C.H. Robinson Worldwide v. Fls Transp., No. A08-2105.

772 N.W.2d 528

C.H. ROBINSON WORLDWIDE, INC., Respondent, v. FLS TRANSPORTATION, INC., et al., Appellants Mark Kummer, et al., Defendants.

No. A08-2105.

Court of Appeals of Minnesota.

September 15, 2009.

Joseph W. Hammell, Jessie A. Collings, Dorsey & Whitney, LLP, Minneapolis, MN, for respondent.

Dean A. LeDoux, Abigail S. Crouse, Gray, Plant, Mooty, Mooty & Bennett, P.A., Minneapolis, MN, for appellants.

Considered and decided by WORKE, Presiding Judge; CONNOLLY, Judge; and MUEHLBERG, Judge.

OPINION

MUEHLBERG, Judge.^*

On appeal from the district court's denial of their motion to dismiss, nonresident appellants argue that (1) forum-selection clauses in nondisclosure agreements did not create personal jurisdiction over either parties or nonparties to the agreements; (2) requisite minimum contacts did not exist to create specific personal jurisdiction over appellants who were former employees of respondent; and (3) the district court erred in refusing to dismiss respondent's claims under forum non conveniens. We affirm.

FACTS

Respondent C.H. Robinson Worldwide, Inc., a corporation with its principal place of business in Minnesota, and appellant FLS Transportation, Inc., a Canadian corporation, are competitors in the field of transportation services. After FLS hired eight of respondent's former employees, respondent filed a complaint in Hennepin County District Court against FLS, its officers, and the eight former employees. The complaint alleged that the former employees breached their nondisclosure agreements by wrongfully using respondent's confidential and proprietary information and soliciting respondent's customers on their own behalf and on behalf of FLS. The complaint also alleged that FLS and its top officers "embarked on a knowing and conscious campaign and conspiracy" to induce respondent's former employees to breach their contractual and legal obligations to respondent, and that FLS officers told these former employees that "such obligations can be secretly circumvented, [respondent] will never know, and in the event legal action is commenced FLS will support and defend" them.

Five of the former employees identified in the complaint, including appellants Arlien Casillas, Kenton K. Geghan, and Jody Winkler, signed Confidentiality and Noncompetition Agreements (CNA) during their employment with respondent. Each CNA contained a section entitled "Governing Law" providing that Minnesota law governs the interpretation and enforceability of the agreement; that "any legal action brought to enforce the terms of [the CNA] shall be brought in Hennepin County District Court, State of Minnesota or the United States District Court for the District of Minnesota"; and that the signing employee consents to the jurisdiction of those courts. The other three former employees, including appellants Scott Helton and Peter Katai, signed agreements containing Minnesota choice-of-law provisions, but did not require them to consent to the jurisdiction of Minnesota courts.¹

Appellants moved to dismiss the claims under rule 12.02(b) for lack of personal jurisdiction and on the basis of forum non conveniens. The district court's denial of these motions is the subject of this appeal.

ISSUES

I. Do the CNAs suffice to subject the employees who signed them, as well as FLS and its officers, to personal jurisdiction in Minnesota?

II. Do the requisite minimum contacts exist to subject all of respondent's former employees to personal jurisdiction in Minnesota?

III. Did the district court err in refusing to dismiss this case for forum non conveniens?

ANALYSIS

I.

Whether personal jurisdiction exists is a question of law, which an appellate court reviews de novo. Juelich v. Yamazaki Mazak Optonics Corp., 682 N.W.2d 565, 569 (Minn.2004). Once a defendant challenges personal jurisdiction, the burden of proof is on the plaintiff to show the jurisdiction exists. Dent-Air, Inc. v. Beech Mountain Air Serv., Inc., 332 N.W.2d 904, 907 n. 1 (Minn.1983). When multiple parties are named as defendants, personal jurisdiction must be established for each defendant. See Minn. Mining and Mfg. Co. v. Rauh Rubber, Inc., 943 F.Supp. 1117, 1122 (D.Minn.1996) (stating that contacts of a corporation's officers or employees named as defendants are not judged by the activities of the corporation, and that "each defendant's contacts with the forum state must be assessed individually"). At the pretrial stage, a plaintiff need only make a prima facie showing of jurisdiction, and the complaint and supporting evidence will be taken as true. Hardrives, Inc. v. City of LaCrosse, 307 Minn. 290, 293, 240 N.W.2d 814, 816 (Minn. 1976)

The district court determined that respondent made a prima facie case that Casillas, Geghan, and Winkler consented to personal jurisdiction in Minnesota by signing the CNAs, thus agreeing to the forum-selection clauses therein. The decision to enforce a forum-selection clause lies within the district court's discretion and will not be disturbed unless the clause is "so unreasonable that its enforcement would be clearly erroneous and against both logic and the facts on record." Interfund Corp. v. O'Byrne, 462 N.W.2d 86, 88 (Minn.App.1990) (quotation omitted). A forum-selection clause is unfair or unreasonable only if: (1) the chosen forum is a seriously inconvenient location for trial; (2) the clause appears in a contract of adhesion; or (3) "the agreement is otherwise unreasonable." Id. "[I]n doubtful cases, doubts should be resolved in favor of retention of jurisdiction." Hardrives, 307 Minn. at 293, 240 N.W.2d at 816.

