Open Text Communication v. Steven Grimes (D. Md. 2017)

Opinion by Judge Richard Bennett

Holding: A contracting party may unilaterally waive a provision of a contract that was placed in the contract for its’ own benefit.

Facts: Plaintiff brought suit against its former employee and his new employer Defendant for violations of the federal Defend Trade Secrets Act, the Maryland Uniform Trade Secrets Act and several common law causes of action. It was alleged that before Grimes departed from his high level executive position at Plaintiff, he stole confidential and proprietary customer data from an internal database and used that data in his new position at the Defendant’s company in order to solicit Plaintiff’s clients. The Defendants were also alleged to have stolen employee’s from Plaintiff. This violated various “non-compete” clauses in the employment contracts for all of the former Plaintiff employees involved in the exodus. Defendant is a direct competitor of Plaintiff.

The Defendant’s argued in a Motion to Dismiss that Plaintiff was bound to a forum selection clause which was listed in the “Employee Confidentiality, Non-Solicitation, and Invention Assignment Agreement, that each employee involved in this matter signed. Plaintiff, is a Canadian company, had delineated in its’ contracts that disputes between the company and employee’s and former employee’s would be handled in Canadian courts. The causes of action alleged in the Plaintiffs complaint however, took place in Maryland. The Defendant employee, the alleged mastermind of the plot, worked out of his home in Clarksville, Maryland. The agreement primarily was put in place to prevent employee’s from sharing confidential company information. The Defendant employee signed the agreement which stated specifically that he would “keep confidential and hold in secrecy” all of Plaintiffs confidential information for a period of three years following the end of his employment. He was also prohibited from publishing or sharing the information, and soliciting employee’s to leave Plaintiff for a period of six months following his termination.

Analysis:

The basis of the Motion to Dismiss was focused on an improper forum argument formum non conveniens and referenced the forum selection clause listed below;

“This  agreement  and  all  the  rights  and  obligations  arising  herefrom  shall  be  interpreted  and  applied  in  accordance  with  the  laws  of  the  Province  of  Ontario and in the courts of the Province of Ontario there shall be exclusive jurisdiction  to  determine  all  disputes  relating  to  this  Agreement  and  all  the  rights  and  obligations  created  thereby.  I  hereby  irrevocably  attorn to  the  jurisdiction of the courts of the Province of Ontario.”

On this aspect of the matter, the Court found that the Defendant had failed to prove that a Canadian court would reach a different result than it would adjudicating the case on the facts. The Defendant argued that the since the clause only benefited the Plaintiff, the Plaintiff should be bound to it and not allowed to continue with the case in Maryland. The Court did not agree.

 “The Court notes that regardless of whether the Defendant agreed to “irrevocably attorn to the jurisdiction  of  the  courts  of  the  Province  of  Ontario, that alone, “did  not  foreclose Plaintiffs ability to  file  suit  in  Defendant Employee home  state.  The Court then provided that “[I]t  is  well  settled  that  a  contracting  party  may unilaterally waive a provision of the contract...which has been placed in the contract for that party’s  benefit.” 132 S.W.3d 302, 307 (Mo. Ct. App. 2004); JetBlue Airways Corp. v. Stephenson, 88 A.D.3d 567, 574, 931 N.Y.S.2d 284, 289 (2011).

The Court went on to draw a distinction referencing the nature of the agreement that was the subject of the lawsuit versus that of an agreement drafted to obligate “each party” to a particular jurisdiction. The wrongful acts were alleged to occur in Maryland, so the filing of lawsuit where the defendant resided was deemed to be the proper forum.  The Motion to Dismiss based on forum non conveniens was denied.

The Motion also argued that eight of the ten counts alleged in the complaint were outside of the scope of the Clause because the usage of the Plaintiffs files was not related to the Defendants employment.

The Court decided that: “In sum, while all ten counts in the Complaint shall survive Defendants’ Motion based on Plaintiffs waiver of the forum selection clause in the Agreement, this Court notes that even if the forum selection clause were not waived, eight of the ten counts would still proceed to discovery.”

The opinion is available in PDF.