CACD Federal MTD — Employment Forum-Selection (§ 925)

California Labor Code § 925 voids out-of-state forum-selection, choice-of-law, and arbitration clauses for employment contracts entered into by California-resident employees, with limited carve-outs. The statute is the most consequential California-law trump to the federal Atlantic Marine default and routinely defeats motions to dismiss or transfer in employment cases.

State law governs threshold FSC validity

Whether the forum-selection clause itself is enforceable is governed by state law. DePuy Synthes Sales, Inc. v. Howmedica Osteonics Corp., 28 F.4th 956 (9th Cir. 2022). Federal Atlantic Marine deference attaches only after the state-law validity inquiry is resolved in the FSC's favor. A successful § 925 attack means the federal default never engages.

The § 925 prohibition

Section 925(a) bars employers from "requir[ing] an employee who primarily resides and works in California, as a condition of employment, to agree to a provision that would either: (1) Require the employee to adjudicate outside of California a claim arising in California, or (2) Deprive the employee of the substantive protection of California law with respect to a controversy arising in California." The statute reaches forum-selection, choice-of-law, jurisdiction, and arbitration clauses.

"Condition of employment" is read broadly

Where the agreement containing the FSC is contemporaneous with or part of the employment relationship, it is a "condition of employment" within § 925, even when the FSC sits inside a merger agreement, NCA, or acquisition document. Ryze Claim Solutions LLC v. Superior Court, 33 Cal. App. 5th 1066 (2019). The merger-and-employment-as-mutually-conditional framing matters: where founders are absorbed into the buyer's workforce ("acquihire"), the FSC inside the merger documents is a condition of employment.

The § 925(e) "individually represented by counsel" carve-out is narrow

The statute does not apply where the employee is "in fact individually represented by legal counsel in negotiating the terms of an agreement." § 925(e). Corporate counsel does not count. La Jolla Cove Motel & Hotel, Inc. v. Superior Court, 121 Cal. App. 4th 773 (2004). The carve-out is read narrowly: shared deal counsel, transaction counsel, or counsel for the employer's business does not satisfy "individually represented" for the employee.

Scope: does the FSC reach the asserted claims?

Independent of § 925, the FSC must by its terms reach the claims at issue. Manetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 509 (9th Cir. 1988). FSCs in merger or NCA documents typically govern claims that "relate to interpretation of the contract"; employment-based torts and statutory claims (FMLA, CFRA, wage theft, retaliation, wrongful termination) commonly fall outside that scope.

Petersen v. Boeing factual-conflict rule

On a Rule 12(b)(3) motion challenging venue or seeking FSC enforcement, the court may consider extrinsic evidence, but factual conflicts must be resolved in favor of the non-movant. Petersen v. Boeing Co., 715 F.3d 276 (9th Cir. 2013). This rule allows plaintiffs to defeat the FSC on factual disputes (e.g., whether negotiation was even possible).

Section 1404(a) discretionary transfer

Absent a valid FSC, the court applies the eight Jones v. GNC Franchising, Inc., 211 F.3d 495 (9th Cir. 2000) factors for discretionary transfer. Where § 925 voids the FSC, those factors typically do not favor transfer in employment cases brought by California-resident plaintiffs.

How CACD applies it (corpus examples)

• 443777578 (Vasan v. Checkmate.com — Frimpong): denied motion to dismiss/transfer in full; merger agreement and NCA contained New York FSCs; § 925 voided both because plaintiff primarily resided and worked in California, the merger was a condition of employment under an acquihire framing, and plaintiff was not "individually represented" within the meaning of § 925(e); claims (FMLA, CFRA, wage theft, retaliation, wrongful termination, civil conspiracy) also fell outside the scope of the merger-document FSC; § 1404(a) factors did not favor New York.

If you're the moving party (employer seeking enforcement)

• Document specific evidence the employee was individually represented by counsel during negotiation. Generic "deal counsel" presence does not suffice.
• Frame the agreement as separate from employment — a true acquisition with an arms-length, post-close hire is harder to characterize as an employment-condition.
• For arbitration clauses, consider FAA preemption arguments alongside § 925 — case law on the interaction is unsettled.
• Identify any claims clearly within the FSC's scope (e.g., breach of merger contract) and frame the venue motion narrowly to those.

If you're the opposing party (California-employee plaintiff)

• Plead California residency and California-based work clearly. The "primarily resides and works" element is fact-driven.
• Frame mergers, acquisitions, and NCAs as conditions of employment when the employment offer is mutually conditional with the deal close (acquihire framing).
• Identify the absence of individual employee counsel in negotiation — corporate or shared deal counsel does not qualify.
• Plead employment-based statutory and tort claims to fall outside merger-document FSC scope under Manetti-Farrow.
• Use Petersen v. Boeing's factual-conflict-favors-non-movant rule to defeat factual disputes about negotiation possibility.