fairness, and concluding that transfer did not constitute abuse of discretion), cert. denied, 502 [189] U.S. 821, 112 S.Ct. 81, 116 L.Ed.2d 54 (1991); Plum Tree, Inc. v. Stockment, 488 F.2d 754 (3d Cir.1973) (reversing district court decision granting franchisee's motion to transfer franchisor's Pennsylvania action to Texas on ground that forum-selection clause designating Pennsylvania as place of suit was contrary to public policy, and remanding to district court to reconsider on adequate record whether enforcement of forum-selection clause would be unreasonable); Kline v. Kawai Am. Corp., 498 F. Supp. 868 (D.C.Minn. 1980) (transferring dealer's Minnesota action against supplier of pianos and organs to California based on forum-selection clause in "boilerplate" dealer agreement, and finding dealer had failed to sustain burden of proving that enforcement of forum-selection clause would be unreasonable); Dick Proctor Imports, Inc. v. Sumitomo Corp. of Am., 486 F. Supp. 815 (E.D.Mo. 1980) (granting franchisor's motion to transfer franchisee's Missouri action to New York pursuant to forum-selection clause, and holding that enforcement of forum-selection clause was neither unreasonable nor incompatible with Missouri public policy); ABC Mobile Sys., Inc. v. Harvey, 701 P.2d 137 (Colo.Ct.App. 1985) (enforcing forum-selection clause designating California as exclusive forum against California franchisor that relocated to Massachusetts and sued franchisee in Colorado, and holding enforcement of clause against franchisor not unreasonable notwithstanding franchisor's contention that clause was inserted in contract primarily for its benefit); Horner v. Tilton, 650 N.E.2d 759 (Ind. Ct. App. 1995) (dismissing dealer's suit against supplier filed in Marion County, Indiana, and enforcing forum-selection clause designating Peoria County, Illinois, as exclusive forum, holding that underlying agreement did not constitute franchise, finding that forum-selection clause was not product of overreaching or unequal bargaining power, and noting that enforcement of clause would not impose heavy burden on dealer); Jacobson v. Mailboxes Etc. U.S.A., Inc., 419 Mass. 572, 646 N.E.2d 741 (1995) (holding that franchise agreement designating California courts as exclusive forum and California law as controlling required court to determine whether forum-selection clause was enforceable under [190] California law; concluding that such clauses were enforceable under California law if not unreasonable, but remanding to trial court to determine whether pre-contract claims for deceit were dominant claims alleged, in which event forum-selection clause in franchise contract would not apply); Minuteman Press Int'l, Inc. v. Hoffman, 826 S.W.2d 34 (Mo. Ct. App. 1992) (holding that Missouri courts would enforce New York judgment obtained by franchisor against Missouri franchisee where New York action was instituted pursuant to forum-selection clause of franchise agreement; concluding that franchisees were validly served with process under New York's long-arm statute and that enforcement of forum-selection clause, which was not product of fraud or overreaching, would be reasonable); Bakhsh v. JACRRC Enters., Inc., 895 P.2d 746 (Okla. Ct. App. 1995) (affirming trial court's decision dismissing franchisee's Oklahoma action against franchisor, and holding that enforcement of forum-selection clause designating Texas as exclusive forum was not unreasonable).

    61

    Some courts applying the Bremen standard have nevertheless determined that forum-selection clauses need not invariably be honored. In Hoffman v. Minuteman Press International, Inc., 747 F. Supp. 552 (W.D.Mo. 1990), a franchisee sued its franchisor in Missouri alleging pre-contract fraud and breach of the franchise agreement. The franchisor moved to change venue to New York, relying on the contract's forum-selection and choice-of-law clauses. The court acknowledged that in resolving change-of-venue motions under 28 U.S.C. § 1404(a), a forum-selection clause is a significant factor, along with the convenience of parties and witnesses and other practical considerations relating to trial convenience. Id. at 553-54. The court noted "the extreme hardship that litigating in New York would impose on these plaintiffs" and that the defendant could easily accommodate litigation in Missouri. Id. at 559. The court also observed that the complaint alleged that plaintiffs were fraudulently induced to enter into the franchise contract that contained the forum-selection clause, an allegation that, if proved, would render the clause "not worth the paper on which it is [191] written." Ibid. Accordingly, the court denied defendant's motion to transfer.

    62

    A Wisconsin federal court declined to enforce a forum-selection clause in Cutter v. Scott & Fetzer Co., 510 F. Supp. 905 (E.D.Wis. 1981), primarily on the basis that Wisconsin's Fair Dealership Law was intended to provide remedies to dealers beyond those available at common law, the court concluding that the statute's underlying remedial purposes would best be served by denying the franchisor's motion to transfer venue to Ohio. Id. at 909. The court also observed that the franchise agreement contained predominately "boilerplate" language and that there was no indication in the record that the forum-selection clause was the subject of negotiation between the parties. Id. at 908; see also Lulling v. Barnaby's Family Inns, Inc., 482 F. Supp. 318, 320-21 (E.D.Wis. 1980) (citing The Bremen, but declining to enforce forum-selection clause in franchise agreement; relying primarily on public policy reflected in Wisconsin Franchise Investment Law, and concluding that Wisconsin public policy can best be enforced by Wisconsin courts); Wimsatt v. Beverly Hills Weight Loss Clinics Int'l, Inc., 32 Cal. App.4th 1511, 38 Cal. Rptr.2d 612 (1995) (declining to enforce Virginia forum-selection clause in California suit against Virginia franchisor; relying on strong public policy underlying California's Franchise Investment Law, which voids any provision in franchise agreement that waives protections afforded by that statute, and requiring franchisor to prove on remand that enforcement of forum-selection clause will not diminish substantive rights of plaintiffs guaranteed by California law).

    63

    Only a few reported decisions in New Jersey involve the enforcement of forum-selection clauses. In Wilfred MacDonald Inc. v. Cushman Inc., 256 N.J. Super. 58, 606 A.2d 407 (App.Div.), certif. denied, 130 N.J. 17, 611 A.2d 655 (1992), a retailer of turf-maintenance equipment brought suit in New Jersey against its supplier on the ground that the impending termination of part of its dealership product line violated the Franchise Act. The supplier moved to dismiss on the basis of a forum-selection clause in [192] the dealership agreement that designated Nebraska courts as the exclusive forum. Reversing the trial court's denial of the motion to dismiss, the Appellate Division observed that the record contained no proof of fraud or overreaching in relation to the forum-selection clause, id. at 63-64, 606 A.2d 407, and expressed confidence in the ability of Nebraska federal and state courts to apply New Jersey law if it was determined that the Franchise Act was implicated. Id. at 66, 606 A.2d 407. (An unpublished disposition by the Eighth Circuit Court of Appeals reveals that a Nebraska federal court, applying Nebraska rather than New Jersey law, initially denied MacDonald's motion for a preliminary injunction and subsequently granted summary judgment in favor of Cushman, dismissing all claims. The Eighth Circuit affirmed both dispositions. Wilfred MacDonald, Inc. v. Cushman, Inc., 29 F.3d 628, 1994 WL 375968 (unpublished) (8th Cir. July 19, 1994)). See also Shelter Systems Group Corp. v. Lanni Builders, Inc., 263 N.J. Super. 373-75, 622 A.2d 1345 (App.Div. 1993) (enforcing forum selection clause against corporate builder and its principal as guarantor, and finding no coercive bargaining power or contrary public policy); Air Economy Corp. v. Aero-Flow Dynamics, 122 N.J. Super. 456, 457-58, 300 A.2d 856 (App.Div. 1973) (upholding forum selection clause based on absence of proof that clause was unfair, unreasonable or contrary to public policy); Fairfield Lease Corp. v. Liberty Temple Universal Church of Christ, Inc., 221 N.J. Super. 647, 535 A.2d 563 (Law Div. 1987) (denying summary judgment to lessor of vending machine suing on New York judgment, where jurisdiction over defendant allegedly rested on forum-selection clause in vending machine "boilerplate" lease agreement providing for waiver of personal service, and court determined that record presented factual issues concerning reasonableness and enforceability of forum-selection clause).

    64
    III
    65

    We are persuaded that enforcement of forum-selection clauses in contracts subject to the Franchise Act would substantially [193] undermine the protections that the Legislature intended to afford to all New Jersey franchisees. We hold that such clauses are presumptively invalid because they fundamentally conflict with the basic legislative objectives of protecting franchisees from the superior bargaining power of franchisors and providing swift and effective judicial relief against franchisors that violate the Act.

    66

    A significant difference exists between the function of a forum-selection clause in an arms-length commercial contract and its function in a typical contract subject to the Franchise Act. For example, the forum-selection clause in Bremen was proposed by a German company engaged in the towing of large vessels through international waters, and accepted by an American company engaged in world-wide oil-drilling operations at sea. The towing contract was the subject of competitive bidding and the parties apparently possessed relatively equal bargaining power. Moreover, a forum-selection clause was clearly relevant to the transaction, and may have served the interests of both parties.

    67

    In contrast, although some franchisees entering into contracts subject to the Franchise Act may be sophisticated and substantial economic entities, the Act's legislative history as well as our common experience suggests that the financial resources of most franchisees pale by comparison to the financial strength and profitability of their franchisors. Because franchisors usually do business in many markets through multiple dealers, franchisors tend to be larger and more sophisticated entities than franchisees.

    68

    At the contract stage, the franchisor typically submits a standard contract and, depending on the potential value and profitability of the franchise, a franchisee may elect not to test the negotiability of terms of the contract to avoid the risk of antagonizing the franchisor and losing the franchise. In that setting, a franchisor has little to lose by including a forum-selection clause in its standard agreement. Although such a clause directly benefits the franchisor by requiring suit to be filed in a geographically convenient state of choice where it can be defended by the franchisor's regular litigation counsel, the indirect benefit to franchisors [194] is to make litigation more costly and cumbersome for economically weaker franchisees that often lack the sophistication and resources to litigate effectively a long distance from home. Particularly in the context of a claim for wrongful termination, a forum-selection clause, if enforced, deprives the franchisee of the right to seek prompt injunctive relief from a New Jersey court, and requires a franchisee to seek that relief, at greater cost and inconvenience, in the designated forum. Thus, if unchallenged by the franchisee, a forum-selection clause can materially diminish the rights guaranteed by the Franchise Act because the franchisee must assert those rights in an unfamiliar and distant forum, with out-of-state counsel, and bear the added expense of litigation in the franchisor's designated forum.

    69

    One of the fundamental assumptions of the Franchise Act, verified by the testimony before the Assembly Judiciary Committee, is that the bargaining power of parties to franchise agreements is generally disproportionate. That assumption finds concrete expression in the provisions of the Franchise Act that prohibit franchisors from coercing franchisees to consent to various specified unreasonable conditions in the franchise agreement. See N.J.S.A. 56:10-7. Although exceptions undoubtedly will occur, we are convinced that forum-selection clauses in the vast majority of franchise agreements are not the subject of arms-length negotiation between parties of comparable bargaining power. In that connection we note that the Uniform Law Commissioners' Model Choice of Forum Act would not authorize enforcement of a forum-selection clause that was obtained by "misrepresentation, duress, the abuse of economic power, or other unconscionable means." Model Choice of Forum Act § 3(4) (1968). The Commissioners' comment addressing that provision of the Model Act states: "A significant factor to be considered in determining whether there was an `abuse of economic power or other unconscionable means' is whether the choice of forum agreement was contained in an adhesion, or, `take-it-or-leave-it,' contract." Id. § 3 cmt. on clause (4).

    70

    [195] Accordingly, we hold that forum-selection clauses in franchise agreements are presumptively invalid, and should not be enforced unless the franchisor can satisfy the burden of proving that such a clause was not imposed on the franchisee unfairly on the basis of its superior bargaining position. Evidence that the forum-selection clause was included as part of the standard franchise agreement, without more, is insufficient to overcome the presumption of invalidity. We anticipate that a franchisor could sustain its burden of proof by offering evidence of specific negotiations over the inclusion of the forum-selection clause and that it was included in exchange for specific concessions to the franchisee. Absent such proof, or other similarly persuasive proof demonstrating that the forum-selection clause was not imposed on the franchisee against its will, a trial court should conclude that the presumption against the enforceability of forum-selection clauses in franchise agreements subject to the Act has not been overcome.

    71

    The strongest single factor weighing against enforcement of forum-selection clauses in franchise agreements is the Legislature's avowed purpose, plainly expressed in the Franchise Act, to level the playing field for New Jersey franchisees and prevent their exploitation by franchisors with superior economic resources. The general enforcement of forum-selection clauses in franchise agreements would frustrate that legislative purpose, and substantially circumvent the public policy underlying the Franchise Act. As the Supreme Court acknowledged in The Bremen, supra: "A contractual choice-of-forum clause should be held unenforceable if enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by judicial decision." 407 U.S. at 15, 92 S.Ct. at 1916, 32 L.Ed.2d at 523.

    72

    As noted, the Franchise Act attempted to remedy the effects of unequal bargaining power by prohibiting the inclusion in the contract of provisions that would relieve franchisors of liability under the Act or would unfairly prejudice the franchisee in the operation of its franchise. See N.J.S.A. 56:10-7. The Legislature sought to prevent franchisors from acquiring the business of a [196] successful franchisee by preventing termination of franchises without good cause. See N.J.S.A. 56:10-5. And in response to concerns about effective enforcement of franchisees' rights expressed at the legislative hearing, the Legislature established a cause of action in the courts of this state for damages, injunctive relief, and counsel fees. N.J.S.A. 56:10-10.

    73

    That comprehensive legislative design for the protection of New Jersey franchisees would be severely undermined if forum-selection clauses in franchise agreements were to be generally enforced and ultimately were to become commonplace in franchise agreements. In such event, the inevitable result would be to limit severely the availability of New Jersey courts as a forum for the enforcement of franchisees' claims under the Act, a result that the Legislature assuredly would find intolerable.

    74

    Contrary to the Appellate Division's view, our concern is not focused only on the likelihood that the court in the designated forum would properly interpret and apply the Franchise Act, but rather on the denial of a franchisee's right to obtain injunctive and other relief from a New Jersey court. The added expense, inconvenience, and unfamiliarity of litigating claims under the Act in a distant forum could, for some marginally financed franchisees, result in the abandonment of meritorious claims that could have been successfully litigated in a New Jersey court. Although the Legislature expressly has prohibited the use of forum-selection clauses only in motor-vehicle franchise agreements, N.J.S.A. 56:10-7.3; supra at 185, 680 A.2d at 623, we entertain little doubt that the Legislature would prefer to extend that prohibition to other franchisees rather than to permit forum-selection clauses to thwart the vindication of franchisees' rights under the Act.

    75

    Parochialism plays no role in our decision. We have no doubt that courts in other states, both state and federal, would faithfully and fairly apply the Franchise Act to suits within their jurisdiction involving issues controlled by that statute. We recognize, however, that even if a California and a New Jersey court afforded identical relief under the Act to an aggrieved franchisee, [197] there may be a difference of substantial magnitude in the practical accessibility of that relief from the perspective of an unsophisticated and underfinanced New Jersey franchisee. Nor does our holding in any respect undermine the interests served by enforcing contracts freely negotiated by responsible parties with comparable bargaining power. We simply acknowledge that the vast majority of franchise contracts do not fit within that category. We are confident that a rule of law generally barring enforcement of forum-selection clauses in contracts subject to the Franchise Act best serves the public policies vindicated by the Act and faithfully adheres to the Legislature's objectives in adopting the Act. Although our decision establishes a new rule of law, settled principles dictate that it should apply retroactively to franchise agreements entered into prior to the filing of this opinion. See Frazier v. New Jersey Mfrs. Ins. Co., 142 N.J. 590, 606-07, 667 A.2d 670 (1995); Williams v. Bell Tel. Labs., Inc., 132 N.J. 109, 122-23, 623 A.2d 234 (1993).

    76
    IV
    77

    We reverse the judgment of the Appellate Division and remand the matter to the Law Division for further proceedings consistent with this opinion.

    78
    GARIBALDI, J., dissenting.
    79

    The New Jersey Franchise Practices Act, N.J.S.A. 56:10-1 to -15 (Franchise Act) prohibits forum-selection clauses only in certain instances between motor vehicle franchisors and franchisees. Notwithstanding the absence of statutory authorization, the majority concludes that "the legislative findings persuade us that the Legislature considered such clauses in general to be inimical to the rights afforded all franchisees under the Act." Ante at 185, 680 A.2d at 623. The majority therefore contrives a test allowing such clauses only when the franchisor can prove that the clause resulted from good-faith and specific negotiation; a test that, it concedes, is "a rule of law generally barring enforcement." Ante at [198] 197, 680 A.2d at 628. Because the plain language of the Franchise Act as well as the legislative history provide that forum-selection clauses should ordinarily be enforced, I dissent.

    80
    I.
    81

    As the majority explains, the modern common-law view is that forum-selection clauses are enforceable unless the clause is the result of "fraud, undue influence, or overweening bargaining power," is "unreasonable," or violates "a strong public policy." 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).

    82

    New Jersey courts have consistently applied that common-law rule to approve forum-selection clauses. See, e.g., Shelter Systems Group Corp. v. Lanni Builders, Inc., 263 N.J. Super. 373, 375, 622 A.2d 1345 (App.Div. 1993); Wilfred MacDonald, Inc. v. Cushman, Inc., 256 N.J. Super. 58, 606 A.2d 407 (App.Div.), certif. denied, 130 N.J. 17, 611 A.2d 655 (1992); Air Economy Corp. v. Aero-Flow Dynamics, Inc., 122 N.J. Super. 456, 457-58, 300 A.2d 856 (App. Div. 1973).

    83

    Courts have rejected the standard that the majority adopts, namely, that unless a party specifically negotiates over the inclusion of a forum-selection clause, it is unenforceable. In Wilfred MacDonald, supra, 256 N.J. Super. at 64, 606 A.2d 407, the Appellate Division enforced the forum selection despite MacDonald's contention that the agreement was a boilerplate document and not open to negotiations. Similarly, in Haskel v. FPR Registry, Inc., 862 F. Supp. 909 (E.D.N.Y. 1994), the plaintiff alleged that the forum-selection clause should not be enforced because the contract was merely a form contract that the defendant used in nearly all its contracts. The court held that "mere absence of negotiation over the actual terms of the contract and the forum-selection clause itself does not make a forum selection clause unenforceable." Id. at 916; see also Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 593, 111 S.Ct. 1522, 1527, 113 L.Ed.2d 622, 632 (1991) ("As an initial matter, we do not adopt the [199] Court of Appeals' determination that a nonnegotiated forum selection clause in a form ticket is never enforceable simply because it is not the subject of bargaining."); Karl Koch Erecting Co. v. New York Convention Ctr. Dev. Corp., 838 F.2d 656, 659 (2d Cir.1988) (holding forum-selection clause between sophisticated parties enforceable although "the parties engaged in little negotiations over its terms, as is the case with many public contracts entered into after competitive bidding"); Elite Parfums, Ltd. v. Rivera, 872 F. Supp. 1269, 1273 (S.D.N.Y. 1995) (rejecting argument that forum-selection clause is unenforceable if not specifically negotiated); Weiss v. Columbia Pictures Television, Inc., 801 F. Supp. 1276, 1279 (S.D.N.Y. 1992) (holding forum selection clause enforceable even if parties did not negotiate clause).

    84

    In the absence of an alternative rule in the Franchise Act, the common-law rule would apply to the forum-selection clause in the contract here, as well as to all other franchise contracts. Thus, the question is whether the Franchise Act provides a different rule.

    85
    II.
    86

    "The interpretation of any statute necessarily begins with consideration of its plain language." Lammers v. Board of Educ., 134 N.J. 264, 267, 633 A.2d 526 (1993). Accord State v. Sutton, 132 N.J. 471, 479, 625 A.2d 1132 (1993) (Stein, J.) ("As a general rule, we consider first the plain language of the statute."). An examination of the plain language of the Franchise Act establishes that in most cases forum-selection clauses are enforceable.

    87

    When the Franchise Act was enacted in 1971, L. 1971, c. 356, it contained two provisions relevant to forum-selection clause analysis. First, N.J.S.A. 56:10-7 lists several practices that are prohibited by the Franchise Act, including any requirement by the franchisor that the franchisee "assent to a release, assignment, novation, waiver or estoppel which would relieve any person from liability imposed by this act." N.J.S.A. 56:10-7(a). (emphasis added). Under that provision, the franchise contract may not [200] waive any substantive rights creating liability. However, that plain language does not prohibit contracts that provide for a different forum to litigate those same rights. See Alpert v. Alphagraphics Franchising, Inc., 731 F. Supp. 685, 688 (D.N.J. 1990) ("This provision does not render arbitration clauses unenforceable. An arbitration clause does not relieve a party from liability under the Franchise Act, it simply determines the forum in which relief may be sought.")

    88

    Other states have enacted franchise acts that contain broad non-waiver language. California, for example, prohibits "any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with any provision of this law or any rule or order hereunder." Cal. Corp.Code § 31512 (emphasis added). See also Haw. Rev. Stat. § 482E-6(2)(F); Ill. Stat.Ann. ch. 815, ¶ 705/41; Mich. Comp. Laws. Ann. § 445.1527(b); Minn. Stat. Ann. § 80C.21; N.Y. Gen. Bus. Law § 687(4); N.D. Cent. Code § 51-19-16(7); Okla. Stat. Ann. Title 71, § 826(C); Wash. Rev. Code Ann. § 19.100.220(2); Wisc. Stat. Ann. § 553.76. Courts in California and Wisconsin have refused to apply forum-selection clauses because of the broad nature of the non-waiver statutes in those states. See Wimsatt v. Beverly Hills Weight Loss Clinics Int'l, Inc., 32 Cal. App.4th 1511, 38 Cal. Rptr.2d 612, 613 (1995) ("Yet a critical feature of California's Franchise Investment Law is an antiwaiver statute voiding any provision of a franchise agreement which forces a franchisee to give up any of the protections afforded by the law."); Lulling v. Barnaby's Family Inns, Inc., 482 F. Supp. 318, 320 n. (E.D.Wis. 1980) ("The Wisconsin Franchise Investment Law prohibits any attempt by parties to contract out from under Wisconsin law, and thus renders void the clauses requiring the application of Illinois law."). But see Bakhsh v. JACRRC Enters., Inc., 895 P.2d 746 (Okla. Ct. App. 1995) (enforcing forum-selection clause despite broad non-waiver statute). Had the Legislature desired to bar or restrict forum-selection clauses, it could have chosen to use the same language used by those other states; its decision to use different [201] language is evidence of its intent to allow forum-selection clauses in accordance with common-law standards.

