Choice-of–Law Provisions in Employment Contracts

Minnesota Court of Appeals: Volkman v. Hanover Investments, Inc.

843 N.W.2d 789 (2014)

This case involves a question of personal jurisdiction when “choice of law” provisions in contracts are at play. Susan Volkman was employed by One Call Concepts (“OCC”) in Minnesota from 1984 until 2010. Volman was employed pursuant to an employment agreement entered into on January 1, 1993.

In 2008, Hanover, a Maryland company, acquired OCC. When Volman was terminated she was the chief operating officer of OCC and a shareholder of Hanover pursuant to a 2008 shareholder agreement, which conditions her status as a shareholder on her employment with OCC. Per this same agreement, if she was to be terminated Hanover had the ability to buy back her stock at 10% market value—to be determined at the sole discretion of Hanover’s board. The shareholder agreement also included a choice-of-law provision in favor of Maryland.

In April 2012, Volkman sued OCC and Thomas Hoff, OCC’s founder and president, in Maryland for various claims. All of her claims in Maryland were dismissed with the exception of being able to pursue her “defective” for cause termination. In December of that same year, Volkman sued Hanover in Minnesota for breach of the shareholder agreement. Hanover moved to dismiss for lack of personal jurisdiction, which was denied. Hanover appealed to the Court of Appeals. The district court’s reasoning for denying Hanover’s motion was because “by contracting with Volkman, a Minnesota resident, [Hanover] had purposeful minimum contacts with the State of Minnesota to satisfy due process.”

As a general rule,

To sustain personal jurisdiction over a foreign corporation, an appellate court must find both that personal jurisdiction is authorized by the Minnesota long-arm statute and that the exercise of such jurisdiction does not violate the due process requirement that the nonresident defendant have certain minimum contacts with the forum state.

Volkman, 843 N.W.2d at 795 (internal citations omitted).

First, the court comments on the difference between general personal jurisdiction and specific personal jurisdiction (both of which can satisfy the “minimum contacts” requirement). General personal jurisdiction exists “when a nonresident defendant’s contacts with the forum state are so substantial and are of such a nature that the state may assert jurisdiction over the defendant even for causes of action unrelated to the defendant’s contacts with the forum state.” Id. In contract, specific personal jurisdiction exists “when the defendant’s contacts with the forum state are limited, yet connected with plaintiff’s claim such that the claim arises out of or relates to the defendant’s contacts with the forum.” Id.

The court applied the five factors enumerated in Juelich v. Yamazaki Mazak Optonics Corp., 682 N.W.2d 656 (Minn. 2004) to determine if personal jurisdiction exists. These five factors are:

  • The quantity of contacts with the forum state;
  • The nature and quality of those contacts;
  • The connection of the cause of action with these contacts;
  • The interest of the state providing forum; and
  • The convenience of the parties.

Id. at 570. After the court examined all of the factors, it concluded that Hanover’s contacts established that Minnesota could exercise specific jurisdiction over Hanover, even in spite of the Maryland choice-of-law provision in the shareholder agreement, holding “[a] choice-of-law clause is not sufficient to confer jurisdiction.” Volkman, 843 N.W.2d at 797.


This article was written by attorney Maureen A. Carlson.

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