sales in Pennsylvania that have injured Dentsply, a Pennsylvania business. Second, he consented to a Pennsylvania forum when he signed the employment agreement containing the forum selection clause and that clause is valid under The Bremen and its progeny.
We do not agree with either part of Dentsply's contacts argument. In support of its claim that Benton's suit in the Eastern District is sufficient for personal jurisdiction, the plaintiff cites only Justice Brennan's opinion concurring in the judgment in Burnham v. Superior Court of California, 495 U.S. 604, 110 S. Ct. 2105, 109 L. Ed. 2d 631 (1990), in which the Justice agreed that a defendant who is in a state voluntarily even on just one occasion can be served with process and subjected to that state's jurisdiction. The plaintiff relies on Justice Brennan's statement that otherwise a party could invoke "the full benefit of the power of the forum State's courts as a plaintiff while retaining immunity from their authority as a defendant." Id. at 638, 110 S. Ct. at 2124, 109 L. Ed. 2d at 657. Even if we were to accept the reasoning, Burnham is distinguishable because Benton is not pressing any litigation in Pennsylvania while simultaneously trying to avoid jurisdiction here. Instead, he withdrew his action.
In the absence of citation to any relevant authority on this issue, we agree with the defendant that the situation is analogous to one where a nonresident defendant enters and then leaves a state without service of process on him. Without any other basis of exerting jurisdiction over him, he cannot be subject to process in that state. Thus, in the instant case, Benton could invoke the legal process of Pennsylvania but then voluntarily dismiss the action. If no jurisdiction was asserted over him while his suit was pending, his decision to abandon the state courts, in the absence of any other basis of jurisdiction, renders him immune from process.
In regard to the second part of Dentsply's contacts analysis, as we noted above, the plaintiff has the burden of establishing jurisdiction by competent evidence. This argument is thus deficient because Dentsply has provided no evidence concerning Tycom's sales in Pennsylvania or Benton's connection with them. Contentions in a brief are not enough. We therefore turn to the last basis on which personal jurisdiction over Benton is asserted--the forum selection clause.
Benton first attacks the clause by attacking the entire agreement as having been induced by Dentsply's superior bargaining position. We reject this argument. A party cannot contest the validity of a forum selection clause by questioning the enforceability of the entire contract. Corinthian Media, Inc. v. Yelsey, 1992 U.S. Dist. LEXIS 2480, 1992 WL 47546 (S.D.N.Y. 1992)(citing Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 n.14, 94 S. Ct. 2449, 2457 n.14, 41 L. Ed. 2d 270, 281 n.14 (1974)). Instead, he must show that the clause itself was the product of fraud or coercion. Corinthian Media, Inc. An attack on the contract as a whole is not sufficient. See also Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d 953 (10th Cir. 1992).
We also note that, contrary to the plaintiff's suggestion, the validity of the forum selection clause is a matter of federal law, not state law. See Jumara v. State Farm Insurance Co., 55 F.3d 873, 879 (3d Cir. 1995)(enforcement of a forum selection clause is a procedural question, not a substantive one, and thus is governed by federal law, even in a diversity case)(quoting Jones v. Weibrecht, 901 F.2d 17 (2d Cir. 1990)). The employment agreement's choice-of-law provision does not control this issue. See Instrumentation Associates, Inc. v. Madsen Electronics (Canada) Ltd., 859 F.2d 4, 6 (3d Cir. 1988). In any event, extrapolating from Churchill Corp. v. Third Century, Inc., 396 Pa. Super. 314, 578 A.2d 532 (1990), the conclusion we will reach about the validity of the forum selection clause would be the same under Pennsylvania law.
As a matter of federal law, in The Bremen, supra, the Supreme Court rejected American cases that held forum selection provisions invalid as contrary to public policy. Since parties to a contract might have very good reasons for including such a clause in their agreement, a forum selection clause is enforceable unless it is "unreasonable under the circumstances." 407 U.S. at 10, 92 S. Ct. at 1913, 32 L. Ed. 2d at 520 (internal quotation marks and footnote omitted). Among other things not relevant to this case, the Court indicated that such factors as "fraud, undue influence or overweening bargaining power," id. at 12, 92 S. Ct. at 1914, 32 L. Ed. 2d at 522, would justify refusing to enforce the clause. Consistent with The Bremen, the Third Circuit has stated, in part, that a forum selection clause will not be enforced if the resisting party can establish "(1) that it is the result of fraud or overreaching." Coastal Steel Corp. v. Tilghman Wheelabrator, Ltd., 709 F.2d 190, 202 (3d Cir. 1983).
In light of the legal standard the Supreme Court adopted, The Bremen represents, perhaps, the quintessential situation where the clause should be upheld. The forum selection clause in The Bremen was part of a contract freely negotiated between two international corporations for the transatlantic tow of an oil rig from Louisiana to Italy. It designated the London Court of Justice as the forum for any dispute. The rig was damaged en route in the Gulf of Mexico, and Zapata Off-Shore Co., the American owner of the rig, resisted enforcement of the clause. The Court upheld it, ruling that it eliminated much uncertainty and inconvenience to the parties by designating beforehand where they would litigate any dispute arising from the agreement.