    89

    The other relevant provision that was contained in the original Franchise Act is N.J.S.A. 56:10-10, which provides that

    90
    Any franchisee may bring an action against its franchisor for violation of this act in the Superior Court of the State of New Jersey to recover damages sustained by reason of any violation of this act and, where appropriate, shall be entitled to injunctive relief.
    91

    This provision grants jurisdiction to the Superior Court, but says nothing about the effectiveness of forum-selection clauses whereby the parties agree to litigate elsewhere. Accord Wilfred MacDonald, supra, 256 N.J. Super. at 66-67, 606 A.2d 407. Similarly, 28 U.S.C.A. § 1333 provides that "[t]he district courts shall have original jurisdiction, exclusive of the courts of the States, of ... [a]ny civil case of admiralty or maritime jurisdiction." (emphasis added). Despite the even more directory language in that statute, the United States Supreme Court in Bremen, supra, approved of a forum-selection clause in a "suit in admiralty." 407 U.S. at 3, 92 S.Ct. at 1909, 32 L.Ed.2d at 517. Like 28 U.S.C.A. § 1333, N.J.S.A. 56:10-10 is simply a grant of jurisdiction that indicates nothing about the enforceability of forum-selection clauses.

    92

    Until 1989, those were the only relevant provisions to assist this Court in considering forum-selection clauses. However, in 1989, the Legislature amended the Franchise Act to address forum-selection clauses. L. 1989, c. 24. The Legislature declared that

    93
    [the] inequality of bargaining power enables motor vehicle franchisors to compel motor vehicle franchisees to execute franchises and related leases and agreements which contain terms and conditions that would not routinely be agreed to by the motor vehicle franchisees absent the compulsion and duress which arise out of the inequality of bargaining power.... As a result, motor vehicle franchisees have been denied the opportunity to have disputes . .. heard in an appropriate venue, convenient to both parties, by tribunals established by statute for the resolution of these disputes.
    94
    [N.J.S.A. 56:10-7.2(b), (c)].
    95

    To remedy the inequality of bargaining power, the Legislature decided that it would be a violation of the Franchise Act to "specif[y] the jurisdictions, venues, or tribunals in which disputes arising with respect to the franchise, lease or agreement shall or [202] shall not be submitted for resolution or otherwise prohibits a motor vehicle franchisee from bringing an action in a particular forum otherwise available under the law of this State." N.J.S.A. 56:10-7.3(a)(2) (emphasis added). However, if the franchisee freely agrees to the forum selection by choosing to accept a contract with a forum selection instead of an identical contract without a forum selection, then the clause is enforceable. N.J.S.A. 56:10-7.3(b).

    96

    The clear meaning of N.J.S.A. 56:10-7.3(a)(2) is that the Franchise Act only modifies the common law to prohibit certain forum-selection clauses in motor vehicle franchise agreements, but does not change the common law to prohibit or restrict those clauses in other franchise agreements. Indeed, the Legislature itself has confirmed that understanding. In 1994, Assembly Bill No. 1165 was introduced to extend the prohibition on forum-selection clauses to all franchises. That legislation provided that "it shall be a violation of this act for any franchisor ... to require a franchisee at the time of entering into a franchise agreement to assent to any provision which would require that arbitration or litigation be conducted outside this State." 1994 New Jersey Assembly Bill No. 1165, 206th Legislature, First Regular Session (emphasis added). That legislation has not passed, but its introduction clearly indicates that the statute does not currently forbid forum-selection clauses. See Croswell v. Shenouda, 275 N.J. Super. 614, 621-22, 646 A.2d 1140 (Ch.Div. 1994) (holding that introduction of bill to amend statute to cover certain category is "strong evidence" that the statute did not currently cover that category.); see also Borough of Matawan v. Monmouth County Bd. of Taxation, 51 N.J. 291, 299, 240 A.2d 8 (1968) ("An amendment ... may be resorted to for discovery of legislative intent in the enactment amended.")

    97

    The majority contends that, while the Legislature has only banned forum-selection clauses in motor vehicle franchises, it would find "intolerable" the routine use of forum-selection clauses in other franchise situations. Ante at 196, 680 A.2d at 628. That [203] conclusion is clearly wrong in view of the Legislature's apparent tolerance of forum-selection clauses and continued rejection of legislation aimed at banning such clauses. The Court should not short-circuit the democratic process by deciding to create a new statutory hurdle that the Legislature has refused to create on its own.

    98
    III.
    99

    As the United States Supreme Court has noted, judicial antipathy to forum-selection clauses is derived from "resistance to any attempt to reduce the power and business of a particular court.... It reflects something of a provincial attitude regarding the fairness of other tribunals." Bremen, supra, 407 U.S. at 12, 92 S.Ct. at 1914, 32 L.Ed.2d at 521. E.g., Wimsatt, supra, 38 Cal. Rptr.2d at 617 (acknowledging that its opinion "sound[s] `provincial'"). I do not share that provincial attitude and am willing to trust our sister states to properly apply the law.

    100

    The majority denies that its motivation in forbidding forum-selection clauses is based upon a provincial attitude that other courts are inferior and cannot be trusted. Instead, the majority writes that its concern is that "the added expense, inconvenience, and unfamiliarity of litigating claims under the Act in a distant forum could, for some marginally financed franchisees, result in the abandonment of meritorious claims that could have been successfully litigated in a New Jersey court." Ante at 196, 680 A.2d at 628.

    101

    However, that argument is unpersuasive. Entre, the franchisee in the current appeal, has hired a prominent New Jersey law firm to handle its appeal, and I cannot see why Entre could not hire a prominent California law firm to handle its case if the forum-selection clause was enforced. In either venue, franchisees will usually hire an attorney who understands and is familiar with the rules of that venue. See infra at 207, 680 A.2d at 633 (discussing claims of inconvenience).

    102

    Although some marginal franchises might not be able to enforce their rights in a foreign court due to the incremental added expense, that does not justify the majority's wholesale creation of [204] a new pseudo-statutory right. In any category of forum-selection clauses, some marginally financed plaintiffs may be forced to abandon their rights if forced to sue elsewhere. However, we enforce forum-selection clauses because the parties have agreed to those clauses in a freely-negotiated contract.

    103

    A franchise agreement is, of course, a contract. As this Court has recognized, that contract "has significant advantages for both parties." Westfield Centre Service, Inc. v. Cities Service Oil Co., 86 N.J. 453, 461, 432 A.2d 48 (1981). Parties should be allowed to structure their own contracts, including forum-selection clauses. Courts should not rewrite contracts between private parties. If a contract did not benefit both parties, then it would not be signed. Under the common-law, the parties' contract is ordinarily respected. While the Franchise Act does partially limit the parties' freedom to contract, the Court should hesitate before extending that limitation beyond the contours of the Act and further rewriting private contracts. Cf. Oswin v. Shaw, 129 N.J. 290, 310-11, 609 A.2d 415 (1992) (stating that statutes in derogation of common law should be interpreted narrowly to make "the least rather than the most major change in the common law.") (citation omitted).

    104

    Defendant entered into contracts with several other resellers; some of those contracts did not contain a forum-selection clause, evidently because those resellers negotiated a change with Sun, presumably in exchange for some further concession. Entre, an experienced, multimillion-dollar computer-reseller that had dealt with many other large computer companies, presumably was free to negotiate a change in its two-page contract, but decided that it was willing to accept the forum-selection clause. "[I]t would be unrealistic to think that the parties did not conduct their negotiations, including fixing the monetary terms, with the consequences of the forum clause figuring prominently in their calculations." Bremen, supra, 407 U.S. at 14, 92 S.Ct. at 1915, 32 L.Ed.2d at 523. Absent a legislative decision, the Court should not allow Entre to [205] modify its contract without providing consideration to defendant in exchange.

    105
    IV.
    106

    Aside from the complete lack of statutory authorization for the majority's new test, the test represents poor public policy. I am unwilling to subject the enforceability of forum-selection clauses to a case-by-case evaluation of whether the clause was fairly negotiated or negotiable. Each time that the enforceability of a forum-selection clause is challenged, there will be a lawsuit in which the parties will be put to the difficult task of seeking to recall negotiations of a contract that they agreed to many years before trial.

    107

    This case presents an example of the difficulties and the time-consuming and expensive procedure that will result from the Court's holding. Plaintiff has not claimed that there was fraud that would justify a refusal to enforce the choice of forum clause. Nor has plaintiff asserted lack of notice as a defense to the enforcement of the clause. It has not even alleged that Sun refused to negotiate over the clause but merely that "the parties did not discuss the provision and Entre's principals did not understand it to be negotiable."

    108

    In contrast, the standard enunciated in Bremen, supra, 407 U.S. at 10-15, 92 S.Ct. at 1913-16, 32 L.Ed.2d at 520-23, and Wilfred MacDonald, supra, 256 N.J. Super. at 63-64, 606 A.2d 407, is much easier and less expensive to apply. In the current appeal, the trial court held the forum-selection clause to be enforceable, citing Wilfred MacDonald, supra, 256 N.J. Super. at 64, 606 A.2d 407, where the Appellate Division held the clause to be enforceable even though MacDonald claimed that the Master Agreement was a "boilerplate" document that had not been open to negotiations and was a contract of adhesion. "It is moreover, further significant ... that this was not an agreement entered into by an unaware, unsuspecting dealer. Rather, MacDonald's president [206] read the forum clause and understood it, yet neither discussed it not questioned it at that time." Ibid.

    109

    The trial court did not need to conduct a factual hearing to recreate prior negotiations; it simply found that "plaintiff had notice of the forum selection clause and could have objected, but did not, did not disagree with it, nor did he seek modification of the provisions." The court further observed that the contract was only three pages long and that "the provisions of forum selection clause are not hidden, not confusing and are signed by Entre's president." I agree with the standard applied by the trial court and the Appellate Division and would affirm.

    110

    Every party seeking to have a court declare a forum-selection clause unenforceable will now allege that the clause was not specifically negotiated. The majority will now force Sun, and all other franchisors affected by this retroactive decision, to prove that they did negotiate the specific provision's inclusion in a negotiation that happened many years ago when the parties never imagined that specific negotiation was required. The majority's test not only makes every trial more expensive and time-consuming, but also fails to recognize the commercial reality that not every clause in a freely-negotiated contract is specifically addressed in negotiations.

    111
    V.
    112

    In the absence of any legislative forum-selection rule, I would follow the general approach of Bremen and uphold forum-selection clauses absent evidence of (1) fraud or overweening bargaining power, (2) a violation of strong public policy, or (3) serious inconvenience for the trial. Wilfred MacDonald, supra, 256 N.J. Super. at 63-64, 606 A.2d 407 (citing Bremen, supra). Plaintiff asserts that the forum-selection clause was the result of overweening bargaining power, violates a strong public policy as embodied in the Franchise Act, and is also seriously inconvenient. None of these claims is persuasive.

    113

    [207] As the trial court found, "Entre has been in business for a number of years, since 1983, and has had experience in negotiating resale contracts with a number of suppliers such as IBM, Compaq and Hewlett Packard. Plaintiff ... was a subsidiary of Intelligent Electronics, a billion-dollar computer business." It is, therefore, difficult to see how the contract could be the result of inequalities in bargaining power, especially since other resellers were able to negotiate changes to the forum-selection clause.

    114

    Since the Legislature specifically has decided to allow forum-selection clauses, a judicial declaration that forum-selection clauses violate public policy would be a usurpation of the Legislature's role. It would be highly inappropriate for the Court to announce that a contractual term violates public policy, as derived from prior legislative enactments, when the Legislature has specifically decided not to reject that contractual term.

    115

    Finally, plaintiff's claim of inconvenience is similarly unpersuasive. "[W]hen it can be said with reasonable assurance that at the time they entered the contract, the parties to a freely negotiated private ... agreement contemplated the claimed inconvenience, it is difficult to see why any such claim of inconvenience should be heard to render the forum clause unenforceable." Bremen, supra, 407 U.S. at 16, 92 S.Ct. at 1916, 32 L.Ed.2d at 524. Defendant is headquartered in California while plaintiff was located in New Jersey. Obviously, either jurisdiction would be somewhat inconvenient for one of the parties; as part of the contract, the parties contemplated that plaintiff would face that additional inconvenience. That inconvenience, however, is insufficient to void the forum-selection clause. Plaintiff has not alleged that the inconvenience is such as to leave it, "for all practical purposes... deprived of [its] day in court." Bremen, supra, 407 U.S. at 18, 92 S.Ct. at 1917, 32 L.Ed.2d at 525.

    116

    I would therefore uphold forum-selection clauses in franchise agreements unless one of the Bremen exceptions applied. As [208] none of the exceptions apply to this case, I would dismiss plaintiff's suit and require plaintiff to pursue its action in California.

    117

    Justice Pollock joins in this opinion.

    118

    For reversal and remandment — Justices HANDLER, O'HERN, STEIN and COLEMAN — 4.

    119

    For affirmance — Justices POLLOCK and GARIBALDI — 2.

  • 9 Pro-Football v. Tupa

    1
    51 A.3d 544 (2012)
    2
    428 Md. 198
    3
    PRO-FOOTBALL, INC., t/a The Washington Redskins, et al.,
    v.
    Thomas J. TUPA, Jr.
    4
    No. 29, September Term, 2011.
    5

    Court of Appeals of Maryland.

    6
    August 22, 2012.
    7

    David O. Godwin, Jr. (Ashlee K. Smith of Godwin, Erlandson, MacLaughlin, Vernon [545] and Daney, LLC, Ellicott City, MD), on brief, for Petitionors.

    8

    Benjamin T. Boscolo (Gerald Herz and Kevin H. Stillman, Chasen Boscolo Injury Lawyers, Greenbelt, MD), on brief, for Respondent.

    9

    J. Porter Wiseman, Esquire, Washington, DC, Jeffrey L. Kessler, Esquire, Adam J. Kaiser, Esquire, Jeffrey H. Newhouse, New York, New York, Amici Curiae brief of the National Football League Players Association, National Basketball Players Association, Women's National Basketball Players Association, Major League Baseball Players Association, National Hockey League Players Association, Professional Hockey Players Association, and Major League Soccer Players Union.

    10

    Argued before BELL, C.J., HARRELL, BATTAGLIA, GREENE, ADKINS, BARBERA, JOHN C. ELDRIDGE, (Retired, Specially Assigned), JJ.

    11
    ELDRIDGE, J.
    12

    In this case, involving a claim by a former professional football player for benefits under the Maryland Workers' Compensation Act,[1] based upon an injury during pre-game warm-up at the employer's stadium in Prince George's County, Maryland, the employer and its insurer presents two issues. The first is whether the Maryland Workers' Compensation Commission should have exercised jurisdiction over the claim when the employment agreement contained a forum selection clause providing, inter alia, that claims for workers' compensation benefits should be governed by Virginia law and that the Virginia Workers' Compensation Commission should have exclusive jurisdiction to resolve such claims. The second issue presented by the employer and insurer is whether injuries occurring while playing and practicing professional football are "accidental injuries" and thus compensable under the Maryland Workers' Compensation Act.

    13
    I.
    14

    The facts underlying the two issues raised in the Court are not disputed by the parties. In March 2004, the respondent Thomas Tupa and the petitioner Pro-Football, Inc., trading as (t/a) the "Washington Redskins," entered into a four-year National Football League (NFL) employment contract for Tupa to play football for Pro-Football, Inc. The position played by Mr. Tupa was "punter." Pro-Football, Inc., t/a the Washington Redskins, is incorporated in Maryland and owns its stadium, named "FedEx Field," which is located in Landover, Prince George's County, Maryland. All of Pro-Football, Inc.'s "home" football games are played at FedEx Field in Maryland, and the players' practice or "warm-up" just before the games also occurs at FedEx Field. Pro-Football, Inc., has its headquarters and practice facility in Virginia, and most practices are at the Virginia facility. Such practices, of course, are for the purpose of getting the players ready to play well at the football games.

    15

    The employment contract between Tupa and Pro-Football, Inc., contained, in an addendum, a forum selection clause which stated as follows:

    16
    "JURISDICTION. The parties hereto agree that this Player Contract shall for all purposes be deemed to have been negotiated and executed in Virginia; that should any dispute, claim or cause of action (collectively `dispute') arise concerning [546] rights or liabilities arising from the relationship between the Player and the Club, the parties hereto agree that the law governing such dispute shall be the law of the Commonwealth of Virginia, and that the exclusive jurisdiction for resolving such dispute in the case of Workers' Compensation is the Virginia Workers' Compensation Commission, and in the case of Workers' Compensation claims the Virginia Workers' Compensation Act shall govern."
    17

    In January 2005, Tupa complained of mild lower back pain, and he was examined by Dr. Thomas Schuler of the Virginia Spine Institute. At the time, Dr. Schuler determined that Tupa suffered from "significant underlying spondylosis and stenosis," a condition which the doctor did not believe would effect Tupa's ability to play during the 2005-2006 football season, particularly because Tupa had successfully completed the 2004-2005 season. The doctor concluded that Tupa "should be able to play one or two more seasons" before the condition greatly impacted him.

    18

    On August 19, 2005, at FedEx Field, during his pre-game warm-up for a pre-season game, Tupa landed awkwardly after a punt and felt a sharp pain in his lower back. He described the pain as a "jarring" sensation, sought immediate medical attention, and received medication.

    19

    On August 22, two days later, Tupa again visited Dr. Schuler, who noted that Tupa was reporting "95% back pain." An MRI disclosed "significant progression of the disc degeneration ... [t]hat clearly progressed significantly from a year ago with much more collapse." When Tupa saw Dr. Schuler again on August 23, Dr. Schuler concluded that Tupa had significant discogenic pain and could possibly be a good candidate for surgery. The doctor also determined that Tupa was not able to continue playing professional football until he was able to get his condition and the related pain "calmed down." The doctor recommended intradiscal steroid injection "as a last ditch effort to get [Tupa] back to a functional status."

    20

    When Tupa next saw the doctor on September 2, 2005, Tupa reported that the pain had not subsided and that he continued to have numbness and tingling sensations in his feet. Dr. Schuler recommended giving Tupa's condition more time to heal naturally before proceeding with an operative solution. Dr. Schuler also noted that "the patient is still disabled from participating in the NFL, and he is still working aggressively in his rehabilitation to get back to a functional pain-free status."

    21

    Despite a treatment regime which included medication and physical therapy, Tupa's condition did not improve. In January 2006, during an end of season evaluation, Dr. Schuler noted that Tupa suffered from "a marked disc collapse ... of approximately 90%." Dr. Schuler concluded that Tupa's condition would not improve further without major spinal surgery, and that, even if Tupa did have surgery, it would be unlikely that he would ever be able to play professional football again. After discussing his options, along with the related risks, with Dr. Schuler, Tupa decided to forego surgery. Dr. Schuler noted that Tupa "under[stands] the risks of surgery versus no surgery, and participation and non-participation in the NFL. [Tupa] agrees ... he is not a candidate for the NFL at this time."

    22

    On May 15, 2006, Tupa filed a claim for benefits because of his back injury with the Virginia Workers' Compensation Commission. He subsequently withdrew this claim, and the Virginia Commission dismissed the matter "without prejudice."

    23

    On October 12, 2006, Tupa sought an independent medical evaluation from Dr. [547] Michael Franchetti. Dr. Franchetti concluded that the back injury sustained by Tupa on August 19, 2005, was "within a reasonable degree of medical certainty ... a career-ending injury for" Tupa. Another doctor, Dr. Charles Jackson, evaluated Tupa on December 11, 2006, and he likewise concluded that Tupa's professional football career would be shortened, but he disagreed with the other doctors' assessment that the back injury was caused by Tupa's professional football activities. Rather, he concluded that the August 19th injury "manifest[ed] an ongoing degenerative spine condition which ... was aggravated by years of [punting]." He determined that "[t]he kicking incident did not cause or precipitate damage to [or] materially change the degenerative condition which" caused the end of Tupa's career.

    24

    At the present time, Tupa has not sought surgical intervention to address his back pain. He no longer plays professional football, but is currently employed in a sedentary position, which he has held since February 2006. Tupa was paid by Pro-Football, Inc., pursuant to his contract, for the remainder of the 2005-2006 season. Although Tupa still suffers from pain and takes medication to address it, he acknowledged in the circuit court trial that he believes that he will eventually need back surgery, although he is delaying the procedure for as long as possible.

    25

    Tupa filed a claim for workers' compensation benefits with the Maryland Workers' Compensation Commission on March 30, 2007. The petitioners, Tupa's employer and its insurer, challenged Tupa's claim on the issues of "jurisdiction," whether the injury was an accidental injury, and whether his disability was casually related to the injury in August 2005. On March 3, 2008, the Maryland Workers' Compensation Commission held a hearing on Tupa's contested claim. The Commission decided, on March 14, 2008, that the Maryland Commission could properly exercise jurisdiction over Tupa's claim, that Tupa had sustained an accidental injury arising "out of and in the course of [his] employment," and that Tupa's disability was causally related to his accidental injury. Tupa was awarded temporary partial disability benefits and the petitioners were ordered to pay the related medical expenses.

    26

    Pro-Football, Inc., and its insurer filed an action for judicial review in the Circuit Court for Prince George's County and requested a trial by jury. Although the parties agreed that there were no factual disputes regarding the issue of jurisdiction, a two-day jury trial was held, in which the jury decided that Tupa had sustained an accidental injury in August 2005 and that his disability was causally connected to that accidental injury. The Circuit Court determined, as a matter of law, that the Maryland Workers' Compensation Commission was entitled to exercise jurisdiction over Tupa's workers' compensation claim.