Appellants argue that the CNAs are unenforceable as contracts of adhesion. "Forum-selection clauses in contracts which are termed adhesion — `take-it-or-leave-it' — contracts and which are the product of unequal bargaining power between the parties are unreasonable." Hauenstein & Bermeister, Inc. v. Met-Fab Indus., Inc., 320 N.W.2d 886, 891 (Minn. 1982). That a contract is an adhesion contract can be supported by the existence of boilerplate language, but also depends on "the relative bargaining power of the parties, the opportunity for negotiation, ... and the business sophistication of the parties." Interfund, 462 N.W.2d at 88-89. Valid non-compete agreements must be bargained for and supported by adequate consideration. Sanborn Mfg. Co. v. Currie, 500 N.W.2d 161, 164 (Minn.App.1993). The mere continuation of employment can constitute adequate compensation to uphold non-compete agreements, but the non-compete must be bargained for and provide the employee with real advantages. Davies & Davies Agency, Inc. v. Davies, 298 N.W.2d 127, 130-31 (Minn. 1980). "The adequacy of consideration for [non-compete agreements] signed during an ongoing employment relationship will depend upon the facts of each case." Freeman v. Duluth Clinic, Ltd., 334 N.W.2d 626, 630 (Minn.1983).

Appellants argue that the CNAs were "identical boilerplate agreements," that respondent had superior bargaining power and sophistication, and that Casillas, Geghan, and Winkler were not presented with the CNAs until "several years after their employment [began]" and signed them "in consideration for their [continued] employment." While the record shows that Casillas, Geghan, and Winkler signed the CNAs while already employed, it does not show that Casillas, Geghan, and Winkler received inadequate compensation for signing them or that they lacked business sophistication. The record at this point does not indicate that the CNAs were so unreasonable that their enforcement would be "clearly erroneous and against both logic and the facts on record." Interfund, 462 N.W.2d at 88 (quotation omitted). Appellants also argue that the CNAs subject them to a "seriously inconvenient" forum, citing Hauenstein, 320 N.W.2d at 890. But appellants show no evidence to defeat the presumption that "consideration was received at the time of contracting for the alleged inconvenience." Id. We therefore decline to disturb the district court's decision to enforce the forum-selection clauses.

The district court also determined that the other appellants, though not parties to the CNAs, were bound by the forum-selection clauses therein because they were "closely related" to the dispute. "[A] third party may be bound by a forum-selection clause where it is `closely related to the dispute such that it becomes foreseeable that it will be bound.'" Medtronic, Inc. v. Endologix, Inc., 530 F.Supp.2d 1054, 1056 (D.Minn.2008) (quoting Marano Enters. of Kan. v. Z-Teca Rests., L.P., 254 F.3d 753, 757 (8th Cir. 2001)); see also Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 514 n. 5 (9th Cir.1988) ("[A] range of transaction participants, parties and non-parties, should benefit from and be subject to forum-selection clauses" (quotation omitted)); Hugel v. Corp. of Lloyd's, 999 F.2d 206, 209 (7th Cir.1993) ("In order to bind a non-party to a forum-selection clause, the party must be closely related to the dispute such that it becomes foreseeable that it will be bound." (quotations omitted)). Federal precedent, though not binding on this court, is persuasive on this point. Riley v. Jankowski, 713 N.W.2d 379, 404 (Minn.App.2006), review denied (Minn. July 19, 2006).

In Medtronic, the plaintiff-employer, Medtronic, sued two former employees and their current employer, Endologix, alleging that the former employees solicited Medtronic clients on Endologix's behalf. 530 F.Supp.2d at 1055-56. After Endologix removed the case to federal court, Medtronic argued that the action should be remanded to state court by the terms of the forum-selection clauses in employment agreements between the former employees and Medtronic. Id. at 1056. Although Endologix was not a party to these agreements, the Minnesota federal district court ruled for Medtronic, stating:

There can be little doubt that Endologix is "closely related" to the dispute between Medtronic and [the former employees]. Indeed,...