In the instant case, on the other hand, the defendant maintains that the clause is invalid because Dentsply had superior bargaining power and did not give him a chance to negotiate over the forum selection clause, which was presented to him in a form contract that he did not understand. He argues that he signed the agreement to save his job, and the clause is therefore the product of overreaching by Dentsply that should render it unenforceable. In opposition, the plaintiff basically argues that the cases the defendant cites are distinguishable, that The Bremen generally upheld the validity of forum selection clauses, and that Benton's perception that he was in a weak position does not mean that Dentsply overreached in having him sign the contract.
We reject the defendant's reliance on his contention that he did not understand the employment agreement. A party to a contract is obligated to understand it before he signs it. We also reject his contention that the form nature of the agreement and the lack of bargaining over the forum selection clause render the clause invalid. Identical arguments were refused in Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 111 S. Ct. 1522, 113 L. Ed. 2d 622 (1991).
Resolution of the defendant's motion boils down to his remaining argument, whether Dentsply overreached by having him sign the contract; stated another way, whether the clause should not be enforced because Benton had no other choice but sign the agreement.
For the purpose of resolving that issue, we believe Benton was in an ongoing employment relationship starting with old Tulsa and continuing with Tulsa and Dentsply. Although Dentsply might have viewed him as a new hire, for all practical purposes he was in the same job.
The parties have not cited any cases dealing with a forum selection clause in this employment context. We have been unable to find any federal appellate authority on point. The Ninth Circuit's decision in Spradlin v. Lear Siegler Management Services Co., Inc., 926 F.2d 865 (9th Cir. 1991), and the cases cited therein, deal with employment agreements executed while the employee still had a choice to enter into the employment relationship. However, we have located some federal district court cases and one state appellate decision on point. The cases are split.
On the basis of overreaching, three courts have refused to enforce a forum selection clause in an employment agreement and have allowed the plaintiff employees to proceed in their chosen forums rather than in the distant forum agreed to in the contract. In Jelcich v. Warner Brothers, Inc., 1996 U.S. Dist. LEXIS 5709, 1996 WL 209973 (S.D.N.Y.), the court did not enforce the clause when the plaintiff employee had been badgered into signing the employment agreement and was also told she had to sign it "as is." While the court also believed that the employee was financially unable to litigate in California, the contractual forum, its citation to Scott v. Guardsmark Security, 874 F. Supp. 117 (D.S.C. 1995), indicates that it considered the employer-employee relationship so inherently unequal as to nullify the clause. Similarly, in Nelson v. Master Lease Corp, 759 F. Supp. 1397, 1402 (D. Minn. 1991), the court refused to rely on the clause in deciding the defendant's motion to transfer to the contractual forum because of the "disparities in bargaining power" between the plaintiff employee and the defendant employer. In Eads v. Woodmen of the World Life Insurance Co., 785 P.2d 328, 331 (Okla. App. 1989), the court ruled, in part, that the clause was the result of "unfair bargaining power" when the plaintiff employee averred that he was forced to sign by the threat that he would lose his job.
On the other hand, two district courts have upheld forum selection clauses in similar circumstances. In Goodman v. Hill-Rom Company, Inc., 1996 U.S. Dist. LEXIS 17602, 1996 WL 685840 (M.D. Fla.), the plaintiff employee was relegated to Indiana from Florida pursuant to the forum selection clause in her employment agreement. Rejecting the employee's argument that she had been coerced, the court stated:
Further, the Court is not persuaded that Plaintiff was coerced because Plaintiff and Defendant did not negotiate the subject clause. Most, if not all, employers require their employees to follow rules, so that business can be conducted in an efficient way. Plaintiff states it was Defendant's choice to merge with Defendant's predecessor in interest, and at that point Defendant requested that Plaintiff sign the Employment Agreement. "It's my way or the highway" is not coercion; some would call it is [sic] "free enterprise." Defendant is not the only possible employer in Plaintiff's line of work. Plaintiff was free to choose other employment which was not subject to the same rules if Plaintiff found Defendant's rules too burdensome. Plaintiff did not do so. The Court concludes there is no compelling reason here to invalidate the forum selection clause. If parties in commercial agreements are not held to those agreements, there would be no certainty or predictability in business transactions.
Id. at *3.
In Corinthian Media, Inc. v. Yelsey, 1992 U.S. Dist. LEXIS 2480, 1992 WL 47546 (S.D.N.Y. 1992), the court also enforced the forum selection clause and denied the defendant employees' motion to transfer to their choice of a forum. In response to the defendants' argument that "they only signed the agreements under the threat of losing their jobs, id. at *3, the court stated:
As defendants themselves acknowledge, however, in order to invalidate a contract on grounds of "economic duress," a party must establish both that the other party put them in a position of economic weakness, and that the other party then exploited that position of weakness. See In Re Consolidated Pretrial Proceedings in Air West Securities Litigation, 436 F. Supp. 1281, 1289-90 (N.D. Cal. 1977). Nothing in the record indicates that either defendant was then in a position of economic weakness, or that they had no meaningful choice other than signing the agreement. If defendants found the agreements or the forum-selection clause in particular to have been so undesirable, they could have refused to sign the agreements and left Corinthian (whether voluntarily or not) to find another job or start their own competing company, as they eventually did.