    27

    Tupa's employer and its insurer noted an appeal to the Court of Special Appeals, which affirmed in a reported opinion, Pro-Football v. Tupa, 197 Md.App. 463, 14 A.3d 678 (2011). The intermediate appellate court agreed with the Commission and Circuit Court that the Commission properly exercised jurisdiction over Tupa's workers' compensation claim, that Tupa was a covered employee, that Tupa incurred an accidental injury in August 2005, and that there was ample evidence to sustain the jury's finding that Tupa's disability was caused by the August 2005 injury.

    28

    Tupa's employer and insurer petitioned this Court for a writ of certiorari which was granted. Pro-Football v. Tupa, 420 Md. 81, 21 A.3d 1063 (2011). The petitioners raise in this Court the following two [548] issues (Petitioners' brief in this Court at 2):

    29
    "Questions Presented
    30
    "I. Whether Maryland has jurisdiction over the Claimant's workers' compensation claim when the Claimant signed an employment contract agreeing to bring all workers' compensation claims in the Commonwealth of Virginia.
    31
    "II. Whether the Claimant sustained an accidental injury arising out of and in the course of his employment on August 19, 2005."[2]
    32
    II.
    33

    The petitioners' principal argument is that the Maryland Workers' Compensation Commission had no jurisdiction over Tupa's claim and that the Maryland Workers' Compensation Act had no application to the claim because "the Claimant was contractually bound to bring his claim for workers' compensation benefits in the Commonwealth of Virginia." (Petitioners' brief at 4). The petitioners rely upon opinions of this Court indicating that "`forum-selection clauses are presumptively enforceable.'" (Ibid., quoting Secure Financial v. Popular Leasing, 391 Md. 274, 282, 892 A.2d 571, 576 (2006)).

    34

    None of this Court's opinions relied upon by the petitioners, however, involved a workers' compensation claim. More specifically, none of these opinions involved a statute which voided a provision in an employment contract waiving the rights of a covered employee under the Maryland Workers' Compensation Act.

    35

    The Maryland Workers' Compensation Act, in § 9-104(a) of the Labor and Employment Article of the Code, provides as follows:

    36
    "§ 9-104. Agreements.
    37
    (a) Exemption from duty; waiver of right. — (1) Except as otherwise provided in this title, a covered employee or an employer of a covered employee may not by agreement, rule or regulation:
    38
    (i) exempt the covered employee or the employer from a duty of the covered employee or the employer under this title; or
    39
    (ii) waive a right of the covered employee or the employer under this title.
    40
    [549] (2) An agreement, rule, or regulation that violates paragraph (1) of this subsection is void to the extent of the violation."
    41

    Thus, an agreement exempting "the employer from a duty of the ... employer under the" Act is "void." (§ 9-104(a)(i)). Furthermore, an agreement waiving "a right of the covered employee ... under the" Act is void (§ 9-104(a)(ii)). Although § 9-104 contains a few special provisions, such as for railroad employees, none of them are applicable to the present case.

    42

    Section 9-104(a), in plain, unambiguous language, precludes an agreement which exempts an employer from the duty of paying workers' compensation benefits which are otherwise due under the Maryland statute. The section also precludes an agreement which waives the right of an employee to receive workers' compensation benefits which are otherwise due under the Maryland statute. A holding that forum selection clauses constitute an exception to § 9-104 would contravene basic principles concerning the interpretation of statutes. The petitioners would have us construe § 9-104 as if there was in the statute an exception for forum selection clauses. This we cannot do. As stated in numerous cases, a "`plainly worded statute must be construed without forced or subtle interpretations designed to ... limit the scope of its operation.'" Harris v. Board of Education, 375 Md. 21, 31, 825 A.2d 365, 371 (2003), quoting Caffrey v. Dept. of Liquor Control for Montgomery County, 370 Md. 272, 292, 805 A.2d 268, 279 (2002). Inserting into § 9-104 an exception for forum selection clauses "`would be to re-draft the statute under the guise of construction,'" Montrose Christian School v. Walsh, 363 Md. 565, 595, 770 A.2d 111, 128-129 (2001), quoting Davis v. State, 294 Md. 370, 378, 451 A.2d 107, 111 (1982).

    43

    Moreover, the applicable authorities support our conclusion that the forum selection clause in the employment contract was ineffective to divest the Maryland Workers' Compensation Commission of the ability to exercise jurisdiction. In Kacur v. Employers Mut. Cas. Co., 253 Md. 500, 509, 254 A.2d 156, 161 (1969), this Court held that a forum selection clause in the employment contract was ineffective in a workers' compensation case, and the Court quoted with approval Professor Larson as follows (3 Larson, Workmen's Compensation Law, § 87.71 at 395 (1968 Supp.)):

    44
    "`Express agreement between employer and employee that the statute of a named state shall apply is ineffective either to enlarge the applicability of that state's statute or to diminish the applicability of the statutes of other states. Whatever the rule may be as to questions involving commercial paper, interest, usury and the like, the rule in workmen's compensation is dictated by the overriding consideration that compensation is not a private matter to be arranged between two parties; the public has a profound interest in the matter which cannot be altered by any individual agreements. This is most obvious when such an agreement purports to destroy jurisdiction where it otherwise exists; practically every statute has emphatic prohibitions against cutting down rights or benefits by contract. The only exception occurs under several statutes which explicitly permit the parties to agree that the local statute shall not apply to out-of-state injuries.'"
    45

    In McElroy v. Pohopek, 375 Md. 574, 578 n. 2, 594-595, 826 A.2d 474, 476 n. 2, 486 (2003), this Court held that Maryland Workers' Compensation law applied to an employee's claim despite a forum selection clause in the employment contract stating that the employee's workers' compensation claims "shall be exclusively governed by [550] the [workers'] compensation laws of the State of Alabama." See also Alaska Packers Assn. v. Comm'n, 294 U.S. 532, 55 S.Ct. 518, 79 L.Ed. 1044 (1935) (The employment contact, entered in California for work in Alaska, provided that Alaska Workers' Compensation law should apply, but the Supreme Court of California, upholding an award of benefits under California workers' compensation law, held that the forum selection clause was invalid. The Supreme Court of the Untied States affirmed, holding that the application of California workers' compensation law violated neither the Full Faith and Credit Clause nor the Due Process Clause of the Fourteenth Amendment).

    46

    As pointed out by the Court of Special Appeals in the present case, numerous cases in other states have also refused to give effect to forum selection clauses in workers' compensation cases. See Pro-Football v. Tupa, supra, 197 Md.App. at 477, 14 A.3d at 686, collecting some of the cases; Swenson v. Nickaboine, 793 N.W.2d 738, 743 (Minn.2011); Gotkin v. Weinberg, 2 N.J. 305, 308, 66 A.2d 438, 439 (1949); McIlvaine Trucking, Inc. v. Workers' Compensation Appeal Board, 570 Pa. 662, 673, 810 A.2d 1280, 1286 (2002); Jenkins v. Sal Chem. Co., 167 W.Va. 616, 280 S.E.2d 243 (1981).

    47
    III.
    48

    The petitioners' second argument is that Tupa's injury was not an "accidental personal injury" within the meaning of the Maryland Workers' Compensation Act, § 9-101(b)(1) of the Labor and Employment Article.[3] Petitioners' rely upon Rowe v. Baltimore Colts, 53 Md.App. 526, 454 A.2d 872 (1983).

    49

    In Rowe, a professional football player was injured while practicing in a "scrimmage," and sought workers' compensation benefits. The Court of Special Appeals held in Rowe that the player had not suffered an "accidental injury" within the meaning of the definition presently codified as § 9-101(b)(1). The Rowe opinion, 53 Md.App. at 535, 454 A.2d at 877, stated that "accidental injury" within the meaning of the Workers' Compensation Act included injury "produced by some unusual and extraordinary condition or happening in the employment." The opinion continued (53 Md.App. at 535-536, 454 A.2d at 878, emphasis added):

    50
    "The key to the application of the term `accidental injury,' is whether the occurrence was an unusual or unexpected happening in the course of employment. Thus, if a stenographer was suddenly subjected to another employee's striking him or her in the elbow with great force, the resulting injury would at a minimum be unusual, unexpected, and surprising. It would, in any event, not be a commonplace happening. Consequently, the stenographer would properly be said to have incurred an accidental injury within the meaning of the Workmen's Compensation Law.
    51
    "On the other hand, a professional football player is engaged in an occupation [551] in which physical contact with others is not only expected, commonplace, and usual, but is a requirement."
    52

    The Court of Special Appeals in the present case held that Rowe was contrary to current statutory and case law, and specifically that it was inconsistent with this Court's opinion in Harris v. Board of Education, supra, 375 Md. 21, 825 A.2d 365. The Court of Special Appeals overruled Rowe, and we fully agree with that Court's action.

    53

    This Court in Harris v. Board of Education explicitly rejected the principle used in Rowe that an "accidental injury" must arise from an unusual or unexpected occurrence. Prior to Harris, several appellate opinions had held that, in order for an injury occurring during employment to be "accidental," the injury must result from some "unusual strain, exertion or condition in employment." Sargent v. Board of Education, Baltimore County, 49 Md.App. 577, 580-581, 433 A.2d 1209, 1211 (1981). See, e.g., Stancliff v. H. B. Davis Co., 208 Md. 191, 198, 117 A.2d 577, 581 (1955); Geipe, Inc. v. Collett, 172 Md. 165, 190 A. 836 (1937); Schemmel v. Gatch & Sons, 164 Md. 671, 166 A. 39 (1933); State Roads Commission v. Reynolds, 164 Md. 539, 165 A. 475 (1933).

    54

    In Harris, a cafeteria worker was engaged in her usual work day activity of laundering the linens at the end of the day. She dragged a forty-five pound box of laundry soap outside, and when she subsequently bent down, her back "cracked." She was in excruciating pain, and she immediately sought medical attention. During judicial review of the Workers' Compensation Commission's order granting Harris compensation, the case went to the jury, which determined that the Harris's injury was not "accidental" because it did not result from an unusual work activity.

    55

    This Court in Harris reviewed previous cases requiring that an accidental personal injury arise out of "unusual activity" in order to qualify for workers' compensation and determined that

    56
    "[t]he line of cases in this Court requiring that an accidental personal injury arise out of `unusual activity' for there to be coverage obviously adds a requirement not contained in the statutory language." 375 Md. at 30, 825 A.2d at 371.
    57

    Reviewing the statutory language and earlier Maryland Workers' Compensation cases, including Victory Sparkler Co. v. Francks, 147 Md. 368, 128 A. 635 (1925), this Court held that "what must be unexpected, unintended, or unusual is the resulting injury and not the activity out of which the injury arises." Harris, 375 Md. at 36, 825 A.2d at 374. The Harris Court explained (375 Md. at 33, 825 A.2d at 372):

    58
    "`The statutory definition of injury, which was made compensable without reference to neglect of employer or fault of worker, except when the injury was self-inflicted or the sole result of the intoxication of the employee, and the abolition of the fellow-servant rule, of defenses of contributory negligence and assumption of risk, and the substitution of a regulated and certain compensation for damages, contribute convincingly to the conclusion that the legislative intent was to include within the act not only the newly created class of compensable injuries, but also every injury which could be suffered by any worker in the course and arising out of the employment, for which there was then a subsisting right of action.... With this conception of the purpose and effect of the act, the Legislature was consistent in making the prescribed liability of the employer and remedy of the employee exclusive with respect to all injuries [552] sustained in the hazardous employment,'" quoting Victory Sparkler, 147 Md. at 376-377, 128 A. at 637-638.
    59

    In 2 Larson's Workers' Compensation § 22.04 (2007), the treatise refers to the "conspicuously wrong" idea that football injuries should not be considered accidental because "football is a dangerous sport fraught with expectation of injury." Larson points out that, in "almost all states in which the National Football League operates," injuries occurring during practice or the game are "routinely treated as compensable." He comments that denying workers' compensation benefits to professional football players effectively denies a class of covered employees compensation for doing precisely the job they were hired to do. Larson also draws attention to the inherent contradictions in this approach, stating:

    60
    "And why is doing the job itself not covered? Because everyone knows it is fraught with danger. As well, then, tell the coal miner — whose occupation is far more dangerous — that he or she is covered, so long as the miner does not go down into the mine.... The books are full of cases in which compensation is denied a covered worker because he or she was not doing the job at the time. But never before because he or she was doing the job....To say that football injuries are not accidental because of the probability of injury is, if one looks more closely, no more than to say that any activity with a high risk factor should be ruled noncompensable."
    61

    Larson criticizes "the kind of loose thinking" that characterizes professional sports injuries as not accidental (ibid.):

    62
    "As a little reflection will show, this is tantamount to saying that the player in effect intended to get himself injured. This is, of course, preposterous. True, some of these sports are rough. But everything about them is elaborately designed to prevent actual disabling physical injury. All the forbidden practices — clipping, piling-on, face-masking, spearing, unnecessary roughness, and a host of others — are precisely intended to do everything possible to forestall injury.... It is, of course, not particularly surprising if, as a result of some such mish-mash of erroneous impressions both about professional sports and about workers' compensation the untrained person-on-the-street (or in the jury) just somehow feels the professional athlete should not get compensation. But it is unworthy of a legally trained mind to substitute this kind of superficial reaction for an accurate analysis that simply accords professional athletes the same protection under compensation law as is enjoyed by everyone else who works for a living."
    63

    Tupa's injury occurred "out of and in the course of [his] employment." He was warming up for a game when he landed awkwardly and thereafter sought immediate medical treatment. Ample evidence was presented to show that Tupa suffered a compensable accidental injury during the course of his employment.[4]

    64

    [553] RESPONDENT'S MOTION TO STRIKE GRANTED. JUDGMENT OF THE COURT OF SPECIAL APPEALS AFFIRMED. PETITIONERS TO PAY COSTS IN THE COURT OF SPECIAL APPEALS AND IN THIS COURT.

    65

    [1] Maryland Code (1991, 2008 Repl.Vol.), § 9-101 et seq. of the Labor and Employment Article.

    66

    [2] As pointed out in the text, the Court of Special Appeals dealt with four issues, namely (1) whether the Maryland Commission should have exercised jurisdiction in light of the forum selection clause in the employment contract, (2) whether Tupa was a "covered employee" under the Maryland statute, (3) whether the injury in August 2005 was an "accidental injury" within the meaning of the Maryland statute, and (4) whether Tupa's disability was caused by the August 2005 injury. The petition for a writ of certiorari raised the first three of these issues but did not include the fourth. In their briefs and oral argument before this Court, however, the employer and insurer raised only two issues, i.e.,whether the Maryland Commission should have exercised jurisdiction in light of the forum selection clause and whether Tupa sustained an accidental injury within the meaning of the Maryland Workers' Compensation Act.

    67

    The "covered employee" issue was not mentioned in petitioners' opening brief, reply brief, or oral argument. Consequently, the issue is not before us. See, e.g., Maryland Rule 8-504(a)(3); CWA v. Public Service Commission, 424 Md. 418, 423 notes 2 and 3, 36 A.3d 449, 451-452 notes 2 and 3 (2012) ("Appellant did not brief this issue, and we do not consider it"); Chesek v. Jones, 406 Md. 446, 455-456 n. 7, 959 A.2d 795, 800 n. 7 (2008) ("[W]e will not address question 4 ... where [the] parties failed to brief the issue and failed to address it at oral argument"); DiPino v. Davis, 354 Md. 18, 56, 729 A.2d 354, 374 (1999) ("[I]f a point germane to the appeal is not adequately raised in a party's brief, the court may, and ordinarily should, decline to address it").

    68

    [3]Section 9-101(b) provides as follows:

    69

    "(b) Accidental personal injury. — `Accidental personal injury' means:

    70

    (1) an accidental injury that arises out of and in the course of employment;

    71

    (2) an injury caused by a willful or negligent act of a third person directed against a covered employee in the course of employment of the covered employee; or

    72

    (3) a disease or infection that naturally results from an accidental injury that arises out of an in the course of the employment, including:

    73

    (i) an occupational disease; and

    74

    (ii) frostbite or sunstroke caused by a weather condition."

    75

    [4]In the "Statement of Facts" portion of their opening brief in this Court, the petitioners include the following footnote:

    76

    "Petitioners would note that the Claimant's contract is governed by the Collective Bargaining Agreement (`CBA') entered into by the NFL players' union (NFLPA) and the NFL owners (NFLMC).... Accordingly, federal law pre-empts Maryland law with regard to interpretation of the CBA, a player's compliance therewith, and the propriety of Claimant's injury-related claims. See the Labor Management Relations Act § 301, codified at 29 U.S.C. § 185. See also Ali v. Giant Food, LLC, 595 F.Supp.2d 618 (Md.2009) [(D.Md.2009)]."

    77

    No arguments based on the collective bargaining agreement between the players and owners, on federal law, on preemption, or on any federal labor statute, were made by the petitioners before the Commission, the Circuit Court, the Court of Special Appeals, or this Court. No such arguments were made in the certiorari petition or the argument portions of petitioners' briefs in this Court.

    78

    The respondent has moved to strike from petitioners' brief the above-quoted footnote, and we agree that respondent's motion should be granted. See Maryland Rules 8-131(a) and 8-131(b). See also, e.g., Fisher v. Eastern Correctional, 425 Md. 699, 714, 43 A.3d 338, 347 (2012); Robinson v. Baltimore Police Dep't, 424 Md. 41, 49, 33 A.3d 972, 977 (2011); McDaniel v. Baranowski, 419 Md. 560, 567 n. 7, 19 A.3d 927, 931 n. 7 (2011); John Hopkins Hosp. v. Correia, 405 Md. 509, 513, 954 A.2d 1073, 1075 (2008); Garner v. Archers Glen Partners, Inc., 405 Md. 43, 60-61, 949 A.2d 639, 649 (2008).

  • 10 Jacobson v. Mailboxes Etc. USA Inc

    1
    419 Mass. 572 (1995)
    2
    CARL M. JACOBSON & another[1]
    vs.
    MAILBOXES ETC. U.S.A., INC., & another.[2]
    3

    Supreme Judicial Court of Massachusetts, Middlesex.

    4
    December 6, 1994.
    5
    March 2, 1995.
    6

    Present: LIACOS, C.J., WILKINS, ABRAMS, NOLAN, & LYNCH, JJ.

    7

    David C. Hawkins for the plaintiffs.

    8

    [573] Donnalynn B. Lynch Kahn (Gary R. Greenberg & Louis J. Scerra, Jr., with her) for the defendants.

    9
    WILKINS, J.
    10

    In the latter part of February, 1989, the plaintiffs executed a franchise agreement with Mailboxes Etc. U.S.A., Inc. (Mailboxes), under which the plaintiffs were licensed to operate a Mailboxes facility in Needham. The endeavor was not a success.

    11

    In April, 1992, the plaintiffs commenced this action, alleging in their amended complaint that Mailboxes had failed to fulfil various obligations of the franchise agreement; that Mailboxes and its agent, the defendant Ovian, had violated a fiduciary duty owed to the plaintiffs; that the defendants were liable for deceit that induced the plaintiffs to sign the franchise agreement; and that the defendants had engaged in unfair or deceptive acts or practices prohibited by G.L.c. 93A (1992 ed.).

    12

    In their answer to the amended complaint (and to the original complaint), the defendants alleged that the franchise agreement contained a forum selection clause that required the plaintiffs to bring any such action in California.[3] It is undisputed, on the record before us, that the franchise agreement provided that "Venue and Jurisdiction for all actions enforcing this agreement are agreed to be in the City of San Diego, County of San Diego, California." The agreement also provided, as applicable to this case, that it "is to be construed under and governed by the laws of the State of California."

    13

    After considerable discovery, the defendants moved for summary judgment. The motion judge denied the motion, because he believed that there were disputes of material fact on the substantive merits. He concluded further, relying on the holding in Nute v. Hamilton Mut. Ins. Co., 6 Gray 174 (1856), that Massachusetts would not enforce the forum selection clause. The motion judge recognized, however, that [574] recent decisions had placed the holding of the Nute opinion in doubt, and, therefore, he reported his ruling on the forum selection clause, but no other ruling, to the Appeals Court.[4] We transferred the report to this court on our own motion.

    14

    Although for many decades Massachusetts did not enforce forum selection clauses except in special cases (see Nute v. Hamilton Mut. Ins. Co., 6 Gray 174, 184 [1856]; Nashua River Paper Co. v. Hammermill Paper Co., 223 Mass. 8, 19 [1916]), more recent opinions indicate that such clauses are not inherently inappropriate (see W.R. Grace & Co. v. Hartford Accident & Indem. Co., 407 Mass. 572, 582 n. 13 [1990]; Ernest & Norman Hart Bros. v. Town Contractors, Inc., 18 Mass. App. Ct. 60, 65 [1984]). See Lambert v. Kysar, 983 F.2d 1110, 1116-1118 (1st Cir.1993). Our Appeals Court recently stated that this court's opinion in W.R. Grace & Co. v. Hartford Accident & Indem. Co., supra, overruled the Nute and Nashua River Paper Co. cases, cited above. Simplex Time Recorder Co. v. Federal Ins. Co., 37 Mass. App. Ct. 947, 947-948 (1994). In The Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972), the Supreme Court announced the Federal common law rule that forum selection clauses are valid and enforceable, except when it is shown that enforcement would be unreasonable. We accept [575] the modern view that forum selection clauses are to be enforced if it is fair and reasonable to do so. See Restatement (Second) of Conflict of Laws § 80 (1988 revision) ("The parties' agreement as to the place of the action will be given effect unless it is unfair or unreasonable")[5]; Annot., Validity of Contractual Provision Limiting Place or Court in which Action may be Brought, 31 A.L.R.4th 404, 409 (1984 & Supp. 1994).

