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Forum Selection Provision Does Not Render Arbitration Provision Ambiguous, Judge Sanders Rules

In McCarthy v. Genesee & Wyoming Railroad Services, an employee brought a lawsuit against his former employer, alleging that the employer breached the parties’ contract by failing to pay the employee severance benefits. The employer moved to dismiss the complaint, arguing that the contract requires the parties to arbitrate disputes about its enforcement or interpretation. The employee counterargued that the contract, at the very least, is ambiguous. The arbitration provision, according to the employee, conflicts with the contract’s forum-selection provision. That latter provision states that “each party . . . consents to the jurisdiction of a competent court in Massachusetts to hear any dispute arising out of this Agreement.”

Judge Sanders allowed the motion to dismiss. In rejecting the employee’s ambiguity argument, she reasoned:

[T]he [agreement] is unambiguous in requiring arbitration of any dispute concerning its interpretation or enforcement. That the [agreement] also states that it is governed by Massachusetts law and that Massachusetts courts have jurisdiction over the parties does not abrogate this arbitration requirement. Rather, it says only that, in the event the matter does end up in court, the parties consent to having a Massachusetts court hear the dispute. That could occur, for example, where a party seeks a court order compelling arbitration or where, after an arbitration takes place, one party seeks judicial review of the arbitration decision or enforcement of it. In short, there is no conflict. Reading the [agreement] as a whole, this Court concludes that it unambiguously requires arbitration of [employee’s] dispute.

McCarthy v. Genesee & Wyoming Railroad Services

July 23, 2018

Full decision.

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