Fraize v. Fair Isaac Corporation

Filing 33

///MEMORANDUM & ORDER RE 9 Motion to Dismiss for Failure to State a Claim. I grant FICO's motion to dismiss (Doc. 9) without prejudice to Fraize's right to refile his claims in a state or federal court located in Hennepin County, Minnesota. The clerk is directed to enter judgment and close the case. So Ordered by Judge Paul J. Barbadoro.(js)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
Josh Fraize
v.

Case No. 17-cv-231-PB
Opinion No. 2017 DNH 005

Fair Isaac Corporation
MEMORANDUM AND ORDER
Josh Fraize has sued the Fair Isaac Corporation (“FICO”)
for breach of contract, breach of the duty of good faith and
fair dealing, a violation of New Hampshire’s wage act, and
wrongful discharge.

FICO argues that Fraize’s claims must be

dismissed because they are subject to choice of forum clauses in
agreements between Fraize and FICO that require Fraize’s claims
to be litigated in Minnesota.

For the reasons set forth in this

Memorandum and Order, I dismiss Fraize’s claims without
prejudice to his right to refile his claims in the jurisdiction
specified by the choice of forum clauses.

I.

BACKGROUND

Fraize worked for FICO as a salesperson from January, 2014
until April, 2017.

His compensation was determined each year in

part based on an annual “Sales Incentive Plan Participation
Agreement” (“Agreement”).

The 2016 and 2017 Agreements specify

commission percentages that vary based on the extent to which
designated sales targets are met or exceeded.

Under both

Agreements, sales generated pursuant to new contracts are
rewarded with higher commissions than sales that result from
contract renewals.

The 2017 Agreement also authorizes FICO to

reduce a salesperson’s commissions for “large” sales, i.e.,
sales that comprise more than 50% of a salesperson’s annual
sales target.

The 2016 Agreement covers the fiscal year

beginning on October 1, 2015, and the 2017 Agreement covers the
fiscal year beginning on October 1, 2016.
FICO had an established business relationship with Xerox
when Fraize was first assigned to work on the Xerox account.

In

October 2016, after months of negotiation, Xerox and FICO
entered into a new contract that yielded substantial additional
revenue for FICO.

Fraize initially received assurances that

sales resulting from the contract would be treated as new sales
for commission purposes.

In February, 2017, however, FICO

reversed its position and informed Fraize that it intended to
treat the Xerox contract as renewal business rather than new
business.

FICO also informed Fraize that even if the Xerox

contract were treated as new business, his commission would be
reduced because the contract qualified as a “large deal” under
the 2017 Agreement.

Fraize complained about his proposed
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compensation and in April 2017 he was fired in retaliation for
pressing his complaint.
The 2016 and 2017 Agreements contain similar choice of law
and choice of forum clauses.

The 2016 Agreement states:

[u]nless prohibited by applicable law, this Plan will
be interpreted and construed in accordance with and
governed by the laws of the State of Minnesota. Any
action relating to or arising out of this Plan must be
commenced exclusively in the State and Federal Courts
located in Hennepin County, Minnesota, and all
Participants agree to the exclusive venue and
jurisdiction of the Minnesota courts and waive any
objection based on lack of jurisdiction or
inconvenient forum. Doc. 2-4 at 3.
The 2017 Agreement provides:
[e]xcept with respect to Participants who primarily
reside and work in California or unless prohibited by
applicable law, this Plan will be interpreted and
construed in accordance with and governed by the laws
of the State of Minnesota, and all Participants agree
to the exclusive venue and jurisdiction of the State
and Federal Courts located in Hennepin County,
Minnesota and waive any objection based on lack of
jurisdiction or inconvenient forum. Doc. 2-3 at 3.
Notwithstanding these provisions, Fraize filed his
action in Hillsborough County Superior Court on May 10,
2017.

FICO then removed the case to this court on June 13,

2017.

II.

