Ensuring the Lawfulness of eSignatures for Non-Compete Agreements in the United States

How to eSign a document: e-signature lawfulness for Non-Compete Agreement in United States

Jonathan Pollard non-compete and trade secret attorney in downtown fort lauderdale florida and i'm going to talk today about one of my favorite topics in law which is choice of law and conflicts of law this is heady stuff but it is extremely important particularly in the realm of non-compete litigation so let's go ahead and get into the mix non-competes are contracts these contractual agreements show up principally in two different arenas the employment context and the sale of a business context most contracts today that are drawn up by any business of any significance will contain the following provisions among others contain forum selection clause and a choice of law provision let's unpack this because some people tend to conflate these things a forum selection clause indicates where litigation arbitration etc must be brought let's focus on litigation let's take arbitration off the table a forum selection clause will say any litigation pertaining to the subject of this contract must be pursued in the Middle District of Florida or in the state courts of Pinellas County Florida or what have you that is the forum where litigation must be pursued and anybody who follows me is well aware that you know I hope and pray it's it's not limited to state court in the forums not you know the circuit court of Pinellas County Florida or what have you that's not a knock against that particular court it's just that it's much easier to defend these sorts of cases in federal court particularly if you have complicated choice of law and conflicts of law sorts of issues so that's a forum selection clause it's going to say the forum where litigation must be brought on the flip side you have to it's long provision the choice of law is exactly that it provides which law will govern so you have contract says form is in middle district of florida state or federal courts choice of law shall be florida law now a lot of these contracts use this language where they say florida choice of law shall apply regardless of any conflicts of law principles well that's nonsense that's nonsense because a choice of law provision like that depending on the exact context can implicate the interest of not just the parties to the contract but also the states that have you know interests in the outcome of the litigation so you can't waive those conflicts of law principles you can put it into your contract you're not going to be able to wait that is still going to do a traditional choice of law and conflicts of law analysis so yeah I'll forum selection clause you have a choice of law provision your choice of law provision says Florida choice of law is it necessarily enforceable because the parties agreed to it no no it's not forum selection clauses are almost always enforceable courts will almost always honor the selection of the forum because there's not really a whole lot of other interests attached to forcing someone to litigate in a particular location that's it a forum selection clause just says you have to litigate in Florida you have to litigate in New York you have to litigate in Virginia you have to litigate in in Arlington there's nothing else attached to it it's just saying here's the forum here's where litigation has to be broad but when you get into choice of law that's where you pull in all sorts of other interests in terms of you know you have a choice of law provision says Florida choice of law the person that offended who's being sued for violating a non-compete agreement lives in for instance California where employee non-compete agreements are unenforceable that creates a big sort federalism public policy California's interest is at stake you have a California citizen who's involved in defending this case there's much more there when you look at choice of law then there is when you simply look at a forum selection clause so don't conflate the two of these whereas a forum selection Clause will almost always be enforced a choice of law provision will not necessarily be enforced if it creates a conflict of law with another state that's got a stronger interest so I'm just going to give you some examples of how this can shake down you have sort of the hypothetical that I just laid out you have an employee who works in California for a company that's based in florida this person has never worked in Florida they've only ever worked in California they still live in California they quit their job at this company and they want to go work for a competing company the company which is based in florida sues them in florida for violation of their non-compete agreement this raises substantial issues about the interplay between florida's interests in protecting the rights of the corporate citizen that's based in florida and and california's interest and the interest of this individual who lives in california has worked in california and has never come to florida for any for any purpose but is going to come here to litigate this this non-compete agreement that's the sort of of context where you'll see the court run a choice of law and conflicts of law analysis and this gets extremely technical and it gets back into what is called the restatements the restatement choice of law of the Restatement conflicts of law this is the sort of thing that can only be handled by someone who has significant experience litigating choice of law and conflicts of law issues I'll give you another example from a from a very recent case and this is this is absolutely someone shocking this is the prosperity bank case and this is out of Texas there was a bank based in texas there were some individuals who worked in Oklahoma for a different Bank that Oklahoma bank was acquired by this Texas bank these folks continued working in Oklahoma for the Texas bank the acquiring bank and they all signed non-compete agreements they didn't left that bank to go work for a competing bank and the corporate parent bank in Texas sued them in Texas for violating their non-compete agreements and there was a huge choice of law fight where the the plaintiff insisted the Texas law should apply the defendants of course insisted that Oklahoma law should apply why because Oklahoma law is far less favorable to non-compete agreements ultimately the court found that Oklahoma had a materially greater interest in the dispute apply to Oklahoma law and found that the non-compete agreements at issue were unenforceable that is the classic sort of choice of law conflicts of law scenario what's the upshot of all this well I'll take off the following points number one you should always look at choice of law and conflicts of law you should always consider it you should always run the analysis because you can't look at a contract and just off the top of your head guarantee that the choice of law provision is going to be upheld the contract may say Florida law but you need to really dig into it you need to get all of the facts you need to muster all the facts where was the person working what office were they based out of how much contact did they have with Florida where did they sign the contract XYZ you want to get all this stuff then you want to run the choice-of-law analysis why because the state to state variation between non-compete law from one state to the next is absolutely tremendous and in some instances can be dispositive Florida where I practice is perhaps the most aggressively Pro non-compete stayed in the entire country I can tell you off the top of my head that there are a number of cases where a non-compete would be enforceable under Florida law but it would be unenforceable under North Carolina law under Illinois law certainly under California law or Oklahoma law that's why it's so important to run the choice-of-law analysis because the variation is tremendous and in some cases it can absolutely come down to winning or losing the case so number one choice of law matters it's important you run the analysis number two because the variation from state to state is so tremendous Jonathan Pollard non-compete and trade secret attorney in downtown fort lauderdale florida if you have a question about choice of law and conflicts of law or if you have a non-compete question generally please feel free to call my office be happy to talk with you thanks for watching and have a good day