A recent decision from the United States Court of Appeals for the Eighth Circuit provides insight as to integration of Minnesota employment agreements and forum selection clauses for claims asserted under an agreement executed as part of a package of other agreements that form the basis of an employee’s offer of employment. In Medtronic v. Gannon, No. 17-3302 (8th Cir. January 9, 2019), the Eighth Circuit Court held that the forum selection clause found in the former employee’s employment agreement was binding against the former employee for claims asserted against him pursuant to a compensation agreement entered into at the time the former employee accepted an offer of employment. In making its decision, the court found that the compensation agreement was clearly and unequivocally part of the same transaction as the employment agreement and unambiguously encompassed the offer of employment.
On March 2, 2015, Patrick Gannon (“Gannon”) signed an Offer Letter, an Employment Agreement, and a Repayment Agreement at the same time to form an employment relationship with Medtronic. The Offer Letter set out the basic terms of Gannon’s employment, including his start date, compensation structure, vacation time, and training. Additionally, the Offer Letter also set out that the offer of employment was expressly “contingent upon [Gannon] signing the attached Employee Agreement and the Sales Guarantee Repayment Agreement.”
The Employee Agreement included provisions regarding confidentiality, proprietary inventions, and restrictions on competition. It also included a forum selection clause providing that disputes “arising out of or related to this Agreement” must be litigated in Minnesota state court and stating that Gannon “irrevocably consents to the personal jurisdiction of the state courts in the State of Minnesota for the purposes of any action arising out of or related to this Agreement.” Notably, the Employment Agreement does not address “compensation, benefits, and other financial terms and conditions,” which it says are “set forth in separate documents provided to [Gannon].”
In contrast, the Repayment Agreement was a one-page agreement that provided for certain guaranteed payments to Gannon over his first three years with Medtronic. The Repayment Agreement, however, included a requirement that if Gannon “voluntarily terminates from Medtronic during the Guarantee Period or within one year after the end of the Guarantee Period, [he] must pay back to Medtronic the difference between” his earned commissions and the guaranteed payments received that forms the basis of Medtronic’s claims against him. The Offer Letter also summarized Gannon’s repayment obligations. The Repayment Agreement did not include a forum selection clause.
In late 2016, Gannon left Medtronic. Medtronic sued him in Minnesota state court alleging that he left during the Guarantee Period and failed to repay Medtronic pursuant to the Repayment Agreement. Gannon removed the action to federal court under 28 U.S.C. § 1332(a)(1), and Medtronic moved to remand pursuant to the forum selection clause in the Employee Agreement. The district court granted Medtronic’s motion, holding that the forum selection clause in the Employee Agreement applied to actions arising from the Repayment Agreement because, under Minnesota law, both agreements were different parts of the same contract, and that Medtronic’s suit was “related to” the Employee Agreement, and therefore, subject to its forum selection clause. See Medtronic Sofamor Danek, Inc. et al. v. Gannon, No. 0:17-cv-00943, 2017 WL 4685041 (D. Minn. Oct. 16, 2017).
The question before the Gannon court was whether or not a forum selection clause contained in the Employee Agreement applied to a dispute under the Repayment Agreement. Under Minnesota law, “instruments executed at the same time, for the same purpose, and in the course of the same transaction are, in the eyes of the law, one instrument and will be read and construed together unless the parties stipulate otherwise.” Marso v. Mankato Clinic, Ltd., 153 N.W.2d 281, 288-89 (Minn. 1967).
Here, the Gannon court found that the Employee Agreement, Repayment Agreement, and Offer Letter were each executed simultaneously and the circumstances surrounding their execution indicate that they should be treated as a single contract. Specifically, the Court found that: (i) without either the Employee Agreement or Repayment Agreement, the Offer Letter would be unenforceable; and (ii) the Employee Agreement and Repayment Agreement address different aspects of the same employment relationship (compensation v. confidentiality, proprietary inventions, and restrictions on competition). The court found that the Offer Letter constitutes a “formal offer of employment” and is contingent upon Gannon’s execution of the Employee Agreement and Repayment Agreement. Likewise, because the Offer Letter summarizes key provisions of the Repayment Agreement, and the Repayment Agreement states that “[Gannon] and Medtronic wish to enter into an . . . employment relationship,” which Gannon conceded was formed by his execution of all three documents, the Repayment Agreement is not a “free-standing contract,” such that it must be read together with the Offer Letter and Employee Agreement.
As a result, the Court found that the Employee Agreement contains a clear and unequivocal forum selection clause that unambiguously encompassed the Repayment Agreement and required the Court to conclude that the Repayment Agreement was “related to” the Employee Agreement. Therefore, Medtronic’s motion to remand to state court was proper where the Offer Letter, Employee Agreement, and Repayment Agreement are parts of a single contract that must be read together.
If you have questions about the terms of a Minnesota employment agreement or the enforcement or application of a Minnesota forum selection clause, contact the Minneapolis employment attorneys of Trepanier MacGillis Battina P.A.
About the Author:
Minnesota employment attorney Nathan R. Snyder represents both employers and employees in a variety of employment law matters, including negotiation of employment contracts and litigating employment agreement claims. Nate may be reached at 612.455.6218 or firstname.lastname@example.org. Trepanier MacGillis Battina P.A. is a Minnesota employment law firm located in Minneapolis, Minnesota.