STANDARD OF REVIEW

FICO bases its motion to dismiss on Fed. R. Civ. P.
3

12(b)(6).

The First Circuit has determined that a forum

selection clause can be enforced through a Rule 12(b)(6) motion.
See Claudio-de Leon v. Sistema Universitario Ana G. Mendez, 775
F.3d 41, 46 (1st Cir. 2014); see also Salovara v. Jackson Nat.
Life Ins. Co., 246 F.3d 289, 298 (3d Cir. 2001) (“a 12(b)(6)
dismissal is a permissible means of enforcing a forum selection
clause that allows suit to be filed in another federal forum”).
When evaluating a Rule 12(b)(6) motion, I “accept as true
the well-pleaded factual allegations of the complaint [and] draw
all reasonable inferences therefrom in the plaintiff's favor.”
Martin v. Applied Cellular Tech., Inc., 284 F.3d 1, 6 (1st Cir.
2002).

To survive dismissal, “the complaint must contain

‘enough facts to state a claim to relief that is plausible on
its face.’”

A.G. ex rel Maddox v. Elsevier, Inc., 732 F.3d 77,

80 (1st Cir. 2013) (quoting Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 570 (2007)).

III. ANALYSIS
FICO bases its motion to dismiss on the forum selection
clauses set forth in the 2016 and 2017 Agreements.

In resolving

FICO’s motion, I first determine whether the clauses are
enforceable and then evaluate Fraize’s argument that they do not
reach either his wage act or his wrongful discharge claims.
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A.

Enforceability
In M/S Bremen v. Zapata Offshore Co., 407 U.S. 1, 15, 18

(1972), the Supreme Court held that a forum selection clause is
unenforceable if it was the product of “fraud or overreaching;
if enforcement “would contravene a strong public policy” of the
forum where the suit was filed; if enforcement would be
“unreasonable and unjust;” or if enforcement would cause the
case to be tried in a forum “seriously inconvenient for the”
parties, such that it would “effectively deprive[ the plaintiff]
of [her] day in court.”

See 407 U.S. at 15, 18.1

Fraize first challenges the forum selection clauses by
arguing that they were the product of “fraud or overreaching”
because they resulted from his negotiations with FICO, which is
a business with much greater bargaining power than a mere
employee.

Doc. 14-1 at 9.

This argument is a nonstarter

because courts have consistently enforced forum selection
clauses in contracts between employers and employees despite the

1

The First Circuit has not yet determined whether the
enforceability of a forum selection clause in a diversity case
presents an issue of federal law or state law. See, e.g.,
Lambert v. Kysar, 983 F.2d 1110, 1116 (1st Cir. 1993) (leaving
issue unresolved); see also Rivera v. Centro Medico de Turabo,
Inc., 575 F.3d 10, 16 (1st Cir. 2009) (same). The circuits are
divided on the subject, but I follow the Third Circuit in
concluding that enforceability questions are resolved by using
federal law. See Collins v. Mary Kay, Inc., 874 F.3d 176, 181
(3d Cir. 2017).
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inherent imbalance in their relative bargaining power.

See e.g.

Claudio-De Leon v. Sistema Universitario Ana G. Mendez, 775 F.3d
at 49-50; Silva v. Encyclopedia Britannica, Inc., 239 F.3d 385,
389 (1st Cir. 2001) (enforcing the forum selection clause
contained in an employment contract, despite the fact that the
clause was contained in “boilerplate provisions not subject to
negotiation . . . in small print on the back of the contract.”);
see also Murphy v. Schneider National, Inc., 362 F.3d 1133, 1141
(9th Cir. 2004) (rejecting claim that a forum selection clause
is unenforceable because of non-negotiability of the clause and
power differential between employer and employee).
Fraize next argues that the forum selection clauses should
not be enforced because it would be “seriously inconvenient” for
him to travel to Minnesota to litigate his case.
8.

