Choice of Forum • Non-Disclosure Agreements • Personal Jurisdiction

SKF USA INC. v. Pieter Johannis Leendert Okkerse, et al. PICS No. 14-0088 (E.D. Pa. Jan. 15, 2014) Surrick, J. (15 pages).

Where ex-employees validly executed non-disclosure/non-compete agreements with former employer, said ex-employees and agreements were subject to state law and forum selected in the agreements. Motion to dismiss denied.

Defendants were employees of a Louisiana-based affiliate of plaintiff SKF USA INC. that later merged into SKF. SKF is a Delaware corporation with a principal place of business in Pennsylvania. Sometime prior to terminating their employment with SKF, all defendants had signed post-employment confidentiality and non-compete agreements. The agreements contained choice of law and forum provisions selecting Pennsylvania law and courts.

Defendants terminated their employment with SKF and commenced working for one of its direct competitors. SKF filed suit, alleging breach of contract and tortious interference with contract against all defendants, and tortious interference with prospective and/or contractual relations against defendant Okkerse.

Defendants filed motions to dismiss for lack of personal jurisdiction under FRCP 12(b)(2), improper venue under FRCP 12(b)(3) (or in the alternative, motion to transfer pursuant to 28 U.S.C. § 1404[a]) and failure to state a claim under FRCP 12(b)(6). Defendants argued that the forum selection clause – the sole potential basis for personal jurisdiction and venue in the present case – was invalid because Louisiana law, which disfavors non-compete agreements and choice of law and forum selection clauses, should apply.

The court found that pursuant to § 187 of the Restatement (Second) of Conflict of Laws, Pennsylvania had a substantial relationship as it was the principal place of business of plaintiff. It also found that, contrary to defendants’ arguments, Louisiana did not have a materially greater interest simply because Pennsylvania law was contrary to Louisiana’s, or that defendants lived and/or worked in Louisiana, and that Pennsylvania in fact had an interest in enforcing voluntarily negotiated contracts that designate the application of its law, as well as an interest in protecting companies within its borders through the enforcement of non-compete agreements.

The court also found that Pennsylvania could properly assert personal jurisdiction over defendants, rejecting their argument that they lacked minimum contacts with the state, on the basis that minimum contacts were unnecessary the parties enacted a valid forum selection clause.

The court also found Pennsylvania a proper venue, as, in addition to establishing personal jurisdiction, the forum selection clause agreed to by the parties also evidenced their agreement that Pennsylvania was a proper forum.

The court rejected defendants’ argument that plaintiff failed to state a claim on the basis that the non-disclosure/non-compete agreements were invalid because they were not supported by consideration, were not necessary for plaintiff’s protection or reasonable in geographic scope.

The court also found that there was insufficient factual information in the pleadings to determine whether the agreements’ geographic scope was unreasonable on its face, and noted that it was empowered to supply a reasonable limited geographic scope if necessary in order to enforce the agreements.