A computer programmer from India who filed a declaratory action to void a noncompetition agreement he signed after coming to the United States had to litigate the action in Michigan pursuant to a forum-selection clause in the noncompete, a federal District Court judge has ruled.
When the plaintiff employee, Rishi Vas Kurra, arrived in the U.S. on an H-1B visa, his Michigan-based employer, Synergy Computer Solutions, informed him there were no projects for him. He found work through a staffing agency in Massachusetts, with Synergy paying his salary. When another company offered him a permanent job, Synergy allegedly threatened to sue to enforce the noncompete and to recoup $9,500 in visa application and travel expenses.
The employer removed the plaintiff’s subsequent declaratory action from Superior Court to U.S. District Court and sought to enforce the forum-selection clause. The plaintiff argued in response that the clause was void because he signed it under duress.
But Judge Allison D. Burroughs disagreed.
“[T]he evidence indicates that Kurra was aware of and agreed to the Agreement, including its forum-selection clause, before he left India, and before Synergy obtained the ‘overwhelming bargaining power’ that could have potentially given rise to a duress argument,” Burroughs wrote in granting Synergy’s motion for transfer. “[T]he ‘presumption of enforceability’ [of forum-selection clauses] remains in force.”
Burroughs also found that the case met the $75,000 threshold for federal jurisdiction, rejecting the plaintiff’s argument that only $9,500 in visa processing and travel expenses was at stake and finding instead that the plaintiff’s own interest in defeating the noncompete was worth more than $75,000.
The 17-page decision is Kurra v. Synergy Computer Solutions, Inc.
The defendant employer’s attorney, Richard M. Gelb of Boston, said that with so many tech workers in the Boston area on H-1B visas, a situation like the one involving his client could arise fairly frequently.
Gelb said the decision sends an important message to employers that even though noncompetes and forum-selection clauses are favored as a matter of public policy, and despite the fact that the employee has a heavy burden of showing duress, employers cannot assume that noncompetes and forum-selection clauses will be enforced in every case.
“You have to make the assumption that the issue could end up in an evidentiary hearing and make sure you have documentary evidence that supports the lack of duress,” he said. “In this case we could show that [the plaintiff] signed a noncompete in India and then [the defendant] presented another one to him here. So based on this decision, it seems that as long as a company can show it placed its employee on notice before he arrived in the U.S., the employee won’t be able to argue he was under duress.”
Plaintiff’s counsel Joshua A. McGuire, who practices in Newton, Massachusetts, said the result should serve as a reminder to all workers to seek good legal counsel when they are asked to sign a noncompete agreement.
“Very often at the point where people are getting a job, they’re reluctant to do a lot of pushing back or getting lawyers involved when asked to sign agreements,” he said. “But it’s important to get counsel and understand what they’re signing, and perhaps negotiate about provisions that have implications a long way down the line.”
Still, McGuire said, the case illustrates the hardships that guest workers from other countries can face.
“Mr. Kurra was asked to sign the agreement very shortly after he was brought over at a time where he didn’t necessarily know anyone here, may not have had the ability to get counsel, and didn’t know he’d be sent out of state to take an assignment,” he said. “Meanwhile, Mr. Kurra has no recollection of signing [the noncompete] in India and didn’t have a copy when he came over. And they did ask him to sign again once he had arrived in Michigan.”
Michael L. Rosen of Boston, who handles noncompete litigation, said he has not seen many cases in which an employee preemptively brings a declaratory action to void a noncompete. The more common scenario has the employer suing to enforce it, he said.
In the cases he has seen in which an employee files first, it typically is to bring suit in a states where noncompetes are unenforceable, such as California, and it is usually the plaintiff’s new employer bringing the action.
“So you get these potential race-to-the-courthouse scenarios where a hypothetical Massachusetts employer wants to sue [in Massachusetts] first,” he said. “But the employee knows where he’s going before his prior employer does and can bring a declaratory action before the old employer knows what’s happening.”
Regarding enforceability of the forum-selection clause in Kurra, Rosen speculated that the fact that there was a real connection to Michigan probably helped the employer.
“Had it been California or Texas or some other faraway state completely disconnected from the facts and contacts of the parties, perhaps a judge would have been more reluctant to enforce it,” Rosen said.