Doc. 14-1 at

Subjecting a litigant to travel costs, however, is not the

kind of “serious[] inconvenien[ce]” that runs afoul of Bremen.
See In re Mercurio, 402 F.3d 62, 66 (1st Cir. 2005) (“something
considerably more than the mere inconvenience of traveling to
litigate in a different, even faraway foreign jurisdiction, is
required to overcome a contractual agreement to do so.”).
Fraize also argues that the forum selection clauses cannot
be enforced with respect to his wage act and wrongful discharge
claims even if they cover his other claims.
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In Fraize’s view,

New Hampshire has a “strong public policy” encouraging those who
have been wrongfully denied wages or discharged to take legal
action against their employers.

Doc. 31 at 4.

Fraize fears

that this public policy would be undermined if he were required
to litigate his wage act and wrongful discharge claims in
Minnesota because a court in that jurisdiction would refuse to
enforce his rights under New Hampshire law.
I reject Fraize’s argument because he has failed to
demonstrate that his fear is grounded in reality.

Although the

2016 and 2017 Agreements must be interpreted using Minnesota
law, the choice of law clauses in the Agreements do not in any
way restrict a Minnesota court from applying New Hampshire law
to Fraize’s wage act and wrongful discharge claims.

Nor do

Minnesota’s choice of law rules require a court to use Minnesota
law to resolve Fraize’s wage act and wrongful discharge claims.
See Jepson v. General Cas. Co. of Wisconsin, 513 N.W.2d 467, 470
(1994) (Minnesota choice of law principles require the court to
choose which law to apply by evaluating “(1) predictability of
result; (2) maintenance of interstate and international order;
(3) simplification of the judicial task; (4) advancement of the
forum’s governmental interest; and (5) application of the better
rule of law.”).

Accordingly, Minnesota courts have not in the

past hesitated to apply the laws of another state where it is
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appropriate to do so.

See, e.g., Buche v. Liventa Bioscience,

Inc., 112 F.Supp.3d 883 (D. Minn. 2015) (federal district court
in Minnesota interpreting and applying the Pennsylvania state
wage act); Aero Systems Engineering, Inc. v. Opron, Inc., 21
F.Supp.2d. 990, 1002 (D. Minn. July 31, 1998) (denying motion to
dismiss and requiring Minnesota court to apply Canadian law in
suit).

Because Fraize would be free to press his New Hampshire

wage act and wrongful discharge claims in Minnesota, enforcing
the forum selection clauses would not violate any New Hampshire
public policy favoring such claims.
Fraize nevertheless argues that the language of the wage
act itself makes the forum selection clauses unenforceable with
respect to a wage act violation.

The New Hampshire wage act

states, “[an] [a]ction by an employee to recover unpaid wages .
. . may be maintained in any court of competent jurisdiction . .
.”

N.H. Rev. Stat. § 275:53.

Fraize argues that because the

wage act permits a plaintiff to bring a claim in “any court,” a
forum selection clause cannot require that a plaintiff bring a
wage act claim in a specific venue, to the exclusion of other
venues.

I disagree.

If a statute requires a party to assert a claim in a
particular venue and a forum selection clause prohibits the
party from filing the claim in the required venue, the court
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will not enforce the forum selection clause.

See Fog

Motorsports #3, Inc. v. Arctic Cat Sales, Inc., 159 N.H. 266,
268 (2009)(“a court may not enforce a forum selection clause [to
preclude a court in New Hampshire from hearing a case] where it
is required by statute to entertain the action”); see N.H. Rev.
Stat. 508-A:3.

If, however, the statute permits a plaintiff to

bring his claim in more than one venue, and a forum selection
clause requires the plaintiff to bring the suit in one of the
many statutorily-permitted venues, the court will enforce the
clause.

Melia v. Zenhire, Inc., 462 Mass. at 172-173; see Summa

Humma Enters., LLC. v. Fisher Eng’g, 2013 DNH 2, 28-29.

