According to a recent Gallup poll, thirty-seven percent (37%) of
U.S. workers report that they telecommute orotherwise work
remotely. Indeed, due to advances in technology, many employees
never report to an office of their employer, but instead use
technology to conduct business on behalf of their employer from a
remote location. Remote employment, however, raises challenges that
the law is just now beginning to resolve. One such challenge is
whether it is fair for an employer to haul remote employees into a
distant district court in order to enforce restrictive covenants
and/or common law obligations to the employer. This presents a new
twist for the age-old problem of jurisdiction and venue in
restrictive covenant disputes.
The United States District Court for the Eastern District of
Pennsylvania recently addressed this issue in Numeric Analytics,
LLC v. McCabe, No. 16-51, 2016 WL 492476 (Feb. 9, 2016). In McCabe,
the employer, a Pennsylvania company, filed a single lawsuit
against five geographically remote departed employees, claiming
that the former employees violated non-solicitation agreements by
leaving the plaintiff's employ, starting a competing business,
and wrongfully soliciting the plaintiff's clients. The former
employees filed a Motion to Dismiss, challenging that the
agreements at issue did not contain forum-selection clauses and
that the Court did not have personal jurisdiction over them because
they did not live in Pennsylvania (the defendants lived in
Colorado, Ohio, Wisconsin and Virginia), they did not work in
Pennsylvania, and many of the defendants had never been to
Pennsylvania for any work-related purpose.
In considering whether it had personal jurisdiction over the
plaintiff's breach of contract claims, the Court analyzed
whether the defendants had minimum contacts with Pennsylvania such
that maintenance of the litigation in the Eastern District of
Pennsylvania did not "offend traditional notions of fair play
and substantial justice." Ultimately, the Court concluded it
had personal jurisdiction over the defendants for purposes of the
plaintiff's breach of contract claims because: (1) the former
employer's back office personnel management occurred in
Pennsylvania; (2) medical coverage, medical benefits and retirement
plans were administered from Pennsylvania; (3) timekeeping,
customer billing and email were managed by Pennsylvania; and (4)
the plaintiff paid the defendants' salaries using a
Pennsylvania bank. The Court did state, however, that the mere
existence of contract, by itself, would have been insufficient to
establish that the defendants had minimum contacts with
Pennsylvania.
Although the Court recognized the burden on defendants in being
forced to litigate in a distant court, the Court found that the
plaintiff's interest in litigating in a single forum outweighed
the burden on defendants. The Court stated: "The benefits that
flow from e-commerce, such as not having to relocate to accept a
position, and the flexibility of work-from-home employment can be
tempered with corresponding obligations to the
employer."
With regard to the plaintiff's common law breach of duty of
loyalty claims, the Court held that it did not have personal
jurisdiction over the defendants. In evaluating the plaintiff's
tort claims, the Court considered whether the plaintiff felt the
brunt of the harm in the forum state, Pennsylvania, and whether the
defendants expressly aimed their tortious conduct at Pennsylvania
such that Pennsylvania was the focal point of the tortious
activity. The Court held that the conduct at issue -the
solicitation of non-Pennsylvania residents -did not deliberately
target Pennsylvania.
Given the above, employers should be careful to include forum
selection clauses in all agreements with remote employees. In
addition, employers should be cognizant that if they are not able
to establish minimum contacts and/or deliberate conduct directed
toward a specific state, they may be forced to litigate claims
against departed employees infar-flung locations.
Numeric Analytics LLC v McCabe.pdf (87.96 kb)
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