In Verdugo v. Alliantgroup, L.P., the Court rejected a forum selection clause and choice of law clause in an employment contract. There the plaintiff filed an action in California. The company filed a motion to stay based on a forum selection clause in her employment agreement. The clause designated Harris County, Texas, as the exclusive forum for any dispute arising out of Verdugo’s employment, and also included a provision designating Texas law as governing all disputes. The trial court agreed. She appealed and argued that the trial court erred because enforcing the forum selection clause and related choice-of-law clause violated California’s public policy on employee compensation. After review, the Court of Appeal agreed and reversed the trial court’s order. It stated that when the claims deal with rights based on unwaivable rights created by California statutes, the party seeking to enforce the forum selection clause bears the burden of proving that doing so “will not diminish in any way the substantive rights afforded . . . under California law.”  The only way to do that is to show that the other state offers the same or greater rights, or the court would apply California law. Here, the Court stated that the fact that a Texas court MAY choose to apply California law was insufficient.

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