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Bad legislation in Sacramento

It marches on and on: "Assembly Bill 335, authored by Assemblyman Felipe Fuentes (D-Los Angeles), would invalidate any mandatory choice of law clause or forum selection clause in an employment contract in California." [California Civil Justice Blog] After all, why give parties a chance to reduce the uncertainties of litigation in advance? It's not as if we want to avoid tactical forum-shopping or anything.

More: Larry Ribstein provides a more extended analysis, with an equally critical conclusion, noting that he takes up these issues in his and Erin O'Hara's new book, The Law Market (first chapter and summary here).

"Nuance" is something this bill [AB 335] avoids assiduously. Many states void some choice of law and forum clauses that would undercut some kinds of mandatory provisions. This bill applies to any employment contract. Even to the ceo of a Fortune 500 company? It protects not only mandatory state laws but also default rules. This prevents interstate firms from getting standardized interpretation of their contracts even where this would not interfere with state policy.

Not only that, the bill includes an escape clause that is sure to provide ample grist for litigation:

(d) Nothing in this section affects the right of an employee to voluntarily agree to a choice of law or forum selection provision that is not required as a condition of employment and that is the subject of independent consideration.

He notes that the bill has already gone down once, so perhaps the march of bad legislation in Sacramento is not so inevitable after all.

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Rafael Mangual
Project Manager,
Legal Policy

Katherine Lazarski
Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.