The state of California has long prohibited employers from enforcing non-compete agreements within the boundaries of that state. This prohibition has posed a significant challenge to employers with operations in California who seek to protect their goodwill and confidential information. Without the benefit of enforceable non-compete agreements, employers have been exposed to the risk of flight of their key talent. Employers have sought to protect themselves by using confidentiality agreements, customer non-solicitation agreements or other common law protections. However, these efforts often prove to be inadequate.

One strategy employers have tried to avoid the negative effects of California law is to enter into agreements with employees providing that California law will not apply, and that disputes will be decided in jurisdictions outside of California. However, many California employees who wish to work for competitors responded to choice of law and forum selection clauses by engaging in a “race to the courthouse” seeking to nullify their non-compete agreements under California law before employers headquartered or incorporated outside of the state are able to enforce the agreement in a non-California court. In many such cases, California courts have held that choice of law and forum selection clauses are not enforceable, because they are contrary to California public policy. See, e.g., Davis v. Advanced Care Techs., 2007 WL 2288298, at *7 (E.D. Cal. Aug. 8, 2007) (refusing to enforce a Connecticut choice of law provision in a non-competition agreement because doing so would violate California’s public policy); Doe 1 v. AOL, 552 F.3d 1077, 1084 (9th Cir. 2009) (refusing to enforce a Virginia forum selection clause because Virginia state courts did not allow consumer class actions).