Whenever I draft or review an employment agreement (or for that matter any contract) one of the first things I look for is a venue provision. Usually there is one, but if not you fall back on the laws of the state the party would like to bring suit in to see if venue works. There is nothing that will take the steam out of a lawsuit then the contention it was filed in the wrong place. Drafting tip – make sure there is a venue provision.
So, assuming there is a venue provision it’s likely there is a choice of law provision as well. Often times the venue provision will require an employee to agree to venue in the state/city where the employer is located. The idea from the employer’s standpoint is it would rather enforce its agreements in the place where it is located and in most cases under the same laws. The provision will look something like this:
Mandatory Venue Provision: Employee and Company agree that any lawsuit arising from or related to this Agreement shall be filed in the state or federal courts of Dallas County, Texas. Employee agrees that Employee consents to jurisdiction in the state or federal courts of Dallas County, Texas.
There are a lot of good things about making an ex-employee defend a lawsuit somewhere other than where they reside. They will have to get a lawyer there and there is the headache of not being at home. That said, it is also very difficult to push a non-compete case in a place where the employee doesn’t live. First, off an employer enforcing a non-compete may seek a temporary restraining order. Assuming the company obtained the TRO in Dallas against an employee that lives in Arizona. The logistics of serving the former employee in Arizona can be daunting. This is especially true when the company wants expedited discovery (depositions/documents). I say all this to underline the concept that venue should be considered in the context of enforcement and how that enforcement will work.
The employer might consider a provision along these lines:
Mandatory Venue Provision: Employee and Company agree that any lawsuit arising from or related to this Agreement shall be filed in the state or federal courts of Dallas County, Texas or the state or federal courts of the county the Employee resides in at the time this Agreement is executed as set forth below. Employee agrees that Employee consents to jurisdiction in the state or federal courts of Dallas County, Texas and will not contest the filing of the lawsuit in Dallas, County Texas based on lack of personal jurisdiction.
Something to consider!