    15

    What we have just stated about Massachusetts law does not, however, answer the question whether the motion judge properly ruled not to enforce the agreement's forum selection clause. The agreement stated that it "is to be construed under and governed by the laws of the State of California." Therefore, in the absence of any substantial Massachusetts public policy reason to the contrary, Massachusetts's attitude toward the forum selection clause is unimportant, and we should turn to the law of California to determine the effect of that clause. See Morris v. Watsco, Inc., 385 Mass. 672, 674-675 (1982); Lambert v. Kysar, supra at 1118-1119; Smith, Valentino & Smith, Inc. v. Superior Court, 17 Cal.3d 491, 494 (1976); Restatement (Second) of Conflict of Laws § 187 (1971 & rev. 1989). In looking to California law, not only must we consider the enforceability of such a clause but we must also consider whether California would construe the particular clause in this case to apply not only to claims made under the agreement but also to claims of precontract deceit and other wrongs that allegedly induced the plaintiffs to sign the franchise agreement. The forum selection clause refers to "Venue and Jurisdiction for all actions enforcing this agreement." Thus the question arises whether language [576] concerning actions enforcing the agreement extends to claims based on allegedly unlawful conduct that led the plaintiffs to execute the agreement.[6]

    16

    California will enforce forum selection clauses in accord with the modern trend. See Nedlloyd Lines B.V. v. Superior Court, 3 Cal. 4th 459, 464 (1992), adopting principles of the Restatement (Second) of Conflict of Laws § 187 (1988 revision); Smith, Valentino & Smith, Inc., supra at 496 (enforcing clause calling for Pennsylvania forum, citing The Bremen v. Zapata Off-Shore Co., supra); Cal-State Business Prods. & Servs., Inc. v. Ricoh, 12 Cal. App. 4th 1666, 1679 (1993) (provision for New York forum enforced). The more difficult problem is to determine the reach of the forum selection clause under California law. The judge did not advert to this issue, nor have the parties addressed it.

    17

    California uses substantially the same reasoning in construing the reach of forum selection clauses as it does in construing the reach of contractual choice of law provisions. See Cal-State Business Prods. & Servs., Inc. v. Ricoh, supra at 1676-1677. In Nedlloyd Lines B.V. v. Superior Court, supra, the California Supreme Court held that a choice of law clause that provided that a contract was to be "governed by" the law of Hong Kong was enforceable and was "applicable to claims for breach of the implied covenant of good faith and fair dealing and for breach of fiduciary duties allegedly [577] arising out of the contract." Id. at 462. The court reasoned that parties, who were sophisticated commercial entities (id. at 468), would not rationally "intend that the laws of multiple jurisdictions would apply to a single controversy having its origin in a single, contract-based relationship." Id. at 469. It does not appear that the Nedlloyd Lines case involved any claim of fraud in the inducement or other precontract wrong. Three Justices of the California court dissented on the ground that the court gave too broad a sweep to the language of the choice of law clause. See id. at 472 (Panelli, J., dissenting, with whom Mosk, J., joined); id. at 474 (Kennard, J., dissenting). The dissenting opinions pointed out that the language of the clause in Smith, Valentino & Smith, Inc. v. Superior Court, supra (applying to any matter "growing out of this agreement") was broader in scope than the clause before the court ("This Agreement shall be governed by ..."). Id. at 473. Id. at 490.[7]

    18

    In Cal-State Business Prods. & Servs., Inc. v. Ricoh, supra, a forum selection clause applied to "any case of [sic] controversy arising under or in connection with this Agreement." Id. at 1672 n. 4. The complaint alleged restraint of trade, unfair trade practices, breach of contract, and both [578] fraud and negligent misrepresentation leading the plaintiff to enter into the agreement. The court applied the forum selection clause to all claims asserted. Id. at 1677. The court said, "The entire gist of the complaint in the present action relates to allegedly false promises made in the course of the negotiations (that culminated in contracts with integration clauses) and the subsequent conduct of the relationship between the parties created by the contracts." Id. The alleged wrongdoing that induced the plaintiff in that case to enter into the agreement could fairly be seen as involving a controversy "in connection with [the] agreement." See Lu v. Dryclean-U.S.A. of Cal., Inc., 1 1 Cal. App. 4th 1490, 1494 (1992) (forum selection clause applicable to "[a]ny and all litigation that may arise as a result of this Agreement" applies to fraudulent representations that induced plaintiffs to enter into agreement).

    19

    We conclude that California courts would not extend the reasoning of the bare majority in the Nedlloyd Lines case to apply the restrictive language of the clause before us to precontract wrongs. The forum selection clause by its terms relates only to actions to enforce the agreement and not to actions based on unlawful conduct that induced a franchisee to sign the agreement. An action to enforce an agreement no doubt includes not only an action for specific performance but also an action for damages for breach of contract. An action for precontract misrepresentations and for fraud in the inducement, however, does not easily sound like an action to enforce an agreement.

    20

    Mailboxes selected the language in its standard form of franchise agreement. That fact does not make the forum selection clause unenforceable (see Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 593 [1991]; Cal-State Business Prods. & Servs., Inc. v. Ricoh, supra at 1679), but it does support our conclusion that one need not read its own language expansively in Mailboxes's favor. In contrast, the Nedlloyd Lines case involved an agreement between two sophisticated commercial entities, and the noncontract claims in that case appear to have been tort-based alter egos of the contract [579] claims. See Nedlloyd Lines B.V. v. Superior Court, 3 Cal. 4th 459, 463 (1992).

    21

    We, therefore, conclude that the forum selection clause does not apply to wrongs that Mailboxes allegedly committed before the parties entered into a contractual relationship, including allegations of precontract violations of G.L.c. 93A. What then do we do with claims of breach of contract and their tort-related alter egos to which, standing alone, California would say the forum selection clause does apply? We share the view of the California Supreme Court (see Nedlloyd Lines B.V. v. Superior Court, supra at 469-470) that separate actions should not be encouraged. The greater focus of the plaintiffs' claims may be on Mailboxes's misleading conduct that induced the agreement and on other precontract conduct that is alleged to be unfair or deceptive.[8] If the plaintiffs show that that is so, the judge should not enforce the forum selection clause by banishing contract enforcement claims to California for separate treatment. If, however, the principal focus of the plaintiffs' claims is on breach of contract, the judge should enforce the clause, if to do so is fair and reasonable, and should decline on the grounds of forum non conveniens to permit any part of the action to be maintained in Massachusetts. A plaintiff should not be allowed to vitiate the effect of a forum selection clause simply by alleging peripheral claims that fall outside its apparent scope.

    22

    Factors, beyond the usual ones, that should be considered in deciding whether to enforce the forum selection clause are whether it would be unfair to dismiss this action if (a) Mailboxes will plead statutes of limitations in California as to claims that were not barred here when this action was commenced or (b) California will not entertain these actions. Also, if California will not enforce violations of G.L.c. 93A and if G.L.c. 93A claims appear to have substantiality, any [580] justification for directing the entire dispute to California is weakened.[9]

    23

    It may, of course, be appropriate in a case like this to bypass the bulk of the issues that we have discussed and to turn to the reasonableness of applying a forum selection clause, thereby assuming its applicability. Both Massachusetts and California consider the same principles in measuring fairness and reasonableness, and it may be that it would be unfair or unreasonable to enforce the forum selection clause in this case.

    24

    The judge's ruling that Massachusetts would not enforce the forum selection clause is vacated, and the case is remanded for further consideration in light of this opinion.[10]

    25

    So ordered.

    26

    ---------

    27

    [1] Regina P. Jacobson. Other plaintiffs below are not parties to the proceedings in this court.

    28

    [2] Lawrence Ovian.

    29

    [3] Although the defendant Ovian was not a party to the franchise agreement, the plaintiffs do not argue that he may not rely on the forum selection clause to the same extent that Mailboxes may.

    30

    [4]The judge asked for guidance on the following questions:

    31

    "1. Does Nute control, or is a forum selection clause to be enforced, in the absence of `fraud, undue influence, overweening bargaining power or such serious inconvenience in litigating in its selected forum that [plaintiff] is effectively deprived of its day in court?' C. Pappas Co., Inc. v. E. & J. Gallo Winery, 565 F. Supp. 1015, 1017 (D. Mass. 1983).

    32

    "2. If Nute does not control, should this Court hold a preliminary trial or otherwise make findings as to whether there was fraud, undue influence, overweening bargaining power or serious inconvenience?

    33

    "3. If Nute does not control, and if none of the factors in No. 2 are found, should this Court never-the-less take jurisdiction over the c. 93A claims, as was done in Davidson v. Mailboxes Etc., Inc., C.A. 92-6743 (Superior Court order dated 10/15/93)?"

    34

    Unlike a single justice of this court who, pursuant to Mass. R. Civ. P. 64, 365 Mass. 831 (1974), may report a question for appellate consideration, a trial judge may not report a question of law in a civil action but may report the propriety of a ruling or order, in circumstances described in rule 64, as the motion judge did in this case.

    35

    [5] "A court will entertain an action brought in violation of a choice-of-forum provision if it finds that the provision was obtained by fraud, duress, the abuse of economic power or other unconscionable means. Relevant in this connection, but not of itself controlling, would be the fact that the provision was contained in an adhesion or take-it-or-leave-it contract whose provisions the party bringing the action was compelled to accept without argument or discussion." Restatement (Second) of Conflict of Laws § 80 comment c (1971 & rev. 1989).

    36

    [6]Although the words "venue" and "jurisdiction" appear in the forum selection clause, this issue involves neither venue nor jurisdiction in the traditional sense. The trial court had jurisdiction of this case. Parties cannot deny jurisdiction by such an agreement. The question under forum selection clauses is whether an agreement of the parties as to where certain actions must be brought will be enforced in the circumstances. If so, the court will decline to exercise its undoubted jurisdiction in response to a voluntary choice of a different forum.

    37

    The question whether Mailboxes waived its right to rely on the forum selection clause is not before us. In any event, Mailboxes did raise the issue in its answers to the complaint and amended complaint. Cf. Celco, Inc. v. Computer Sys. Eng'g, Inc., 392 Mass. 1001 (1984). As is apparent from the factual issues that bear on the enforceability of the forum selection clause, no waiver can be found in the taking of depositions and in other pretrial activities in this case.

    38

    [7] The disagreement among the Justices of the California Supreme Court is reflected in the conflicting views of other jurisdictions as to whether the language of a forum selection clause should be read expansively. The Court of Appeals for the First Circuit recently construed a forum selection clause applicable to any action "brought to enforce [the] terms and conditions" of an agreement to apply to claims of misrepresentation and violations of G.L.c. 93A. Lambert v. Kysar, 983 F.2d 1110, 1112 (1st Cir.1993). "The better general rule, we think, is that contract-related tort claims involving the same operative facts as a parallel claim for breach of contract should be heard in the forum selected by the contracting parties." Id. at 1121-1122. On the other hand, for example, in Crowson v. Sealaska Corp., 705 P.2d 905, 910 (Alaska 1985), the court determined that an action to rescind contracts for fraud was not barred by a forum selection clause applying to proceedings to "enforce any term or provision" of a contract, because seeking to rescind a contract, although intrinsically related to the terms of the agreement, was not an action to "enforce" any term of the agreement. The results in these two cases can be reconciled, at least on the facts, because the Lambert case does not appear to involve precontract wrongs and the Crowson case does.

    39

    [8] We speak only of claims that appear to be validly presented, ones that are not subject to dismissal on summary judgment.

    40

    [9] The agreement does not state that the rights of the parties are to be governed by California law but only that the agreement is to be governed and construed by California law. The choice of law clause does not purport to bar the application of G.L.c. 93A to the parties' dealings in Massachusetts. We need not decide whether, if the agreement purported to contract away any claims under G.L.c. 93A, we would decline to enforce the provision on public policy grounds. See Northeast Data Sys., Inc. v. McDonnell Douglas Computer Sys. Co., 986 F.2d 607, 609-611 (1st Cir.1993) (G.L.c. 93A claims based on contract violations are covered by contractual choice-of-law provision stating that rights and obligations of parties to the agreement are governed by the laws of California; G.L.c. 93A allegations of fraud concerning formation of contract said to fall outside contract's choice-of-law provisions).

    41

    [10] Mailboxes's motions concerning the record appendix, that in January, 1994, the Appeals Court referred to the hearing panel, are referred in turn to a single justice of this court for the award of such costs and attorney's fees as seem appropriate.

  • 11 DeLorean v. DeLorean

    1
    211 N.J. Super. 432 (1986)
    2
    511 A.2d 1257
    3
    JOHN Z. DELOREAN, PLAINTIFF,
    v.
    CRISTINA DELOREAN, DEFENDANT.
    4

    Superior Court of New Jersey, Chancery Division Somerset County, Family Part.

    5
    Decided April 10, 1986.
    6

    [434] John J. Trombadore for plaintiff (Schachter, Cohn, Trombadore & Offen, attorneys).

    7

    David M. Wildstein for defendant (Wilentz, Goldman & Spitzer, attorneys).

    8
    IMBRIANI, J.S.C.
    9

    This matrimonial case examines the circumstances under which an antenuptial agreement may be enforced and whether that issue may be resolved by arbitration. The intent of most marriages is to create an "indivisible union of one" in which both spouses generally contribute whatever they own prior to the marriage or acquire thereafter into a common marital fund. Upon death the survivor usually receives whatever has been accumulated but, if a divorce ensues, in the usual case they share all marital assets equally.

    10

    However, when parties enter into an antenuptial agreement their purpose is to alter that usual arrangement and enter into an economic partnership whereby many or all of the assets owned prior to the marriage or acquired thereafter are not contributed into a common marital fund but are kept segregated [435] and, when the marriage ceases, whether by death or divorce, they are not shared equally but pursuant to a plan conceived and agreed upon before the marriage was consummated. It is important that we understand that normally the intent of most antenuptial agreements is to deny a spouse an interest in assets held in the sole name of the other which the former would ordinarily receive by operation of law when the marriage ceased.

    11

    These parties entered into an antenuptial agreement on May 8, 1973 (only a few hours before they married) which provided that:

    12
    any and all property, income and earnings acquired by each before and after the marriage shall be the separate property of the person acquiring same, without any rights, title or control vesting in the other person.
    13

    The potential assets could exceed $20 million and practically all of them are in the sole name of the husband. Absent this agreement and considering that this is a thirteen-year marriage in which there are two minor children, under New Jersey law this wife could reasonably have anticipated receiving approximately 50% of the marital assets at the time of divorce. But if this agreement is upheld she will receive relatively little. She asserts that this agreement should not be enforced because (1) she was not provided with a full and complete disclosure of her husband's financial affairs before she signed it and (2) undue influence was exerted upon her by her husband who possessed far greater financial knowledge and experience than she.

    14

    Initially, it is clear that "antenuptial agreements fixing post-divorce rights and obligations [are] ... valid and enforceable" and courts should "welcome and encourage such agreements at least `to the extent that the parties have developed comprehensive and particularized agreements responsive to their peculiar circumstances'." D'Onofrio v. D'Onofrio, 200 N.J. Super. 361, 366 (App.Div. 1985). In determining whether to enforce an antenuptial agreement there are at least three requirements that have to be met.

    15

    [436] First, that there was no fraud or duress in the execution of the agreement or, to put it another way, that both parties signed voluntarily. The wife alleges she did not sign voluntarily because her husband presented the agreement to her only a few hours before the marriage ceremony was performed and threatened to cancel the marriage if she did not sign. In essence she asserts that she had no choice but to sign. While she did not have independent counsel of her own choosing, she did acknowledge that before she signed she did privately consult with an attorney selected by her husband who advised her not to sign the agreement. Yet, for whatever reasons, she rejected the attorney's advice and signed.

    16

    While her decision may not have been wise, it appears that she had sufficient time to consider the consequences of signing the agreement and, indeed, although she initially refused to sign it, after conferring with her intended spouse and an attorney, she reconsidered and decided to sign it. Concededly, the husband was 25-years older and a high powered senior executive with General Motors Corporation, but she was not a "babe in the woods." She was 23-years old with some business experience in the modeling and entertainment industry; she had experienced an earlier marriage and the problems wrought by a divorce; and she had advice from an attorney who, although not of her own choosing, did apparently give her competent advice and recommended that she not sign. While it may have been embarrassing to cancel the wedding only a few hours before it was to take place, she certainly was not compelled to go through with the ceremony. There was no fraud or misrepresentation committed by the husband. He made it perfectly clear that he did not want her to receive any portion of the marital assets that were in his name. At no time did she ever make an effort to void the agreement and, of course, it was never voided. Under these circumstances the court is satisfied that the wife entered into the agreement voluntarily and without any fraud or duress being exerted upon her.

    17

    [437] Second, the agreement must not be "unconscionable." This is not to say that the agreement should be what a court would determine to be "fair and equitable." The fact that what a spouse receives under an antenuptial agreement is small, inadequate or disproportionate does not in itself render the agreement voidable if the spouse was not overreached and entered into the agreement voluntarily with full knowledge of the financial worth of the other person. See 41 Am.Jur.2d § 298. So long as a spouse is not left destitute or as a public charge the parties can agree to divide marital assets in any manner they wish. Marschall v. Marschall, 195 N.J. Super. 16, 30-31 (Ch.Div. 1984). Mrs. DeLorean presently enjoys substantial income from her employment as a talk-show television hostess and was given a life interest in a trust of unknown amount created by Mr. DeLorean, which he testified had assets of between $2 and $5 million dollars.[1] She will not be left destitute. The court is unaware of any public policy which requires that the division of marital assets be made in what the court believes to be fair and equitable if the parties freely and voluntarily agree otherwise. In the final analysis it is for the parties to decide for themselves what is fair and equitable, not the court. So long as a spouse had sufficient opportunity to reflect on her actions, was competent, informed, and had access to legal advice and that of any relevant experts, a court should not, except in the most unusual case, interject its own opinion of what is fair and equitable and reject the wishes of the parties. Since the wife voluntarily agreed to this division of the marital assets and she will not become destitute or a public charge, the agreement is not unconscionable.

    18

    Third, the spouse seeking to enforce the agreement made a full and complete disclosure of his or her financial wealth [438] before the agreement was signed. Obviously, one cannot make a knowing and intelligent waiver of legal and financial rights unless fully informed of all of the facts; otherwise one cannot know what is being waived. The husband asserts that the wife acknowledged that she received a full and complete disclosure of his financial wealth because the agreement states:

    19
    Husband is the owner of substantial real and personal property and he has reasonable prospects of earning large sums of monies; these facts have been fully disclosed to Wife.
    20

    However, that statement is not very meaningful and is insufficient to satisfy his obligation to make a full and complete disclosure of his financial wealth. While several states hold that a full and complete disclosure is not synonymous with a detailed disclosure, see e.g., Lopata v. Metzel, 641 P.2d 952 (Sup.Ct.Colo. 1982), those cases can be distinguished because they impose upon each spouse a duty to inquire and investigate into the financial condition of the other. However, as far as this court can ascertain, New Jersey imposes no such duty.

    21

    A conflict arose as to precisely what financial information was disclosed by Mr. DeLorean. However, the court is satisfied that even if it accepted as true the testimony of Mr. DeLorean he did not satisfy his legal obligation to make a full and complete disclosure. But we should address the question of how to avoid disputes of this nature in the future. It is clear that we can ascertain with complete certainty whether there was a full and complete disclosure only by requiring a written list of assets and income be attached to the antinuptial agreement. Anything less will encourage a plethora of plenary hearings which would frequently be complicated by contradictory and conflicting testimony, often tainted by memory lapses. Research has disclosed, for reasons not clear to this court, several cases in which the suggestion of a written list has been rejected, Roberts v. Estate of Roberts, 664 S.W.2d 634 (Mo. App. 1984); Hengel v. Hengel, 122 Wis.2d 737, 365 N.W.2d 16 (App. 1985).

    22

    [439] Our purpose must be to fashion a rule which will avoid litigation. As said in Brandenburg v. Brandenburg, 83 N.J. 198 (1980):

    23
    the complexity of the many issues facing a matrimonial court call for rules that possess some degree of certainty and ease of application. [at 207]
    24

    Obviously, a rule which relies upon the testimony of the parties and their witnesses of what was said and done many years ago will not do so and, in fact, will result in considerable litigation.

    25

    It is interesting to note that when our Supreme Court was confronted in Brandenburg with the issue of when to fix the termination of a marriage so as to determine when marital assets should be valued for equitable distribution purposes (an issue that arises in practically all cases), the court rejected procedures that relied upon oral testimony and held that it shall be either the date of the filing of the complaint or an earlier date if there was a written property settlement agreement and the parties lived in separate habitations. This simple rule predicated on a written document has avoided a tremendous amount of litigation. That same philosophy should be adopted here.

    26

    While the wife was aware that Mr. DeLorean was a person of substantial wealth, there was no way that she could have known with any substantial degree of certainty the extent of his wealth. This is important because one can appreciate that while a wife might waive her legal rights to share in marital assets of $1 million, she might not be willing to do so if she knew the marital assets were worth $20 million. And the suggestion that Mrs. DeLorean had a duty to investigate to ascertain the full nature and extent of his financial wealth is both unfair and unrealistic. How many people when about to marry would consider investigating the financial affairs of their intended spouse? How many people would appreciate or tolerate being investigated by an intended spouse? And how many marriages would be cancelled when one of the parties is informed of an investigation being conducted by the other? Such [440] a requirement would cause embarrassment and impose a difficult burden. The better rule is that the:

    27
    burden is not on either party to inquire, but on each to inform, for it is only by requiring full disclosure of the amount, character, and value of the parties' respective assets that courts can ensure intelligent waiver of the statutory [and other] rights involved. [Rosenberg v. Lipnick, 377 Mass. 666, 389 N.E.2d 385, 388 (Sup.Ct.Mass. 1979).]
    28

    When a spouse has a duty to fully and completely disclose his financial wealth we would eviscerate and render meaningless that duty if we imposed upon the other spouse a duty to investigate.

