Midwest Motor Supply Co. v. Superior Court of Contra Costa Cnty.

56 Cal.App.5th 702

270 Cal.Rptr.3d 683

MIDWEST MOTOR SUPPLY CO., Petitioner,

v.The SUPERIOR COURT OF CONTRA COSTA COUNTY, Respondent;

Patrick Finch, Real Party in Interest.

A160096

Court of Appeal, First District, Division 4, California.

Filed October 28, 2020

Hatmaker Law Group, Susan King Hatmaker, Robert William Branch, for Petitioner.

No appearance for Respondent.

Lebe Law, Jonathan Michael Lebe ; Bisnar Chase, Jerusalem Belgian, Ian Silvers, for Real Party in Interest.

BROWN, J.

Petitioner Midwest Motor Supply Co. (Midwest) seeks writ relief from a trial court order denying its motion to dismiss or stay a lawsuit filed by its former employee, Patrick Finch, on the basis of forum non conveniens. At issue is whether Finch may void a forum-selection clause in his employment agreement under Labor Code section 925, which renders such a clause in an employment contract voidable by an employee if the contract containing the clause was "entered into, modified, or extended on or after January 1, 2017." ( Lab. Code, § 925, subd. (f).)¹ The trial court determined Finch could void the forum-selection clause under section 925 because Midwest modified the compensation provision of Finch's employment agreement in 2017 and again in 2018. Midwest claims this was error, arguing that section 925 applies only when a forum-selection clause itself is modified on or after January 1, 2017. We disagree and shall deny Midwest's writ petition.

BACKGROUND

Finch began his employment with Midwest in October 2014 as a Sales Manager in Training. The terms of Finch's employment were memorialized in an employment agreement. The employment agreement contained a forum-selection clause, which stated: "This Agreement shall be construed in accordance with Ohio Law. The Employee agrees that: (1) Any action brought by the Employee or on the Employee's behalf, concerning, relating to or involving this Agreement, or any other Agreements entered into pursuant to this Agreement, must be venued in Franklin County, Ohio; and (2) Any action brought by the Company, or on its behalf, concerning, relating to or involving this Agreement, or any other Agreements entered into pursuant to this Agreement, must be venued in Franklin County, Ohio. The parties hereby consent to the jurisdiction of the state or courts in said county."

In May 2016, Midwest promoted Finch to Sales Supervisor. The exhibits to the 2014 employment agreement were revised to reflect Finch's promotion. Finch's compensation as Sales Supervisor was controlled by revised Exhibit C. Exhibit C stated that "[t]his description of the Employee's compensation supersedes any and all previous descriptions of such compensation which predates this Exhibit C." As to the details of Finch's compensation, Exhibit C stated: "Please reference the yearly Compensation and Annual Plan Letter." At the time of his promotion, Finch's compensation for 2016 was described in a Compensation and Annual Plan Letter dated January 18, 2016, which set Finch's sales goals and the bonuses he would receive for meeting those goals, along with other bonuses for the year.

On March 10, 2017, Midwest provided Finch with a Compensation and Annual Plan letter for 2017, which revised Finch's compensation, including his sales goals and bonuses for meeting those goals. On March 14, 2018, Midwest provided Finch with a Compensation and Annual Plan letter for 2018, which once again revised Finch's compensation, including his sales goals and bonuses.

In September 2019, Finch filed this lawsuit in Contra Costa County against Midwest, alleging violations of the Labor Code for Midwest's failure to pay his final wages on time and failure to reimburse him for business expenses. Finch also alleged a violation of Business and Professions Code section 17200 and a cause of action under the Private Attorneys General Act.

Midwest filed a motion to dismiss or, alternatively, stay this action on the basis of forum non conveniens. Midwest asserted that Finch was required to litigate his lawsuit in Franklin County, Ohio, pursuant to the forum-selection clause in his 2014 employment agreement. Finch opposed the motion, arguing that the forum-selection clause was unenforceable under section 925.

The trial court denied Midwest's motion. The court concluded that the 2017 and 2018 Compensation and Annual Plan letters modified the 2014 employment agreement that contained the forum-selection clause. Because these modifications occurred after January 1, 2017, the court concluded they triggered Finch's right under section 925 to void the forum-selection clause.