John R. Bauer of Boston, who also handles noncompete litigation, found the judge’s analysis of the amount-in-controversy matter particularly interesting. He noted that other circuits have considered the issue, but in those cases the employer was the plaintiff and had to show it would suffer at least $75,000 in lost business should the employee be allowed to continue working for the new employer.
Here, the plaintiff alleged that he would suffer damages if the noncompete was enforced, Bauer said.
“The court considered what income the plaintiff-employee would lose if ordered to cease employment with his [new] employer,” he said. “That amount clearly exceeded $75,000.”
Michael L. Rosen of Boston, who handles noncompete litigation, said he has not seen many cases in which an employee preemptively brings a declaratory action to void a noncompete; the more common scenario has the employer suing to enforce it.
In January 2014, the plaintiff, who lived in India, entered into an agreement with an affiliate of defendant Synergy Computer Solutions, under which Synergy agreed to employ him in the U.S. for 18 months and to apply for an H-1B visa on his behalf.
As part of the agreement, the plaintiff agreed to start working for Synergy within 18 months, and if he were to leave Synergy within 18 months of joining, he would reimburse the company for his visa processing fees and other expenses incurred on his behalf.
According to the plaintiff, the company told him that it had several clients who needed his services and that he would be “staffed” on a project for one of them. The company then secured an H-1B visa on the plaintiff’s behalf, representing in the application that he would be working for a particular client, Johnson Controls.
The plaintiff arrived in Michigan, where Synergy was based, in February 2015. But upon his arrival, a human resources representative told him she did not know of any contract with Johnson Controls and there were no other projects for him to work on.
The company then apparently told him to search job listings for a position in which Synergy could staff him. In the meantime, the plaintiff was paid a stipend instead of a salary.
According to the plaintiff, when he arrived he was also told to execute a noncompete agreement, which he claimed the company did not tell him about when he entered the visa application agreement a year earlier. Nonetheless, he signed the noncompete in March 2015.
The plaintiff eventually found a position with a staffing company in Woburn and began working there in June 2015. He was placed with Kronos, a Chelmsford, Massachusetts, company, but remained a Synergy employee and Synergy paid his salary. Meanwhile, he claimed that Synergy initially told him it would apply to extend his visa, but did not respond to his efforts to follow up.
On Sept. 30, 2015, the last day an employer could submit a renewal application for his H-1B visa, Kronos offered the plaintiff a full-time position and agreed to file a visa extension application on his behalf.
Several days later, the plaintiff told Synergy he was resigning. Synergy allegedly responded that it would take legal action and seek reimbursement for visa processing fees and travel expenses it had paid on his behalf. The company followed up with a letter formally demanding that he pay back the $9,500 and reminding him of his noncompete agreement.
The plaintiff then filed an action in Superior Court seeking to void the noncompete on grounds of duress. Synergy removed the case to U.S. District Court, where it sought to have the case transferred to the Eastern District of Michigan pursuant to a forum-selection clause in the noncompete.
The plaintiff moved to remand the case back to state court on grounds that there was less than $75,000 in controversy.
Burroughs denied the plaintiff’s motion to remand.
The judge pointed out that most courts assess the amount in controversy from the viewpoint of the plaintiff, and when the plaintiff is seeking declaratory relief, the amount in controversy is the “value of the right or the viability of the legal claim to be declared.”
Here, Burroughs observed, the plaintiff sought a declaration that he did not need to reimburse Synergy for visa fees and travel expenses, making that particular claim worth $9,500 to him.
Additionally, the value of the noncompete being voided could be assessed by the amount the plaintiff would stand to lose should it be enforced, the judge continued.
“Assuming the Non-Competition Agreement is enforced for a one-year term, Kurra would be prohibited from working for Kronos for 12 months,” Burroughs said. “Thus, he stands to lose at least the $110,000 salary that he presently earns at Kronos.”
Meanwhile, Burroughs rejected the plaintiff’s argument that the forum-selection clause was unenforceable because he signed the noncompete under duress.
Specifically, the judge found that despite the plaintiff’s contention that the noncompete was sprung on him by surprise after he arrived in Michigan, he had actually executed a previous one more than a year earlier while still in India.
As a result, the judge concluded, the case should be transferred to Michigan pursuant to the forum-selection clause.