Tuesday, January 12, 2010
Executive Claim Fails Because of Forum Selection
By: Tommy Eden, Attorney
In Barabe v. Apax Partners Europe Managers Ltd. (Oct. 26, 2009) the 11th Circuit Court of Appeals held that a Georgia executive’s employment claim was brought in the wrong court; really the wrong country. He was terminated after his employer was acquired by an English corporation and the new employer found his position redundant.
Regent Medical Americas LLC was acquired by Mölnlycke Healthcare US LLC—a subsidiary whose parent company was London based Apax Partners Europe Managers Ltd. Shortly before the merger, Timothy Barabe was required to sign a subscription agreement setting forth terms under which he could purchase stock and how, and at what price, he would be paid for those shares if he left the company. In the documents the parties mutually agreed to submit to the jurisdiction of the English courts which replaced Barabe’s former service agreement, which specified the jurisdiction and laws of Georgia.
Barabe was terminated and forced under the Agreement to sell his shares back to the company at a price below market value. He then brought suit alleging eight various causes of action. The 11th Circuit affirmed the dismissal of all counts holding that any counts relating to the subscription agreement were due to be dismissed for improper venue because they were not brought in England as required by the signed subscription agreement.
Common Sense Counsel: This case demonstrates how global mergers and acquisitions can work to the advantage of the party who makes the rules. The best way to win a legal fight is to make sure it is held in your living room, which in the case just happed to be 6000 miles away. American courts will generally enforce forum selection clauses even when they require a U.S. citizen to bring suit in a foreign country. Signing, or creating, a legal document without consulting a lawyer is risky.
Tommy Eden is a Lee County native, an attorney with the local office of Constangy, Brooks & Smith, LLP and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at firstname.lastname@example.org or 334-246-2901. Blog at www.alabamaatwork.com