    29

    The only way that Mrs. DeLorean could knowingly and intelligently waive her legal rights in Mr. DeLorean's assets was if she was fully and completely informed what they were. And for Mr. DeLorean to merely state that he had an interest in a farm in California, a large tract of land in Montana, and a share in a major league baseball club fell far short of a full and complete disclosure. If this issue were decided under New Jersey law the court would conclude that Mr. DeLorean did not make a full and complete disclosure of his financial wealth before his spouse signed the antinuptial agreement and, therefore, it would not be valid and enforceable.

    30

    However, it is argued that California, not New Jersey, law should be applied. The parties married and executed the agreement in California. It is hornbook law that when an agreement is silent as to which law should be applied, the validity and construction of a contract shall be determined by the law of the place of contracting. Colozzi v. Bevko, Inc., 17 N.J. 194 (1955); Chaudry v. Chaudry, 159 N.J. Super. 566 (App.Div. 1978); Restatement, Conflict of Law, § 332 (1934). But this agreement is not silent and expressly provides that it:

    31
    shall be construed under the laws of the State of California and enforceable in the proper courts of jurisdiction of the State of California.
    32

    When the agreement was executed the parties had substantial contacts with California and reasonably expected to retain many of them which, indeed, has been the case. For these reasons the law of California must be applied in this case.

    33

    [441] That being so, what duty does California law impose upon a party to an antenuptial agreement with regard to the disclosure of one's financial wealth? In both California and New Jersey fiduciaries are required to exercise a high degree of trust, good faith and candor in their dealings with each other.

    34
    [T]he person occupying a position of trust, has the burden of showing affirmatively that no deception was practiced ..., that no undue influence was used, and that all was fair, open and voluntary as well as understood. [Petruccio v. Petruccio, 205 N.J. Super. 577, 580 (App.Div. 1985); emphasis supplied]
    35

    Where California and New Jersey law part is in their determination of what constitutes a fiduciary because, unlike New Jersey, California does not treat a party to an antenuptial agreement as a fiduciary on the theory that "parties who are not yet married are not presumed to share a confidential relationship." Marriage of Dawley, 17 Cal.3d 342, 355, 131 Cal. Rptr. 3, 551 P.2d 323 (1976). So long as the spouse seeking to set aside such an agreement has a general idea of the character and extent of the financial assets and income of the other, that apparently is sufficient in California. Indeed, absent fraud or misrepresentation, there appears to be a duty to make some inquiry to ascertain the full nature and extent of the financial resources of the other. See Boeseke v. Boeseke, 255 Cal. App.2d 848, 63 Cal. Rptr. 651 (1967). As this court reads California law, the disclosures made by John DeLorean appear to be sufficient for purposes of enforcing this agreement.

    36

    And this court does not have to rely solely upon its review of California law because here we have the benefit of a decision by a retired California judge, (see infra), who also was of the opinion that the disclosures made by John DeLorean were sufficient. Accordingly, the court is satisfied that under California law there was a sufficient disclosure by the husband and the antenuptial agreement of May 8, 1973 is valid and enforceable.

    37

    [442] There is another and perhaps even more compelling reason why this agreement must be enforced. Initially, Mrs. DeLorean filed suit for divorce in California and was granted a divorce there. About the same time that she filed her divorce complaint, Mr. DeLorean filed a suit for divorce in New Jersey and he asked this court to assume jurisdiction of the matrimonial dispute because the wife was not a resident of California for six months before she filed her complaint in California as is required by California law. Following a plenary hearing this court ruled on July 3, 1985 that the California proceeding (including the California judgment of divorce) was invalid because Mrs. DeLorean was not a resident of California for six months before she filed her complaint for divorce in California and held that jurisdiction lies with the New Jersey courts since it was here the parties resided for several years.

    38

    Nonetheless, thereafter, on July 10, 1985 (only a week later) both parties, while being represented by both California and New Jersey counsel, voluntarily consented in a formal, three-page agreement to have retired California Judge Lester A. Olson "hear and try the issue of the validity of the Prenuptial Agreement." A hearing commenced before him on July 15, 1985 in which both parties testified in their own behalf, were subjected to cross-examination, and presented witnesses. Promptly thereafter, on July 18, 1985, in a formal, five-page decision Judge Olson upheld the validity and enforceability of the agreement. It is urged by the husband that those proceedings constituted an arbitration proceeding and under New Jersey law both parties are bound by his decision.

    39

    It is really astonishing that although the Arbitration Act was adopted in 1923, see N.J.S.A. 2A: 24-1, et seq., its use has been generally limited to resolve labor and commercial disputes. However, the immense rise of other types of legal disputes has caused our courts to explore its use in other areas as well. Only recently the Supreme Court mandated its use to resolve certain automobile law suits. See R. 4:21A.

    40

    [443] Arbitration is a consensual, voluntary contract entered into by parties to a dispute for the purpose of securing a "final disposition in a speedy, inexpensive, expeditious, and perhaps less formal manner of [one or more of] the controversial differences between the parties." Barcon Associates v. Tri-County Asphalt Corp., 86 N.J. 179, 187 (1981). Arbitration offers many benefits: it reduces the length and cost of the court process, it enables the parties to select their own judge who they believe has the ability, fairness and expertise to render a just decision, and the dispute can frequently be resolved in a private forum in which the decision, absent an appeal, will not become a public record.

    41

    However, there are at least two significant disadvantages. First, the arbitrator is not bound by the usual rules of evidence and, second, there is limited appellate review because an "award is not to be cast aside lightly. It is subject to being vacated only when it has been shown that a statutory basis justifies that action." Kearny PBA Local # 21 v. Town of Kearny, 81 N.J. 208, 221 (1979).

    42

    N.J.S.A. 2A:24-8 permits an arbitrator's award to be vacated only under four limited circumstances: if (a) "procured by corruption, fraud or undue means," (b) the award displays "evident partiality or corruption in the arbitrators," (c) the arbitrators refused to hear pertinent and material evidence or committed other prejudicial "misbehaviors," or (d) the arbitrator exceeded or imperfectly executed his powers so that a mutual, final and definitive award was not made. No such misconduct exists here and, therefore, the arbitrator's decision must be upheld.

    43

    As noted in Ukrainian Nat. Urban Renewal v. Muscarelle, Inc., 151 N.J. Super. 386 (App.Div. 1977):

    44
    [t]he essence of arbitration is that, by agreement of the parties, the arbitrators decide both the facts and the law ... An arbitrator's factual ... [and] legal conclusions may be scrutinized only to determine whether one or more of the criteria of N.J.S.A. 2A:24-8 is fulfilled. [at 396]
    45

    [444] Crutchley v. Crutchley, 306 N.C. 518, 293 S.E.2d 793 (1982) perceptively noted that a:

    46
    mistake committed by an arbitrator is not of itself sufficient ground to set aside the award. If an arbitrator makes a mistake, either as to law or fact, it is the misfortune of the party, and there is no help for it. There is no right of appeal, and the Court has no power to revise the decisions of `judges who are of the parties own choosing'. [293 S.E.2d at 797]
    47

    Do parties to a pending lawsuit in New Jersey have the right, without the authorization or knowledge of the court, to submit one or more legal and factual issues to a third party whose determination would be binding upon them in their lawsuit? This court is unaware of any requirement that the designation of an arbitrator must be made by the court or with its knowledge and approval. And the question whether arbitration should be allowed in a matrimonial action was affirmatively resolved in Faherty v. Faherty, 97 N.J. 99 (1984) where a property settlement agreement was incorporated into a judgment of divorce and the court said:

    48
    [i]t is fair and reasonable that parties who have agreed to be bound by arbitration in a formal, written separation agreement should be so bound. Rather than frowning on arbitration of alimony disputes, public policy supports it ... In this sensitive and intensely private area of domestic disputes, arbitration expressly contracted for by the spouses is highly desirable. [at 107-108]
    49

    These principles of law apply with equal force to a case involving an antenuptial agreement.

    50

    In this era of explosive matrimonial litigation the need for adoption of alternate dispute resolution is self-evident. And while the incidence of antenuptial agreements is now minimal, one could reasonably anticipate that with the increasing frequency of remarriages resort to their use will occur more often. Under these circumstances use of arbitration to resolve disputes arising from such agreements will have a significant beneficial impact on the court case load and should be encouraged.

    51

    I do not view Judge Olson, as does Mrs. DeLorean, as a judge who is part and parcel of what this court ruled to be an invalid California proceeding, but as an arbitrator who the parties [445] voluntarily selected to decide an important issue in their New Jersey divorce suit. Indeed, since the antenuptial agreement specifically provides in paragraph eight that it "shall be construed under the laws of the State of California" there was obvious logic in having a retired California judge pass upon that issue.

    52

    The parties are bound by his decision and the antenuptial agreement of May 8, 1973 is valid and enforceable in New Jersey.

    53

    ---------

    54

    [1] Actually the testimony of the husband was vague, if not evasive, about the content and value of the trust fund and it appeared that the wife was unaware that she possessed a life interest in a trust fund until he disclosed that information during his testimony in court.

  • 12 Lewis v. Lewis

    1
    748 P.2d 1362 (1988)
    2
    Patricia Ann LEWIS, Respondent-Appellee,
    v.
    Daniel Harbert LEWIS, Petitioner-Appellant.
    Thomas Vyn REESE, Sr., Petitioner-Appellee,
    v.
    Beverly Jean REESE, Respondent-Appellant.
    3
    Nos. 10820, 10740.
    4

    Supreme Court of Hawaii.

    5
    January 22, 1988.
    6

    [1364] Gary V. Dubin (R. Steven Geshell, with him on the brief), Honolulu, for petitioner-appellant Daniel Harbert Lewis.

    7

    Maurice Sapienza, Honolulu, for respondent-appellee Patricia Ann Lewis.

    8

    Steven R. Scott, Scott and Ohigashi, Wailuku, for petitioner-appellee Thomas Vyn Reese, Sr.

    9

    Edward F. Mason (Eugene S. Evans, Jr., with him on the brief), Wailuku, for respondent-appellant Beverly Jean Reese.

    10
    WAKATSUKI, Justice.
    11

    The following opinion covers two unconsolidated cases with related legal issues.

    12
    Lewis v. Lewis, No. 10820
    13

    Certiorari was granted to Daniel Harbert Lewis, petitioner-appellant ("husband"), for a review of the Intermediate Court of Appeals ("ICA") decision affirming the family court's divorce decree awarding spousal support and division of property.

    14

    On May 22, 1970, the day before husband and Patricia Ann Lewis, respondent-appellee ("wife"), were married in New York, they executed a premarital agreement which provided that in the event of divorce after they have had a child, wife would accept $1000 per month until death or remarriage in full satisfaction of husband's spousal support obligation. The agreement [1365] made no provision for division of property upon divorce.

    15

    In the divorce decree dated July 3, 1985, the family court refused to enforce the premarital agreement and instead awarded wife $2500 per month for 72 months or until death or remarriage. The decree awarded husband the residence subject to his paying to wife the sum of $150,000. Husband appealed.

    16

    The ICA affirmed and held: 1) that Hawaii law governed the issue of the enforceability of the premarital agreement; 2) that the family court did not err or abuse its discretion in refusing to enforce the premarital agreement and by awarding $2500 per month in spousal support; and 3) that the family court did not abuse its discretion in awarding wife the sum of $150,000. We agree on points 1) and 3), but vacate the ICA's holding on point 2).

    17
    I.
    18

    Husband contends that the enforceability of the premarital agreement should be governed by New York law, the place where the parties were married and the agreement was executed. We disagree.

    19

    We have moved away from the traditional and rigid conflict-of-laws rules in favor of the modern trend towards a more flexible approach looking to the state with the most significant relationship to the parties and subject matter. See Peters v. Peters, 63 Haw. 653, 634 P.2d 586 (1981). Primary emphasis is placed on deciding which state would have the strongest interest in seeing its laws applied to the particular case. Cf. id.

    20

    The most valuable real property owned at the time of divorce is located in Hawaii. Wife has been continuously living in Hawaii since no later than July 1982, and husband has been a resident of Hawaii since February 1983. New York's interest, if any, regarding the spousal support wife receives from husband is secondary to Hawaii's interest. Hawaii has the stronger and primary interest in seeing its laws applied to this case because it is most directly affected by the respective financial positions of husband and wife. Cf. Peters, 63 Haw. at 664, 634 P.2d at 593.

    21

    Finally, the family court's task of deciding the enforceability of premarital agreements would become more difficult with less certainty if the law of the place where the parties were married or the premarital agreement was executed is applied. Cf. Peters, 63 Haw. at 666, 634 P.2d at 594. We hold that Hawaii law governs this case.

    22
    II.
    23

    In June, 1987, the Governor signed into law the Uniform Premarital Agreement Act ("Hawaii Act"), which is virtually identical to the Uniform Premarital Agreement Act approved by the National Conference of Commissioners on Uniform State Laws in 1983.

    24

    Other than Section 10, the Hawaii Act has no application to this case. Section 10 states:

    25
    All written agreements entered into prior to the enactment of this Act between prospective spouses for the purpose of affecting any of the provisions of this Act shall be valid and enforceable if otherwise valid as contracts.
    26

    The premarital agreement between husband and wife was entered into in 1970, and therefore, the issue is whether the agreement was valid and enforceable under principles of contract law.

    27

    The ICA held that under Hawaii Revised Statutes ("HRS") § 580-47, the family court's obligation to issue "just and equitable" support and property awards empowers the court to refuse, under equitable principles, to fully enforce an otherwise valid premarital agreement. We disagree.

    28

    Section 10 of the Hawaii Act specifically states that such premarital agreements are valid and enforceable if otherwise valid as contracts. Unless the agreement rises to [1366] the level of unconscionability, a merely "inequitable" contract is not unenforceable under contract law.[1] Furthermore, when a premarital agreement setting forth support and property division in the event of divorce is not unconscionable and has been voluntarily entered into by the parties with knowledge of the financial situation of the prospective spouse, enforcement of the agreement does not violate the principle of a "just and equitable" award under HRS § 580-47.

    29

    Under the facts of this case, the only plausible grounds for not enforcing the agreement under contract law are: 1) the absence of true assent to the agreement due to duress, coercion, undue influence, or any other circumstance indicating that wife did not freely and voluntarily enter into the agreement; and 2) unconscionability.

    30

    There is no specific finding by the family court on whether wife freely and voluntarily entered into the premarital agreement. The court found that the agreement was prepared one day prior to the marriage and wife was not represented by counsel. These findings, although relevant, are insufficient for this court to conclude that wife voluntarily executed the agreement.

    31
    III.
    32

    The Hawaii Supreme Court discussed the issue of "unconscionability" in two cases, one involving a non-UCC real estate lease agreement and the other being a sale-of-goods UCC case. In both cases, the court adopted the "UCC definition" by looking to the comment to UCC § 2-302(2) or HRS § 490:2-302 (the Hawaii equivalent of the former). See City and County of Honolulu v. Midkiff, 62 Haw. 411, 418, 616 P.2d 213, 218 (1980); Earl M. Jorgensen Co. v. Mark Construction, 56 Haw. 466, 474, 540 P.2d 978, 984 (1975). The comment states:

    33
    The basic test is whether, in the light of the general commercial background and the commercial needs of the particular trade or case, the clauses involved are so one-sided as to be unconscionable under the circumstances existing at the time of the making of the contract... . The principle is one of the prevention of oppression and unfair surprise (Cf. Campbell Soup Co. v. Wentz, 172 F.2d 80 (3rd Cir.1948)) and not of disturbance of allocation of risks because of superior bargaining power.
    34

    HRS § 490:2-302 comment.

    35

    It is apparent that two basic principles are encompassed within the concept of unconscionability, one-sidedness and unfair surprise. As applied to premarital agreements, one-sidedness would mean that the agreement leaves a post-divorce economic situation that is unjustly disproportionate. Unfair surprise would mean that one party did not have full and adequate knowledge of the other party's financial condition when the premarital agreement was executed.

    36

    The family court summarily concluded that $1000 per month in spousal support was unconscionable when viewed at the time of divorce. The comment this court relied on in Midkiff and Jorgensen, however, states that unconscionability is to be determined not at the time of divorce, but "under the circumstances existing at the time of the making of the contract." HRS § 490:2-302 comment. Nevertheless, it is in the best interest of the state that the financial well-being of the parties at the time of divorce be preserved by taking into consideration factors and circumstances arising throughout the marriage in determining whether the support provision of the premarital agreement is unconscionable. Indeed, each of the thirteen factors that HRS § 580-47[2] specifically requires a court to consider in making a "just and equitable" spousal support and maintenance [1367] award can only be fully evaluated at the time of divorce. So, too, whether the support provision of the premarital agreement is unconscionable can only be determined at the time of divorce by reviewing and considering all relevant factors and circumstances occurring after the execution of the premarital agreement. To enforce a spousal support provision of a premarital agreement because it was reasonable at the time of execution of the agreement can result in unforeseen economic hardship to a spouse that may shock the conscience of the court due to relevant changes in the circumstances of the marriage by the time of divorce. Public policy mandates against the enforcement of unconscionable support payments.

    37

    The Supreme Court of Ohio has stated:

    38
    In the review of provisions in antenuptial agreements regarding maintenance or sustenance alimony, a further standard of review must be applied — one of conscionability of the provisions at the time of the divorce or separation... . [P]rovisions relating to maintenance or sustenance may lose their validity by reason of changed circumstances which render the provisions unconscionable as to one or the other at the time of the divorce of the parties. Accordingly, such provisions may, upon a review of all of the circumstances, be found to have become voidable at the time of the divorce or dissolution.
    39
    We believe that the underlying state interest in the welfare of the divorced spouse, when measured against the rights of the parties to freely contract, weighs in favor of the court's jurisdiction to review, at the time of a subsequent divorce, the terms in an antenuptial agreement providing sustenance alimony for one of the parties. There is sound public policy rationale for not strictly enforcing such a provision which, even though entered into in good faith and reasonable at the time of execution, may have become unreasonable or unconscionable as to its application to the spouse upon divorce. It is a valid interest of the state to mitigate potential harm, hardship, or disadvantage to a spouse which would be occasioned by the breakup of the marriage... .
    40

    Gross v. Gross, 11 Ohio St.3d 99, 464 N.E.2d 500, 509 (1984) (footnote omitted).

    41

    Here, husband was Vice Chairman of the Board of D'Arcy Advertising with an annual income of $285,000 and a net worth of approximately $1.8 million at the time the premarital agreement was executed. Wife was his secretary and had no assets other than some jewelry. She had stopped working when they were married. The record does not indicate wife's annual income from her secretarial job nor her future earning potential at the time of divorce. The record does not make clear what factors and circumstances the family court considered in determining husband's and wife's respective financial needs upon divorce. Whether the $1000 a month support payments to wife is too one-sided cannot be determined without more appropriate findings and conclusions by the family court.

    42

    The record in this case is not clear as to the extent of wife's knowledge of husband's [1368] financial condition at the time of execution of the premarital agreement. Husband had attached statements indicating his assets and liabilities to the agreement. The family court found that these statements "were not complete disclosures, although they were substantially complete." Without more definitive findings and conclusions as to the accuracy and completeness of the statements, we are unable to evaluate the element of unfair surprise to wife.

    43
    IV.
    44

    Husband contends that the $150,000 property award to wife was an abuse of discretion based on Cassiday v. Cassiday, 68 Haw. ___, 716 P.2d 1133 (1986). There we said that "[i]t is generally accepted that each divorcing party is entitled to the date of marriage net value of his or her premarital property." 716 P.2d at 1138. Husband argues that he should not have to give up $150,000 of his property because he owned virtually all the valuable property brought into the marriage and at the time of divorce.

    45

    In Cassiday, however, we also stated that:

    46
    Hawaii Revised Statutes (HRS) § 580-47(a)(3) (Supp. 1984) vests in the trial court the discretion to divide all of the property of the parties, whether community, joint or separate according to what is "just and equitable." This includes the discretion to award separate property to the non-owning spouse.
    47
    ... .
    48
    ... [T]he source of the asset is but one of the "circumstances of the case," as is a spouse's positive or negative effect on the accumulation or preservation of the separate property of the spouse.
    49

    Cassiday, 716 P.2d at 1136 (citations and footnote omitted). Thus, it was within the family court's discretion to award wife part of husband's premarital property.[3]

    50

    In deciding to award wife $150,000 out of the husband's net worth of over $1,000,000 at the time of divorce, the court relied on many factors, including the assets, liabilities and income of the parties, their respective employment (including the fact that the wife gave up opportunities in quitting her job upon marriage), the standard of living established during the marriage, and the fact that the wife was to have primary physical custody of the couple's child. We hold that the award was not an abuse of discretion.

    51
    V.
    52

    Husband's remaining contentions are without merit.

    53

    The decision of the ICA is affirmed in part, and vacated in part. We vacate the affirmance of the spousal support order and remand this case to the family court for further proceedings to determine the issues of "voluntariness" and "unconscionability" not inconsistent with this opinion.

    54
    Reese v. Reese, No. 10740
    55

    Certiorari was granted to Thomas Vyn Reese, Sr., petitioner-appellee, to review the decision of the Intermediate Court of Appeals (ICA) vacating the property division portion of the family court's divorce decree.

    56

    On January 6, 1974, prior to their marriage, Mr. and Mrs. Reese executed a premarital agreement which provided that property owned by either party at the time of the marriage, or subsequently received through inheritance, or the income on and/or enhanced value of such property shall remain the separate property of the respective party in the event of divorce.

    57

    On May 23, 1985, the family court entered a Decree of Absolute Divorce and issued a Decision and Order that, inter alia, awarded Mrs. Reese property worth $66,521. The court stated that the premarital [1369] agreement was merely one factor it considered in making the property award. Mrs. Reese appealed.

    58

    The ICA ruled that under the circumstances of the case, any division of property leaving Mrs. Reese with property valued at less than $125,000 was an abuse of discretion, and therefore, remanded the case for further proceedings. We reject the ICA's position and hold that the premarital agreement should have been fully enforced. With one minor exception,[4] the other portions of the family court's Decision and Order were affirmed. We affirm the ICA on these latter matters.