Because

the New Hampshire wage act permits an employee to file a claim
“in any court of competent jurisdiction. . .,”

N.H. Rev. Stat.

§ 275:53, the choice of forum clauses do not violate New
Hampshire law.2
B.

Scope
Fraize also argues that the choice of forum clauses in the

2

The fact that the forum selection clauses state that they will
apply “unless prohibited by applicable law” does not change this
outcome. If the wage act required a particular venue, and a
forum selection clause prohibited that venue, then the forum
selection clause would be invalid with respect to the wage act
claim, because the clause is “prohibited by applicable law.”
The wage act, however, does not prohibit employers and employees
from adopting choice of forum clauses that specify a forum other
than New Hampshire.
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2016 and 2017 Agreements do not cover his wage act and wrongful
discharge claims even if the clauses are otherwise enforceable.
I examine this argument by first construing the choice of forum
clauses and then applying them to each claim in turn.
Both Agreements specify that “[a]ll Participants agree to
the exclusive venue and jurisdiction of the state and federal
courts in Hennepin County, Minnesota and waive any objection
based on lack of jurisdiction or incorrect forum.”
3; Doc. 2-4 at 3.

Doc. 2-3 at

The 2016 Agreement, but not the 2017

Agreement, also prefaces this statement with an additional
declaration that “[a]ny action relating to or arising out of
this Plan must be commenced exclusively in the state and federal
courts of Hennepin County, Minnesota . . . .”

Doc. 2-4 at 3.

Fraize seizes on the omission of this language from the 2017
Agreement and concludes without providing any argument or
citation to relevant authority that the 2017 Agreement’s choice
of forum clause, which he asserts is controlling with respect to
his wage act and wrongful discharge claims, must be read more
narrowly than the 2016 Agreement.
I reject Fraize’s argument because it makes no grammatical
sense.

The language omitted from the 2017 Agreement narrowed

the class of actions subject to the forum selection clause to
actions “relating to or arising out of” the Agreement.
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Doc. 2-4

at 3.

The omission of narrowing language from an agreement

ordinarily will not be read to further narrow the agreement’s
scope.

Because Fraize presents no principled argument to

support his contention that a different result was intended
here, I construe the 2017 Agreement to be at least as broad as
the counterpart clause contained in the 2016 Agreement.
Because I read the forum selection clauses in both
Agreements to cover claims relating to or arising out of either
Agreement, it necessarily follows that Fraize’s wage act and
wrongful discharge claims are covered by the Agreements.

I

reach this conclusion with respect to Fraize’s wage act claim
because the claim arises from the Agreements and involves the
same operative facts as his breach of contract and good faith
and fair dealing claims.

See Collins, 874 F.3d at 185 (forum

selection clause in contract applied to state law wage claim);
Melia v. Zenhire, Inc., 462 Mass. 164, 169 (2012) (forum
selection clause that covered all claims “arising out of” the
contract applied to wage act claim).

Although Fraize’s wrongful

discharge claim does not arise directly from either Agreement,
it relates to the Agreements because Fraize claims that he was
wrongfully discharged for demanding commissions the Agreements
authorized.

See John Wyeth & Bro. Ltd. V. CIGNA Int’l Corp.,

119 F.3d 1070, 1074 (3d Cir. 1997) (citing Webster’s Dictionary
11

for the proposition that a dispute “relates to” an agreement if
it has a “logical or causal connection” to the agreement).

IV.

CONCLUSION

For the aforementioned reasons, I grant FICO’s motion to
dismiss (Doc. 9) without prejudice to Fraize’s right to refile
his claims in a state or federal court located in Hennepin
County, Minnesota.

The clerk is directed to enter judgment and

close the case.
SO ORDERED.
/s/Paul Barbadoro
Paul Barbadoro
United States District Judge
January 4, 2018
cc:

Paul M. DeCarolis, Esq.
James P. Harris, Esq.
Anthony Sculimbrene, Esq.

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