Osborne v. Brown & Saenger, Inc.

2017 ND 288, 904 N.W.2d 34
CourtNorth Dakota Supreme Court
DecidedDecember 7, 2017
Docket20170254
StatusPublished
Cited by8 cases

This text of 2017 ND 288 (Osborne v. Brown & Saenger, Inc.) is published on Counsel Stack Legal Research, covering North Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Osborne v. Brown & Saenger, Inc., 2017 ND 288, 904 N.W.2d 34 (N.D. 2017).

Opinion

Tufte, Justice.

[¶1] Dawn Osborne appeals from the district court’s order granting Brown & Saenger, Inc.’s motion to dismiss for improper venue. We reverse under N.D.C.C. § 28-04.1-03(5), concluding the forum-selection clause in the parties’ employment agreement violates North Dakota’s public policy against non-compete agreements. The non-compete clause is unenforceable under N.D.C.C. § 9-08-06 to the extent it limits Osborne from exercising a lawful profession, trade, or business in North Dakota.

I

[¶ 2] In 2011, Brown hired Osborne as a sales representative in its Fargo office to sell office supplies to businesses. Brown is headquartered in South Dakota, but operates as a foreign business corporation in North Dakota. Osborne signed’yearly employment contracts with Brown. The parties agree that the 2015 Employment Agreement is the controlling contract for this action, and it was the. only one brought before the district court.

[¶ 3] The two.clauses at issue in deciding the motion to dismiss are the “Agreement Not to.Compete” (“non-compete clause”) and the “Choice of Law/Forum” clauses. The non-compete clause states, in relevant part:

[E]mployee agrees not to engage directly or indirectly, either personally or as an employee, associate, partner, or otherwise, or by means of any corporation or other legal entity, or otherwise, in any business in competition with Employer and, in addition, not to solicit customers of Employer for Employee’s own benefit or for the benefit of any third party, during the term of employment and for a period of two (2) years from the last day of employment, within a 100 mile radius of employment location.

The “Choice of Law/Forum” clause states: “The parties agree that this agreement is governed by the laws of the State of South Dakota and that the state circuit court situated in Minnehaha County, South Dakota, shall be the exclusive jurisdiction of any disputes relating to this Agreement.”

[¶ 4] In January 2017, Brown terminated Osborne. Osborne sued Brown, alleging retaliation, improper deductions, and breach of contract. Osborne also sought a declaratory judgment declaring the non-compete clause to be void. Osborne moved for a preliminary injunction seeking to prevent Brown from enforcing the covenant-not-to-eompete against her. Brown responded to that motion and moved to dismiss the action for improper venue. Brown argued the forum-selection clause in the employment agreement was valid and therefore a North Dakota court was an improper venue. Brown argued that the clause required the case to be heard by the South Dakota court specified in the agreement. The district court, without ruling on the motion for preliminary injunction, agreed with Brown and granted the motion to dismiss.

[¶ 5] Additionally, Brown has sued Osborne in the state circuit court situated in Minnehaha County, South Dakota, seeking a preliminary injunction against Osborne restricting her actions under the non-compete clause.

II

[¶6] We have not previously addressed the standard of review of a district court’s granting of a N.D.R.Civ.P. 12(b)(3) motion on the basis of a forum-selection clause. Because Rule 12 is derived from Fed.R.Civ.P. 12, we view federal interpretations of Fed.R.Civ.P. 12(b)(3) as highly persuasive authority. See Unemployment Comp. Div. v. Bjornsrud, 261 N.W.2d 396, 398 (N.D. 1977) (“[W]hen we adopted the Federal Rules of Civil Procedure we did so with knowledge of the interpretations placed upon them by the Federal courts, and although we are not compelled to follow those interpretations, they are highly persuasive and, in the interest of uniform interpretation, we should be guided by them.”).

[¶ 7] The Second Circuit U.S. Court of Appeals has adopted the following standard of review:

Where the district court has relied on pleadings and affidavits to grant a Rule 12(b)(3) motion to dismiss on the basis of a forum selection clause, our review is de novo. We view all facts in the light most favorable to the plaintiff when determining whether the plaintiff has made a prima facie showing that venue is proper. Issues of contract interpretation are reviewed de novo.

Global Seafood Inc. v. Bantry Bay Mussels Ltd., 659 F.3d 221, 224 (2d Cir. 2011) (quotations and citations omitted). Other circuits agree that this issue requires de novo review. See Rucker v. Oasis Legal Finance, L.L.C., 632 F.3d 1231, 1235 (11th Cir. 2011); Pee Dee Health Care, P.A. v. Sanford, 509 F.3d 204, 209 (4th Cir. 2007); Continental Ins. Co. v. M/V ORSULA, 354 F.3d 603, 606-07 (7th Cir. 2003). Accordingly, we apply de novo review to the district court’s dismissal for improper venue on the basis of a forum-selection clause.

III

[¶ 8] Osborne argues the district court erred by granting Brown’s motion to dismiss for improper venue, because the forum-selection clause in her employment agreement is unenforceable under North Dakota law and selection of a foreign forum would be unreasonable.

[¶ 9] “If the parties have agreed in writing that an action on a controversy may be brought only in another state and it is brought in a court of this state, the court will dismiss or stay the action, as appropriate, unless ... 5. It would for some other reason be unfair or unreasonable to enforce the agreement.” N.D.C.C. § 28-04.1-03; see also Servewell Plumbing, LLC v. Federal Ins. Co., 439 F.3d 786, 789 (8th Cir. 2006) (citing M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972)) (stating that “forum selection clauses are prima facie valid and are enforced unless they are unjust or unreasonable or invalid”). A forum-selection clause “may be set aside if enforcement would contravene a strong public policy of the forum in which suit is brought.” Servewell Plumbing, 439 F.3d at 790 (quotation omitted).

[¶ 10] Osborne argues that it would be unfair or unreasonable to enforce the forum-selection clause, because Brown would be allowed to violate North Dakota’s strong public policy against non-compete agreements. Osborne argues that N.D.C.C. § 9-08-06 provides for such strong public policy.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Melaas v. Diamond Resorts U.S. Collection Development
2021 ND 1 (North Dakota Supreme Court, 2021)
Munson v. Indigo Acquisition Holdings, LLC
2019 ND 197 (North Dakota Supreme Court, 2019)
Berg v. North Dakota State Board of Registration
2018 ND 274 (North Dakota Supreme Court, 2018)

Cite This Page — Counsel Stack

Bluebook (online)
2017 ND 288, 904 N.W.2d 34, Counsel Stack Legal Research, https://law.counselstack.com/opinion/osborne-v-brown-saenger-inc-nd-2017.