    59

    As in the Lewis case, the Reese's premarital agreement was entered into prior to the enactment of the Hawaii Act; therefore, the enforcement provision of that Act (Section 6) is inapplicable to this case. If the premarital agreement is a valid contract, the agreement must be enforced. See Section 10 of the Hawaii Act. As in Lewis, based on contract law, the agreement will not be enforced: 1) if Mrs. Reese did not freely and voluntarily enter into the agreement; or 2) if the agreement is unconscionable.

    60

    The family court in its Findings of Fact found that Mrs. Reese executed the premarital agreement voluntarily and knowingly without undue influence or coercion. The court resolved the conflicting testimony and evidence in favor of Mr. Reese. In reviewing the record, we do not find the court's finding to be clearly erroneous.

    61

    We held in Lewis that two basic principles underlie the doctrine of unconscionability, one-sidedness and unfair surprise. We also held that in determining the unconscionability of a spousal support provision, the court must consider, at the time of divorce, all relevant factors and circumstances including those occurring after the execution of the premarital agreement. In this case, the premarital agreement provided for property division and not spousal support. We find that the public policy considerations enunciated in Lewis relative to spousal support have no bearing on and applicability to property division in a premarital agreement. We, therefore, hold that the issue of unconscionability of a provision governing division of property in a premarital agreement should be evaluated at the time the agreement was executed.

    62

    The agreement reserves to Mr. Reese premarital and inherited property as separate property not subject to division in case of divorce. We stated in Cassiday v. Cassiday, 68 Haw. ___, ___, 716 P.2d 1133, 1138 (1986), that "[i]t is generally accepted that each divorcing party is entitled to the date of marriage net value of his or her premarital property and the date of acquisition net value of gifts and inheritances which he or she received during the marriage."[5] After careful review of the record, we conclude that the reservation of premarital and inherited property, and the income from and any enhanced value of such property, to Mr. Reese was not unacceptably one-sided at the time the agreement was executed.

    63

    As to the element of unfair surprise, the family court found that prior to the execution of the agreement, Mr. Reese had fully disclosed to Mrs. Reese the nature of his property holdings and a "not unrealistic" estimate of the value of his separate estate. Although our review of the record discloses conflicting evidence on this point, we conclude that the family court's finding on this issue is not clearly erroneous.

    64

    In our view the agreement was not unconscionable because the premarital agreement, at the time of execution, was not unacceptably one-sided and did not involve unfair surprise. We hold that the agreement was a valid contract and should have been fully enforced by the family court. In determining the division of property [1370] between Mr. and Mrs. Reese, however, the family court stated that the agreement was only one factor it took into consideration. The family court did not make sufficient findings to allow us to determine the distribution of property that would result from full enforcement of the agreement. In light of our holding, the family court is directed, on remand, to redetermine the division of property in strict accordance with the agreement by entering appropriate findings of fact and conclusions.

    65

    The ICA held that the family court clearly erred in assigning a value of $10,000 to the IMMT franchise and corrected the amount to $1,000. Mr. Reese does not challenge this holding in his petition.

    66

    Mrs. Reese's cross-petition for certiorari challenging the ICA's affirmation of the values placed on certain property by the family court was denied as untimely filed. We concur.

    67

    The family court's order of division of property is vacated and this case is remanded for further proceedings not inconsistent with this opinion.

    68

    [1] Nor can it be said that enforcement of inequitable premarital agreements violates public policy as the Hawaii Act itself reflects a public policy in favor of enforcement of such agreements.

    69

    [2]HRS § 580-47 states, in relevant part:

    70

    In addition to any other relevant factors considered, the court, in ordering spousal support and maintenance, shall consider the following factors:

    71

    (1) Financial resources of the parties;

    72

    (2) Ability of the party seeking support and maintenance to meet his or her needs independently;

    73

    (3) Duration of the marriage;

    74

    (4) Standard of living established during the marriage;

    75

    (5) Age of the parties;

    76

    (6) Physical and emotional condition of the parties;

    77

    (7) Usual occupation of the parties during the marriage;

    78

    (8) Vocational skills and employability of the party seeking support and maintenance;

    79

    (9) Needs of the parties;

    80

    (10) Custodial and child support responsibilities;

    81

    (11) Ability of the party from whom support and maintenance is sought to meet his or her own needs while meeting the needs of the party seeking support and maintenance;

    82

    (12) Other factors which measure the financial condition in which the parties will be left as the result of the action under which the determination of maintenance is made;

    83

    (13) Probable duration of the need of the party seeking support and maintenance.

    84

    [3] The wife is limited, however, to a maximum of 50% of the husband's premarital property. Cf. Cassiday, 716 P.2d at 1138 (limiting the non-owning spouse to a maximum of half the appreciation on the owner's separate property).

    85

    [4] See discussion regarding IMMT franchise.

    86

    [5] Although there is no general rule regarding division of the appreciation on such property, see id., 716 P.2d at 1138, Cassiday acknowledged that a trial court could determine that all appreciation goes to the owner if that would be fair and equitable. See id.

  • 13 Gustafson v. Jensen

    1
    515 So.2d 1298 (1987)
    2
    Anne-Lise GUSTAFSON, As Personal Representative of the Estate of Henning Jensen, Appellant,
    v.
    Dorrit JENSEN, Appellee (Two Cases).
    3
    Nos. 86-2754, 86-2964 and 86-3150.
    4

    District Court of Appeal of Florida, Third District.

    5
    November 10, 1987.
    6
    Rehearings Denied December 17, 1987.
    7

    [1299] Edward C. Vining, Jr., and Thomas B. Scott, Miami, for appellant.

    8

    Kimbrell & Hamann and Roy D. Wasson, Miami, for appellee.

    9

    Before BARKDULL, HENDRY and BASKIN, JJ.

    10
    HENDRY, Judge.
    11

    This proceeding arises from a final judgment of dissolution of the marriage between Dorrit and Henning Jensen. Two consolidated appeals from that judgment, (86-2754 and 86-2964), are reviewed herein with an appeal from a judgment for arrearages (86-3150). We affirm the judgments, with one exception.

    12

    Dorrit first met Henning Jensen while she was living at home with her parents in Denmark. Twenty-one years of age with a high school education, Dorrit asked for time to think it over when Henning, a resident of the Virgin Islands sixteen years her senior and a graduate engineer, proposed marriage. Three years later she was working as a hairdresser and still living at home when he returned to Denmark for her answer, after having opened a furniture business on Biltmore Way in Coral Gables.

    13

    On July 16, 1964, three days before their marriage, Dorrit and Henning executed an antenuptial agreement by which each agreed that any property brought to the marriage or acquired during marriage would remain the sole property of the one who earned or acquired it. The writing contained no provision for the wife.

    14

    Henning returned to Florida with his bride and, although the business of Jensen & Hansen flourished under their combined efforts, the marriage was often stormy due to Henning's problem with alcohol. At one point, after being chased by her husband with a knife, Mrs. Jensen prepared to file for divorce but agreed to reconcile if Henning [1300] would enter an alcohol treatment program and would terminate the antenuptial agreement. He agreed and proceeded to tear up a copy of the agreement while renouncing its terms. Relying upon his words and actions, Mrs. Jensen resumed their marital relationship.

    15

    Soon after completing the agreed upon treatment program, Henning Jensen resumed his old drinking habits and his abusive behavior towards the family, which by now included two daughters. On October 1, 1984 Dorrit Jensen filed a petition for dissolution of marriage but it was not until November 4, 1986 that a final judgment of dissolution was recorded.

    16

    By its findings, the court declared the antenuptial agreement invalid and of no force and effect. As lump sum alimony, Mrs. Jensen was awarded the marital residence, the realty on Biltmore Way leased to Jensen & Hansen, the sum of three hundred thousand dollars, (with annual payments over a fifteen year period), and title to her automobile. The court reserved jurisdiction as to the disposition of $140,000 in silver and the wife's claim for attorney's fees and costs. To effectuate its order, the court stated that the judgment constituted a lien against Henning Jensen's individual assets and funds until the lump sum alimony obligation was paid in full. Further, "In the event that the husband shall die prior to the satisfaction of this obligation, same shall constitute a charge against the husband's estate and all assets thereof." The judgment left the parties in equitable positions but Henning Jensen filed a notice of appeal. Shortly thereafter, weakened by years of alcohol abuse, Henning died. His estate, through its personal representative, became a substitute party on appeal. On December 17, 1986 a judgment for arrearages was entered against the estate by the trial court.

    17

    Appellant first contends it was error not to uphold the premarital agreement executed in Denmark. However, the trial court's determination that Florida law applies to the issue of enforceability of the antenuptial agreement was correct. A principle of the choice-of-laws doctrine applicable herein presumes that, where a party seeking to rely upon foreign law fails to demonstrate that the foreign law is different from the law of Florida, the law is the same as Florida. Collins v. Collins, 160 Fla. 732, 36 So.2d 417 (1948); Coyne v. Coyne, 325 So.2d 407 (Fla. 3d DCA), cert. denied, 339 So.2d 1168 (Fla. 1976); Morin v. Morin, 466 So.2d 1255 (Fla. 2d DCA 1985). Henning Jensen failed to establish that the law of Denmark permits the enforcement of antenuptial agreements with neither fair provision for the wife nor disclosure of the husband's assets and liabilities.

    18

    It should be remembered that the laws of other nations are enforced by Florida courts only to the extent called for under principles of comity. Where the foreign sovereign has no significant interest in the issue being adjudicated, there is no basis for the invocation of comity. The Florida Supreme Court has expressly held that the principles of comity will not apply where the state in which the contract in dispute was entered into has little or no interest in the matter or controversy. Gillen v. United Services Auto. Ass'n, 300 So.2d 3 (Fla. 1974). Nor will comity be recognized where to do so would bring harm to a Florida citizen or would frustrate an established public policy of this state. 10 Fla.Jur.2d, Conflict of Laws §§ 3, 4, 14 (1979). Here, where testimony established that under Danish law a husband's domicile determines the validity of an antenuptial agreement, comity is inapplicable since the husband was domiciled in Florida at the time of the making of the agreement and Florida was the intended marital home of the couple.

    19

    In Florida, an antenuptial agreement may be abandoned by mutual consent without consideration, as was done in McMullen v. McMullen, 185 So.2d 191 (Fla. 2d DCA 1966), which held:

    20
    Such contracts are contractual in nature and should be construed as other types [1301] of contracts... . The abandonment of a contract may be effected by the acts of one of the parties thereto where the acts of that party are inconsistent with the existence of the contract and are acquiesced in by the other party. This is tantamount to a rescission of the contract by mutual assent. McMullen, 185 So.2d at 193.
    21

    Henning testified that when he tore up a copy of the antenuptial agreement he believed it to be the original and intended its terms to be of no further force and effect. Thus, by act and intent, Henning Jensen abandoned the agreement, rendering it void. Parties to written agreement may by their actions indicate abandonment of its terms. Sinclair Refining Co. v. Butler, 172 So.2d 499 (Fla. 3d DCA 1965). A contract may be abandoned by the parties, and once abandoned, it may not be specifically enforced. Boswell v. Dickinson, 300 So.2d 61 (Fla. 1st DCA 1974).

    22

    Although conceding that an additional witness was not listed in timely compliance with the trial court's order, appellant nevertheless contends it was error to refuse to allow the witness's testimony as an expert or in rebuttal. We find the trial court properly excluded the testimony of this undisclosed witness. Irremedial prejudice could have befallen Mrs. Jensen's cause had the court not exercised its discretionary power. While a hastily scheduled deposing of the husband's surprise expert may have been possible, the time frame for assimilation and analyzation of refuting testimony and documents was too highly compressed to allow the wife a fair presentation. The Florida Supreme Court has expressly disapproved the proposition that impeachment witnesses need not be listed in advance of trial. Binger v. King Pest Control, 401 So.2d 1310 (Fla. 1981). In Binger, the court held that "a trial court can properly exclude the testimony of a witness whose name has not been disclosed in accordance with a pretrial order ... [where] use of the undisclosed witness will prejudice the objecting party." Binger v. King Pest Control, 401 So.2d at 1313-1314.

    23

    Despite appellant's allegation that the final judgment of dissolution substantially endangered his economic status, it is apparent that the trial court used great care in fashioning this award. As is always the case in an appeal from an adjudication of property rights in a dissolution action, the trial court's decision is cloaked in "a presumption of correctness, and appellant's burden is to show that the judgment was clearly erroneous." Meyer v. Meyer, 328 So.2d 531, 532 (Fla. 3d DCA 1976), cert. denied, 344 So.2d 325 (Fla. 1977). Viewing the evidence concerning the parties' earnings and the valuation of the property awarded in the light most favorable to Mrs. Jensen, Mr. Jensen was neither "short-changed" by the final judgment of dissolution nor did he "pass from prosperity to misfortune." While the total amount of lump sum alimony and property Dorrit Jensen received under the final judgment was equitable, it was considerably less than the retained assets awarded Henning. The harm which the law protects against in the review of such awards is the harm of inequitable economic hardship occasioned by a party to the marriage. See, e.g., Tronconi v. Tronconi, 466 So.2d 203 (Fla. 1985). No equities in favor of Henning Jensen have been presented which warrant a change in the trial court's distribution.

    24

    However, it was error on the trial court's part to reserve jurisdiction over the proposed award of Mrs. Jensen's attorney fees. Where the parties were left in equitable positions following dissolution, and there was no showing that such reservation would not result in prejudice, each party should assume responsibility for the fees incurred while pleading his or her cause. Seitz v. Seitz, 471 So.2d 612 (Fla. 3d DCA 1985); Arsht v. Arsht, 467 So.2d 421 (Fla. 3d DCA 1985); Golden v. Golden, 410 So.2d 945 (Fla. 3d DCA), review denied, 419 So.2d 1197 (Fla. 1982).

    25

    Contrary to appellant's contention, the trial court was not divested of jurisdiction [1302] in the dissolution cause by the probate proceedings where the issue under consideration pertained to a judgment for arrearages in back alimony. Blocker v. Ferguson, 47 So.2d 694 (Fla. 1950).

    26
    We are of the view that the chancellor did not commit error in refusing to grant the motion to dismiss the petition. It is well settled that so long as past-due installments of alimony under a valid decree remain unsatisfied they constitute vested property rights, Van Loon v. Van Loon, 132 Fla. 535, 182 So. 205 (1938), which are enforceable against the estate of the deceased husband in the manner and by the method provided by law for the enforcement of any other claim or demand against the estate of a decedent. Fields v. Fields, 140 Fla. 269, 191 So. 512 (1939). And where payment of such a properly filed claim in the probate court is refused or disputed by the personal representative, the claimant has her remedy by bringing in the personal representative as a party to a supplementary proceeding brought for the purpose of adjudicating the validity of the demand, filed in the original suit in which the alimony decree was rendered.
    27

    Blocker v. Ferguson, 47 So.2d at 697.

    28

    The rules stated circumscribe the facts of this cause for within the time prescribed by law Mrs. Jensen filed a claim against the estate of the decedent in the amount of $5,000 for the past-due November 1986 alimony payment. The personal representative of the estate refused to pay the claim or recognize it as valid. The judgment was properly entered.

    29

    The judgments reviewed in this opinion are affirmed, with the exception of that portion reserving jurisdiction of award for the wife's attorney fees, which is reversed.

    30

    Affirmed in part, reversed in part.

  • 14 Elgar v. Elgar

    1
    238 Conn. 839 (1996)
    2
    PAMELA F. ELGAR
    v.
    ERIC M. ELGAR, ADMINISTRATOR (ESTATE OF GEORGE P. ELGAR)
    3
    (15272)
    4

    Supreme Court of Connecticut.

    5
    Argued March 27, 1996.
    6
    Officially released August 13, 1996.
    7

    Peters, C. J., and Callahan, Berdon, Norcott and Katz, JS.

    8

    [840] Miles F. McDonald, Jr., with whom was Donat C. Marchand, for the appellant (plaintiff).

    9

    A. Reynolds Gordon, with whom was Amy J. Greenberg, for the appellee (defendant).

    10
    NORCOTT, J.
    11

    The principal issue in this appeal is whether an antenuptial agreement between the plaintiff, Pamela F. Elgar, and her husband, George P. Elgar (decedent), which contains a New York choice of law provision, is valid and enforceable. The plaintiff appeals from a judgment of the trial court wherein the court concluded that the antenuptial agreement: (1) contained a valid choice of law provision specifying that the agreement was to be interpreted according to New York law; and (2) is valid and enforceable under New York law. We affirm the judgment of the trial court.

    12

    The relevant factual and procedural history is as follows. The plaintiff and the decedent were married in 1988. Prior to their marriage, they had executed an antenuptial agreement wherein each party had waived his or her rights to the other's property in the event of death or divorce.[1] In 1990, the decedent died intestate. [841] There were no children of the marriage. The decedent was survived by two adult children from a prior marriage, Marie Elgar Hopper and Eric Elgar, the defendant in the present action. The Westport Probate Court appointed the defendant as the administrator of his father's estate. Subsequently the antenuptial agreement was admitted to and approved by the Probate Court,[2] and the plaintiff, pursuant to the agreement, was divested of her statutory share of the decedent's estate.[3] Thereafter, the plaintiff appealed the decree of the Probate Court to the Superior Court pursuant to General Statutes § 45a-186.[4]

    13

    The case was referred to an attorney trial referee[5] who conducted a trial de novo. The referee made the following findings of fact and recommended judgment for the defendant. The plaintiff and the decedent were married in Westport on September 25, 1988, after having [842] lived together for the previous four years. Both were experienced business people. During the month of July prior to their marriage, the decedent had told the plaintiff that he would require her to sign an antenuptial agreement before they could be married, to which she had responded "[f]orget about it."

    14

    On the morning of September 22, 1988, after the wedding date had been set for September 25, the invitations had been sent, and the acceptances had been received, the decedent informed the plaintiff that she was to sign an antenuptial agreement on the following day at the New York office of his lawyer, Stephen J. Corriss.

    15

    On September 23, 1988, the plaintiff saw the antenuptial agreement for the first time. Due to her immediate impending marriage and other events in her life, it was a busy day for the plaintiff and she had a lot on her mind. When she arrived at Corriss' office, however, she had already determined that she was going to sign the agreement and that she did not intend to read it. She testified that she understood the agreement to apply only in the event of divorce and had not considered that it would apply in the event of the decedent's death. Moreover, she believed that her refusal to sign the agreement would put her impending marriage in jeopardy. Furthermore, she testified that she would have signed the agreement regardless of its provisions. The night before she signed the agreement, two of the plaintiffs friends had told her that they did not like the fact that she was signing an agreement that she had not read, but she, nonetheless, simply flipped through the agreement quickly, stared at the pages rather than reading them, and signed the agreement.

    16

    Corriss hastily reviewed the agreement with the parties before they signed it and pointed out that it referred to events that would occur in the event of divorce, provided for waivers of rights against one another's [843] estates, and contained a choice of law provision specifying that the agreement was being made pursuant to New York law and would be interpreted accordingly. Immediately before the agreement was signed, the parties wrote out financial disclosures, which were annexed to the agreement.

    17

    At the time the agreement was executed, the plaintiff was a lawful resident and domiciliary of New York and remained so following the marriage. Except for holidays, weekends, and summers in Westport, she resided in New York and educated her daughter from a previous marriage at a school in New York. The plaintiff had a New York driver's license and voted, filed tax returns and patronized a dentist in New York. She also owned a business in New York until 1990. Additionally, the plaintiff had bank accounts, credit cards and store charge cards, which she maintained at her New York address. Despite requests from the decedent, she did not wish to relocate herself and her daughter from New York to Connecticut.

    18

    The decedent considered himself to be a lawful resident and domiciliary of Connecticut, although he spent weekdays with the plaintiff in an apartment in New York and purchased an apartment in New York after their marriage in the name of a trust in order not to jeopardize his Connecticut residency for tax purposes. He also owned a business in New York and managed both his business and his personal affairs using a New York law firm.

    19

    All discussions between the decedent and his attorneys, and the limited discussions between the decedent and the plaintiff in connection with the antenuptial agreement, took place in New York. The antenuptial agreement was negotiated, discussed and executed in New York.

    20

    [844] The trial referee found that in connection with the agreement, the plaintiff had not been represented by an attorney and that the opportunity provided to her to procure an attorney, one day during a busy time in her life, was not reasonable. The plaintiff saw the agreement for the first time in Corriss' office and, for all practical purposes, she did not read it. Although she had told Corriss that she had read it, despite having not done so, under the circumstances, Corriss knew that she was not represented by counsel and should have known that she had not carefully studied the agreement. Corriss knew that the manner in which the agreement was signed was not in conformity with the normal practices of his own office and, in fact, he had received a note from a colleague in which the colleague had stated that he was "distressed by the combination of no counsel and no financial disclosure."

    21

    The referee, however, further found that no false representations had been made to the plaintiff with regard to the contents of the agreement and that there was no proof of fraud, duress or undue influence in connection with its execution.[6] While the parties were neglectful in their rush to sign the agreement, the plaintiff had nevertheless wished to sign the agreement and to get on with her wedding and life regardless of what the agreement said. The plaintiff had told her friends that she had decided in advance to sign the agreement because it was what the decedent wanted, and she wanted to sign it to please him. In fact, the plaintiff produced no evidence that she would not have signed [845] the agreement if she had realized that it had included disposition of the parties' estates upon their deaths.

    22

    On the basis of his factual findings, the referee concluded that under §§ 187 and 201 of the Restatement (Second) of Conflict of Laws (1971),[7] the parties' express choice of New York law was valid and, furthermore, that under New York law, the agreement was enforceable because the plaintiff had not met her burden of proving that the agreement had been the product of fraud. See In the Matter of Sunshine, 51 App. Div. 2d 326, 327-28, 381 N.Y.S.2d 260, affd, 40 N.Y.2d 875, 357 N.E.2d 999, 389 N.Y.S.2d 344 (1976) (New York rule places no special burden on party seeking to sustain antenuptial agreement). The referee submitted his report to the trial court and the trial court, having determined that the referee's findings of fact were supported by the evidence and that the conclusions drawn therefrom were legally and logically correct, accepted the [846] recommendation and rendered judgment in favor of the defendant. The plaintiff appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to Practice Book § 4023 and General Statutes § 51-199 (c). We affirm the judgment of the trial court.