Midwest challenged the trial court's ruling by filing a petition for writ of mandate with us. We issued an order to show cause. The matter is now before us for decision.

DISCUSSION

Section 925 provides: "An employer shall not require an employee who primarily resides and works in California, as a condition of employment, to agree to a provision that would ...:[¶] (1) Require the employee to adjudicate outside of California a claim arising in California." ( § 925, subd. (a).) "Any provision of a contract that violates subdivision (a) is voidable by the employee, and if a provision is rendered void at the request of the employee, the matter shall be adjudicated in California and California law shall govern the dispute." ( § 925, subd. (b).) Section 925 became effective January 1, 2017, and applies "to a contract entered into, modified, or extended on or after January 1, 2017." ( § 925, subd. (f).)²

Midwest and Finch disagree about whether section 925 permitted Finch to void the forum-selection clause in the 2014 employment agreement. Their dispute centers on the meaning of the phrase "to a contract ... modified" in subdivision (f). Midwest argues that this phrase should be interpreted to mean that a forum-selection clause itself must be modified or added to a contract on or after January 1, 2017 in order for an employee to void the clause. Midwest asserts that although it changed Finch's compensation after January 1, 2017, the parties neither modified the forum-selection clause in the 2014 employment agreement nor added a new forum-selection clause, which precludes Finch from voiding the clause under section 925. Finch, embracing the trial court's reasoning, argues that subdivision (f) is not limited to modifications to a forum-selection clause, but rather applies to any modification to a contract containing a forum-selection clause that occurs on or after January 1, 2017. Because his employment agreement was modified after January 1, 2017 to change his compensation, Finch argues section 925 allowed him to void the forum-selection clause, even though no changes were made to the forum-selection clause itself.

We appear to be the first appellate court in this state to address whether section 925 applies to any modification to a contract or is limited to the modification of a forum-selection clause specifically. To resolve this issue, we apply well-known principles of statutory interpretation. " ‘When we interpret a statute, "[o]ur fundamental task ... is to determine the Legislature's intent so as to effectuate the law's purpose. We first examine the statutory language, giving it a plain and commonsense meaning. We do not examine that language in isolation, but in the context of the statutory framework as a whole in order to determine its scope and purpose and to harmonize the various parts of the enactment. If the language is clear, courts must generally follow its plain meaning unless a literal interpretation would result in absurd consequences the Legislature did not intend. If the statutory language permits more than one reasonable interpretation, courts may consider other aids, such as the statute's purpose, legislative history, and public policy." [Citation.] "Furthermore, we consider portions of a statute in the context of the entire statute and the statutory scheme of which it is a part, giving significance to every word, phrase, sentence, and part of an act in pursuance of the legislative purpose." ’ " ( City of San Jose v. Superior Court (2017) 2 Cal.5th 608, 616–617, 214 Cal.Rptr.3d 274, 389 P.3d 848.)

Applying these principles, we agree with Finch's interpretation and conclude that under section 925, a forum-selection clause is voidable by an employee if it is contained in a contract that is modified on or after January 1, 2017, irrespective of whether the modification was to the forum-selection clause or another provision.

Our conclusion is based on the "plain and commonsense" meaning of the statutory language. First, subdivisions (a) and (b) of section 925 identify which provisions of a contract are prohibited by law and voidable by an employee. Among the voidable provisions is a forum-selection clause that "[r]equire[s] the employee to adjudicate outside of California a claim arising in California." ( § 925, subd. (a)(1).) Subdivision (f) then states when a prohibited provision is voidable by an employee—specifically, when a "contract" is "entered into, modified, or extended on or after January 1, 2017." ( § 925, subd. (f).) Contrary to Midwest's contention, subdivision (f) does not limit section 925 ’s applicability to the modification of a forum-selection clause. Instead, section 925 applies, without limitation, to the modification of a "contract," which is well understood to mean every promise agreed to as part of a transaction. (See Rest. 2d Contracts, § 1 ["A contract is a promise or a set of promises for the breach of which the law gives a remedy ...."], italics added.) Read together, the provisions of section 925 state unambiguously that a forum-selection clause in a contract is voidable by an employee when any provision of the contract is modified on or after January 1, 2017.

If, as Midwest urges, we were to read into section 925 a limitation that restricts the statute's applicability to the modification or addition of a forum-selection clause, we would "violate the cardinal rule that courts...