    23

    The plaintiff makes the following claims on appeal: (1) the New York choice of law provision contained in the antenuptial agreement should not have been given effect because (a) it had been obtained by improper means and, alternatively, (b) to give effect to the provision would contravene a fundamental policy of the state that has a materially greater interest in the determination of the issue, namely, Connecticut; see 1 Restatement (Second), supra, § 187; (2) in the absence of an express choice of law by the parties, an application of the test set forth in the § 188 of the Restatement,[8] and the principles set forth in O'Connor v. O'Connor, 201 Conn. 632, 638, 519 A.2d 13 (1986), compels the conclusion that, because Connecticut has the most significant relationship to the parties and the antenuptial agreement, the agreement must be interpreted in accordance with Connecticut law, under which it is unenforceable; and (3) even if the New York choice of law provision is valid, the antenuptial agreement is [847] unenforceable under New York law. We are not persuaded that the referee's finding that the parties' choice of New York law was valid is not supported by the record.[9] Furthermore, we agree with the referee and the trial court that, under New York law, the agreement is enforceable and that, therefore, pursuant to the agreement, the plaintiff was not entitled to her statutory share of her husband's estate.

    24
    I
    25

    Before addressing the validity of the antenuptial agreement, we must first determine under the law of which state the agreement should be assessed. The plaintiff makes two arguments in support of her contention that the New York choice of law provision contained in the agreement was improperly determined to be valid. First, she argues that it is invalid because it was obtained by improper means. See 1 Restatement (Second), supra, § 187, comment (b); see footnote 7. Specifically, the plaintiff argues that she could not have knowingly and voluntarily elected the choice of law provision because she did not, pursuant to the standards governing Connecticut antenuptial agreements, knowingly and voluntarily enter into the agreement. Second, the plaintiff argues that even if she knowingly had agreed to the New York choice of law provision, an application of the parties' choice of New York law in the present case "would be contrary to a fundamental policy of [Connecticut] which has a materially greater interest than [New York] in the determination of the particular issue"; see 1 Restatement (Second), supra, § 187 (2) (b); and, therefore, may not be given effect. We disagree with both of the plaintiffs contentions.

    26
    [848] A
    27

    The plaintiffs first argument puts the cart before the horse. If the agreement itself must be valid under Connecticut law in order for the choice of New York law to be valid, any choice of law provision specifying that the agreement must be interpreted according to the law of another forum would be rendered meaningless. In evaluating a choice of law provision, we conclude, in accordance with comment (c) to § 201 of the Restatement, that "[t]he fact that a contract was entered into by reason of misrepresentation, undue influence or mistake does not necessarily mean that a choice-oflaw provision contained therein will be denied effect. This will only be done if the misrepresentation, undue influence or mistake was responsible for the complainant's adherence to the provision (see § 187, Comment [b] and Illustrations 1 and 2). Otherwise, the choice-oflaw provision will be given effect provided that it meets the requirements of § 187." See footnote 7. Our conclusion is consistent with our prior case law in which we have given effect to an express choice of law by the parties to a contract provided that it was made in good faith. International Union v. General Electric Co., 148 Conn. 693, 699, 174 A.2d 298 (1961); Pollack v. Danbury Mfg. Co., 103 Conn. 553, 557, 131 A. 426 (1925); see also Economu v. Borg-Warner Corp., 652 F. Sup. 1242, 1248 (D. Conn. 1987).

    28

    In the present case, the referee found that there was no evidence of misrepresentation, fraud or undue influence underlying the parties' choice of New York law. "A reviewing authority may not substitute its findings for those of the trier of the facts. This principle applies no matter whether the reviewing authority is the Supreme Court ... the Appellate Court ... or the Superior Court reviewing the findings of ... attorney trial referees. See Practice Book § 443; Rostenberg-Doern Co. v. Weiner, 17 Conn. App. 294, 299, 552 A.2d [849] 827 (1989). This court has articulated that attorney trial referees and factfinders share the same function ... whose determination of the facts is reviewable in accordance with well established procedures prior to the rendition of judgment by the court." (Citations omitted; internal quotation marks omitted.) Wilcox Trucking, Inc. v. Mansour Builders, Inc., 20 Conn. App. 420, 423-24, 567 A.2d 1250 (1989), cert. denied, 214 Conn. 804, 573 A.2d 318 (1990).

    29

    "The factual findings of a [trial referee] on any issue are reversible only if they are clearly erroneous.... [A reviewing court] cannot retry the facts or pass upon the credibility of the witnesses.... Holy Trinity Church of God in Christ v. Aetna Casualty & Surety Co., 214 Conn. 216, 223, 571 A.2d 107 (1990). Rosick v. Equipment Maintenance & Service, Inc., 33 Conn. App. 25, 40-41, 632 A.2d 1134 (1993). A finding of fact is clearly erroneous when there is no evidence in the record to support it ... or when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." (Citations omitted; internal quotation marks omitted.) Farrell v. Farrell, 36 Conn. App. 305, 309, 650 A.2d 608 (1994).

    30

    Our review of the record convinces us that the referee was not clearly erroneous in his finding that the choice of law provision had not been obtained by improper means. See Campisano v. Nardi, 212 Conn. 282, 285, 562 A.2d 1 (1989). The antenuptial agreement contains an explicit "Governing Law" provision that states that "[a]ll matters affecting the interpretation of this Agreement and the rights of the parties shall be governed by the law of the State of New York." Both parties were experienced business people. The referee found that Corriss had reviewed the agreement with the plaintiff briefly before she signed it and had explained that the agreement was created pursuant to New York law [850] and would be interpreted accordingly. Finally, the referee found that the plaintiff had been prepared to sign the agreement regardless of what it said. Such findings adequately support the referee's conclusion that the choice of law provision had not been obtained by fraud or undue influence.

    31
    B
    32

    The plaintiffs second argument in connection with the choice of law provision is based on § 187 of the Restatement. The plaintiff contends that an application of New York law in the present case would be contrary to a fundamental policy of Connecticut concerning the validity of antenuptial agreements and, therefore, may not be given effect. We are not persuaded.

    33

    We conclude, in accordance with § 187 of the Restatement, that parties to a contract generally are allowed to select the law that will govern their contract, unless either: "(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or (b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties."[10] Applying this test to the facts of the present [851] case, we conclude that the parties' choice of New York law was valid and, therefore, was properly given effect.

    34

    The first requirement that must be met in order to satisfy § 187 of the Restatement is that the state whose law is selected must have a substantial relationship to the parties or the transaction, or that there be some reasonable basis for the parties' choice. On the basis of the referee's factual findings, the trial court concluded that New York has a substantial relationship to the parties. We agree with the trial court. The plaintiff was at all times a New York resident and conducted many of her affairs in New York. The decedent spent weekdays in New York and maintained a business in New York. Furthermore, the agreement was executed at the decedent's attorney's office, which is located in New York.

    35

    The second requirement is that the application of the law of the chosen state must not violate a fundamental policy of the state that (1) has a greater material interest in the determination of the issue, and (2) is the state whose law would be applied in the absence of a choice by the parties. Thus, we need consider the relative policy interests only if Connecticut has a materially greater interest than New York in deciding the validity of the antenuptial agreement.

    36

    In light of the referee's findings, the trial court determined that Connecticut did not have a materially greater [852] interest than New York, so as to trigger an inquiry into the relative policy interests. We agree. Although there were significant contacts with Connecticut, including the facts that the marriage took place in Connecticut, that the decedent was a Connecticut resident, and that his estate is in probate in Connecticut, these contacts are not "materially greater" than the contacts with New York. In view of the numerous contacts, as set forth earlier in this opinion, between the parties, the agreement and the state of New York, we conclude that Connecticut does not have a materially greater interest in the enforceability of the agreement than New York. Accordingly, we conclude that the trial court properly upheld the parties' choice of New York law.

    37
    II
    38

    Having determined that the agreement must be interpreted in accordance with the law of New York, we now turn to the plaintiffs claim that even if we were to assume that New York law applies, the trial court improperly concluded that the agreement was valid. Specifically, the plaintiff contends that New York recognizes that the parties to an antenuptial agreement stand in a confidential relationship to each other and that, therefore, once some evidence indicating unfairness has been introduced, the burden of proving the validity of the agreement shifts to the party seeking its enforcement, who must show that it was entered into knowingly and in good faith. We disagree.

    39

    The law in New York with regard to the enforcement of antenuptial agreements is clear. "Under prevailing law and public policy, a duly executed antenuptial agreement is given the same presumption of legality as any other contract, commercial or otherwise. It is presumed to be valid in the absence of fraud .... A party seeking to attack the validity of the agreement has the burden of coming forward with the evidence [853] showing fraud .... Where an antenuptial agreement becomes the subject of litigation the courts will exercise rigid scrutiny in exploring the circumstances within which such agreement was made ... [b]ut, in the absence of proof of facts from which concealment or imposition may reasonably be inferred, fraud will not be presumed.... Such a presumption must have as its basis evidence of overreaching—the concealment of facts, misrepresentation or some other form of deception." (Citations omitted; internal quotation marks omitted.) In the Matter of Sunshine, supra, 51 App. Div. 2d 327-28.

    40

    The referee found that there was nothing in the record "to supply any evidence of coercion or undue influence by either [the decedent] or his attorney," and that the plaintiff had not established fraud or overreaching. These findings are supported by the record and are not, therefore, clearly erroneous. The parties were both experienced business people; Corriss informed the plaintiff of the scope of the agreement; the agreement incorporated full financial disclosure by the parties; and the plaintiff had decided prior to the meeting that she would sign the agreement regardless of what it said. Thus, because there was no evidence of fraud or overreaching, we agree with the trial court that the agreement is enforceable as a valid contract under New York law.

    41

    The plaintiff relies on two cases, both of which were decided in New York prior to 1900; Graham v. Graham, 143 N.Y. 573, 38 N.E. 722 (1894); Pierce v. Pierce, 71 N.Y. 154 (1877); in support of her argument that a confidential relationship exists between the parties to an antenuptial agreement, which shifts the burden of proving its validity to the party seeking its enforcement. As the referee concluded, however, these cases are no longer the current law of the state of New York.

    42

    [854] The Appellate Division of the Supreme Court of New York addressed an argument similar to that raised by the plaintiff in the present case with regard to the burden of proving the validity of an antenuptial agreement. See In the Matter of Liberman, 4 App. Div. 2d 512, 516-17, 167 N.Y.S.2d 158 (1957), aff d, 5 N.Y.2d 719, 152 N.E.2d 665, 177 N.Y.S.2d 707 (1958). In that case, the court stated: "In the absence of proof by petitioner that she was induced to execute the waiver because of fraud or overreaching on the part of the decedent, the waiver must be held valid (Matter of Phillips, 293 N.Y. 483 [58 N.E.2d 504 (1944)]) .... Petitioner relies on Pierce v. Pierce, [supra, 71 N.Y. 154] but in that case there was conclusive proof of fraud and deception on the part of the decedent which had induced the wife to enter into the prenuptial agreement. It should be noted that at the time the Pierce case was decided (1877), antenuptial agreements were presumed to be invalid unless proven otherwise. Now, however, in view of the expression of public policy by the Legislature in amending section 18 of the Decedent Estate Law ... that presumption no longer exists and a prenuptial agreement is presumed to be valid in the absence of proof of fraud, concealment or imposition...." (Citations omitted; internal quotation marks omitted.) In the Matter of Liberman, supra, 516-17. It is clear that the present state of the law in New York is reflected in In the Matter of Sunshine, and that, therefore, the trial court's determination that the antenuptial agreement was valid was proper.

    43

    The judgment is affirmed.

    44

    In this opinion the other justices concurred.

    45

    [1] The antenuptial agreement was executed in the presence of a witness and acknowledged before a notary public. It provides that each party can own, hold and freely dispose of all real and personal property owned at the time of the agreement or acquired thereafter by gift, free from all rights of the other; that each party can dispose of all real and personal property upon death by will, testamentary substitute, or any other arrangement as if the parties had never been married; that each party waived, released and renounced all interest in the other party's estate; and that neither party would contest the will of the other. Further, the agreement provides that the plaintiff waived the right to legal counsel and acknowledged that, in light of the voluntary and knowledgeable nature of the waiver, she would not claim that the agreement was void and unenforceable. Finally, the agreement provides that both parties acknowledge that the agreement was fair, equitable, and entered into voluntarily, not as a result of duress or undue influence.

    46

    [2] The Probate Court determined that the agreement was valid and enforceable and that, therefore, in accordance with General Statutes § 45a-436 (f), which provides that the statutory share of a spouse's estate may be waived by a written agreement, the plaintiff had no right to share in the decedent's estate.

    47

    [3]See General Statutes § 45a-437, which provides in relevant part: "Intestate succession. Distribution to spouse. (a) If there is no will, or if any part of the property, real or personal, legally or equitably owned by the decedent at the time of his or her death, is not effectively disposed of by the will or codicil of the decedent, the portion of the intestate estate of the decedent... which the surviving spouse shall take is ...

    48

    "(4) If there are surviving issue of the decedent one or more of whom are not issue of the surviving spouse, one-half of the intestate estate absolutely."

    49

    [4] General Statutes § 45a-186 provides in relevant part: "Appeals from probate. Any person aggrieved by any order, denial or decree of a court of probate in any matter ... may appeal therefrom to the superior court for the judicial district in which such court of probate is held...."

    50

    [5] See General Statutes § 52-434.

    51

    [6] Simultaneously with the signing of the agreement, the plaintiff was presented with a letter that stated that on several occasions she had been told that she should retain independent counsel but had freely elected not to do so. The referee found that the contents of this letter were untrue and rejected the letter as an effective waiver of anything. The referee further concluded, however, that the letter did not rise to the level of fraud because it had induced nothing and had been neither believed nor relied upon by the parties.

    52

    [7]Section 187 of the Restatement (Second) of Conflict of Laws (1971), provides in relevant part: "Law of the State Chosen by the Parties ...

    53

    "(2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either

    54

    "(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or

    55

    "(b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties."

    56

    Comment (b) to § 187 of the Restatement (Second) provides: "Impropriety or mistake. A choice-of-law provision, like any other contractual provision, will not be given effect if the consent of one of the parties to its inclusion in the contract was obtained by improper means, such as by misrepresentation, duress, or undue influence, or by mistake."

    57

    Section 201 of the Restatement (Second) of Conflict of Laws (1971), provides: "Misrepresentation, Duress, Undue Influence and Mistake

    58

    "The effect of misrepresentation, duress, undue influence and mistake upon a contract is determined by the law selected by application of the rules of §§ 187-188."

    59

    [8]Section 188 of 1 Restatement (Second) of Conflict of Laws (1971), provides in relevant part: "Law Governing in Absence of Effective Choice by the Parties ....

    60

    "(2) In the absence of an effective choice of law by the parties (see § 187), the contacts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include:

    61

    "(a) the place of contracting,

    62

    "(b) the place of negotiation of the contract,

    63

    "(c) the place of performance,

    64

    "(d) the location of the subject matter of the contract, and

    65

    "(e) the domicil, residence, nationality, place of incorporation and place of business of the parties.

    66

    "These contacts are to be evaluated according to their relative importance with respect to the particular issue."

    67

    [9] Because we conclude that the New York choice of law provision was valid, we need not reach the plaintiff's claims in connection with the validity of the antenuptial agreement under Connecticut law.

    68

    [10] Many other jurisdictions have adopted § 187 of the Restatement. See, e.g., Moore v. Subaru of America, 891 F.2d 1445, 1449 (10th Cir. 1989); Uniwest Mortgage Co. v. Dadecor Condominiums, Inc., 877 F.2d 431, 435-36 (5th Cir. 1989); Tele-Save Merchandising Co. v. Consumers Distributing Co., Ltd., 814 F.2d 1120, 1122-25 (6th Cir. 1987); Woodling v. Garrett Corp., 813 F.2d 543, 551 (2d Cir. 1987); Shipley Co. v. Clark, 728 F. Sup. 818, 825 (D. Mass. 1990); Economu v. Borg-Warner Corp., supra, 652 F. Sup. 1248; Cherry, Bekaert & Holland v. Brown, 582 So. 2d 502, 507 (Ala. 1991); In re Estate of Levine, 145 Ariz. 185, 189, 700 P.2d 883 (App. 1985); Sekeres v. Arbaugh,31 Ohio St. 3d 24, 25, 508 N.E.2d 941 (1987).

    69

    Such a rule is supported by the rationale set forth in comment (e) to § 187 of the Restatement, which provides: "Prime objectives of contract law are to protect the justified expectations of the parties and to make it possible for them to foretell with accuracy what will be their rights and liabilities under the contract. These objectives may best be attained in multistate transactions by letting the parties choose the law to govern the validity of the contract and the rights created thereby. In this way, certainty and predictability of result are most likely to be secured. Giving parties this power of choice is also consistent with the fact that, in contrast to other areas of the law, persons are free within broad limits to determine the nature of their contractual obligations."

  • 15 Icahn v. Todtman

    1

    United States District Court, S.D. New York.

    2
    Liba ICAHN, Plaintiff,
    3
    v.
    4
    TODTMAN, NACHAMIE, SPIZZ & JOHNS, P.C., Defendant.
    5

    No. 99 CIV 11783(WHP).

    6

    Oct. 1, 2001. 

    7

    Edward Rubin, Esq., New York, for Plaintiff.

    8

    William S. Beslow, Esq., New York, for Plaintiff.

    9

    Philip S. Kaufman, Esq., Kramer Levin Naftalis & Frankel, LLP, New York, for Defendant. 

    10
    MEMORANDUM & ORDER
    11
    PAULEY, District J.
    12

    This is a diversity action for legal malpractice arising out of the legal representation of plaintiff Liba Icahn (“Icahn”) by the defendant law firm Todtman, Nachamie, Spizz, & Johns, P.C. (the “Todtman Firm”) in a New York divorce action. Icahn, a Connecticut resident, alleges that the Todtman Firm, a New York corporation, erred by recommending that she commence divorce proceedings in New York rather than Connecticut. The Todtman Firm moves for summary judgement on the following grounds: (1) the relevant rules of evidence bar Icahn from offering evidence regarding the advice of the Todtman Firm, (2) New York's statute of limitations bars this action, and (3) Icahn cannot establish “but-for” causation. For the reasons set forth below, defendant's motion is denied.

    13
    BACKGROUND
    14

    In the summer of 1978, plaintiff Liba Icahn, then a 28 year-old interior design trainee, and Carl Icahn, then a 41 year-old millionaire, met and began dating. (Def.'s 56.1 Stmt. ¶¶ 1-2.) After the couple dated for eight months, she learned that she was pregnant. (Def.'s 56.1 Stmt. ¶ 1.) Carl Icahn told Liba Icahn that he would marry her if she signed a prenuptial agreement, and recommended that she consult an attorney. (Def.'s 56.1 Stmt. ¶ 3.) In February or March 1979, Liba Icahn met with and retained an attorney to advise her on the prenuptial agreement. (Def.'s 56.1 Stmt. ¶ 4.)

    15

    On March 20, 1979, the day before her wedding, Icahn and her friends reviewed a prenuptial agreement provided that day by Carl Icahn. (Aff. of Phillip S. Kaufman, dated Sept. 28, 2000 (“Kaufman Aff.”) Ex. 2: Liba Icahn Dep. at 88-89.) After friends advised her that the agreement provided very little for her, Liba Icahn told Carl Icahn that she did not want to sign it. (Kaufman Aff. Ex. 2: Liba Icahn Dep. at 92.) Carl Icahn reiterated that he would not marry her without a prenuptial agreement. (Kaufman Aff. Ex. 2: Liba Icahn Dep. at 93.)

    16

    The next day, Liba Icahn met with her attorney just hours before her wedding to discuss the prenuptial agreement. (Def.'s 56.1 Stmt. ¶ 5.) The attorney reviewed each paragraph of the agreement, explained its terms, and advised her that the agreement was extremely favorable to Carl Icahn. (Def.'s 56.1 Stmt. ¶ 5.) Icahn understood that under the agreement, she was “not getting anything.” (Def.'s 56.1 Stmt. ¶ 5.) Icahn's attorney advised her that if she did not marry Carl Icahn, she could commence a paternity suit against him. (Def.'s 56.1 Stmt. ¶ 6.) Icahn opted to sign the agreement and married Carl Icahn that evening. (Def.'s 56.1 Stmt. ¶¶ 11-12.) 

    17

    In 1993, Icahn retained Carl Tunick (“Tunick”), then a member of the Todtman Firm, to represent her in divorce proceedings against her husband. (Def.'s 56.1 Stmt. ¶ 14.) Tunick was the only member of the Todtman Firm who provided legal counsel to Icahn. (Def.'s 56.1 Stmt. ¶ 23.) In October 1993, Liba Icahn filed an action for divorce against Carl Icahn in New York State Supreme Court in Westchester County. (Def.'s 56.1 Stmt. ¶ 13.) Icahn claimed that the prenuptial agreement should be declared unenforceable on the grounds that she signed it under duress and coercion and that it provided for an unconscionable distribution of marital assets.[1] (Def.'s 56.1 Stmt. ¶ 15.)

    18

    On November 15, 1994, Carl Icahn moved for partial summary judgment dismissing Liba Icahn's claims regarding coercion and duress. (Def.'s 56.1 Stmt. ¶ 17.) Carl Icahn argued, inter alia, that her claim to rescind the prenuptial agreement was barred by New York's six-year statute of limitations. (Def.'s 56.1 Stmt. ¶ 17.) Liba Icahn asserted that the statute of limitations should be tolled during the marriage.

    19

    On April 25, 1995, the trial court found that Liba Icahn's claim accrued fourteen years earlier when she executed the prenuptial agreement. Therefore, her claim was time-barred. (Def.'s 56.1 Stmt. ¶ 18.) The court did not consider the merits of her claims of duress, coercion, or unconscionability. (Def.'s 56.1 Stmt. ¶ 18.)

    20

    Following the trial court's decision, Icahn's confidence in Tunick's abilities waned. (Kaufman Aff. Ex. 3: Icahn Dep. at 196.) Icahn retained additional appellate counsel and appealed the partial grant of summary judgment. (Def.'s 56.1 Stmt. ¶ 20.) On November 12, 1996, the Appellate Division affirmed the trial court's grant of partial summary judgment. (Def.'s 56.1 Stmt. ¶ 19.) After the appellate court's decision, Icahn again sought new counsel. (Kaufman Aff. Ex. 3: Icahn Dep. at 236.) The Todtman Firm performed no services for Icahn after November 27, 1996. (Def.'s 56.1 Stmt. ¶ 22.) Although Icahn spoke with Tunick by phone in December 1996, she does not recall discussing anything other than a request by Tunick to transfer her file to his new law firm. (Def.'s 56.1 Stmt. ¶ 22.) Icahn denied his request. (Def.'s 56.1 Stmt. ¶ 22.)

    21

    On January 6, 1997, Icahn executed a consent to change attorneys in her matrimonial litigation. (Pl.'s 56.1 Stmt. ¶ 2.) Todtman executed the consent agreement on February 6, 1997. (Pl.'s 56.1 Stmt. ¶ 3.) On July 20, 1999, the Icahns settled their dispute; Liba Icahn obtained a divorce on the ground of abandonment and received $20 million and various other assets from the marital estate. (Def.'s 56.1 Stmt. ¶ 25.) Tunick is now deceased. (Def.'s 56.1 Stmt. ¶ 25.)

    22

    On December 3, 1999, Icahn commenced this action alleging that the Todtman Firm committed legal malpractice by advising her to file a divorce action in New York rather than moving to Connecticut and filing in that forum to avoid New York's statute of limitations.

    23
    DISCUSSION
    24
    I. Summary Judgment Standard
    25

    Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment “shall be rendered forthwith if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 2509-10 (1986). The burden of demonstrating the absence of any genuine dispute as to a material fact rests with the moving party. See, e.g., Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608 (1970); Grady v. Affiliated Cent., Inc., 130 F.3d 553, 559 (2d Cir.1997). In evaluating the record to determine whether there is a genuine issue of material fact, “[t]he evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor.” Liberty Lobby, 477 U.S. at 255, 106 S.Ct. at 2513.

    26

    If the moving party meets its initial burden, the non-moving party must come forward with “specific facts showing that there is a genuine issue for trial.” Fed.R.Civ.P. 56(e). The non-moving party must “do more than simply show there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1355 (1986). The applicable substantive law determines which facts are critical and which are irrelevant. See Liberty Lobby, 477 U.S. at 248, 106 S.Ct. at 2510. 

    27
    II. Statute of Limitations for Icahn's Malpractice Claim
    28

    Under New York law, a legal malpractice claim must be commenced within three years of the alleged malpractice. See N.Y. C.P.L.R. 241[6]; see also Panigeon v. Alliance Navigation Line Inc., No. 96 Civ. 8350(SAS), 1997 WL 473385, at *3 (S.D.N.Y. Aug. 19, 1997). It is undisputed that Todtman's act of alleged malpractice occurred on June 14, 1993, more than three years before commencement of this action. Icahn asserts that the three-year statute of limitations should be tolled for a period that the Todtman Firm continued to represent her.

    29

    The rationale underlying tolling during the period of continuous representation is that “the client has a right to presume the professional's ability and good faith, and realistically cannot be expected to question and assess the techniques employed or the manner in which the services are rendered ... or to jeopardize his pending case or his relationship with the attorney handling that case.” Glamm v. Allen, 57 N.Y.2d 87, 93, 453 N.Y.S.2d 674, 678 (1982); see also Greene v. Greene, 56 N.Y.2d 86, 94, 451 N.Y.S.2d 46 (1982). The tolling ceases once a client loses trust and confidence in the attorney. See Aaron v. Romer, Wallens & Mineaux, LLP, 272 A.D.2d 752, 755, 707 N.Y.S.2d 711, 715 (3d Dep't 2000); Pittelli v. Schulman, 128 A.D.2d 600, 601, 512 N.Y.S.2d 860, 861 (2d Dep't 1987). 

    30

    The question of continuous representation is usually one for the trier of fact. See In re Investors Funding Corp. of N.Y. Sec. Litig., 523 F.Supp. 533, 548 (S.D.N.Y.1980) (citing Gnoj v. New York, 29 A.D.2d 404, 288 N.Y.S.2d 368, 369 (1st Dep't 1968)). Broad allegations that counsel continued representation do not merit the application of the continuous representation doctrine “in the absence of more specific allegations that the matters which gave rise to the claim were ongoing matters in which the plaintiff is represented.” See Panigeon, 1997 WL 473385, at *5 (S.D.N.Y.1997). To invoke the continuous representation doctrine, a plaintiff must demonstrate “(1) ongoing representation in connection with the specific matter from which the malpractice arose and (2) clear indicia of an ongoing, continuous developing and dependent relationship between the client and the attorney.” Nobile v. Schwartz, No. 99 Civ. 2375(RWS), 2000 WL 1753036, at *8 (S.D.N.Y. Nov. 29, 2000); Panigeon, 1997 WL 473385, at *4.

    31

    On December 3, 1999, Icahn commenced this diversity action. For it to be timely, the Todtman Firm must have represented Icahn until at least December 3, 1996. Icahn concedes that her confidence in Tunick diminished after April 25, 1995 when the trial court granted partial summary judgment. ( See Kaufman Aff. Ex 3: Icahn Dep. at 196, 236.) However, the Todtman Firm continued to bill Icahn for legal services as late as November 27, 1996. In addition, Icahn offers a letter dated December 23, 1996 from the Todtman Firm advising her appellate counsel that it had been served with the trial court's summary judgment decision and a notice of entry and requesting further instructions. Those circumstances present a question of fact as to whether the Todtman Firm continued to represent Icahn past December 3, 1996. See Baff v. Redfield Blonsky & Co., No. 93 Civ. 3596(MBM), 1995 WL 242107, at *3 (S.D.N.Y. Apr. 26, 1995) (exhibits demonstrating investment firm's professional advice defeated motion for summary judgment based on allegation that no advice was ever given); Gray v. Wallman & Kramer, 224 A.D.2d 275, 275-76, 638 N.Y.S.2d 18, 19 (1st Dep't 1996) (question of fact existed where law firm accepted service of complaint and forwarded to client's new counsel). Accordingly, defendant's motion for summary judgment based on the three-year statute of limitations is denied.

    32
    III. Dead-Man's Statute
    33

    The Todtman Firm contends that Icahn cannot offer evidence of Tunick's alleged malpractice because her only evidence, her conversations with Tunick regarding the legal strategy of her divorce, is barred by New York's “Dead Man's Statute.” (See Def.'s Mem. in Supp. at 13.)

    34

    Rule 601 of the Federal Rules of Evidence provides in part that “in civil actions and proceedings, with respect to an element of a claim or defense as to which State law supplies the rule of decision, the competency of a witness shall be determined in accordance with State law.” Here, it is not disputed that New York law governs Icahn's legal malpractice claim.

    35

    New York's “Dead Man's Statute” provides in part:

    36

    [u]pon the trial of an action or the hearing upon the merits of a special proceeding, a party or a person interested in the event, ... shall not be examined as a witness in his own behalf or interest, ... against ... a person deriving his title or interest from, through or under a deceased person ..., by assignment or otherwise, concerning a personal transaction or communication between the witness and the deceased person ....

    37

    N.Y. C.P.L.R. § 4519. 

    38

    However, evidence that is “otherwise relevant and competent upon a trial or hearing, but subject to exclusion on objection under the Dead Man's Statute, should not predetermine the result on summary judgment in anticipation of the objection.” Phillips v. Joseph Kantor & Co., 31 N.Y.2d 307, 310, 338 N.Y.S.2d 882, 883 (1972); see also Silverstein v. Smith Barney, Inc., No. 96 Civ. 8892(JSM), 1999 WL 33291, at *1 (S.D.N.Y. Jan. 22, 1999) (although New York's Dead Man' Statute may ultimately bar testimony regarding communications with a deceased party, affidavits about those communications were properly before the court on the motion for summary judgment) vacated and remanded on other grounds Silverstein v. Smith Barney, Inc., No. 00-7627, 2001 WL 883549 (2d Cir. Aug. 7, 2001); accord Josephson v. The Crane Club, Inc., 264 A.D.2d 359, 360, 694 N.Y.S.2D 376, 377-78 (1st Dep't 1999); Silvestri v. Iannone, 261 A.D.2d 387, 388, 689 N,Y.S.2d 241, 242 (2d Dep't 1999). Compare Tancredi v. Mannino, 75 A.D.2d 579, 580, 426 N.Y.S.2d 577, 578 (2d Dep't 1980) (defense consisting solely of evidence that might be excludable at trial by reason of Dead Man's Statute was sufficient to defeat summary judgment) with Albany Sav. Bank v. Seventy-Nine Columbia St., 197 A.D.2d 816, 816, 603 N.Y.S.2d 72, 73 (3d Dep't 1993) (summary judgment granted where sole evidence to defense of a cross claim was rendered inadmissible by New York's Dead Man's Statute). Accordingly, defendant's motion for summary judgment based on the exclusion of evidence under New York's Dead Man's Statute is denied.

    39
    IV. “But-For” Causation
    40

    The Todtman Firm offers a trident of reasons why Icahn cannot establish “but-for” causation. First, the defendant contends that a Connecticut court would have barred Icahn's complaint under New York's statute of limitations. Second, the Todtman Firm asserts that Icahn's complaint did not state a prima facie case of duress or coercion under New York law. Finally, the Todtman Firm asserts that Icahn's damages claim is too speculative to support her legal malpractice claim.

    41
    A. Timeliness in the Connecticut Forum
    42

    The Todtman Firm asserts that had Icahn filed her action to rescind the prenuptial agreement in Connecticut, a Connecticut state court would have applied New York's statute of limitations pursuant to the prenuptial agreement's choice-of-law clause.

    43

    Where a statute of limitation is considered procedural, the law of the forum applies. Somahomo v. Somahomo, 615 A.2d 181 (1992) (Conn App.1992); see also Messler v. Barnes Group., Inc., No. CV 960560004, 1999 WL 61034, at *3 (Conn.Super.Feb. 1, 1999) (Connecticut courts will apply the procedural law of the forum state irrespective of the substantive law determined by a choice-of-law provision.). “A statute of limitation is generally considered to be procedural, especially where the statute contains only a limitation as to time with respect to a right of action and does not itself create the right of action.” Jones Destruction, Inc. v. Upjohn, 161 Conn. 191, 195, 286 A.2d 308 (1971); see also Antonios v. Farmers Ins. Exch., No. Civ. 930117917S, 1998 WL 165065, (Conn.Super.Apr. 2, 1998); Cafferty v. Scotti Bros. Records, Inc., 969 F.Supp. 193, 203 (S.D.N.Y.1997); Insurance Co. of North Am. v. ABB Power Generation, Inc., 925 F.Supp. 1053, 1059 (S.D.N.Y.1996); Collucci v. Sears, Roebuck and Co., 585 F.Supp. 529, 532 (D.Conn.1984). But see, Baxter v. Strum, Ruger & Co., 644 A.2d 1297 (1994) (statute of limitations is substantive where the right of action did not exist at common law but was created by statute).

    44

    Under current Connecticut law,

    45

    [a]ny statute of limitations applicable to an action asserting a claim for relief under a premarital agreement[2] is tolled during the marriage of the parties to the agreement, except that equitable defenses limiting the time for enforcement, including laches and estoppel, shall be available to either party. 

    46

    Conn. Gen.Stat. § 46b-36i. However, that tolling provision took effect on October 1, 1995 and applies only to premarital agreements executed on or after that date. See Conn. Gen.Stat. § 46b-36j; see, e.g., Pite v. Pite, No. FA 99-0429262S, 2001 WL 238144, at *5 (Conn.Super.Feb. 20, 2001). Nevertheless, Connecticut courts most likely would have tolled Connecticut's contractual statute of limitations in equity and considered Icahn's claims of unconscionability, duress, and coercion to be timely. See Pite, 2001 WL 238144, at *1, 5 (reviewing a premarital agreement executed in August 1986); Lakin v. Lakin, No. FA 970327718S, 1999 WL 1320464, at *19-20 (Conn.Super.Dec. 6, 1999) (reviewing a premarital agreement executed in 1986); Baumgartner v. Baumgartner, No. FA 960155390S, 1998 WL 811565, at *2-4 (Nov. 9, 1998) (reviewing premarital agreement executed on June 21, 1988) Brooks v. Brooks, No. FA 950143086S, 1997 WL 297586, at *1 (May 20, 1997, Conn.Super.) (reviewing agreement executed in 1987).

    47

    Moreover, while the trial judge determined that Icahn's marriage did not toll the statute of limitations under New York law, a Connecticut court applying New York law may not have reached the same conclusion because New York courts lack consensus on that tolling principle. Compare Rubin v. Rubin, 275 A.D.2d 404, 405, 712 N.Y.S.2d 626, 627 (2d Dep't 2001), with Bloomfield v. Bloomfield, 723 N.Y.S.2d 143, 146 (1st Dep't 2001). See also Dubovsky v. Dubovsky, 725 N.Y.S.2d 832, 834-35 (Nassau County Sup.Ct.2001) (“[W]hile this Court notes its agreement with the reasoning of the Appellate Division, First Department, in Bloomfield ..., it is constrained to follow the well established law in the Appellate Division, Second Department which unequivocally holds that the existence of a viable marriage does not toll the Statute of Limitations with regard to challenges to prenuptial agreements.”) (citing Rubin, 275 A.D.2d at 405, 712 N.Y.S.2d at 627). Thus, a Connecticut court could have found that the statute of limitation was tolled under New York law. Accordingly, the Todtman Firm's motion for summary judgment on the ground that Icahn's underlying claim would have been time-barred is denied. 

    48
    B. Merits of Icahn's New York Divorce Action
    49

    The Todtman Firm also asserts the self-contradictory proposition that Icahn “cannot show that any court-either in New York or Connecticut-would have sustained her claim to set aside the prenuptial agreement on the merits” because she cannot “prove that she had been compelled to sign the agreement by threats of unlawful conduct, and that those threats had operated to deprive her of the exercise of free will.” (Def.'s Mem. in Supp. at 20.) This assertion starkly contrasts with the Todtman Firm's posture as Icahn's attorneys in the divorce action. 

    50

    Icahn's prenuptial agreement contained a New York choice of law provision. Under Connecticut law, “parties to a contract generally are allowed to select the law that will govern their contract, unless either: ‘(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or (b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which ... would be the state of the applicable law in the absence of an effective choice of law by the parties.” ’ Elgar v. Elgar, 679 A.2d 937, 942 (Conn.1996) (citing Restatement (Second) of Conflict of Laws §§ 187-88). The parties do not dispute that New York had a substantial relationship to the Icahns' marriage. Further, a Connecticut court “would consider the relative policy interests only if Connecticut has a materially greater interest than New York in deciding the validity of the antenuptial agreement.” See Elgar, 679 A.2d at 944. The Icahn's were married in New York, they remained married residents of New York for more than fourteen years, and they executed the prenuptial agreement in New York. Thus, Connecticut does not have a “materially greater” interest than New York in determining the validity of the prenuptial agreement. See Elgar, 679 A.2d at 944 (despite decedent's “significant contacts” with Connecticut, including being a Connecticut resident and his estate being probated in Connecticut, Connecticut's interests were not “materially greater” where plaintiff was a New York resident and deceased husband maintained his business in New York.) Accordingly, a Connecticut court would most likely apply New York law.

    51

    The Todtman Firm also asserts that Icahn could not have sustained her claim to rescind the prenuptial agreement because she could not prove that “she had been compelled to sign the agreement by threats of unlawful conduct, and that those threats operated to deprive her of free will.” (Def. Mem. in Supp. at 20.) However, Icahn's action to rescind the prenuptial agreement claimed not only that it was the product of duress and coercion, but also that it was unconscionable. ( See Kaufman Aff. Ex. 5: Amended Verified Compl. ¶ 20.) Thus, Icahn could have sustained a claim without establishing fraud or duress. See Bloomfield, 281 A.D.2d 301, 305, 723 N.Y.S.2d 143, 146 (1st Dep't 2001) (A prenuptial agreement that “provides for no division of property at the end of the marriage, without regard for when, how or why it ends, and absolutely no right of election, is manifestly unfair.”). Accordingly, the Todtman Firm's motion for summary judgment on the ground that she could not have prevailed on her underlying claim is denied.

    52
    C. Speculative Damages
    53

    The Todtman Firm further contends that Icahn's claimed injury is too speculative to sustain a damages award.

    54

    Icahn seeks $1.4 billion, representing one-third of Carl Icahn's purported net worth. (Compl.¶ 58.) Icahn asserts that by either bringing the action in Connecticut or “do[ing] nothing except beg[ging] Carl Icahn for money,” Todtman could have won “even a moderate share” of Carl's Icahn's assets amounting to “tens or hundreds of millions of dollars” (Pl.'s Mem. in Opp. at 9, 10.) However, the Todtman Firm's strategy did not preclude Icahn from bringing her action in Connecticut. 

    55

    When Mrs. Icahn did actually move to Connecticut in 1998 after four years of litigation in New York, she brought suit there. Her husband moved to dismiss the Connecticut suit on the grounds that it was an obvious attempt to do an end run around the statute of limitations decision reached by the Supreme Court, Westchester County and affirmed by the Appellate Division, Second Department during the four years of litigation in New York. Even in those circumstances, however, the Connecticut court rejected the charge of forum shopping and sustained its jurisdiction over Mrs. Icahn's suit, deferring the merits to a later day.

    56

    (See Pl.'s Mem. in Opp. at 10.); see also Icahn v, Icahn, No. 980168862S, 1999 WL 417580, at *3 (Conn.Super. June 9, 1999) (denying Carl Icahn's motion to dismiss for lack of subject matter jurisdiction and reserving decision on the issues of collateral estoppel, res judicata, and the finality of the New York judgment until it was presented with the prenuptial agreement). Rather than pursue the matter in Connecticut, Icahn settled for $20 million. Thus, Icahn cannot claim in this action that the Todtman Firm's advice precluded her from pursuing her “move and sue” tactic. See First Fed. Sav. & Loan Assoc. of Rochester v. Dietz Int'l Public Adjusters, Inc., 143 A.D.2d 45, 48 (1st Dep't 1988) (Where plaintiff's own act resulted in a particular outcome, “any other conclusion must rest on the sheerest of speculation.”).

    57

    Moreover, whether Icahn would have won more than $20 million if she prevailed in Connecticut or New York is sheer speculation. “The rule for proof of damages in legal malpractice is stringent. The lawyer's conduct must have caused damages that are actual and ascertainable. ‘Mere speculation of a loss resulting from an attorney's alleged omissions is insufficient to sustain a prima facie case in malpractice.” ’ Schweizer v. Mulvehill, 93 F.Supp.2d 376, 395 (S.D.N.Y.2000) (citing Luniewski v. Zeitlin, 188 A .D.2d 642, 643, 591 N.Y.S.2d 524, 526 (2d Dep't 1992) (Plaintiff will not prevail on a malpractice claim where the damages are hypothetical and “incapable of being proven with any reasonable certainty.”)); see also Zarin v. Reid & Priest, 184 A.D.2d 385, 387-88, (1st Dep't 1992) (Damages claimed in a legal malpractice action must be “ ‘actual and ascertainable’ resulting from the proximate cause of the attorney's negligence.”); Phillips Smith Specialty Retail Group v. Parker Chapin Flattau & Kimpl, LLP, 265 A.D.2d 208, 210, 696 N.Y.S. 150, 151 (1st Dep't 1999) (“Contentions underlying a claim for legal malpractice which are ‘couched in terms of gross speculations on future events and point to the speculative nature of plaintiffs' claim” are insufficient as a matter of law to establish that defendants' negligence, if any, was the proximate cause of plaintiffs' injuries.”); Tilden v. Profeta & Eisenstein, 236 A.D.2d 292, 293, 654 N.Y.S.2d 10, 10-11 (1st Dep't 1997) (malpractice claim based on attorney's failure to file timely a notice of appeal was “too speculative” to raise a genuine issue of fact with respect to proximate cause). The speculative nature of what Icahn “might have recovered at trial is precisely the risk that her pre-trial settlement avoid[ed].” Schweizer, 93 F.Supp.2d at 395; see also Perkins v. Norwick, 257 A.D. 48, 51, 693 N.Y.S.2d 1, 3 (damages based on what non-parties “might” or “would” have done are “couched in terms of gross speculation”).

    58

    Thus, Icahn's damages based on an award she would have won from her ex-husband if not for the Todtman's Firm's alleged malpractice are too speculative to maintain a claim. However, Icahn's claim for “hundreds of thousands of dollars in [wasted] legal fees,” (Pl.'s Mem. in Opp. at 9), is quantifiable. ( See Kaufman Aff. Ex. 19: Billing Memorandum.) Accordingly, the Todtman Firm's motion for summary judgment on the ground that Icahn's damages are speculative is denied to the extent that she may seek to recover the attorney's fees and costs expended in the underlying action. 

    59
    CONCLUSION
    60

    For the reasons set forth above, the defendant's motion for summary judgment is denied. A pretrial conference is scheduled for October 19, 2001 at 3:00 p.m.

    61

    SO ORDERED.

    62

    [1] Icahn initially alleged that the prenuptial agreement was also a product of fraud because Carl Icahn had misrepresented his income and assets. Icahn dropped this claim after testifying in a deposition that she had not relied on the information in his net worth statement when she signed the agreement. (Def.'s 56.1 Stmt. ¶ 16.)

    [2] Connecticut law provides that “[n]o action ... on any contract in writing [ ] shall be brought but within six years after the right of action accrues” except when the action “is barred in the state of the otherwise applicable law by a statute of limitations which bars the right and not merely the remedy.” Conn. Stat. Ann. § 142-43.

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